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As governments around the world embrace austerity, one of the key arguments they use is that the welfare state is unaffordable. Paying for the Welfare State in the Twenty-First Century shows that argument to be specious, relating current debates about taxation and welfare to a deeper understanding, informed by political economy, of the relationship between taxation and spending on social services. Only by understanding the critical functions of welfare in post-industrial society can we legitimately consider what levels of taxation and support are reasonable.