A Revised Analytical Fram Reform of Welfare States

This paper argues that the existing theories of welfare state reform are powerful in explaining the pathdependent adjustment of welfare states from the 1970s to the 1990s, but that they fail to account for institutional path-departures which are becoming more common in the 2000s. By examining the deviant case of pension privatization in a frozen welfare state, the paper first confronts current theories with the reform experience in Germany between 1996 and 2001 and demonstrates that it contradicts their expectations and implications regarding the initiative, the process, the strategies as well as the outcome of welfare state reform. It then seeks to improve the existing analytical framework by suggesting a better concept of change in welfare states and by incorporating two additional theoretical components, termed “institutional interference" and "creative opportunism", that jointly lead to a better understanding of institutional path-departure in highly unfavorable settings. Finally, the paper uncovers the underlying assumptions of the three existing components – blame avoidance, vested interests and policy legacies – and shows that turning them into conditions further helps us to resolve the paradox of major institutional change in frozen welfare states.