1.
The Rise and Fall
of the Welfare State
Asbjørn Wahl
Author
15 November 2012 Ryerson University, Toronto

2.
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

3.
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 power
15 November 2012 Ryerson University, Toronto

4.
The three foundation pillars
The social System Struggle of
help competition organised
stat labour
15 November 2012 Ryerson University, Toronto

5.
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, utilities
15 November 2012 Ryerson University, Toronto

6.
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

7.
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 parties
15 November 2012 Ryerson University, Toronto

8.
Regulation of capital
Regulation of Trade protectionism
investments
Private capital
Fixed
Capital control exchange rates
Labour legislation Huge public sector
15 November 2012 Ryerson University, Toronto

9.
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 situation
15 November 2012 Ryerson University, Toronto

10.
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 power
15 November 2012 Ryerson University, Toronto

11.
The neoliberal offensive
Regulation of Trade protectionism
investments
Private capital
Fixed
Capital control exchange rates
Labour legislation Huge public sector
15 November 2012 Ryerson University, Toronto

12.
The neoliberal offensive
Regulation of Trade protectionism
investments
Capital control Private capital
Labour legislation Huge public sector
15 November 2012 Ryerson University, Toronto

13.
The neoliberal offensive
Regulation of Trade protectionism
investments
Private capital
Labour legislation Huge public sector
15 November 2012 Ryerson University, Toronto

14.
The neoliberal offensive
Trade protectionism
Private capital
Labour legislation Huge public sector
15 November 2012 Ryerson University, Toronto

15.
The neoliberal offensive
Private capital
Labour legislation Huge public sector
15 November 2012 Ryerson University, Toronto

16.
The neoliberal offensive
Private capital
Labour legislation Reduced public sector
15 November 2012 Ryerson University, Toronto

17.
The current situation
Private capital
Attacks on labour legislation Reduced public sector
15 November 2012 Ryerson University, Toronto

18.
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 power
15 November 2012 Ryerson University, Toronto

19.
«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 common
15 November 2012 Ryerson University, Toronto

20.
Reduced wage share
15 November 2012 Ryerson University, Toronto

21.
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 capitalism
15 November 2012 Ryerson University, Toronto

22.
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 crisis
15 November 2012 Ryerson University, Toronto

23.
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 countries
15 November 2012 Ryerson University, Toronto

24.
The future of the welfare state?
?
The social System Struggle of
help competition organised
stat labour
15 November 2012 Ryerson University, Toronto

25.
The future of the welfare state?
Financial,
economic
crisis
?
The social Struggle of
help organised
stat labour
15 November 2012 Ryerson University, Toronto

26.
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 offensive
15 November 2012 Ryerson University, Toronto

27.
This was just not enough !
Regulation of Trade protectionism
investments
Private capital
Fixed
Capital control exchange rates
Labour legislation Huge public sector
15 November 2012 Ryerson University, Toronto

28.
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 crisis
15 November 2012 Ryerson University, Toronto

29.
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 law
15 November 2012 Ryerson University, Toronto

30.
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-therapy
15 November 2012 Ryerson University, Toronto

31.
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 left
15 November 2012 Ryerson University, Toronto

32.
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 state
15 November 2012 Ryerson University, Toronto

33.
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 forces
15 November 2012 Ryerson University, Toronto

34.
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