Understanding the Mixed Economy of Welfare

Martin Powell, Powell, Martin, Martin Powell

• Publisher: Policy Press
• Year: 2019
• eBook ISBN: 9781447333234
• Edition: 2
• Topic: Politik & Internationale Beziehungen
• Subtopic: Sozialpolitik

As the state withdraws from welfare provision, the mixed economy of welfare – involving private, voluntary and informal sectors – has become ever more important. This second edition of Powell's acclaimed textbook on the subject brings together a wealth of respected contributors. New features of this revised edition include:

• An updated perspective on the mixed economy of welfare (MEW) and social division of welfare (SDW) in the context of UK Coalition and Conservative governments

• A conceptual framework that links the MEW and SDW with debates on topics of major current interest such as 'Open Public Services', 'Big Society', Any Qualified Provider', Private Finance Initiative (PFI) and 'Public Private Partnerships' (PPP)

Containing helpful features such as summaries, questions for discussion, further reading suggestions and electronic resources, this will be a valuable introductory resource for students of social policy, social welfare and social work at both undergraduate and postgraduate level.

1

Introduction: the mixed economy of welfare and the social division of welfare

Martin Powell

Overview

This chapter introduces the mixed economy of welfare (MEW) and the social division of welfare (SDW). It points out that these have varied over time and space. It outlines the components of the MEW – state, market, voluntary and informal – and of the SDW – statutory, occupational and fiscal. While the MEW has largely been considered from a one-dimensional view (provision), it is vital to move to a three-dimensional view which also considers finance and regulation.

Key concepts

Mixed economy of welfare; welfare pluralism; social division of welfare; provision; finance; regulation

Introduction

In Essays on ‘the Welfare State’, Richard Titmuss (1963, p 53; note the use of inverted commas) pointed to ‘three different systems of social services’ (social, fiscal and occupational welfare) which ‘are seen to operate as virtually distinct stratified systems’. The Labour politician and author, Frank Field (1981) pointed to Britain’s five welfare states: the traditional welfare state; the tax allowance welfare state; the company welfare state; the private market state; and the unearned income from inherited wealth. This text focuses on these wider welfare states, which tend to be less visible than traditional state or ‘social’ welfare. The distribution of welfare services through a range of social mechanisms beyond the state itself has been termed ‘one of the most important categories in the contemporary study of social policy’ (Spicker, 2008, p 136). However, there seems to be no broadly accepted or dominant term to signal this welfare beyond the state. Different writers point to the mixed economy of welfare (MEW) (eg Murphy, 2006), welfare pluralism (eg Dahlberg, 2005), the welfare mix (eg Lee et al, 2016), the welfare triangle (Pestoff, 2014), the welfare diamond (eg Christensen, 2012) or the care diamond (eg Razavi, 2007). Most writers appear to use these terms broadly interchangeably (Johnson, 1999; Dahlberg, 2005).

Moreover, the MEW and SDW tend to be invisible or hidden. Burchardt and Obolenskaya (2016, p 217) state that the ‘pure public’ (public provision, finance, and decision) segment is what we might consider to be the archetypal post-war British welfare state. Prasad (2016) points to the terms that have been used to describe the ‘indirect’ and ‘private’ American welfare state: hidden, divided, submerged, and invisible. Many mechanisms are ‘invisible’ to citizens in the sense that they are not considered part of government activity of the ‘welfare state’. For example, Mettler (2011) reports the results of surveys and experiments in the USA to show how citizens respond to policies (mostly but not exclusively tax expenditures) from which they benefit. She finds that 60% of respondents who benefit from the home mortgage interest deduction respond that they ‘have not used a government social program’. Similar numbers are found among users of tax-deferred savings plans, the lifetime learning tax credit, government-subsidised student loans, the child and dependent tax credit (CTC), and the earned income tax credit (EITC).

It is ironic that this ‘invisible’ or ‘hidden’ welfare state is largely invisible or hidden in many social policy texts. For example, the terms MEW and SDW, and welfare mix and welfare pluralism, have limited discussion in some introductory texts (eg ; Blakemore and Griggs, 2007; Alcock, 2008; Bochel et al, 2009; Daly, 2011; Dean, 2012; Hudson et al, 2015).

Similarly, there is limited material in recent ‘Handbooks’ on the welfare state. For example, Castles et al (2010) has no index entries, but has chapters on ‘public and private social welfare’ and ‘families versus state and market’, while Greve (2013) contains chapters on fiscal and occupational welfare. Fitzpatrick et al (2010) includes discussions on occupational benefits (occupational welfare), SDW and the welfare mix. The most extended treatments appear in Spicker (2008), and Alcock et al (2016) where a section on ‘welfare production and provision’ has chapters on state, commercial, occupational, tax and voluntary and informal welfare, while Sinclair (2016) has the most extended treatment of the SDW.

Since the first edition of this text in 2007, the MEW and SDW have lived in ‘interesting times’, having seen the terms of the ‘Third Way’ and the ‘Big Society’ largely come and go, but related issues such as privatisation (eg Powell and Miller, 2014) and personalisation (eg Lee et al, 2016) remain important (see other chapters for details).

Giddens (1998) states that the Third Way involved replacing the ‘welfare state’ by a ‘welfare society’ and in which, for example, voluntary organisations are expected to have a more active role in the provision of welfare services. Ellison (2011) points out that although the ‘Big Society’ was introduced in a speech in 2009, some constituent elements such as the need to move from a ‘welfare state’ to a ‘welfare society’ had previously appeared. The ‘Big Society’ involves devolution of power towards private and voluntary sectors, and decentralised civil society (eg Bochel, 2011; Bochel and Powell, 2016).

A number of accounts tend to examine the components of welfare in isolation (eg in separate discussions or chapters – see earlier discussion). Moreover, there are many texts that deal with individual components of the MEW such as the voluntary sector (Rees and Mullins, 2016), the market sector (Drakeford, 2000; Gingrich, 2011) and the community/ informal sectors (eg Deakin, 2001; Taylor, 2003). There are fewer texts that deal with the social division of welfare (SDW) and the occupational and fiscal sectors (Mann, 1989).

However, these accounts tend to deal with the components in individual silos, and tend not to analyse the relationships between them. Moreover, they tend to focus on provision, rather than on the additional dimensions of finance and regulation (discussed later). In other words, the focus has been on the individual trees rather than on the wood. Put another way, while the individual pieces of the jigsaw have been described, there has been little attempt to piece them together in order to see the full picture. This means that, as concepts, the MEW and particularly the SDW have been neglected, and it is hardly surprising that this translates in student essays on the mixed economy and social divisions rather than on the MEW and SDW respectively. One of the few texts that focuses on the MEW remains the pioneering work of Johnson (1987; see also Johnson, 1999).

This text takes a broader sense, examining the traditional sectors of the MEW of state, market, voluntary and informal sectors, but also the SDW of statutory, fiscal and occupational welfare. While much of the book focuses on the elements of the welfare mix, it also aims to stress two major points. First, the mix of the elements in the contemporary British welfare state is not the only or the best way of organising welfare, and the mix has varied over time and space. It has long been recognised that social policy extends far beyond the welfare state, and that the MEW varies significantly over different times, services and spaces. The ‘classic welfare state’ (from roughly the 1940s to the 1970s: see Powell and Hewitt, 2002) tends to be associated with étatiste perspectives, but at certain times commercial, voluntary and informal sectors may be more important (see Chapter Two). Before 1945, sectors other than the state were dominant, and their importance may be increasing again over recent years. While state provision in services such as health and education has been the norm since 1945, housing has been more in the realm of the market.

In terms of variation over space, in some ways the UK experience of the dominance of the state in welfare is unusual compared with other countries, where voluntary and commercial agencies assume much greater importance. For example, at its peak ‘council housing’ in the UK accounted for about a third of all houses, but ‘welfare housing’ in the USA has always been a much more residual service accounting for about 2% of houses. The ‘welfare mix’ is an integral but largely unexplored component in welfare regimes (Esping-Andersen, 1990, 1999; O’Connor et al, 1999; see Chapter Nine). Powell and Barrientos (2004, p 87) argue that ‘the welfare mix constitutes the centre of gravity of welfare regimes’.

Second, while it is important to examine the welfare mix in terms of provision, it is necessary to move beyond this ‘one-dimensional’ account and to examine the other dimensions of finance and regulation. State ownership or provision is not the only or necessarily the best method of state intervention. The state can finance or subsidise non-state providers to ensure that users have access to goods or services at zero or reduced price. For example, many people in private residential homes have their fees partly or fully met by the state. Many charities providing services for groups such as homeless people are funded by local or central government.

Finally, the state can intervene without ownership or finance by using its legal authority to regulate prices or standards. For example, private residential homes are subject to inspection. For many years the government, through rent control, set maximum rents for private landlords letting out property. A full picture of the MEW can, therefore, only be achieved by a ‘three-dimensional’ view involving provision, finance and regulation.

Social policy and the welfare mix

Some discussions differentiate between the descriptive and prescriptive uses of the terms MEW and welfare pluralism (Beresford and Croft, 1984). More recently, Heuer et al (2016) state that, from a conceptual perspective, it is useful to distinguish three uses of the term ‘welfare mix’ in social policy research: analytical (which highlights actors and their constellations in welfare provision); comparative (which examines actor constellations in order to identify institutional arrangements of welfare regimes or policy fields); and normative (which argues for an ideal constellation of actors).

In the descriptive or neutral sense, it is pointed out that there are four components of the MEW, which can vary over time (eg Finlayson, 1994) and space (eg Johnson, 1999; Ascoli and Ranci, 2002) and between sectors (eg Burchardt and Obolenskaya, 2016). For example, some British historians and social policy analysts point out the importance of non-state welfare (see Stewart, Chapter Two). According to Harris (1992, p 116), legislation after the Second World War created in Britain one of the most uniform, centralised, bureaucratic and ‘public’ welfare systems in Europe, and indeed in the modern world. Yet a social analyst of a hundred years ago would have observed and predicted the exact opposite: that the provision of social welfare in Britain was and would continue to be highly localised, amateur, voluntaristic and intimate in scale by comparison with the more coercive and étatiste schemes of her continental neighbours (in particular imperial Germany). According to Lewis (1995, p 3), it may be necessary to rethink the nature of the ‘welfare state’ as, rather than seeing the story of the modern welfare state as a simple increase in state intervention, it is more accurate to see Britain as always having had a mixed economy of welfare, in which the voluntary sector, the family and the market have played different parts at different times. The place of welfare pluralism in the ‘classic welfare state’ remains unclear (eg Finlayson, 1994; Hewitt and Powell, 1998; Powell and Hewitt, 1998).

At one level, the comparative literature reflects the descriptive sense, pointing out that analytically simply focusing on state provision misses much of the picture. Gilbert and Gilbert (1989) write that the ‘direct public expenditure model’ is an important part of the picture, but conveys a somewhat distorted view of welfare benefits and beneficiaries, within a narrow frame of reference. Klein (1985) asks us to consider a mythical country whose government decides to keep public expenditure below 25% of gross nati...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• Detailed contents
• List of boxes, figures and tables
• Notes on contributors
• 1. Introduction: the mixed economy of welfare and the social division of welfare
• 2. The mixed economy of welfare in historical context
• 3. The state
• 4. Market welfare
• 5. Voluntary and community welfare
• 6. Informal welfare
• 7. The benefits and inequalities of fiscal welfare
• 8. Occupational welfare
• 9. The mixed economy of welfare: a comparative perspective
• 10. Conclusion: analyses in the mixed economy of welfare and the social division of welfare