Nanny Doesn't Know Best: The Welfare State, Intended to Improve Everyone's Lives, Has Had a Malign Effect on Equality. We Need a New Compromise between State Socialism and Naked Capitalism: Voluntary Co-Operation May Be the Answer

By Wheatcroft, Geoffrey | New Statesman (1996), March 29, 2010 | Go to article overview

Nanny Doesn't Know Best: The Welfare State, Intended to Improve Everyone's Lives, Has Had a Malign Effect on Equality. We Need a New Compromise between State Socialism and Naked Capitalism: Voluntary Co-Operation May Be the Answer


Wheatcroft, Geoffrey, New Statesman (1996)


Over most of the past century, the liberal democracies of the west were distinguished from totalitarian regimes in eastern and central Europe--communist, but also at one time fascist and National Socialist--by representative government and a rule of law. But the democracies themselves were increasingly divided by the Atlantic. The countries that now form the core of the European Union developed elaborate systems of public health care, education and welfare funded by taxation and directed by the state (as indeed did those dictatorships). The United States did not.

During the astonishing three decades after 1945-with the German Wirtschaftswunder and what the French called les Trente Glorieuses--Europeans believed that they could indefinitely combine rapid growth with public welfare. This was what the historian Tony Judt has called the "social-democratic moment", although it was in many ways also the work of Christian Democratic leaders and governments, as most European politicians on all sides accepted a Keynesian-interventionist consensus. In 1956, Anthony Crosland published The Future of Socialism, making the egalitarian case while deriding the puritanical-bureaucratic traditions of "total abstinence and a good filing system", but also assuming that rapid growth and widening prosperity would continue in any foreseeable future.

Then, in the 1970s, the "Glorious 30" ended with both a bang and a whimper: economic crisis followed by social unrest. The social-democratic moment was over, and governments of a reinvigorated populist right came to power--notably Margaret Thatcher's in 1979--and assaulted that Keynesian consensus. The future now belonged to markets rather than planning, privatised rather than nationalised industry, the individual rather than the collective ("There is no such thing as society") and, it turned out, the rich rather than the poor.

Thus it is, Judt asserts in his remarkable new book, Ill Fares the Land, that "something is profoundly wrong with the way we live today". Even ardent free-marketeers scarcely foresaw the astonishing increase in disparity of income, particularly in the US. In 1968, the chief executive of General Motors was paid 66 times as much as an average worker on his payroll; in 2005, the head of Wal-Mart made 900 times as much. No politician is very keen to defend this now; the deadly sin of avarice appears more sinful than ever in the lurid light of bankers' bonuses, not to mention BBC salaries and MPs' expenses.

For Judt, the answer to this ill is a renewed commitment to social democracy, which European countries continue to practise but "have forgotten how to preach". Even after the greatest financial crisis in generations, the left is curiously reticent and bedraggled, though in this country the deeply demoralising effect of New Labour might have something to do with that. It is significant that this clarion call comes not from a Westminster politician but from a historian, a Londoner who has spent more than 20 years in exile as a professor at New York University.

In truth, the death of the welfare state has been much exaggerated, at least here and elsewhere in Europe, if not in America. Thatcher's enemies concede that she couldn't dismantle the welfare state, but did she really try? Often we mistake rhetoric for reality, and despite Thatcher's supposed "cuts" and her trumpeting of the virtues of self-help and individual responsibility, spending on the National Health Service increased by 60 per cent in real terms while she was prime, minister. Overall public spending as a proportion of GDP was almost the same when she left Downing Street as when she entered it.

The United States was a different story. From the Marxist left, Perry Anderson has observed that, in terms of domestic policy, the Nixon administration was decidedly more progressive than the Clinton administration (one of those truths that conventional American liberals are incapable of digesting). …

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