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

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.