Welfare

Central values

The term equality has at least three meanings:

  • Legal or formal equality: Everybody is equal before the law, irrespective of birth or social position.
  • Equality of opportunity: Everybody should have equal chances to achieve whatever they can through their own merits (meritocracy).
  • Equality of outcome: Everybody has the same resources and status, irrespective of their talents, efforts and abilities.

These three concepts are not consistent with each other. Hayek (1960) points out that the attempt to bring about equality of opportunity or equality of outcome must undermine legal equality (for example, Labour Party all female shortlists). This is because in pursuing egalitarian outcomes it is necessary to treat people differently, rather than apply the same rules to everybody.

John Rawls

A John Rawls Theory of Justice (1972), considers that if people had to devise a system of distribution without knowing what position they would occupy within it they would settle on two points:

  • Agreement on a principle of equal liberties.
  • Resources allocated equally except where an unequal allocation could be shown to benefit those who end up with least. This means there might be conditions where giving some more than others could ensure that everybody is better off.

Rawls describes this unequal distribution of resources as the difference principle, and argues that it is strongly egalitarian as there is a presumption in favour of equality unless a case can be made for allowing some inequality to emerge.

However, Robert Nozick, Anarchy, State and Utopia (1974), criticises Rawls because people do not make judgements about distribution from a position of total ignorance and innocence. Nozick argues that equality cannot be established on the basis of the actual distribution of goods but whether or not people have established a legitimate right to the things that they own.

Robert Nozick

Nozick is arguing that the existence of inequalities is irrelevant to considerations of social justice. What counts is how goods are acquired. The idea that peoples' possessions legitimately acquired can be taken away and given to someone else is not a realisation of social justice, but the negation of it. Nozick argues that provided we have a legitimate right to our possessions, whether we end up with more or less than others is irrelevant.

Rawls and Nozick identify important considerations for the analysis of inequalities:

  • We cannot assume that inequality is necessarily immoral or socially damaging.
  • Redistribution can itself create injustices.

To show that a society is unequal is not the same as showing it to be unfair.

The problem of the relationship between equality and liberty is developed buy P. Saunders, Social Class and Stratification (1990). He starts by outlining the two basic questions asked by the functionalist sociologists Davis and Moore, Some Principles of Stratification (1948).

  • Do stratification systems perform positive functions in human societies?
  • If they do, does this explain their existence and does it mean that stratification is therefore inevitable?

On the first question, it can be shown that a system of stratification can have positive effects (this does not mean that there cannot, at the same time be negative effects), but this does not mean that the same effect could not be achieved in some other way, there may be alternatives. In other words, to show that something is functional is not to show that it is necessary.

It is possible to imagine a society where all positions are rewarded equally in terms of material resources and formal status, but the problem is then to ask, how would these positions be filled?

The only answer seems to be that some powerful authority would be required to force people into certain positions and police them to make sure they their duties properly. In the absence of economic rewards and penalties the only sanction against those who refuse to co-operate is the threat or use of physical force.

So, stratification based on the distribution of material goods and social status is not the only way of allocating people to positions in society. Coercion, repression and terror could achieve the same objective.

Milton Friedman

These are, argues Milton Friedman (1962), the only alternatives:

'Fundamentally there are only two ways of co-ordinating the economic activities of millions. One is central direction involving the use of coercion - the technique of the army and of the modern totalitarian state. The other is voluntary co-operation of individuals - the technique of the market place.'

Most societies seem to rely on both techniques. Capitalist societies rely more on the market and so they have greater inequalities than socialist societies. But, socialist societies are seemingly (to some of us at any rate) more repressive.

Equality and liberty are incompatible objectives, to have more of one we have to sacrifice some of the other. Egalitarianism is attainable only at the cost of individual liberty. We have to choose our balance between these values because we cannot have all of both.

There is a continuing dispute as to whether welfare should be the overriding goal of society.

This is because:

  • There is difficulty defining the precise meaning of the concept.
  • There is, following from above, the problem of measurement.
  • Scepticism concerning the claim that values form a hierarchy with welfare at the top.

There is, for example, a tension between utilitarianism, which is collectivist in its subordination of all other moral considerations to the welfare maximising imperative, and classical liberalism, which stresses the inviolability of individual rights. The anti-state stance in liberal thought derives from the claim that any statement concerning what is good for society, that ignores individual desires, is fundamentally misconceived.

Robert Nozick argues:

'There is no social entity with a good that undergoes sacrifice for its own good. There are only individual people with their own individual lives. Using one of those for the benefit of others uses him and benefits the others.'

This is another version of the Thatcher claim that there is no such thing as society.

In this approach justice is limited to actions that protect individual rights and justly acquired property.

A second liberal argument against state involvement in welfare is that in a complex society there are a variety of values and we have no innate reason for ranking them in any particular order. People may choose to donate to welfare but it should not be a demand made by the state for redistributive justice.

To contemporary thought justice and welfare seem to be closely linked, that the one (justice) implies the other (welfare). Rawls, in his Theory of Justice, argues that justice is the first virtue of a society and that it should take priority over welfare. However, he also argues that the distribution of resources is just if it is to the benefit of the least advantaged.

Inequalities are permissible to the extent that they are necessary for the generation of a surplus for redistribution.

Friedrich von Hayek

Hayek, objects to the very idea of social or redisdributive justice because, in his view, justice and injustice can only be attributed to the intentional actions of human agents under fair rules applicable to everyone. Since society is not a person, it is thus absurd to speak of it acting justly or unjustly. Any one person does not intend the distribution of income that results from the actions of individuals, so no one can be morally responsible for it.

In a famous comparison, the result of market processes, because they cannot be foreseen and are unintentional, are likened to the weather; no one would, for example, claim that the distribution of sunshine between Britain and Spain was unfair, precisely because it is a fact of nature. Hayek claims that incomes are natural in a sense of not being planned; and although they can be altered, such action will have unanticipated consequences.

What Hayek is pushing us towards is an acknowledgement that the concept of desert is irrelevant to the distribution of income. In a market system income is a function of value not merit. All political interference with the market is arbitrary and rests on the mistaken assumption that there is general agreement on deserts and needs, when in a complex society there is no such general agreement.

Hayek does not rule out all welfare, some people will not be able to earn an adequate income because of the low or zero value of their labour and will need extra-market payments. But, these payments are not a matter of justice, but of benevolence, the victims are not entitled to welfare because their distress is not the result of any one's deliberate actions.

Robert Plant provides a critique of Hayek. He argues that although the outcomes of a market process are unintended they can be foreseen. Furthermore, he claims that the meaning of justice is not simply a matter of how things come about but of how we respond to them.

It would be an act of injustice not to correct any market outcome that left people in dire need. And, although a society is not a person it does have an agency, the state, which has the moral duty of alleviating alterable distress. However, we do not have to assume that only the state can fulfil such obligations.

Some research suggests that the market can contribute to equality and freedom. It is suggested, for example, that the market will be far more effective than the state at eliminating excess profits and cutting waste. Additionally, there seems a clear trend to inequality in the consumption of state provided welfare.

The egalitarianism claim that greater equality can be achieved by the common consumption of welfare services, not subject to price or means testing has been challenged.

Le Grand, in a comparison in income and occupational terms of the top and bottom fifths of the UK population, found alarming inequalities in health care, secondary education, university education, tax subsidies and rail subsidies.

Rail

The fact that a public service is available to all does not mean all will consume it equally.

Le Grand argues that:

'Policies involving subsidies whose distribution is dependent upon people's decision to consume the good or use the service favour the better off.'

Le Grand reaches the conclusion that, in some cases, it is likely that there would be greater equality if there were no public expenditure on the service concerned - an implicit recognition of the equalising tendencies of the market.

Defenders of state provided welfare services argue that without middle class participation, the poorest would be even worse off. Apparently, it is middle class political pressure that keeps up the public expenditure from which the poorest benefit. This is a strange argument that, in effect, is claiming that the selfish consumption of education, health and housing subsidies by the middle class ensures the survival of the welfare state for the benefit of the poor.

Clearly:

This idea has devastating implications for the argument that welfare institutions tap our resources of altruism.

  • This idea has devastating implications for the argument that welfare institutions tap our resources of altruism.
  • The theory is false.
  • It is most unlikely that there would be no welfare state without middle class participation.
  • The middle class can protect the services from which they benefit.

Le Grand and Godwin claim that in times of reduced Government, spending it is those activities that have the fewest middle class users that are most adversely affected. They use the term beneficial involvement to describe the relationship between the m/c and the welfare state (Not Only the Poor, 1987).

The Welfare State has produced the phenomenon of redistribution of welfare from rich and poor towards the middle-income groups. The results of egalitarian social engineering have been shown to be disappointing.

Adapted from: Welfare, Barry Norman, 1990.

Essay-style Questions

  1. "The Welfare state has blunted the extremes of poverty, but has failed to achieve its goal of eliminating it."

    Explain and assess this view.

    (Marks available: 20)

    Answer

    Answer outline and marking scheme for question: 1

    Introduction

    Consider which definition of poverty seems to be being used here.

    The 'some' tend to be on the 'new right'.

    This is a behavioural approach, which is opposed by structural approaches.

    So you need to consider whether some behaviours lead to poverty and whether some behaviours are a response to poverty.

    Then you need to consider alternative reasons for the persistence of poverty.

    Main

    Historical distinction between 'deserving' and 'underserving' poor.

    Rowntree's distinction between primary and secondary poverty. There is then a historical precedent for current concern with the behaviour of the poor.

    Lewis: culture of poverty.

    Joseph: cycle of poverty.

    Murray: 'new rabble'.

    Marsland: poor misled by over generous welfare state.

    However, look at who the poor are: children, the elderly, single parents, those in low wage employment. The behaviour and attitudes approach can only apply to those who can do something about their situation.

    Consider economic restructuring and regional patterns of unemployment - some jobs have disappeared, some areas - for example, Cornwall have very few job opportunities.

    The behaviour of the government - the switch from progressive direct taxation to regressive indirect taxation has widened gap between rich and poor.

    The behaviour of the rich?

    Are the attitudes of the poor different? Some researchers would say no, but rather that the poor have no opportunity to make choices the rest of us take for granted.

    Conclusion

    Don't sit on the fence with this one. The evidence seems fairly clear. Of course some people do take advantage of benefits and don't want to work. But evidence consistently shows that people want to work and that people don't like being poor and unemployed.

    Added to this is the straightforward evidence that many of those in poverty are there as a result of consequence, not behaviour - the young, the old, the disabled, those who live in the 'wrong' areas. The argument about behaviour is a moral rather than a sociological argument.

    (Marks available: 20)

Social Policy: Philosophies of Welfare

Key areas regularly examined in the areas of welfare and poverty and social policy include:

The aims of welfare provision; principally in areas such as the family; poverty and health and involving concepts such as equality, rights and social justice.

Analysis of the Welfare State from different perspectives.

The debate concerning the proper purpose, and the extent of state involvement in the provision of welfare has - since the creation of the British Welfare State - been dominated, certainly at the level of actual policy, by two main perspectives:

  • The Social Democratic approach.
  • The New Right (market liberal) approach.

Social democracy

The Social Democratic approach dominated political and public opinion for the thirty years after 1945. It is a philosophy based on the economic theory of J. Keynes and the social thought of W. Beveridge.

Houses of Parliament

Keynes argued that governments could and should intervene in the economy, and that it could manage demand for goods and employment levels by its own taxation and spending policies.

Beveridge believed it was the duty of individuals to combine as a society with the strong supporting the weak. This liberal consensus involved an acceptance of the mixed economy and of the welfare state. The term 'Butskellism' was coined to describe this approach of moderate reformism. Leading writers in this tradition are: R. Titmuss, P. Townsend; D. Donnison, and B. Abel-Smith.

What many followers of this tradition share, is a belief that the free market produces a number of undesirable features. These are:

  1. Based on accumulation not social purpose, a free market economy inevitably leads to avoidable ills and misery for some.
  2. Market forces are undemocratic being controlled by a few very powerful individuals.
  3. A free market gives unjust rewards. Rewards and penalties are not governed by moral principle.
  4. The market is not self-regulating. Unless regulated it ends in economic crisis, unemployment, inflation and over production.
  5. Because of the above, poverty and inequality increase in a free market economy.

From the social democratic viewpoint, the Welfare State is an obvious response to the drawbacks of the free market. For social democrats, it is necessary for governments to intervene in the market, compensating victims, redistributing income, providing opportunity for the underprivileged and restraining the greedy and powerful.

The outcome, social democrats argue, is greater social justice, and the rewarding of talent and effort rather than of power and privilege. It helps society to become more efficient in avoiding the wastage of the talents of its citizens. Social conflict is avoided because society becomes more integrated and all can support a manifestly fair system.

The aim of Social Democracy is to promote a society where social priorities are set in a considered and rational way, with a co-ordinated plan to achieve them. In such a society, social inequalities are reduced to acceptable levels and social ills are countered by state run organisations.

Within this tradition the key issue concerns the nature of welfare provision.

Should welfare be provided universally or selectively?

Universalism provides services as a matter of right to all citizens. Selectivity involves establishing the criteria that gives access to welfare and a process for means testing applicants. A parallel distinction is that between institutional and residual concepts of welfare.

A residual system provides that state social welfare institutions come into play only when all other avenues of assistance have been exhausted. An institutional system, on the other hand, sees the state welfare service as a normal first line function of a modern industrialised and civilised society.

Arguments in support of universal benefits are:

  1. Universal benefits eliminate the need for means-tests which could be humiliating, bureaucratic, and off putting, which may discourage people from claiming benefit to which they are entitled. For social democrats the low take up of means tested benefits is an important failing of the current social security system. In 1980, no means tested benefit had more than an 80% take up. (Parliamentary answer, 1981).
  2. Universal benefits are funded from taxes and National Insurance contributions paid in the past by the people themselves. One should thus be able to draw money from the fund regardless of one's current financial circumstances. This point was strongly made in the Beveridge Report.
  3. Universal benefits are more practical. They are cheaper to administer, and these savings can be used for higher benefit levels.
  4. Means-tests perpetuate poverty by creating a poverty trap. Universal benefits are paid regardless of income and so prevent the poverty trap from operating.
  5. Means-tests can be used as a form of social control through the way the rules of eligibility are framed.
  6. Universal benefits are integrative, selective ones are divisive.

Beveridge recommended a system of national security that was universal and compulsory. It is argued that the universal system provides services on the basis of right an equality, and therefore fosters a shared community; clearly a social vision. It was also considered that a more socially secure society would be a more orderly one. The major argument against such a system is cost and this is a major reason for the drift away from universalism in the British Welfare State.

Crises in Social Democracy:

The reason for the crises in welfare is the decline of the economy. The crisis in the economy tested and broke the post-war social democratic consensus and the compromise between capitalism and socialism.

The free market failed to supply an expanding surplus with which to fund the welfare state. The problem became insoluble because to take pressure off the market meant reducing taxation and cutting welfare. Expanding, or even maintaining welfare levels, meant increasing taxation.

Criticisms of Social Democracy:

It tends to concentrate on the symptoms of social problems rather than on the causes. Poverty, to be tackled at the level of its causes has to be related to the system that produces it; to income, to career patterns, etc.

Career options

The approach is fundamentally conservative. Attention focuses on particular examples of poverty rather than on the system that generates it. There is a stress on gradual reform, but not the realisation that capitalism is a system that only works in the presence of inequality because it is based on the principles of economic self interest and the incentive to have more than others by being successful

The New Right

The New Right is the dominant philosophy in the Western world at present.

It is a development of the old right, notably the political economy of Adam Smith. When the conservative party came to power in the UK in 1979, they set about cutting social expenditure. They did this because they believed that to do so would regenerate private profitability, but also because they believed that reducing public reliance on state provision was a matter of principle.

The New right wanted to liberate Britain from the tax burden of social democratic welfare principles. M. Friedman argued that the state should not be used to bring about any social objectives, no matter how laudably such objectives might be.

The New Right argued that:

  1. The capitalist system is capable of providing wealth and happiness for all.
  2. The market system ensures that prices and wages find their 'correct' level so that there is full employment and a match between supply and demand.
  3. Governments are mistaken if they interfere in the market through taxation, welfare measures and artificial restraints on business activity.
  4. Government interference leads to wages that are too high, unemployment and lack of initiative.

These beliefs committed the Conservative governments of the 1980s and 90s to:

  1. Reducing the size and expenditure of the state sector.
  2. Reducing the levels of taxation.
  3. Leaving the labour markets to regulate themselves.
  4. Weakening unions and restrictive practices.
  5. Promoting the market via privatisation.
  6. Increasing individual and family self-help to remove dependence on the state.

However, these measures were not cheap, and also had consequences in terms of state control. The costs of forcing the market to be free are:

  1. A strong state.
  2. Increased centralised intervention.
  3. More authoritarian and repressive measures (Held, 1984; Gamble, 1986).

In the UK, as in the USA, public expenditure has continued to grow despite government efforts to curb it. However, although levels of social expenditure have continued to rise, they have not been sufficient to meet the needs of the changing population structure, and increased social needs and deprivations.

In Britain we have a combination of four sectors providing social services and health care:

  • Statutory organisations - set up by parliamentary legislation.
  • Voluntary - often charities.
  • Commercial - profit-making businesses.
  • Informal - relatives, neighbours, friends.

Commercial

This situation has been described by the Wolfenden Report as 'Welfare Pluralism'. The Conservative governments since 1979 have attempted to alter the mix of this pluralism, reducing the role of the state and increasing the other three.

The reason for this is a belief that:

  • State organisations are captured by professionals who use them in their own interests; increased salaries rather than improved services for clients, more bureaucracy less efficiency.
  • State services are impressive and bureaucratic. Private schemes and charitable agencies give more choice and efficiency than state schemes.
  • State organisations are too large and unresponsive to client needs.
  • Generally state intervention should be reduced.
  • Compulsory insurance, state programmes etc belong to pre-war and early post-war years, they are out of date in modern society.
  • The strategy of equality has gone too far.
  • The costs of the welfare state are too great - demand is unlimited and there are constantly rising expectations.
  • Government action has unintended consequences - for example, the importance of the family declines, people become unwilling to take low wage labour.
  • The government has become overloaded - the system is too complex and outcomes are no longer predictable.
  • Government spending on welfare creates inflation, which causes further problems.
  • Governments act according to the vote motive, they offer welfare bribes. This means welfare services are set up irresponsibly, without thought to cost or consequences.

The New Right does not propose that the Welfare State should be abolished, but that it should be in line with what is termed a 'residual model'. For example, those who need state help form a small group at the bottom of society. Benefits should be targeted at them (and only them - the deserving poor), and should be minimal.

Universal provision of benefits is nonsensical; it gives to those who don't need it and wastes resources. Child benefit, for example, costs nearly £5 billion a year (1988), going to 6.8 million households with 12 million children regardless of income.

Child benefit

The residual model relies on the ability of the caring agencies to identify those in need. This is done primarily through the use of means testing. Benefits can thus be targeted to those who need them. Means-tested benefits are cheap, efficient and effective. And being cheap, taxes can be reduced and the incentive to work is increased as a result. Means-testing also limits the demand for goods and services. For example, charging for eye tests and dental check ups (free prior to 1989) will cut unnecessary demand for these services.

The 1986 Social Security Act reflects the Government's New Right thinking. It returned to the views that motivated the passing of the 1834 Poor Law Amendment Act, that the principle cause of poverty is the ignorance and idleness of the poor themselves. Poverty is seen as a moral problem rather than an economic problem.

The New Right tend to adopt an absolute definition of poverty and see it as the fault of poor people themselves. The 1986 Social Security Act (operative in 1988) has been called the most important social welfare measure since the post-war legislation, which followed the Beveridge Report.

The Act introduced:

Income support to replace Supplementary benefit. The result was that the level of benefit was reduced for many, and cut completely for some. Discretionary payments for hardship were abolished.

The social Fund, partly to help those in hardship not covered by income support, but almost all payments were loans not grants.

Family credit replaced Family Income Supplement. In some ways it was more generous but it could not be claimed by many of those eligible for it - family heads in work but on low income.

Reduced state pensions for those retiring early, by limiting the link between the earnings now and pension then. It became easier to take out private pensions.

Pensions

In addition, the 1988 Social Security act withdrew benefit from most people under 18. The assumption was that all such people should be in work or on youth training schemes. It was estimated that at least 14,000 people between the ages of 16-17 were without jobs or income during Christmas 1988.

Other Conservative social security measures of recent years include:

  • A failure to increase child benefit in line with inflation.
  • An increase in prescription charges and charges introduced for dental and eye checks.
  • After 1982, LEAs not obliged to provide school meals (except for benefit claimants) or nursery education.
  • The council house-building programme was stopped or cut in a number of ways.
  • Resources for DHSS to identify fraudulent claims greatly increased.
  • Income tax was reduced dramatically between 1979 and 1988, most of it going to benefit higher rate taxpayers.
  • Domestic rates were replaced by the poll tax.

The effect of these changes was to leave 80% of the poorest claimants worse off than they were before April 1988, and to intensify the poverty trap.

The General election of 1979 is now seen as a watershed in the development of the post-war welfare state. Two immediate changes occurred:

The government brought a determined economic regime and a reaffirmation of the principles of self-help and value for money. This was bolstered by an uncompromising social morality.

At present, the Welfare State mirrors the social, economic and ideological values of the modern Conservative party, and some would add, New Labour as well.

S-Cool Revision Summary

This Revision Summary applies to all of the Poverty, Wealth and Welfare topics...

Can You?

Outline and explain competing definitions of poverty.

Explain who are 'the poor'.

Explain conflicting approaches that explain why the poor are poor.

Be able to illustrate all of the above by reference to both historical and contemporary research.

Can You?

Describe and outline the main features of competing philosophies of welfare state and social policy.

Absolute poverty Having only what is required for physical health.
 
Relative poverty Measured in terms of judgments by members of a particular society of what is considered a reasonable and acceptable standard of living.
 
Consumption property Property that we have for personal use-clothes, cars, family homes.
 
Productive property Makes money, it is capital and includes factories, farms, stocks and shares.
 
Income The flow of money. Based on market reward for skills. The ownership of intellectual capital or skills.
 
Wealth The store of capital. Obtained via inheritance or accumulation via high salaries.
 
Social Democracy A society with the strong supporting the weak through state intervention via taxation.
 
New Right The belief that the state should not be used to bring about any social objectives.
 
Welfare pluralism The provision of welfare from various sources, not just the state.
 
Lumpenproletariat Marx and Engels in the Communist Manifesto 1848, referred to the Lumpenproletariat as 'the dangerous class'.
 
1988 Social Security Act Withdrew benefit from most people under 18, reintroduced idea that poverty was the result of idleness.
Booth, Life and Labour in East London.  
 
Rowntree's early studies of York, 1899, 1936, 1950.  
 
Townsend and Abel Smith (1965) The Poor and the Poorest. Poverty caused by low income.
 
Townsend Poverty in the United Kingdom (1979). Poverty resulted in a deprived lifestyle.
 
Piachaud (1981) Has sympathy with Townsend's view of poverty but criticises his deprivation index as rather arbitrary in its choice of indicators of poverty.
 
Mack and Lansley (1985) 'Breadline Britain'. Public perception poverty line.
 
Westergaard and Ressler (1975) Argue that class inequalities generated by the capitalist system are the fundamental reason for the persistence of poverty.
 
Peter Townsend et al (1987) The feminisation of poverty.
 
The Acheson Report  
 
Oscar Lewis The Culture of Poverty Thesis, 1965.
 
Wilson (1987) A structural account of poverty.
 
Field (1989) Has argued that Britain has an underclass of poor people whose structural location is markedly different from others on low income.
 
Rutter and Madge (1976) Over half of all forms of disadvantage arise anew each generation.
 
Bradshaw and Holmes (1989) "The poor are just the same people as the rest of our population, with the same culture and aspirations but with simply too little money to be able to share in the activities and possessions of everyday life with the rest of the population."
 
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