The Welfare State as Crisis Manager: Comparing Social Policy Responses to Global Economic Crises

The topic of this talk are welfare state responses to three major economic crises, namely, the Oil Shocks of the 1970s, the worldwide recession of the 1990s and the current Financial Crisis. Policy developments in four small open economies – Belgium, Sweden, the Netherlands and Australia – are compared in order to show how countries react to major crisis events and explain their reactions. Are welfare state schemes used for active crisis management? Under which conditions do countries cut back or expand welfare state programs ? Do crises tend to lead to fundamental policy reform? Two main conclusions can be drawn: First; political parties shape crisis responses (albeit in ways that go beyond traditional partisan theory); second, crises tend not to produce fundamental social policy innovation in a way that could be expected against the background of the historical institutionalist literature on policy change. Rather, governments stick to existing policy routines. I offer an explanation as to why this is the case.