The Limits of (In)Equality: Liberalization, Solidarity and Support for Welfare Policy

Since the 1980s, rich welfare states experienced liberalization in various forms, resulting in increasing wealth inequality, health inequality, and poverty. While a majority in most rich societies experienced losses in income since 1980 and face increasing obstacles to their long-term welfare, we do not see the public unifying in response. Mainstream political parties are thinning government, reducing taxes and increasing private competition for welfare. A general theory of democratic institutions predicts that policymakers respond to public preferences. Public support of mainstream parties thus equates with indirect support of retrenchment. This forces us to consider the hypothesis that the public increasingly favors liberalization, and is not dissatisfied with its outcome of continued inequality growth, i.e., they are not very solidaristic.

Given the complexity of social, economic and political processes across societies, we suspect this hypothesis is overly simplistic. We have as many good reasons to expect the public to become or react more solidaristic after decades of liberalization, meaning increased support of the role of government in counteracting market forces – even if not visible in political (re)action. We thus construct theoretical arguments and empirical models to test both propositions. We use ISSP, income inequality and liberalization measures between 1980 and 2006 for 13 countries, to analyze changes in public solidarity.

We find that support did not clearly decrease over time, instead increase or decrease depends on the liberalization context (Thelen 2014). In liberal institutional contexts with strong inequality gains since 1980 (mostly English-speaking), increasing inequality leads to increasing social welfare support, suggesting that public opinion reaches the limits of liberalization. In social, less liberalized societies (mostly European) increasing inequality leads to less support suggesting the limits of equality.