SUMMARY
The article is concerned with the large and continuous growth of “welfare state” expenditures. It analyses the reasons for the emergence of the welfare state and its impact on economic growth. The work is intended as a diagnosis of this growth since 1883, examining the causal forces behind expansion and its impact in mitigating the social conflicts which Marx detected in the first decades of modern capitalist development. Also considered is whether the welfare state has reached dysfunctional limits which impede economic performance. The author augments the historical record with cross-country analysis of development in the five big capitalist economies plus the Netherlands, in order to assemble convincing evidence. JEL: H53, I38