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Part I Modernization and Human Development ¡¡¡¡The European Welfare State ¡¡¡¡Alberto MARTINELLI ¡¡¡¡Emeritus Prof. of Political Science and Sociology at the University of Milan£¬ Italy ¡¡¡¡Former President of the International Social Science Council£¬ ISSC ¡¡¡¡Co-chair of the IMF ¡¡¡¡The European Union (EU)£¬ with less than 7% of the world population and 22% of the world gross domestic product (GDP) in U.S. $£¬ but only 17% of the purchasing power parity (PPP) of the world£¬ has about 50% of world welfare expenditure (European Commission£¬ 2017). The welfare state£¬ one of the most important institutional innovations of the 20th century£¬ is a European innovation£¬ and together with market economy are component parts of the European Social Model (ESM)£¬ an original blending of capitalism and welfare. The concept is sometimes used to define both the components£¬ some other times only one of the two£¬ i.e.£¬ the European variety of coordinated capitalism or social market economy (with respect to the American variety of market-driven capitalism)£¬ and the welfare state£¬ i.e.£¬ the set of health£¬ education£¬ social security£¬ public assistance services and benefits£¬ labor market norms and industrial relations practices. In this paper£¬ the writer will use the term ¡°welfare state¡± mostly in the latter sense£¬ with the further specification that the European welfare state means either the complex of what national welfare regimes of EU member countries have in common£¬ or the set of EU norms and policies aiming at coordinating£¬ superseding and integrating EU member countries¡¯ social policies (adding a new supranational layer to the existing regimes); or a unified European welfare state with the same policies for all European citizens (which absorbs and integrates the various national welfare systems). The writer will refer all the three meanings£¬ although the third one reflects the present situation less than the other two. ¡¡¡¡The ESM is a distinctive aspect of the European society with regard to other main societies in the world£¬ such as£¬ first of all£¬ America. The concept is omnipresent in EU documents£¬ which is often used in a normative rather than descriptive sense. The ESM rejects the conception of the self-regulating market and aims at achieving economic competitiveness and social cohesion at the same time. It is an effective institutional device to remedy market failures and ensure social protection£¬ a major way of non-violent conflict resolution through the virtuous circle between social citizenship rights and representative democracy. The sharpening of competition in the global market and the rising costs of the welfare threaten its survival£¬ but the welfare state proves to be very resilient£¬ and the belief that economic competitiveness and solidarity are complementary goals is still widely agreed upon by Europeans. ¡¡¡¡The ESM develops in different forms and through different paths in various EU member countries£¬ but is based on the core of shared values that include representative democracy and individual rights£¬ market competition£¬ freedom of movement£¬?collective bargaining£¬ equal opportunities£¬ social protection and solidarity. The model is based on the conviction that economic progress and social progress are inseparable. Its main distinguishing characteristics are: a non-residual welfare system£¬ which is not addressed only to the poorest social groups and hence involves high social expenditures (between 20% and 30% of GDP); labor market ¡°flexicurity¡± aimed at ensuring both incoming and outgoing flexibility for firms and jobs£¬ and wage security for workers; institutionalized industrial relations with inclusive representative organizations and collective bargaining for wages and working conditions. Other characteristics are presented only in some countries£¬ like the involvement of trade unions and business interest associations in economic and social policy-making as well as workers participating in corporate governance (mitbestimmung). ¡¡¡¡1. Welfare state models ¡¡¡¡Speaking of the ESM does not imply neglecting the relevant diversity in member states¡¯ welfare systems. Well-known classification of welfare ideal types can help us to appreciate this diversity£¬ although a word of caution is in order: First£¬ one should not neglect the discordance between ideal types and concrete arrangements where they combine in various ways; second£¬ one should be aware of the inherently static character of ideal types and the false systemic coherence of their component parts£¬ and should not consider one type as the perfect model£¬ evaluating all others in terms of their deviations from it. From the rich literature on comparative welfare systems (such as Esping-Andersen£¬ 1990; Esping- Anderson et al.£¬ 2002; Crouch£¬ 1999; Pierson£¬ 2001; Gallie & Paugam£¬ 2002; Ferrera£¬ 2005; Hemerijck£¬ 2012)£¬ one can identify three main ideal types£¬ which can be defined in terms of basic principles£¬ institutional mechanisms£¬ key actors£¬ entitl