David Craig’s response to Understanding the purpose of the welfare state.

David, your re-examination of some core elements of the welfare state is elucidating and timely. What I think is especially interesting and also important here is your choice to focus on two core elements that are probably not that well understood (and may no longer be so widely supported in the terms you present them), but which refer to mechanisms and dispositions at the core of the matter: the social wage and decommodification.

Both are core elements of the welfare state’s central orientation to labour markets. In both of these the state it looms as key arbiter, intervening in market relations to make them non- (or less) market (de-commodification) or more socially registered (the social wage- perhaps delivered through tripartism).

What seems interesting and crucial about these elements (compared to say health or education or even welfare, elements which are core in many people’s understanding of the welfare state) is that they exist in a relation to markets; a relation which seems a good deal less settled in people’s minds these days. In health and education or welfare, the role of the market in a NZ context seems pretty cut and dried: in the current settlement, people in NZ are reasonably comfortable with the idea of the state as a guarantor of basics like health and education. These have become largely non-market entities, around which the state has overwhelming (and in health and education, endless) responsibility, while markets in these areas seem to be the imaginary playing field of only the far right.

But in labour markets, things are different, and the state’s role perhaps more problematic. It’s this role of the state in relation to labour markets I want to dig around in a little more here. And I want to do this in terms of a somewhat vague sense of popular discourse and attitude: vague, as in not strongly empirically based, but rather reflective of a range of impressions.

It seems to me that both notions- the social wage and decommodification- have been eroded (and in some areas, reframed) in recent years, both in popular understanding  and in actual policy. The shape of this erosion I think tells us a little bit about the welfare state as we currently have it, and about where we might see it either further eroded, or re-forged in progressive ways.

Overall, what remains of these core elements and their rationales in popular discourse is I suggest much narrower and more specific than it has been in the past; and thus popular support for the whole idea of a ‘welfare state’ has accordingly become narrower and more focused. Let me see if I can explain this a bit more clearly.

Markets, the welfare state and its machinery in popular imagination

Basically I suspect that taking work, labour and its rewards out of a market mechanism, which both these concepts normatively urge, is I think something many people currently look at with a considerable level of suspicion. Yes, the market is flawed, but the implicit/ explicit proposal in these two terms is that the market is best replaced as a governing mechanism by a state function is, perhaps, regarded as dangerously heavy handed and reactionary.  The market may be flawed, but I think for many people it is somehow accepted as a basic social good: one that needs framing to be sure, but one without which we would need to fall back on less efficient machinery. I confess myself to accepting much of this argument: with, as I hope to explain, some large caveats.

Michel Foucault has a useful notion here in his late ‘governmentalities’ analysis, which posits by a simple reading three discernable  modes of governing: sovereign or monarchical government (the state as authority and tyrant); disciplinary government (the state as standards setter, educator, moral reformer, industrialiser), and government through freedom (with the state governing ‘at a distance’, through market mechanisms such as contracts, KPIs and audit, community groups, and ultimately the internal self discipline of liberal subjects themselves). Governing through freedom, which yes aligns in many ways with liberal ideals, but also governs fairly minutely in terms of performative stipulations, is something that labour markets are today supposed to do. The state stays back behind the scenes, and essentially labour market situations are sorted out on an individual or somewhat collective basis. This, in some contrast to what used to happen in the world of eg national awards.

Governing through freedom of course comes with a number of moral dimensions: freedom to contract, rewarding individuals according to performance, and more. It has, I would argue, become core to people’s expectations of themselves and their workplace setting. In this perhaps more than in other areas we are all (neo)liberals now.

This leaves the question of what decommodification and the social wage might actually mean popularly now:  whether these are widely supported, and on what terms. In terms of the social wage, family support via tax credits and paid parental leave seems to be a way the social wage is still widely recognised, and perhaps some residual emergency family (domestic purposes) benefit is still widely supported. But both of these, to be sure, generate a good deal of grumpiness from people who see their own labour market rewards as being compromised by these modes of redistribution. Similarly, progressivity in the tax rate, which underpins a great deal of the social wage, is under siege. Tax can go to consumption: leave me to enjoy the (market) fruits of my labour.

Thus there is I would argue a level of belief that the primary governor in all of this is and should be the labour market; a market in which people must ultimately engage out of personal and family necessity (which is seen as basically a good and necessary thing). So, a social wage primarily from the state is bad; a social wage including some recognition of family needs in the wider context of market engagement is ok, part time labour market work for beneficiaries of all stripes is good, decommodification  or, most of all, a social wage for beneficiaries is bad.

Similar logics I think can be plausibly applied to other mechanisms for delivering a social wage/ decommodification: I would think a minimum wage (which happens within a labour market contract, and as a neat, clean, liberal ‘rules of the game’ intervention) is good; tripartism (which has a heavy social presence of the state and organised labour) , well, hmmm… . Given the long years of tripartism, this is an interesting  and important loss of role-legitimacy: perhaps it signals another aspect of a widespread and fundamental social shift .

So, in labour, the market has moral sway, above a certain minimum, and even that is only applied to those actually in the labour market.

Markets, the state, and shifts in the basic social contract

Beyond the simple notion that ‘governing through freedom’ mechanisms are holding increasing sway in people’s sense of themselves and their primary social relations, I have been wondering if in all this what is shifting/ has shifted  is a popular conception of the social contract, and the state’s particular role in that.

What the above speculation would suggest is that the wider social contract is currently regarded more in transactional, market exchange terms, and less in terms of one party (the state) as possessor of needed power and resultant security. If so, there’s a need to reconsider the state’s role, as backstop, as referee, as market player and enabler. We need to understand more about where and how, in the current context, the state is imagined as having a legitimate role, and how this relates to the real capabilities a state might need in current contexts. Again, let me try to explain.

In historical terms (I mean the relatively brief history of the welfare state, since the mid 1930s), perhaps the biggest shift which underpins all of this is a shift in popular understandings of the need for social security, and for a big powerful state to guarantee this. At the time welfare states emerged most strongly, all this was viscerally understood in terms of the threat of grand scale economic depression, and/ or invasion and social destruction by extremists of left and right.

Now that basic social and personal catastrophe are not so obviously at stake, some basic questions it seems to me are back in play. How does the state act in relation to markets, especially in terms of its guaranteeing role? Should it allow a greater role for markets and other social intermediaries, and operate at  greater arms’ length? In cases where markets alone don’t generate optimal outcomes, should/ can it place more trust in social agents working to more managerial and incremental programmes of personal and social development?  What, in all this, is the role of wider social regulation, around, say issues of asset or intergenerational inequality, and how does the state make this happen, and rationalise its role?  How, in other words, do we achieve equality and other outcomes largely within a market mechanism?

It does seem to me that in this context, there’s now a serious tension between social welfare/ security and social development aspects of the social contract. It does seem to me that at least one cornerstone foundation of the welfare state, its towering guaranteeing of social security, is felt as less necessary across a great deal of society.  Indeed for many it is resented, and held up as a monster they want to starve. For others, there’s a new, finer-grained selectivity about which bits really matter to them.   Social development of necessity addresses itself to the market: around the market, within the market, for the market?  But does it really achieve equity and inclusion goals in that context?

Yet at the same time, as your discussion points out, for all the talk of crisis in the welfare state, it still occupies and enormous role/ chunk of budget. Structurally, then, not all that much has really changed in many western contexts. At the same time, there is clearly a more radical contemporary mood for reconsidering the role of the state per se in all of this. Some of this I see coming through in the institutional changes the Blairites managed to open out in education delivery in the UK. More I see in the emergence of the Big Society discourse among the conservatives. Each maintains a backstop/ monitoring role for the state, but is keen to see what can be leveraged from wider elements of the social, local government, communities: elements imagined to be ‘closer’ to individuals and families, and as more flexible and people-oriented than ‘the welfare state’. In each there’s a real will to see “communities” take up aspects of the social contract that the state has had.

We are right to be suspicious: it is of course not a bad impulse to limn all of this as neoliberalisation (the state being rolled back into a strong night watchman role, while welfare is privatised, and restricted to the worthy poor, including children), and some of it is just that. Certainly the working and petty bourgeois class reactionaries in the tea party and elsewhere are ready to countenance radical reactionary moves which align all too easily with elite neoliberalism’s preferred policy settings.

But I do think there is something else at work here. And I wonder if it is also possible to talk about some of this in other progressive terms, which don’t simply do the state-security-reaction thing, and simply spring to the defense of the state’s role. And something which takes us beyond a Foucauldian shift from state as discipliner to a governing through freedom analysis, which makes us all subjects of our own free ranger consumerist desires.

In Part 2 of this, I want to rashly try to come at it from some slightly different angles, which track closer to a plausible conception of a renewed social contract and real progressive social development, while not losing sight of the state’s role in social security. This will involve in part a reconceptualisation of the society side of things, especially in terms of notions of social (and even class) agency in relation to markets.