Looking back over the ‘age of austerity’ since the 1970s, we know that the welfare state has declined. We know that welfare payments have become less generous, some people have seen their entitlements curtailed, and we’ve been left without the same protections that the welfare state gave us in its ‘golden age’. But according to a lecture by Paul Pierson at LSE on Tuesday, these common-sense beliefs are wrong – when we look at the data, we instead see the resilience of the welfare state. And in a second reversal of common sense, Pierson argues this shows the weakness not the strength of the left: the wealthy have achieved their goals through other means – or put more controversially, that in focusing on the welfare state, we are missing the point.
To argue that the welfare state has been ‘resilient’ may come as a surprise in the UK – OECD figures show a large fall in the generosity of unemployment benefits, which is nicely shown in the figure below from Peter Kenway’s report last year. But it’s easy to miss the areas where benefits payments have expanded – the rises in receipt of all types of disability benefits, the increase in the length of retirement, and the increasing transfers to families (e.g. through tax credits). Despite all of Thatcher’s attempts to cut welfare spending in the 80s – and the long-term effects of technical rules on uprating benefits each year – even the Iron Lady didn’t manage to cut welfare spending overall.
Unemployment benefits haven’t kept pace with rising living standards
So far, this is the classic Pierson argument on the resilience of welfare states. Where his argument became really interesting, though, was in saying that this ‘resilience’ might be illusory.
An imaginary resilience
According to Pierson, the ‘soft version’ of this argument is from Gosta Esping-Anderson: the welfare state may not have disappeared, but it has been a ‘frozen landscape’ while the world around it has changed. Given the ‘new social risks’ that a number of researchers have talked about, the old welfare state is now failing to protect us from the fears that really matter, and is discriminating against the new victims in favour of those with the classic risks of the welfare state. In my own terms: we live in a ‘risk society’ under a new, bloodier form of capitalism, and the welfare state has simply failed to keep up.
This is a depressing picture – but it pales in comparison to the cynicism of the ‘hard version’ that Pierson and Hacker outline for the US in their latest book (which Charlotte has brilliantly described in two posts on Inequalities). In this climate of austerity, the left have hung on to the welfare state as a ‘Maginot line’ – in other words, as their main line of defence against the onslaught of neoliberalism. Yet this focus on the welfare state has been a distraction. Instead of resilience being positive, it simply shows that the interests of corporations and certain parts of the wealthiest classes have been served through other means – in particular through “financial de-regulation, changes in marginal taxation rates, corporate governance reform and industrial relations”, as Charlotte summarises it.
Is this true in the UK?
Pierson may have been over-stating his argument on Wednesday – and I have probably taken this argument to extremes that Pierson would not defend. Against this, we have to accept that the welfare state is going to be a key battleground in the UK, given massive attacks on the most vulnerable people in society (as Daniel has pointed out).
But it does capture something, at least for the UK. I’ve already argued that New Labour fundamentally failed to change the economic structure of British society, and so it’s little surprise that their ability to challenge inequalities was limited. And increasingly I’ve seen thinkers and politicians on the left realise this – after seeing Lisa Harker argue something similar, you can now hear these arguments coming out of frontline Labour politicians, not least Ed Miliband.
While we have been focusing on the welfare state, then, we haven’t noticed that the battleground has changed, and that the left has been outflanked rather than outfought. Perhaps it’s now time for inequalities researchers to follow Pierson’s – and Charlotte’s – call, and move on from our obsession with the welfare state.
[You can hear the lecture here - but you may want to skip the first half hour or so, before he gets to his main argument].