This document compares different economic systems and models of welfare states. It discusses the key differences between socialist and capitalist systems, and identifies three archetypal models of capitalist economies: market-oriented (Anglo-Saxon), developmental (Japanese), and social market (German). Each model varies in the role of the state, corporate structure, and purpose of economic activity. Welfare states generally provide social services like income redistribution, worker protection and personal services. They differ in levels of state administration and universality. Challenges to welfare states include changing demographics, increased fiscal/administrative burdens, and perceived ineffectiveness at solving problems.

1. Economic Systems and Welfare States

2. The comparison of economic systems mainly
had to do with comparisons of Socialist and
Capitalist Systems.
Once upon a time...
SOCIALIST
SYSTEMS
CAPITALIST
SYSTEMS
Emphasis on central
planning and
government control
Emphasis on
decentralized (market)
decision-making
CommanD
EconomY
MarkeT
EconomY

3. Points to Ponder
Although the thunder has been stolen from
socialism in general, capitalist systems are far
from homogenous.
There are significant differences among
capitalist institutions and how states approach
market design.

4. Comparing Economic Systems
All economic systems differ from one another
in at least three very important respects:
1. The primary purpose of the economic
activity of the nation.
2. The role of the state in the economy.
3. The structure of the corporate sector and
private business practices.

5. Comparing Economic Systems
Three general archetypal models of capitalist
economies:
1. Market-oriented capitalism
2. Developmental capitalism
3. Social market capitalism

6. Comparing Economic Systems
Three general archetypal models of capitalist
economies:
1. Anglo-Saxon (American) model
2. Japanese model
3. German model

7. The American Model
Economic activity should maximize consumer
welfare.
Wealth distribution is of secondary importance
to wealth creation.
Authority over the economy is limited and
divided among different government branches.
Fragmentation and lack of policy coordination
among businesses.
Firms seek to maximize shareholder value.

8. The Japanese Model
The economy is subordinate to the socio-
political objectives of society
Central and autonomous role of the state in the
economy.
Cooperation and coordination with private
businesses and social groups.
Strong industrial organization and emphasis
on stakeholder value

9. The German Model
Emphasis on balancing social concerns with
market efficiency.
Tripartite economic management: capitalist,
organized labor and government cooperation.
Greater representation of labor and the larger
society in the governance of corporate affairs.
Integration of financial institutions with
industry organizations as well as an organized
labor force.

10. The Welfare State
A state that accepts the principle that it should
intervene to ensure that all its inhabitants
enjoy minimal standards of living, health and
protection against major contingencies.
In short, state that undertake large-scale social
action in the provision of public welfare.

11. Social Welfare
Welfare states generally provide the following
social services:
1. Personal services
2. Income redistribution
3. Worker protection

12. Degree of StatenessDegreeofUniversalism
Administered by state
and non-state entities
Administered by state
and non-state entities
Largely state
administered
Largely state
administered
Often applies to all
citizens
Often applies to all
citizens
Often applies to
specific groups
Often applies to
specific groups

13. Degree of StatenessDegreeofUniversalism
SCANDINAVIAN
MODEL
COMMUNIST
MODEL
GERMAN
MODEL
BRITISH
MODEL

14. Challenges to the Welfare State
The continuing relevance of the welfare state
faces severe criticism because...
1. Demographics have changed.
2. The fiscal and administrative burden of
maintaining the state have increased.
3. Welfare states apparently do not solve the
problems they seek to address.

15. ~fin~
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