The Welfare State as Rational Choice: Social Democracy in a Post-Socialist World

In this article* it is argued that rational choice analysis can help explain social democratic welfare states (SDWS). It explores the common ground between the methodological individualism of rational choice political economy and the "U-shaped curve" central to neocorporatist analysis, the idea of a curvilinear relationship between the level of corporatism in institutional arrangements and societal welfare. Central to the SDWS, it is suggested, is the reduction of information costs due to the configuration of institutional arragements in three key arenas of social action in the SDWS: the informational-cultural; the organizational-economic; and the governmental-political. These arrangements frame the choices under which rational individuals act to maintain the SDWS and the outcomes it produces. Concrete examples demonstrating the usefulness of the approach are offered in terms of explaining differences in policy choices (and therefore outcomes) between the Scandinavian countries and more laissez-faire systems such as the US. The conclusion looks at the prospects for the SDWS, asking just how the institutional arrangements central to the SDWS are being challenged by recent developments.