Industrial welfare and the state: nation and city reconsidered

Industrial welfare history presents important challenges to developmental state theories in “late” industrialization. This article expands the debate by examining how nation-states create statutory welfare by addressing institutional variety beyond markets. It is simplistic to argue linear growth of national welfare or of states autonomously regulating markets to achieve risk-mitigation. I contend that welfare institutions emerge from the state’s essential conflict and collaboration with various alternate institutions in cities and regions. Using histories of Europe, India, and Karnataka, I propose a place-based, work-based, and work-place based welfare typology evolving at differential rates. Although economic imperatives exist to expand local risk-pools, it is precisely the alternate institutional diversity that makes late industrial nation-states unable or unwilling to do so. This results in institutionally “thin,” top-down industrial welfare. Ultimately, theories that overly depend on histories of small nations, homogenous nations, or city-states, provide weak tests of the economics of industrial welfare. The state in late industrial welfare The study of capital accumulation has generated the most influential state theories of the twentieth century. In most, the state is posed against markets and acts as the development institution of last resort in specifying cost structures and mitigating risks during industrial transformation. This article examines the evolution of industrial welfare during “late” industrial development. I analyze the historical record of how states institute welfare and regulate markets, thus managing conflicts between production and redistribution. I consider several questions: Are traditional models of linear growth of welfare institutions appropriate for late industrializing states? What is the appropriate scale of the “state”: nation, city, or region? Finally, Theor Soc (2010) 39:451–470 DOI 10.1007/s11186-010-9116-2 S. Srinivas (*) Urban Planning Program and Technological Change Lab (TCLab), Columbia University, New York, NY, USA e-mail: [email protected] under what conditions can and do states incorporate pre-existing institutions in statutory systems? My response is that it is simplistic to argue linearity of growth of national welfare institutions or to consider states autonomously regulating markets to do so. We have to look beyond classic market failure arguments. Instead, late industrial welfare institutions emerge from essential conflicts and collaborations between states and multiple alternate institutions, not markets alone. I emphasize here that while economic and actuarial imperatives exist for nation-states to expand local risk-pools, late industrial nation-states may be unable or unwilling to do so, resulting in institutionally “thin,” top-down industrial welfare. For reasons of space, I do not visit state ‘developmentalism’ in depth, but analyze its welfare aspects in the following sections. I define industrial welfare as institutionalized modes of state-supported social provision delivered to workers in services and manufacturing, and then propose a terminology to better distinguish comparative risk-mitigation in place-based, work-based, and work-place based industrial welfare. These may not be exclusive domains of the state (in fact rarely are). This sets up my enquiry into state rule over institutional variety. Its actions then emerge from the trust (or lack of it) vested in it by other actors. Its legitimacy can be seen through open-ended, evolving, and contested local norms. The economics of this trust and information challenge in statutory expansion require closer scrutiny. Nation-states continue to be dynamic variables in both theory and practice. However, the development aspects of nation-states remain vastly under-theorized. My task is thus more than pointing out exotic oddities from India. Rather, I consider late industrial welfare evolution and variety as presenting an important challenge to state theories. The productive side of late industrializing societies has been an extraordinarily active research area for over 30 years, but the redistributive side has largely been ignored or constituted in linear terms. This article starts to redress this imbalance. The economics of risk and industrial welfare “I propose here the view that, when the market fails to achieve an optimal state, society will, to some extent at least, recognize the gap, and nonmarket social institutions will arise attempting to bridge it.....” (Arrow 1963a, p. 947) Polanyi posed society’s dilemma as a double movement oscillating from unregulated markets (the “fictitious self-regulating market”) to social protections in order to minimize risk exposure in a fully waged economy (Polanyi 1944/1957). In his Great Transformation, the state responds to wage-dependence and insecurities of industrialization and urbanization, but is pulled in two often conflicting directions: between supporting market capitalism through industrial production, and instituting social protections to minimize its risks (see Table 1 below) often through a contested amalgam of local parish and poorhouse. In principle, workers can derive personal risk mitigation and security from: (1) wage income and occupational welfare (2) private provision of savings and insurance (3) voluntary welfare (e.g., families) (4) state intervention via labor 452 Theor Soc (2010) 39:451–470