The State of Welfare

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Acknowledgements

This edited collection comes out of a series of presentations at a symposium held at University College Dublin (UCD), Ireland, on 14 and 15 April 2016. The symposium was hosted by the School of History at UCD, and the office staff, including Emma Lyons, Sara Feehan and Kate Breslin, assisted with the planning and organization of the event. The symposium received financial support from the College of Arts, Humanities and Social Sciences at UCD through a conference support grant. Head of the School of History, Associate Professor Tadhg Ó hAnnracháin, was a strong and consistent supporter of this initiative.

We thank the then Australian Ambassador to Ireland, the Honourable Dr Ruth Adler, for showing such an interest in the symposium and supporting our endeavours. The Australian Embassy in Dublin also provided financial support towards the symposium. The Keith Cameron Fund at UCD, which supports Australian studies in Ireland, provided a generous level of funding, which enabled esteemed colleagues from across Europe, the UK and Canada to attend. We also gratefully acknowledge financial support from two Australian universities, the University of the Sunshine Coast and Flinders University. Our related research project on Australian social welfare reform during this period was supported by an Australian Research Council Discovery Grant, ‘A Bold Experiment? A historical evaluation of the Australian Assistance Plan (AAP), and its regional impact’.

As collection editors, we appreciated the support and enthusiasm of Christabel Scaife, commissioning editor at Peter Lang. Perhaps our most important debt is to the authors of the individual chapters. They all participated in the symposium (either in person or via videoconference), and they all responded in such a positive and collegial fashion to our suggestions and requests. Their genuine enthusiasm for this period and their wealth of experience and insight was a crucial factor in encouraging us to go ahead with publication. Dr Carolyn Collins proofread the entire work ← vii | viii → and contributed in her own way through excellent organizational skills and timely input.

We also want to thank our referees, who were diligent and committed to their vital but often unacknowledged role. Those referees included Dr Nancy Cushing, Dr Brian Dickey, Professor Marian Quartly, Associate Professor David Roberts, Professor Margaret Tennant, and Dr Christian Wicke. Dr Antoinette Holm was a referee, participant at the Dublin symposium, and assisted greatly in framing the idea for the symposium.

The Editors

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ERIK EKLUND, MELANIE OPPENHEIMER AND JOANNE SCOTT

1 The Welfare State at the End of the Long Boom, 1965–1980: Themes and Issues

Forged during the Second World War and the post-war era, the modern Western welfare state was created as a bulwark against the penury associated with the twin repercussions of the First World War and later the Great Depression of the 1930s and the insecurities brought about by the second global war. The state accepted an enlarged commitment to the social and economic well-being of its citizens, propelled by a concern to ensure social stability as much as a commitment to the welfare of individuals. Most Western economies developed a mix of public and private provision of welfare, building on existing initiatives and reaching a new level of scale and maturity in the period 1945 to 1975. In Britain, William Beveridge laid down what his biographer, Jose Harris, has described ‘as a key foundation document for social welfare provision in any modern “mixed economy”, not just in the United Kingdom but also for much of the developed world’ through his 1942 Social Insurance and Allied Services report, otherwise known as the Beveridge Plan.¹ Two years later, the father of the welfare state published his second report, Full Employment in a Free Society, influenced by Keynesian economics. Some nations, such as Australia, Canada and New Zealand, opted for a modest combination of public and private provision of services or mixed economy of welfare with the state augmenting both private market activities and the voluntary sector or seeking to maintain ‘integrity’ of or ‘balance’ with market-driven policies. In other states, ← 1 | 2 → notably in Scandinavia, public provision was dominant, with market mechanisms relating to welfare either absent or tightly controlled. Despite some contestation at the edges, there was acceptance – variously summarized as a ‘Keynesian’ consensus, a ‘Fordist regime’, or a ‘Keynesian-Fordist’ regime2 – that state action was desirable, even necessary, to manage the economy and mitigate the social inequities that accompanied the long boom. Whatever your preferred term, the welfare state and its social policy provisions were central planks of this post-war consensus.³

This edited collection returns to the initial set of economic and ideological shocks to that consensus. As Western economies spiralled into recession from 1973, and unemployment rates climbed precipitously, the first signs of a weakening of the consensus emerged. Our analyses of this period seek to recognize its complexities, with numerous economic, political and cultural factors at play. We aim to discern how reform was expressed in various contexts, and what impacts, if any, the recessions of 1973 and 1979 had on the endlessly fascinating social welfare politics of this era.

Rethinking the impacts of economic crises on the welfare state has begun to emerge as a rewarding endeavour for social scientists who have sought to eschew easy assumptions about the relationship between the welfare state and economic realities. Starke, Kaasch and Van Hooren’s 2013 work, ‘one of the few studies to look at social policy responses to economic crises’, has demonstrated the value of comparative approaches to this topic.⁴ We, too, adopt a comparative approach but, in contrast to Starke et al., our project concentrates on the 1970s and the recessions associated with the 1973 oil shock and the 1979 energy crisis. Whilst acknowledging that other economic and political factors mediated the impacts of these ← 2 | 3 → recessions, affecting their severity and even the particularities of their timing in different locations, it is the confluence of reformist zeal coming out of the late 1960s and immediate economic shock that we are interested in considering. This focus allows us to explore in detail how economic effects and their concomitant political influences shaped (or otherwise) the social policy debates and outcomes of the 1970s.

The number of case study nations (and a province) covered in this volume allows us to explore the interplay between global and local factors. Those case studies include (in chapter order): The United Kingdom, Northern Ireland, Ireland, Australia, New Zealand, Canada, Germany and Sweden. This selection enables us to consider the comparative situation across settler societies of the former British Empire, a Western European case study in Germany and a Scandinavian one in Sweden. The inclusion of Northern Ireland highlights a situation dominated by an ongoing political crisis rather than the faltering global economy; it also reminds us that nations are not the only political entities of relevance to the Western welfare state. As a former colony-turned-twentieth century-Republic, Ireland offers a distinctive cultural and religious context as well as ongoing connections with British models and debates. The form and scale of governance arise in other chapters in the collection. New Zealand, with its centrist unicameral system, for example, differs from the federal systems of Germany, Australia and Canada, which themselves have nuanced but crucial differences.

As historians and historically focused social scientists our commitment is to a detailed qualitative examination of each case study.5 Nonetheless we remain open to the wider literature on public policy, state action, crisis, and historical change.⁶ As we add depth through each of the case studies we can tease out complexities while being mindful of the wider conceptual and theoretical challenges that this topic brings. Before beginning the ← 3 | 4 → individual case studies, however, it is important to provide a contextual overview of the post-war period.

From post-war consensus to economic crises

The post-war consensus was based on a set of core features, some of which can be sketched here. After the international economy recovered from the immediate aftershocks of the end of the Second World War, the rate of economic growth was sustained at more than 4 per cent per annum. Between 1950 and 1973, Western Europe grew at 4.79 per cent per annum and the US grew at 3.93 per cent.7 Resource rich economies with rapidly industrializing sectors and strong immigration programmes outstripped these rates with Canadian annual growth at 5.2 per cent and Australian growth at 5.5 per cent between 1950 and 1969.⁸ Migrants came from Western and Eastern Europe in large numbers, including from Ireland where net emigration paralysed economic growth for many decades. The beginning of the Troubles in 1969 further exacerbated Ireland’s economic woes.⁹

There was an overall growth in world trade, stimulated by major economic investment from the US and increasing demand for goods and services due to military actions such as the Korean War (1950–3). The Cold War led to massive state spending from the US and her allies on defence. Military expenditure was a major element of the post-war boom. While it underpinned significant government investment in the US and elsewhere, it skewed investment to areas that were not necessarily economically ← 4 | 5 → productive. Across the political spectrum, there was a widespread commitment to full employment. In some Western countries, there were large-scale migration programmes ensuring sufficient flows of labour for new industrial and public sector works. For example, in 1949, Australia’s population was 7.9 million; between 1950 and 1970, some 2.4 million people migrated to that country. There was continued growth of the manufacturing sector, which provided the characteristic and iconic employment type of the Fordist era. Additionally, though, the steady rise of the financial and services sectors shaped most Western economies.

Alongside economic growth and the particular status quo that the Bretton Woods system of fixed exchange rates and the Cold War engendered, there were important demographic changes in the post-war period. The end of the Second World War and the return of prosperity encouraged families to have more children, and average family sizes recovered from depression-era lows. A distinctive ‘baby boom’ generation, born between 1946 and 1964, helped create societies with a young demographic profile. Immigration programmes, as noted above, at least in some of our case study countries, also contributed to population changes.10 Shifting demographics generated different challenges for social welfare systems, including demands for child support and, eventually, childcare subsidies. At the same time, more women were entering the paid workforce as legislative and institutional barriers to female participation, such as the marriage bar on further employment and unequal pay, were either removed or partly redressed.¹¹

Another area of welfare development concerned the increase in the categorization of specific assistance through legislation to a range of identified groups. Recognition of the disabled, child allowances for families, youth allowances and further support for the unemployed, for example, were implemented as well as further social insurance measures such as workers’ compensation and unemployment insurance. Much of this was linked to the so-called ‘rediscovery of poverty’, a call that resonated across a ← 5 | 6 → wider global context of Western democracies, led by UNESCO seminars in the early 1960s, and publications of ground-breaking books such as Michael Harrington’s The Other America.12 ‘The evil that must be fought is not sin, suffering, greed, it is neither monopolization, ignorance, alcoholism, war, nor plague, it is simply poverty’, lamented Canadian parliamentarian Gerard Laprise, quoting George Bernard Shaw during a debate on the Canada Assistance Plan.¹³ The social upheaval of the 1960s and economic dislocation of the 1970s saw the introduction of significant social policy legislation in countries such as Canada, where the Canada Assistance Plan was seen as a ‘milestone in the sequence of public assistance measures’. In the words of Norman Cragg, who became the first Director of the Canada Assistance Plan, it was ‘one of a number of social and economic measures designed to improve employment opportunities, to deal with the causes and effects of poverty and, through increased opportunities, to reduce dependence on public assistance’.¹⁴ In Australia, the first systematic study to measure poverty was conducted in 1966 by the University of Melbourne, with a Federal government Commission of Inquiry into Poverty established belatedly in 1972. This culminated with the Henderson Poverty in Australia report published in 1975.¹⁵

The end of the 1960s was an era of heightened global activism as social movements in areas as diverse as women’s issues, civil rights, the peace movement, indigenous rights and environmental protection emerged to challenge political and social conservatism. This reformist energy informed fresh approaches to welfare reform and social policy innovation as governments ← 6 | 7 → (sometimes very reluctantly) responded to unfamiliar demands and expectations. The personnel who staffed newly established government and non-government welfare agencies were often schooled in activist and social movement politics. Although this phenomenon was evident in many countries, its impacts were highly differentiated. They were felt most strongly in the social democratic states of Western Europe and the liberal democratic states of the US, Canada, Australia, the UK and New Zealand. Other countries, including Ireland, Spain, Italy and Portugal, had powerful religious and cultural barriers to reform, resisted its influence and remained isolated from its full effects.16

Amongst the suite of features that defined the post-war consensus, assumptions about world economic growth were fundamental. From the later 1960s there were some ominous signs, foreshadowing the global downturn which began in 1973. There was a recession in 1966–7. ‘Stagflation’ afflicted the US and Britain from the late 1960s, challenging policy makers. The failure of Keynesian models to predict the phenomenon of poor economic growth accompanied by high inflation cast doubt on the Keynesian consensus.¹⁷ By 1971, in the US the unemployment rate exceeded 5 per cent and inflation reached 6 per cent. In the same year, the US decoupled its currency from the gold standard, disrupting the stability of the Bretton Woods monetary agreement. January 1973 heralded the beginning of a major stock exchange downturn. Members of the European Economic Community and Japan floated their currencies early that year. There was growing concern over the deleterious effects of tariffs on the volume of world trade, prompting some modest tariff reductions. The deteriorating global economic situation was further complicated by the strategic and political intricacies of the Middle East. The Arab-Israel War commenced on 6 October 1973. Later that month, in retaliation against the US and other Western nations for their support of Israel during the war, the Organization of Arab ← 7 | 8 → Petroleum Exporting Countries (the Arab members of OPEC, Egypt and Syria) announced reductions in oil production and an oil embargo against selected Western nations including the US. After more than thirty years of a more or less stable price for oil, that price quadrupled, rising from $3 a barrel in early 1973 to $12 a barrel by the end of 1974.

The dismantling of earlier certainties and questioning of the trajectory of change provided a favourable environment for the promotion of neoliberal economics by such influential figures as Francis Hayek and Milton Friedman. Advocates for ideas that the free market offered a unique system for ‘managing’ an economy, thus avoiding the worst excesses of state regulation and intervention, developed their arguments during a period of government interventionism. Truman in the US, Chifley and Menzies in Australia, King and St. Laurent in Canada, and Attlee in the UK, all sought to recast modern government as a democratic process of building social and economic citizenship. Enthusiasm for the role and capacity of governments in ‘the West’ followed the era of ‘total war’ with its mobilization by national governments of both the military and the home front, including the labour market and voluntary sectors. Plans by governments for the post-war era encouraged, even required, major state involvement in social welfare as well as the economy. In the immediate aftermath of the Second World War, the emerging neoliberals were lone voices speaking out against the apparent dangers of collectivism while Western governments introduced legislation that underpinned the post-war welfare states.