Poles apart. alternative welfare trajectories under finance-dominated capitalism

By connecting the post-Keynesian view of financialization with Comparative Political Economy, we suggest some elements for an updated interpretation of the existing models of welfare. As a main element of nov- elty, we consider how high-income countries are reacting to the pressures of finance-dominated capitalism, namely by extending, keeping, or retrenching their welfare systems. The contribution of the article is three- fold. First, we elaborate on the nexus between welfare and financialization. Second, we introduce a multidimensional index aimed at assessing the degree of welfare of 32 OECD countries for the period 1990–2015. Third, we compare our index with the socio-economic models identified in the literature and with the patterns of financialization. Two trajectories emerge from our exploration: on the one side, Scandinavian and Continental European countries moved toward relatively higher levels of welfare; on the other side, lower levels of welfare feature Anglo-Saxon, Asian, Mediterranean, and Central and Eastern European countries. Besides such divergence, we find that the process of financialization was more intense in countries with stronger welfare, which likely opted for a compensation strategy. Our work highlights the relevance of policies and institutions in shaping different welfare systems and coping with the challenges of the current phase of capitalism.