The rise and fall of the welfare state

The Rise and Fall of the Welfare State Asbjorn Wahl Translated by John Irons PlutoPress www.plutobooks.com First published 2011 by Pluto Press 345 Archway Road, London N6 5AA www.plutobooks.com Distributed in the United States of America exclusively by Palgrave Macmillan, a division of St Martin's Press LLC, 175 Fifth Avenue, New York, NY 10010 Copyright © Asbjorn Wahl 2011; English translation © John Irons 2011 This translation has been published with the financial support of NORLA The right of Asbjorn Wahl to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN ISBN 978 7453 3140 Hardback 978 7453 3139 Paperback Library of Congress Cataloging in Publication Data applied for This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin 10 Designed and produced for Pluto Press by Curran Publishing Services, Norwich Simultaneously printed digitally by CPI Antony Rowe, Chippenham, UK and Edwards Bros in the United States of America CONTENTS List o f figures and tables Preface ix xi Introduction Freedom and equality Who owns the welfare state? Power and polarization The non-historical approach About the book 11 14 17 The power base Historical background The class compromise System competition The content and ideology of the compromise Restraining market forces A broader concept of the welfare state 20 22 25 31 33 35 39 The turning point Globalization - or market fundamentalism? Deregulation The economy of madness Privatization Three phases - three stages Monopolization and corruption What went wrong? 43 43 45 48 55 59 60 64 The shift in the balance of power Attacks on the trade unions The end of the class compromise The employers failed in Norway The undermining of democracy Deregulation and privatization 66 66 71 73 75 78 v VI CONTENTS Forms of organization and management Supranational agreements and institutions The myth of the powerless state 82 85 89 The attacks Poverty and increasing inequality Pensions under attack But Norway is best Crisis and shock therapy The transformation of welfare 93 98 101 107 115 121 The brutalization of work Labour as a commodity Brutalization and exclusion The demands of neoliberalism Social dumping Driving forces Abolish workfare policies! Loss of welfare? 126 127 130 137 142 145 150 154 The misery of symbol politics The workfare fiasco Blessed are the poor? From power struggle to legal formalism 159 160 165 171 Challenges and alternatives Changes to power relations The struggle is already on The European Union as a barrier Internal political-ideological barriers Politicization and revitalization A new course! Freedom 178 179 183 188 192 198 204 208 Notes Bibliography Index 213 225 235 FIGURES AND TABLES F IC U R E S 2.1 The power of private capital was limited via wide-ranging state regulation 3.1 The comprehensive regulations of private capital have been removed 3.2 Growth in GNP per capita globally 3.3 The relation between financial assets and GNP globally 3.4 The relation between financial transactions and international trade in goods and services per day 4.1 Unemployment in a number of major industrial countries 4.2 The wage share of total income (factor income) in the EU15, Germany, the United States and Japan between 1975 and 2006 5.1 The development of income inequality (the Gini coefficient) in Norway, 9 -2 0 6.1 Percentage of the Norwegian population between 16 and 66 receiving a disability pension 36 46 47 49 51 68 70 108 132 T A B LE S 4.1 Level of unionization in selected countries (as a percentage of the work force) as the neoliberal offensive made its impact Annual average tax level as a percentage of GNP in OECD countries, 9 -2 0 4.3 Income and taxation for Norwegian divisions of multinational companies, 0 6.1 Effects on health and working environment of various types of insecure work vii 69 80 81 139 To Anja and Vegard PREFACE This is an updated and partly newly written, translated version of a book I published in Norwegian in 2009 My aim with the book is to challenge conventional interpretations of the welfare state I this by linking the analysis of social development, welfare and work with more fundamental power relations in society Such analyses have been in short supply over the last few decades At the political level our experience is that fundamental causes and driving forces in society are non-issues, while symbol and symptom politics flourish and political spin doctors whatever they can to deceive us The critical potential of social science is in a poor state, while an army of social scientists in institutes of applied research are mass-producing superficial descriptions of isolated social phenomena - to the great satisfaction of their employers The book is also meant as a warning about the threats to the social progress which was won through the welfare state, if we are not able to resist the offensive by market forces and regain and reinforce democracy in our societies As I have been working on the manuscript, these threats have increased enormously across Europe and the Western world Particularly in the European Union, we have seen not only attacks on social protection and public services but direct massacres of them, in the countries most strongly affected by the economic crisis While the financial crisis contributed to delegitimizing neo­ liberalism and the current economic model, our experience is that neoliberals and financial capital are still running the show Rather than regulating the speculation economy, they therefore seem to be using the opportunity to complete their ‘silent revolution’ by forcing further privatization and cuts in public budgets on countries in deep economic crisis In the European Union we are seeing frightening developments in the direction of a more authoritarian regime, where economic and political power is being further de-democratized and centralized through the so-called Euro Plus Pact and new legislation on economic government and enforcement mechanisms (popularly called ‘the sixpack’, since it contains six pieces of legislation) This more than anything else illustrates the current defensiveness and weaknesses of the labour and trade union movement, the deep political crisis on the Left and the lack of ambitious alternatives to the current economic model It is therefore a matter of urgency to X PREF ACE develop our analyses of the situation, our alternative social models, as well as our strategies and tactics to achieve our aims The time is ripe to build broad social alliances and to organize resistance against the current onslaught on the best parts of our societies In this book I have given some indications of how this can be done, and I therefore hope that it will contribute to inspiring activities in this direction I would never have been able to write this book without my almost 30 years of experience in the Norwegian and international trade union movement Not least, the last nearly 20 years of service in the International Transport Workers’ Federation, in the Norwegian Union of Municipal and General Employees and in the broad Norwegian alliance, the Campaign for the Welfare State, have been decisive for my comprehension of power structures and other social relations I am therefore greatly indebted to the trade union movement, which is still the foremost defender of ordinary people’s rights, influence and dignity in the world of work as well as in society in general Unmentioned but not forgotten are many Norwegian friends who have given me a great deal of advice and suggestions, useful and constructive comments and encouragement during my work on this book These have been a great help Particularly, I should like to thank my union, the Norwegian Union of Municipal and General Employees, as well as the Norwegian government-funded, non­ commercial foundation NORLA (Norwegian Literature Abroad), both of which contributed financially to the translation of the book Many thanks also to the staff at Pluto Press, who have been very positive, helpful and professional throughout the process Finally thanks to John Irons, who translated the manuscript from Norwegian and delivered promptly in spite of some late submissions from the author Last, but not least, warm thanks to Solveig, who has commented, supported and encouraged me from the beginning to the end and helped me to keep the inspiration alive all along - in spite of the fact that the work has detracted from many evenings, weekends and holidays All the responsibility for details as well as the totality of the book lies of course with me, including all weaknesses and any mistakes that still exist Asbjorn Wahl Oslo, July 2011 INTRODUCTION Jan e1 is 49 years old and lives in a medium-sized Norwegian town called Moss She is on an 80 per cent disability pension She was awarded this in September 0 , after just over three and a half years of being tossed back and forth in the system The story she has to tell me over a cup of coffee is not a happy one The problem is that I have heard a good many other similar stories in recent years They are the stories of people who struggle with their health, then their self-confidence and their self-image, and finally have to face the toughest fight of all - the machinery of the welfare state Jane was employed for 30 years She started early, as a welding apprentice at the legendary shipyard Nyland Vest in Oslo After three years, her back gave out She had a long period of illness and had to quit her job The doctor even advised her to apply for a disability pension, but she declined Jane wanted to be back at work After almost a year, she managed to get a job on the Norwegian State Railways (NSB) as a station inspector at Lillestrom station She stayed with the railways for 25 years, at various locations and in various functions - lastly as a head of transport in the freight transport company CargoNet Throughout, she liked her job, liked her colleagues, and liked the solidarity and the environment of which she was a part However, her health never fully recovered after her back injury at the shipyard Jane has been in a lot of pain, but she has learned to live with it, as she says In 1985, her doctor diagnosed ankylosing spondylitis, since when she has gone to physiotherapy once or twice a week This enabled her to muster the necessary strength to go on working for so many years From around 0 , however, her absences owing to illness ... representation of the situation and future of the welfare state It almost looks as if the success of the welfare state has been carved in stone Attacks on, and the undermining of, the welfare state exist... analysis of the origins of the welfare state and the understanding of its development during the recent neoliberal era When the emergence of the welfare state is portrayed as a result of consensus... years They are the stories of people who struggle with their health, then their self-confidence and their self-image, and finally have to face the toughest fight of all - the machinery of the welfare