Benjamin Radcliff: Which Political System Produces Greater “Happiness”?

Which Political System Produces Greater “Happiness”?

The welfare state, despite leading to greater human happiness, continues to be under attack.

Benjamin Radcliff

Translated by: Alireza Khazaei

To some, happiness is so vague that it cannot be easily measured by scientific methods. But social scientists in the growing field of “happiness economics” claim that a satisfying life is rooted in objective conditions, and that the economic, political, and social orientations of societies can accurately predict individual happiness. For these researchers, the question of the extent of happiness is neither a philosophical question nor a matter of political taste, but an empirical question that can be answered by examining data.

Most of us are like the Stoics; we imagine that individuals must find their own happiness[1]: the key to happiness for a good life is hard work and resilience in the face of difficulties. This “rugged individualism” may align with the American spirit, but it contradicts a growing body of empirical research showing that some societies have greater life satisfaction than others. In other words, happiness is more a social matter than a psychological one.

If this is the case, then, as Albert Einstein said, the obvious next step is to “ask ourselves what changes the structure of society and the cultural attitude of man must undergo to make human life as satisfying as possible.” Economists, political scientists, and other social scientists in the growing fields of the political economy of well-being[2], or “happiness economics,” use empirical rather than theoretical methods to better understand what leads to satisfying lives. Happiness economics should not be confused with “positive psychology.” Positive psychology views happiness as a matter of individual attitudes, but in contrast, researchers in “happiness economics” claim that a satisfying life is generally rooted in objective conditions, such that the economic, political, and social orientations of societies can accurately predict individual happiness.

Incidentally, the policies that contribute most to human well-being are the very ones Einstein himself initially pointed to: policies associated with social democracy. Adam Okulicz-Kozaryn, a political scientist at Rutgers University in Camden, New Jersey, reviewing the research in 2014, found that, controlling for other factors, it can be acknowledged that “societies governed by leftist or liberal governments (also known as welfare states)” have the highest levels of satisfaction. Across different countries and regardless of other influential factors, the more generous and universal the welfare state, the higher the level of human happiness.

The term “welfare state” is pejorative for most Americans, but if they had a better understanding of what the term means for the rest of the world, they would be less inclined to ascribe a pejorative character to it. In short, the welfare state means a society that, through the socialization of risk and reward, has created a system that protects people from the insecurities of everyday life. This characteristic holds true not only for the main pillars of social support (such as guaranteed access to health care, unemployment insurance, and pensions), but also includes provisions that are unknown in America, such as sick leave (in Germany, six weeks at full pay and up to 78 weeks at 70 percent pay) and guaranteed vacation leave (in Germany, four weeks at full pay). The part that is more surprising is “child benefit” or the payments given to all families with children, regardless of their income: every German family receives 184 euros (or about 205 dollars) per month for each child. Also, in countries that approach the ideal level of the welfare state, the guaranteed minimum income is much higher: the livable minimum wage in Denmark is about 20 dollars an hour. It is this same concept of “risk and prosperity for all[3]” that led the late Swedish Prime Minister Olof Palme to say: “The welfare state, with all its imperfections, is the most humane and civilized system ever created.”

Humane and civilized public policies create the conditions for individuals to enjoy being alive. This conclusion is profound and provocative, and it suggests that if human well-being is an appropriate standard for judgment, then the choice of leftist public policies over rightist ones is justifiable in an “objective” and scientific context. But what is this “science of happiness[4]” and how has it reached these dramatic conclusions?

The idea of a science of happiness provokes skepticism. Some imagine that happiness is so unstable and elusive that it cannot easily be measured or studied with scientific methods. The reluctance to approach well-being through social-scientific tools can be explained by a Frankensteinian fear of science, the fear that the study of happiness might deprive non-experts of the right to comment. This fear should be respected; no one wants a world where only “experts” have the right to speak about happiness.

Happiness is not a scientific field, like chemistry or algebraic geometry, where non-expert opinions have little impact. In fact, the basis of social science research on happiness is to ask people whether or not they are happy. Therefore, we are not interested in defining what happiness is—which is undoubtedly a difficult problem—but only want to know whether people consider themselves happy or not. In short, all we want to know is to what extent people find their lives positive and fruitful or, in Einstein’s words, “satisfactory.”

The World Values Survey[5] provides comparable data on life satisfaction and other measures of personal well-being for the world of industrial democracies from 1981 to 2014. The bulk of research on the economics of happiness relies on this survey question (with some minor variations): “All things considered, how satisfied are you with your life as a whole these days?” Each respondent was asked to answer the question on a scale of 1 (dissatisfied) to 10 (satisfied). It is the individuals themselves who decide on the vital and personal aspect of the meaning of happiness and their level of happiness. Social scientists, using their answers, can study happiness just like any other empirical phenomenon.

The use of survey methods comes with pitfalls [and errors], but these are the same pitfalls that social scientists are accustomed to in any survey. Do our questions measure what we intend them to, and is this measurement instrument reliable—that is, if repeated at the same moment, would we receive similar answers? Do people even know how happy they are, and if they do, are there cultural factors that prevent them from answering honestly? The discussion surrounding these very questions and similar topics has grown considerably, but experts believe that these issues do not pose serious difficulties for the researcher.

Thus, we now have data on happiness at hand. What theories are available to analyze this data? Psychologists rely on genetic and personality explanations: happiness is a relatively stable personality trait, and everyone has a personal set-point for this trait to which they naturally return after a brief deviation in reaction to life events. Economists tend to focus on the importance of “consumption” and income, and rely more on the relativity of happiness. The Easterlin Paradox, named after the American economist Richard Easterlin, originates from here. He first described this concept in 1974: at any given time, people with the highest incomes are happier because, compared to low-income individuals, they perceive themselves as having an advantage. But over time, increases in national income levels do not raise the average level of happiness, because, simultaneously, the aspirational consumption standard in society against which people compare themselves also rises. This point means that a narrow focus solely on the raw rate of economic growth is mistaken, for what people need are social goods that are judged absolutely and not relatively, goods whose prime examples are financial security, access to healthcare, and a sense of dignity.

This very matter brings us to approaches that point to the provision of such human needs. The most important of these approaches is what the Dutch sociologist Ruut Veenhoven, from Erasmus University Rotterdam, has termed “livability theory[6].” This theory shows that people are happier in societies that have the greatest livability, meaning societies that provide the highest level of human needs for the greatest number of people. In this interpretation, individuals are, in practice, happier when their needs as human animals are better met. The influential research of the late American psychologist Abraham Maslow provides a model for understanding these needs; this model begins from a lower, more basic level of needs that are necessary for attaining higher needs in the hierarchy. Our physiological needs—food, clothing, and shelter—are at the base of the pyramid, followed by financial security, employment, and freedom from fear or crime. These are safety and security needs. A sense of esteem forms the next level, which includes friendship, romantic love, and immersion in networks of social relationships. Having a sense of worth in one’s community and a degree of efficacy and agency, meaning the ability to make decisions about the outcomes of one’s personal life, form the higher level of the pyramid: self-respect and self-actualization.

This approach reveals a hierarchy of needs. Physiological and security needs (the lower end of the well-being chain) are the most vital, as they are essential for achieving other goals. Therefore, those factors external to the individual that drive the fulfillment of basic needs will have the greatest impact on well-being. By specifying these basic needs, we discover which institution is most important in their creation and distribution: the economy. Thus, the key to understanding happiness hinges on comprehending how the mechanism of the market economy works.

The market has many fascinating aspects and is one of humanity's greatest achievements, providing both a high degree of human freedom and a higher standard of living for people than any other currently attainable form of economic production. As a system, the market contributes to human happiness by successfully meeting basic human needs through vital and unique methods. However, the internal logic of capitalism contains elements that are destructive to the common good. Externalities, such as pollution, are the most familiar of these problems, but there is a deeper and even more fundamental feature of capitalism that requires our attention.

Commodification, and specifically the commodification of labor, is perhaps the single most important concept in the entire logic of capitalism. A commodified world is one in which the economic survival of the majority of its population depends on selling their labor power as a commodity, taking the form of wages or wage labor. In other words, to survive, people must sell their capacity to work on the market, just like any other commodity. As the eighteenth-century political economist Adam Smith noted, the demand for humans is like the demand for any other commodity. Whatever the positive and admirable aspects of the market economy, reducing people to commodities has two negative consequences.

First, turning people into commodities means turning them into prisoners of the ruthless forces of the market, which are beyond their control. They face a world characterized by permanent insecurity, because the market in which their labor is sold, like the market for other goods, is subject to uncontrollable fluctuations. People become dependent on forces that are indifferent to them or any other individual. As the Danish sociologist Gøsta Esping-Andersen says in his book The Three Worlds of Welfare Capitalism[7] (1990), "the market becomes a prison for the worker." To survive and flourish, people adopt the values and norms of the market prison, which are competitive individualism, self-centeredness, and a focus on short-term material gain. These values, in practice, divert the individual from the path of a satisfying life.

Commodification has another aspect that is equally destructive. When people are reduced to commodities, they can no longer make moral demands of society. Just as we have no moral obligation toward a sack of wheat or a carton of mobile phones, we have no such obligation toward workers, who are viewed not as human beings but as commodities and units of labor power. The worker is a commodity that has no right to a job, absolutely no right to be paid on sick days or during holidays, should not be entitled to pensions and health insurance, and is not protected against arbitrary dismissals by the employer; let alone end-of-service benefits (seniority payments) or other similar payments related to layoffs.

Workers treated as commodities, instead of enjoying respectful and dignified treatment (that is, as valued members of a society whose work contributes to the common good), are merely another factor in production, deserving the same consideration we give to the machines they operate.

If, on the one hand, commodification, as part of the market system, harms human beings in this way, and, on the other hand, the market system itself brings major benefits to human society, then the obvious solution is to preserve the vital characteristics of the market while, at the same time, introducing government policies that serve the "de-commodification" of workers and their families. Simply put, the criterion for the "de-commodification" of a society is this: when individuals—due to illness, old age, disability, the need to care for family members, the desire to improve their social standing through education, or simply the inability to find a (good) job in difficult times—cannot sell their labor power as a commodity, to what extent are they able to maintain a middle-class standard of living? The greater the degree of de-commodification, the easier it is for people to survive without succeeding in the labor market.

Creating a social safety net (that is, the much-maligned “welfare state”) is essential for the decommodification of people. This safety net guarantees that those who cannot find employment will have a minimum income. In its broader form, this safety net also merges with other programs that reduce the degree to which a person’s well-being depends on income, programs such as “family allowances” (which are support payments for raising children, funded by public revenues), the provision of housing and childcare expenses, and ensuring access to healthcare as an instance of “social rights.” By social rights, I mean something akin to police protection, which a person enjoys not in exchange for a fee, but simply by virtue of being a citizen.

Labor unions also play a vital role in helping to decommodify people by providing a measure of support for workers against the capricious desires of employers. The wages and benefits of unionized workers raise the wage ceiling for all workers. Finally, labor market regulations can cover all employees, even those who are not members of labor unions. In some countries, these protections cover all workers and provide them with assurance on issues such as: wages for vacation and sick leave, maintaining a high level of workplace safety, and perhaps even (in the form of worker-employer cooperation schemes) the right to have a say in how the business is managed. All of this not only reduces insecurity and other forms of stress but also helps create an environment in which workers enjoy the respect and dignity that all human beings deserve.

Does decommodification truly have these positive benefits, and if so, do these benefits, on balance, outweigh the negative costs resulting from reduced market efficiency? This is an empirical question that political scientists focus on. Simply put, do left-wing political programs truly best serve a world in which people lead fulfilling and positive lives? This is not a philosophical or normative question, nor a matter of political taste, but rather an empirical question that can be answered by examining data on life satisfaction.

I have examined this data more closely in my book The Political Economy of Human Happiness[8] (2013), but I will present a preliminary sketch of my answer, which is similar to the findings of other researchers, below. The primary data comes from the World Values Surveys, and, regarding satisfaction in America, similar data has been added for supplementary comparison.

Using data at both the individual and aggregate levels, I found that life satisfaction is higher in countries that enjoy a high level of decommodification. A direct (positive) relationship between decommodification and well-being is obtained when we use two different indicators: the first relates to the overall level of decommodification (which summarizes multiple programs into a single index), and the second relates to more granular measures of specific policies, such as the share of the economy (the percentage of GDP allocated to social spending), the scale of the scope and generosity of unemployment benefits (in and of itself, i.e., separate from other social spending), as well as the total amount of “government consumption” (as a percentage of GDP) as a measure for understanding the government’s total share in controlling the economy. There is also a positive relationship between satisfaction and the tax burden, meaning that the level of well-being increases in line with the amount of tax paid by society. These payments are, in fact, the necessary tribute people pay for higher government spending. Furthermore, if we consider the index of the size and scope of government, created by the ultra-conservative Fraser Institute in Canada, we find that well-being here also rises and falls in the direction we would expect: according to this institute, life satisfaction increases when “economic freedom” exists.

Taking into account the effects of labor organizations and economic regulation, we arrive at similar results. Individuals who are members of labor unions report greater life satisfaction compared to non-members in otherwise similar circumstances. More importantly, everyone benefits from high levels of union organization, regardless of whether they are members or not. The main reason for this latter finding is that when unions become stronger, they support public policies—both out of self-interest and altruism—that, like a social safety net, benefit all workers. They also tend to support those labor market regulations that favor workers, which themselves have a powerful, positive effect on life satisfaction (as has been shown statistically, using various measures of regulation, one of which belongs to the anti-regulation Fraser Institute).

The crucial point is that all these relationships hold regardless of individuals' income or social status. Everyone, at every income level, benefits from a more generous welfare state, pro-worker labor laws, and strong unions, because these institutions help build a more "livable" and prosperous society for all (and human dignity for all), a society from which everyone benefits.

The cross-national pattern repeats itself in America: depending on what data are available, different precise indicators are defined. Nevertheless, it is clear that life satisfaction is higher in states that have high levels of welfare spending and also benefit from a more regulated economy. They also have governments with a longer history of liberal policymaking or, to express the same concept on a partisan scale, governments that have recently been controlled by the Democratic Party. Moreover, quality of life (for rich or poor, man or woman) has the same powerful, direct (positive) relationship with the breadth of the labor movement: controlling for factors, one can acknowledge that life is better in states where more workers are union members.

The truth is that, although we approach the subject empirically, human happiness increases in parallel with the level of decommodification. If we truly care about building a world in which people's lives are of a kind that they themselves find valuable and fulfilling, then we had better pay attention to this point: why is the term "welfare state" so disreputable in America, despite the fact that it has brought more happiness to people than any other form of government?

If there is a strong link between the social democratic political vision and human well-being, why does that vision seem to be in retreat? If "big government" makes people happy, why do voters seem increasingly inclined to elect governments committed to unfettered markets, "flexible" labor laws, and the continual reduction of social spending?

This is an important and real question, but raising it should not be equated with the end of the welfare state. Generous welfare states in Western Europe have been weakened in recent decades, but their basic characteristics have remained everywhere. This is because a social consensus exists to preserve its fundamental framework. Even, as conservative commentators have noted with regret, the central elements of the welfare state in Britain and America have resisted the former efforts of Margaret Thatcher and Ronald Reagan to abolish them.

The welfare state, as we see in England’s National Health Service or American health care, has shown remarkable resilience, the principal reason being its intrinsic connection to human well-being. The examples at the beginning of this article concerning social support in Germany—which, compared to the Scandinavian countries, has a moderate welfare state—also show that, even in this era, social democracy is flourishing. Other signs of the expansion of this progressive achievement can be seen everywhere, so I will mention only two: recently, the United States, through the ObamaCare Act, succeeded in expanding the social right of access to health care. Thomas Piketty’s book, Capital in the Twenty-First Century[9] (2013), which is a leftist critique of the dominant, contemporary form of capitalism, has rightly, according to the Guardian newspaper, become the “pulse of publishing”[10]. This book can be compared to Fifty Shades of Grey[11]. When an economist’s research on long-term patterns of inequality under capitalism generates an appeal comparable to a bizarre sexual act, it is still too early to say that leftist tendencies have been eliminated from the equation.

The question remains: if the welfare state leads to greater human happiness, why is it attacked instead of being expanded? The most obvious answer is that people sometimes do not know what makes them happy. Most works by psychologists as well as economists confirm that most of the things we strive for either lead to happiness that is far less than we expect (job promotion, salary increase) or even diminish our happiness and comfort (having children). Judging what makes us happier is difficult enough in personal life, let alone the difficulties involved in inferring the effects of political programs on our happiness, especially those programs whose connection to personal life is harder to judge.

Hence, our strongest support is for those programs related to “big government” whose performance can be observed: when you or your parents receive an income from social security programs, you like those programs more. If you and the people you interact with do not depend on nutritional assistance programs, agreeing with these programs becomes harder; the tangible benefit of these programs reaches you indirectly: in the form of greater social capital and less violent crime. When political parties succeed in demonstrating the value of building a country where children do not go hungry and a direct, pleasant benefit is provided for those with children (recall the child allowance in German families), in this case, political support for the welfare state naturally increases. People, as in their personal lives, must also learn which political outcomes lead to their happiness. This is easier in some places than in others.

Unfortunately, it is also true that what people want is not always, or generally, reflected in government policies. Students of political economy often think that policy outputs are, in fact, the result of the “power resources” that different classes possess. Labor unions, both in the policy arena and in the realm of public opinion, are among the most important representatives of working-class and middle-class interests, which have been under pressure almost everywhere, and especially in the United States. The recent passage of so-called “right-to-work” laws in the states of Indiana, Michigan, and Wisconsin, whose explicit goal is to eliminate the possibility of union organizing, must be seen in this context: the aim of such measures is to silence the major institutional voice demanding progressive policies that benefit workers and, consequently, to reduce this group’s participation in public debate and policymaking.

As the organization of labor declines and, consequently, the voices associated with it fade in all countries, the level of happiness and the welfare state also decline. So perhaps the neutering of the strongest interest groups that (each to some extent) supported these progressive approaches is more important than the public’s turning away from those ideals. Although labor organizations, in most European countries, have resisted to a considerable degree, their defeats in America have been spectacular. The decline of unions has been reflected in a large volume of recent research regarding policymaking in America, subtly summarized in this headline from the April 2014 issue of U.S. News & World Report[12]: “The Oligarchy Nation- Political scientists find that wealthy minorities control policymaking in America.”

To understand the excessive influence of corporations and the wealthy on the political arena, such scientific precision is not even necessary: these individuals are generally disinclined to support the welfare state and also, by virtue of media ownership, possess enormous power to influence public opinion. But some insight is required to understand that the fate of the social democratic approach to politics, regardless of its effects on human well-being, faces a difficult struggle.

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[1] happiness

[2] political economy of wellbeing

[3] shared prosperity

[4] science of happiness

[5] The World Values Survey

[6] liveability theory

[7] The Three World of Welfare Capitalism

[8] The Political Economy of Human Happiness

[9] Capital in the Twenty-First Century

[10] publishing sensation

[11] Fifty Shades of Grey: A three-volume bestselling erotic novel by British author E.L. James, the first volume of which was published in 2012.

[12] US News and World Report

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Notes:

• This piece was written by Benjamin Radcliff and published on September 17, 2015, under the title “A happy state” on the Aeon website. The website Tarjomaan published this piece on January 8, 2017, under the title “Which Political System Produces Greater ‘Happiness’?” translated by Alireza Khazaei.

•• Benjamin Radcliff is a professor of political science at the University of Notre Dame in Indiana and the author of the book The Political Economy of Human Happiness.

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A happy state

Why is the welfare state under attack when happiness economics shows it is the system most conducive to human wellbeing?

Most of us are Stoics. We think that happiness is something that individuals find for themselves: the key is to work hard for a good life, and to face adversity with defiance. This ‘rugged individualism’ might fit the American ethos, but it is at odds with a growing body of empirical research that shows that some kinds of societies produce a great deal more satisfaction with life than others. Happiness, in other words, is more social than psychological.

If so, then the obvious step, as Albert Einstein put it, is to ‘ask ourselves how the structure of society and the cultural attitude of man should be changed in order to make human life as satisfying as possible’. Economists, political scientists and other social scientists in the growing field of the political economy of wellbeing, or ‘happiness economics’, are using empirical rather than speculative methods to better understand what makes for satisfying lives. Happiness economics is not to be confused with ‘positive psychology’, which approaches happiness as a matter of individual attitudes. In contrast, scholars of ‘happiness economics’ maintain that, in the aggregate, a satisfying life is rooted in objective conditions, such that the economic, political and social aspects of societies are strong predictors of individual happiness.

The policies most conducive to human wellbeing turn out to be essentially the same ones that Einstein himself originally suggested: those associated with social democracy. In reviewing the research in 2014, Adam Okulicz-Kozaryn, a political scientist at Rutgers University-Camden in New Jersey, found that ‘societies led by leftist or liberal governments (also referred to as welfare states)’ have the highest levels of life satisfaction, controlling for other factors. Looking across countries, the more generous and universalistic the welfare state, the greater the level of human happiness, net of other factors.

The phrase ‘welfare state’ is pejorative to many Americans, but it would be less so if they had a better understanding of what it implies to the rest of the world. In the abstract, a welfare state means a society that has created a system of protecting people against the insecurities of everyday life by socialising risk and reward. This implies not only the staples of social protection – guaranteed access to healthcare, unemployment insurance, and pensions – but benefits unknown in the United States, such as state-mandated sick days (in Germany, six weeks at full pay, and then up to 78 weeks at 70 per cent) and guaranteed vacation days (four weeks at full pay in Germany). More surprising perhaps are ‘family allowances’, or grants paid to all families with children, regardless of income – every German family receives 184 euros (or around $205) per month, per child. Minimum guaranteed earnings are also much higher in countries approaching the welfare state ideal – Denmark’s effective minimum wage is about $20 per hour. It is this sense of shared risk and shared prosperity that prompted the late Swedish Prime Minister Olof Palme to observe that: ‘With all its faults, the welfare state remains the most humane and civilised system ever created.’

It is public policies that are humane and civilised that foster the conditions which allow people to actually enjoy being alive. That conclusion is provocative and profound, suggesting that if human wellbeing is the appropriate metric by which to judge, then the choice of left over right public policies is justified on objective, ‘scientific’ grounds. But what is this ‘science of happiness’ and how has it come to such dramatic conclusions?

The idea of a science of happiness invites skepticism. Some feel that happiness is too slippery or elusive to admit of easy measurement or study using scientific methods. Antipathy to approaching wellbeing via social-scientific means can be down to a Frankenstein-like fear of science, an apprehension that studying happiness might lead to the silencing of non-experts. This fear is worth respecting; no one wants a world in which only ‘experts’ can talk about happiness.

Happiness is not chemistry or algebraic geometry, fields where lay views have little impact. But social science research on happiness is based on asking people if they are happy. Thus, we are not interested in deciding what happiness is – an undeniably difficult problem – but only in knowing if people are happy. All we want to know, in sum, is how much people find their lives to be positive and rewarding – in Einstein’s phrase, ‘satisfying’.

The World Values Survey provides comparable data on life satisfaction and other measures of subjective wellbeing for the universe of industrial democracies from 1981 to 2014. Most of the research in happiness economics relies upon this survey question (or some minor variant): ‘All things considered, how satisfied are you with your life as a whole these days?’ to which respondents are asked to reply on a scale from 1 (dissatisfied) to 10 (satisfied). Individuals decide the vital, and individual, matter of what happiness means, and how happy they are, for themselves. With their answers, social scientists can study happiness the way any empirical phenomenon is studied.

There are pitfalls in using survey methods, but only the same ones that social scientists are used to in any kind of survey. Does the question measure what we think it does, and does it do so consistently and reliably? Do people even know how happy they are – and if they do, are there cultural factors that discourage them from answering honestly? A cottage industry of research has grown up around these questions and similar matters, but the professional jury believes that they do not present serious complications to the researcher.

those factors external to the individual that drive the provision of basic needs will have the greatest impact on wellbeing

So, we have data on happiness. What theories do we have to inform the analysis of those data? Psychologists rely on genetic and personality explanations: happiness is a relatively fixed personality trait, wherein everyone has a set-point, to which they naturally return following brief deviations in reaction to life events. Economists have tended to focus on the importance of ‘consumption’ or income, and are much vested in the idea that happiness is relative. Thus, the Easterlin Paradox, named for the US economist Richard Easterlin, who first described it in 1974: at any given time, people with higher incomes are happier, since they judge themselves to be relatively privileged compared with those on lower incomes. But, over time, rising levels of national income do not raise the average level of happiness, since the consumption norm by which people make comparisons also increases. The implication is that a narrow focus on just raw economic growth is a mistake, given that what people need more of are the social goods that are judged absolutely, not relatively – of which financial security, access to health care, and dignity are prime examples.

This takes us to approaches that stress the provision of just such human needs. The most prominent of these is what the Dutch sociologist Ruut Veenhoven of the Erasmus University in Rotterdam has labelled ‘liveability theory’, which simply suggests that people are happier in those societies that are the most liveable, in the sense of providing the highest level of human needs to the greatest number of people. In this interpretation, people are simply happier when more of their needs as human animals are met. The influential work of the late US psychologist Abraham Maslow provides a model for understanding those needs, from the more basic lower-level needs necessary to obtain the higher-order ones. Food, clothing and shelter – our physiological needs – are at the bottom of the pyramid, followed by financial security, employment, and freedom from fear or crime. These are safety and security needs. Esteem constitutes the next level – these include friendships, romantic love, and immersion in social networks. A sense of being valued by one’s community and an amount of agency, or being able to make decisions of consequence about one’s life, form the higher level needs of self-respect and self-actualisation.

This approach reveals a hierarchy of needs. Physiological needs and security – the bottom of the chain of wellbeing – are most crucial, in that they are necessary for the attainment of other goals. Thus, those factors external to the individual that drive the provision of basic needs will have the greatest impact on wellbeing. By enumerating what these basic needs are, we know what institution is most important in generating and distributing them: the economy. The key to understanding happiness, then, is to be found in understanding how the market economy works.

The market has much to recommend it. It is one of humanity’s greatest achievements, providing both a greater degree of human liberty and a higher standard of living for more people than any other readily achievable form of economic production. As a system, it contributes to human happiness by successfully meeting basic human needs in vital and unique ways. But the internal logic of capitalism contains elements that are destructive to the common good. Externalities, such as pollution, are the most familiar of such problems, but there is a deeper, even foundational characteristic of capitalism that warrants our attention.

It is arguably the single most important concept in the entire logic of capitalism: commodification, more specifically the commodification of labour. A commodified world is one in which the vast majority of the population is dependent for their economic survival on the sale of their labour power as a commodity in the form of wage or salary work. In other words, to survive, people must sell their ability to work in the same kind of market that exists for any other commodity. As the 18th-century political economist Adam Smith noted, the demand for men is like that for any other commodity. Whatever the many positive and commendable aspects of the market economy, the reduction of people to commodities comes with two negative consequences.

people adopt the values of the market prison – competitive individualism, short-term material gain – that detract from a satisfying life

First, when people become commodities they become subject to pitiless market forces beyond their control. They face a world characterised by chronic insecurity, since the market for the sale of their labour is, like the market for any commodity, subject to uncontrollable fluctuation. People become dependent on forces indifferent to them, or to any individual. As the Danish sociologist Gøsta Esping-Andersen put it in The Three Worlds of Welfare Capitalism (1990), ‘the market becomes to the worker a prison’. To survive and try to flourish, people adopt the values and norms of the market prison – competitive individualism, egotism, a focus on short-term material gain. In practice, these values detract from a satisfying life.

Commodification has another, equally destructive aspect. When people are reduced to commodities, they lack the ability to make moral claims on society. Just as we have no moral responsibility to bushels of wheat or consignments of mobile phones, we have no moral responsibility to workers who are conceived of as commodities, labour units instead of people. Not only is a commodity without a right to a job to begin with, it certainly has no right to paid sick days or vacation time, to pensions or healthcare, or to protection against arbitrary dismissal, to say nothing of a guaranteed severance package or similar redundancy benefits.

Rather than being treated with dignity and respect – as valued members of a community whose work contributes to the general good – workers as commodities are merely another factor of production, no more worthy of considerate treatment than the machines they manipulate.

If commodification is so harmful to humans, while the greater market system itself contributes so much to human society, the obvious solution is to maintain the essential features of the market while introducing public policies that serve to ‘decommodify’ workers and their families. Simply put, a society is decommodified to the extent that individuals can maintain something like a middle-class existence if they are unable to successfully sell their labour power as a commodity due to illness, old-age, disability, the need to care for a family member, the desire to improve one’s position through further education, or simply the inability to find (good) jobs when times are hard. The greater the level of decommodification, the easier it is for more people to survive without winning in the labour market.

The creation of a social safety net (the much-maligned ‘welfare state’) is essential to decommodifying people. It assures that those unable to find work will be provided with a minimum income, coupled in its most expansive form with other programmes that limit the extent to which one’s wellbeing is dependent on income – such as ‘family allowances’ (ie child support payments provided by the public), subsidised daycare and housing, and the availability of healthcare as a social right, ie as something (like police protection) that one receives because one is a citizen, not because one can pay for it.

Labour unions also play a vital role in helping decommodify people, by providing a degree of protection to workers against the arbitrary whims of employers; the higher wages and benefits of unionised workers tend to raise the wage floor for all. Finally, labour market regulations can cover all employees, even those not in labour unions. These protections, in some countries, protect all workers, assure them paid vacation and sick days, maintain high levels of workplace safety, and might even (as in codetermination schemes) provide workers with a say in how the business is managed. All this serves to not only reduce insecurity and other forms of stress, but helps contribute to an environment in which workers feel that they are treated with the dignity and respect all persons deserve.

Does decommodification actually have these positive benefits, and, if so, do these positive benefits accrue in excess of the negative costs of reducing market efficiency? That is the empirical question on which political scientists focus. Simply put, does the political programme of the left really best contribute to a world in which people lead positive and rewarding lives? This is not a philosophical or normative question. Nor is it a matter of political taste. It is rather a relatively simple empirical question that can be answered through the examination of the data on life satisfaction.

In The Political Economy of Human Happiness (2013), I analyse the data in more detail, but the sketch of an answer follows, and other scholars have come to similar conclusions. The principal data come from the World Values Surveys; additional similar data are used for a companion comparison of satisfaction across the US.

Using both individual- and aggregate-level data, I find that life satisfaction is higher in those countries that have the highest levels of decommodification. The positive relationship between decommodification and wellbeing obtains when using two different indices of the total level of decommodification (summarising multiple programmes into a single index), as well as with more particular measures of specific policies, such as the share of the economy (the percentage of gross domestic product) devoted to social spending, a measure of the scope and generosity of unemployment compensation per se, and the total amount of ‘government consumption’ (as a percentage of GDP) as a measure of the total share of the economy the government controls. There is also a positive relationship between satisfaction and tax burden, meaning that wellbeing improves as society pays more in taxes, as a necessary compliment to higher levels of spending. Wellbeing also varies in the expected direction when considering an index of the general size and scope of government developed by the ultra-conservative Fraser Institute in Canada: in their terms, life satisfaction increases when there is more ‘economic freedom’.

Similar results obtain when considering the effects of labour organisation and economic regulation. Individuals who belong to labour unions are more satisfied with their lives than non-members, other things being equal. More importantly, everyone in society benefits from higher levels of labour union organisation, whether a member or not. The principal reason for the latter finding is that, as unions become stronger, they support public policies (through their own self-interest as much as any altruism) which benefit all workers, such as the social safety net. They also tend to support pro-worker labour-market regulations, which themselves also have a strong and positive impact on life satisfaction (as demonstrated statistically using different measures of regulation, including, again, one from the anti-regulation Fraser Institute).

life satisfaction is higher in those states that have, measured in partisan terms, recent rule by the Democratic Party

Critically, all of these relationships obtain regardless of one’s income or social status. Everyone benefits from a more generous welfare state, from labour laws that protect workers, and from strong unions, whatever their income, in that these institutions help build a more ‘liveable’ society of shared prosperity (and shared human dignity) from which all benefit.

The cross-national pattern also repeats itself across the US: while the exact indicators vary based on the availability of data, it is clear that life satisfaction is higher in those states that have higher levels of welfare spending, a more regulated economy, and governments that have a longer history of either policy liberalism or, to measure the same concept in partisan terms, recent rule by the Democratic Party. Quality of life (for rich and poor, men and women) also shows the same strong and positive relationship with the size of the labour movement: life is better in those states where more workers belong to unions, controlling for other factors.

The fact is that, however we approach the subject empirically, human happiness increases as the level of decommodification increases. If indeed we are concerned with building a world in which people lead lives that they themselves find to be valuable and rewarding, we would be well‑advised to consider why the term ‘welfare state’ has acquired such disrepute in the US, despite the fact that it has produced more human happiness than other kinds of state.

If there is a strong link between the social-democratic vision of politics and human wellbeing, why does that vision appear to be in retreat? If ‘big government’ makes people happy, why do voters seem to be more inclined to elect governments that are committed to unfettered markets, ‘flexible’ labour laws, and ever-lower social spending?

This question is a real and important one, but its posing should not be understood as tantamount to the end of the welfare state. The generous welfare states of Western Europe have indeed been chipped away at in recent decades, but their basic features remain in place almost everywhere. That is because there is a social consensus for maintaining those fundamental contours. Even in the UK and the US, as conservative commentators have gloomily observed, the core elements of the welfare state have resisted the past efforts of Margaret Thatcher and Ronald Reagan to undo them.

The welfare state has shown great resilience – as in the UK’s National Health Service or Medicare in the US – precisely because of its intimate connection with human wellbeing. The examples earlier in this article about social protection in contemporary Germany – a middling welfare state, compared with the Nordic countries – also illustrates that, even in these times, social democracy is flourishing. Other signs of the vibrancy of this progressive achievement are everywhere to be seen, so I will name just two: the US just managed to extend a social right of access to medical care, courtesy of Obamacare; and Thomas Piketty’s Capital in the Twenty-First Century (2013) – a leftist critique of the currently dominant form of capitalism – has become what The Guardian rightly called a ‘publishing sensation’ comparable to Fifty Shades of Grey. When an economist’s research on long-term patterns of inequality under capitalism is generating the same interest as kinky sex, it is definitely too early to count the left out.

Just as in their private lives, people have to learn what political outcomes will make them happy

Still, if the welfare state leads to more human happiness, why is it under attack, and not expanding? The most obvious answer is that people do not always know what makes them happy. Much work by psychologists and economists alike has confirmed that many of the things we strive for either provide far less happiness than we might expect (promotions, raises) or even make us less happy (having children). It is hard enough to judge, in our personal lives, what will make us happier. The difficulties in deducing the consequences of political programmes on our happiness, especially those whose connection to our own life is hard to judge, are significant.

The strongest support is for those kinds of ‘big government’ programmes we can see working: you like social security when you get a payment, or your parents receive one. It is harder to like food stamps if you and the people you interact with don’t rely on the programme; the tangible benefits to you come obliquely, in the form of more social capital and less violent crime. When political parties succeed in illustrating the value of building a country in which children do not go hungry, and so providing an immediate and welcome benefit to everyone with children – remember those German family allowances – political support for the welfare state is naturally higher. Just as in their private lives, people have to learn what political outcomes will make them happy. That is easier in some places than others.

It is also unfortunately true that what people want does not always, or even usually, get translated into public policies. Students of political economy often think of policy outcomes as being the result of the ‘power resources’ that different classes possess. Among the most important for representing the interests of the working class and the middle class, in both policy and opinion spheres, are labour unions, which have been under pressure almost everywhere, but especially in the US. The recent instituting of so-called ‘right-to-work’ laws (whose explicit purpose is to make union organising impossible) in Indiana, Michigan and Wisconsin must be seen in this context: the goal is to destroy a major institutional voice for the progressive policies that benefit working people, so as to reduce their contribution to public debate and policymaking.

To the extent that labour has declined across countries, so has this voice – and thus so have both happiness and the welfare state. It is thus not necessarily so much that people have turned against progressive ideals as that the strongest organised interest group supporting that approach has been (to various degrees) emasculated. While labour has hung on to a substantial degree in much of Europe, losses in the US have been dramatic. The decline of unions is reflected in the huge body of recent research on policymaking in the US, nicely summarised in April 2014 by this US News and World Report headline: ‘Oligarchy Nation – Political Scientists Find Wealthy Elites Control Politics in America’.

We need not be quite so literal as to believe that business and the wealthy have grossly disproportionate influence over politics: such people are generally disinclined to be supportive of the welfare state, and they also have enormous influence over public opinion through their ownership of the media. But it takes little insight to see how the fate of the social-democratic approach to politics faces an uphill battle, whatever the consequences for human wellbeing.

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