Welfare states - Lecture notes all PDF

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WEEK 6: Welfare States Capitalism and Welfare: Why should capitalist’s care for workers? Traditional arguments against welfare, or for only very limited welfare is that welfare is that it is a disincentive to work, it is a drain on resources that could be dedicated to investment and it is a underhan...

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WEEK 6: Welfare States Capitalism and Welfare: Why should capitalist’s care for workers? Traditional arguments against welfare, or for only very limited welfare is that welfare is that it is a disincentive to work, it is a drain on resources that could be dedicated to investment and it is a underhand form of redistribution away from real ‘wealth creators’.

Was the workhouse an example of the welfare state? Fear of being pushed into the workhouse if people didn’t find a job. -

The more expansive capitalism gets, the more powerful the state needs to be

An alternative perspective: -

Enable reproduction of labour market (skilled and fit)

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Shape workers to meet the needs of capital

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Pressure from below through mass struggles, pushed capitalists to invest in workers welfare.

UK: Pre-cursors of welfare capitalism -

10 hours act of 1847 – limiting the working day

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1870 – introduction of mass education in Britain, after 1880, attendance in education became compulsory

Impact of 2nd Boer War (1899-1902) -

To be conscripted men had to pass medical exam

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As the war progressed the number of men failing army medical inspection was one in three, terrible in terms of conscription. General understanding that the British population was malnourished and not fit.

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Government feared a larger war (context of looming tensions with Germany)

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1904 Government reports – advocated free school meals and medical examinations introduced in Britain to help combat the poor physical condition of many British citizens

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Emphasised that diet should be improved and overcrowding reduced, as the worst cases of ill health were found in the industrial cities.

Pre-cursors of welfare capitalism: Germany Newly formed German State combined:

Anti-Socialist Laws (passed in 1870s) – to foreclose possibilities of Paris commune-style uprisings with: Beginnings of regulation of capitalism: -

1883 – Health insurance Bill

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1884 – Accident Insurance Bill

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1889 – Old Age and Disability Insurance Bill

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1891 – Workers Protection Act

Early forms of welfare capitalism

The New Deal, the Labour Question and the State -

Prior to 1930s – independent unions were not legally recognised

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Mass strikes in US following 1929 Crash

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Generate widespread fear amongst US governing class and business:

One senator said: ‘you have seen strikes in Toledo, Minneapolis, San Francisco and some of the Southern Textile strikes…but…you have not seen that gates of hell opened, and that is what is going to happen from now on.’ -

National Labour Relations Act 1935 – legalised trade unions, allowed collective bargaining, allowed collective action (strikes)

Post-War Welfare State in UK -

Changed balance of class forces in UK

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Fear by R/C of repeat 1918 Upsurge, labour class and military

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Defeat of fascism, raised sentiment of entitlement

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The Beveridge Report (Liberal civil servant William Beveridge) of 1942 – identified five “Giant Evils” in society: squalor, ignorance, want, idleness and disease – there was mass poverty at this time

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Over 600,000 copies sold

Real outcomes -

National Insurance Act – in return for flat-rate contribution provided:

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unemployment and sickness benefits

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Maternity grants and allowances

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Retirement pensions

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A death grant

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House building – Attlee govt. built over 1 million new homes

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New towns planned

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1944 Education Act (introduced under Wartime coalition, but implemented under Atlee govt) – free secondary school education – raised school leaving age to 15

Limitations: -

Generated paternalism (political de-mobilisation)

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Dependant on economic boom – even in 1951 – labour re-introduced prescription charges, charged for dentures and spectacles – help pay for Korean War

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Economic crisis in 1970s – labour gov’t (1974 – 79) begins to attack welfare state: o E.g., public spending levels reduced in 1976-8 by 9.5% o Tens of hospitals were closed o Attacked wages of workers leading to ‘winter of discontent’ 1978-79

Three theoretical traditions Liberal: based on particular reading of Smith – seeing market as means for abolishing class, inequality and privilege Conservative (Friedrich List and others): promoted conservative ‘monarchical’ welfare states to guarantee social welfare, class harmony, loyalty and productivity (in reaction to French revolution, Paris commune, threat of socialism) Socialist/Social Democratic: welfare states help overcome fragmentation/poverty of labour – enable workers to participate in society as socialist citizens…

Gøsta Esping-Anderson (1990) The Three Worlds of Welfare Capitalism -

Welfare state – not just about expenditures but about state’s role in managing economy

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E.g., state-spending rose under Thatcher – but on unemployment benefits, whilst cut on social programmes

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Big issue – de-commodification ‘the degree to which they permit people to make their living standards independent of pure market forces’

How to explain variations in welfare states?

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Class mobilisation (especially of the working class)

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Class-political coalition structures/class alliances

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Historical legacy of regime institutionalisation

Class mobilisation/class alliance/regime institutionalisation -

Class alliance (with farmers)

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E.g., Ref-Green alliance in Norway and Sweden – State aid supported farming sector and welfare for workers

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US – New Deal – initially broad-based – but Southern farmers did not support welfare roll-out

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Germany/Italy – Farmers support conservatives parties/saw agriculture workers as a socialist threat – hence supported conservative welfare state

Liberal model -

State uses means-testing to provide very basic needs

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Market and private provision are dominant – very limited decommodification

Conservative/Christian Democratic -

Aimed to consolidate differences amongst wage earners and undercut attraction and raise support for monarchy

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Limited decommodification – benefits depend on work and employment (i.e., are not universal)

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Strong role of the Church/family values – e.g., social insurance excludes non-working wives, family benefits encourage motherhood (e.g., limited child care provision)

Social democratic -

Universalist principles (access to benefits and services based on citizenship – prior class/market position is irrelevant)

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Reduces individual’s reliance on family and market

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High degree of decommodification

Britain – an outlier in Anderson’s Scheme? -

Citizens benefit

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Provides basic, equal benefit to all – irrespective of prior earnings

Conclusions -

General tendency of rising state spending over time

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Labour mobilisation key – but leads to different results in different countries

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But also, class alliance and institutional; trajectories

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Can welfare states overcome problems of poverty, inequality, unemployment?

Key Readings The Three Worlds of Welfare Capitalism – Gøsta Esping-Anderson 

Most debates on the welfare state have been guided by 2 questions: can the welfare state fundamentally transform capitalist society? What are the casual forces behind welfare state? Classical political economists were preoccupied with the relationship between capitalism and welfare.

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Contemporary neo-liberalism is an echo of classical liberal theory. Adam Smith knew the market was the superior means for the abolition of class and inequality. State intervention would only stifle the equalising process and create monopolies and inefficiency

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As long as capitalism remained a world of small property owners, property itself would have little to fear from democracy. Many liberals discovered that democracy would usurp or destroy the market

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Both conservative and Marxist political economists understood this contradiction but refused to believe that the market was the best guarantee of economic efficiency

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Conservative political economy emerged in reaction to the French Revolution and the Paris commune – it was nationalistic and anti-revolutionary, and sought to arrest the democratic impulse. It feared social levelling and favoured a society with both hierarchy and class.

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Marxist political economy attacked the liberal claim that markets guarantee equality. Capital accumulation disowns people of property, the end result will be ever-deeper class divisions.

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It took major extensions of political rights before the socialists could wholeheartedly embrace a more optimistic analysis of parliamentarism

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Socialism was premised on two arguments: that workers require social resources, health, and education to participate effectively as socialist citizens, and that social policy is not only emancipatory, but is also a precondition for economic efficiency.

The Political Economy of the Welfare State 

Two types if approach have dominated in explanations of welfare states; one stresses structures and whole systems, the other, institutions and actors

The systems/structuralist approach 

Seeks to capture the logic of development holistically. Its attention is concentrated on the laws of motion of systems meaning this approach is inclined to emphasise crossnational similarities rather than differences

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The welfare state is made possible by the rise of modern bureaucracy as a rationale, universalist, and efficient forms of organisation.

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A certain level of development is needed in order to permit the diversion of scarce resources from productive use to welfare. Social redistribution endangers efficiency, and only at a certain economic level will a negative-sum trade-off be avoidable.

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New structuralist Marxism’s analytical starting-point is that the welfare state is an inevitable product of the capitalist mode of production. Capital accumulation creates contradictions that compel social reform. In this tradition of Marxism, welfare states hardly need to be promoted by political actors.

The institutional approach 

The classical political economists made it clear why democratic institutions should influence welfare-state development. The liberals feared that full democracy might jeopardise markets and inaugurate socialism. Freedom, in their view, necessitated a defence of markets against political intrusion.

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This approach also faces considerable empirical problems. When it holds that welfare, states are more likely to develop the more democratic rights are extended, the thesis confronts the historical oddity that the first major welfare-state initiatives occurred prior to democracy and were powerfully motivated by the desire to arrest its realisation.

Social class as a political agent 

The case of a class-mobilisation thesis differs from structuralist and institutional analyses in its emphasis on the social classes as the main agents of change, and in its argument that the balance of class power determines distributional outcomes

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Power depends on the resources that flow from electoral numbers and from collective bargaining. Power mobilisation, in turn, depends on levels of trade-union

organisation, share of votes, and parliamentary cabinet seats held by left or labour parties. 

There are several objections to the class-mobilisation thesis: the locus of decisionmaking and power may shift from parliaments to neo-corporatist institutions of interest intermediation, the capacity of labour parties to influence welfare-state development is circumscribed by the structure of right-wing party power, and, how the model’s linear view of power holds that a numerical increase in votes or seats will transfer into more welfare-statism.

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We have to think in terms of social relations, not just social categories

What is the welfare state? 

Common textbook definition is that it involves state responsibility for securing some basic modicum of welfare for its citizens. This skirts the issue of whether social policies are emancipatory or not.

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In Britain, total social expenditure has grown during the Thatcher period, yet this is almost exclusively a function of very high unemployment. Low expenditure on some programs may signify a welfare state more seriously committed to full employment.

A Re-specification of the Welfare State 

The welfare state cannot be understood just in terms of the rights it grants. We must also take into account how state activities are interlocked with the market’s and the family’s role in social provision

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There is no doubt that de-commodification has been a hugely contested issue in welfare state development. For labour, it has always been a priority. When workers are completely market-dependant, they are difficult to mobilise for solidaristic action. De-commodification strengthens the worker and weakens the absolute authority of the employer.

Conclusion 

Presented an alternative to a simple class-mobilisation theory of welfare-state development. It is motivated by the analytical necessity of shifting from a linear to an interactive approach with regard to both welfare states and their causes.

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The risks of welfare-state backlash depend not on spending, but on the class character of welfare states.

Can the Tories abolish the welfare state? – Iain Ferguson

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The National Insurance Act introduced a state-run insurance system which, in return for flat rate contributions, made possible a range of new or increased benefits including unemployment and sickness benefits.

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Since the Conservative-Liberal Democrats coalition 65 years later, huge cuts meant that the welfare state is under attack.

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As Marxist critics of the Attlee government such as John Saville and Ralph Miliband argued, whatever its achievements, even that government operated very clearly within the framework of capitalism and had no hesitation in putting the needs of capital before those of the working class.

Capitalism and welfare 

Marx argues that having workers, including small children, working 14 or 16 hours a day is very wasteful. However, given that individual capitalists themselves won’t do anything about it for fear of losing their competitive advantage over their rivals, the state as the representative of the capitalist class as a whole is forced to step in.

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Discusses the parallels between poor law ideology and the coalition’s current demonisation of the poor. It does not, however, take great political insight to see that the modern equivalent of less eligibility in Britain.

The post-war welfare states 

There was a real sense that the welfare state was a product of class struggle that changed the balance of class forces in Britain.

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For much of the 1950s and 1960s the argument did not seem of central importance. As long as the system was expanding and living standards were rising, as they did in the long boom between the late 1940s and the early 1970s, it was possible for governments in most advanced capitalist countries (including Japan) not only to maintain many of these reforms but also to extend them, regardless of whether social democratic or conservative governments were in office.

Thatcher, neoliberalism and welfare 

Contrary to popular belief, dismantling the welfare state was not a key priority for Thatcher following her election in 1979. There were three reasons for this. First, she had bigger fish to fry, in the form of the trade unions. Second, with British Social Attitudes surveys showing very high levels of popular support for the welfare state, and especially the NHS, throughout her term of office, attacking them directly carried huge electoral risks. Third, contrary to the myths of “Thatcherism” as a coherent

ideology cultivated by some on the left in the 1980s, Thatcher had no clear idea about what to do with the welfare state. The end of the welfare state? 2008 and after 

After the financial crisis, there were many attacks on welfare benefits as there were new taxes introduced that impacted those who would claim benefits.

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There was increased privatisation

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The coalition is indeed exploiting the crisis to push through changes which would be more difficult in “normal” times.

Conclusion 

welfare under capitalism is always provisional. As Saville argued almost 60 years ago, “reforms, whether large or small, have always been opposed by some section of or group within the ruling class; and it has been rare for any reform to be achieved without modification in the interests of the propertied classes or within a short period of time”.

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the commitment of social democratic parties to working within the framework of capitalism means that such parties cannot be trusted to defend the welfare state

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the welfare state can do no more than offer protection against the ravages of a system based on exploitation, oppression and war. That protection is vital and defending it in the current period means above all refusing to allow the ruling class to divide and rule through their scapegoating of the unemployed, immigrants, the sick and the disabled....