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WELFARE STATE A new social contract in
an age of population decrease As the framework of a capitalist market economy and liberal democratic governance appears increasingly fragile, alternative approaches must be developed.
By Huck-ju Kwon Professor at the Graduate School of Public Administration, Seoul National University and President of the Korea Institute of Public Administration
The world today is witnessing a profound transformation of the socio-economic paradigm that has shaped global political and economic relations since the end of the Cold War. For more than three decades, the combination of a capitalist market economy and liberal democratic governance provided a relatively stable institutional framework for economic integration, political cooperation and social development. That framework now appears increasingly fragile. The breakdown of the socio-economic paradigm At the global level, geopolitical tensions have intensified. For smaller and highly open economies the situation is complex. Countries that have benefited greatly from globalization and global production chains now face difficult strategic dilemmas amid global hegemonic conflicts. In numerous democracies, political competition has increasingly shifted toward polarization, distrust and populist mobilization. This stems partly from the fact that the middle class — worldwide — has experienced growing economic insecurity. Global competition and technological transformation have altered labor markets, undermining job stability and long-term career prospects. These changes have contributed to a perception among citizens that representative political institutions serve elite interests rather than the broader public. As a result, populist movements and anti-establishment political forces have gained traction across a wide range of democratic societies. Beneath these geopolitical and political developments lies another, perhaps more fundamental challenge: the structural strain placed on the welfare state. The welfare state has historically functioned as a set of institutional arrangements that moderated the relationship between capitalist markets and democratic politics. Through systems of social protection, public services and redistribution, welfare institutions helped maintain social cohesion while supporting economic development.
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