Management Summary Research Study „When does a welfare state become a road to serfdom? A model of discretion, knowledge, and political selection”
This study investigates the institutional conditions under which a welfare state becomes a threat to freedom in the sense of Hayek’s “road to serfdom” warning. Using a dynamic political-economy model, the study demonstrates that the decisive margin is not the fiscal size of the state but the implementation form of public policy: whether it relies on general, prospective rules or on case-by-case administrative discretion. The model formalizes an electoral mechanism in which voters compare the perceived operational benefits of discretionary governance (speed and targeting) against costs arising from knowledge-intensive implementation errors and citizen-borne procedural burdens. Results show that greater administrative discretion and a wider scope of directly administered activity raise the probability of electing discretionary politicians, particularly during crises. Absent constitutional constraints, targeted exceptions tend to accumulate over time, generating upward drift in discretion. Constitutional meta-rules requiring generality, automaticity, and independent judicial review can block this drift without limiting the fiscal scale of the welfare state. The findings warn against interest-group politics and deviations from the rule of law, which can undermine liberal constitutional order even within democratic procedures.
Target groups of stakeholders: Policymakers, constitutional lawyers, economists working on political economy and public administration, journalists covering governance reform.
Citation: Berggren, Niclas (2026). When does a welfare state become a road to serfdom? A model of discretion, knowledge, and political selection. Constitutional Political Economy. https://doi.org/10.1007/s10602-026-09510-w