In order to work out an appropriate division of labor between the public and the private sector, we need a normative standard that tells us what the state ought to be doing. In order to be credible, this standard needs to be more than just prescriptive, it must provide the basis for a broader reconstructive theory of the welfare state. The problem, however, is that even among supporters of the welfare state there are several different theoretical reconstructions of the normative commitments that are taken to underlie it, all of which are in tension with one another. In particular, the three normative purposes most commonly cited as providing a justification for the scope of welfare state activity are equality, community, or efficiency. These give rise to a corresponding set of models, which I refer to as the redistributive, the communitarian, and the public-economic models of the welfare state. My objective in this paper is to show that the public-economic model of the welfare state, although the least popular among political philosophers, is actually the most plausible. Not only does it provide a superior account of the existing configuration of welfare-state activities, but it alone is able to explain why, in all Western democracies, state spending rose almost continuously over the course of the 20th century as a fraction of GDP.
Key words: communitarianism, distributive justice, efficiency, equality, public goods, welfare state, Wagner’s law.
