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The problems raised by advanced welfarism reach beyond the immediate risk of insolvency. Crippling levels of taxation and ubiquitous state intervention, many observers believe, are expanding the so-called black economy, in which deals are made and work is done without reference to taxes or minimum wages. In France, an estimated 10% of the work force are engaged in moonlighting, despite stiff penalties that include prison sentences. Warns Ralf Dahrendorf, director of the London School of Economics: "The welfare state takes a large part of people's earnings and tells them what to spend them on while leaving them only pocket money for their own disposal."
A longer-term threat comes from aging populations. Because of a dramatic drop in the birth rate over the past 15 years, a dwindling working population will have to support a larger number of the retired. Francis Blanchard, director general of the International Labor Organization in Geneva, wonders whether a "clash of generations" may not erupt during this graying process. Sweden already offers a glimpse of that kind of future: roughly 4.2 million workers support 1.2 million pensioners. With minor variations, all of Western Europe faces the same demographic squeeze. Says Bernard Bruhnes, social security chief of France's Planning Commission: "The active population will just have to give up more."
Just what sectors of the population give up how much to the common welfare commitment is, of course, the fundamental political problem. But there is a vague public awareness of the issue, and it is beginning to affect the political process. Thatcher's perilous effort to tame Britain's bureaucracies amounts to the first groping attempt at a stricter definition of the aims of welfare.
At a conference on social policy this fall at the O.E.C.D., academics, business men, union leaders and government officials reached agreement on a central point: in the face of a world slump induced by rising energy prices, the era of openhanded social benefits has effectively ended. Said Victor Halberstadt, Dutch public finance expert: "We must have a reshuffling of our economies to provide more funds for investment and therefore less money for public consumption." As the great postwar experiment in social engineering undergoes an inevitable reassessment, that basic but hard message is gradually filtering into the West European consciousness.
—By Frederick Painton
Reported by Lawrence Malkin/Paris and European Bureaus