Rising inequalities, weakened power resources

The liberal states never fully developed social democratic institutions like some European and all the Nordic countries did. This was not because there was a universal commitment to the institutionalisation of a market-driven liberal ethos. Unions and progressive parties sought to build social democracies. But resistance from the right was tougher, electoral arrangements favoured the political right, and industry would not tolerate state coordination of markets. Across employment and welfare policy, the US made the least progress, failing to develop the national institutions after World War Two. This left the country with, as Weir (1992, p 4) puts it, a ‘truncated repertoire of policies to deal with employment issues’. The same can be said about social welfare.

Of course, the antipodean states, the UK, and Canada all went further, building employment and welfare state institutions that reflected the power resources of labour and the political left. Still, the ‘truncated repertoire’ remains an enduring problem across the liberal world. Broader institutional delay and half-measures illustrate these problems. Australia was late to develop universal health insurance, NZ still has some way to go in this respect, and the US is yet to create a national public scheme. Unemployment assistance falls short of high replacement rate universal social protection for wageearners. Benefits across the liberal world have low replacement rates. They variously combine severance pay for better-off workers, timelimited unemployment insurance, or flat rate benefits now subject to welfare paternalism. Full employment policies across these countries were still limited compared to Europe, and constrained by weak or discontinuous labour institutions and, moreover, the refusal of capitalist power to allow state capacity to develop in the interests of coordinated economic change.