Today the welfare state today is a focal point of intense political controversy. A number of forces have come together to question its viability, efficacy and utility. These forces include the ageing of the population, high levels of unemployment, soaring budget deficits, ascendancy of market forces, privatisation of economic and social activities, and accelerated globalisation and technological change. This essay will look at the different types of welfare provision and the associated struggles over their nature and scope.
I will account for the rise of the welfare state and explain how the idea of social rights leads many to expect a certain level of welfare provision. I will conclude with an assessment of what the future is likely to hold for the welfare state. In order to look at the issues facing welfare provision today, we need to know exactly what we mean by a welfare state. A welfare state involves state responsibility for securing some basic modicum of welfare for its citizens. The basic premise of a welfare state is that the government has the responsibility for the well being of its citizens and that this cannot be entrusted to the individual.
In Britain, the rise of the welfare state came about particularly after WW2, which was centred on the writings in the Social Security and Allied Services in 1942, later known as the Beveridge Report. It proposed schemes that would combat ‘want, disease, ignorance, squalor and idleness’. It saw the consolidation of existing separate schemes for pensions, unemployment and sickness benefits into a universal national insurance scheme, providing ‘cradle to grave benefits’. Instead of a means tested system, flat rate benefits would be paid as of right in return for flat rate contributions.
There would also be a ‘safety net’ of means tested national assistance benefits for those not covered by social insurance. Welfare provision involved a national insurance scheme, which offered a minimum level of income as of right – it provided unemployment benefit for those out of work and pensions for those retired. In 1948 the NHS came into operation which provided free treatment as of right. There was also free and compulsory education to age 14, later extended to 16. Finally, the welfare state saw the extension of public housing with many being provided with council housing.
This welfare state became an intrinsic part of capitalism’s post-war ‘Golden Age’, an era in which prosperity, equality, and Keynesian ideas of full employment via demand management seemed in perfect harmony. The welfare state promised a more universal, classless justice and solidarity of ‘the people’; it was presented as a ray of hope to those who were asked to sacrifice for the common good in the war effort. In all the advanced industrial democracies, the welfare state was a central part of the post-war settlement.
But in order to look at the struggles of welfare provision we need to look at the different types of welfare state, as each type gives rise to different problems. Esping-Andersen argued that welfare states fit broadly into three types. The first of these was liberal. This is based on the principle of selective state benefits for the poor, where benefits are means tested and many are expected to subscribe to private welfare schemes. Health care is provided mainly through insurance and private medicine, with the state funding very basic care for the poor only. Welfare is otherwise seen as the responsibility of the individual, not the state.
This approach is ‘liberal’ because its supporters believe in the freedom and responsibility of the individual. Examples of this model are the US, Canada and Australia. The second type is conservative and includes nations such as Austria, France, Germany and Italy. In these Conservative and strongly ‘corporatist’ welfare states, the liberal obsession with market efficiency was never pre-eminent and, as such, the granting of social rights was hardly ever a seriously contested issue. What predominated was the preservation of status differentials; rights, therefore were attached to class and status.
Finally, the social democratic model was based on the idea that state welfare should be not selective but universal. It should provide benefit for all, irrespective of income and provide a comprehensive range of benefits, including pensions, health care, education and employment. By providing equal access to welfare the welfare state seeks to reduce the inequality generated by market forces. Esping Andersen argued this saw the decommodification of welfare, which essentially means making people’s welfare independent of the market.
Decommodification occurs when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market. But what accounts for the rise of the welfare states and why have its struggles become endemic to modern society? T H Marshall (1950) argued that social citizenship constitutes the core idea of a welfare state. Marshall argued we could see the rise of the welfare state as an extension in the nature of citizenship, linked to a broad historical change in the nature of rights as we as citizens can legitimately claim.
Marshall drew a distinction between three types of rights: civil rights are those basic legal and constitutional rights such as freedom of speech and association. Political are those rights to participate in political process and to vote. Social rights are where citizens can count on the provision of basic levels of education, health and social security. Marshall argued that over the past 300 years there has been an evolutionary process of the expansion of citizenship rights in Britain, where in the 20th century citizenship expanded to include social rights.
Britain favoured the social democratic model of welfare provision after the war as it saw that its citizens should be entitled to these social rights. Thus, the idea that citizens are entitled to these social rights has meant that people demand a certain level of welfare and any struggles over its provision becomes an important issue to modern society. Esping-Andersen explains further that in Britain the rise of the welfare state is associated with the forming of coalitions with the new middle white class. With the middle class having an investment in the welfare state, its nature and struggles become much more endemic to society.
The struggles over the nature and scope of welfare states can be traced back to the early 1970s. By the 1970s many welfare states were coming under increasing pressure. High unemployment combined with slow growth created huge demands on Britain’s welfare state. In particular people spoke of a fiscal crisis whereby spending outstripped revenues increasing the PSBR. The typical ratio of general government outlays to GDP rose from 35% in 1970 to over 50% in the early 1990s. Thus the capacity of governments to finance welfare became an increasing problem.
The increasing pressure on the welfare state led to attacks from both the Left and Right. The rise of the New Right and Public Choice theory argued that excessively large bureaucracies are inefficient and that whole sectors of social provision are shielded from the discipline of the market, creating wastage and inefficiency. They argued that the welfare state could actually exacerbate poverty with poverty traps and cycles of dependency created. Bacon and Eltis (‘Britain’s economic problem’) argued that resources could be better used for productive services and that growth crowded out private sector investment.
From the left came criticisms from Habermas and Offe, who argued that because the welfare state cannot live up to its promises, people lose faith. The demand for welfare constantly outstrips the ability to pay and the state is faced with a legitimation crisis. In the 1970s Conservative governments came to power, which were committed to rolling back the welfare state and curtailing expenditure. Thus in the 1970s, there was a shift from the social democratic to the liberal route.
Thatcher and Regan of the Republican Party pursued neoliberal policies aimed at cutting back the welfare state as they argued that the welfare state failed to target resources on the most needy and lessened the recipient’s sense of personal reliance and responsibility, creating a ‘dependency culture’. Thatherties reformed in an attempt both to target benefits on the most needy and also to ensure that the provision of welfare did not erode the recipient’s incentive to work. Internal markets in the NHS were used and opting out in education was designed to increase efficiency and responsiveness to consumers.
But why is it that despite attempts to ‘roll back the state’ in the 1970s, social expenditure has roughly maintained its share of economic output in many countries? For example, in 1996, the last full year of the Conservative government, the share of the GDP spent on state funded welfare services was somewhat greater than in 1974 – it accounted for a quarter of all spending in the economy. Pierson argues that retrenchment is a distinctive and difficult political enterprise – it is not a simple mirror image of welfare state expansion.
Citizens remain fiercely attached to public social provision and new interest groups have become increasingly well organised and mobilised to defend interest when there is a need to cut back. Also public support makes it very hard for government to pursue a determined policy of retrenchment. Further struggles over the nature and scope of welfare provision have been dominated by a concern with the consequences of population ageing. It has been widely argued that the burden of the state pension will become insupportable as the proportions of old people in the population increases.
The increase in the elderly dependence ratio results from greater longevity, which will raise the number of old people, and past declines in the birth rate, which will gradually reduce the size of the working population. This problem raises questions of whether pensions in the future will provide an adequate standard of living. Other social changes such as families becoming less stable, a rise in lone parenthood and divorce rates, a rise in female labour force participation and part time work, mean that problems arise for a social insurance system originally designed for a labour market dominated by full time male employee breadwinners.
There is further argument that increasing global integration reduces all government’s room for manoeuvre. Is Britain merely conforming to global tendencies that are moving all countries away from the welfare state model of state welfare? It has been argued that countries can no longer afford a welfare state in a world of increasing international competition. It has put pressure on those countries who have higher costs and thus are outcompeted by NICs with low cost competition.
Furthermore, increased mobility of capital means that any country which adopts welfare policies judged to diminish competitiveness is likely to find money leaving its shores for lower cost and safer places. These ideas are reflected in New Labour’s concentration on the supply side of the economy. New Labour believes that we are in a post fordist world where new skills are required and there is a need for a highly skilled work force to ensure domestic industry is competitive. They emphasise that flexible labour markets and low tax will attract investment, create jobs and economic growth.
New labour further argues that people who claim unemployment benefits should also have obligations which is reflected in their Welfare to work programme – unemployment benefit is now conditional on entering unemployment schemes and on seeing work. Education, work training and work experience should be taken up to achieve the necessary skills. However, current fears are turning to the issue of private provision with New Labour increasingly placing emphasis on the private sector. What then is likely to be the future of welfare provision?
Those who predict the imminent demise of welfare state have probably overstated the case. In the future, the welfare state is likely to remain along with intensifying pressures. It is not likely to be radically dismantled but rather subject to continuous restructuring. It is likely that governments need to shift the costs back onto individual and the market – to reverse logic of decommodification that lies at the heart of he welfare state. In conclusion, struggles over the nature and scope of welfare have taken many forms.
Problems over funding are exacerbated by demographic trends and international pressures. These problems have become endemic features of contemporary societies as not only the working class, but middle classes now expect a certain level of welfare provision in accordance with the extension of social rights. However, governments have been under intense pressure to cut back welfare as criticisms of their efficiency and viability arose. But despite efforts to cut back spending, welfare states have remained remarkably resilient and are likely to remain in the future.