What is a welfare state and what are its features ?

The term ‘welfare state’ describes collectively a range of social policies that aim to provide basis services such as health and education, according to the need and normally, free of charge through state funding. It is sometimes extended more loosely to areas such as social security in which individuals are legally required to make substantial contributions in order to receive the benefits. The theory of welfare state is the basis of positive liberalism.

A World Without The Welfare State - Ludwig von Mises Institute Canada

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It is a sort of state, which provides extensive social services to all the citizens, protects the weaker sections, provides economic and social security and tries to reduce the gap between the rich and the poor. It makes laws to control the economy, nationalizes industries, makes laws to protect the weaker sections, arranges the supply of essential commodities, maintains essential services and through progressive taxation and income redistribution, tries to reduce the gap between the rich and the poor and thereby, harmonizes the different interests in society.


The existence of some form of welfare is now accepted across most of the political spectrum. However, of late, the concept of welfare state has been radically challenged by the libertarians for whom it represents a violation of the rights of those who are taxed to provide its funding. The major point of debate is, whether it should be regarded as a safety net establishing a minimum level of welfare beneath which no one is allowed to fall or as an agency of redistribution from the rich to the poor fostering greater social equality.

Others have also questioned the strength of the welfare state; i.e. does it ensure the citizens the necessary income to fight insecurities and enable them to lead a stable, dignified civilized life ? Does it remove inequalities of real income ? Does the welfare state usher a trend where private sector be curbed, crippled and made powerless? Has the welfare state been able to free the economy from booms, depression, inflation and other economic crises? The contemporary crisis in the welfare state has given a boost to classical liberalism in the new grab of libertarianism.

Features of Welfare states

1. Welfare State Is a Positive State

The underlying assumption behind the welfare state is that the state is not a necessary evil, but a desirable institution capable of promoting positive good. Whereas the laissez faire liberalism contended that the government can advance the common interest by leaving the individual alone and through the free and unrestricted play of natural forces, the exponents of welfare state argued that ‘the state could best promote the general welfare by a positive exercise of its powers’. It regarded the democratic state not as an evil force but as an instrument that the people could and should use to further their common interest, to ameliorate the conditions under which they lived and worked, and provide for their health and safety, and to some extent, for their social and economic security.

2. Welfare State is Democratic

The neo-liberals categorically asserted that the welfare state is a democratic state, possessing a certain formal institutional mechanism which is considered essential in liberal democratic society. Any state which may be a welfare state, but is not democratic from the institutional point of view, cannot be regarded a liberal state. The state can be a welfare state only, if it manifests itself through formal democratic institutional attire.


A state which merely undertakes the task of welfare such as guaranteeing a minimum income, elimination of insecurity of the individual and the family crises by supplying ‘social contingencies’ and which also tries to provide a certain range of services to all, but does not provide a democratic institutional framework and political and civil liberties, will not be considered a welfare state. It is on this ground that communist countries as well as fascist states like Germany were excluded from the category of the welfare state. In other words, the term welfare state is used only for the states of those capitalist countries which undertake the positive task of providing welfare services and where the government preserves the formal democratic institutional framework.

3. Welfare State believes in a Mixed Economy

A welfare state operates within the framework of the market economy i.e. the capitalist mode of production. However, unlike the laissez faire capitalist economy, the welfare state believes that unrestricted operation of the market has proved dangerous for the individual (because it led to poverty, ignorance , illiteracy etc.) as well as for the economy (because it led to booms, depression , crises leading to waste and inefficiency).The welfare state does not want to eliminate the market-based economy, but to streamline it in a manner where it could realize the productive potentialities by preventing crises.

The welfare state believes that poverty, dependencies and economic insecurity are not the consequences of nature and incompetence on the part of the poor, but result from changeable institutions of society. For the first time in history, modern technology has made it possible to banish poverty from the face of earth. The economic and other insecurities are caused by social faces and could be avoided by purposeful social action.

Economic insecurity stems from – a) inadequate compensation, b) disabilities incurred through accident, ill health, old age etc. and c)unemployment. The welfare state believes that these insecurities can be overcome by remodeling the laissez faire economy and by introducing a form of planning to realize these objectives. But planning should be combined with the market economy in various degrees. In other words, it would rectify the evils of the capitalist system by state intervention. It stands for what is now popularly known as ‘mixed economy’ or a ‘managed economy’.

4. Welfare State is a Permanent Institution

The welfare state, positive liberalism maintains, is an eternal and permanent institution of society. The state is also a neutral instrument of power which can be used for any purpose. The state is an arbiter seeking the good of any society impartiality. The ability of the state to provide quantity, quality and the type of welfare depends upon the groups who wield the state power. The personnel of the government could be changed by the will of the people through universal suffrage.

The state does not belong to a particular class. It tries to intervene in the economy positively and reshape it in such a manner that a minimum of social living is created for all the citizens irrespective of the status and class position of citizens in the society. As Titmus pointed out, ‘it was increasingly regarded as a proper function of government to ward of distress and strain among not only the poor, but almost all classes of society’.

In short, positive liberalism considered the welfare state as a new kind of state which is democratic in form; which though considering ‘profit oriented market economy’ as desirable, seeks to regulate or streamline it to serve social needs and thereby, provide social welfare to the citizens. It is a state which has evolved from the laissez faire state by a process of increased interference in the operation of the market economy at various levels and by gradually regulating the power of capital. It is a state in which political power is increasingly used to free the people from the tyranny of capital assuring them a certain standard of welfare. The welfare amenities are not restricted to a specific group, but belong to the society as a whole.

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