Disrupting the Welfare State? Digitalisation and the Retrenchment of Public Sector Capacity

Welfare state bureaucracies the world over have adopted far-reaching digitalisation reforms in recent years. From the deployment of AI in service management, to the ‘opening up’ of administrative datasets, digitalisation initiatives have uprooted established modes of public sector organisation and administration. And, as this paper suggests, they have also fundamentally transformed the political economy of the welfare state. Through a case study of Danish reforms between 2002 and 2019, the analysis finds that public sector digitalisation has entailed the transfer of responsibility for key infrastructure to private actors. Reforms in Denmark have not only been pursued in the name of public sector improvement and efficiency. A principal objective of public sector digitalisation has rather been the growth of Denmark’s nascent digital technology industries as part of the state’s wider export-led growth strategy, adopted in response to functional pressures on the welfare state model. The attempt to deliver fiscal stability in this way has, paradoxically, produced retrenchment of critical assets and capabilities. The paper’s findings hold important implications for states embarking on public sector digitalisation reforms, as well as possibilities for future research on how states can harness technological progress in the interests of citizens – without hollowing out in the process.