Globalization and the Decline of the Welfare State

The idea that globalization and the welfare states can conflict comes from the fact that: while globalization is based on profit maximization, the welfare states main goal is to reduce, if not eliminate inequality, insecurity and poverty through proper redistribution of wealth mechanisms. The welfare state has to enhance “people’s adaptability, so that they, whatever their skills, can turn themselves from losers into winners through their own efforts” (Dennis J. Snower. Et al.137). The point of departure is that these two concepts are related to the allocation of resources and any conflict will have to occur on that level. This paper will not analyze the responses of the welfare states to the challenges of the 1970 and 1980s but instead will look at the response of the welfare systems in the face of the increasing global integration of product and capital markets and thereafter determine how the conflict begins and ways in which it can be minimized. I will argue that globalization has happened to the expense of the welfare state and that states will have to correct its negative effects by re-establishing social justice.

This question suggests that there may be an incompatibility of goals between globalization and the welfare states. The conflict comes from the government need and interest in protecting and promoting the economic and social well-being of its citizens, and its need to integrate and expand into a process of expansionary international flows of goods and services, capital, information and people. There are many components of economic growth, one of them being competition of wages and prices, research and development or human capital of nation states to name a few.

Thomas J. Courchene, author of Social Policy a...

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...t benefits (OECD). suggested the idea that Globalization has entered a new state where the patterns of winners and losers is its new stage. Consequently they recommend compensations mechanisms and reforms that would encourage people who have been hurt by globalization regardless of their skills or sectors (Beirnstein, et al. 20).

Globalization has put pressure upon countries to develop new ways to cope and adapt to the changing economic environment. We have seen that globalization has happened in the expense of the welfare state and has ignored it responsibility to achieve social justice in the midst of economic changes. Nevertheless the conflict between globalization and the welfare states has to be dealt with on a case by case basis, the obvious fact is that different countries will have different mechanisms with specific preferences and needs of its citizens.