http://www.youtube.com/watch?v=sKTfQ9_A3C4
At 30:11 of this video, former advisor to Gorbachev is asked that question. But I don't think he answered it or have a vague understanding of what he said.
is switzerland a warfare state or a welfare state or both??
If I remember correctly, Mises gives the following answer: a welfare state wishes to force wages and employers benefits up, and ends up creating unemployment and actually rising wages for a few.
Yet, business cannot afford to hire less workers whose wages are higher than their productivity. So, business begin to close. To avoid that, one must give some extra profits to business without eating into the increased wages. The answer is to cartelize industries.
Many business are forced to close, and the few remaining gain increased profits though their monopoly position, a part of these profits is than used to pay for the artificially higher wages.
Yet as long as import is an option, almost no cartel will work. Why would citizens buy dear from a local, cartel when they can buy far cheaper abroad?
So for the whole thing to work, severe restrictions must be placed on imports. But as the balance of payments is just that- balanced – than exports too take a hit.
Thus, at the end of the day, the international division of labor breaks down. Now Italy is no longer an asset for France: trade doesn’t bring mutual benefits. If France didn’t exist at all Italy could not care less. Attacking and conquering others makes sense again. So, a world of welfare states must be a world of war, in which survival is only bestowed to the better armed, more aggressive state.
Thus we’ve gone the full way: form welfare to warfare.
About Switzerland, it is a very unregulated country (due to cantonal competition), with some labor market exceptions and the occasional high tax (in some cantons). But measured against any of its neighbors (with the exception of Lichtenstein) it certainly is no welfare state.