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The Politics of Co-optation and the Origin of the Welfare State

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Abstract

By promoting some of the poor into the middle class and thereby co-opting them into the system, a self-interested elite reduces the threat of political instability and the risk of being overthrown. Co-optation is accomplished through the transfer of resources to some of the poor, enabling them to enter the middle-class - a group with sufficient income to make the overthrow of the existing order a dominated choice. The resulting dynamic model captures the early evolution of the welfare state, society's class structure and political stability. A more elitist economy, i.e., one beginning with a larger elite and poor class, and a smaller middle class, exhibits larger transfers and a steady state with fewer poor than does an economy that begins with a larger middle class. The more poverty stricken are the poor, the smaller will be the steady-state poor class. Improvements in revolutionary technology decrease the size of the steady-state poor class.

Suggested Citation

  • Graziella Bertocchi & Jody Overland & Michael Spagat, 1998. "The Politics of Co-optation and the Origin of the Welfare State," Royal Holloway, University of London: Discussion Papers in Economics 98/11, Department of Economics, Royal Holloway University of London, revised Jan 1998.
  • Handle: RePEc:hol:holodi:9811
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    Keywords

    Co-optation; Welfare State; Politics; Revolution; Growth; Re-distribution. Transfers.;

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H1 - Public Economics - - Structure and Scope of Government

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