What would happen to your life if you suddenly fell seriously ill and had to stop working for several months? In some countries, you can focus on treatment while a large part of your salary is guaranteed; in others, you have to worry about rent right away. The concept that expresses how far society protects people's lives from falling apart even when they cannot work is decommodification.
Put simply, decommodification is ‘the degree to which individuals can maintain a socially acceptable standard of living without selling their labor power on the labor market.’ In social welfare studies, it is used as a leading yardstick for comparing how robust a country's welfare system is.
This article explains, in easy-to-understand terms, what decommodification means and how it emerged, the criteria used to measure it, the three types of welfare state classified by their degree of decommodification, and the criticisms and refinements the concept has received.
Decommodification and Types of Welfare State
What Is Decommodification?
In a market economy, most people sell their labor power to earn wages and live on that money. In this sense, labor power is in the same position as a ‘commodity’ bought and sold on the market. The problem is that, unlike things, people fall ill, grow old, and lose their jobs.
In his 1944 book The Great Transformation, the Hungarian-born economic historian Karl Polanyi warned that leaving labor to the market as if it were a pure commodity could cause society itself to collapse. Building on this concern, the Danish sociologist Gøsta Esping-Andersen put forward decommodification as the core concept for comparing welfare states in his 1990 book The Three Worlds of Welfare Capitalism.
- Commodification: A state in which one's livelihood depends entirely on selling one's labor power.
- Decommodification: A state in which one can sustain a livelihood outside the market as a matter of right.
The key here is the phrase ‘as a matter of right.’ Support that depends on the goodwill of the giver, like help from a charity, or that can be obtained only by proving one's poverty, is regarded as offering a low degree of decommodification. Only protection that every citizen can claim with dignity counts as true decommodification.
Three Criteria for Measuring Decommodification
Esping-Andersen examined three programs in each country, namely old-age pensions, sickness benefits, and unemployment benefits, and gave them decommodification scores. What he focused on was not simply how much money was spent, but how easily, how adequately, and for how long the programs protect people's livelihoods.
(1) Conditions for eligibility
This looks at how long people must pay contributions to receive benefits and whether they must pass an income or means test. The stricter the conditions, the lower the degree of decommodification.
(2) Level of benefits
This looks at the ‘replacement rate,’ which shows how large benefits are compared with the income people earned while working. If benefits are too small, people end up being driven back into work.
(3) Coverage and duration
This examines what share of the total population is protected by the program and how long benefits can be received.
For example, a country whose unemployment benefits guarantee 80% of previous wages for a year and a country that pays only 30% for three months may have the same kind of program, but the sense of security felt by people who lose their jobs is entirely different.
Three Types of Welfare State by Degree of Decommodification
Considering both the degree of decommodification and the effects on social stratification, Esping-Andersen divided Western welfare states into three types.
[Type 1] The liberal welfare state
The United States, the United Kingdom, Canada, and Australia are typical examples. These countries emphasize the role of the market, and state support goes mainly to low-income people who pass a means test. The degree of decommodification is the lowest.
[Type 2] The conservative welfare state
Germany, France, and Austria are typical examples. Social insurance divided by occupation and status is at the core, so people are protected in proportion to the contributions they paid while working. Decommodification is at a medium level, and existing class differences tend to be preserved.
[Type 3] The social democratic welfare state
Sweden, Norway, and Denmark are typical examples. Universal programs covering all citizens guarantee generous benefits, and the degree of decommodification is the highest.
Limits of the Concept and How It Was Refined
Decommodification changed the direction of welfare state research, but it also drew several important criticisms.
(1) It overlooked care work
Feminist scholars pointed out that the concept was built around people in paid work, mainly men. For those caring for children and older family members at home, dependence on the family was a bigger problem than dependence on the market.
(2) Defamilialization as a complement
Accepting these criticisms, Esping-Andersen also addressed the concept of ‘defamilialization’ in his 1999 book Social Foundations of Postindustrial Economies. It refers to the degree to which the state or the market shares the burden of care so that it does not fall on families alone.
(3) Countries outside the three types
Critics also noted that Southern European countries and East Asian countries such as Korea and Japan do not fit neatly into any of the three types. In response, in 1996 the Italian political scientist Maurizio Ferrera proposed a ‘Southern European model’ in which the family plays a large role, and in 2000 the British political scientist Ian Holliday proposed ‘productivist welfare capitalism’ for East Asia, which puts economic growth first.
Decommodification is a concept that made us see welfare not as ‘charity given to the poor’ but as ‘a right that every citizen should enjoy.’ Of course, it also comes with a challenge: a high degree of decommodification requires correspondingly high taxes and broad social consensus.
Imagining together a society where people can keep their dignity even when they cannot work: that is the first step toward a better welfare state.
