Economic Rationalism versus the Community: Reflections on Social Democracy and State Capacity

By Dow, Geoff | Australian Journal of Social Issues, August 1999 | Go to article overview

Economic Rationalism versus the Community: Reflections on Social Democracy and State Capacity


Dow, Geoff, Australian Journal of Social Issues


In the context of calls for a `third way' which proposes the abandonment of many of the social democratic and statist commitments of the postwar era, this paper reviews both the responsibilities accepted by peak bodies such as ACOSS and those that ought to be retained by government. It is sceptical of claims that social policy debates in Australia lead to the conclusion that welfare state development here has been satisfactory. Social democratic objectives (derived from intellectual contributions in the 1940s and 1950s as swell as from the comparative political economy of the 1980s and 1990s) emphasize more decommodified provision of services than can be readily admitted in Australia. If the demand for social welfare and social policy continues to increase to the extent suggested by past and present circumstances, serious implications emerge for both public and private providers.

Community sector workers are familiar with ACOSS's 1998 attempts to influence `the next government' as well as with its earlier paper Keeping sight of the goal: the limits of contracts and competition in community services (1997). Not unexpectedly, ACOSS has defended `community organizations' and the provision of `human services' against the application of market criteria. The 1997 paper claimed that competition is an inappropriate criterion for the welfare sector because it is likely to lead to (a) increased insecurity, (b) lower levels of community infrastructure, (c) reduced levels of inter-agency co-operation, (d) less autonomy for providers, (e) less choice for beneficiaries, (f) an inappropriate trade-off between efficiency and equity, and, in general, (g) a `distortion of purpose' in the nonprofit community sector.

ACOSS also asserted the legitimacy of a range of public principles which fairly explicitly contradict the austere principles of economic rationalism.

These concern:

(a) the desirability of citizenship entitlements;

(b) the need for a viable concept of the public good -- which is not equated with successful, efficient, competitive, flexible, cost-minimizing or consumer-oriented provision;

(c) the need for a mixed economy -- wherein government plays a facilitative role, by sponsoring, not just complementing, private economic activity, by managing economic fluctuations, by underwriting new economic activity (through, for example, infrastructure provision) and by cross-subsidization of activity deemed desirable by the political process but not by market processes.

These principles were extended during 1998 by ACOSS's affirmation of `the valuable role of non-profit agencies in policy development and the promotion of active citizenship'. Such aspects of the ACOSS perspective obviously invoke a broader range of contentious issues than those implied by a defence of non-profit community activities. During the 1998 federal election campaign, ACOSS's evaluations of the major parties' taxation reform proposals revealed quite explicitly the sector's pretensions to influencing the whole of social and economic development, on the grounds that decent social policy is necessary for decent economic management.

The wider endorsements of political and policy arrangements consonant with the discharge of welfare responsibilities leads ACOSS to having policy commitments in respect of

- full employment,

- taxation reform,

- budgetary policy,

- wage and labour market policy,

- anti-recessionary strategies,

- the general level of regulation and de-regulation,

- industry development (and industry policy),

- social and economic inequality,

- public and private provision of infrastructure, and

- the role of other organizations (such as the BCA, the ACCI and the ACTU) in macro-policy making.

In these respects, ACOSS (as a key peak-level organization in the non-profit community and human services sector concerned with research and policy advocacy) has at times emerged as a major influence on social development under social democratic auspices.

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