Political Concept of Welfare

Since the early twentieth century, debate about equality and social justice has tended to focus on the issue of welfare. In its simplest form, ‘welfare’ refers to happiness, prosperity and well-being in general; it implies not mere physical survival but some measure of health and contentment as well. As such, ‘general well-being’ is an almost universally accepted political ideal: few political parties would wish to be associated with the prospect of poverty and deprivation. Although there is clearly room to debate what in fact constitutes ‘well-being’, ‘prosperity’ or ‘happiness’, what gives the concept of welfare its genuinely contentious character is that it has come to be linked to a particular means of achieving general well-being: collectively provided welfare, delivered by government through what is called the ‘welfare state’. The welfare state is linked to the idea of equality in that, in broad terms, it aims to secure a basic level of equal well-being for all citizens. In many cases it is also seen as one of the basic requirements of social justice, at least from the perspective of needs theorists. Nevertheless, there is a sense in which welfare is a narrower concept than either equality or social justice. Whereas theories of social justice usually relate to how the whole cake of society’s resources is distributed, the notion of welfare is more concerned with providing a minimum quality of life for all, accepting that much wealth and income is distributed through the market.

In political debate, welfare is invariably a collectivist principle, standing for the belief that government has a responsibility to promote the social well-being of its citizens. This principle of welfare is sometimes termed ‘social welfare’. However, two other principles of welfare have been employed, each of which continues to be relevant to ideological debate. The first is the individualist theory of welfare, which holds that general well-being is more likely to result from the pursuit of individual self-interest, regulated by the market, than it is from any system of public provision. This notion of ‘welfare individualism’, is rooted in the classical economics of Adam Smith but has been revived by New Right thinkers such as Hayek and Friedman. Second, attempts have been made to develop a ‘third way’ in welfare thinking. This seeks a balance between collectivism and individualism, based upon the recognition that citizens have both welfare rights and moral responsibilities.

Welfare, Poverty and Social Exclusion

The term welfare state came into being in the twentieth century to describe the broader social responsibilities of government. However, the term is used in at least two contrasting senses, one broad, the other narrow. The broad meaning, in the form of ‘a welfare state’, draws attention to the provision of welfare as a prominent, if not the predominant, function of the state. This is how William Temple, Archbishop of York, first used the term in English in 1941 to distinguish Western ‘welfare states’, orientated around the promotion of social well-being, from what he called the ‘power states’ of Nazi Germany and Stalinist Russia. This is also the sense in which modern welfare states can be contrasted with the minimal or ‘nightwatchman’ states of the nineteenth century, whose domestic functions were largely confined to the maintenance of domestic order. More commonly, however, the term is used in the form of ‘the welfare state’ to describe the policies and, more specifically, the institutions through which the goal of welfare is delivered. Thus institutions like the social security system, health service and public education are often referred to collectively as ‘the welfare state’. This is also the sense in which it is possible to refer to the welfare state expanding or diminishing as government either assumes broader social responsibilities or relinquishes them.

It is sometimes difficult, however, to determine which institutions and policies can be said to be part of the welfare state in the narrow sense, because a very wide range of public policies can be said to have a ‘welfare’ goal. The most common image of the welfare state is of positive welfare provision, the delivery of services such as pensions, benefits, housing, health and education, which the market either does not provide or does not provide adequately. In this sense, the welfare state is an attempt to supplement or, in some cases, replace a system of private provision. This was the form of welfare state constructed in the postwar period in the UK, modelled on the Beveridge Report (1942), and subsequently adopted throughout much of Western Europe. Such a system of positive welfare provision was developed most fully in countries such as Sweden and Germany in the early post-1945 period. However, welfare provision can also be negative, in the sense that it attempts to promote social well-being not by the provision of services but through the regulation of market behaviour. For example, any attempt by government to influence working conditions – legal protection for trade unions in industrial action, minimum wage legislation and regulations about health and safety – can be said to serve a welfare purpose.

However, it is often difficult to determine if a state is, or has, a welfare state. This problem is particularly apparent in the USA. On the one hand, the USA clearly does not possess the developed and comprehensive institutions found in certain European states; on the other, however, a wide range of benefits are available in the form of social insurance, based upon the Social Security Act 1935, Medicare and Medicaid, the food stamps programme and so forth. Following Gosta Esping-Anderson (1990), it is possible to identify three distinct forms of welfare provision found in developed industrialized states. The US, Canadian and Australian systems can be described as liberal (or limited) welfare states since they aim to provide little more than a ‘safety net’ for those in need. In countries such as Germany, conservative (or corporate) welfare states provide a more extensive range of services but depend heavily on the ‘paying in’ principle and link benefit closely to jobs. Social-democratic (or Beveridge) welfare states, such as the classical Swedish and the original UK system, are, by contrast, based upon universal benefits and the maintenance of full employment. Nevertheless, the distinction between these models has become increasingly blurred since the 1980s and 1990s, as a result of widespread programmes of welfare reform. These are discussed in the final section of the chapter.

All systems of welfare, however, are concerned with the question of poverty. Although welfare states may address broader and more ambitious goals, the eradication of poverty is their most fundamental objective. However, what is ‘poverty’? On the face of it, poverty means being deprived of the ‘necessities of life’, sufficient food, fuel and clothing to maintain ‘physical efficiency’. In its original sense, this was seen as an absolute standard, below which human existence became difficult to sustain. According to this view, poverty hardly exists in developed industrialized states like the USA, Canada, the UK and Australia; even the poor in such countries live better than much of the world’s population. However, to regard as ‘poor’ only those who are starving is to ignore the fact that poverty may also consist in being deprived of the standards, conditions and pleasures enjoyed by the majority in society. This is the notion of relative poverty, defined by Peter Townsend (1974) as not having ‘the living conditions and amenities which are customary, or at least widely encouraged and approved, in the society to which they belong’. In this sense, the poor are the ‘less well-off’ rather than the ‘needy’. The concept of relative poverty, however, raises important political questions because it establishes a link between poverty and inequality, and in so doing suggests that the welfare state’s task of eradicating poverty can only be achieved through the redistribution of wealth and the promotion of social equality. The definition of poverty is therefore one of the most contentious issues in the area of welfare provision.

Modern debates about welfare, however, often focus upon the issue of social exclusion rather than the traditional problem of poverty. Poverty, from this point of view, has two important implications. First, it implies that disadvantage is an essentially economic issue linked to material deprivation, whether absolute or relative. Second, poverty suggests that disadvantage is a structural matter, in that the poor are, in effect, the ‘victims’ of some form of social injustice. ‘Social exclusion’, on the other hand, is a broader concept: it is about all the processes and conditions that detach individuals and groups from the social mainstream. The socially excluded thus suffer from multiple deprivation, in that, although they may be materially poor, they may also be marginalized by educational failure, crime and anti-social behaviour, a dysfunctional family environment, or the absence of the work ethic. In short, cultural factors may be as important as material ones in explaining social disadvantage. The lan-guage of social exclusion has shifted thinking on welfare in important ways. For instance, whereas a concern with poverty tends to link the provision of welfare to the pursuit of social equality through the redis-tribution of wealth, a concern with social exclusion is more commonly associated with the pursuit of equality of opportunity and the redistribu-tion not of wealth but of life-chances. Equality is therefore redefined as social inclusion. Moreover, traditional welfare systems have to be sig-nificantly rethought to take account of deprivation as a cultural, social and even moral phenomenon and not merely an economic one.

In Praise of Welfare

Welfarism, in its traditional sense, is the belief that social well-being is properly the responsibility of the community and that this responsibility should be met through government. In the post-1945 period a ‘welfare consensus’ developed in most Western liberal democracies, which saw parties of the left, right and centre competing to establish their welfarist credentials, disagreeing with one another only on matters of detail like funding, structure and organization. Without doubt, this consensus was underpinned by powerful electoral factors, as a large body of voters recognized that the welfare state provided social safeguards which free market capitalism could never match. Nevertheless, welfarism is by no means a coherent philosophy. Although liberals, conservatives and socialists have each recognized its attractions, they have often been drawn to welfare by different considerations and have endorsed different systems of welfare provision.

One of the earliest reasons for interest in social welfare had more to do with national efficiency than with principles like justice and equality. When a country’s workforce is sickly and undernourished it is in no position to build up a prosperous economy, still less to develop an effective army. It is therefore no coincidence that in countries like Germany and the UK the foundations of the welfare state were laid during a period of international rivalry and colonial expansion, the period leading up to the outbreak of the First World War. The first modern welfare state developed in Germany in the 1880s under Chancellor Bismarck, featuring a system of medical and accident insurance, sick pay and old-age pensions. Britain’s response, under the Asquith Liberal government after 1906, was dictated by growing apprehension about German power, highlighted by the discovery during the Boer War (1899–1902) that a large proportion of working-class conscripts were unfit for military service. Although such motives have little to do with altruism and compassion, it can clearly be argued that in the long run a healthy and productive workforce is beneficial for the whole of society. Indeed, it is often suggested that the growth of social welfare is linked to a particular stage of economic development. Whereas early industrialization makes use of a largely unskilled, unthinking manual workforce, further industrial progress requires educated and trained workers, who are capable of understanding and utilising modern technology. It is the function of the welfare state to bring such a workforce into existence.

Welfare has also been linked to the prospect of social cohesion and national unity. This concern has been close to the heart of conservative thinkers, who have feared that grinding poverty and social deprivation will generate civil unrest and, possibly, revolution. Such considerations helped to advance the cause of social reform in mid-nineteenth-century Britain, often associated with the Conservative statesman Benjamin Disraeli (1804–80). Disraeli was acutely aware that industrial progress brought with it the danger of strife and social bitterness, the prospect of Britain being divided into ‘two nations: the Rich and the Poor’. As prime minister, Disraeli therefore introduced a programme of social reforms, including improvements in housing conditions and hygiene, which contrasted sharply with the laissez-faire policies still advocated by the Liberal Party. Similar motives also influenced the advance of welfare provision in Germany. Bismarck, for example, believed he was confronting a ‘Red menace’, and supported welfare in a deliberate attempt to wean the masses away from socialism by improving their living and working conditions. This conservative welfare tradition is based upon a combination of prudence and paternalism. It is undoubtedly concerned to alleviate material hardship, but only to the point where the working masses cease to pose a threat to the prosperous minority. Moreover, this form of welfarism is entirely compatible with the survival of hierarchy: it can be seen as an attempt to uphold social inequality rather than eradicate it. Welfare paternalism is based upon neo-feudal principles like noblesse oblige, which imply that it is the duty of the privileged and prosperous to ‘look after’ those less fortunate than themselves – not to bring to them up to their level.

The liberal case for welfare, by contrast, has very largely been based upon political principles, and in particular the belief that welfare can broaden the realm of freedom. Although early liberals feared that social reform would sap initiative and discourage hard work, modern liberals have seen it as an essential guarantee of individual self-development. Such a theory was advanced in the late nineteenth century by the so-called New Liberals, people such as T.H. Green (1836–82), Leonard Hobhouse (1864– 1929) and J.A. Hobson (1858–1940), whose views created the intellectual climate which made the Asquith reforms possible. The central idea of liberal welfarism is the desire to safeguard individuals from the social evils which can blight their lives, evils such as deprivation, unemployment, sickness and so on. The Beveridge Report (1942), the blueprint for a modern welfare state in Britain, described its purpose as to protect citizens from the ‘five giants’ of want, disease, ignorance, squalor and idleness, and to extend this protection ‘from the cradle to the grave’.

Very similar motives influenced the introduction of social welfare in the USA in the 1930s, under F. D. Roosevelt’s ‘New Deal’. The high point of this New Deal liberalism was reached in the 1960s with Lyndon Johnson’s ‘War on Poverty’, an ambitious programme of education, job training and urban renewal projects. While firmly aware of the benefits that welfare can bring to society, liberal welfarism is nevertheless rooted in a commitment to individualism and equality of opportunity. This is reflected in support for a contributory system of welfare provision which preserves a measure of individual responsibility and serves to counter dependency. The War on Poverty, for instance, tried to stimulate communities to mobilize their own resources and involve the poor themselves in the operation of its projects. The ultimate goal of welfare, from this perspective, is to enable individuals to make their own moral decisions, to help individuals to help themselves. Once deprivation has been alleviated, liberals hope that individuals will once again be able to take responsibility for their own economic and social circumstances and ‘stand on their own two feet’.

The socialist or social-democratic case for welfare, however, goes further. Although social-democratic politicians have increasingly come to adopt the language of liberal welfarism in taking up the cause of individual liberty, they have traditionally based their support for welfare upon two more radical principles: communitarianism and equality. Social democrats have, for example, seen the welfare state as a practical application of communitarian values, believing that its function is to promote the spontaneous bonds of sympathy and compassion which characterise a genuine community. In other words, the welfare state should not merely be concerned with ameliorating conflict or relieving individual hardship, but should actively strengthen a sense of responsibility for other human beings. In The Gift Relationship (1970), for example, Richard Titmuss suggested that the welfare state is, in essence, an ethical system, based upon reciprocal obligations amongst citizens. People should receive welfare as if it is a gift from a ‘stranger’, as an expression of human sympathy and mutual affection. Its ultimate purpose is therefore to strengthen social solidarity. As a demonstration that such welfare princi-ples are practical as well as morally attractive, Titmuss pointed to the success of systems of blood donation by comparison with ones where blood is bought and sold.

Social democratic theorists have also linked welfare to the goal of equality, believing it to be a necessary counterweight to the injustices and ‘inhumanity’ of market capitalism. Indeed, modern socialism is largely based upon the merits of welfarism. For instance, in The Future of Socialism (1956), Anthony Crosland identified socialism with progress towards equality rather than with the fundamentalist goal of common ownership. The welfare state, according to this revisionist socialist view, is a redistributive mechanism: it transfers wealth from rich to poor through a system of welfare benefits and public services, financed by progressive taxation. The merit of such a system is that it consciously addresses the problem of ‘relative’ poverty and also seeks to remove the stigma attached to welfare by insisting that as far as possible benefits are universal and not ‘means tested’. Nevertheless, it is clear that the welfare state can never bring about absolute social equality; its goal is rather to ‘humanize’ capitalism by reducing distributive inequalities. As such, though, social democratic welfarism is dedicated not merely to fostering equal opportu-nities but also to bringing about a greater measure of equality of outcome.

Welfare: Roll-back or Reform?

The welfare consensus which underpinned a steady rise in the social budget has come under growing pressure since the 1970s. The expansion of welfare provision that occurred in the 1950s and 1960s had been made possible by a period of sustained economic growth, the so-called ‘long boom’. The onset of recession in the 1970s, however, precipitated a fiscal crisis of the welfare state. As levels of economic growth declined, governments throughout the world were confronted with the problem of how to sustain their welfare programmes at a time when tax revenues were falling. This boiled down to two options: one, push up taxes; two, cut the welfare budget. Against this background, New Right theories emerged which suggested that welfare had not only been responsible for unacceptable levels of taxation but is also an affront to individualism and personal responsibility. Nevertheless, this turn against welfare has been every bit as ideologically diverse as welfarism itself. So-called ‘new’ social democrats and ‘third-way’ thinkers have focused heavily upon the need to rethink welfare provision and reform the welfare state.

New Right criticisms of welfare range over moral, political and economic considerations. The centrepiece of the New Right’s libertarian critique is, however, the idea that the welfare state in effect enslaves the poor by creating dependency and turning them into ‘welfare junkies’. In the USA this took the form of a backlash against the welfare reforms of the 1960s. George Gilder’s Wealth and Poverty (1982) and Charles Murray’s Losing Ground (1984) were among the most influential attempts to portray welfare as counter-productive. Job creation programmes, for instance, had only pushed up unemployment by weakening individual initiative; and classifying people as ‘unemployed’, ‘handicapped’ or ‘disadvantaged’ merely convinced them that they were ‘victims of circumstance’. In this way, a welfare-dependent underclass had come into existence, lacking the work ethic, self-respect and the supportive structures of conventional family life. Murray’s solution to this problem was for welfare responsi-bilities to be transferred from central government to local communities, emphasizing, as far as possible, individual and community initiative.

By suggesting that the less well-off can, and should, be responsible for their own lives, the New Right revived the idea of the ‘undeserving poor’. In its extreme form, this implies that the poor are simply lazy and inadequate, those who are more interested in living off the charity of others than in working for themselves. However, in its more sophisticated form, it implies that regardless of the causes of poverty, only the individual can get himself or herself out of it; society cannot be held responsible. Welfare should therefore be provided in such a way as to promote and reward individual responsibility. The welfare state, for instance, should be nothing more than a safety net, designed to relieve ‘absolute’ poverty, and benefits should be ‘targeted’ at cases of genuine deprivation. When welfare is turned into a system of rights or entitlements, people are sucked into dependency rather than encouraged to get out of it. The New Right has consequently placed a heavy stress upon civil obligations, believing that welfare in some way has to be ‘earned’. This is why many in the New Right have been attracted by the idea of ‘workfare’, which forces those in receipt of state support to work for their benefit. A further proposal, popularized by the US economist Milton Friedman, is that all forms of welfare be replaced by a ‘negative income tax’. This would mean that all those below a certain income would receive money from the tax authorities instead of having to pay tax (as those above this level have to do). The virtue of such a system is that it greatly extends choice for those in need and encourages them to be more responsible for improving their circumstances.

The New Right also objects to welfare on a variety of other grounds. The welfare state has, for example, been blamed for both declining levels of economic growth and high inflation. Electoral pressures allowed welfare expenditure to spiral upwards out of control, creating the problem of government ‘overload’. This, however, penalized those in work or in business, who were crushed by an ever-higher tax burden. While benefits themselves create an incentive to idleness, the taxes needed to finance them constitute a disincentive to enterprise. To make matters worse, rising levels of public spending pumped more money into the economy, so pushing up prices. The New Right has therefore been interested in squeezing the welfare budget by cutting benefits and encouraging a shift towards private welfare provision. For both ideological and economic reasons, the New Right favours the privatization of welfare in areas such as education, health care, pensions and so forth. Where privatization is ruled out by electoral constraints, they have pressed ahead with reforms designed to make state provision conform to market principles. This is best seen in the ‘internal markets’ which were established in education and health in the UK in the 1980s and 1990s. In turn, though, the New Right claims that the stimulus to economic performance gained by privatization and reform will bring benefit to all social groups, including the poor. This is what has been called ‘trickle down’ economics. Welfare cuts may initially widen inequal-ities but by promoting an ‘enterprise culture’ they will ensure that the economic cake itself expands, pushing up general living standards.

However, the new politics of welfare in the USA and the UK that developed during the Reagan–Thatcher years has not been confined to the New Right or to these countries. The ‘golden age of the welfare state’ appears to have ended and been replaced by a passion for welfare reform in almost all states, even though this has been pursued with different degrees of vigour in different countries. Where welfare individualism has been rejected for electoral or ideological reasons, there has been a search for a ‘third way’ in welfare thinking. This accepts certain aspects of New Right anti-welfarism, notably the fear of dependency and opposition to ‘top-down’ statism, but it goes further in that it seeks to rethink strategies for the promotion of personal independence and economic and social dynamism. From this perspective, traditional social democrats believe that the poor are poor because they do not have enough money, in which case the solution is to redistribute wealth through the social security system; while the New Right holds that the poor are poor because they have too much money, in which case the solution is to scale down over-generous welfare support. By contrast, third-way welfare thinking believes that poor are poor because they lack the opportunities and cultural resources to achieve full participation and inclusion in society. Anthony Giddens (1994) thus called for a switch to ‘positive welfare’, understood less in terms of the provision of benefits and services, and more in terms of individual empowerment, that is, the provision of opportunities for self-development.

Third-way thinking on welfare goes beyond collectivism and individu-alism in that it rethinks the link between ‘welfare’ and the ‘state’. In particular, it advances a rights and responsibilities agenda, in which the widening of opportunities for social mobility and social advancement is matched by an acceptance of social duties and moral obligations. The purpose of welfare reform, from this perspective, is to replace ‘curative’ welfare policies with ‘preventative’ ones. This can be seen in ideas such as ‘welfare-to-work’ and ‘asset-based welfare’. ‘Welfare-to-work’ is based upon the assumption that the lack of access to secure employment is the primary source of social exclusion and low self-worth. In the UK, Australia and elsewhere, welfare reform has focused very largely upon boosting the citizen’s employability by improving access to education and training. However, the right to education, training and skills, particularly job-related skills, has been balanced against a more explicit civic responsibility to seek and find work. In other words, the price of improved employability is a stronger work ethic. The welfare state is thus giving way to a ‘workfare state’. The idea of ‘asset-based welfare’ reflects the belief that social mobility and equality of opportunity can best be boosted by ensuring that all citizens have a right of access to capital assets. This has, for instance, been pursued through the idea of ‘baby bonds’, capital sums which are provided to citizens at birth and which can later be used for purposes such as paying for higher education or helping to buy a house. While reforms such as improved access to education and baby bonds recognize a continuing need for the state to provide the basis for personal and social well-being, they ultimately countenance the end of the welfare state as we know it, in that their purpose is to shift responsibility for welfare from the state to the ‘empowered citizen’.

Summary

1 A commitment to equality may take one of three contrasting forms. Formal or foundational equality holds that all human beings are of equal moral worth and is reflected in a commitment to legal and political equality. Equality of opportunity is concerned with equalising the starting point of life in order to allow natural inequalities to flourish. Equality of outcome seeks to achieve equal, or at least more equal, circumstances of life, social equality.

2 Social justice refers to a defensible or just distribution of material rewards. Fundamental differences exist between those who believe that distribution should be broadly egalitarian because it aims to satisfy human needs; those who argue that it should reflect individual merits, rights based upon talent and the willingness to work; and those who suggest that it is determined by innate and unchangeable factors, the natural deserts of individuals and groups.

3 Welfare is the idea of a basic level of equal well-being for all citizens, a minimum quality of life for all. Although some believe that this goal can best be achieved through individual self-reliance and hard work or by a sys-tem of private charity, it is invariably achieved in practice through collec-tively provided welfare services delivered by government, the welfare state. Forms of welfare provision however vary considerably.

4 Among the virtues that have been identified with welfare are that it pro-motes national efficiency, fosters social cohesion, helps individuals to devel-op their potential, and tends to narrow social inequalities. Critics, however, have attacked welfare, on the one hand, for creating dependency and pro-moting inefficiency. Third-way welfare thinking is based upon a rights-and-responsibilities agenda, which at heart reflects the desire to improve access to education and skills, and thus to work.