The transformation of night-watchman states into insurance states is one of the most notable societal developments in recent history. In 1880, not a single country had a nationally compulsory social policy program. A few decades later, every single one of today's rich democracies had adopted programs covering all or almost all of the main risks people face: old age, sickness, accident, and unemployment. These programs rapidly expanded in terms of range (number and types of risks covered), reach (number of people covered), and resources (money spent). Today, all rich democracies cover all main risks for a vast majority of citizens with binding public or mandatory private programs. Three main aspects of this transformation are particularly fascinating: the trend (the transformation to insurance states happened in all rich democracies), differences across countries (the generosity of social policy varies greatly across countries), and the dynamics of the process.

Concerning the trend, Figure 1.1 shows the development of social policy in terms of range, reach, and resources. What explains this meteoric rise in all the rich democracies? How can we understand their fundamental transformation from night-watchman states into insurance states? Regarding differences across countries, Figure 1.2 presents two measures of welfare state generosity: total social expenditure as a percentage of GDP and the average percentage of benefits in case of unemployment (replacement rates). Why does Sweden spend almost twice as much of its national wealth on social policy as the United States? Why is the benefit for an unemployed worker in Switzerland almost 80 percent of her previous wage, while it is less than 50 percent in Ireland? Why does welfare state generosity vary across countries? With respect to dynamics, why and when did social policy emerge? What conditions led to expansion? What conditions led to retrenchment? What explains the timing of social policy milestones?

Existing Approaches

The large welfare state literature offers a variety of explanations for social policy provision in general, and the questions of trend, differences, and dynamics in particular. Let me distinguish three broad approaches to making sense of the enormous scale and cross-national diversity of social insurance provision: functionalist, antagonistic, and cross-class approaches.