The Evolution of the British Welfare State

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Strictly speaking, the class mobilization thesis should be seen not as a mere variation but as a distinctive theory that has its root in the neo-Marxist tradition because, unlike the logic of capitalism, which sees welfare spending as a means for capital to maintain its dominant position, it views welfare spending as a reflection of the political power gained by workers. It pays attention to the relative power of the “subordinate” class and regards variations in their power as being key in explaining variation in welfare state development. An increasingly interdependent world economy has also led many scholars to anticipate a significant degree of convergence (Scharpf 1991; Mishra 1996; Greider 1997; Martin and Schumann 1997; Gray 2002). Indeed, many countries have embraced the free market policy prescription as a solution to a range of policy problems, and some scholars predict a long-run decline – a race to the bottom – of the welfare state (Rodrik 1997; Allard and Danzir 2000) or a future of “permanent austerity” (P. Pierson 2001b:456). On the other hand, many studies of welfare state trajectories during the 1990s and the early years of the twenty-first century indicate that various welfare states respond differently to more or less similar sets of challenges, thereby negating a second coming of convergence thesis. The key to this divergence has been the politics of reform in each country, which has produced very different results and reform paths (Esping-Andersen 1999; Scharpf and Schmidt 2000a; 2000b; Huber and Stephens 2001; P. Pierson 2001a). The overseers were meant to provide work for the able-bodied poor. Anyone who refused to work was whipped and, after 1607, they could be placed in a house of correction. Pauper’s children were sent to local employers to be apprentices. From 1911 workers in certain trades such as building and shipbuilding who frequently had periods of unemployment all contributed to a fund. If unemployed they could claim a small amount of money for a maximum of 15 weeks in any year. Again it was hardly generous but in 1920 the scheme was extended to most (not all) workers. Welfare was not therefore seen as a neutral agency operating in society. Rather it was one, which, for good or ill, helps determine motivation, shape action and thereby determine character.

Historically informed work by the likes of Esping-Andersen ( 1990), Baldwin ( 1990), Immergut ( 1992) and Skocpol ( 1992) could all be grouped under this tradition, particularly in their articulation of the ways in which institutions and interests interact and in their claims that different paths of welfare state development have occurred over an extended period of time. It is recent debates surrounding globalization and the crisis of the welfare state, however, that have brought with them a fresh wave of theorizing in the realm of the institutional analysis of social policy. Life was hard for the working class at the beginning of the 20th century. In 1900 surveys showed that between 15% and 20% of the population were living at subsistence (bare survival) level. Worse between 8% and 10% of the population were living below subsistence level. By 1979 occupational pensions had grown from the modest initiatives recalled earlier into the great welfare success of this country. Alongside these pensions the Tories planted individually owned schemes, known as personal pensions. The advent of these schemes was their major welfare innovation. This advance, however, has been hampered by miss-selling - i.e. persuading people to leave occupational schemes almost invariably against their best interest - often accompanied by the imposition of very high charges and the absence of an employer's contribution. Even so, by 1979, Britain had more assets owned by occupational and personal pension schemes than the whole of the asset portfolio owned by other European Community schemes combined. An enquiry was established in 1941 to propose how best to tidy up state welfare. Beveridge seized the opportunity, rewrote the script, and then redesigned the contours of British welfare. The publication of his report was fortuitously delayed. When it was produced in November 1942 it followed hard on the heels of the Allies' first major victory of World War Two. Implementing Beveridge was immediately seen as part of winning the peace. Thus far, much of scholarly endeavor has been either about welfare state expansion or welfare state retrenchment, and accordingly the resilience of welfare states in relation to change. More recently, though, a number of research projects have begun to examine the new risk configurations that have emerged in the transition to postindustrial societies and that in turn have challenged welfare state arrangements that were established in the context of old, traditional risk contexts of industrial societies (Taylor-Gooby 2004; Bonoli 2005; Armingeon and Bonoli 2006). Numerous risk categories peculiar to postindustrial restructuring make an entry (Esping-Andersen 1999). Yet the central driving force of this postindustrial change is the notable rise in the international mobility of capital, which has an unprecedented impact on the welfare state. Swank has argued that Marxists, neoliberals, political scientists, economists, and popular analysts utilize “nearly identical reasoning to argue that the globalization of capital markets has effectively increased the power of capital over governments that seek to expand or maintain relatively high levels of social protection and taxation” ( 2001:203).An established introductory textbook that provides students with a full overview of British social policy and social ideas since the late 18th century. Derek Fraser's authoritative account is the essential starting point for anyone learning about how and why Britain created the first Welfare State, and its development into the 21st century. A law of 1697 said that paupers (people supported by the parish) must wear a blue or red ‘P’ on their clothes. On a more cheerful note in the 17th century in many towns wealthy people left money in their wills to provide almshouses where the poor could live. Those subscribing to such views believe that the high-spending welfare regimes are coming under sustained pressure to reduce the size and cost of their welfare programs because failure to make “domestic investment conditions attractive to internationally mobile capital” (Evans and Cerny 2003:55) will lead to capital flight from their economies. Drawing from the international relations literature, Evans and Cerny ( 2003) argue that the era of postindustrialism is remarkably different from the period that preceded it. In the postwar boom period, social policy was a relatively autonomous field of policy, a domestic issue that was unimpeded by wider economic concerns and so favorable to continual increases in state spending on welfare state activity. Yet “globalization has undermined these conditions.” Hence they anticipate the emergence of the “competition state,” which is “the successor to the welfare state, incorporating many of its features but reshaping them, sometimes quite drastically, to fit a globalizing world” ( 2003:20, 24).

Welfare had to work with the grain of human nature. Self-interest, one of the most powerful of human instincts, had to be the cornerstone around which welfare reform was built.Clearly, this line of reasoning carries some compelling elements, not least because it offers a narrative that broadly fits with the historical path of development of the nations to which it was applied. Nonetheless, the core proposition of this logic of industrialism has been subject to a number of criticisms. First, as is the case with the transnational diffusion literature that predicts the sequence within which welfare programs are adopted but not their form (e.g., Abbott and DeViney 1992), it oversimplifies the process of policy development and ignores the important structural variations in the organizational and institutional features of welfare states. Pressures under economic globalization have urged us to think again about the traditionally protective functions of social policy and whether this particular dimension will be robust enough to capture the highly complex nature of welfare state retrenchment and/or restructuring in the postglobalization era. As discussed earlier, this has led to a significant rethinking of the sustainability of welfare state. Increasingly, much attention has been paid to identifying “productive” elements of welfare compared to its traditional “protective” traits (Giddens 2000; Holliday 2000; Room 2000; Midgley and Tang 2001; Castells and Himanen 2002; Powell and Barrientos 2004; Vis 2007) and to test the argument that “welfare states have shifted away from traditional protective functions towards a model of ‘productive welfare,’ characterized by a greater emphasis on investment in human capital” (Hudson and Kühner 2009:34).