Current Welfare Reform: A Return to the Principles of 1834

By Kern, William S. | Journal of Economic Issues, June 1998 | Go to article overview
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Current Welfare Reform: A Return to the Principles of 1834

Kern, William S., Journal of Economic Issues

In his Presidential Address of 1992, President Clinton announced his intention of "ending welfare as we know it." That promise has finally come to fruition in principle, if not yet in actual practice, with the passage of The Personal Responsibility and Work Opportunity Reconciliation Act in 1996. The Act proposes to substantially modify the previous welfare system by compelling welfare recipients to accept greater responsibility for their own support by requiring "workfare." Workfare will require them to perform public service, enroll in job training programs, limit the length of time they can receive payments, eliminate payments for additional children born to welfare mothers, and, in some states, drop the able-bodied from the welfare rolls altogether. These are all components of a strategy designed to eventually move able-bodied welfare recipients into the private work force and off public support.

These changes follow from widespread acceptance of the belief that the welfare system is responsible for the creation of a dependant class unwilling to accept responsibility for themselves. The view is that members of this "underclass" or "poverty culture" are characterized by and reproduce such social pathologies as crime, drug abuse, and unwed motherhood that prevent its members from active participation in mainstream American life. In addition, the recipients of relief are no longer viewed as having a right to public support [Melville 1994, 19], particularly if they are able-bodied [Aaron 1990, 277]. Reforming, or "ending welfare as we know it," is now seen as being in the best interests of the poor - as "honoring a moral obligation to help poor people help themselves" [Clinton 1996].

Why welfare reform? Why now, and why in this form? The answer, it is argued, can be found in the theme of this conference - "the Great Capitalist Restoration." If, as has been suggested, we are in the midst of a restoration of the values and institutions of capitalism, welfare reform should come as no surprise, for as Karl Polanyi pointed out in The Great Transformation, the passage of the Poor Law Reform Act of 1834 marked the beginnings of industrial capitalism [Polanyi 1957, 83].

In The Great Transformation, Polanyi examined the emergence of the capitalist system in England in the nineteenth century. An essential feature of the transition to capitalism was the attempted establishment of what Polanyi termed the "utopia" of an entirely self-regulating market order based upon the commodification of land, labor, and money [Polanyi 1957, 68]. Polanyi explained that a self-regulating order implies that all production is for sale on the market and that all incomes must derive from such sales as well. Accordingly, there must be markets for goods and services and also for land, labor, and money. The logic of the self-regulating market system implied that:

Nothing must be allowed to inhibit the formation of markets, nor must incomes be permitted to be formed otherwise than through sales. Neither must there be any interference with the adjustment of prices to changed market conditions - whether the prices are those of goods, labor, land, or money. . . . only such policies and measures are in order which help to ensure the self-regulation of the market by creating conditions which make the market the only organizing power in the economic sphere [Polanyi 1957, 69].

We should therefore expect, following Polanyi's thesis, that a process of "capitalist restoration" would involve a renewed effort to deny the compatibility of relief of the able-bodied poor and the self-regulating market order. As Polanyi demonstrated, the creation of a market for labor required the wielding of the "stick" of a denial of the "right to life" outside the market, because it was only through the threat of starvation that labor could be induced to offer its services in the market [Polanyi 1957, 164]. In the mid-nineteenth century, this was accomplished by the passage of the "New Poor Law" of 1834 and at the end of the twentieth century by "welfare reform.

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