Welfare State Capitalst Society

Ramesh Mishra

• Publisher: Routledge
• Year: 2014
• eBook ISBN: 9781317867258
• Edition: 1
• Topic: Politique et relations internationales
• Subtopic: Politique sociale

First published in 1991. The Welfare State in Capitalist Society, uses a methodological approach that draws extensively on comparative material. It presents an analysis of the fortunes of the modern welfare state in conditions of economic and ideological adversity is able to generate propositions of significance; sweeping masterfully over developments on three continents, it distilling a multiplicity of discrete domestic events into a coherent, comprehensible account.

1
The end of post-war consensus: strategies of retrenchment and maintenance

The post-war consensus around the mixed economy and the welfare state, to which almost all advanced Western countries subscribed to a greater or lesser extent, weakened a good deal in the 1970s. The reasons for this breakdown were primarily 'material' rather than 'ideational'. True, in the United States from the late 1960s social scientists and philosophers on the right had begun denigrating the Great Society reforms and were cultivating disillusionment with social engineering itself.¹ More generally, neo-conservative philosophers had begun to counterpose the idea of the minimal state against the liberal Rawlsian notion of social justice which implied a larger role for the government in economic and social matters.² In the United Kingdom, it should be noted, a comparable groundswell of right-wing ideas did not appear until the mid-1970s or even later. On both sides of the Atlantic, however, what enabled neo-conservative ideas to gain a hearing and what eventually created a market for them was the change in material conditions - in short, the advent of stagflation. The combination of inflation and recession was something new and not easily amenable to Keynesian solutions. As economic conditions deteriorated in the West from about the mid-1970s and failed to recover or return to anything like a 'normal' situation, general confidence in the mixed economy and the welfare state pretty much evaporated. Above all, the apparently benevolent role of the state in managing the economy and in financing an ever growing range of social services came under direct attack. This much is history.³

What is important from the viewpoint of this book is the fact that the neo-Keynesian orthodoxy of the post-war years has not been replaced thus far by a new orthodoxy - whether of the right, centre or left. No new 'settlement', or even its lineaments, are in sight. Rather, we have a situation where regimes have responded in a variety of ways to economic problems. On the one hand, we have seen neo-conservative governments in the United Kingdom and the United States apparently determined to carve out a new path for their nations - one which allows more scope for private enterprise and the market and reduces the scope of the state in respect of its economic and social activity. On the other hand, we have the social-democratic corporatist approach (which for convenience we will refer to as 'social-corporatist'), for example in Austria and Sweden, whose main feature is concerted action involving major economic interests and the state, based on a broad consensus on the maintenance of the mixed economy and the welfare state. At the same time it should be pointed out that this is not a new departure in the manner of neo-conservatism. These countries have been following a more or less social-corporatist route since about the late 1960s. However, the significance of this particular approach to managing welfare capitalism has become much more apparent since the collapse of Keynesianism and the resurgence of the New Right.⁴ Thus neo-conservatism and social corporatism may be seen as two distinct responses to the problems and difficulties of welfare capitalism in the 1970s and beyond. Leaving aside purely ideological responses (i.e. Marxism) to the problems of welfare capitalism, the situation in which Western welfare states now find themselves could be summed up as follows. On the right there is the model of neo-conservatism, with its rhetoric and ideology of retrenching social welfare, relying on the private sector and market forces for economic growth and for the provision of various human services. Us objective is to reduce substantially the 'welfare' element of welfare capitalism. On the left, in a practical and not merely theoretical sense, we have the model of social corporatism which has refused to abandon the goals of the post-war welfare state, notably full employment, economic growth and social welfare.

As far as social welfare is concerned, the former might be described as the strategy and policy of retrenching, the latter that of maintaining the welfare state. These two extremes, so to speak, can be seen as the end points of a continuum on which most other welfare states of our times can be situated with respect to their objectives and policies. True, over the last two decades a variety of ideas and social movements relevant to issues of social welfare have arisen which cut across the left-right and public-private divide. These include ecological and other forms of 'post-industrial' as well as feminist movements. But so far these remain somewhat tangential to the ideology and politics of welfare in Western democracies.

It is one thing, however, to profess an ideology of welfare, whether of retrenchment or maintenance. It is quite another to be able to practise it successfully. Thus the Reagan administration came to power with a promise to reduce the government deficit, indeed, to cut back public expenditure and eventually to balance the budget. In the event, under Reagan the budget deficit soared to historically high levels. In the United Kingdom, too, the advent of the Thatcher government saw a rise rather than a fall in social expenditure (see page 34 below). The framework of universal social services, notably education, health care and income security, has also remained largely intact in both the United States and the United Kingdom, notwithstanding neo-conservative rhetoric of privatization and retrenchment of social welfare. On the other hand, social-democratic regimes such as Sweden and Austria, while upholding the principle of collective responsibility for the welfare of the nation, have in practice been obliged to trim social expenditure and accept higher levels of unemployment. These conditions have lent considerable support to a new thesis of convergence or rather structural constraint, which argues that the welfare state is irreversible, right-wing rhetoric notwithstanding.⁵ Is the New Right, then, more bark rather than bite as far as the welfare state is concerned? If so, by the same token the relevance of social corporatism also weakens in that under different ideological flags flown by regimes the reality of social welfare remains pretty much the same. This is an important thesis, and a major interest of this work is to examine this proposition in light of policies and their consequences in the United States and the United Kingdom under neo-conservative regimes and in Sweden and Austria under social-corporatist regimes. While these two pairs of countries can be seen as the most redoubtable exponents of the contrasting approaches we have identified, two other countries, Canada and Australia, will also be examined as candidate members of one or the other of these two policy 'clubs'.

In Canada the Progressive Conservative Party swept to power in 1984 with a landslide majority. Once in office the new government showed a clear propensity for a neo-conservative approach to social welfare. Faced with strong protest, however, it retreated. Does this support the 'irreversibility' thesis or is it the case that, instead of a frontal assault, there is a strategy of piecemeal retrenchment at work in Canada? The question assumes greater importance with the election of Conservatives to a second term of office in 1988 and the subsequent passage of the free trade agreement with the United States.

About a year before Canada elected a Conservative government, Australia moved in the other direction. There a Labour government took office whose economic and social strategy was based on an 'Accord' with the trade unions and a tripartite approach - in short, a form of social corporatism. Indeed, a Labour government in Britain had embarked on a similar 'Social Contract' which broke down irretrievably, sweeping Margaret Thatcher to power.⁶ In light of the failure of the social-corporatist approach in Britain, Australia's attempt to use it as a base for harmonizing the economic and social objectives of welfare capitalism is of considerable interest. At the time of writing (1989) the Australian Accord still holds. Mirroring Thatcher's record, the Labour government in Australia is now also in its third term of office. Has Australian social corporatism been a success? What policies has the social-democratic regime in Australia followed and with what consequences? Does the Australian experience support the view that social corporatism offers an effective means of the defence of the welfare state? In short, the diffusion and operation of neo-conservative and socialcorporatist models beyond the four 'hard-core' countries is also a matter of considerable interest especially from the vantage point of the ideology and practice of social welfare in English-speaking countries.

No doubt social welfare institutions and practices of neo-conservative and social-corporatist regimes are similar in many ways. But the interest of this work lies more in their differences. This interest stems from a theoretical as well as a value standpoint. More generally, it is an approach against determinisms of various sorts and in support of the possibility of choice and change. Far too long in the history of post-war social sciences, especially politics and sociology, global determinism of one kind or another - whether Marxist or otherwise - about social development has occupied centre-stage. The variations, the choices and the options available, even if within limits, have on the whole been played down. From the standpoint of social welfare, in particular, these differences matter a great deal. For policy choices have quite direct and far-reaching value implications for the well-being of individuals. What the breakdown of the Keynesian welfare state paradigm has underlined above all is the possibility of variations; of choice and change in the social organization of industrialized capitalist societies. This is a lesson driven home forcefully by the 'counter-revolution' of the right. But what sort of choice and what kind of change? From the viewpoint of this book, this is the crux of the matter. The policy responses and the models we consider (neo-conservative and social-corporatist) and the countries we examine can together be seen as so many social experiments relevant to the future of social welfare and capitalist democracies. Will neo-conservatism - with its promise of economic growth, higher productivity and voluntary initiative with respect to economic and social welfare - be triumphant and increasingly attract voters and nations to itself? Will this happen because it is able to deliver on its promises or rather from a sense that there are no other options within a capitalist society? Alternatively, will nations such as Sweden and Austria - with their integrated approach, which considers economic and social policy issues as interrelated and which seeks to work through a tripartite form of decision-making - offer an attractive framework within which the essentials of the post-war welfare state may be maintained and perhaps consolidated? Or again will it turn out to be the case, as the 'irreversibility' thesis implies, that, in effect, the structure of the welfare state will remain intact with only minor impairments and differences? These problems have a theoretical as well as a practical interest and various national experiments have an importance that may well extend beyond their boundaries. There may be scope here for 'lesson-learning'.

It is important, however, to acknowledge that policies are made and options exercised within a national context. While social scientists as far apart in time and in theoretical stance as Marx and Titmuss agree that nations can and should learn from each other whether positive or negative lessons - it also remains true that the history of nation-states is characterized by a great deal of cultural and institutional insularity which resists change. Moreover, the structural and cultural configuration that goes to make up a nation-state in its historical continuity makes the nature of 'problems' peculiarly national. By the same token, it makes certain kinds of change and direction more feasible than others. Even so, general models of social organization have several uses. At one level they have a 'demonstration effect' in that they show that certain kinds of social arrangements are feasible and therefore, in principle at any rate, available to all nations. At another level their historical existence and more or less successful functioning induce a critical attitude or at least a comparative frame of reference towards those social arrangements which constitute the status quo.⁷

Comparison implies evaluation, which in turn suggests the possibility of choice and change. The history of social welfare provides many examples of diffusion. In the late nineteenth and early twentieth century, Bismarckian social insurance measures had a considerable 'demonstration effect' not only in European countries, but also in the United States. However distant politically the authoritarian German state was from the liberal-democratic polities of Britain and the United States, there is no denying the impact of Bismarck's pioneering social insurance scheme. Its diffusion was undoubtedly piecemeal and gradual, but clearly there were lessons to be learned and they were learned by nations very different in politics and culture from Germany.⁸ Nearer our time, the emergence of the Keynes-Beveridge welfare state in post-war Britain also had a 'demonstration effect' at least on English-speaking countries, although in its comprehensiveness, institutional features and timing it was a peculiarly British phenomenon. Clearly, the influence is often indirect. 'Diffusion' is not simply a matter of importing institutions in toto. Thus the Beveridge Report inspired the Marsh Report in Canada, which may be described as the blueprint for the Canadian welfare state. But it took Canada more than twenty years to translate some of the principal recommendations of the Marsh Report into social welfare policy.⁹ Today it appears that neo-conservative and social-corporatist approaches to policy-making may be candidates for diffusion. A major objective of this book is to compare these two approaches with respect to their policies and consequences as an aid to lesson-learning.

The intriguing problem of the dialectic between general models and the uniqueness of nation-states is highlighted in the case of the economic crisis of the 1970s and its effect on different nation-states. True, as an economic system capitalism is an international or rather a transnational phenomenon. To speak of the 'crisis' of capitalism is to speak of a system whose field of operation is world-wide and whose problems are generic in nature (unemployment, declining profits, high interest rates, inflation and so on). Yet what is also evident is the 'uneven' nature of capitalist development and the specifics of the crisis in each national setting. The national context, of course, refers not simply to the economy but also to the polity-in short, to the attitudes, values and institutions within a nation-state. Both diachronic and synchronic elements are involved.

A nation has its history - economic, political, and social. At any given moment in time it also has a set of institutions through which it regulates production and distribution, manages conflict, and, more generally, makes societal decisions and maintains social values. The 'crisis' of capitalism therefore takes on a specific form as it impacts on nation-states at different points in the trajectory of their history and development. Take the United Kingdom, for example. Compared with industrial nations generally, the UK's economic performance in the post-war decades has remained sluggish. The 1960s saw a spate of books and an almost continuous debate about the state of the nation. Relatively speaking, Britain was in economic decline. In the late 1960s, joining the EEC looked like a possible way of stopping the downhill slide. But that, too, failed to cure the 'British disease'. Thus when the recession hit capitalist countries in the mid-1970s Britain already had a long history of economic decline. Continuing economic stagnation and the failure of the 'social contract' between the Labour government and trade unions ended in the 'winter of discontent'. Hyperinflation, industrial conflict and, above all, the inability to fashion an effective national consensus over crisis-management and economic recovery was the context in which the British at last turned to a radical brand of conservatism - Thatcherism.¹⁰

Canada provides a useful contrast. Economic growth in Canada was healthy, comparatively speaking, through the 1950s and 1960s. Inflation barely reached double-digit figures in the 1970s (see Table 3, Appendix 2). Compared with the United Kingdom, the unions and the labour movement in Canada have been and remain much weaker.¹¹ Not surprisingly, then, a much higher rate of unemployment has been acceptable than in Britain, thus creating a slack rather than a tight labour market. Canadian governments have found it relatively easy to order striking workers back to work and to impose statutory wage restraint.¹² Moreover, the Canadian economy managed to grow at a healthy rate through the seco...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Dedication
• Contents
• Series editors'preface
• Acknowledgements
• Introduction
• 1 The end of the post-war consensus: strategies of retrenchment and maintenance
• 2 The New Right: retrenching the welfare state in Britain and the United States
• 3 Social corporatism: defending the welfare state in Sweden and Austria
• 4 Social policy and the new models: Canada and Australia
• 5 The welfare state after the 'Crisis'
• Appendix 1 'Welfare state': the problem of definition
• Appendix 2 Tables
• Bibliography
• Index