Welfare Capitalism: Social Democratic Sweden vs. Conservative Germany

By Kartikeya  Singh

In contemporary capitalist societies, governments have the crucial role of ensuring the well-being of their citizens through what we call welfare systems. Welfare arrangements differ by country. Some nations provide generous services to all citizens while others maintain existing social hierarchies. The mix of capitalism with welfare systems is called welfare capitalism. Gosta Esping-Andersen, a renowned political scientist, in his book ‘Three Worlds of Welfare Capitalism’ explains three types of welfare regimes: Liberal, Conservative, and Social Democratic. In this essay, we’ll be discussing two of these models which are especially prominent in Europe: the social democratic model and the conservative (or corporatist) model. After outlining both these models and discussing what makes them different, I will use the class coalition theory to help us gain more perspective about why different countries took different approaches. Specifically, we’ll be taking the cases of Sweden and Germany to understand the social democratic and conservative models respectively.

To begin with, the social democratic model emphasises the provision of basic welfare services like education and healthcare to all citizens regardless of their income or backgrounds. The state aims to promote equality among citizens and reduce dependence on the market (decommodification). The key test for social rights is the degree an individual can sustain a living without completely relying on the market, or decommodification of labour. Social democrats pursued a welfare state that would promote equality of the highest standards, not an equality of minimal needs (Esping-Andersen 27). This model plays out in Scandinavian countries like Sweden and Denmark. To put it simply, the goal of a social democratic state is to promote equity and reduce divisions in society. Such an approach helps make the society less stratified (separation of classes). For instance, in Sweden, a low income worker and a high income professional both enjoy the same services due to free healthcare and education being ensured for all citizens. Interestingly, Swedish institutions support individuals when they lose jobs, thus making work more secure. Sweden’s welfare state has foundations around the idea of Folkhemmet (meaning people’s home) introduced by former Prime Minister Per Albin Hansson. This vision targeted achieving virtues like fairness and social harmony. Affordable childcare and generous parental leaves are provided, making socioeconomic spaces more inclusive for women. As highlighted by David Samuels in his work on Gender and Politics, greater gender inclusivity in places like Sweden correlates with larger democratic participation (Samuels 206). This is in line with Anderson’s findings. All strata in Sweden are incorporated within one system and benefits are graduated according to accustomed earnings (Esping-Andersen 28). Therefore, everyone from the farmers to the middle class receives welfare. But these benefits are also adjusted by income to ensure that they remain meaningful and fair. The ideal is not to maximize dependence on the family, but capacities for individual independence (Esping-Andersen 28). The system doesn’t wait for communities like families to collapse before it offers help, unlike the conservative model which we will explore next.

Not all countries in Europe followed the social democratic path. Countries like France and Germany adopted the conservative welfare regime which functions differently. Rather than providing welfare benefits universally, these states provide them on the basis of job and employment status. If one has a longer and more respectable work history then they’re provided with greater support. The goal behind the conservative approach is to maintain the social order and traditional social roles, not reduce inequality. An individual continuously works and can appeal for welfare benefits when they retire, are sick, or are transitioning from one job to another. Since this approach is more focused on preserving people’s social profile and status than striving for equity, it’s more stratified than the social democratic model. Decommodification in a conservative model isn’t as high as the social democratic one as well due to the protections to reduce market dependence hinging on work history. Furthermore, the model presumes that family — especially women — are responsible for taking care of the household, thus reinforcing traditional gender roles and discouraging dual-income households. The state only intervenes when the family is unable to do so. For example, the German system treats family as the first line of support for the people. Occasionally, the government intervenes — only as a source of help when needed. There are fewer work incentives for women and opportunities like childcare aren’t generously offered. The state’s emphasis on upholding status differences means that its redistributive impact is negligible (Esping-Andersen 27). A good example of this is Germany’s joint taxation policy called Ehegattensplitting, which favours single income households. Unlike social democratic regimes like Sweden where everyone is individually taxed, in conservative models like Germany the total tax to be paid is split between a couple even if only one person works, leading to lower taxes. Higher income inequality leads to lower taxes for couples and compels men to be the breadwinners, thus maintaining gender norms. Influences by the Catholic Church and conservative parties played a crucial role in the development of this model — an aspect we’ll be dabbling in further using the class coalition theory. It’s important to note that the Class Coalition Theory gives perspective about the roots for these distinct models for welfare capitalism, helping us understand how Sweden and Germany developed such distinguished welfare approaches. The Class Coalition Theory says that social policies are nurtured by the groups that mobilize to gain political power. These social groups could include the middle class, farmers, business elites, religious groups, etc. The alliances created in society impact the welfare policies.

In Sweden, the working class was dominant and politically active. They held prominence through the lengths and breadths of the country via labour unions. The working class began collaborating with the farmers and the middle class. Together, they formed a broad coalition that supported the social democratic model. They championed values like equality, freedom, and individual civil liberties and sought to extend these at the grassroots level. Thus, a powerful coalition, known as the red-green alliance, emerged which stayed in power for several years. Red included the social democrats and green indicated the farmers. It formulated a system that emphasized the aforementioned values through a universal welfare system. The breakthrough of Swedish social democratic hegemony stems from its ability to forge the famous ‘red-green’ alliance with the farmers (Esping-Andersen 18). Interestingly, this reflects Rueschemeyer’s argument in his publication titled Capitalist Development and Democracy, that both democracy and welfare expand when political power shifts to ordinary citizens (Rueschemeyer 59). By contrast, the German working class didn't have as much influence. Christian Democratic parties cooperated with the Catholic Church, business elites, and other middle class groups, each of whom upheld conservative interests. They propagated preservation of social ladders, class based treatment, and traditional dynamics that placed men on a pedestal, unlike the social democratic regime in Sweden. The German welfare system didn’t focus on equity, they prioritized loyalty of workers to the state to ensure social stability. Otto Von Bismarck, former chancellor of the German Reich, aimed to chain the workers to the paternal authority of the incumbent monarchy. This brought a system that endorsed preservation of social hierarchies and employment based welfare. The social insurance model promoted by conservative reformers such as Bismarck, was also explicitly a form of status politics. The German system was designed to split the working class and create different hierarchical tiers. This helps explain why German left wing’s efforts towards creating a system of universal welfare like Sweden’s called Volksversicherung were in vain. They didn’t include a diverse set of classes. In contrast to Sweden whose red-green alliance allowed the working class to cooperate with the farmers, Germany’s socialist agenda was confined primarily to urban areas. A telling example is how civil servants in Germany get much higher pensions than regular workers today, illustrating the employment based welfare facet of the conservative welfare regime in action.

In conclusion, welfare capitalism regimes differ globally. The social democratic model, seen in Sweden, and the conservative model, seen in Germany, are two prominent approaches in Europe. Both models offer support to citizens with different goals and ways. While the social democratic model emphasizes universal welfare and equality, the conservative approach concentrates on job-based welfare and maintaining traditional social hierarchies. The differences in these models have been constructed through a history of sociopolitical dynamics. As reflected by the Class Coalition Theory, these differences were shaped by which political groups — farmers, working class, business elites, etc — held power and how they interacted with one another. Understanding these coalitions enhances the capacity to learn why welfare systems are the way they are in the countries mentioned. Ultimately, welfare regimes don’t just showcase people’s needs, but the political forces and class coalitions that impact who gets what.

Bibliography:

Esping-Andersen, Gøsta. The Three Worlds of Welfare Capitalism. Polity Press, 1990.

The People’s Home 1900–2020: An Interpretation - Riksbankens Jubileumsfond. www.rj.se/en/grants/2020/the-peoples-home-19002020-an-interpretation.

Taxation of Married Couples in Germany and the UK: One-Earner Couples Make the Difference | International Journal of Microsimulation. 31 Dec. 2013, www.microsimulation.pub/articles/00086.

Mehde, Veith. “The Civil Service in Germany.” CERIDAP, ceridap.eu/the-civil-service-in-germany/?lng=en.

Samuels, David J. Comparative Politics. Chapter 8: “Gender and Politics.” Pearson, 2013, pp. 202–224.

Rueschemeyer, Dietrich, et al. Capitalist Development and Democracy. 1992.

Kartikeya Singh is an undergraduate student at Ashoka University, pursuing a major in Political Science. Deeply interested in the intersection of governance, social justice, and economic systems, his academic focus includes welfare policy, democratic institutions, and development models across Europe and the Global South. He is particularly drawn to comparative politics and public policy analysis, with a growing interest in how class coalitions shape state structures.