The crisis of the welfare state

The set of all the factors that are involved in the quality of life and give rise to human satisfaction can be understood as welfare. It can also be classified as social welfare (in reference to collective provision) economic welfare (in reference to the forms of guaranteed welfare through the market or in the formal economy) and the welfare state (in reference to the state agency through which the social welfare provision is realized) (Pierson, 1999). Human satisfaction and quality of life are two subjective conditions that are different for each individual and not observable directly. “The difficulty of measuring welfare forces us to delimit the concept towards the field of basic needs (food, shelter and clothing, but also health, education and protection against social risks linked to the age - pension - or other contingencies)”. (Culfaz, 2014, p. 106)

Giving a definition of the welfare state is not easy. The reason of this difficulty is that this concept includes various contents. The definition of Harold L. Wilensky is one of the most commonly used one in this field: "the essence of the welfare state is a guarantee by the government of minimum standards of income, food, health, housing and education, attributed to each citizen not as charitable gesture but as a political right". (Wilensky, 1975, p. 1)

According to the framework of Wilensky’s modernization theory, the rise of the welfare state reflects the economic development that is conceived as the result of the processes of industrialization, urbanization, and rationalization. Against this statement, Moris Janowitz argues that the development of the welfare state is embedded in political processes such as:

nation-building, the institutionalization of democracy and the implementation of the political, social and legal rights of citizens. Janowitz considers the welfare state not only as

a reflection of an offer of a mature economy, but also as a product of inclusive rights and institutions which increasingly become more universalistic. “…analyzes the welfare state from the perspective of social control which can be defined as the ability of a society or social group to pursue a set of superior moral values. In his view, the contemporary structure of the welfare institutions has contributed to the development of regimes that are governed by narrow margins or unstable coalitions, or even by minority governments”

(Martinez, 2006, p. 18). His definition of the welfare state includes political control through a parliamentary democracy with an effective legislative opposition. (Janowitz, 1976, p.17)

According to the neo-Marxist theory, the capitalist state must "simultaneously" fulfill two contradictory features of the system - the accumulation and legitimation - and it is very far away from being a conscious instrument of the ruling class (Offe, 1984). The capitalist state depends on incomes coming from private sector production and it functions by contributing to the process of capital accumulation and providing the social capital through investment and social consumption. The social investment ensures the prerequisites of capitalist production, which are urban infrastructure, education and research and in this way it causes an increase the labor productivity. The social consumption decreases the reproduction of the labor costs through providing a social security system to workers. The total social capital increases in parallel to the centralized and private capital whose only goal is efficiency and "profit". With regard to the relationship between capital and labor, the social policies of the welfare state incorporate workers to the labor force through direct and indirect wages or in other words through a " administrative re-commodification " (Offe, 1984, p. 120) and thus, the labor force conforms to the requirements of the capitalist labor

On the other hand, because of the need to ensure the process of accumulation, the capitalist state must maintain the public loyalty through taking charge of social expenditures. Some expenses, even if they are necessary for the legitimacy, are not productive in economic terms; however they serve to sustain the social consensus. The crucial point of the analysis - as it is mentioned previously –is that the two functions of the welfare state- the accumulation and the legitimation - are partially contradictory. The welfare state distances itself from the mentality of the capitalist economy by providing goods and services as use values and it weakens the primacy of the obtaining of benefits, which is the first target of a capitalist economy.

Ultimately, the contradiction between the accumulation and legitimacy is based on the tension between pure democracy and market capitalism. According to Marxists, the universal suffrage and the citizens can lead to the emancipation of the working class through the use of political power in order to eliminate private ownership of the means of production. On the other hand, liberal democracy could also give rise to relatively authoritarian regimes that maintain the domination of the capitalist class. The historical importance of Keynesian economics lies here. Keynesianism creates political and ideological bases for a compromise between capitalism and democracy and also between capital and labor. The state, through the management of unemployment and the redistribution, reconciles the interests of the workers who are productive and those of private property -who controls the means of production-.(Przeworski, 1985) In a democratic Keynesian capitalism, workers give consent to the capitalist social relations while capitalists accept the participation of workers in the formulation of some policies such as the increase of wages,

social security against the risks of the labor market and the responsibility of the state in full employment.

According to Keynes, the economic crisis may be defined by the insufficiency of the demand and, through counter-cyclical demand management; workers convert their "consumer"

roles into "representatives of the public interest" where they can slightly give shape to the production. An augmentation in wages, public spending and social well-being increases the demand and thus it stimulates the production which leads to full employment and a high profit rate. In this sense, the material interests of the workers and also of capitalists are partially reconciled.

In a liberal democracy based on majority rule and parliamentary representation, the state is committed to the public interest. So the interventionist state created expectations that democratically controlled economic management can solve the economic crises. In this case, conservative analysts say that in the welfare state, some instruments of redistribution and a specific level of public consumption cannot return to its original level without a threat of the loss of the loyalty of the majority of the population. This mentality leads to the chronic inflation (an overload of economic demand) and the crisis of governance (an overload of political demand). (Offe, 1984)

However it should be noted that discussions on the social policy began much before the oil crisis. The first type of criticism for the welfare state is not focused on its economic potential defects but on its social impact. The arguments of authors such as Roland Huntford, Ivan Illich or Helmut Schelsky drew attention in the beginning of the 1970s. (Alber, 1988, p. 182)

criticism including economic aspects accompanied to the first type and added the adverse effects of the welfare state on the competitiveness of producers in the international market.

According to Alber, we can call the first type as a political liberal attack on the welfare state and the second as an economic liberalism attack. (Alber, 1988, p. 182) In the next decade, in the 80's, there were several interpretations about the crisis of the welfare state. These interpretations can be grouped into two. The first perspective questions whether the crisis was only a recession period and if it had to be considered as an inherent element of capitalism. On the other hand, the second claims that this period of crisis is unique and can result in major changes in societies and that could cause a readjustment process. Alber, in his article, classifies these interpretations among three groups; Durkheimian, Weberian and Marxist.

The perception of the welfare state by Marxist authors has already been explained. The rising intensification of the exploitation of workers in the business sector increased its need to cover certain levels of welfare and social protection by the state. Public intervention is necessary not only to balance the contradiction between capital and labor, but also to obtain the reproduction of the human labor which is the main profit generator. However, the welfare state cannot solve the crises of capitalism; but it creates new problems related to social expenditures. According to the Marxist tradition, the crisis of the welfare state is just another type of reflection of the crisis of capitalism. The modern state fulfills the social functions required for social integration or reinforces the activity of the capitalist economy, while in general both objectives cannot be achieved at the same time. (O’Connor, 1973;

Gough, 1979)

From the perspective of Durkheim, the welfare state is considered as the consequence of the problems in the modernization process. The modernization process and particularly the urbanization softened the traditional ties and societies started to seek institutions to satisfy their security needs. The emergence of the welfare state is related to this search. The growing trend toward the mobilization and democratization also serves to channel this demand to the political system. This is why; there was an expansion in the post-war period in the welfare state. According to this approach, the weakening of social integration mechanisms, such as the family, is the foundation of the expansion process of the welfare state and thus the welfare crisis is a crisis of modern democracy.

In the modern and democratic society, citizens and interest groups are more mobilized and have more influence in the decision-making processes than in the precedence. This is why it is more difficult to define a common public interest by governments. The growing complexity in the social structure leads to a change from class to mass parties. This change creates a political instability and generates even more dependence on governments with regard to pressure groups. Consequently, the expenses of the government are influenced by the demand of these groups. This situation diminishes the authority of the state as each group has its own interest. The government deficit increases and short-term consumption takes the place of the long-term investment. Basically, the fiscal crisis of the state can lead to an economic crisis which can even influence the democratic order. From a conservative perspective, it is possible to say that crises occur because of the inability of the state to organize social expenditure and restrain them against the pressure groups. (Huntington, 1975; Janowitz, 1976)

Thirdly, the Weberian ideas dominate the concept of the welfare state. According to this group of ideas, the welfare state is related to the elites who seek new bases of legitimation. After the creation of supranational military powers and the dominance of the global economy on all nations, the functions of the state have less control over maintaining external security and the judicial order and the elites try to find new liabilities. These new liabilities take the form of services which serve to deal with social problems in the modernization process. Institutionalization of public problems charged the states with the responsibility to classify the various demands of society, which each is formed according to their peculiar priorities. The difference between those who are recognized and those who are not, leads to the marginalization of latter groups as their interests are not considered by the public.

On the other hand, authors like Moran argue that there isn’t any crisis of the welfare state. In fact, there are problems in the political administration and financing of the fiscal economy. Rather than focusing on the question of why the welfare states are in crisis, we must ask why the ideas of the 70s were not verified. According to Moran, we cannot talk about a welfare state crisis because there is not only one model of the welfare state.

(Moran, 1988, p. 412) The states are formed by the peculiar dynamics of each country. The extent of the variation of the states is so great that it includes Stalinists, Bismarckians, social democrats, Keynesians or neo-liberals. Each one has its own model of the crisis and of course its own way of solving it.

In summary, several academic groups tried to clarify the crisis of the welfare state.

However, although there are several views on this matter since the 80s, what is the most significant thing is that, there is really a deep intellectual crisis on the topic. It is obvious

that although the defenders of the welfare state have lost credibility, the impact of the post-Keynesian period on academics is also a significant social fact that has implications in the area of welfare.