soziologie und gesellschaftliche entwicklung (35 mb) - ISF München

effective demand as determinant of Output, employment and income.
Spending on welfare affects the Standard of living and, therefore consumption,
which is, however, a function of employment and income. While
socializing investment creates profit and savings, and Substitutes market
forces, welfare sustains consumption and provides room for market forces.
The preference afforded to welfare spending, in turn, was the result of postwar
development strategies, based on expanding international free trade,
rather than socializing national investment, which created the need for
balance of payments policies and therefore for State policies of mediation
(to control competitiveness). Unfortunately, when the bases of international
development collapsed (the break of the Bretton Woods agreement
on international liquidity and trade), State mediation became aimless
(zero-sum game), and the role of the State lost legitimacy.
This has not prevented the continued presence of the Welfare State —
although its essence has changed. With low and fluctuating international
demand, the rate of growth of each economy has been low and fluctuating
— and welfare expenditure has not been able to either increase or stabilize
the rate of growth. Actually, the negative economic results cannot be
imputed to welfare: this Supplements household consumption, but total
household consumption is determined by household income; thus, other
income sources, rather than welfare, will determine the propensity to consume,
the multiplier and the effects on the economy. When the economy
does not grow and fluctuates, labor demand will not grow and fluctuate.
Now, welfare can be seen as a means to provide greater contractual power
to the unemployed, when labor demand is present; but when labor demand
is absent, welfare becomes similar to charity (there is no social exchange
justifying it) and this — contrary to what Job search economists think —
reduces, rather than increases, the contractual power of the unemployed;
the nature of the mediation effected by the State changes substantially,
and the role of the State is diminished.
Furthermore, welfare expenditure gives rise to welfare institutions.
These are built, from the beginning, with two objectives: one — common
to all institutions — is to provide effective demand to the economic System
(effectiveness); the other, constitutive the Institution, to spend government
funds (efficiently — in the sense of making the public institutions viable;
not in the market sense). When public policy is of a mediating character,
the "effectiveness" objective becomes less relevant than the "efficiency"
objective: there will be a progressive tendency of institutions to prefer
"efficiency" to effectiveness — or, in other words, to reinforce their specific
vis-a-vis of their general role. This, in turn, will exercise pressures on Government
budgets, favoring financial transfers to welfare institutions vs. expenditure
on goods and Services, so that — in the end — Government
deficits may paradoxically grow due to greater "efficiency" (i.e. autonomy)
of welfare institutions. It is as if a "public market" is created, where institutions
behave as private enterprises enjoying a degree of monopoly in the
Lutz (1984): Soziologie und gesellschaftliche Entwicklung.
URN: http://nbn-resolving.de/urn:nbn:de:0168-ssoar-100776