2.2.3 Households and the state
Helpful prior knowledge and learning objectives
Helpful prior learning:
Section 1.1.1 The economy and you, which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems
Section 1.3.6 Households, markets, state and commons, which explains four provisioning institutions in the economy and their interconnection
Section 1.3.7 Care in the economy, which explains the importance of care in the economy, the types of care, and why care is undervalued
Section 2.1.1 The household as a system, which describes households, the basic relationships of household members, and the connection between the household and the rest of the economy.
Section S.1 Systems thinking, which explains what a system is and why systems thinking is useful. (coming soon)
Learning objectives:
discuss the relationships between households and the state
Buurtzorg, meaning "neighbourhood care" in Dutch, is an innovative community-based approach to long-term home healthcare in the Netherlands. Buurtzorg is an example of how the state can effectively support household care.
Buurtzorg employs small nurse teams who collaboratively organise their work. These nurses form lasting, close relationships with patients, providing personalised care and taking time to listen to their needs. The Dutch government supports Buurtzorg by funding it and creating supportive regulations, though Buurtzorg is not itself a state institution. This partnership strengthens household care. The short video below describes the Buurtzorg model.
How are households and the state interconnected?
The state, covered in detail in Topic 5: The state, is a provisioning institution that provides essential services and regulates economic activity, though a state’s ability to do this varies from place-to-place. In turn, households provide some funding to the state through taxes and shape the relationship between households and the state through civic participation (Figure 1).
Figure 1. The interconnections between households and states
(Credit: Gregor Cresnar, Muhammat Sukirman, Noun Project)
State support for households
States support households in a number of important ways:
provider: states may offer universal basic services to everyone such as education, healthcare, and child- and eldercare. These services improve wellbeing and reduce the time and money households spend on caregiving, enabling caregivers to take paid work or support their communities, and thereby also strengthening markets and the commons;
distributor: states can provide financial support to households who need it, or even a universal basic income to everyone, a strategy now being tested globally. States can fund these investments through progressive taxation on wealth and/or income, borrowing, reallocating funds, or in some cases by creating money (Topic 5: The state). Financial support for household members ensures a basic level of financial stability. Financial stability reduces household stress, allowing members to focus on caregiving and reducing economic inequality. This stability and greater economic equality improves social cohesion and can reduce wasteful aspirational consumption.
regulator: The state sets and enforces fair and safe conditions in society and the economy. This includes regulating industries, labour markets, and environmental practices, as well as providing legal and financial support for households, such as parental leave and caregiving subsidies.
investor: The state invests in infrastructure, technological innovation, and public projects to improve living conditions. Good infrastructure increases mobility and energy access, while technological advances make caregiving and domestic work easier. Public projects like parks, libraries, and hospitals enhance social care and quality of life.
Significant state support reduces economic inequality and environmental damage while increasing human wellbeing. Countries with higher levels of state support tend to rank higher in happiness.
Conversely, minimal state support leads to less resilient households. In the United States, for example, where the state's role has been reduced since the 1970s, households are less resilient. The lack of universal healthcare means many households lack necessary care, have little savings, and experience declining life expectancy despite high average incomes and overall healthcare spending in the economy.
Household support for states
Households don’t just receive state support, they also support and shape the state in a number of important ways.
Households’ civic engagement influences the state's values, policies, and actions, which in turn affect households. Civic engagement includes activities like voting, protesting (Figure 3), advocacy, commoning, participating in local initiatives and running for office among other activities. By raising awareness of their needs, households help the state strengthen household care and society. This engagement also strengthens bonds between households, building resilience through dependable relationships in times of need.
Figure 3. There are many ways to make your voice heard so the state knows how to better support your household
(Credit: Polina Kovaleva, Pexels licence)
A notable example is the civic engagement for paid family leave in California, USA. Grassroots campaigns used advocacy and protest to convince the state to pass the country's most comprehensive paid family leave policies. This policy allows workers to receive part of their wages while on leave for family or medical reasons, directly benefiting household care and wellbeing. Civic participation can shape state policies to support households.
Figure 4. Community meetings can give people an opportunity to voice their perspectives on local issues.
(Credit: Sage Ross, CC BY-SA 3.0)
Households also impact states through taxes. Households pay taxes based on income, wealth, and spending. Governments use these funds, as well as other funding, to provide essential services like education and healthcare and to build infrastructure such as water systems, energy, and transportation networks, which are vital for meeting needs, working, and community engagement.
States need adequate funding and civic engagement to perform their roles effectively. But states must also support households adequately so people, including those with caregiving responsibilities, have the time and energy for civic participation.
Our economic systems must support all provisioning institutions—households, markets, commons, and states—for a balanced economy that meets human needs within planetary boundaries. This balance is discussed further in Section 2.2.4.
Activity 2.2.3
Concept: Systems
Skills: Research (information literacy)
Time: 30-40 minutes
Type: Individual, pairs or small group
Your state may have a range of strategies to support households, commonly referred to as social welfare or social services.
Do some quick research on the internet to find out how your state supports households OR
Ask some adults in your school or community what kinds of support they get, or could get, to support meeting human needs in their households.
Do you think that the level of state support is adequate to support households? What other strategies are being suggested in the country, or region, where you live to strengthen households?
Ideas for longer activities and projects are listed in Subtopic 2.5 Taking Action
Checking for understanding
Further exploration
Gender Awareness & Public Policy | Feminist Economics Part 4 - Feminist economist Jayati Ghosh explains gender is so important to consider in countries’ economic policies. Part of the video discusses how state cuts to essential services put pressure on households as a social shock absorber. Difficulty level: medium
Sources
Tronto, J. C. (2013). Caring democracy: Markets, equality, and justice. New York University Press.
Institute for New Economic Thinking (INET). (2021). Gender Awareness & Public policy: Feminist economics part 4. YouTube. https://youtu.be/cWAqtlmtrC8?list=PLmtuEaMvhDZaFEkdkLr9YTaUqKNdYGLj8
Terminology (in order of appearance)
care: the act of providing what is necessary for the health, welfare, upkeep, and protection of someone or something
state: a system that provides essential public services, and also governs and regulates other economic institutions
household: a system where people living together care for each other and do domestic work, often termed the 'core economy'
regulation: a rule that guides individual or group behaviour and enforced by an authority
institution: human-made systems of rules and norms that shape social behavior
provisioning institution: a group of people and their relationships as they try to meet human needs and wants
economy: all the human-made systems that transfer and transform energy and matter to meet human needs and wants
tax: payment from individuals or organisations to the government, used to provide public infrastructure and services
universal basic services: a form of social welfare where all people receive access to free, basic services, like education and health care, funded by taxes and provided by the state
universal basic income (UBI): financial support from the state in the form of recurring payments to everyone to meet basic needs
investment: money spent for the enhancement of human or physical capabilities
progressive tax: a tax in which the tax rate increases as the taxable amount increases
wealth: the total value (stock) of someone’s assets such as money, house, or investments
income: money received from work or investments
economic inequality: unequal distribution of income and opportunity between different groups in society
social cohesion: the extent to which people in society feel connected to one another and share common values
aspirational consumption: buying products in order to increase self-esteem and social status
labour market: the market where household members sell their labour to firms who pay a wage
parental leave: time off of paid work used to care for children; can be paid or unpaid by the employer or state
subsidy: a payment made by the state to a business or individual to encourage certain behaviour
infrastructure: large scale physical systems that a society needs to function (roads, railways, electricity networks, etc)
energy: the ability to do work or cause change
resilient: able to recover after a disturbance
universal healthcare: a situation where everyone in a country has access to healthcare regardless of ability to pay
civic engagement: all the ways that people take action together to address issues of public concern
advocacy: when a person or a group expresses support for or recommends a particular policy or action
commoning: when a group of people self-organise to manage shared resources
grassroots campaign: collective action from people at a local level to get change at the local, regional, national, or international levels
system: a set of interdependent parts that organise to create a functional whole
market: a system where people buy and sell goods and services for a price.
planetary boundaries: the limits of Earth systems to absorb the impact of human activity and continue to function