Productiveness of Welfare Expenditures

During the welfare state, the main streams of economics considered welfare expenditures as unproductive despite the great advantages they gave to workers and mass consumers (Sect. 1). The classical approach excluded any room for workers’ welfare due to the idea of wages at the subsistence level (Sect. 2). Also, neoclassical authors considered public employees and state expenditures unproductive. An exception was Alvin Hansen (with Kuznets and others), who argued that if all sectors depend on the others, then all of them are productive (Sect. 3). Even the majority of Marxists considered welfare expenditures unproductive. Sweezy assumed the old thesis of Loria that there are increasing unproductive investments (in assistance, armaments, etc.) to avoid excessive surplus (Sect. 4). Only post-Keynesians praised welfare expenditures, but—due to their empirical approach—they neglected the problem of their productiveness (Sect. 5). The only prospect of long-run development was provided by Pasinetti, Kindleberger and others, who relied on the variety and increasing refinement of consumption (Sect. 6).