California Rewrites the Welfare State While Europe Looks Away

Europe owes much to thinkers such as Thomas Piketty, Isabelle Ferreras and Mariana Mazzucato for keeping alive a progressive imagination that might otherwise have faded. Yet the weakness of the traditional vehicles of social mobilisation—political parties and trade unions—stands in stark contrast with the intellectual and programmatic ferment now visible in California, where the leaders of the latest technological revolution are among those sketching out new policy horizons.

As the US midterms approach, the proposals on the table range from the familiar tax reforms supported by Gabriel Zucman and Emmanuel Saez to more radical ideas often inspired by the social philosophy of predistribution advocated by Jacob Hacker and Delilah Rothenberg: robot taxation, a renewed interest in universal basic income, the concept of Universal Basic Capital (UBC), and new financial instruments designed explicitly to serve the public interest. Crucially, the definition of “public interest” now goes beyond fulfilling the ambitions of high-profile businesspeople who once invested in e-commerce and now place their bets on artificial intelligence.

In France, progressive actors often invoke the historical struggle against the far right to justify defending the political status quo and relying on public agencies as the primary guarantors of social protection. Across all the countries of former Western Europe, in fact, and regardless of the extent to which social security is financed by a national budget, attachment to the traditional welfare state remains strong and modernisation is seen as a threat.

The link between universal suffrage, entrepreneurial freedom within a social market economy, the social state, and resistance to totalitarianism is real. But it cannot serve as an excuse for political immobility—nor justify dismissing American innovations.

A more uncomfortable reality must be acknowledged. After a period marked by the temptation of hyper-concentrated ownership—enabled by the automation of Taylorist production—and by the other temptation, secession from society, America’s new industrial leaders have rediscovered the logic of Fordism: without consumers who have sufficient purchasing power, sales and innovation stall. This is why the most politically significant development today is not billionaire philanthropy but the emerging debate on how to redesign social security and employment in an era of automation.

Figures such as Elon Musk and Sam Altman—probably unintentionally—revive Keynes’s prediction that technological progress would both disrupt social norms and open the possibility of a society less dependent on wage labour. California’s policy debates reflect this tension: they are not merely speculative exercises but attempts to craft “concrete utopias” for a post-Keynesian world.

These debates also differ markedly from European discussions on wealth taxation inspired by Piketty and Zucman. In the US, the opponents of fiscal justice, among whom Californian billionaires are well represented, do not simply reject redistributive proposals; they offer alternatives. While they resist taxing industrial property—arguing that long-term investment must be protected—many accept taxing income from property, or introducing levies to offset the employment impact of robots.

Another striking development is the convergence between Donald Trump and Bernie Sanders—figures usually portrayed as ideological opposites—around the idea of endowing government-controlled sovereign funds with corporate shares. This shared interest in nationalising productive assets also reveals a dividing line that cuts across the US parties and echoes a familiar European debate: state-centred governance versus confidence in civil society.

Given the state of public finances in Europe and the US, a diversification of political tools is becoming unavoidable. While sovereign functions have historically relied on taxation, nothing requires maintaining the post-1945 European model of social security. The American experience of occupational social protection and Europe’s tradition of mutualist organisations—financed by voluntary contributions and managing unemployment, health, housing and other services, including the production of bread and beer sold at decommodified prices—suggest that decentralised models of solidarity, neither Beveridgean nor Bismarckian, remain viable.

Seen from this angle, the Californian debate is not only a fight between supporters and opponents of the “tax the rich” argument, as the campaign around Proposition 40 shows. It illustrates the range of technical possibilities for organising solidarity among producers—entrepreneurs or employees, active or inactive—within a new production model. It also invites a reconsideration of the social role of diffusing corporate ownership through financial funds capitalised by firms themselves, as in employee-shareholding schemes. Such funds already exist, and they often support the incomes of retired Americans and Europeans.

What remains largely unaddressed, however, is the question of corporate governance and its interaction with democratic institutions. Peter Thiel, drawing on a libertarian anti-political perspective, underscored early the contemporary relevance of a discussion on the relationship between democratic mechanisms and economic freedom. Alexander Karp theorised last year a “technological republic”. But contrary to James Burnham’s classic opinion, the last word does not belong to managers, even if they have a say because they pay.

The debate is only beginning on the American continent, where the republican intellectual tradition inaugurated by the Founding Fathers is rich and complex. Europe would gain far more by entering that debate than by reviving its familiar repertoire of vintage clichés.

Europe, in fact, possesses at least three strategic advantages.

First, the states of former Western Europe are not only based on republican principles. They have also institutionalised structured dialogue between social actors—within firms, at the level of national governments, and even within the European Union. These mechanisms may be slowed or partially immobilised, yet, like parliaments, they remain available arenas for organising deliberation and negotiation. Their mere existence constitutes an infrastructure for collective problem-solving that other world regions simply do not have.

Second, despite the tendency of both left- and right-wing populist movements to dramatise societal conflicts, the continent—much like the United States—benefits from a long-standing pluralist intellectual tradition in social reform. The concern to prevent nations from degenerating into mere market societies is not the exclusive property of social democracy. It is also deeply embedded in Christian social thought, from Rerum Novarum to Pope Leo XIV’s recent encyclical Magnifica Humanitas. And although the historical tensions of the Kulturkampf between state and church were not confined to Germany, contemporary Catholic social doctrine continues to shape both conservative and liberal political traditions. This intellectual diversity remains one of Europe’s under-recognised strengths.

Finally, despite the strong rhetorical attachment of European political parties to state intervention, financial funds already play a central role in the national social-security systems that have introduced capitalisation, particularly in pensions. Sweden—routinely invoked as a benchmark in debates on the welfare state—has embodied this model since the 1990s. Europe therefore has practical experience with welfare architectures that combine public authority with financial instruments, even if it rarely acknowledges this openly.

Now is the time for a social Europe that refuses both marketisation and institutional paralysis, and embraces reinvention and hybridisation.