European Foundations of the Welfare State

Franz-Xaver Kaufmann

• Publisher: Berghahn Books
• Year: 2012
• ISBN:
  9780857454775
• Edition: 1
• Topic: Politik & Internationale Beziehungen
• Subtopic: Sozialpolitik

While social welfare programs, often inspired by international organizations, are spreading throughout the world, the more far-reaching notion of governmental responsibility for the basic well-being of all members of a political society is not, although it remains a feature of Europe and the former British Commonwealth. The welfare state in the European sense is not simply an administrative arrangement of various measures of social protection but a political project embedded in distinct cultural traditions. Offering the first accessible account in English of the historical development of the European idea of the welfare state, this book reviews the intellectual foundations which underpinned the road towards the European welfare state, formulates some basic concepts for its understanding, and highlights the differences in the underlying structural and philosophical conditions between continental Europe and the English-speaking world.

Part I

INTELLECTUAL FOUNDATIONS

Chapter 1

PIONEERS OF SOCIAL REFORMISM

Sismondi, List, Mill

Is There a Classical Way of Thinking about the Welfare State?

The best way to ascertain the nature of a cultural tradition is to reconstruct its history. That reveals the value of talking about ‘classical authors’, those who succinctly articulated the ideas that over time became accepted as leading and influencing a subject. The discussion of classical authors necessarily involves a discourse of historical reconstruction. Only later generations can decide the classical status of texts, which they do according to the perspectives of their own time and not those of the authors. And because the perspectives of those later generations change over time, the perceived value of the classical authors may swing widely.

Like the proverbial owl of Minerva, which spreads its wings only with the falling of the dusk, so systematic reflection on the social or welfare state first emerged in the context of diagnoses of its crisis. The discourse of the crisis of the welfare state arose in neo-Marxist circles at the beginning of the 1970s, but soon widened out after the collapse of the Bretton Woods agreement on exchange rates and the first oil crisis. Since the collapse of the Soviet system, the European model of the social welfare state has lost its role as midpoint between capitalism and socialism, and now has to defend itself against attack by both U.S.-inspired market approaches and the discourse of globalization, which predicts the inescapable demise of the European welfare state. The increasingly unbalanced demographic structure of many European states, especially Germany, adds further plausibility to the crisis scenario.

But what, besides exhausted social budgets, does it mean to talk about the social or welfare state? Jürgen Kaube recently diagnosed a ‘deficit in reflection on the welfare state’ despite some three decades of international welfare state research. What is lacking, he claimed, is

a unitary prior or associated ideology something like the idea of contractual natural law or the doctrine of the dictatorship of the proletariat.… [Additionally, it lacks] any theoretical formulations of ‘justice’, ‘solidarity’ or ‘welfare’ equivalent to those of ‘freedom’ in the theory of natural law, or of ‘equality’ in democratic theory. (Kaube 2003: 44)

Incremental and pragmatic reformism, to which the development of the welfare state can above all be traced, seems to be less clearly delineated and permeated by ideology in comparison with the dominant arguments between the great streams of nineteenth-century ideas – liberalism, conservatism and socialism. Its idealistic foundations in Anglo-Saxon utilitarianism, in Christian Catholic and Lutheran (particularly pietistic) values, and not least in social-democratic reformism, remain heterogeneous and ideologically controversial. Even if there are solid grounds for talking about an international development of the welfare state after the Second World War, this was nationally path-dependent, each country identifying its individual ‘social problems’ and institutional responses based on assumptions reaching far back into its own unique history (Kaufmann 2003c). It is therefore hardly surprising that there is no internationally recognized ‘ideology of the welfare state’, even if the doctrine of fundamental social rights is at least a step in this direction that may become significant as a consequence of globalization (see chapter 4).

Kaube’s observation that there is no coherent body of legitimating ideas and concepts for the welfare state has to be taken seriously. Nevertheless, I want to identify potential classic welfare state thinkers, those whose ideas and concepts should be taken into account in any current theory of the welfare state. To be brief, I mean authors who, in the course of the characteristic nineteenth-century dispute between liberalism and socialism (confidence in the market or in the state), sought a third way, giving credence to the advantages and necessity of both guiding principles, and who (at least implicitly) took account of the core issues of modernization theory, the differentiation and complementarity of society’s functional systems. The history of ideas about national economy generally includes them under the concept of interventionism, which is doubtless an important aspect.¹ But this is misplaced, not only from a sociological perspective but also in the sense of the specificity of phenomena both in the market economy and in political events seen in their total social context. In what follows, the representatives of various disciplines will be referred to in the light of these perspectives.

German Authors

In terms of historical influence, Lorenz von Stein is fundamental, and in this connection his inspiration, Hegel, must not be overlooked (see chapter 2). The development of the welfare state had its origins in dealing with the consequences of liberalization and industrialization, in particular the problems of functional differentiation.² Modern thought on differentiation reaches back to Hegel. Stein was the first to seek out the agency of the ‘state’ and of ‘civil society’ disrupted by class conflict, although he and the other German social policy thinkers were similarly inattentive to the third factor of Hegelian differentiation, namely the family. Nevertheless, Lorenz von Stein was the founder of a theoretical perspective on society that nowadays seems indispensable for a theory of the welfare state.

As the second German classical welfare state thinker I want to propose the ‘state socialist’ Adolph Wagner (see Kaufmann 2003b: 49ff., 65ff.). Wagner’s significance lies not only in his ‘Speech on the Social Question’ (1871), which led to the establishment of the Verein für Socialpolitik (Association for Social Policy), but chiefly in his exposition of the scientific foundations of public finance. Wagner systematically laid out the ‘toolkit’ of what von Stein had called ‘the working state’, paying particular and constant attention to its significance both for the fiscal economy and for social policy. To Wagner, social policy meant influencing the distributive conditions of the social economy in the interests of the disadvantaged classes. Wagner’s science of public finance continues to be seminal for such basic ideas of the social state as progressive income tax and the significance of publicly funded services.

The social democratic jurist Hugo Sinzheimer has almost been excluded from social policy discourse (see Kaufmann 2003b: 87ff.). He did not move in social policy circles, and although it is true that at the time some connections were being made between social law and welfare state development (though hardly with labour law), little support can be expected from jurisprudence. Sinzheimer’s groundbreaking contribution consisted in overcoming the individualistic interpretation of the labour contract as envisaged by Roman law. Following Karl Marx, he described the labour contract as a ‘legalised power relationship’, and in line with German legal traditions he developed the legal model of the ‘corporate agreement on labour standards’ as it has become operative in German laws on labour relations and wage agreements. Sinzheimer was clear about law’s social consequences and therefore promoted a ‘legislative jurisprudence’, or in today’s terminology, a theory of legislation. If with hindsight we can say that Wagner justified the state’s socially formative actions in terms of fiscal theory, Sinzheimer did so on the basis of legal theory.

In recent decades increasing attention has been paid to Eduard Heimann (see Kaufmann 2003b: 113ff.). Apparently unaware of Lorenz von Stein, Heimann published Soziale Theorie des Kapitalismus (The Social Theory of Capitalism), which again raised the problem of social theory and placed the dynamic of capitalism in the context of social and intellectual history. Heimann saw social policy as ‘the institutional sediment of the social idea in capitalism’ (Heimann 1929: 167). He described the ‘social idea’ as the middle and working classes’ common basic values, drawn from Christianity and the Enlightenment. We see here a clear perception of the challenge of capitalism as moulding society and its productive reconfiguration through social policy, though by contrast Heimann lacks a clear concept of the state. In later publications stretching into the 1960s, he examined the connections between cultural and economic development. He was among the first to show explicitly how the class problem would be superseded by the new challenges of capitalism, particularly through the depersonalizing effects of techno-economic rationalism and by environmental hazards.

Few social scientists in Germany after the Second World War interpreted the relations between state and society in the light of the widespread international development of the welfare state that was then taking place. However, Hans Achinger deserves mention, since among other things notably contributed to the integration of institutional welfare and social policy, thereby helping to overcoming the social policy fixation on problems of class and ‘the workers question’. The thrust of his argument is clear from the title of his book, Sozialpolitk als Gesellschaftspolitik – von der Arbeiterfrage zum Wohlfahrtsstaat (Social Policy as Societal Politics: From the Labour Question to the Welfare State) (1958). His writings also sensitized readers to the undesirable side effects of the growing institutionalization of social policy, which were subsequently debated at length under the headings of ‘juridification’ and ‘bureaucratization’. Finally, Achinger (1966) contributed significantly to a sociological engagement with social policy, and outlined important items for a research agenda.

This account of German authors to be assigned to the history of social policy is incomplete without a reference to Friedrich List, the campaigner for the German Tariff Union. List’s theoretical work was in part only rediscovered decades after his death and, perhaps for that reason, has led a shadowy existence in the histories of the various social sciences – unjustly, as will be shown below.

Foreign Authors

Nominations to the list of classical writers on welfare state thought must, of course, also include names from abroad, although until the end of the Weimar Republic the German tradition was at the international forefront of social policy theory. Without doubt this list must include the names of the two Swedish economists Alva and Gunnar Myrdal and the British sociologist, Thomas H. Marshall. The Myrdals were among the first to point to the relationship between demographic trends and social policy, and supported a connection between gender politics and family policy (Myrdal and Myrdal 1934; A. Myrdal 1945). Furthermore, Gunnar Myrdal directed attention to fundamental problems of social policy, in addition to pioneering social policy perspectives on the problems of developing countries (G. Myrdal 1960). In more recent years, Marshall’s theory of ‘citizenship’ and, in this context, its emphasis on social rights as the foundation of social inclusion (1950, 1964), has also been adopted in Germany (Rieger 1992a).

Rather than add further names from this period, I now want to focus in greater detail on three pioneers of welfare state thinking who belonged to a generation in which no mention was made of ‘social policy’ or even of ‘welfare state’.³ Apart from Friedrich List (mentioned above), they are the Swiss Sismondi, highly influential chiefly in francophone circles, and the Englishman John Stuart Mill. None of the three can be ascribed to any particular discipline or was tied to one by university life; rather, they all pursued the Enlightenment ideal of the polymath. In addition, all three developed their relevant social science positions in reaction to Adam Smith and his followers. That is a crucial criterion for inclusion in my list of classical authors, since the governmental and mercantilistic welfare doctrines of the seventeenth and eighteenth centuries were already aware of the relationship between princely policies, the well-being of the subjects and economic and political success; to that extent, reference to the ‘pre-liberal welfare state’ is entirely justified (Dorwart 1971; see chapter 14). What they lacked was awareness of the growing problems that emerge from the increasing independence of the business sphere from the state. This tension, first conceptualized by Hegel, between civil society, the state and the family, is nevertheless theoretically constitutive of all the contemporary problems of what is meant by a welfare state.

Simonde de Sismondi: Distributive Problematics and External Effects

Jean Charles Léonard Simonde was born in Geneva in 1773 and died there in 1842. Throughout his life he was a private scholar and could afford to decline the invitations he received to the universities of Vienna and Paris. To draw attention to his Italian ancestry he added the surname of de Sismondi, and it is under this name that he is known in social science, chiefly as a historian and scholar of political economy. The title of his book (which in this context must be rated a classic), Nouveaux principes d’économie politique: Ou, de las richesse dans ses rapports avec la population (New Principles of Political Economy: Of Wealth in its Relationship to the Population) (1819),⁴ alluded to David Ricardo’s Principles of Political Economy, which had been published two years earlier and represented the first critical discussion of the Adam Smith school. Besides Ricardo, the next significant representative was the Frenchman Jean-Baptiste Say, and together with him Sismondi initially propagated the ideas of Adam Smith in French-speaking circles, in a paper published in 1803. In his later book New Principles of Political Economy (referred to above) he again addressed the ideas of this school, but now in certain respects as a critic:

I separated myself from friends with whom I shared political opinions – I pointed to the dangers of innovations they recommended – I showed that many institutions they had attacked for a long time as evil, had beneficial consequences – and finally, on more than one occasion, I called for the intervention of the state to regulate the progress of wealth, instead of reducing political economy to the simplest and apparently most liberal motto of laisser faire et laisser passer. (Sismondi 1991: 7)

Sismondi’s diagnostic insight was that, under the influence of the first industrial crisis of overproduction in England, he showed the contradictory character of the bourgeois industrial economy: the growing economic change brought about by industrial capital was presented as a threat to the harmonic picture of a civil society of equals. His main contribution to a theory of political economy consists of the systematic differentiation of the problems of production on the one hand and of distribution on the other, which has become seminal for most proposals for social reform. Political economy meant to him ‘the investigation of the means by which the greatest number of men in a given state may participate in the highest degree of physical happiness, so far as it depends on the government’ (Sismondi 1991: 511), and he saw it as the state’s responsibility to ensure a just distribution of the wealth produced. He even professed the principles of Adam Smith’s political economy and explained very clearly its superiority to the mercantile system and the teachings of the physiocrats. But he distanced himself from Smith on one decisive point: that it was not just the gross value of the social product that determined people’s welfare, but the relationship between its size and its distribution. Thus the distinctiveness of distributive issues from allocative issues was first articulated, and on this point a theory of the welfare state is very clearly different from the economics of welfare, since the latter’s reference to Pareto optimalization is concerned only with allocative and not with distributive aspects of economic processes; indeed, the difference is still often not recognized (Sen 1970).

The significance of Sismondi’s argument for social theory resulted from bringing three insights together:

1. That left to its own devices the industrial system tends to overproduction because it concentrates the dominant share of the profits in the hands of some few capitalists while the vast mass of the population receive too little in wages to be able to buy the products. The industrial system continually expands the range of goods on offer while simultaneously bringing about unemployment through the competition for jobs and thus reducing demand. This became the basis of the demands for state involvement in income distribution.

2. Sismondi opposed Malthus’s claim that there was an immanent tendency towards overpopulation, but argued instead that the large size of proletarian families (and here he used the adjective in its original Latin sense) could be ascribed to their poverty, which negated all possibility of security or plans for the future. Sismondi pleaded for a wider distribution of productive resources and support for small business, which would of itself generate a rationalization of reproduction and thus a reduction in population growth.

3. The exploitation of workers – and here Sismondi, in the state of economic development of the time, was thinking of agricultural as well as industrial workers – was the consequence of the dissolution of the ancient obligations of solidarity and mutual protection as they had been laid down both in the feudal system and by the guilds. This ‘emancipation’ enabled employers to overload their workers and to externalize the costs of their illness and disability, since these consequences were now to be the responsibility of the community. Thus Sismondi e...