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The transformation of night-watchman states into welfare states is one of the most notable societal developments in recent history. In 1880, not a single country had a nationally compulsory social policy program. A few decades later, every single one of today's rich democracies had adopted programs covering all or almost all of the main risks people face: old age, sickness, accident, and unemployment. These programs rapidly expanded in terms of range, reach, and resources. Today, all rich democracies cover all main risks for a vast majority of citizens, with binding public or mandatory private programs. Three aspects of this remarkable transformation are particularly fascinating: the trend (the transformation to insurance states happened in all rich democracies); differences across countries (the generosity of social policy varies greatly across countries); and the dynamics of the process. This book offers a theory that not only explains this remarkable transition but also explains cross-national differences and the role of crises for social policy development.