Welfare in an Idle Society?

Reinventing Retirement, Work, Wealth, Health and Welfare

Bernd Marin

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351873406
• Topic: Politics & International Relations
• Subtopic: Social Work
• Index: Politics & International Relations

The modern welfare state is indeed one of the greatest achievements of the post-war 20th century. With its key aims of eradicating the five giant social ills of Want, Ignorance, Disease, Squalor and Idleness, it aimed to providing a minimum standard of living, with all people of working age paying a weekly contribution; in return, benefits would be paid to anyone who was sick, unemployed, retired or widowed. The modern welfare state, therefore, is about maintaining a delicate equilibrium between dependent social groups on the one hand and the active working classes on the other. In the case of old-age security, this balance is being achieved (or not) by the so-called Generation Contract. This social pact is more of an implicit, unwritten and unspecified social contract. This ground-breaking book demonstrates how countries are addressing population-ageing challenges in depth, using the case study of Austria to gain the required complexity and differentiation in a comparative European framework of empirical evidence. This is a broad social science study in political economy and sociology, not an economic analysis. Though focusing on pensions, it centres on the (im)balance between work and non-work, issues of health, work ability, employability, and benefit receipt from old-age security to disability allowance. It will be required reading for all sociologists and social policy experts and academics working within this area.

Part I
Global Ageing Challenges and 21st Century Austrian Pension Future

I.1 Introduction: The Policy Issues at Stake and the Task in Hand

Inventing the Modern Welfare State

The modern welfare state is indeed one of the greatest achievements of the postwar 20th century - whether from the long-term historical perspective (Flora et al., 1983,1987,1997; Flora and Heidenheimer, 1981; Alber, 1972) or from a comparative historical and theoretical/analytical point of view (Barr, 2001, 2004; Baumol, 1965; de Swaan, 1993; Esping-Andersen, 1985,1990,1999,2009; Giddens, 1998; Goodin, 1988; Goodin and Mitchell, 2000; Lindblom, 1977; Lynch, 2006; Marin, 1990a, 1990b, 1993a; Marshall, 1975, 1977; Matzner, 1982; Pierson, 1994, 2001; Scharpf and Schmidt, 2000; Teubner, 1985; Teubner and Febbrajo, 1992; Titmuss, 1958; Tufte, 1978; Wilensky, 1975, 2002; Wilensky and Turner, 1987). The basic idea of its founding father, Sir William Beveridge, the British social scientist and long-time director of the London School of Economics (LSE), was developed in his famous 1942 report to Parliament on "Social Insurance and Allied Services" and in his book Full Employment in a Free Society (1944).

The key aim was to finally overcome the five giant social ills - Want, Ignorance, Disease, Squalor and Idleness - by providing a minimum standard of living "below which no one should be allowed to fall". The famous "Beveridge Report" proposed that all people of working age (note, not just all people actually working - that was obviously taken for granted!) should pay a weekly contribution; in return, benefits would be paid to anyone who was sick, unemployed, retired or widowed.

Given such a work-and-welfare-focused mindset, voluntary, freely chosen inactivity or minor part-time work by ordinary people of working age was not even regarded as an option worth considering, let alone worth supporting, since idleness was among the social pathologies to be eradicated, not assisted. Being out of work was perceived as a state that was always compelled by work injury, illness, infirmity, mass unemployment or child-rearing obligations; or else was imposed by old age and corresponding incapacity and dependence, handicap and frailty. Pensions, old-age security and health and care services were a social insurance for those either too old or too disabled to work in gainful employment, and who should be maintained by those active in the labour force.

From Eugen Böhm von Bawerk to Karl Renner: The Balance between Dependent Groups and Active Working Classes (Versorgungsklassen vs. Erwerbsklassen)

The modern welfare state, therefore, is about maintaining a delicate equilibrium between dependent social groups on the one hand and the active working classes on the other. The welfare state both initially creates and also simultaneously liberates and cushions dependent classes from harsh exposure to the tough laws of free markets and from commodification (Esping-Andersen, 1985,1990). In the Austrian context, the founding father of the Austrian School of Economics (and also Minister of Finance on repeated occasions between 1895 and 1904), Eugen Böhm von Bawerk, wrote of the tension between the power of the state and economic principles in his 1914 Macht oder ökonomisches Gesetz? ("Control or Economic Law"). Opposing the so-called Historical School (Historische Schule) around Gustav von Schmoller, he supported Carl Menger in the methodological controversy on economics (Methodenstreit der Nationalökonomie). He held that wages are determined by the "economic law" of supply and demand, rather than by the balance of forces between employers and workers. Political intervention by the state cannot overrule such basic economic laws.

A dissenting pupil of Bohm von Bawerk on the left was the Austro-Marxist Otto Bauer, with his notion of a balance of class forces (Bauer, 1923,1924,1934). That is what he labelled the fragile and temporary political and socio-economic equilibrium existing between capital and labour and allowing for negotiated compromise through the state apparatus. Quite a different (and theoretically more topical) concept concerns the balance between productive and dependent population groups - the Erwerbsklassen and the Versorgungsklassen - as conceptualized by the more "right-wing" or centrist Austro-Marxist thinker, Karl Renner.

After the First World War and the fall of the Austro-Hungarian Empire, Renner became the first chancellor (Staatskanzler) of the First Republic and then later the first president of the parliament, before its abolition by the Austro-Fascist corporative state (Ständestaat) in 1933; finally he was the first president of the re-established Federal Republic of Austria after the Second World War and the Nazi annexation (Anschluss). He was also a political leader and one of the ideological masterminds of the pragmatic, moderate or so-called right wing of social democracy and Austro-Marxism. As a scholar, he is still internationally recognized as one of the pre-eminent founders of the sociology of law. Though the notion was subsequently taken up by others, including the liberal thinker Ralf (later Lord) Dahrendorf, Renner it was who conceptualized the solidaristic (or exploitative) relationship between working and non-working population groups using the catchy label of a balance between dependent classes (Versorgungsklassen) and active working classes (Erwerbsklassen), the latter taking care of the former (Renner, 1904/1965a, 1952/1965b, 1953; Dahrendorf, 1959; Lepsius, 1979; Alber, 1984). Tichy (2005: 108, 111) calls them working vs. non-working people, or, in more technical language, sustainer vs. sustained (Erhalter vs. Erhaltene).

Though Renner's concept was also somewhat dependent on a certain balance of forces between capital and labour, it referred rather to a balance or tension between active and non-active, working and non-working classes. The Erwerbsklassen were (and are) a productive, wealth-generating alliance of the working class and the business class - a producer's coalition, a cartel of employers and employees. Politically, they are represented by the social partners. Entrepreneurs and workers together generate the riches that allow the politicians, often together with social partners, to engage in redistribution and to assist dependent population groups, such as children and youth, the elderly, injured and infirm, the ill and disabled, the unemployed, the poor and all others in need of help and social protection.

The many able-bodied, healthy and productive men (originally they were largely men) were, through moderate taxation and marginal levies, supposed to help look after the few in need of medical services and social assistance. But since then, those in gainful employment (in Lohn und Brot); those producing commodities and generating wealth; those paying taxes and making social security contributions - in short, the active population - have come to be outnumbered (even heavily so) by those people who need to be fed and taken care of. The working and middle classes have reached the stage when not just a painful part but indeed most of their earnings are squeezed out of them in the form of taxes, payroll deductions, public charges, etc. Under these new conditions, "welfare as we knew it" (in the words of Bill Clinton) since Beveridge will (or has already) come to an end and cannot survive in the old way.

Going far beyond wage determination through collective bargaining, Bohm von Bawerk's elementary tension between (as the title of one of his essays has it) "Control or Economic Law" (Macht oder ökonomisches Gesetz?) today emerges in ever more varied and ever newer forms - in the challenges presented by the strains between dependent population groups and active working classes (workers, employers and the self-employed) and in the very sustainability of the welfare state. To work or not to work? How much work is indispensable and how much is enough to sustain an elaborate and generous welfare state? Is welfare possible at all without sufficient work? How much demand for welfare is affordable on the back of how great a supply of labour and how much workforce participation? How much idle time in life - and in working age in particular - can be maintained fiscally? How much idleness is compatible with international competitiveness? Is an idle welfare society - a society with a clear majority of Versorgungsklassen, with most of the resident population out of work or gainful employment - even theoretically conceivable? Is it financially sustainable and is it politically desirable? What welfare mix constitutes a sustainable social fabric, balancing wealth production through work and enterprise against health, welfare and other public consumption?

The Generation Contract as a Contrat Social or Social Compact: “Contracting without Contracts”

In the case of old-age security, this balance is being achieved (or not) by the so-called Generation Contract. This social pact is more of an implicit, unwritten and unspecified Contrat Social or social compact, concluded by the state (and occasionally also by collective actors, such as interest organizations of the elderly or trade unions) and binding not only on those they represent, but on all citizens or residents subject to collective bargaining agreements or political deals. Such a collective compact is not a contract according to civil law, enforceable by individuals; rather it is an instance of "contracting without contracts", as I have conceptualized such highly complex, generalized exchange schemes in the area of indu...

Table of contents

• Cover
• Half Title
• Original Title
• Title
• Copyright
• Dedication
• Contents
• Part I: Global Ageing Challenges and 21st Century Austrian Pension Future
• Part II: Doomed to Fail - or Robust, Fair, and Sustainable? Reinventing Social Security, Welfare and Self-Governance
• Part III: Invalidity Pensions - or Disability Insurance?
• Part IV: Women's Work and Pensions: Gender-Sensitive Arrangements
• List of Figures and Tables
• Figures