MODULE III THE WELFARE STATE READINGS PART I, 2-3; V 6/6 – 12

1. MODULE III THE WELFARE STATE READINGS PART I, 2-3; V 6/6 – 12

2. SESSION 3: THE WELFARE STATE (WS) • The totality of social welfare programs in a given national setting. • Most elaborate in the most advanced countries---W. Europe, N.A., and Australia/New Zealand. • W. European WSs tend towards the “mature” or “cradle to grave” type, whereas the US WS is usually classified as “immature”and characteristic of our national “exceptionality.” • American domestic politics is principally about two sets of issues---1) the so-called “social questions,” like abortion and family “values”; 2) the contents of and eligibility for WS benefits. • All these issues are linked: the “immaturity” of our welfare state reflects our politics, which in turn reflects the “exceptionality” of American circumstances, as variously interpreted. • Each of the above points will be addressed in this session.

3. SESSION 3 TABLE OF CONTENTS • Conflicting political perspectives on the WS. • Types of WSs. • Reasons for US “exceptionality.” • Globalization and the Future of the WS.

4. CONFLICTING PERSPECTIVES ON THE WELFARE STATE VS.

5. A LIBERAL PERSPECTIVE “I’m often asked if I’m a liberal, and I say, ‘Well, if Jack Kennedy was a liberal or… Franklin Roosevelt was a liberal, then I’m a liberal.’ This is not 1960, and it’s not 1932. We’re in a completely different world than then. But I believe in opportunity, and I believe in…fairness. The only way this country prospers is if everybody is sharing in the prosperity. I think my party has uniquely stood for that…,where government can be an active partner with the private sector in moving the country forward….” RICHARD GEPHARDT DEMOCRATIC LEADER, US HOUSE OF REPRESENATIVES.

6. THE LIBERAL PERSPECTIVE EXPLAINED • Liberals support a moderately high level of social services, but tend to favor equality of opportunity more than equality of social condition. They do believe that society has a duty to help the poor and oppressed, and to make appropriate arrangements for the young and elderly, but they would not go as far as social democrats and other radicals in the pursuit of these goals. • Many liberals also believe that the educated elite should lead society and that the power of rational persuasion (“ideas” again) are sufficient to convince voters of the moral correctness of their aims; they are thus “idealists” in the strictly philosophical sense of the term. • The dominant political ideology during certain periods of 20th century American history, classic reform liberalism reached its high tide during the Johnson years (1963 - 68). While still strongly supported by minorities, intellectuals, femininists, and various other groups, liberalism has essentially been on the defensive ever since. Indeed, the “L” word is now often shunned even by liberals themselves (although obviously not by Gephardt), who are afraid of alienating voters. Many liberals accordingly now prefer to be called “progressives.” That has not increased their electoral popularity, however.

7. A RADICAL PERSPECTIVE “THE CENTRAL QUESTION…IS WHETHER AND UNDER WHAT CIRCUMSTANCES THE CLASS DIVISIONS AND SOCIAL INEQUALITIES PRODUCED BY CAPITALISM CAN BE UNDONE BY [LEGISLATIVE] DEMOCRACY.” GOSTA ESPING-ANDERSEN RADICAL WELFARE STATE ANALYST

8. A RADICAL PERSPECTIVE: THE “BALANCE OF CONTENDING FORCES” • To understand the WS, radicals contend you must first understand the relative political strength of the principal classes (“forces”) in capitalist society:---on the one hand, the asset-owning rich (“capitalists”) and the top managers who work directly for them; on the other, ordinary wage - dependent workers in potential political alliance with the “new middle class” of technical/professional workers. • As we saw in Module 2, distinct social classes can have distinctly different perceptions of their interests and, hence, different attitudes towards swps and the WS. Blue-collar workers may well look to the WS for socially – financed protections against the uncertainties of life under capitalism, whereas owners see the WS as blocking their quest for a “free market” system in which worker resistance & government intervention are minimized. (See the following section on “conservative perspectives” for more on this last point.) • Radicals thus view politics largely in terms of coalition-building, since failure to form such alliances means that, as in the US, the WS is likely to be limited.

9. A RADICAL PERSPECTIVE: THE ROAD TO SOMEWHERE? • The very existence of the WS is evidence of class conflict: each side seeks to control the size of the WS in order to gain leverage in its struggle with the other. Thus, capitalist political dominance (“hegemony” is the term used by radical intellectuals) is reflected in the extent to which WS programs are means-tested and modest in scale. By the same token, working class political muscle is on display if those same programs are generously funded and offer benefits to all citizens under the “universality” principle. • But is a generous WS itself enough to satisfy working class needs? Or is it necessary for workers to take a fateful step further and seek direct control of the nation’s productive wealth (“capital”) in order to assure its rational use for the benefit of all? The more radical radicals have at least until recently argued that such control is indeed indispensable and can only be secured via overthrow of “bourgeois” democracy; the more moderate, that a humane social order can be attained through gradual evolution from the existing WS base towards a more egalitarian society. As we’ll see in the discussion of globalization, later in this session, this longstanding controversy has recently been superseded by a more immediate question: Can the WS itself survive at all given recent changes in the overall “balance of contending forces.”

10. A CONSERVATIVE PERSPECTIVE “MY CONCLUSION IS …[THAT] IN ADDITION TO ITS STRONG MORAL BASE IN PERSONAL FREEDOM, CAPITALISM AND COMPETITIVE MARKETS WORK TO DELIVER SUBSTANTIAL ECONOMIC PROGRESS;…BUREAUCRATIC WELFARE STATE[S] DO NOT WORK. THEY SAP INDIVIDUAL INCENTIVE, INITIATIVE AND CREATIVITY AND ULTIMATELY CANNOT DELIVER SUFFICIENTLY RISING STANDARDS OF LIVING TO MEET THE EXPECTATIONS OF THEIR CITIZENS….” MICHAEL BOSKIN CHAIRMAN OF THE COUNCIL OF ECONOMIC ADVISERS DURING THE BUSH ADMINISTRATION

11. AN CONSERVATIVE PERSPECTIVE: A DRAG ON THE MARKET • Conservatives argue that, especially in its more advanced European forms, the WS has become a dangerous anachronism. By requiring high taxes, the WS deprives society of needed investment resources and saddles employers with workers who feel that the are “owed” a living---by the state if not by the boss! • Conservatives concede that the WS may once have been fiscally tolerable (if never politically or economically desirable) but argue that it should now be dismantled because its extravagances are unsustainable in our age of intensified global competition. Indeed advanced nations that continue to adhere to old-style “welfarism” risk permanent inferiority within the emerging postindustrial division of labor.

12. A CONSERVATIVE PERSPECTIVE: “AN IDEA WHOSE TIME HAS GONE” • As we have just seen, conservatives view the WS as dangerously obsolescent. It represents the past, whereas the unimpeded “free market” is said to represent the future. • More specifically, conservative intellectuals assert that the WS is a product of the so-called “Fordist” period, when huge corporate bureaucracies (e.g., as in the auto industry) employed hordes of manual and administrative workers. Government developed similarly insofar as it consisted of cumbersome bureaucracies seeking to expand their regulatory “turf.” • Workers today, however, are necessarily far more self-reliant. Like their employers, they realize that they must be flexible and intensely competitive. The old-style “Fordist” WS has thus become an anachronism incompatible with postindustrial society.Conservatives claim that most Americans recognize this, which is why voters now regularly reject liberal attempts to revive the WS.

13. A CONSERVATIVE PERSPECTIVE: “AN IDEA WHOSE TIME HAS GONE” CLICK HERE FOR EDU-RAMA! This 4 minute discussion features professors Samuel Bowles and Milton Friedman, respectively, leading social democratic and conservative welfare state analysts. Although fragmentary the segment is worth watching for discussion of the so-called “Third Way,” which is the name often given to the Swedish WS experiment, and intended to distinguish it from the US and Soviet communist models.

14. WHAT DO YOU THINK? Which of the just reviewed perspective makes the most sense to you? (Doing the readings may help you make up your mind!)

15. U.S. AND EUROPEAN WS MODELS COMPARED • As we shall see in the following section, U.S. and European wss are organized on very different assumptions, expectations, and principles. • Our task will be to summarize what those difference are and what accounts for them. • On the latter point, we’ll look particularly at the issue of “American exceptionalism”---i.e. why the U.S. welfare state is so different from its European counterparts. • Finally, we’ll briefly survey the issue of globalization, most particularly, the impact that that phenomenon is having on all welfare states regardless of their operating assumptions.

16. Mature and Immature Welfare States (1) • US • Relatively modest social insuranceprograms + very limited means-testedprotections against hardship or destitution. • EUROPE • Extensive social insurance+ other publicly funded non-means tested benefits and services designed to reduce relative inequalities and assure economic security for all citizens (i.e., “universalistic”). These radical or social democraticobjectives are characteristic of the most advanced European social welfare legislation, notably in Scandinavia.

17. Social security Unemployment insurance (ui) Medicare/Medicaid Public housing Education through h.s Limited maternity leave Social security Extended ui and job retraining Health care for all Housing allowance Free education Family allowances Generous maternity leave Pensions for all Paid vacations Public child care Extensive recreation facilities Mainstream US & SWEDEN (2) Social Democratic

18. US WS MODEL: A “MARKET FIRST” APPROACH THE “MARKET FIRST” BIAS IS THE KEY TO UNDERSTANDING SPECIFIC COMPONENTS OF THE AMERICAN WS. THE MARKET THE KEY U.S. INSTITUTION, WITH WS PROGRAMS ESSENTIALLY SUBSIDIARY TO AND SUPPORTIVE OF IT. PREVAILING ASSUMPTION IS THAT VIRTUALLY EVERY NEED CAN AND SHOULD BE MET THROUGH THE MARKET SYSTEM, EXCEPT AS NOTED BELOW. SOCIAL INSURANCE SOCIAL SECURITY MEDICARE ENACTED BECAUSE OF “MARKET FAILURE,” I.E., INABILITY OF MARKET TO PROVIDE FOR BASIC NEEDS IN CERTAIN SITUATIONS MEANS-TESTED PROGRAMS TANF (welfare) SSI ASSISTANCE TO INDIVIDUALS IF DEEMED “DESERVING” DUE TO TEMPORARY OR PERMANENT INABILITY TO COMPETE IN JOB MARKETS.

19. THE UNDERLYING LOGIC OF THE US WS • The dominant presumption in American society, especially strongly held among conservatives, is that all human needs can and should be met through the market, and that those unable to pay for commodities (i.e., goods and services purchased on the market) simply must forgo them. • However, two exceptions to this rule are sometimes recognized: • Certain goods and services cannot be adequately provided exclusively through the market because of their very nature. For example, left to itself the market has been able of provide adequate health insurance only to those old people who are both rich and in reasonably good health---clearly a minority. At the very least, then, publicly organized, regulated, and partly subsidized health care social insurance is indispensable to ensure if the majority of old people are to be covered----hence, Medicare. • Those who are destitute or near-destitute, and unable to work by definition cannot and do not participate in the market economy. Unless subsidized by the government, they might well starve, which (presumably) still remains morally unacceptable in a civilized society---hence, public assistance (TANF) and Supplemental Security Income (SSI) for those able to meet their stringent eligibility criteria.

20. NEVERTHELESS… as the preeminent American institution, the market is constantly encroaching, in various ways, on ws programs. Thus: • the American WS is in many respects a “partnership” between the public and private sectors: the government buys WS goods and services from the private sector, because: a) that’s the only place they can be purchased; b) of the political pressure exerted by vendors; c) of the assumption that the private sector can provide such services more efficiently (i.e., at less cost) than the public sector. • the private sector is dynamic and accordingly constantly seeks to expand into public sector territory if profitable opportunities exist there. Hence the “privatization” movement of recent years, in which various publicly funded programs---e.g., welfare assistance and health services---are increasingly provided by private vendors working under government contract. • perhaps most importantly, there are prominent and even disastrous “market failures” that are not adequately rectified because of corporate political clout, which seeks to prevent government from “trespassing,” or even potentially usurping, existing profitable markets. The profit-driven health care system, despite its “market failure” to provide adequate coverage to millions, comes most readily to mind in this regard.

21. SWEDEN AND “DECOMMODIFICATION” • The Swedish WS, widely regarded as the world standard, is based on a radical---and hence markedly different---conception of what government can and should provide to its citizens. • Most dramatically, the Swedes have sought to “decommodify” a wide variety of goods and services (see earlier comparative slide), i.e. to remove them from the market and instead make them readily available to all as a right of citizenship---what American social policy analysts call “entitlements.” • In doing so, the Swedish social democratic government hoped to promote equality of results rather than simply equality of opportunity, on grounds people must have a wide variety of goods and services if they are to lead a decent life. • The next few slides take a closer look at the Swedish model.

22. THE SWEDISH WELFARE STATE: AMULTIDIMENSIONALMODEL • Remember this figure? It first appeared in Module 2 to illustrate the different levels at which policy is formulated. • The distinguishing characteristic in the Swedish case, however, is the high degree of planned integrationamong these three policy levels. That is, the key to Swedish success lay in assuring that each level operated so as to reinforce the other two. • The next slide provides an example of how this social democratic strategy works in practice. PUBLIC POLICIES SOCIAL POLICIES SOCIAL WELFARE POLICIES

23. THE SWEDISH MODEL IN THEORY Common Policy Objective Creation of a what Swedes call a “people’s home:” humane, egalitarian, yet also economically dynamic • SOCIAL WELFARE • POLICIES • Generous unemployment, • old age, and child • care benefits • Excellent health care & • recreational facilities • SOCIAL POLICIES • Heavy investment • in education and • job training/retraining • Strict prohibitions • against gender • discrimination • PUBLIC POLICIES • State tax and other • support for new housing • & corporate investment • Tight control over • capital exports • Low interest rates

24. THE SWEDISH MODEL IN PRACTICE: THUS… • PUBLIC POLICIES • State tax and other • supports for new • investment • HELPS RESULTS IN: • Rapid job creation • & low • unemployment • WHICH IN TURN • MAKES • POSSIBLE: • Generous • unemployment • benefits & job • retraining ALL ELEMENTS INTHE SWEDISH MODEL ARE DESIGNED TO BALANCE AND REINFORCE ONE ANOTHER

25. WHY THE DIFFERENCE?THE ISSUE OF AMERICAN “EXCEPTIONALISM” Lack of a politically significant radical political movement, and the consequent backwardness of the American welfare state, are often cited as proof that the U.S. is an “exceptional” country---not necessarily in a positive sense (although most mainstreamers certainly see it that way), but in its stark divergence from the European pattern of relatively generous and extensive WS benefits. The following American traits are also sometimes cited as further manifestations of our “exceptionality:” fear of and resistance to taxes and government • willingness to resort to capital punishment • lack of knowledge about other societies • tightfistedness in dealing with the poor • degree of racial prejudice • self-righteous moralism

26. WHAT ACCOUNTS FOR EXCEPTIONALISM?THE MAINSTREAM VIEW There is no single mainstream interpretation of “exceptionalism,” but there are certain common themes that mainstreamers have identified over the years. As one would expect, these tend to emphasize ideas and institutions, rather than social class relations. Following are several of these explanations: • America fought a war of independence precisely to guarantee that government be limited, and subsequent national experience has only further deepened our rightful suspicion of centralized power. The nation’s commitment to local control and a “checks and balance” constitutional system are expressions of this same outlook. • Americans still adhere to the individualistic ethos. They expect to participate in competitive markets, and likewise once expected that those who failed competitively would try their luck elsewhere. But that was before the welfare state.

27. WHAT ACCOUNTS FOR EXCEPTIONALISM?THE RADICAL VIEW Radicals have sometimes seemed near – obsessed with the “exceptionalism” question, perhaps because their failure to achieve a significant role in American life has indeed been a defining feature of “exceptionalism.” Here, then, are some radical interpretations: • American historical experience is significantly different from Europe’s, where a relatively homogeneous mass populations shared a common medieval past and a common working class way of life. For their part, the European ruling classes long sought to maintain an almost caste-like distance from the masses, and indeed democratic ideas did not really triumph in Europe until late in the 19th century---in some places, not even then. America, in contrast, was almost from the beginning a land of INDIVIDUAL opportunity that drew a heterogeneous immigrant population. The odds against forming an American radical political movement were thus formidable, and were made even more so by expansive prosperity that reinforced the individualistic ethos. • Throughout American history the political agents of the ruling classes have persecuted radicals under the bogus banner of “Americanism,” so that those holding dissenting views have frequently been ostracized as “un-American.” This has been a devastatingly effective tactic in repressing radical dissent. Intra-working class racial divisions has been yet another factor in the “exceptionalist” political equation.

28. INDIVIDUALISM: A COMMON THREAD As we have seen, both radicals and mainstreamers lay stress on individualism as a deep – seated American trait at odds with the collectivist logic of the WS. Yet here the similarity ends. Whereas radicals view individualism as an essentially negative factor, obstructing the unity needed to promote a more egalitarian society, conservatives regard individualism as the central defining element in American life---the thing that made this country great.

29. THE IMPACT OF GLOBALIZATION

30. THE WELFARE STATE: ADVANCE (1) • The welfare state is the product of many generations of popular struggle against injustice and oppression. • Its “golden age” (1945-70) was thought by many to mark a fundamental turning point in human history: henceforth the benefits of industrial civilization would be distributed more equitably thanks to increased productivity, popular political pressure, and the need to maintain a high standard of consumption if capitalism itself were going to survive. • No one wanted to go back to the “bad old days,” when poverty was common and material insecurity the fate of most people. • In short, optimism about the future, specifically the future of the welfare state, was fairly pervasive.

31. WELFARE STATE: ADVANCE (2) • The positive mood of this period was exemplified by the so-called Marshallian theory of the welfare state that posited the following 3 stage historical evolutionary progression: • Social Rights (the ws/economic security) • Political Rights (parliament/the vote) • Legal Rights (courts/due process)

32. Welfare State: Decline ORThe Professors Confounded • Political support and state funding have everywhere been declining around 1970. • As we have seen, some now retrospectively claim that the welfare state was simply an industrial age phenomenon anachronistic in the post-industrial era of specialist labor and individual initiative. • Globalization is, however, the most immediate causal factor in welfare state decline.

33. WHAT IS GLOBALIZATION, ANYWAY? • Globalization involves the rapid diffusion of investment and speculative capital, and, more generally, of the market economy, throughout the world. These processes are spearheaded by transnational corporations (“industrial capital”), seeking low cost labor and profitable markets regardless of national boundaries; and investment banks and other agents of “finance capital,” looking for comparable speculative or investment opportunities with comparable indifference to old-style state boundaries. • Some governments in the larger capitalist states, notably that of the U.S., have actively partnered with the private sector and such institutions as the World Bank and World Trade Organization to “make the world safe for capital” by removing all national-level obstructions to the free flow of capital, thus weakening the nation-state’s ability to regulate its own territory and, more particularly, sustain a high level of welfare state services.

34. GLOBALIZATION: THE MASTER THEME OF OUR TIME • It has promoted the: • power shiftfrom labor to capital; from social welfare programs to corporate profit priorities. • downsizing of the welfare state and the non-profit sector • privatization and increased political and economic inequality IT’S ALL MINE! Please let go of me!

35. WELFARE STATE DECLINE: CAUSES, EVIDENCE, AND CONSEQUENCES • Disappearance (?) of popular expectations that activist government could solve our national problems. (Social transformation/demographic fading of the Depression/WWII generation.) • Few new social welfare programs; reduction or elimination of established ones • Privatization of former state services: e.g., prisons, welfare, and maintenance. • Growing economic inequality, racial tension, and political alienation.

36. GLOBALIZATION: SUMMING UP • The impact of globalization has indeed been “global,” insofar as it has affected all aspects of life, and not merely the WS. There are two general ways of summing up the impact of these changes. • Radicals deplore globalization and instead continue to see government as a positive force capable of improving life through its capacity to plan, regulate, protect, and promote social and economic equality within traditional national settings. • The opposing globalization thesis, supported by conservatives and by our own government (indeed, it is sometimes called the “Washington consensus”), holds that markets rather than governments are the indispensable motors of material progress, and that government economic regulation must therefore be reduced to an absolute minimum. • The next slide summarizes two correspondingly divergent ways of envisioning the consequences of continued globalization.

37. HOMOGENIZATION Continuation of current trends resulting in creation of a globally integrated “consumer culture,” which replaces virtually all local cultures Formal retention of state sovereignty and political democracy as a façade for corporate power. RESISTANCE Growing resistance to current trends based on the following possible factors: religious belief possible collapse of the world economy increased worker immiseration environmental collapse ALTERNATIVE GLOBAL FUTURES

38. WHAT DO YOU THINK? WHAT KIND OF WS WORKS BEST FOR SOCIETY? FOR THE INDIVIDUAL CITIZEN? SHOUD QUESTIONS OF SOCIAL JUSTICE BE DECIDED BY THE MARKET OR BY LEGISLATIVE BODIES, LIKE CONGRESS? IS GLOBALIZATION THE KEY TO PROGRESS, AS CONSERVATIVES CLAIM, OR IS IT IN FACT THE SOCIAL DISASTER, AS RADICALS CONTEND?