The Retreat of the Welfare State: Neoliberal Transformation and the Future of Social Protection in Europe

MAVROZACHARAKIS, EMMANOUIL (2026): The Retreat of the Welfare State: Neoliberal Transformation and the Future of Social Protection in Europe.

Abstract

The welfare state constitutes one of the most significant institutional innovations of modern democratic societies. Emerging gradually during the late nineteenth and twentieth centuries, welfare institutions were designed to mitigate the social risks associated with industrial capitalism while promoting social cohesion and political stability. Through mechanisms such as social insurance, public healthcare, labor regulation and redistributive taxation, welfare states sought to reduce poverty, protect citizens from economic insecurity and support social equality. However, since the late twentieth century welfare states have faced substantial political, economic and ideological pressures. Economic globalization, demographic change, technological transformation and the rise of neoliberal economic thought have challenged traditional welfare arrangements and raised questions regarding their long-term sustainability. Particularly since the economic crises of the 1970s, policymakers and scholars have debated whether welfare states are undergoing a process of institutional decline, restructuring or adaptation. The analysis suggests that although welfare institutions have undergone significant restructuring since the 1980s, the welfare state has not disappeared. Instead, welfare systems have demonstrated considerable institutional resilience and continue to play a central role in mitigating inequality and stabilizing democratic societies. Rather than representing a simple process of retrenchment, the transformation of welfare states reflects broader changes in the relationship between state, market and society in contemporary capitalism.

• Item Type: MPRA Paper
• Language: English
• Keywords: Welfare State Social Policy Neoliberalism Political Economy European Social Model Social Democracy
• Subjects: H - Public Economics > H1 - Structure and Scope of Government > H12 - Crisis Management; H - Public Economics > H4 - Publicly Provided Goods > H40 - General; H - Public Economics > H5 - National Government Expenditures and Related Policies; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I30 - General; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I39 - Other

References

Bonoli, G. (2005). The politics of the new social policies. Policy & Politics.

Castles, F. (2010). The Oxford Handbook of the Welfare State. Oxford University Press.

Esping-Andersen, G. (1990). The Three Worlds of Welfare Capitalism. Princeton University Press.

Eurostat. (2023). Social Protection Statistics. European Commission (2021): The 2021 Ageing Report: Economic and Budgetary Projections for the EU Member States. Brussels: European Commission.

Ferrera, M. (1996). The Southern model of welfare in social Europe. Journal of European Social Policy.

Friedman, M. (1962). Capitalism and Freedom. University of Chicago Press.

Harvey, D. (2005). A Brief History of Neoliberalism. Oxford University Press.

Hayek, F. (1944). The Road to Serfdom. University of Chicago Press.

Hemerijck, A. (2013). Changing Welfare States. Oxford University Press.

OECD. (2022). Social Expenditure Database.

OECD (2021) Social Expenditure Database (SOCX). Paris: OECD Publishing

Pierson, P. (2001). The New Politics of the Welfare State. Oxford University Press.

Piketty, T. (2014). Capital in the Twenty-First Century. Harvard University Press.

Polanyi, K. (1944). The Great Transformation. Beacon Press.

Standing, G. (2011). The Precariat. Bloomsbury.

Starke, P. (2006) :‘The Politics of Welfare State Retrenchment: A Literature Review’, Social Policy & Administration, 40(1), pp. 104–120.

Stiglitz, J. (2012). The Price of Inequality. W.W. Norton.