Sustainable welfare: Independence between growth and welfare has to go both ways

Abstract

One of the main challenges of sustainable welfare is to design welfare systems that are “growth resilient” or independent of economic growth. When the sustainable welfare literature discusses the relationship between welfare states and economic growth, it mostly focuses on the growth dependency of welfare states. This is undoubtedly an important component. However, I argue in this contribution that the relationship between welfare states and growth is bidirectional. Hence, it is equally important to understand the various roles that welfare states can play for economic growth, as some of the earlier welfare state literature has argued. Welfare states and growth can influence each other in both negative and positive ways depending on the context and on the time horizon that one focuses on. Designing sustainable welfare systems will only be possible if we acknowledge the mutual and complex dependencies between welfare states and economic growth and if we seek to reduce the mutual dependencies between them. Why is a decoupling of welfare and growth so important for sustainable welfare? Sustainable welfare can be defined as welfare systems that support the satisfaction of human needs within planetary boundaries (Büchs and Koch, 2017). Sustainable welfare systems prioritise needs satisfaction and adherence to planetary boundaries over economic growth. They also provide a fair distribution of resources and opportunities, and are democratically governed. A deprioritisation of economic growth in the Global North is necessary because available evidence suggests it is unlikely that global climate targets can be achieved in a context of economic growth. Very few countries have managed to decouple economic growth from greenhouse gas emissions in absolute terms, and even where it has been achieved, the rates of emission decline are far too slow to match climate targets (Haberl et al., 2020). Globally, the carbon intensity per dollar of gross domestic product (GDP) has decreased by an average of 1.1% per year between 1960 and 2016, while economic