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Abstract

Understanding the development of social security systems constitutes the ultimate goal of social security research. This review traces and compares two schools of thought regarding social security development: the convergence and divergence schools. Using a thematic approach, this article first categorizes extant studies into one of these two schools and then identifies the broadly accepted mechanism of social security development by comparing them. After reviewing the extant research and its theoretical underpinnings, this article applies Mill’s methods of agreement and difference to show how the Chinese case contributes to and challenges our understanding of social security development. By discussing the assumptions of current research on social security development in light of the Chinese case, this article illuminates how political legitimacy serves as a common mechanism of social security development regardless of political context or structure.

Keywords

social security studies welfare politics industrialization convergence divergence

On November 17, 2016, the International Social Security Association (ISSA) announced the Government of the People’s Republic of China (PRC) as the recipient of the Award for Outstanding Achievement in Social Security in recognition of its unprecedented extension of pensions, health insurance, and other social protections. As the largest emerging economy in the world, China’s social security development has naturally attracted global attention. Beyond China, both welfare states and emerging economies have instituted reforms of their pension, health, and other social protection programs, with the frequency of such modifications compounded by political conflict regarding the purpose of social security. Of course, understanding and predicting social security development has been a major field of study since the Second World War (1939–1945). Nonetheless, nearly half a century after the so-called “golden age” of social security development, debates regarding the impact of politics on social security development are heating up again.

This article reviews research on social security development to discern the broadly accepted mechanism of social security development and demonstrate the value of the Chinese case in challenging accepted arguments and identifying a more viable mechanism. Accordingly, this study adopts a historical approach and John Stuart Mill’s methods of agreement and difference as its dominant tools of analysis, categorizing, and comparing arguments regarding social security development. More specifically, Mill’s method of agreement is used to identify the same factors and trends in understanding social security development, while the method of difference is used to identify the differences between theories with similar arguments. By comparing the results of the aforementioned analysis with those of Chinese research, this study clarifies how the Chinese case challenges contribute to the current understanding of social security development.

This study contributes to the broader literature by situating the Chinese case in the context of international studies, evaluating the findings of Chinese studies in the context of the general conclusions of different schools of thought on social security development and deducing the common mechanism of social security development. To do so, first, this article reviews the development of the broadly accepted social security development thesis in terms of the convergence and divergence schools. In this respect, this article historically compares the two schools of thought and traces more recent explanations on social security development, drawing on issues of globalization, population aging, and gender revolution. Second, this article uses the Chinese case to test theses on social security development, as well as present the contributions of Chinese studies for identifying a universal mechanism of social security development. Finally, this study identifies the features of varying social security development perspectives and the contribution of the Chinese case in this field. Based on a comparison of Western studies—which reflect liberal democratic contexts—and those examining the Chinese case, this article examines the significance of politics and political legitimacy on a country’s social security development.

Social Security Development

Social security was recognized as a human right with the ratification of the Universal Declaration of Human Rights in 1948. However, its definition and content remain matters of debate, varying from one state to another. For instance, although Germany initiated social security provisions in the late 19th century, such provisions were significantly expanded by Britain during and after the Second World War (1939–1945), requiring governments to intervene in the market and society to collect resources and implement social security (Robson, 1957; Williamson & Weiss, 1979).

Scholars use the terms “social security” or “welfare state” to describe the provision of support (both in kind and in cash), services, and welfare services not expected to yield economic profit. While there are differences between the perspectives and main points of the “welfare state” and “social security,” the overlap between these concepts in terms of design, practice, and outcome has resulted in scholars tending to treat them as interchangeable. Consequently, an increasing number of scholars began using descriptive methods to define their topic. For instance, Adema and Ladaique’s (2009) OECD report, How Expensive Is the Welfare State?, uses nine social security functions to describe a social security system. In this respect, old age, survivors, incapacity-related benefits, health, family, active labor market policies, unemployment, housing, and other social policy areas were treated as essential functions to define the domain of a social security system, enabling a comparison of the social security of various OECD countries by function.

Meanwhile, study items of this scope vary along regions and countries. For instance, scholars like Feldstein (2018) have highlighted the ongoing exhaustion of the social security fund in America. Studies on Eastern Europe have observed more generous social expenditure in postcommunist autocratic countries compared with postcommunist democratic countries (Vera, 2020). East Asian studies have tended to focus on the positive impact of social security development on economic growth (Zhao, 2013), often emphasizing the importance of traditional culture in the development of social security. In this respect, scholars like Peng and Wong (2010/2012) have advanced the notion of a so-called East Asian style social security system. Essentially, differences in both definition and study approach have tended to hinder the ability to conduct cross-country comparisons. Certainly, such cross-country comparison is considerably easier if we ignore the variations in the definitions of social security and welfare from one country to another (G. Huang, 2017). Nonetheless, the political connotations of these studies have made the practice of alternating between the two terms—welfare and social security—commonplace.

The Convergence School

Several seminal studies have noted the emergence of social security in the rebuilding of Europe after the Second World War (Heclo, 1974; Kerr et al., 1960; Myles & Quadagno, 2002; Pryor, 1968; Rimlinger, 1971; Wilensky & Lebeaux, 1958; William, 1957). The bulk of contemporary research focuses on social security development in the 1970s, with industrialism used to illustrate the development of social security in affluent democracies. This research birthed the primary thesis of the convergence school—a stream reflecting the desire of scholars to assure the fundamentally impersonal mechanism of social security development.

Social security began attracting academic attention in 1960, when the average public expenditure on social security was about 7.5% of the GDP in Western democracies (social expenditure data are from SOCX database of the OECD, 2017). Accordingly, the expenditure of Western democracies was much higher than that of developing economies when scholars began examining social security development. In the golden age of capitalism (Also known as the “long boom,” postwar economic expansion was an international period of economic prosperity in the mid-20th century that lasted from the end of Second World War to the early 1970s, when the collapse of the Bretton Woods system in 1971, the 1973 oil crisis, and the 1973–1974 stock market crash resulted in the 1970s recession. Narrowly defined, the period spanned 1950/1951 to 1973. However, there are some debates regarding periodization, particularly insofar as individual countries differed, with some starting as early as 1945, while the East Asian booms lasted into the 1980s or 1990s.), average public expenditure on social security was over 14% of the country’s GDP. Both economic development and public expenditure on social security increased quickly and continuously, highlighting the positive correlation between economic growth and social security development. However, these dynamics also prompted the question of why states with similar economies did not spend the same proportion of their GDP on social security.

Initially using economic growth to explain social security development, Wilensky and Lebeaux (1958) identified a new impersonal factor—demographic profile—to illustrate the variations between different countries (Wilensky, 1975). Scholars argued that industrialization eroded the kinship support system of the traditional agrarian world and created demands for public compensation to replace this support structure (Kerr et al., 1960). A greater proportion of the population exchanging labor for wages resulted in less labor being available to provide such support (Pampel & Weiss, 1983), forcing states to develop a social security system to maintain their labor force and achieve harmony in a rapidly industrializing society (Offe, 1972). Following this thesis, Wilensky (1975) argued that the impact of economic growth modified by demographic factors fundamentally decided social security development.

The convergence school’s explanations of social security development have seldom been questioned. Most scholars accept that economic growth and population aging constitute the fundamental reason for social security development in industrial societies. Wilensky (1975) was the first to empirically test alternative theories of social security development. Thereafter, scholars began using economic growth measured by GDP per capita, demographic profile according to the percentage of people unable to sell their labor, and system rigidity based on path dependence theory to empirically explain public expenditure on social security (Zheng & Scholz, 2019).

Essentially, scholars hold that the long economic boom of the golden age of capitalism provided the foundation of social security expansion in affluent democracies. The improvement in personal income meant that governments could collect more resources and thus expand the provision of public support. Industrialism changed the mode of production and increased productivity, resulting in issues related to child care and retirement. As industrialization destroyed the social support system based on kinship and the patrimonial traditions of agrarian societies, the demands for relief from people with little or no ability to sell labor on the market increased and commodification became the primary way of living (G. Huang, 2019). These changes generated enormous demands for social security provisions. Assuming that this developmental process is shared among industrializing states, scholars argue that the developmental trajectory of each social security system is convergent.

Although the convergence school’s explanations of social security development became widely accepted, its predictions of the consequences of social security development have been questioned. While the argument that states with similiar levels of economic development would develop similar social security systems has merits, it is not supported by reality. Although these arguments demonstrate that expansive and impersonal economic forces influence social policy outcomes and introduce demographic profile and institutional rigidity as control variables, they fail to explain the differences in social security development trajectories in countries with similar resource bases (i.e., economic development). In other words, the convergence school has failed to explain why countries with similar GDPs have markedly different social security development in terms of their institutional designs, redistribution levels, and benefit mechanisms. Failing to solve this dilemma, scholars have turned to the impacts of a country’s politics on social policy, thus expanding their research scope beyond large impersonal factors.

The impersonal factors introduced by theories of industrialism, which advocates the changing forces of production (e.g., Wilensky, 1975), and neo-Marxism, which emphasizes the changing relation of production (e.g., O’Connor, 1973), have been repositioned by political scientists. These scholars gave consideration to the need to facilitate capital accumulation and legitimate capitalist modes of production to illustrate the expansion of social security in affluent democracies. While the interpretations of political scientists differ from theories of industrialism, they share the same basic logic: Social security development is an inevitable product of economic growth, with policymakers compelled to implement changes in response to public demands. As such, political science theories start from the desire to provide a universal explanation for the variations of social security development across countries with similar economies. Although political science theories are rooted in the convergence school, their development facilitated the emergence of the divergence school.

The Divergence School

The divergence school reflects attempts to explain the variations between different countries regarding their social security development. Such variations between affluent democracies gained scholarly attention when economic growth began slowing down at the end of the golden age. Limitations on the expansion of resource bases resulted in furious discussions regarding proper or efficient measures of social security implementation. Scholars frequently used “political matters” to account for the diversity of social security systems (Beloshitzkaya, 2020; Stephens, 1979). In this respect, power resource theory became the most famous explanation. Focusing on capitalist, liberal democracies, scholars contend that the “many” find a way to unite against the “few”—that is, the elites—and use the state to claim a larger share of social surplus (Haggard et al., 2013; Lenski, 1966).

Elections are one of the most important control variables in explaining the variation of social security development. In liberal democracies, universal suffrage and free and competitive elections are necessary but insufficient conditions for individuals to impact redistribution. More specifically, as electoral constituencies are large and elections costly, people with less property are systematically placed at a disadvantage. General employees have to unify to amplify their only advantage: their numbers. The lower or working classes use their votes to elect overtly class-based parties to represent their interests, thereby ensuring that redistribution will favor them through social security (Hewitt, 1977). However, this phenomenon varies today. As the political spectrum changes in affluent capitalist countries, so right wing parties have moved toward liberalism while left wing parties have moved even further left. Consequently, disadvantaged groups engaged in market competition swing toward right wing parties in an effort to protect their interests and welfare benefits from immigrants (De Cleen, 2018; Ennser-Jedenastik, 2016; Stuckler et al., 2017). Comprising two key factors—namely, voter alliances and parties—this process results in the diversity of social security development.

Based on these arguments, power resource theory concludes that major differences in social security expenditure and the entitlement of affluent capitalist democracies can be explained by the relative success of left-leaning parties—particularly social democrats—which aligned with strong trade unions in shaping the democratic class struggle (Myles & Quadagno, 2002). Benchmark models of this thesis have been tested both quantitatively and through historical comparison by Korpi (1983; Western & Rosenfeld, 2011), who founded this theory, among others (Cameron, 1978; Castles, 1982; Ellison, 2018; Esping-Andersen, 1985; Hicks & Swank, 1984). Power resource theory subsequently became the dominant paradigm in this field (Alesina et al., 2018; Orloff, 1993). Based on the explanations provided by power resource theory, working-class mobilization (i.e., unions and parties) is the most frequently used variable in accounting for the early appearance of social security and its developmental variations across countries. The contributions of this theory have increased with the growth of cross-national research (Emmenegger & Klemmensen, 2013; Huber et al., 1993).

Scholars have also demonstrated the importance of the intensity of electoral competition among parties and voters in the development and variation of social security (Beloshitzkaya, 2020; Hicks & Swank, 1984). The class content of elections is altered by high voter turnout, which generally reflects increases in the participation of lower status and previously excluded groups, thereby shifting the center of political power to the left (Iversen, 2001). In short, different countries with different political participation produce different social security development trajectories.

In contrast to society-centered approaches emphasizing the role of elections and parties in aggregating interests from below, institutionalist scholars focus on the organization and structure of state institutions in constructing polity-centered arguments (Skocpol, 1992). According to institutionalists, the institutional features of a government and the rules of electoral competition are more decisive factors than the balance of class forces in determining electoral and policy outcomes. Such scholars typically illustrate their arguments through the American case. In the United States, the division of power between the executive and legislative branches and the courts, together with a weak party system and appreciable state autonomy, significantly diffuse the government’s authority and limit political leaders’ abilities to innovate a radically universal social security system (Lipset, 1996).

The arguments of polity-centered institutionalists have influenced comparative research on cross-national social security development. Comparative research on the Swedish, French, and Swiss health care systems shows that centralization and the insulation of the executive from parliamentary and electoral pressures constitute an important precondition for reform (Immergut, 1992). In addition, comparative studies of Canadian and American health care reform demonstrate the importance of a parliamentary system with strong party discipline in promoting social security reform (Maioni, 1998). Through a quantitative analysis of 18 capitalist countries, Huber, Ragin and Stephen (1993) revealed the strong independent effect of state authority concentrated in the constitutional structures of a country’s social security development.

Scholars have also highlighted the role of corporatist, social Catholic, and Christian democratic parties in generating alternative strategies for social security implementation in a country with a high level of public expenditure and intensive competition with leftist parties and unions for the allegiance of working-class voters (Van Kersvergen, 1995). According to corporatist theories, the higher the organizational level of a social class or group, the more powerful its ability to bargain for welfare support (Hicks, 1999). Meanwhile, the growing political power of the aged has resulted in an increase in public expenditure favoring them—after all, countries are generous to both the old and the young. The trade-off between the old and young appears in most countries, except those lacking corporatist representation and strong leftist parties, like America (Pampel, 1994; Van Der Waal et al., 2013).

Esping-Andersen’s (1990) seminal study provides the most persuasive support for the argument that politics and political institutions play a significant role in social security development. The persuasiveness of this work brought an end to the monopoly of industrialist explanations of social security development. Benefiting from cross-national studies, Esping-Andersen (1990) demonstrated that the institutional logic assigning social security functions to the state, market, and family is more useful than relative generosity and public expenditure in distinguishing a country’s social security system.

The introduction of two dimensions—namely, de-commodification and de-stratification—led to the identification of three distinct social security systems: liberal, conservative, and social democratic systems. In a liberal social security system, citizens are individual actors in the market, refuse to replace market relations with social rights, and prefer finding support in the market. Social insurance and means-testing are the primary tools for implementing benefits. Meanwhile, proud of their precapitalist origins in the dynastic elites of continental Europe, conservative systems are antiliberal in origin and intend to maintain the organic hierarchical social order inherited from the past. Social rights and privileges are differentiated on the basis of class and status, and redistribution is marginal. The family constitutes the smallest unit of this system. While larger than that of liberalism, public expenditure is primarily distributed to finance the transfer of program benefits to male breadwinners. Finally, social democratic systems encourage extensive social rights. This system emphasizes equality between citizens and the universalization of social rights rather than the preservation of status. In addition to adopting the highest redistribution and income security level, this model advances gender equality to facilitate the participation of women and parents in the labor market (Huber & Stephens, 2000). Although social democratic systems prefer increasing public expenditure on social security, this is implemented in a fundamentally different way to that of conservative systems.

In addition to the diversity of the methods each social security system adopts to solve the inequalities generated by the market, studies in the divergence school have examined the policies that may impact social security implementation and their repercussions. A series of policies regulating the primary distribution of income and job securities has been adopted in more or less every country. Theories advancing the importance of politics and political institutions also note the correlation between the interference of different levels of government in the operation of the market and the preference for different social security models. Nonetheless, although the divergence school’s answer to the diversity of social security development is persuasive, it fails to solve the question of why countries with similar political structures and institutions adopt different social security programs or why countries with different political structures and institutions adopt similar programs.

Revitalization of Social Security in the Era of Globalization

Scholars have tended to overlook that divergence arguments emerged with the maturity of social security in Western countries, while convergence theories arose at the beginning of the social security boom. Consequently, the two schools generate different results, interpretations, and predictions of social security development. Fortunately, new economic and social security developments provide an opportunity to test these arguments. Developments like economic globalization, postindustrialism, and demographic changes, combined with the establishment of the nation state, have rendered factors like political parties and institutions relatively impotent in preventing the demise or dramatic restructuring of social security systems.

Thus, extant theories from both the convergence and divergence schools have been strengthened by testing them against the cases of new and developing states. This is particularly true of young and emerging nation states, which, intending to strengthen their national identity, view the economy and security as inseparable (Cohen, 2020). Such nation states adopt the theories of affluent capitalist countries in building their social security systems, often importing program designs from other countries (Bhandari & Burroway, 2018). Consequently, such states tend to reflect a mixture of convergence and divergence social security development.

In this respect, impersonal factors like GDP per capita and demographic profile can be quantitatively valued depending on the application of certain standards to each country to illustrate their social security development. These studies form part of the convergence school, as their independent variables are universal. However, scholars find that these values vary from one country to another. Independent variables that vary among countries—for example, when different countries have different political structures and institutions—typically fall under the divergence school.

The diversity of social security development was highlighted as development slowed, with the familiar contours of national social security institutions formulated at the end of the golden age. However, globalization, postindustrialism, and the advancement of gender equality toward the end of 20th century have wrought fundamental changes, often requiring the dramatic restructuring of social security systems. Numerous social security systems have been developed in emerging economies, when affluent democracies commenced the “politics of austerity.” These changes have motivated scholars to rethink the arguments and theoretical contributions of the convergence and divergence schools.

Until the end of the 1970s, scholars from both the right and left predicted the discontinuation of the expansion of social security as a function of markets, as well as the demise of social security (Bell, 1960; O’Connor, 1973). Although affluent democracies have experienced economic stagnation, increasing unemployment, and rising deficits associated with population aging following the retrenchment of social security programs, these countries introduced compensation for these retrenchments. Consequently, scholars have recognized these changes as the restructuring of social security to accommodate changing social needs rather than its demise (Ku & Chang, 2017; Quadagno, 1988).

In advanced countries, average levels of public expenditure continued to rise in the 1980s, albeit at a slower rate, before leveling off in the 1990s (Hicks, 1999). According to scholars, the fundamental transformation of existing social security institutions is impossible without dramatic exogenous economic and political shocks (Pierson, 1994). Explanations that advance the importance of politics associate this impossibility with the high political costs to an incumbent government when programs benefiting large sectors of the population are cut or reduced, although governments typically find ways of sharing liabilities with opposition parties and other social actors (Myles & Pierson, 1997). As it is based on the bipartisan consensus-building process, each cutback is often accompanied by new entitlements to win support for reform. This means that social security development in this new period is fundamentally different from that of the period of expansion (Pierson, 1996). Discerning the reasons for these changes presents a new opportunity to enhance our understanding of social security development.

Scholars have focused on the impacts of exogenous factors—including globalization, postindustrialism, and the gender revolution—in explaining changes in social security development, particularly insofar as no fundamental endogenous political changes appear to have occurred in affluent democracies. The abandonment of the Bretton Woods agreement renewed capital flow in the advanced Western world, significantly strengthening the bargaining power of capitalists against that of the government and labor (Mishra, 1999). Irrespective of political preferences, governments were compelled to compete with policies that reduced the cost of investment after the limiting of the transnational flow of capital in affluent democracies before the end of the Cold War. Consequently, advanced countries with less public expenditure—which equated to lower taxation—became more attractive. This revived the convergence school’s arguments regarding social security development. However, unlike explanations for development during the expansion period, the notion of the “race to the bottom” has been used to describe social security development amid globalization.

Although the causal chain from the rise of globalization to diminished social security in affluent democracies has been established, finding supporting evidence has been difficult. This gap has been addressed by studies from the divergence school. Scholars have observed a positive correlation between economic openness and large public expenditure, as governments had to provide social security to cushion the increasing impact of growing international competition with the onset of globalization (Cameron, 1978; Development Initiatives, 2019). Subsequent studies further supported the argument that open trade leads to compensatory social spending (Rodrik, 1997). The expected reduction in public expenditure and income transfers to favor trade and capital openness have occurred under social democratic corporatism, where political institutions mediate any negative impacts (Swank, 1998). Moreover, social security systems in market-oriented liberal contexts have been subjected to downward pressures by the mobility of international capital, which are either absent or positive in the other two types of social security.

Thus, divergence studies have addressed the gap in the convergence school’s prediction of a “race to the bottom.” As the political structures and institutions that shaped a country’s social security system in the golden age did not fundamentally change with the rise of globalization at the end of 20th century, they also shaped domestic responses to internationalization. In countries with centralized authority, strong institutions represent collective interests, and a social security system manipulated by universalism either mediates the impact of the mobility of international capital mobility or ensures that it positively impacts public expenditure by making sure that economic and political interests protect the social security system from neoliberal reform. Conversely, in countries with fragmented authority and weak institutions representing collective interests, capital mobility forces serve to reduce public expenditure. According to this argument, the impact of globalization has been refracted by the different politics concerning the representation of interests and political institutions to result in divergent trajectories of social security development.

Beyond the controversial impacts of globalization, most scholars agree that postindustrialism has had a negative impact on social security development, although this has varied from one country to another. Nonetheless, the link between globalization and postindustrialism remains the subject of debate. There is broad consensus that lower productivity and rising unemployment are major features of postindustrialism, resulting in the growth of fiscal pressures in terms of both supply and demand. Postindustrialism involved the massive shift in employment from manufacturing to service (Baumol, 1967). This endogenous economic change resulted in a limited number of divergent and unfavorable trade-offs (Iversen & Wren, 1998). Possessing high social benefits and egalitarian wage structures, continental Europe had lower services consumption, as high wage costs drive up the price of services. Consequently, productivity growth was slower and unemployment levels higher, leading to reduced wages for labor-intensive services and rising inequality (Esping-Andersen, 1999). To address this, social democracies typically opted to underwrite high wage employment in public services and endure mounting fiscal pressures. According to Iversen and Wren (1998), postindustrial service economies face a “trilemma,” wherein governments seeking to achieve full employment, relieve fiscal pressure, and ensure equality can only pursue two of these three objectives simultaneously.

The postindustrial thesis captures the broad differences in social security developments, politics, and economic change since the end of the golden age. The thesis also reflects the developmental trajectories of social security systems in affluent democracies, which provided the original resources for Esping-Andersen (1999) to establish his “three worlds” and divergence thesis in the 1990s. However, the strong productivity gains of the late 1990s, internet revolution, and integration of the world economy, as well as the spread of social security in emerging markets, served to reignite global economic growth. Thus, the logic of the postindustrial thesis of divergence was soon challenged—the reignition of increased public expenditure, the “politics of the surplus,” and falling unemployment dramatically altering the debates surrounding the impact of postindustrialization on social security development. However, whether postindustrialization led social security to develop according to convergence or divergence remains unclear.

Scholars focusing on the gender revolution provide a different perspective. Criticizing the tendency to overlook the effects of gender on social security modification, these scholars note that the literature’s reliance on the average industrial worker and male-breadwinner family model reflects an anti-female bias that weakens its reliability (Lewis, 1992; O’Connor et al., 1999; Orloff, 1993; Sainsbury, 1996). Feminist studies in the 1980s and 1990s broadened social security research by investigating new and ground-breaking hypotheses, significantly expanding the range of social security research. Highly abstract feminist studies stimulated several comparative and historical case studies highlighting the dramatically different ways women influence and are influenced by social security (Jenson, 1986; O’Connor, 1996; Pedersen, 1993; Skocpol, 1992). Although their main argument is that female political mobilization leads governments to adopt women-friendly social security programs, whether women’s participation influences the type of programs developed remains subject to debate (Hobson & Lindholm, 1997; Mahon, 1997; O’Connor, 1996; Pedersen, 1993; Skocpol, 1992).

Gender revolution is a by-product of postindustrialism. Indeed, postindustrialization led to the shift of employment from manufacturing to services, incurring higher female employment and impacting gender politics and family structures. The change in family structure increased the demand for services like child and elder care, significantly stimulating the growth of female employment. These changes in gender politics, family structure, and employment forced greater public expenditure on and distribution of resources to support women’s participation in the labor market. Convergence theories also note the impact of the nontraditional measures of feminist organizations on public policy outcomes. As Skocpol (1992) argues, “female-dominated modes of politics . . . are not dependent on action through parties, elections, trade unions or official bureaucracies” (p. 30).

Although the gender revolution’s answer to the cause of increased public expenditure is convergent, its arguments regarding the consequences of social security development are divergent. As noted, different countries possess different social security systems; therefore, they have responded to the gender revolution in different ways. While liberal systems with weak governments seldom provide surplus support to already highly mobilized women, strong continental states have undertaken more significant actions in providing financing programs to protect women. However, the effects of the gender revolution have yet to be realized by political structures and institutions, resulting in the disappearance of the women-friendly outcomes produced by the growing political mobilization of women in some countries like Britain (Pedersen, 1993). For example, despite the presence of a women’s movement with a well-articulated feminist vision of welfare, Britain developed comparatively inegalitarian policies that discouraged women’s employment. In contrast, in France, conservative pronatalist employers supported policies aimed at assisting women’s attempts to combine welfare and work. Political institutions are still critical for understanding gender and class-related outcomes. While the gender revolution is a good perspective through which to observe social security development, how it impacts our understanding of social security development remains unclear (Elomäki & Sandberg, 2020).

Newly emergent factors have provided scholars opportunities to deepen their understanding of social security development. Scholars have begun testing the theories of both the convergence and divergence schools against the impact of these new factors. However, few ground-breaking theories have been established, and the majority of explanations have been built around impersonal economies, demographic profiles, elections, and political institutions. Although some conflicts exist between the convergence and divergence arguments, they actually tend to be more mutually beneficial. Even Esping-Andersen (1990) accepts Wilensky’s (1975) assertion that impersonal economic and demographic factors positively and fundamentally decide a country’s public expenditure. Scholars living in different development stages of capitalism understand social security development differently (Lu, 2021). Indeed, the disagreements between the convergence and divergence schools may be due to the periods in which they were developed. Today, the main body of each social security system has matured. Accordingly, contemporary scholars have focused on cross-national differences in an attempt to establish a universal theory for understanding social security development. However, like their predecessors, contemporary scholars have overlooked social security development before the emergence of affluent Western democracies, dismissing the value of emerging economies and unmatured social security systems. These cases—like that of China—provide scholars the opportunity to observe the emergence of a social security system ex nihilo.

The Chinese Case

Political institutions are designed to implement a country’s regime, which provides the foundation for the operation of its politics. However, studies of advanced Western cases rarely discuss the impact of capitalist regimes on social security development, despite this being the foundation of the dominant independent variables of political structures and institutions. Although their institutional designs in implementing liberal democracy and the market system varied, liberal democracy and the market system spread across Western capitalist countries in the wake of the Second World War. Consequently, the comparison of affluent capitalist countries cannot adequately reflect the impact of a country’s regime on its social security development because their regimes share a similar foundation. Certainly, the expansion and austerity periods of Western social security development can only be compared to that of the Soviet Union. Unfortunately, the lack of data and the use of different measures in recording development have prohibited the investigation and comparison of the Soviet case. Moreover, the Soviet Union’s story has already ended, impacting how Western scholars can investigate the case.

Modern social security systems were established in Western capitalist countries in a relatively short period of time, although their origins can be traced back to authoritarian regimes, like that of Prussia. In the expansion period, countries lacking the time to carefully design their own social security programs could adopt similar programs for different proposes or implement the same function using different programs. Without blueprints or comprehensive references for establishing a social security system, Western capitalist countries tended to imitate one another. The convergent development did not extend past the expansion stage. As the increase in public expenditure slowed down, divergent proposals and usages of similar social security programs emerged. The observation of social security development in different periods challenges the arguments of both the convergence and divergence schools, including the identification of more decisive variables. Testing theories based on affluent Western democracies on a non-Western case—like China—may enhance our understanding of social security development.

Although Chinese industrialization occurred before the country’s economic reform in 1978, the expansion of public expenditure only started after it accepted globalization and its economy began growing rapidly. In contrast to capitalist countries, the impacts of industrialization and globalization on a country’s social security development can be compared simultaneously in the Chinese case. Possessing the fastest developing social security system, China has absorbed Western experiences and been exposed to all of the conditions experienced by affluent democracies except democratic politics. Thus, it is possible to identify the impact of regime changes, economic reform, and political modification by comparing the Chinese and Western cases. Moreover, in light of the downturn in China’s economic growth, the country provides the opportunity to observe whether the capitalist experience of shifting from the golden age to austerity will repeat itself. Furthermore, China appears to be an industrialized country able to cut back some social support without having to provide similar or new benefits. It thus provides scholars the chance to observe the dramatic reform of a social security regime. By using the Chinese case, scholars can investigate how social security regimes can be modified in an industrialized country with a different political system, thereby identifying the universal features shared by both democratic and nondemocratic societies and testing the arguments of the convergence and divergence schools.

As rural social security was virtually nonexistent until 2009, extant studies on the Chinese case essentially focus on urban China after 1949, and particularly after economic reform (X. Huang, 2013). Prior to economic reform, Dixon (1981) was the first and only scholar to analyze the Chinese case in the Mao period, introducing “productivity (This can be described as the government’s attempt to use social security for political means to earn social support, as well as economically to collect revenues. The political and economic income of social security was always intended to be higher than expenditure.)” as the philosophical underpinning of the institutional design of China’s urban social security system. In this respect, social security was intended to facilitate the Chinese Communist Party (CCP) government’s ability to accrue capital and increase its political power. This corresponds with Estévez-Abe’s (2008) argument that bureaucratic governments prefer maximizing their fiscal control.

Recent studies have focused on China’s social security system following the country’s economic reform. As the first generation of major Chinese scholars in this field appeared in the 1990s, their studies were deeply influenced by Esping-Andersen’s (1990) The Three Worlds of Welfare Capitalism. Supporting the divergence school, these scholars classified the Chinese system as a unique or hybrid system, although they also believed that economic and demographic factors shaped public expenditure. The difference between Chinese social security development and that of other countries was recognized from the outset. Nonetheless, scholars used the theories derived from advanced Western countries to explain and predict the development of China’s social security system without critically testing the applicability of these theories.

Influenced by globalization, China’s urban social security was established based on the experience of advanced capitalist systems, especially that of Japan (Chen, 2004), to facilitate trade and international investment. Scholars tended to classify China’s social security as a hybrid system to highlight its mix of programs from different regime types (J. Liu, 2009), or as developmental insofar as it followed the path of its Japanese predecessor and supported economic development (Peng & Wong, 2010/2012). In addition to securing the dominance of the current government and sustaining existing social stratification, the system seeks to encourage the commodification of citizens, as well as amplify the government’s ability to collect capital to support economic development through the adoption of money-accumulation insurance programs. This reduces the support provided by this system to a very basic level: while people can get help from this system, they still have to live under the market system. To avoid becoming unattractive to international investment and increase its exports, China has to keep its urban social security development equal to or lower than that of Western countries (Qi, 2013).

Some scholars have sought to provide an explanation for the Chinese system’s lack of generosity by highlighting the Chinese intrafamily informal redistribution function. As China has one of the highest and most sustained Gini coefficients, they assert that the Chinese intrafamily redistribution functions are effective and comprehensive (C. Liu et al., 2008). Scholars have also emphasized the importance of kinship and market-support in the operation of social security (Peng & Wong, 2010/2012). For instance, G. Huang (2015) argues that families share responsibility for de-commodification when the governmental system provides low benefits and that citizen benefits from this system are decided by their preexisting contributions. China does not recommend that people treat the government as the final resort (Sun, 2000).

By adopting comparable standards—including universal level, benefit level, burden on citizens, resource distribution among regions, and the relation between the state and market as connected by the social security system—the Chinese system has been studied both qualitatively and quantitatively. Consequently, China’s urban social security has been described as a generally fragmented government-oriented system, with both benefit and resource distribution on a regional basis (Pan, 2007). While China’s urban social security is a market-promoted one, its burden is mainly shouldered by employers and employees. Indeed, having adopted contribution-based money-accumulation insurance programs, the Chinese government actually bears the smallest part of the fiscal burden (Su & Yang, 2007). Recipient IDs (Hukou) and the industry in which individuals work significantly influence the benefits that they can receive—clearly illustrating the system’s fragmentation. However, to explain the system’s apparent lack of generosity, the same scholars adopt convergence theories and add the degree of integration between China’s urban social security and its economic development as a new standard to claim that China’s urban social security development corresponds to its economic development (Y. Wang & Long, 2011). Others have argued that the Chinese system is unique and generous by taking industrial and market-activation policies into account (C. Liu et al., 2008). These scholars claim the Chinese system is effective by pointing to rapidly increasing standards of living and social harmony (S. Wang & Chen, 2007). These studies combine the results of rapid economic growth and social security development.

It is difficult to apply theories of political structures and institutions to explain Chinese social security development as there are no players with legal veto capabilities or effective election systems. Even labor unions are semi-governmental, and their main mission is assisting the government and ensuring harmony in the workplace (S. Yang, 2011). However, scholars have found new independent variables to apply the theory of “political competition” matters in the Chinese case. Some have used intragovernment relations at different levels and regions (J. Liu, 2003), as well as political power distribution across the CCP regime (Ke, 2009) to explain Chinese social security development. Powerful Chinese professional bureaucrats are now regarded as an important condition for its welfare development (L. Yang & Hu, 2010). According to an expert who participated in the whole process of designing social insurance reform, this initiative was intended to solve the social security needs of fixed-term employees in the public sector, as well as place the growing burden of public expenditure on the shoulders of workers by introducing insurance premiums (Gao, 2006). The suspension of free social security and introduction of insurance premiums are also intended to collect the funds necessary to expand the Chinese government’s power to manipulate the economy and reduce consumption by getting rid of the

inflation of consumption (This terminology was created by the CCP to describe the massive growth in the purchasing of merchandise by Chinese citizens in the early 1980s. The CCP believes that the uncontrolled purchasing of goods, such as televisions and men’s suits, is irrational and potentially detrimental to economic development.) (Gao, 2006; G. Huang, 2017)

Moreover, private sector workers are included to share the cost of the social insurance reform (Gao, 2006; G. Huang, 2018). In this respect, the existence of powerful bureaucrats, as well as the absence of veto and effective election systems, enables the adoption of a social security system run to benefit its operator.

According to these arguments, social security is not a priority of the Chinese government and seldom causes conflict within the Chinese political system, although Chinese bureaucrats—primarily CCP members—serve as semi-politicians and informal veto players within the system. Generally speaking, CCP leaders and bureaucrats advocate an industry-favoring social security system. To protect their authority, CCP politicians highlight social security provisions that prioritize the privileged classes. Local government leaders have autonomous rights in adjusting and implementing local social security to promote the growth of local economies and earn achievements for themselves, as Chinese local governments enjoy a high degree of autonomy and unbalanced economic development (Pang & Pan, 2012). At the end of the 1970s, to support economic reform, politicians and bureaucrats worked together to design and implement so-called “Chinese style social security” (L. Liu et al., 2015). As the most powerful veto players, bureaucrats actively established a revenue-oriented, precontribution, and money-accumulation social insurance system to secure control over resources and social security following economic reform (C. Liu et al., 2015).

Scholars have also noted Chinese preexisting dualistic labor market, arguing that comprehensive and universal social security could result in relatively lower incomes for better-paid workers (H. Yu & Cai, 2015). Privileged and secure state-enterprise workers generally prefer work-unit based revenues to generous social security as they already enjoy comparatively generous work-unit social insurance and do not wish to share their privileges with their less fortunate peers (C. Yu & Zhang, 2011). According to Y. Wang (2015), the alliances between bureaucrats, state enterprises, and labor aristocrats make a generous and universal social security system impossible, while the alliance between governmental and economic elites led to China’s adoption of money-accumulation programs favoring economic development. However, finding evidence of such cross-class alliances has proven difficult, hindering opportunities to quantitatively and empirically test these arguments.

Chinese scholars have recently begun addressing the gap between explanations of extant theories and discontinued development of Chinese social security (G. Huang et al., 2016). Refusing to use social insurance reform to superficially explain this discontinuity, G. Huang et al. (2016) argue that basic changes in the CCP regime shaped the development of Chinese social security. Using quantitative methods, they tested the industrialization theory using historical records of Chinese social security from establishment of the PRC to the present, demonstrating that the common assumption of a relation between economic growth and public expenditure does not apply to the Chinese case (G. Huang et al., 2016). In this respect, G. Huang (2020) reveals an association between the discontinuous development of social security in China and the change in the CCP’s legitimacy after the death of Chairman Mao in 1976. According to these studies, the decisive impact of legitimacy demonstrated by the Chinese case complements our existing understanding of social security development and may point to a common theory able to resolve the dispute between the convergence and divergence schools.

Conclusion: Social Security Development According to the Chinese Case

The expansion of social security gained widespread academic attention in the golden age of capitalism—a period of rapid economic growth and the spread of liberal democracy, although countries designed different institutional systems to implement liberal democracy. Meanwhile, rapidly increasing public expenditure was the most attractive and widespread phenomenon across affluent liberal democracies. Scholars initially sought to identify a universal mechanism of social security development. In particular, scholars sought to discover the mechanism behind the increase in public expenditure. Industrialization offered the first persuasive reason behind the general increase in public expenditure, and demographic profile was introduced as a universal control variable. While the convergence school highlighted the basic reason for the increase in public expenditure, others noticed differences in the social security development of various countries, supporting divergence school arguments.

Most divergence theories are centered around the direct causes of social security development. As economic growth slowed down and the “politics of austerity” emerged, the differences between countries in terms of social security development became more apparent. Although public expenditure generally increased and the functions of each social security system were convergent during the period of expansion, the programs designed to implement those functions varied across affluent liberal democracies. The consequences of each country’s social security development also diverged. Different political structures and institutions became the key means through which scholars understood social security development in different countries. In other words, impersonal factors were backgrounded, while political matters took center stage.

Globalization and postindustrialization fundamentally changed the flow of capital and industrial structure across affluent democracies. The convergence school was revitalized by “race to the bottom” arguments. These scholars still evaluated a country’s social security development based on its public expenditure and contended that the slowing economy, population aging, globalization, strengthened bargaining power of capital, postindustrialization, and rising employment in low productive services explain the decrease in public expenditure. Convergence theorists integrated some “political matters” models to improve their arguments. While evidence does not support the convergence school’s arguments, divergence school arguments were strengthened by the development of social security in this period. Political structures and institutions resulted in the divergence in social security development trajectories in the expansion period and responded differently to globalization and postindustrialization. Even the appearance of the gender revolution strengthened the divergent interpretation of social security development. Finally, Esping-Andersen (1990) connected the basic mechanism of and direct reasons for social security development and established three worlds of welfare capitalism.

As social security variations have settled in affluent liberal democracies, emerging economies and nation states provide new resources for investigating social security development and testing existing arguments. This is especially true of the Chinese case, which achieved radical economic reform in just 10 years, and possesses a prereform communist social security system prioritizing labor insurance for comparison. Extant theories provide references and examples for studying the Chinese case. Unlike researchers in other countries, few Chinese scholars support the convergence school (Qian, 2003). However, while scholars highlight the differences and downplay the similarities between China and other countries, they accept economic growth and globalization as the fundamental reason behind the increase in public expenditure. Meanwhile, postindustrialization or gender revolution theories have rarely been applied to the Chinese case due to their being relatively recent. While scholars have recognized the significance of the discontinuous development of social security in China and its association with social insurance reform in an effort to support and facilitate economic growth, they have not necessarily questioned the reasons behind socioeconomic insurance reform (G. Huang et al., 2016). Thus, convergence and divergence theories have been combined to explain and predict Chinese social security development. The future of China’s social security system remains a matter of debate. Chinese officials believe that economic and demographic factors fundamentally decide the increase of public expenditure, but that the Chinese government has designed a “Chinese style” system to correspond with CCP preferences, Chinese tradition, and citizens’ demands (Long, 2017). This argument is a hybrid of convergence and divergence arguments.

According to the results of studies on China, it is unwise to divide convergence and divergence theories when attempting to understand a country’s social security development. In this respect, we need a comprehensive theory to fundamentally understand the increase in public expenditure and directly illustrate the institutional design and consequences of social security development. To achieve this, as well as settle the dispute between the convergence and divergence schools, it is necessary to clarify whether politics or economics has the most decisive impact on social security development. In other words, we need to identify the decisive independent variable in social security development.

In summary, after reviewing and comparing the extant research on social security development, this article explored how the Chinese case can enhance our understanding of social security development and facilitate the identification of a common variable in social security development. As communism is still the official ideology of the incumbent CCP, the Chinese case provides a productive sample for scholars to improve their understanding of social security development from the following three perspectives. First, the Chinese case provides scholars with the opportunity to exclude ideological changes and highlight the impact of other political matters, including legitimacy changes (G. Huang et al., 2016), when comparing social security in pre- and postreform China. Moreover, the legitimacy of the CCP regime changed dramatically after Chairman Mao’s death, giving scholars a chance to exclude the impact of election strategy in identifying the reason for a party changing its approach to social security development. Second, the Chinese government did not depend on capital investment to create jobs and income before economic reform, enabling scholars to detect the real impact of globalization by comparing social security development pre- and postreform. In other words, whether globalization compels governments to stimulate business confidence (Strange, 1996) by reducing public expenditure can be tested by studying the Chinese case. Third, the Chinese case reflects how disagreements between the convergence and divergence periods are contextually located, underscoring the need to test popular understandings and formulate a universal explanation of social security development. Future studies should examine these arguments and test the reliability of using a polity’s legitimacy changes to explain its social security development.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research and/or authorship of this article.

ORCID iD

Guan Huang

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Understanding Social Security Development: Lessons From the Chinese Case

Abstract

Keywords

Social Security Development

The Convergence School

The Divergence School

Revitalization of Social Security in the Era of Globalization

The Chinese Case

Conclusion: Social Security Development According to the Chinese Case

Footnotes

Declaration of Conflicting Interests

Funding

ORCID iD

References