In the post-World War II era the apparent success of Keynesian economic principles in evening out the instabilities of the business cycle stimulated rapid growth in public welfare expenditures in Western capitalist democracies. For social science, welfare state expansion was not a puzzle but a given. When the economic crisis of the 1970s undermined faith in permanent and sustained growth in welfare programs, the new agenda for social theory concentrated upon the conditions that hindered or favored development. Ironically, both neo-Marxists and conservative economists reached the same conclusion: Welfare programs undermined profitability. The first half of this paper traces these theoretical developments, both in relation to internal debates among social scientists and in regard to external social and economic conditions that shaped the context of theorizing about the welfare state. Underlying the broader debates about the factors influencing welfare state development has been a more specific concern with the exceptionalism of the American welfare state. Here the central agenda has been to explain why the United States was late in developing national welfare programs and why the programs that did arise contained a bifurcated structure that separated benefits for the poor from those available to all citizens as a right. Three explanations have emerged: the failure of organized labor, the legacy of American politics and the dualism of the American economy. This paper critically assesses the theoretical relevance of these arguments and their implications for recent attacks on benefit programs.
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