1. the Welfare State in Transition (1996)

Political philosophers once claimed that the basis of political democracy is virtue; today it is fashionable to think it is economic prosperity. Europe has been prosperous for centuries, a commercial and economic powerhouse commanding resources and capital and expertise to maintain its primacy. Following the devastation of World War II, political decisions were made that, unlike those of Versailles, encouraged Europe's recovery, with the Marshall Plan leading the way. Excessive reparations and beggar-thy-neighbor economic nationalism were avoided. The reach of modern industrial society penetrated into the rural world of most of Western Europe, creating a mass market. The rising tide lifted all boats: the war was followed by 30 years of growth. In the wake of World War II, Western European countries sought ways to rebuild their domestic social and industrial infrastructure and mechanisms to integrate their economies. These developments went in parallel, largely complementing one another. Domestically, West European governments adopted a variety of economic intervention measures that helped shape the modern comprehensive state. National leaders, often coming from the anti-Nazi resistance, formulated plans for a social order that could resolve the bitter ideological conflicts of the 1930s. Socialists, liberals and conservatives agreed on the creation of a uniquely European mixed economy, blending the rules of the market system with the principles of distributive justice. This was to usher in a period of social peace, facilitating economic recovery and growth on the continent. European workers earned and then became accustomed to high wages, excellent social benefits, long vacations, and munificent unemployment benefits. These conquests were deemed acquis sociaux, permanent gains. At the same time, the stage was set for economic and political cooperation across national borders. As a first step, six states agreed to place national industrial resources under a common European authority so as to deter future conflict. (1) The process that began with the formation of the European Coal and Steel Community, the European Atomic Energy Agency and the European Economic Community eventually led to the historic Treaty of Rome in 1957, formally creating the European Communities. In this way, just as the welfare state was meant to foster social tranquility at home, so would increasing economic integration promote peace across Western Europe. A stable Europe became an affluent Europe. The evolution of the European welfare state has been accompanied by a long series of economic achievements, leading Western Europe into great affluence and prosperity. By the early 1990s, Western Europe had at its command more resources held by its 12 member states than the United States, in terms of gross domestic product (GDP); after the admission of three more members in 1995, the European Union of the 15 enjoys an even larger aggregate income, twice the size of Japanese GDP. Per capita incomes in Western Europe have reached, and in some cases surpassed, the American one. The Europe of the 15 constitutes the largest single trading bloc, accounting for over 25 percent of total world trade; by comparison, the United States share stands at one-fifth, while Japan's remains much smaller at about 12 perent. The collective economic prowess of the member states of the European Union is represented by a single entity in international trade for a and negotiations. In the world of finance, the European Currency Unit (ECU) has become much more than an administrative accounting convention; financial assets of all kinds are now denominated in ECUs and the EU's planned monetary union will solidify the position of the ECU as a premier international currency. But there is cause for concern. Unlike the welfare system in the United States, Europe's welfare state has not been faulted for perpertuating poverty or for contributing to social ills. …