The Clientelistic Turn in Welfare State Policy-Making

Party Politics in Times of Austerity

Evelyne Hübscher

• Publisher: ECPR Press
• Year: 2018
• ISBN:
  9781785522994
• Edition: 1
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

Using a mix of quantitative methods and case study research, this book critically assesses the impact of party governments in different institutional settings on welfare state generosity and labour market reforms. Its key findings contradict earlier established views on the impact of leftist governments on welfare state policies. Specifically, left-wing governments are pursuing clientelistic policies when facing high institutional constraints and austerity and turn out to cater towards the core workforce rather than designing policies for the full range of labour market participants.

Chapter 1

Yes, They Can – Partisan Impact on Welfare State Change

Welfare states and social policy play a key role in political competition in modern democracies. These institutions and policies are crucial in mitigating some of the most important risks, such as the loss of income, sickness and unemployment, that individuals in industrialised countries face in modern times. The position of parties and their propositions on how to address social risks, therefore, are crucial for social groups with diverging exposure to these risks. Accordingly, among the variety of approaches that explain the development of welfare states and their differences, a majority of them attribute an important, if not crucial, role to political parties (Esping-Andersen 1990; Korpi 1978; Manow 2015; van Kersbergen 1995). The ability of parties and party governments to offer and implement distinct social policies to meet these diverging policy preferences is an essential component of political competition and democratic politics. From this perspective, the development of differing welfare state regimes and social policy schemes across countries can be viewed as an exemplar of democratic political competition.

Although the influence of party politics and party governments has preoccupied political scientists since the emergence of the discipline and has been assessed in a number of policy fields, most prominently in economic policy-making (i.e. Hibbs 1977), the study of welfare states and party politics stands out as there is hardly any citizen who is unaffected by social policies, either as a contributor to social security schemes or as a recipient of benefits. The comparative welfare state literature has produced a great number of studies which examine the effects of party politics on welfare state development, structure and design. One of the reasons why comparative welfare state research is so rich in studies that focus on how party governments, in particular left-wing governments, shape welfare states is the fact that social and labour market policies affect such a large number of citizens in a country.

While historically welfare state policy has been a central component of political competition, citizens and researchers nowadays often have doubts about whether political competition in this policy area still works as well as it used to. With increasing international economic interdependence, the role of politics, and in particular the influence of party governments on social policies, has been questioned and critically scrutinised. Additional factors, such as a changing regulatory environment for global financial flows, and structural changes in the domestic economic environment have further nourished the emerging claim about the diminishing room to manoeuvre of party governments. Scholars concerned with questions having to do with welfare state retrenchment and the nature of party competition in Western democracies have also developed a more critical view about the ability of political parties to shape the development of public policies according to their electoral platform. A common conclusion is that economic globalisation imposes serious constraints on political parties and welfare state policy-making (Huber and Stephens 2001; Pierson 2001). Following their argumentation, the politics of retrenchment follow a different underlying logic, less susceptible to partisan politics and preferences than the politics of welfare state expansion and growth. As an example, Pierson (1996) proposes that the politics of welfare state reform and retrenchment are mainly characterised by strategies that help to avoid blame and obfuscate the implications and impact of reforms. Based on these key assumptions, parties in government try to delay unpopular reforms and obscure their impact (Hübscher and Sattler 2017; Vis 2010; Wenzelburger 2014).

In a separate literature focusing on other forms of party competition, researchers have come to similar conclusions. They assess the role of political parties in Western democracies from a broader perspective and propose that the policy positions and electoral platforms of political parties have converged (Katz and Mair 2009; Mair 2000; Nanou and Dorussen 2013). Furthermore, competition among parties around political issues has declined or is no longer taking place (Mair 1995, 2008). The reasons that party scholars put forward to explain this development are similar to the ones that are prominent in the comparative welfare state literature. Due to international interdependence and increasing budgetary pressures, political parties find themselves deprived of the possibility of shaping large areas of economic policy-making according to their ideological roots. In addition to the shrinking room to manoeuvre in terms of preferred policy choices, party scholars observe an increasing alienation of parties from their voter base and a convergence of policy positions among parties which have historically presented different policy solutions.

The inability of parties in government to pursue their ideological agenda or their electoral platforms has implications for representative democracy and the way in which voters perceive political parties. It negatively affects people’s trust in government and the democratic processes and eventually leads to a decline in political participation (Armingeon and Guthmann 2014; Armingeon and Schädel 2015). It is widely agreed that the role of political parties and party governments is fundamental to democratic and representative politics (Gallagher, Laver and Mair 1992; Manin 1997; Przeworski, Stokes and Manin 1999). Political parties have a key role in shaping and reforming public policies in general, and social and welfare policies more specifically. Democratic rule and representative democracy is meaningful only if political actors have the ability to propose and implement diverging solutions to social, economic and political problems, and if citizens have a choice between different sets of policies. Without political competition over different policies and strategies to address issues that are salient to the electorate, the significance of core democratic institutions diminishes because the importance of elections and representative government becomes increasingly insignificant. Diminishing party competition therefore reduces both interest and trust in political institutions, a phenomenon that has been well documented in many industrialised democracies over the recent years (Katz and Mair 2009; Mair 2008).

Despite these pessimistic assessments of party governments and their room to manoeuvre, the welfare state literature has started to challenge the idea that social policy is ‘locked in’ and cannot be changed. While it is true that most policy change is associated with retrenchment, we still see significant variation in social policy developments. Contrary to popular predictions, continental welfare states such as France, the Netherlands, Switzerland and Germany did cut social rights in not only several policy fields, especially pensions (Germany, Switzerland and France) but also unemployment insurance schemes (the Netherlands) (Green-Pedersen 2002, Häusermann 2010a; Huber and Stephens 2001; Seeleib-Kaiser, van Dyk and Roggenkamp 2008). These findings clearly go against the notion of path dependence and stasis proposed by proponents of the ‘New Politics’ thesis. Furthermore, party politics, coalition building with extra-parliamentarian actors and the ideology of the incumbent government played an important role in these country-specific reform processes and significantly shaped their outcome. While some fields of welfare state policy-making underwent retrenchment, others, such as family and child-care policies, experienced significant expansion and increasing attention by policy-makers and citizens (Morgan 2013; Taylor-Gooby 2004). Many older studies also fail to explain why some governments have provided new policies directed at newly emerging social needs, such as child care, or why others fail to do so. These developments cannot be explained by the institutional theories which predominantly emphasise path dependency and ignore party politics.

More broadly, the empirical accounts of the functionalist view on policy-making in the post-golden era of the welfare state and the results found on the influence of partisanship on policy designs and reforms are contradictory. Although it is generally agreed that the pressure to reform social welfare institutions has been consistently high during recent decades, social policies continue to differ substantially across countries. The expected convergence of different types of welfare states did not take place, and the way countries take on welfare state reforms differs considerably. In light of these findings, the recent wave of welfare state research engages with alternative theoretical explanations, taking the role of politics and parties more seriously and reassessing the role of political parties as well as their vote- and policy-seeking motives in view of recent reforms and structural changes. Scholars have started to take a renewed interest in the key question concerning what parties in government really want, and whether their policy goals are representative of the party’s public image and of their constituency’s policy preferences. More recent contributions, therefore, show a more multi-faceted picture of welfare state development in the age of austerity (Green-Pedersen and Haverland 2002; Häusermann 2010a; Seeleib-Kaiser, van Dyk and Roggenkamp 2008).

This book stands in the tradition of these studies and aims at further developing and advancing our understanding of welfare state policy-making in times of budgetary and political constraints. It critically engages with traditional assumptions about the policy preferences of political parties, as well as their impact on public policies and on their traditional constituencies (Alexiadou 2013; Hübscher 2017; Jensen and Mortensen 2014). In particular, it deals with the question of which social groups benefit from which party constellation in government. Recent studies still maintain, at least implicitly, the idea that overall the salaried working class generally benefits from left-wing governments and that the working class also supplies the majority of votes for left-wing parties (Pontusson and Rueda 2010). This key assumption, however, has been seriously questioned by researchers assessing the changing class structure of societies and political parties (Oesch 2006b, 2008; Rehm 2009). Together with this well-documented knowledge about ongoing economic and structural changes, the long-held views on the party preferences of individuals also need to be assessed and revised. Newer contributions to the literature thus more critically assess the link between government partisanship and public policies with a particular focus on the reform of popular welfare state institutions and the development of new social policies (Häuser-mann, Picot and Geering 2013). The type of policy instruments and means that political parties choose from to reform policies in times of budgetary constraints may deviate from our expectations, which are still grounded in the traditional, one-dimensional approaches.

Recent work also proposes that the strategic aspects of policy-making have gained more importance in an environment of permanent austerity and budgetary constraints (Hübscher and Sattler 2017; Wenzelburger 2014). The increasing importance of strategic aspects of public policy-making substantiates and confirms the insight that the New Politics literature was accurate in its assessment that welfare state and social policy reforms are unpopular with the electorate. Governments are aware that, while necessary, the implementation of welfare state and labour market reforms can deploy negative electoral effects. Yet, the fact that such reforms are electorally risky does not mean that governments refrain from embarking on reforming welfare state institutions. Party governments are able to successfully address these challenges and also implement the necessary reforms, for example, by strategically timing the reform within the electoral cycle (Hübscher 2016). Alternatively, governments may make use of specific policy instruments which obfuscate the true nature of the changes (König and Wenzelburger 2014; Vis and van Kersbergen 2013). Current research, however, should carve out these strategies more carefully.

With regard to strategic behaviour, institutional setups play a crucial role. However, our knowledge of the interplay between political strategy and institutional context is still sparse. On the one hand, it is commonly acknowledged that institutional factors matter for policy-making. On the other hand, the dominant theories explaining welfare state development and change are surprisingly agnostic when it comes to the effect of institutional contexts on the reform strategies of parties in government. The institutionalist literature mostly conceptualises institutions as preservers of existing policies and says little on how institutions condition policy change. However, institutions not only influence the paths reforms of the social insurance schemes can take but also constitute a framework to mobilise and unite beneficiaries of the schemes. The way political institutions, existing social policy schemes and political actors mutually influence each other and affect the reforms that political parties propose has not been systematically assessed. An exemption is an emerging literature that engages with the question of how institutional contexts and constraints may enable some parties but restrict others in pursuing their preferred reform paths (Abou-Chadi and Immergut 2014; Jensen and Mortensen 2014). Overall, however, there is a clear need to examine how reform strategies and their impact on specific societal groups differ across institutional context and party government.

The argument presented in chapter 3 addresses these shortcomings. In short, it proposes an explanatory framework that highlights the following building blocks: the first building block of the argument suggests that social policies are multi-dimensional. More specifically, this means that the room to manoeuvre that is available to party governments is not only limited by their ability to influence the spending dimension. In times of fiscal austerity, governments can also alter the redistributive characteristics of a given social security scheme and therefore privilege or discriminate against specific societal groups. The second building block of the argument is the explicit modelling of the interactions between institutional constraints and the reform strategies of political parties in this multi-dimensional policy space. The political constraints configure the room to manoeuvre available to party governments. Depending on the given configurations, governments are able to propose and implement social policy reforms which address the preferences of the electorate on both dimensions. However, this scenario is plausible only if political constraints are low. If political constraints are high, the policy-making opportunities of party governments are significantly limited and they have to compromise with the demands of the opposition party with regard to one dimension, usually the spending dimension. In such cases, policy proposals will be designed in such a way that they preserve the privileges of the core workforce, the traditional working class, in order to maintain their electoral support.

The last building block of the argument is the emphasis on the strategies of left-wing governments to compensate the well-organised part of the labour force (‘insiders’) at the expense of the poorly organised and politically inactive labour force (‘outsiders’). In a political environment characterised by high levels of constraint, left-wing party governments have to come to an agreement with the parties in the opposition, which is often reached by limiting expenditures on social security, all the while attempting to ensure that they don’t lose the support of their core constituency. This balancing act can be achieved through the compensation of the core labour force, specifically by increasing the redistributive generosity of core social security schemes.

1.1PARTY GOVERNMENTS AND THEIR INFLUENCE ON WELFARE STATES – OUTLINE OF THE ARGUMENT

A defining feature of many contributions assessing the impact of party politics on changes to the welfare state is their focus on a uni-dimensional conceptualisation of welfare state and labour market policies. In other words, they mostly examine the extent to which spending on specific programmes has increased or decreased. The dominant focus on a single dimension of policies does not allow for the observation of the more finely grained and nuanced choices that political parties have for the further development of public policies. Having a more nuanced way of assessing the impact of politics is particularly relevant in these times when (mostly left-wing) political parties are increasingly deprived of any possibility to expand traditional social security schemes due to budgetary pressures. The newly emerging policy-making landscape, however, requires that political parties consider additional policy options and strategies to compensate their constituency and distinguish themselves from their political opponents. This means that social policy-making should be perceived as a multi-dimensional exercise rather than as a battle to implement the least cost-saving policies.

The argument of this book proposes that the way in which a government reforms social policies under these circumstances depends on two key factors: first, its partisanship and policy preferences influenced by its underlying ideology; and second, the institutional constraints that the government faces. The existing institutional constraints alter the reform strategy of party governments and influence the set of policies available to a government. Institutional constraints determine whether a party government has to gain support from opposition parties (e.g. in a bicameral system) to implement a reform, and the extent to which interest groups can access the policy-making process and block a reform proposal. The theoretical framework highlights the logic in which the ideology of party governments jointly with institutional constraints determines the outcome of welfare state reforms.

An important aspect of this process is the ability of party governments to build broader reform coalitions or to obtain the support of interest groups, mainly that of trade unions, in order to overcome institutional barriers. This argument is centred on the idea that social policy-making encompasses two main dimensions, specifically, an expenditure dimension and a dimension capturing the redistributive generosity of social policy programmes. By taking into account more than just the spending dimension, we are able to understand how governments exploit leverage on one dimension in order to be able to compromise on the other. While party governments are likely to face constraints on one dimension, particularly the spending dimension, they have greater room to implement their preferred policy choices on the other dimension. This setting also allows them to overcome and bridge diverging preferences on one of the two policy dimensions. Thus, party governments can gain the support of pivotal, well-organised societal groups and overcome institutional constraints by partly compensating them for social cuts through greater concessions on other policy dimensions.

The institutional setting of a country decisively influences how governments strat...

Table of contents

• List of Tables
• List of Figures
• Preface
• 1 Yes, They Can – Partisan Impact on Welfare State Change
• 2 The Politics of Welfare State Retrenchment – A Re-Assessment
• 3 Party Politics and Political Constraints
• 4 Austerity, Party Governments and Welfare State Output
• 5 The Mechanisms of Clientelistic Politics – Case Study Framework
• 6 Germany
• 7 Ireland
• 8 Discussion and Conclusion
• Bibliography
• Index
• About the Author