Posts Tagged ‘social wage’

New publication: ‘Reconceiving the Welfare State’

Wednesday, December 22nd, 2010

David Craig’s three-part guest-post series looking at the prospects for the welfare state was one of the most-viewed and best-regarded pieces that we published this year. Now, as promised, it’s been collected (in slightly revised form) into a single online publication.

From my foreword:

New Zealand doesn’t generate at lot of profound theoretical analysis of the political economy of institutions like the welfare state. In particular, the New Zealand political blogosphere is the last place you’d expect to see someone grappling with the dilemmas of progressive labour market regulation in the context of Foucaultian ‘governing through freedom’.

Which is why I’m so pleased to have had the opportunity to publish work by David Craig.

In the case of this essay, which appeared in an earlier form as a series of blog posts in September 2010, I can even claim that it was something I wrote that prompted him to start composing it. (Even if he swiftly went well beyond anything I’d said in both scope and depth.)

I fully expect David Craig’s conception of the ‘wellbeing society’ to be developed into a recurring idea in the journals and textbooks of the future. When it does, I’ll be able to say, you heard about it here first!

You can download a copy here.

Tags: , , , , , , , , , ,
Posted in Overview | Comments Off

Reconceiving the welfare state (part one)

Thursday, September 9th, 2010

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.

Tags: , , , ,
Posted in Guest Post | 3 Comments »

Understanding the purpose of the welfare state

Tuesday, September 7th, 2010

Despite its association with the name of economist John Maynard Keynes, the most important achievement of the mid-twentieth-century period of progressive ascendancy across the advanced capitalist countries was not Keynesian economic management. Rather, it was the consolidation of the welfare state.

By ‘welfare state’, I don’t just mean the social welfare system of pensions and benefits, but the whole range of areas of social expenditure. That includes public spending on health, education and housing.

The early development of the welfare state began in the 19th century. In New Zealand a key milestone was the set of reforms by the Seddon administration in the early 1890s, led by William Pember Reeves. But in most cases it was either in the 1930s (as with New Zealand under the First Labour Government) or immediately after World War II that the full range of expenditures and entitlements took their modern form. And, perhaps even more importantly, this was when the idea of the modern state as a ‘welfare state’ reached a point of legitimacy as a normal and desirable arrangement.

That legitimacy has been under assault for the last thirty or so years, and is now somewhat diminished. ‘Welfare state’ is now as often a complaint or accusation as a term of praise. Despite this, though, what is perhaps surprising is how resilient the institution has been. No major country has ever divested itself of ‘welfare state’ status (indeed one could argue that the US with its recent health reforms has just made a major step towards becoming a fuller welfare state). And indeed even the fiercest self-declared scourges of the welfare state, Reagan and Thatcher, made scant impact on its scale of expenditure or major entitlements. (Which isn’t to say they didn’t hurt a lot of people in their attempts.)

Nevertheless, proponents of the welfare state these days often have a somewhat defensive, even apologetic, tone. So it is worth restating what the welfare state is for, as part of our current efforts to instill renewed confidence into the theoretical underpinnings of the progressive movement.

There are two important concepts that progressives ought to become familiar with, in this regard: the ’social wage’ and ‘decommodification’. Both represent ideas that had largely been developed after-the-fact, and yet both can claim to say something meaningful about the intent of those progressive who pioneered the welfare state. And each speaks to a competing, although not mutually exclusive, vision of the purpose of the welfare state.

The idea of the welfare state as a ’social wage’ that sits alongside and complements the private wage that workers earn through their labour has been put forward in a range of settings, often by trade unionists. In this conception, welfare state expenditure across areas such as health, education and income entitlements can be seen as something to be fought for and secured through collective action, often in exchange for moderation of demands for increased private wages. The social wage is thus somewhat exchangeable with the private wage, and can be seen in effect as part of a worker’s income. Cuts to the social wage are an attack on workers’ material well-being in much the same way as attempts to cut their private wages.

Implicit in the idea of a social wage, however, is the recognition that it is not an undifferentiated amount ‘paid’ out to everybody at the same rate. Indeed, to large extent, the social wage represents transfers within the working class, mediated by the state. Part of this is the extraction of income from those in paid employment to support what Marx called the lumpenproletariat and John Key described as the underclass. Another part reflects the fact that some expenditures, such as tertiary education, go more to some people than to others, and indeed are often ‘captured’ disproportionately by the middle class.

It is the existence of these sorts of transfers, and the resentments they can often give rise to, that have been used by non-progressives to undermine public support for the welfare state. Rather than a shared social wage, they seek to create the sense of a discrete series of unearned privileges. It is not surprising therefore that it is in areas of broad-based participation such as schooling and in the aspects of health that evoke the strongest sense of ‘it could happen to anybody’ that popular support has remained the strongest.

The idea of ‘decommodification’ seeks to inspire a more transformational sense of the potential of the welfare state. It is most strongly associated with the work of the Danish sociologist Gosta Esping-Andersen and his seminal work The Three Worlds of Welfare Capitalism (1990), which sought to understand the difference between what he called the Liberal, Corporatist- Statist and Social Democratic welfare states.

For Esping-Andersen, 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’. A key purpose of the welfare state is not only to provide people with the basics of life irrespective of their employment status, but also to place certain essential services such as health and education outside the logic of the market.

The extent to which this occurs differs from place to place and forms the core of Esping-Andersen’s distinction between the different types of welfare states.

But, in general, it has tended to decline in recent years, as the logics and practice of private market activity have increasingly been seen as something to emulate, even for non-traded services provided by the public sector, and even within the core Social Democratic regions such as Scandinavia. Thus we see even the aim of decommodification tending to fade from view.

If progressives are to recapture the debate, however, and both secure and further advance the institution of the welfare state, then we need to turn back to ideas such as the social wage and decommodification. We should look at both of these concepts again, and consider whether some version of one or both of those can serve to underpin a revitalised 21st century welfare state. And if so, we would need to think about what changes to the current practice of the welfare state that would imply.

That’s what I think. What’s your view?

Further reading:
http://esping-andersen.com/
Chris Holden, Decommodification and the Workfare State (2003)
Moudud and Zacharias, The Social Wage, Welfare Policy and the Phases of Capital Accumulation (1999)

Tags: , , ,
Posted in Theoretical Foundations | 4 Comments »

State subsidisation of low wages

Wednesday, May 19th, 2010

It’s great to see the debate on redistribution vs. altering market power and outcomes rolling out here. I think there’s a great deal of sense in James Purnell’s basic assertion that New Labour’s “unwillingness to be more hands on with the market” had “required it to be too hands on with the state”.

There are several aspects to this debate that I’d like to expand on. But let me start with just one. It has to do with the primary (non?) strategy for dealing with low wages and their emergence from the restructuring/ post 1987 recession, the ECA and the hollowing out of labour markets/ growth of the low wage service sector.

It is possible, though by no means exhaustive of the possibilities, to call this strategy ’state subsidisation of low wages’. I’ll expand a little below, but a fuller/ complementary account of important aspects of this can be seen in Gerry Cotterell’s recent University of Auckland PhD comparing Making Work Pay policy in the UK and in NZ [not online].

Essentially, (in my words not Gerry’s) starting in 1996 under the Nats with the child tax credit, there have been moves back towards a kind of (unwittingly) social wage. These have almost entirely involved using fiscal measures/ tax credits/ variously redistributive policy to subsidise low wages for families (not for individuals, who have remained classic standalone/ exemplary liberal subjects: and paid the price for it!). Obviously, as David notes in his post, more of this happened via the In Work Tax Credit and restoration of family support levels under Working for Families.

But importantly it didn’t stop there. Another ’state subsidisation’ measure was the accommodation supplement, introduced again targetted at families as a way to smooth a move towards a wider market model for housing provision; and since ensconced as a key subsidiser of that vital engine of growth, the (rental) housing industry.

But wait, there’s more: subsidisation of costs of work for families through subsidised childcare, 20 hours ECE, and other active labour market inklings.

And still more: subsidisation of training costs for employers (new apprenticeships) and professionals (interest free student loans).

And, finally, massive subsidisation of (mainly middle class) savings through Kiwisaver, which did also move to obtain some support from employers.

Now, I don’t think for a minute this cumulative effect was what the architects of  what John Kay in the FT called ‘redistributive market liberalism’ intended. But it accrued anyway, largely for reactive and political reasons: and largely driven by the state through executive means. It was highly borrowed (from the UK, and the Greens pushed some of it) and I think largely incremental/ path-dependent (as opposed to consistently strategic), as surprising and incremental fiscal headroom emerged. It responded to, perhaps rather than harnessed, a kind of viscerally felt ‘enlightened reaction’ or pushback against to low wages and wider neoliberal/ marketised insecurities. Karl Polanyi (The Great Transformation) and his seminal notion of the ‘double movement’ should be wheeled in at this point to explain!

On the other hand, it could be argued, given that neoliberal reform here as elsewhere itself relied heavily on the executive to ram through and protect its reforms, maybe the reversal needed the same executive action.

But either way, the main political points relevant now are:

  1. It benefitted mainly people in families, though student loans and kiwisaver also ‘helped’ more widely. So single people fell behind: both workers, and, if you are really looking for victims, single beneficiaries, who went furthest backward of any group against the average wage under Labour.
  2. There was massive fiscal churn going on here, especially as WFF In Work Tax Credit got shunted up the income levels.
  3. There was ongoing undermining of the labour market relations themselves (and especially any duty on employers) as a mechanism having to bear the brunt of worker and family costs: these were sent back to the state, which dipped into its burgeoning fiscal pockets and paid.
  4. With tax cut enthusiasm, liberal fears over Leviathan in the Economist, rising questioning of even the most basic fiscal aspects of the welfare state (eg in the current Welfare Working Group), and the sense that for all Labour did, child poverty is still unfinished business, we are in for a scrap over the fiscal pie, that could see some real half-thought radicalism, and prompt some of the basic/ turbulent binarism we see in US politics over tax happening here.

But meantime the net effect, as David and James Purnell note, is dulling of pressure on employers in an industrial bargaining sense. The state  subsidisies that away; or, a bit more helpfully, legislates that employers will pay more through minimum wage arrangements (but doesn’t put teeth back into the industrial relations legislation).

And, of course, all this did little or nothing to rein in the other great beneficiaries of unbridled market power in the distribution of assets and income, the rental properteers. Rather it started a pattern of subsidisation there that is only now starting to be reined in.

So, and not for lack of state effort, we are still stuck after 20 years of reform with this pattern of risen inequality.  Inequalities now need to fall, and low incomes rise: but leviathan is running out of grunt.

Real equivalised household incomes (BHC): changes for top of deciles, 1988 to 2008

So, some propositions:

  1. We have nearly reached the limits of fiscal based subsidisation (though there is more room in supporting family work/ care costs: watch this fiscal space).
  2. We all want higher wages, but have taken away incentives and mechanisms to re-organise industrially for them.
  3. Employers have been somewhat left off the hook, and unions left impotent, but no-one is the long term winner.
  4. We need a return to a better relationship between the employers, workers and the state that doesn’t involve the state in large-scale palliation of workers demands through Fabian style executive order/ fiscal churn/ policy based expansion of subsidy.
  5. This might in time spill over into better / more demands for political representation, including from underpaid singles and the folk currently referred to as the enrolled non vote.
  6. We need to continue to reassess as a whole the state’s contribution to housing, and in particular to the rental housing industry, and see whether the tax payer is getting value for money, etc.
  7. Interest free student loans? Compulsory or subsidised Kiwisaver instead of a pay as we go pension? Hmm.

So the irony/ disappointment is that, for all the well intentioned interventions so far, it seems we haven’t seen the shifts in real market and political power that might sustain equity. The market and the middle classes still have it pretty much their way, albeit now via a churnier state and all the backlash that causes.

One thing seems clear: to quote David and Jordan Carter, and channel Purnell, if real policy progress is to happen, the state can’t be the one to be doing all the heavy lifting here!  The beneficiaries of all this state subsidisation need to do their part too: and we know who you all are!!

But for this to happen (and to happen substantively and anytime soon), basic tripartite relations and powers — and political/ representational relations — may need to shift again.  And, as on the ‘Nixon goes to China’ principle perhaps only a Tory government could do, someone needs to continue to take on the landlords, and incentivise returns to industries workers can be a part of.

——-

David Craig is senior lecturer in Sociology at the University of Auckland, where he teaches around the history and political economy/ sociology of liberalism; colonialism and development; and urban sociology.

Tags: , , , , ,
Posted in Guest Post | 1 Comment »