New Labour's State of Health

Political Economy, Public Policy and the NHS

Calum Paton

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351914895
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Social Policy
• Index: Politics & International Relations

In this timely and unique work, Calum Paton assesses the political economy and politics of current health policy in order to explain the underlying causes of problems in the National Health Service. Debates from political theory, political economy and public administration are used to examine health policy made and implemented by New Labour since their election victory in 1997. The author argues that the fundamental nature of health policy is dependent upon the prevailing regime in political economy and also that 'policy overload', contradictions and confusion have rendered the task of coherent implementation very difficult. Although there is implicit comparison, the primary focus is England within the UK (post-devolution), and the book provides a detailed examination of contemporary health policy. Written by an established scholar in the field, it will particularly interest academics, post-graduate students and professionals in health policy, social policy and politics.

Part 1
Political Economy

Chapter 1
Political Economy: Economic Regimes, Political Regimes and Political Economy in Britain

Changing Regime

In a nutshell, the move from the era of 'Keynesian' social democracy to our 'post-Fordist capitalist era of today is the move from an era when redistribution was politically feasible but increasingly impossible economically – to an era when redistribution is economically viable but politically difficult. In the first era of ' Fordism' – with mass production, mass consumption and mass welfare – redistribution was based on 'left-of-centre' electoral and political majorities but increasingly difficult economically. If the 'majority working class' voted itself benefits, the profit margin was squeezed and both Marxist left (Glyn and Sutcliffe, 1972) and monetarist Right (Bacon and Eltis, 1976) agreed that, in this environment, 'centrist' social democracy was untenable.

In the second era, the class structure of 'post-Fordism' was different – composed of separate strata, based on economic niches in both national and international economies, with a few a lot better-off; most a little better-off while working a lot harder; and the 'underclass' (about 10-20%) worse-off and working in unskilled jobs or not at all. In this era, redistribution also meant something different: it was limited to the 'underclass', as the political majority was aspirant and 'right-of-centre' (Galbraith, 1992) and was not seeking 'social benefit' (except for state-funded subsidies to middle-class purchases, such as houses, or what were still universal services such as health and education). Initially, while limited redistribution was economically possible (new wealth and less ambition for the redistribution), it was politically infeasible during the Thatcherite high noon, the 'loadsamoney' 1980s when the devil took the hindmost.

Later however there were both economic and social reasons for doing something about the embarrassing reminder that 'post-Fordism' had a weak underbelly. So redistribution meant 'tidying up the bottom of the heap' or taking the ' 10-20 %' out of poverty and seeking to 'count in' the underclass to the new society of 'permanent revolutionary consumerism', at whatever menial level. Shorn of its rhetoric, the latter was the essence of the New Labour project (hence stealth taxes, minimum wage and tax credits) – to sanitise the Thatcherite dung-heap of its smell without radically altering the structure! In fairness, it has succeeded – although such success is equivocal for a party of the left, in that – once again – Labour's historic mission has translated in practice into making capitalism safe and socially acceptable.

The Origins of Crisis

Incentives for capitalists to invest had diminished as the 1970s moved to 'crisis'. 'Left-of-centre politics' had dominated both Labour and Conservative governments after the 'post-war settlement', from the 1950s to the 1970s. The 'Butskellism' of the 1950s and 1960s (named after the Conservatives Rab Butler and Labour's Hugh Gaitskell (Williams, 1979)) had been followed by Premier Edward Heath's 1972 'U-turn', under pressure from trade unions, which seemed to re-affirm centrism. Social democracy was still (just) viable in terms of electoral behaviour - hence the Labour victories in 1974. albeit with reduced percentages of the vote by comparison with the 1960s.

Things were beginning to fall apart, however; the centre was not holding very well, Britain seemed to be 'against itself' (Beer, 1982), with the centrist orthodoxy challenged from both the left and industrial strong-arming (not the same thing) in the Labour party; and, from 1975 onwards, by a resurgent monetarist right in the Conservative party. It was in other words the 'last chance saloon' for the semi-planned economy, with prices and incomes policies as part of a general political settlement (the trade unions, in Harold Macmillan's phrase, had "never had it so good" but could only finally see that more than two decades later, when the Thatcher 'economic settlement' was confirmed by New Labour.) The electorate had seen, first, the Labour government's and, second, the Tories' industrial relations initiatives undermined by the trade unions; and the 1974 Labour victories were the last chance for a centrist social democracy which – given the climate of militancy – often looked like anything but.

This political regime was however also undermined by the decline of the economic regime. As the economic decline and 'crises' filtered through to political crises, an alternative regime in political economy was increasingly sought by both left and right. This in turn led to a political re-alignment based on an electoral realigmnent.

The politics of 'spending more' came to be replaced by the politics of 'taxing less', as the 'swing voters' from those strata of the working class undergoing 'embourgeoisement' (Goldthorpe et al, 1968) found that (variously) affluence, the prospect of affluence or the illusion of affluence meant a changed calculation as the costs and benefits of tax and spending. In the 1970s, higher wages had often been extorted by industrial muscle – superficially in the name of socialism but actually in the pursuit of sectional benefit. (Brian Abel-Smith, a health policy advisor to Barbara Castle, Health Secretary in the 1970s, had put it nicely in a Fabian pamphlet, "Socialism is about equality; trade-unionism is about differentials.") In the 1980s and 1990s, when Thatcherite economic policy and industrial reform ensured that relative affluence could only be earned not extorted, it was too late: acquiring the latest consumables for the family meant a treadmill from which it was too risky to jump – both for individuals and for classes, with the rise of globalisation and competitive threat to whole industries.

Implications of the New Regime for Health and Welfare

Lower taxes, given the downward pressure on wages in the world economy, became the means by which the middle and even worse-off strata sought a viable income (with more take hone-pay as a result of lower taxes 'outvoting' more social benefit except for those who derived unequivocal net benefit from the latter).

For health, this might have radical implications in theory. For those in work or part of the 'contented majority', why not 'pay as you go', or rather insure yourself, if public insurance or public taxation meant subsidy to the poorer – which was no longer politically necessary (as in the era of the left-of-centre majority). While politics and culture are thankfully never as simple as this, the moral from this possibility was not lost on New Labour. They knew the NHS had to justify every penny. And if it was to please the middle-classes and give them as much 'bang for the buck' for their taxes as insuring themselves privately would do while also redistributing to poor people and public health programmes, it would have to be hyper-efficient.

The question, then, was not: is the NHS more efficient than private alternatives. Of course it is. The question was: is it so much more efficient that it can fulfil a triple mission of pleasing 'middle England' (both health-wise and tax-wise), investing in the economy and reducing health inequalities. The jury is still out – although perhaps understandably it is the first two which have dominated in practice despite ambitions to reduce health inequalities which have not yet been realised. Even the NHS's 'target regime' has diluted the focus on inequalities (See Part 3).

After all, even if public provision is more efficient than private provision, it would still be possible for public services to be privately purchased by insured individuals and groups – the case has to be continually re-made for both public provision and public financing. Indeed New Labour has focussed on the latter, as it believes that private provision 'at the margin and more' may be more efficient.

Political economy's effects upon public policy may be exemplified by health policy as follows. Globalisation and further internationalisation of capital creates particular constraints for regimes of taxation and public expenditure. The provision of healthcare is a means of securing what the Marxist James O'Connor (1973), writing in the 1970s, called social investment as well as 'social expenses'. Investing in healthcare can be investment in the productive process (i.e. labour) and also investment in corporations to give them competitive advantage in the world economy. Either or both may involve the state in a central role. Some countries (such as the UK) use the state both to provide equitable health services and to prioritise health expenditures in line with economic needs.

This premise has a number of implications for an institution such as the National Health Service and for health policy more generally. Investing in the health of individuals or corporations can be carried out privately or through the state. In the United States it is primarily the former; in the UK the latter. If the state has a dominant role, it can be conceptualised as acting either on behalf of all society or on behalf of capital. The latter view is the traditional Marxist view, although it should be noted that it does not necessitate the 'vulgar Marxist' view which has the state as the executive committee of the bourgeoisie. The likelihood today is that, in statist health systems in capitalist society within a global capitalist world, the state will have to balance both roles.

The tensions here can be summed up as follows. Firstly, the international economy calls for low corporate tax, and possibly low personal tax. This in turn necessitates a restrictive regime of 'rationed' healthcare. Yet on the other hand, quite apart from investing in the health of workers to the benefit of the economy (or niches within the international economy), the state may develop a direct or indirect industrial policy to support native industries (whether native to Britain or to Europe), in the light of international competition. Clearly the medical technology and pharmaceutical industry are cases in point. From the viewpoint of government expenditure, it may be important to restrict access to new drugs from the public purse. Yet it may also be important to provide a welcoming home for multinational and national companies for the development of new products.

Secondly, there is also a tension between the classic egalitarian mission of the NHS as defined by socialists and social democrats, on the one hand, and economic investment using statist health services, on the other hand. Add to this the pressures from more virulent consumerism, on the one hand, and more active citizenship, on the other hand, and we can see how an institution such as the NHS becomes financially squeezed irrespective of its 'efficiency'. The question for the NHS is not. 'is it more efficient than alternative systems?'; the real question again, is, 'is it so much more efficient than alternative systems that it can provide both a Fordist service for the mass of the population and also a post-Fordist service for economically privileged niches therein?'

In more concrete terms a variation of the above tension is expressed in the 'antithesis' of curative care and repair, on the one hand, and prevention and promotion on the other hand. Here we find conventional textbooks (eg Ham, 2004) giving a superficial impression of what a Marxist argument would be. The Marxist argument applied to British health services is often referred to through the writing of Navarro – in particular, his 1970s analysis of the National Health Service (op. cit). The NHS is caricatured as high technology medicine for the masses rather than a preventive socialist policy. The alleged rationale is to 'buy off' the masses. A related argument is that it is not complex technology which requires centralisation in health services, but centralisation for political reasons (barely explained) which leads to an emphasis on complex technology.

Both these related arguments are simply wrong. The idea that, in the socialist society, ordinary people will not want access to the most advanced technology is almost anti-diluvian in its naivety, and also deeply patronising. Next, there are 'neutral', planning-based reasons for centralisation and regionalisation of services which make Navarro's argument a caricature. But perhaps most importantly, there is a much more convincing Marxist case to be made about the role of the state in health services. It concerns, in Marxist terms, the extraction of surplus value in public services, to the benefit of the private economy (Paton, 1997).

Thirdly, political economy also affects the nature of employment in a service such as the NHS. There is much debate about whether post-Fordism and the change from the Keynesian National Welfare State to the post-Fordist economy directly affects the nature and organisation of welfare services. (There are of course debates about the validity of the construct of post-Fordism itself. I do not propose to engage with these here.) I argue below that it is misleading to imply that the organisation of the workforce (economy-wide) has immediate parallels for the organisation of the workforce in a service such as the NHS. It is more convincing to depict evolving employment in the NHS as exhibiting characteristics of neo-Fordism rather than post-Fordism. Neo-Fordism may involve mass production, mass consumption and mass welfare - but organised in an integrated manner rather than involving separate employment and contract rights for separate 'guilds' or cadres of workers and professionals which characterised the heavily unionised economy of the 1970s). Thus in the NHS we see employment and labour force initiatives such as 'Agenda for Change' which represent standardisation rather than local flexibility.

An overwhelming reason for the decline of Keynesian National Welfare State (as agreed by both the New Right and the Marxisant Left) was a falling rate of profit in the economy accompanied by inflation which led to a vicious circle in terms of wage demands and legitimacy. Applying national pay norms and conditions across whole industrial sectors which couldn't necessarily afford them was a feature of the old 'regime' which yielded to the post-Fordist economy and flexibility.

The choice had been to reinvigorate capitalism or make a transition to socialism. The latter was never likely. The only political mechanism for effecting it was the Labour Party. While the 'alternative economic strategy' as a left social democratic variant of capitalism had intellectual power (Eatwell, 1982), by the time it was bolted on to the 'left programme' of the Bennites in the Labour Party, it was wholly implausible and unrealistic (Radice, 2002, pp 262-3), and led in the end to 'the longest suicide note in history' (the 1983 Labour Party Manifesto).

The paradox for an institution such as the NHS is that it must be both Fordist and post-Fordist: as Derek Wanless, Gordon Brown's chosen health advisor, has put it, the NHS admittedly cannot provide a five star service, but must produce at least a three star standard (standardised?) service for everyone if it is to meet expectations while also be affordable. The implications for the labour force are neo-Fordist rather than post-Fordist. At the same time, if the NHS is to fulfil its economic as well as its social mission (and also fulfil its 'consumerist' mission for the better off), it must provide differentiated services according to differentiated needs and demands in a more inegalitarian society.

Political Economy, Healthcare and The State

It is not far-fetched to draw a comparison between the political economy of Labour in the late 1920s and early 1930s and Tony Blair's New Labour. Then as now, Labour was obsessed, under Prime Minister McDonald, with appearing fiscally responsible, and was also in hock to the macro- economic orthodoxy of the day. Then it was pre-Keynesian supply-side economics; today it is post-Keynesian supply-side economics. The Third Way, as an economic strategy at least, has proved ephemeral.

Of course the world economy operated differently in some ways. Britain was losing its place as a primary exporter, early in the century; today, Britain has to fight for its share of inward investment. But the meaning is the same for British workers – intensified labour, or unemployment. It might be thought New Labour has an answer to this – education and skills training, to put us at the elite end of today's globalised world economy. But this is as partial a solution as Chancellor Snowden's 'support for export industries' as the answer in 1929. As that unorthodox modern buccaneer James Goldsmith put it (1994), skilled labour in the developing world can still outbid our own labour. Britain gets rich today by 'British' and multi-national companies transferring production abroad – that is, national wealth is defined as profit for capital. And it can get worse than that: as fairly-paid labour is eliminated, demand falls; companies fold; and only the hyper-rich corporations prosper.

For the poor countries of the world ('developing' is a euphemism), globalisation is bringing problems as well as opportunities – and even the latter have a sting in the tail. Some of the problems are of course caused by hypocrisy in parts of the developed world: the rhetoric of open markets is belied by the reality of dumping subsidised goods in poor countries. And markets for primary products from the developing world need to be opened more.

But some problems are intrinsic to capitalist globalisation: elites in poor countries seek to import more expensive but more cost-effective goods from the developed world; in turn elite industries in poor countries are geared to the export market; and there are shrinking national and local economies from which the poor can benefit as producers and consumers. Add to this the expropriation of natural resources through patenting and other devices under the tutelage of the World Trade Organisation, and we realise that, to benefit the poor, globalisation would have to be transformed.

The political constituency for this has to come from the 'losers' in rich countries making common cause with the losers in poor countries. The trouble is that political strategy in the rich countries makes these losers a minority of the voting classes. This can even be true in poor countries, where globalisation can make a critical mass of people 'better-off' but more intensively exploited. Any 'answer' requires global trade rules to be challenged such that industry in the developed world is legitimately protected while markets are opened to legitimately-produced goods from the developing world. This is logically possible but politically very difficult, when the politics of international relations and trade are accounted for – making recent UN shenanigans over Iraq simple by comparison!

Yet if we take material needs (housing; food; education; health; clean environment; work/life balance and related community stability) as the touchstone, many workers and families are actually getting poorer. It is only when we add an obsolete-as-soon-as-it's-invented technology that 'the standard of living is rising for all but the bottom ten per cent' in the West.

Post-Fordism and Public Policy

What was called post-Fordism in the early 1990s was basically the class (economic and social) structures deriving within nations from increasingly international capitalist political economy and the 'regulation' strategies of governments to compete in open markets. This led to literature in political science (state theory) on the alleged 'hollowing out' of the state, now christened the 'Schumpeterian workfare state' (Jessop, 2002) and to the new orthodoxy in public administration of ...