The Rise and Fall of the Welfare State

The Rise and Fall of the Welfare State Asbjørn Wahl Author15 November 2012 Ryerson University, Toronto

The welfare state success The welfare state represented great progress in terms of living and working conditions, unprecedented in the history of mankind. Public health, life expectancy and social security improved enormously as the welfare state developed in the last century.15 November 2012 Ryerson University, Toronto

A question of social power • In the last resort, welfare is a question of the distribution of the wealth in society • The distribution of the wealth in society is a question of economic and social power • Control and ownership of capital / resources form the basis of social power15 November 2012 Ryerson University, Toronto

The three foundation pillars The social System Struggle of help competition organised stat labour15 November 2012 Ryerson University, Toronto

The welfare economy • A considerable shift in the balance of power • The post WWII politics of Bretton Woods • Capital control and market interventions • Market competition was dampened • Compensated the deficiencies of the market • Social insurance, public services, utilities15 November 2012 Ryerson University, Toronto

Result of social struggle Well-developed welfare states were the result of social struggles – struggles based on popular mobilisation, confrontations with the counter forces, and the fact that a great part of the economy was taken out of the market and made subject to democratic governance.15 November 2012 Ryerson University, Toronto

The class compromise • Compromise between labour and capital • The result of a shift in power relations • A long-term booming capitalism • Result: great progress, and depolitisation • The crisis-free capitalism was a «reality» • The role of the social democratic parties15 November 2012 Ryerson University, Toronto

Regulation of capital Regulation of Trade protectionism investments Private capital Fixed Capital control exchange rates Labour legislation Huge public sector15 November 2012 Ryerson University, Toronto

A specific power relation • The welfare state is not only a sum of social institutions and public budgets, but first and foremost the result of certain power relations in society • The welfare state was never planned, it was a compromise of interests in a specific historic situation15 November 2012 Ryerson University, Toronto

The turning point • The 1970s: crisis in the world economy • The breakdown of the social pact • The triumph of neoliberalism • The abolishment of capital control • Deregulation of the markets • Immense shift in the balance of power15 November 2012 Ryerson University, Toronto

The neoliberal offensive Regulation of Trade protectionism investments Private capital Fixed Capital control exchange rates Labour legislation Huge public sector15 November 2012 Ryerson University, Toronto

The neoliberal offensive Regulation of Trade protectionism investments Capital control Private capital Labour legislation Huge public sector15 November 2012 Ryerson University, Toronto

The neoliberal offensive Regulation of Trade protectionism investments Private capital Labour legislation Huge public sector15 November 2012 Ryerson University, Toronto

The neoliberal offensive Trade protectionism Private capital Labour legislation Huge public sector15 November 2012 Ryerson University, Toronto

The neoliberal offensive Private capital Labour legislation Huge public sector15 November 2012 Ryerson University, Toronto

The neoliberal offensive Private capital Labour legislation Reduced public sector15 November 2012 Ryerson University, Toronto

The current situation Private capital Attacks on labour legislation Reduced public sector15 November 2012 Ryerson University, Toronto

Effects of the offensive • Increased pressure from competition – at the workplace, in school, in society • Redistribution from public to private • Redistribution from labour to capital • Redistribution from the poor to the rich • Undermining of public welfare institutions • De-democratisation - increased market power15 November 2012 Ryerson University, Toronto

«Public sector has become too big» • It has become too big in all countries, no matter the size of the public sector • It has actually become most too big where it from the outset was smallest (i.e. the USA) • The myth of the too big public sector is being used ideologically to weaken it • The power-relations in society and the political-ideological hegemony decides how much we decide to organise in common15 November 2012 Ryerson University, Toronto

Reduced wage share15 November 2012 Ryerson University, Toronto

Contemporary capitalism • Capitalism is in a deep systemic crisis • Politicians across the board has responded by deregulating markets /abolishing capital control • A neo-liberal strategy of global restructuring • Institutionalisation of neo-liberalism in the EU • No more room for compromises with labour • A new phase in the development of capitalism15 November 2012 Ryerson University, Toronto

From financial to debt crisis • Gigantic rescue packages saved the economic system from the financial crisis • The financial crisis turned into a debt crisis • Strong demands for balanced budgets • Trade unions and public welfare under attack • On a straight course towards a depression • From economic to social and political crisis15 November 2012 Ryerson University, Toronto

Draconian austerity policies • Wages in the public sector have been cut without negotiations in at least ten EU countries • Considerable down-sizing in the public sector • Massive attacks on pensions and social security • Forced privatisation of whatever is left of public property, pushed by the Troika • In other words, a massacre of the welfare state is going on in the most crisis-ridden countries15 November 2012 Ryerson University, Toronto

The future of the welfare state? ? The social System Struggle of help competition organised stat labour15 November 2012 Ryerson University, Toronto

The future of the welfare state? Financial, economic crisis ? The social Struggle of help organised stat labour15 November 2012 Ryerson University, Toronto

What went wrong? • The social pact was not a stable situation • A compromise in a concrete historical situation • Tactical compromise became the final aim • Basic power relations remained in tact • The ideology of the social pact proved wrong • Taken by surprise by the neo-liberal offensive15 November 2012 Ryerson University, Toronto

This was just not enough ! Regulation of Trade protectionism investments Private capital Fixed Capital control exchange rates Labour legislation Huge public sector15 November 2012 Ryerson University, Toronto

Labour movement in crisis • Deep political-ideological crisis on the left • System criticism is more or less non-existent • No attempt at mobilising for a power struggle • Almost no measures are put in place in order to weaken the power of financial capital in society • The crisis reinterpreted as public irresponsibility • A lack of trust, since they have supported/ carried out the policy which led to the crisis15 November 2012 Ryerson University, Toronto

New economic governance • The Annual Growth Survey (AGS) • The European ’Semester’ (budget control) • New economic governance (’sixpack’) • Euro-/Financial pact (Euro countries + others) • A new system of economic sanctions • Austerity policies are turned into a matter of principle, and Keynesianism is banned by law15 November 2012 Ryerson University, Toronto

Economic growth not the aim • Many criticise the austerity policies in Europe for failing to counteract the effects of the crisis • But the aim of the austerity policies is not to regain economic growth and create jobs • It is implemented in order to destroy the welfare state and defeat trade unions • The elite uses the crisis as an opportunity to carry out what they did not achieve with the Lisbon strategy, now with shock-therapy15 November 2012 Ryerson University, Toronto

Important challenges ahead • The class compromise is breaking down – the social partnership ideology is doomed to fall • Negative and partly catastrophic experiences with social democratic / centre left governments • Greece, Spain, Portugal • France, Italy, Norway and Denmark • The EU moves in an authoritarian direction without it being noticed by the broad left15 November 2012 Ryerson University, Toronto

Beyond Keynesianism ! • Emancipatory social policies presuppose a shift in the balance of power in society • The welfare state did not go far enough in taking democratic control of the economy • A new needs-based social model will have to go beyond the Keynesian welfare state15 November 2012 Ryerson University, Toronto

Light at the end of the tunnel? • Under current conditions we are facing the end of the era of the welfare state • The task now is not to “save the welfare state”, but to defend the achievements which were won • Our future will depend on the development of the social struggle – the balance of power in society • A higher level of civilisation is still possible, but only through mobilisation of broad social forces15 November 2012 Ryerson University, Toronto

The Rise and Fall of the Welfare State In an age of government imposed austerity, and after 30 years of neo-liberal restructuring, the future of the welfare state looks increasingly uncertain. Asbjørn Wahl offers an accessible analysis of the situation across Europe, identifies the most important challenges and presents practical proposals for combating the assaults on welfare. $ 25,- 15 November 2012 Ryerson University, Toronto

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The Rise and Fall of the Welfare State

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