From Dissonance to Sense

Welfare State Expectations, Privatisation and Private Law

Thomas Wilhelmsson, Samuli Hurri

• Publisher: Routledge
• Year: 2019
• eBook ISBN: 9780429802225
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

First published in 1999, this book focuses on the new role of private law in late modernity. It analyses the pressures for changes in this area of law due to the present processes of privatisation and marketisation. The perspective is welfarist: in what ways and to what extent can the welfare state expectations of the citizens be defended through private law mechanisms when state-offered security is diminishing? Which alternatives are available when developing private law? The questions are discussed against the background of theories concerning important features of late modern society, for example consumerism, risk, information, globalisation and fragmentation. Several fields of private law are analysed, such as private law theory, tort and liability law, contract law and credit law as well as access to justice issues. The approach is comparative, including analyses of both common law and continental law.

Part I

Introduction

1 Welfare State Expectations, Privatisation and Private Law

Thomas Wilhelmsson

1. Perspective

At the end of the millenium the conditions and the future of the welfare state – or, more correctly, of the various types of welfare states existing in various parts of the developed world – have become one among the key issues of social research and discussion. Some have seen the welfare state as modernity’s last project, its last Great Narrative, which is inevitably proceeding towards its demise, while others tend instead to speak of changing conceptions of welfare in late modern societies. Be that as it may, there seems to be rather broad recognition of the fact that profound, even paradigmatic changes with respect to the production and distribution of welfare are taking place in our societies.

Although social scientists always tend to discover profound changes, or even crises,¹ in their societies precisely at the time they are writing, no one would probably contest the fact that we are living in an age of complete social reorganisation (or deorganisation). Many of the traditional, self-evident starting points in our understanding of society have given way or are about to give way to new approaches. These new features have often been reflected in concepts beginning with ‘post-’ or ‘late’. There is of course no consensus among the authors concerning the adequacy of such concepts. For example, there are different approaches to ‘postmodernism’. Whilst Jørgen Dalberg-Lars en analyses the role of the postmodern jurist in postmodern society, Kaarlo Tuori denies that modern law has been replaced by something called postmodern law. In his opinion, in order to speak of a new postmodern law one would have to show that the deep structure of this allegedly emerging type of law differs from that of its predecessor, which is not the case. Instead, what we are experiencing today is, in his opinion, rather a coming of age, a final maturation of modern law. In this introductory chapter I will not take any stand on which term I would prefer, but will use the terms in accordance with the language of each respective author.²

Those changes of society and law which are more directly connected with the future of the welfare state can be expressed as a reorganisation of the relationship between state, market and civil society.³ The state is the target of ideological attack, and on the surface level of concrete restructuring measures one encounters various methods of privatisation or marketisation:⁴ the ownership of the state is reduced through (genuine) privatisation; public functions are contracted out to private entities; public functions are reduced, leaving the service to be offered on the market; considerations of economic outcomes and other market-oriented mechanisms are introduced into the public sector; social security is reduced, putting more responsibility on market-based solutions and the family; and regulated branches of industry and commerce as well as international trade and financial markets are deregulated. All this contributes to the reduction of social security.

The social problems connected with such measures – the deepening of the differences between groups and classes in society and the reduction of social justice in general – are much discussed and have also to some extent been the subject of empirical research. The results need not be repeated here. Instead, this book focuses on the question whether this development is inevitable or whether there is still room for a social –meaning welfarist⁵ – approach to society and what such an approach could mean under present conditions. As the problems of the welfare state have not necessarily removed – but may have altered – the welfare expectations of the citizens, the question is how such expectations can be fulfilled at the beginning of the next millenium, in spite of these problems.

Zygmunt Bauman claims that there are ‘two sharply opposed versions of postmodern tolerance’, namely indifference and solidarity (Bauman 1992, xxiii). In this book the focus is on the opportunities and ways to choose the second path.⁶ What can be done to promote solidarity⁷ under contemporary conditions for those living now and for future generations.

An established way to speak of the contemporary disintegrated and partly privatised welfare solutions is to speak of a welfare mix or a welfare pluralism. The proponents of such conceptions see a combination of resources of the state and the market which together provide the expected level of welfare. Such a ‘mix’ has always existed, and it certainly exists today. The ingredients of the mix can also be expected to multiply in a disintegrating society. The interesting question is therefore not whether one should have a mix, but rather what the contents and proportions of the ingredients in the mix should be. Can we create recipes for mixes, including their contents as well as the procedure for preparing the mix, which could contribute to the preservation of welfarist values in a changed environment?

The idea of this book is to look especially at those parts of the mix which are or could be offered by the market or the civil society (including the family). In legal terms this means that it focuses on these changes from the perspective of private law: what are the implications for private law of the decline or metamorphosis of the welfare state?

At this early point, however, it should be underlined that private law as an isolated phenomenon cannot be the subject of this study. As will be demonstrated later, one very well known feature of the development of the welfare state is the withering away of the private/public law distinction combined with thorough reclassifications of materials within the remnants of this dichotomy. Such developments are lost from view if one focuses only on private law. The subject of this study could therefore rather be described as the development of the legal structures, analysed from a private law perspective. This perspective includes both content and method, that is, both the substance of the law as well as developments in legal reasoning.

The perspective is on the future. In all research undertaken from this temporal perspective, forecasting and wishing are inseparably linked together: realistic wishes take account of forecasts and forecasts always contain wishes. The approach in this book is therefore both empirical and normative, with an emphasis on the latter. It is not only a question of how society and law work at present and most likely will function at the beginning of the next millenium, but rather an analysis of the directions in which one could and should try to push the development. Although the collapse of the socialist project destroyed the credibility of Utopian thinking, there is still a need for normative models of social activity. The Great Utopian Narratives are dead – or perhaps only temporarily paralysed – but small good stories on possible change can still be told. The book contains a collection of such stories.

The legal perspective may seem an odd starting point for this endeavour. However, as ethical systems and science seem to have lost their trustworthiness in our times as the prime guides for social development, the law may offer a method of practical learning which is needed to imagine new opportunities for beneficial changes in society. Legal analysis is said to have the potential ‘to become a master tool of institutional imagination in a democratic society’ (Unger, 1996, 1). It can provide the instruments for connecting pure Utopian thinking with the concrete opportunities of today. Pieces of law and legal development can be used as parts of the data one needs for mapping⁸ these opportunities. Law can offer the materials needed for creating new small Utopian stories.

Of course this job cannot be done by pure black-letter law. On the contrary, the practical learning through law has to take place in the context of contemporary social and ethical discourse. Utopian legal analysis, in other words, transcends the boundaries of traditional legal dogmatics. It is an analysis that allows for institutional experiments; regards deviations and contradictions as materials for alternative constructions; identifies in the ‘small and fragmentary alternatives the possible beginnings of larger alternatives’; and sees ‘in some of these solutions the germs of a market economy and of a system of private law distinct from the ones established in the contemporary industrial democracies’ (Unger, 1996, 7 and 13). It is a question of finding and bringing to the fore the critical instances of new thinking existing in and suppressed by the bulk of traditional legal materials. These fragments of alternative patterns of thinking, appearing, for example, in odd cases, offer gateways to new but nevertheless realistic visions of law and society.

The connection with legal analysis makes the new modes of thought legal visions. In relation to law their perspective is therefore internal. They participate in and affect the ideological struggle within the law. It is a question of using ‘the self-identity of law to produce criteria for its own transformation’ (Teubner, 1986, 301).

2. Problems and Opportunities

2.1 Introduction

In social theory discourse the contemporary changes in our societies have been explained in various ways and have been seen to have various consequences. The relations between those factors and the changes are often complicated. What from one perspective appears as a cause or a reason for a change may from another angle be regarded as the result of the change. Because of these dialectical relationships one could rather speak about features connected with the changes. In the following I will note some such very general features. These features are well known and even taken as more or less self-evident in modern social theory. A short summary is, however, required to structure the basic topography of the map on which the sought-for new opportunities will be drawn. Mainly it is a question of expressing a few catchwords to which the discussion of the legal perspectives can relate. This sketch illustrates the kinds of phenomena that have been thought of as important in the research project behind this volume.

The perspective, as noted above, is the welfarist one: what are the most important features connected with the changes in the production and distribution of welfare? From one point of view one could label these features the problems of the welfare state. However, as will be noted below, each ‘problem’ contains new opportunities as well.

2.2 The Alleged Overburdening of the State

Some claim that the most apparent and basic contradiction of the welfare state is the growing gap between the welfare expectations of the citizens and the capacity of the state to provide welfare. The growth of the welfare expectations is in principle unlimited at the same time that the growth of the material resources is not. A popular example is the development of medical science and technology: the invention of ever more advanced and more expensive methods of treatment creates demands which cannot be fulfilled within available economical resources. The problem of the welfare state is said to be the confrontation of a limited system with an unlimited demand (Foucault, 1983). From the point of view of system theory the picture has been characterised as a political system making excessive demands on itself (Luhmann, 1981). This alleged contradiction obviously becomes acute during an economic crisis. In such a situation even limited demands can be labelled as excessive. The public spending deficits and, in Europe, the strict requirements related to the EMU have contributed to this picture of conflict between demand and resources.

The claim that the welfare state has outgrown its possibilities does not refer, however, to economical factors alone. The problems are seen as organisational as well. The growth of bureaucracy and inefficiency are often underlined, with or without justification.

At least some of the criticism of the welfare state is certainly ideological in the negative sense, as there does not seem to be any clear correlation between welfarism and economic inefficiency (Pfaller & Gough, 1991). Accordingly, in her paper Anna Christensen is skeptical of the thesis that the welfare state is ‘withering away’, as there presently is no alternative way for maintaining the pattern of basic subsistence.

Be this as it may, the gap between the expectations of the citizens and the services rendered by the state can be assumed to be growing not so much as a consequence of growing demands but rather because of a diminishing production of public welfare. This should not only be regarded as a threat; it can also be a basis of new opportunities. It may produce new demands for welfare on other parts of society besides the public sector, such as the market and the so-called third sector (the nonprofit organisations).⁹ It brings to the fore the question to what extent the gap can be closed by fulfilling the expectations through other mechanisms than the public budget. It focuses the attention on questions such as those asked in this book.

A new social model, in which the welfare expectations are incorporated into market-oriented thinking, has been developed by Udo Reifner (1996), inspired by Amitai Etzioni (1988, 1993), in the idea of a ‘social and ecological market economy’. It is, according to him, a false starting point to see the state and the market as opposites. The dismantling of the social state as an institution does not necessarily imply a reduction of solidarity functions if one is able to overcome the traditional division of labour between the productive market economy and the compensatory social state. This again requires that qualitative goals are introduced in business life. The market economy has to learn to construe the fulfillment of social and ecological goals as profit, while the political arena must learn to use profit to reach these goals. In this context Reifner has underlined the important role of financial institutions, such as banks and insurance companies, in the functioning of the market economy. This is why concepts like ‘ethical investment’ and ‘community investment’ become important. To some extent such institutions might feel compelled to act in an ethical way.¹⁰ However, as this certainly is not the rule, one has to ask how these institutions can be directed to invest in objects which are socially beneficial, or rather, how the market economy can be reorganised so that it is profitable for the institutions to make their investments in this way. Reifner sees an important role for private law in this context; he has mentioned competition law, corporation law and tort law, as well as rules on information, as fields to be developed.

In his paper in this volume Udo Reifner develops these ideas with special focus on contract law. He emphasises the need for modern societies to integrate the social elements into the real exchange mechanisms. He sees the welfare state as an interim solution which was developed as an answer to the challenges posed by the labour movement. ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Table of Articles
• Contributor
• Preface
• Part I Introduction
• Part II Privatisation, Society and Law
• Part III Privatisation and Private Law Theory
• Part IV Privatisation and Liability
• Part V Privatisation and Contract
• Part VII Privatisation and Environment
• Part VIII Privatisation and Access to Justice
• Part IX Epilogue