Public goods and social welfare

A state is a term that denotes a territory that has a unified legal system. In political science, the state is understood as a tool for people to organize their common life. The state is a comprehensive power organization formed in the interaction of the state apparatus and the citizenry to define and implement common goals. Therefore the goal of all governments is or should be, to increase the well-being of their citizens.

The simplest definition of well-being is: well-being means just feeling well. In the European cultural space, well-being is based on the following values: good health; comfortable living conditions; personal liberty; safe working conditions; and guarantees in case of unemployment.

According to Maslow’s hierarchy of needs, human well-being is based on the meeting of physiological and safety needs. Physiological needs are needs we cannot live without (food, water, air, sleep, etc.), and safety needs include feeling safe (physical and financial safety, job security, health). These two groups of needs are also called basic needs. When basic needs are satisfied, a person strives for realizing their social needs. We all look for social connections with friends and family and want others to respect us. In doing so, we try to increase our self-esteem and self-confidence. Self-realization is the realization of one’s full potential. This is the highest level of the hierarchy that we strive for.

In economic terms, people need to consume different types of goods and services in order to meet their basic and social needs. Maslow’s hierarchy of needs shows that the consumption of economic goods and services does not satisfy all our needs. To satisfy our needs and ensure our well-being, we need also goods and services that the economic system does not provide. These goods and services are called common and public goods and services. Common goods are, for example, wild fishing, forests, beaches, etc. Public goods are, for example, national defense, oceans, Ozon layer, etc. The distribution of common and public goods and services can only be organized by the state.

The organisation of distribution of public and common goods depends on the socio-economic policy of the government. Esping-Andersen (1990) divides welfare states into three: conservative, liberal, and social-democratic. Welfare states are divided into these types according to the public offering of state services (decommodification), the class division of society, and the proportion of the public and private sectors. According to the author, decommodification is a situation where the state, without the support of the market, gives a person the right to consume a service.

What kind of welfare state do you live in? Read the study material “Public goods and social welfare” and you get more information on defining well-being; on describing common and public goods; on problems with the supply of common and public goods; on defining social welfare and the welfare state; on measuring well-being, and the success of social welfare policies.

by Aija Kosk

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