The dramatic growth of household indebtedness that began in the latter half of the twentieth century is one of the most remarkable and consequential trends in recent comparative political economy. But an increased reliance on consumer credit and its subsequent debt burdens has not been experienced equally by households across the globe. While the average American might find it inconceivable to imagine navigating daily life without access to credit cards, student loans, and a bevy of other consumer financing, the same cannot be said for citizens in all affluent democracies. Moreover, even within a credit-fueled country like the United States, the amount people borrow, the cost of that borrowing, and the degree to which borrowers use credit to afford basic necessities or to build productive assets varies considerably across the socioeconomic spectrum. In Indebted Societies: Credit and Welfare in Rich Democracies, Andreas Wiedemann offers a compelling account both of the uneven rise in household debt across wealthy democracies, and, critically, how credit burdens have been distributed unequally within those countries. In so doing, he provides a timely and necessary update of the classic comparative political economy scholarship.

Offering a different account from those that attribute the uneven growth in borrowing to either cultural explanations or regulatory regimes, Indebted Societies argues that variation in the rise of household debt both across and within countries is the direct consequence of intersecting social welfare and credit policy arrangements. While the notion that credit and debt are intertwined features of political economy is not a completely novel argument—indeed, scholars of American political economy have described a US “credit welfare” state in which access to consumer credit forms an ersatz social safety net in the absence of more robust public programs—Wiedemann provides by far the most thorough and nuanced theoretical exposition to date of the credit-welfare trade-off and its consequences for both the distribution of consumer debt and the politics of welfare support more broadly.

At the heart of Wiedemann’s analysis is a robust and detailed articulation of how welfare and credit regimes interact to shape distributive outcomes. His social policy theory of everyday borrowing contends that welfare and credit policies combine to determine how people navigate social risks and take advantage of social opportunities. Specifically, Wiedemann argues that three distinct outcomes arise from the intersection of strong versus weak systems of social support and permissive versus restrictive credit regimes. When welfare states offer more comprehensive risk protection, particularly to those lower down the socioeconomic ladder, more permissive credit regimes serve as a complement to the welfare state. This can lead to increased levels of debt, but primarily for middle- and upper-income households who borrow to supplement existing social supports. By contrast, when welfare states provide weak or incomplete support—particularly for the less affluent—and credit regimes are permissive, borrowing is high but stratified by income as credit becomes a substitute for public social support. For lower-income borrowers, credit serves as a consumption tool to help people meet basic needs, while for upper-income borrowers, credit can be an investment tool allowing people to accrue new assets. In the third case, where welfare states offer incomplete coverage and credit regimes are restrictive, credit is suppressed and borrowing is infrequent as people turn to savings, family support, and other sources to navigate risk.

After detailing his theoretical framework with impressive conceptual clarity, Wiedemann turns his attention to demonstrating empirically the effect of credit and welfare regimes on borrowing across and within countries. He creates an original measure of credit regime permissiveness to illustrate the accessibility of household credit in 17 OECD countries from 2000 to 2017. Wiedemann clearly depicts the variety of outcomes both across and within countries during this period; for example, the Swedish credit regime has become more permissive as its Irish counterpart has become more restrictive. He then leverages existing cross-national survey data to demonstrate the correlation between credit regime permissiveness and household choice to go into debt to navigate social risk.

Having established a positive relationship between credit market permissiveness and household indebtedness, Wiedemann moves on to a case study approach to test the core of his argument: that credit and welfare regimes combine to create different incentives for household borrowing. He identifies three case studies that correspond with each model of credit-welfare interaction: Denmark (complementary), the United States (substitutive), and Germany (suppressive). Wiedemann uses quantitative analysis of existing data to show how each country’s credit-welfare regime corresponds with how people use credit (or not) to navigate social risks and opportunities for social investment—focusing on responses to labor market and lifecycle changes like childbearing and job loss. As predicted, each case corresponds with distinct choices about the use of credit to ensure basic needs, pursue social mobility, and the disparate costs families face in doing so.

All this alone would be an important contribution to the comparative political economy literature, but Indebted Societies takes one further step by showing how these credit-welfare regimes shape people’s broader social policy preferences. Drawing on an impressive original survey of households administered in nine OECD countries, Wiedemann illuminates how access to different forms of credit can generate distinct preferences for social support. Broadly speaking, easier access to credit diminishes support for welfare spending, but that relationship is mediated by the type of debt incurred and the alternative welfare support available. For those who rely on credit to finance basic consumption—primarily through forms of unsecured credit like credit cards, increased debt leads to greater support for social spending. By contrast, borrowers who accumulate investment debt—like mortgages or student loans—are less supportive of public welfare spending. The result, as Wiedemann explains, is that more conservative borrowers and those who benefit primarily from investment debt can “opt out” of the welfare state, while liberal borrowers and those at the bottom of the socioeconomic spectrum cannot. While Wiedemann does not explicitly situate his work within the policy feedback family, connecting constellations of welfare and credit policy to people’s political preferences is an excellent example of the feedback process in action.

In a project reminiscent of Gøsta Esping Anderson’s (1990) classic, Three Worlds of Welfare Capitalism, Wiedemann’s Indebted Societies is a meticulously developed, empirically rich, and thoroughly modern account of comparative political economy. He convincingly shows that we cannot fully understand today’s welfare state politics without considering how they overlap with credit policy regimes. Furthermore, he demonstrates how the relationship between credit and welfare policy influences the unequal distribution of social risks and social opportunities both across and within countries, with serious consequences for socioeconomic inequality. This ambitious book also offers a foundation for future work to consider questions like why countries adopt the credit regimes they do, or how the inequalities generated by these systems unfold for groups marginalized by dimensions other than class. As such, Indebted Societies is a must read for scholars of social welfare policy, political economy, and inequality.