Some contradictions of the welfare state: Revisited

Abstract

It is now 40 years since the publication of Claus Offe's classical paper, Some Contradictions of the Modern Welfare State. Much change has occurred to the form and content of welfare states over the intervening years, yet in addition to change, continuities are very much evident, and it is this constellation of developments – alongside anniversarial convenience – which has motivated a re-examination of Offe's seminal work on the contradictions of welfare states. This anniversary article re-introduces and provides a critique of the original paper before moving on to a historical comparison of the major political economic and societal differences which sets the scene for a concluding review of the major contradictions within welfare states in contemporary times. The paper argues that the core historical contradiction identified by Offe – that between the accumulation requirements of capital and the legitimation requirements of political elites to satiate the welfare needs of populations – remains at the core of contemporary contradictions.

Introduction

2024 marks the 40^th anniversary of Claus Offe's classical paper, Some Contradictions of the Modern Welfare State. The article has been identified within the broader canon of social policy literature as a significant contribution to understandings of welfare developments (Pierson and Castles, 2007) and crucially, to understandings of the contradictions contained within various welfare states at any given time. Much of course has changed over the intervening years, with the political economic, technical, socio-cultural and natural environments of our current juncture presenting its own unique challenges for citizens, policymakers and analysts of welfare state developments. Yet in addition to change, continuities are very much evident.

The capitalist mode of production remains entrenched, though its guiding mode of regulation has changed from a Fordist/Keynesian to a neoliberal form. Within this, a decisive shift from manual to automated forms of labour and from a production to a service economy has occurred (in most Western nations), yet the commodification and exploitation of human labour remains at the core of strategies of capital accumulation. Socio-culturally, Western nations have experienced considerable inward migration and as a consequence are far more ethnically diverse than the early-1980's, while women, sexual minorities and disabled people experience greater levels of aggregate equality and inclusion yet do so within the structures of pre-existing hierarchies of inequality (Fraser and Jaeggi, 2018). Perhaps most consequentially, the objectivities and subjectivities of class have altered with a resultant impact on political power and welfare state developments: politically, the vestigial social democratic consensus has long ago conceded to a neoliberal hegemony. Finally, on the level of the natural world, the destructive logic of extractivism identified by pioneering environmentalist academics in the 1970's (Commoner, 1971), are manifesting in very real consequences for human populations, most especially in the global South.

It is this constellation of developments – alongside anniversarial convenience – which has motivated a re-examination of Offe's seminal work on the contradictions of welfare states. The contemporary landscape is presenting continuities with certain of those contradictions identified by Offe, whilst also presenting its own unique contradictions. The interregnal qualities of the period considered within Offe's paper and those of our period also appear to share certain parallels (Streeck, 2017). Structurally, this anniversary article offers a re-introduction to certain of the key arguments of the original, before offering a critique, with a specific emphasis on aspects which remained underdeveloped or absent from the 1984 paper. The discussion then moves on to a brief overview of the major political economic and societal differences between then and now which sets the scene for a concluding review of some the major contradictions within welfare states in contemporary times. The intention is to largely navigate through the thematic channels identified by Offe in his contribution, so whilst the form of the paper is somewhat different from the original, the content is largely representative. Stylistically the article mimics the relatively informal character of the original, draws on many of the authors within Offe's temporal and ontological orbit including James O’Connor, Ian Gough and Wolfgang Streeck whilst also utilising the works of Antonio Gramsci and Karl Polanyi.

The original article

Some Contradictions of the Modern Welfare State was first presented as a paper in early-1980 before its publication in Critical Social Policy in 1982 and then appearing as a chapter within a collected edition of Claus Offe's work in 1984. This temporal aspect is critical in understanding the articles form and content. Offe's thoughts took place in the context of an epochal shift in the regulation of capitalism and a related shift in the nature of political power in advances capitalist states: the shift from a Fordist/Keynesian mode of regulation wrapped in the political architecture of social democracy to a (return) to a laissez-faire mode of regulation wrapped in an emergent political architecture of neoliberalism. The former had not yet died out completely and the new neoliberal mode of regulation was not yet fully operationalised. Offe's contemporary, Wolfgang Streeck (2017) and Danish academic Rune Moller Stahl (2019) have identified this period, beginning in the mid-1970's, as one of interregnum: a period in which the hegemony of the old system has been broken, yet a new hegemonic system cannot be fully born (Gramsci, 1971). It is a period in which a battle for ideas takes place, a battle for a new ‘common sense’ to capture the hearts and minds of elites and masses alike. I will return to this theme later in the article, but this temporal aspect is of central importance in understanding much of Offe's paper and the analysis within this article, as we find ourselves situated within an interregnal period of our own.

The second key concept to understanding and critiquing Offe's paper is the emphasis on modern welfare states managing the twin challenges of capitalist accumulation and political legitimation through a parallel strategy of commodification and de-commodification. Political elites must ensure a sufficient commodification of land, labour and money to ensure an uninterrupted flow of capital accumulation, whilst concurrently de-commodifying these very same fictitious commodities (Polanyi, 1944) to a degree which wins them sufficient political support from the working classes (Offe, 1984a, 1984b). The post-WW2 welfare state settlement balanced these two seeming polar-opposites, however by the middle of the 1970's the tensions inherent within such a strategy began to burst through the careful political architecture around which it had been constructed. This is where the idea of contradictions enters the debate, with Offe arguing that it is implausible that such an ‘optimum point’ between commodification and de-commodification can be reached or sustained for long, due to the historical conflict between producers and owners over the relative distribution of the productive surplus. With the slow breakdown of the Keynesian consensus, Offe argued that the welfare state, once idealised as the formula for social peace, had now morphed in to the site of contest and class conflict. These two key aspects– the temporal and the conceptual are critical to understanding the three main sections of Some Contradictions of the Welfare State: the critique of the welfare state from the Right, the critique of the welfare state from the Left and political change and the welfare state.

In reviewing the broad attack on the welfare state by the Right, Offe's provides a refreshingly honest assessment, openly acknowledging that much of the critique from the Right does in fact contain essentials truths. He points to two of the fundamental critiques: that the welfare state acts as a disincentive to investment and as a disincentive to work. Expounding the Rightist view that collectively these lead to a dynamic of falling growth – a la O’Connor's (1973) famous thesis – and that they increase working class expectations, contribute to inflation and ultimately, ungovernability, as the pool of fiscal resources available to the state steadily declines in lock-step with a decline in accumulation (Offe, 1984a, 1984b). The association between the welfare state apparatus and the disincentive by capital to invest is taxation, social security requirements, and regulations which act as a form of profit squeeze. The association between the welfare state apparatus and the disincentive to work is the empowering of trade unions, the expansion of labour rights, and the extension of various forms of social security safety nets which makes undesirable employment less attractive and unemployment itself less unattractive. Summarising, Offe argues:

‘In other words, the welfare state maintains the control of capital over production, and thus the basic source of industrial and class conflict between labour and capital; ……..at the same time, it strengthens workers potential for resistance against capital's control, the net effect being that an unchanged conflict is fought out with means that have changed in favour of labour’ (Offe, 1984a, 1984b: 152).

The dialectical reasoning within this hypothesis is clear, which he extends, arguing that ultimately, despite the protestations of the Right, proponents of a reductive welfare state remain well aware that of the critical role it plays in the social reproduction upon which labour – and therefore profit – rests. For Offe then, this is the contradiction: ‘…that while capitalism cannot coexist with the welfare state, neither can it exist without the welfare state’ (1984a, 1984b: 153)

Some Contradictions of the Welfare State also reviews the critique of the welfare state from the Socialist Left. The review posits that the Left critique can be summarised as: the welfare state model is ineffective and inefficient; that it holds a key function of social control and is therefore fundamentally repressive; and that it conditions a false consciousness within the working classes. As to the first point, Offe summarises that the welfare state does not fundamentally alter the distribution between labour and capital, it merely spreads redistribution within the wage-earning class. In addition, the causes of inequality are not removed, instead, their contingencies are ameliorated. The logic of existing welfare states ensures that bureaucracy holds a latent potential to absorb any increases in absolute welfare expenditure. Secondly, the centralised bureaucracy acts as gate-keeper to citizens welfare rights and exercises a social control mechanism whereby citizens must adapt their behaviours to the particular prescriptions of the ‘moral order’ of society. Finally, Offe presents the Left critique as arguing that the welfare state holds a politico-ideological control function in which politics and economics are divorced from one another, thus preventing a working-class consciousness of the totality of social relations.

The final section with Some Contradictions of the Welfare State examines the role of political power and political change in the shaping the form and content of individual welfare states. Following an acknowledged peremptory review of certain future potential trajectories for welfare state developments, the article devolves in to a discussion regarding the political process involved in shaping these potential futures, arguing that this consists of three cumulative arenas of conflict. The most obvious and visible is the arena of decision-making within the state apparatus, composed of political elites via the electoral system. Yet, as acknowledged across the disciplinary and ideological spectrum (Harvey, 2007; Kingdon, 2010; Lukes, 2005), this arena of conflict and decision-making is heavily circumscribed by power relations within what Offe refers to as the matrix of social power. This matrix is comprised of events (economic cycles, wars etc.) and social forces (classes, collective forces etc.) which are ultimately determinative in setting the political agenda or, in Offe's terminology, the environment of decision-making. Finally, the redistribution of social power is a continuous element within each of the previous arenas, whereby social and political actors engage in various forms of political economic, social and cultural action to strengthen their own positions to the point whereby a hegemony is established. Offe summarises:

‘Although the action space of level one (formal politics) is largely determined by the matrix of social power (level two), it may itself facilitate and promote a revision of the distribution of social power (level three). And the stage of democratic politics would thus have to be looked upon as both determined by and a potential determinant of social power’ (Offe, 1984a, 1984b: 161).

A critique of the original article

Some Contradictions of the Welfare State was a succinct review of the politics of the welfare state within the particular historical juncture of the late-1970's and early-1980's which the various editions of the paper covered. It did, as per any academic exercise, contain certain themes which remained underdeveloped and some omissions. An important area which remained underdeveloped in the original article was the absence of a clear explication of the term ‘contradiction’. The closest Offe comes is the following brief extract:

‘The contradiction is that while capitalism cannot coexist with the welfare state, neither can it exist without the welfare state. This is exactly the condition to which we refer when using the concept ‘contradiction’ (Offe, 1984a, 1984b: 153).

Yet this definition does not provide the conceptual clarity required to accept the argument wholesale, without, for example reading the above statement as a rather bland social (or liberal) democratic aphorism. Offe provides a far more succinct understanding of the term in Legitimacy vs Efficiency within the same volume:

‘A contradiction is the tendency inherent within a specific mode of production to destroy those very pre-conditions on which its survival depends’ (Offe, 1984a, 1984b: 132).

This point is not raised for petty semantics but to argue that the very centrality of the term ‘contradictions’ within the article deserved a more appropriate framing clarification to that provided.

A further critique of Some Contradictions of the Welfare State – and one again related to conceptual clarity, yet one which is fundamental in my estimations – is Offe's conceptualisation of the welfare state itself. At various points throughout the article, the welfare state is presented in conceptually different lights, approximating to Garland's (2014) typology of: welfare for the poor; as insurance, income maintenance and health and social services; government at the level of the economy and the population. While the elasticity of these narrow and broad interpretations may prove conceptually useful for welfare state novices, this very elasticity becomes problematic on a theoretical level when exploring the structural contradictions of what in reality is a particular form of political economy. Therefore, this paper adopts the position throughout – and argues that Offe's article would have been strengthened by – an explicit and consistent recognition of the welfare state as a central component in a particular mode of regulation of capitalism.

Related, and again implicit throughout, is a tendency to conceptualise the welfare state as an institutional arrangement which only benefits the working classes. That the welfare state benefited the middle classes as much if not more than the working classes was demonstrated at a similar time of the original publication (Abramovitz, 1983; Goodin and Le Grand, 1987) and Offe, coming from a broadly Marxian ontology would no doubt have supported such an argument. Yet there is no mention of this class dynamic within Some Contradictions of the Welfare State. One simple explanation for this of course could be the unspecified adoption by Offe of the classical Marxian two-tiered class structure of owner-worker, yet Offe's broader writings would seem to suggest a reticence at utilising such a crude typology.

The original article also ignores the immanent potential of welfare states to create political apathy amongst those sections of the working classes – in contemporary language an underclass or precariat – who remain marginalised from labour and thus dependent on the direct cash transfers of the welfare state and as a consequence, marginalised from labour politics. This pacificatory consequence of state welfare dependency has a correlate in a logic of a highly redistributive welfare state creating the conditions for the embourgeoisement of a section of the working class and lower middle classes – the Marxian aristocracy of labour – therefore fashioning institutional support for capitalism and political liberalism, a point identified by Hadziabdic and Kohl (2021). Whilst Marx once foretold that capitalism would create its own gravediggers, a very real consequence of the social democratic form of capitalism is that it has created its own cheerleaders.

Finally, the original article suffers from a certain Western-centric bias in one critical area: that relating to the political economic origins of the post-WW2 welfare state. Whilst the intention of Offe's article was not to expound on the historical development of the welfare state, he did nonetheless list a set of well-known historical factors which led to its post-WW2 development and consolidation. Absent however – as generally within the broader disciplinary canon – was any reference to the reliance on neocolonial extractivism for welfare state development. The historical reliance on colonialism for processes of capital accumulation by Western nations has been well-documented (Hobsbawm, 1989; Mukherjee, 2010), however the role of (neo)colonialism in supporting Western welfare states has received comparatively less academic attention. Radical political leaders from the Global South did however recognise the relationship between neo-colonialism and Western welfare state development. Kwame Nkrumah (1965), for example, recognised the same class compromise identified by Offe, yet argued that this was funded via diverting colonial earnings from Western elites to the Western masses. More recent academic work (Bhambra, 2022; Bhambra and Holmwood, 2018; Fraser and Jaeggi, 2018) highlights the relationship between (neo)colonialism and the original and contemporary formulations of the welfare state. Bhambra (2022) refers to the manner in which resources were and are extracted from the imperial community and redistributed within the national (Western) community drawing attention, by way of just one example, to the relation between taxation and price policies in Beveridgean-era Britain which sought to – and did – gain the political legitimacy of the British working classes, whilst contributing to mass famine in late-colonial India. Extractivism from peripheral nations has not been limited to that of natural resources but of course has extended to human resources also – the brain drain hypotheses – both historically and contemporaneously. Paul (1996), for example draws attention to the role labour from the then-peripheral Irish state played in rekindling post-WW2 British industry, with tens of thousands entering the British workforce each year from 1946–1961, while Mukherjee (2010) identifies a similar trend with Indian labour.

The current conjuncture

Prior to examining certain of the contradictions of the welfare state in the 2020's, it would seem apposite to briefly review the global political economic and welfare state environments of our current conjuncture. I will place a particular focus on those areas critical to understanding Offe's own conception of welfare state change contained within the final section of his paper in which he introduces us to the matrix of social power, for it is this, if I am reading Offe correctly, which seems the determinative element within his analysis. The most relevant events and social forces would appear to be the neoliberal revolution; the 2007/08 Global Financial Crash (GFC); the unravelling environmental catastrophe; the changed nature of political actors; and the changed nature of class forces. These, in-turn, constitute Offe's environment of decision-making.

The neoliberal turn was already underway by the time Offe published his first version of Some Contradiction in the Modern Welfare State. Described – paraphrasing Polanyi's (1944) earlier theorem – as the counter counter-movement (Gough, 2017), neoliberalism arose as a distinct material and ideological practice following the crisis of capital accumulation of the 1970's (Harvey, 2007). Whilst pre-fixed with the neo label, it was in fact simply a return to the laissez-faire led mode of regulation and thus a re-balancing of the capital-labour relationship away from the latter and towards the former. The key components of neoliberalism have been well-rehearsed elsewhere (Crouch, 2011; Fraser, 2019) and require no further recitation, however what does require certain elucidation are two related symptoms of the neoliberal revolution: its impact on political power and on class structure.

Both the form and content of political power has changed substantially since the publication of Some Contradiction in the Modern Welfare State. As to form, mass political party membership is now largely a historical relic, with cavernous declines in party membership co-developing with significantly decreased party identification and low levels of electoral participation. (Mair, 2013). This has been complemented by the significant loosening of formal and informal ties between social democratic and labour parties and trade unions. Political parties which were once largely – if never completely – constitutive of and represented the working classes, now no longer do so. This has of course had a symbiotic relation to the content of politics, which has been increasingly reduced to a perverse media-driven jumble of soundbites and episodic electoral contests between stylistically-distinct yet policy-homogenous parties, best captured by Streeck's (2017) concept of politainment. The transformation of the left has been most pronounced, with the socialist-inspired social democratic parties of the 1970's – committed to state control of key industries, capital controls, progressive taxation of the wealthy and relatively generous redistribution – appearing almost fairytale-esque in comparison with their modern iterations (Schmidt, 2016). In short, beyond episodic examples e.g., Syriza, Podemos, Corbynism etc., an organised, coherent, ideologically-committed left simply does not exist. In regards decision-making within the state apparatus, it appears as if Margaret Thatcher's aphorism rings true at present: there is no alternative.

The TINA thesis has of course evolved from conservative fantasy to actually-existing reality following the collapse of actually-existing socialism (Bahro, 1978) and the global spread of capitalist political economy. This complemented an existing process – beginning with the ending of the Bretton Woods agreement and the 1970's crisis of accumulation – within the global division of labour, in which de-industrialisation within the core facilitated the entry of peripheral nations in to the global capitalist political economy. Harvey (2007) describes these events – the temporal co-joining of the neoliberal revolutions in Britain and the USA and China's 1978 market-turn economic reforms – as ‘a conjunctural accident of world-historical significance’ (2007: 120). The re-organisation of the global division of labour had a significant impact upon the key constitutive grouping within welfare state politics: class. The shift from manufacturing economies to service economies proletarianized the labour forces of peripheral countries while fragmenting the working classes of core nations. This of course undercut the material and ideological basis for trade union membership which, in almost every single core nation, has experienced precipitous declines (Waddinton et al., 2023). The material attacks upon labour in the form of redundancies, inflation and wage stagnation, and union-smashing met with the ideological force of elite academic and political argument that class – at best – no longer mattered and where it was recognised, idealised as a cage from which individuals should aspire to escape from. This was most aptly represented in the synthesis of Giddensian sociological analysis and New Labour politics (Skeggs, 2019). The pincer movement of the asphyxiation of the political and the cultural elements of working-class consciousness ensured that the (conscious) class base supporting a redistributive welfare state has been significantly undermined. In its place has not been the destruction of the welfare state but its re-orientation in which its vertical redistributive focus has been minimised, replaced by an (individualised) social investment strategy and permanent state austerity (Jensen and Tyler, 2015).

The final critical difference between the time of drafting and publication of Some Contradiction in the Modern Welfare State is the state of global ecology. It is almost universally accepted (Gough, 2017; IPCC, 2023; Koch et al., 2016) that planet earth is experiencing climatic change and severe environmental degradation as a result of human activity. This is being felt most keenly, not in the nations of the global North which are largely those covered in this and the original article, but by poorer nations. Gough (2017) refers to this as a ‘double injustice’ whereby citizens of richer nations contribute a majority of greenhouse gases yet enjoy far more comfortable lives than citizens of the global South who are experiencing climatic-induced disasters at ever more frequent intervals, causing death, disease, famine and forced displacement. As put succinctly by Kennet ‘the poor often have no input in to the squandering of the earth's resources and derive little benefit from it’ (Kennet, 2020: 250). The ideological battle which surrounds this most contradictory of issues is ultimately located within the same logic of debates which have surrounded welfare states: the extent to which land, labour and money are either commodified or de-commodified and the resultant influence upon legitimacy and accumulation (and of course, human life itself on planet earth).

Some contemporary contradictions of the modern welfare state

On the theme of contemporary contradictions within the modern welfare state, it is pertinent to return to Claus Offe's statement regarding the fundamental contradiction he identified in the early-1980's, that ‘…while capitalism cannot coexist with the welfare state, neither can it exist without the welfare state’ (Offe, 1984a, 1984b: 153). He then dismisses the concept of an ‘optimum point’ of symmetry between the demands of accumulation and legitimation – between commodification and decommodification – or the ability of the political machinery of capitalist democracies to deliver on any hypothetical techno-rationalist balance. From our own historical moment this dismissal appears as eminently appropriate, for as in the period covered by Some Contradictions of the Modern Welfare State, we too now are in the midst of a period in which the previous politico-ideological hegemony has fractured (Schäfer and Zürn, 2024; Stahl, 2019) and the battle for ideas has re-opened following the Global Financial Crash (GFC) of 2007/08 which exposed the fallacy of any such ‘optimum point’. And it has been within periods of crisis such as this that the synthesis between cycles of accumulation, political power and welfare state developments moves from the occluded shadows of nescience to the dazzling glare of social consciousness. Contradictions are exposed. Political elites must openly choose between capital and labour, between commodification and decommodification, between accumulation and legitimation. Therefore, staying true to the focus of the original article, this penultimate section will concentrate on the trinity of cycles of accumulation, political power and welfare state developments and the contradictions which these create for the latter. In doing so, I will draw liberally on the work of one of Offe's contemporaries, Wolfgang Streeck, whose work on the contradictions of capitalism and human welfare sews a neat fit between the two time periods under consideration. The contradictions highlighted are structured as per Polanyi's three fictitious commodities but should not be read as a de-limiter of the debate, acting more as a framing mechanism confined within the key parameters of accumulation and legitimation.

For a capitalist political economy to function as per its own inner logic, capital accumulation must continue apace: Harvey (2010) identifies a 3% rate of growth as an acceptable minimal. Certain critical attributes are required to maintain this, including healthy and compliant labour force available in sufficient quantities; a steady supply of natural resources for input; access to taxation flows for states and credit flows and avenues for investment for private enterprise; and on the demand side, requisite purchasing power. In short, Polanyi's (1944) three fictitious commodities. Certain of these are under threat under the current model of welfare state commodification-maximalisation with many of the solutions enhancing capital accumulation whilst degrading political legitimacy and thus containing the potential for these contradictions to move from latent to manifest status.

In regards labour, whilst the labour forces of most advanced capitalist nations are compliant (perhaps subservient is a more appropriate term), an ageing population base in Europe and the USA is creating a contradiction regarding sufficient quantities of labour (Cooper et al., 2021; Eurostat, 2024). This drag on accumulation continues to be ameliorated through measures to increase pension ages; through so-called work-life balance schemes; and the expansion of the labour market through increased immigration. The labour commodification-maximalisation strategy however suffers in relation to legitimacy as increases to the pensionable age are often met with resistance from older age groupings. Work-life balance schemes favour elite groupings more than working and lower-middle class groupings (Warren, 2021) thereby increasing resentment amongst these social groupings towards political elites who champion this as a solution to the multiple challenges of ‘…birthing and raising children, caring for friends and family members, maintaining households and broader communities, and sustaining connections more generally’ (Fraser, 2016: 99). This attack on the capacities for effective social reproduction in-turn undermines long-term labour supply as overall birth rates decline and therefore aggregate labour supply and the population base for future purchasing capacity.

Much of these latent and realised problems for capital accumulation are ameliorated through the creation of alternative forms of labour value creation in the form of immigration. As Streeck (2017) argues, neoliberal ideology supports immigration based upon the crude logics of expanding the aggregate supply of low-paid, subservient labour thereby destabilizing protective labour regimes. Yet strongly pro-immigration policies have begun to undermine the political legitimacy of existing political elites following the 2007/08 GFC, with access to welfare state resources for indigenous and immigrant workers a key site within the interregnal battle for political hegemony (Schäfer and Zürn, 2024). Equally, a further contradiction is created within this dynamic, whereby wealthy nations predate upon the human resources of poorer nations, emaciating their capacities to support their own welfare systems and thereby creating a clear push-factor for external migration towards wealthier nations. Mukherjee (2010), for example, notes the draining of the scientific, technical and managerial community from India to the advanced countries since the 1960's, while Kerr et al. (2016) highlight a 130% in the overall number of high-skilled migrants to OECD countries between 1990 and 2010, a trend that has intensified over the subsequent decade (OECD, 2023). This migrant labour then enters in to the structural inequalities of a pre-existing aristocracy of labour resulting in the denial of employment, the receipt of lower incomes, and concentrated in precarious employment (ENAR, 2022). Finally, it would be inappropriate to ignore the profound – yet at time of writing largely latent – contradiction of the use of Artificial Intelligence (AI) as a labour substitution mechanism. Utilised as a tool for labour substitution under a logic of capital accumulation, AI could conceivably displace millions of workers, simultaneously undermining the tax base of welfare states and aggregate levels of effective demand. Therefore, within the first of Polanyi's fictitious commodities the prerogative of capital accumulation is undermining the political legitimacy upon which liberal capitalist democracies rely.

In regards land and nature, the unfolding destruction of the Earth's natural environment automatically fulfils Offe's conceptualisation of a contradiction as ‘the tendency inherent within a specific mode of production to destroy those very pre-conditions on which its survival depends’ (Offe, 1984a, 1984b: 132). Human activity animated through the capitalist mode of production is driven by a commodification imperative in the form of an environmental extractivism sourced from an Earth which has finite limits (O’Connor, 1999). Yet the obvious solution to this logic – a switch to de-growth and a concomitant switch from exchange value to use value – undermines capital accumulation and thereby the economic base for welfare state provision. In relation to the accumulation-legitimization dialectic, the multiple areas of welfare state workings from housing to healthcare to education all require vast inputs from nature in both direct and indirect ways which the current form of stoffvechsel – a term adopted from Marx and defined by Dean (2014) as social-ecological metabolism – simply cannot sustain.

Gough (2017) highlights the direct and indirect consequences of climate change on welfare states. The direct consequences of climate change have already begun to hit several of the semi-core advanced capitalist nation states in the form of extreme weather events from prolonged droughts to wildfires and heatwaves. These have already led to significant excess death rates across Europe (Ballester et al., 2023) while there are already signs of climate change impacting tourism (Matei et al., 2023), one of the key planks of the political economies of much of southern Europe. Indirect consequences will include potential disruptions to supply-chains for foodstuffs, increased inter-state competition for natural resources and increased migration flows. Each of these consequences will continue to have an undermining effect on political legitimacy, with each seeming to buffer support towards a form of protectionist nationalist political economy, at odds with the free trade focus of neoliberal capitalism. The adaption of climate mitigation policies will inevitably involve a diversion of resources away from the immediate welfare priorities which the working and middle-classes rely upon, towards programmes which, for many people, contain only an abstract logic: in most advanced capitalist nations, direct climate change impacts are minimal, whilst the impact of reductions in housing, health and social security payments are very much concrete.

Finally, in regards money, I will not attempt to traverse the full panoply of latent contradictions related to the commodification of money, instead I will restrict my brief analysis to one element, which I believe contains the greatest inherent tendency to create a crisis of contradictions: debt. The inherent contradictions between commodification and decommodification contained within the neoliberal mode of capitalism was the critical element in the collapse of the global and national economies in 2007/08, with the debt form of money to the fore within this (Graeber, 2014). In short, and as has been well-detailed by Streeck (2014), the re-orientation of welfare responsibilities from state provision to private provision facilitated an enormous accumulation of private debt (both individual and corporate) which ultimately proved unsustainable. This accumulation of debt has continued largely unabated – in fact accelerated due to the borrowing associated with the COVID-19 pandemic – raising growth and sustainability concerns (IMF, 2024; UNCRP, 2023). And with the current model of welfare state delivery predicated upon laissez-faire principles of low taxation and low welfare spending, a vicious circle of degraded public services feeding increased demand for private welfare services creates a closed, self-fulfilling loop, whereby state capacity to reduce the public debt-burden meets an increased private debt-burden through citizens borrowing to fund private welfare provision (Streeck, 2017; Weidemann, 2021). Global combined public and private debt stands at $USD 235 trillion with global public debt doubling since the early-1980's (IMF, 2024).

Should this global architecture of debt come crashing down in the not-too-distant future, liberal democracies – and their associated welfare state apparatuses – face the threat of a complete collapse of political legitimacy. As Streeck (2014) has argued, the mechanisms which capitalist economies have for ‘buying time’ necessary to ward off an ultimate contradiction-driven collapse have been progressively reduced. The ‘familiar dialectic of problems treated with solutions that turn in to problems themselves’ (Streeck, 2017: 18) is reaching a point whereby the debt mechanism can no longer be relied upon to save capitalism from itself. Certainly, it is very difficult to imagine populations – given the reservoirs of rage stored from the GFC, nurtured through years of austerity and inequalities, and liberally and continuously fertilised through social media channels – deferentially accepting any future-crash inspired bouts of austerity without recourse to severe social disorder. Exactly how – and towards whom – any such political rage is directed, will of course be key to the resolution to the forthcoming crisis. The battles which will form the redistribution of social power, may be quite haphazard, incoherent, even anarchic, due mainly to the disempowering and dismembering of the historical oppositional groups of mass trade unions and mass (social democratic) political parties. Equally, political rage might be carefully corralled and directed by political elites and/or right-wing nationalists – having methodically utilised the interregnum to their advantage – against the remnants of leftist parties and sexual and ethnic minorities and towards the promotion of some form of nationalistic capitalism. For, as Dale reminds us, Polanyi argued that ‘the protective impulse can be hitched to a defence of the market system (Dale, 2010: 61).

Conclusion

In summary, Some Contradictions of the Modern Welfare State has stood the test of time as a succinct review of the set of immanent contradictions within the welfare states of advanced capitalist nations. Whilst certain of the specificities of these contradictions have taken different form in the intervening 40 years, the fundamental contradiction remains: that between the accumulation requirements of capital and the legitimation requirements of political elites to satiate the welfare needs of populations. The unfolding global crises of politics, ecology, and inequality within our current interregnum are at the core of this contradiction. Increasingly, the opportunities for a corrective turn towards the type of equitable social structures which Offe has dedicated much of his academic and political energies towards seems increasingly unlikely as the social forces of the Right appear to be winning the battle for hegemony. And it was this very battle within the matrix of social power to which Offe turned to conclude his article, asking:

‘Will the agenda of the welfare state, its space of action and future development be shaped and limited by the matrix of social power of advanced capitalist social structures? Or will it, conversely, open up possibilities of reshaping this matrix, either through its own accomplishments or failures?’ (Offe, 1984a, 1984b: 161).

There are of course different ways of responding to this, though for expediency I will jump immediately to my own thoughts. History demonstrates that the matrix of social power of advanced capitalist social structures was won over by neoliberal forces during the 1970's interregnum. The accomplishments and the failures of the welfare state were dictated by political economic power: social democracy lost, and neoliberalism won. The intervening decades have witnessed the re-commodification of labour, land and money. Yet Offe's identification of capitalism being unable to function without the welfare state holds true. Whilst it may present in significantly re-oriented form, and with its content aimed at preserving the interests of the privileged classes over the working and lower-middle classes, it nevertheless remains a constitutive element of advanced capitalist societies. Located as we are in the midst of our own interregnum, Offe's concluding questions remain as pertinent today as they did in 1984. The mantle of hegemony within the matrix of social power remains within the grasp of neoliberal elites, yet it is a truncated hegemony, weighted too heavily towards the former end of the accumulation-legitimation axis. The great concern for future welfare state developments – and for the existence of our species – is that this trajectory may continue.