The Socialist Welfare State: A Brief (and Intriguing) History

‘Do you think Europe – especially Scandinavia – is more socialist than China?’

This question used to be more common 7 or 8 years ago. But it came up recently while I was in Yunnan province, in the far southwest of China. It is of course connected with the impression that Scandinavia had a developed welfare system, which some seem to think indicates a socialist influence. And Scandinavians love to cite this one, although by now it is wearing quite thin.

The ‘Scandinavia had’ is quite deliberate in my earlier sentence, but to understand why requires a brief history.

The first country in human history to develop what I have elsewhere called a ‘domestic state’ was the Soviet Union. It happened under Stalin’s watch. In the 1920s, many regulations had been promulgated concerning education, healthcare, pregnancy preparation, maternity leave, childcare, divorce, guardianship and so on (although not unemployment benefits, since there soon was full employment) – the full gamut of matters that had been regarded until then as the domain of the ‘family’, no matter how extended it may have been. But it was only in the 1930s that they could be enacted in a realistic manner. Why? Only with the massive ‘socialist offensive’, with its twin programs of comprehensive industrialisation and agricultural collectivisation, did the Soviet Union have the economic resources to implement them in full. This is not to say that many problems did not happen, for the Soviet Union was making a tumultuous leap to becoming a superpower. As Mao put it later, ‘Progress and at the same time difficulties – this is a contradiction’ (1957). But the contradiction was a feature of a leap into the future.

What did some of the capitalist countries do? They realised that workers were increasingly drawn to the Soviet Union’s model. So the bourgeois governments borrowed some features and sought to institute what became known as the ‘welfare state’. But it was a warped version, predicated on the slogan, ‘from the cradle to the grave’. The state would take care of you, especially if matters beyond your control dealt you a bad hand.

Why warped? The way it was implemented in Europe (and even in the United States for a while with the ‘new deal’) was to neutralise any push by workers and peasants to alter the system itself. A bourgeois state would provide, so why bother with any revolutionary desires. Even more, it became a mechanism for ensuring that everyone in the state’s population remained – or could be retrained – to be productive, and thereby also remain consumers. Crucially, this altered form of the welfare state was restricted to full citizens, producing the framework for the xenophobic charge that ‘immigrants’ want to avail themselves of the benefits of a system to which they were not entitled.

This history has a further twist or two. After the symbolic ‘fall’ of the Berlin Wall in 1989, most countries that had a version of the bourgeois welfare state no longer felt the need to support it. The alternative model of the Soviet Union had imploded, so country after country systematically began to dismantle the ‘welfare state’. So-called ‘cheats’ became the target, such as the demonised ‘single mother’ with multiple offspring who ‘milked’ the system for her benefit. The rhetoric was relentless, ensuring that one plank after another of the bourgeois welfare state was removed. Even Scandinavia began to follow suit, albeit belatedly with the turn of the millennium.

Meanwhile, what was happening in China? Let us deal with the facts rather than mythology. After the communist revolution, a system had developed that may be called ‘Owenite’ (after Robert Owen’s model factories in the UK of the 19th century). Large conglomerates were established, around factories, publication houses, state-owned-enterprises (SOEs) and so on. In these conglomerates, people had everything: accommodation, jobs, dining halls, hospitals, shops, childcare facilities, funeral services … It was dubbed the ‘iron rice bowl’ – a term that originated outside China.

But they were grossly inefficient, sucking up resources, breeding familial corruption and giving little back to the overall system. In the 1980s and into the 1990s, Deng Xiaoping bit the bullet: the conglomerates would have to face the realities not of a ‘planned economy’ but of a ‘socialist market economy’ that has its own distinct Chinese articulation. Many went bankrupt, since they could not manage in the new order. Others thrived, like the Xinhua News Agency. In the process, mistakes were made: workers lost their jobs and were not compensated; farmers lost the healthcare to which they had become accustomed; retirees could no longer rely on the conglomerate to provide for them.

China first had to get its economic act together. As it did so and the resources became available, a whole new system began to be implemented. Farmers who had lost healthcare found a different model in its place. Retirees began to notice that the state was offering a leaner and more efficient system for their security. Workers who had lost their jobs were compensated. In short, a new model of the socialist welfare state was being systematically and carefully rolled out, with an eye on accountability and efficiency. But it goes much further, with a concentrated effort to lift the final 30 million people out of poverty. In short, it is clear that the socialist state has to ensure that it has the resources before implementing such policies.

The upshot: in the current situation we find ourselves at an important crossroads. As the neo-classical model of a capitalist market economy seeks to dismantle ever more vestiges of a bourgeois welfare state that was a response to the appeal of the Soviet Union (of increasingly distant memory), China is gradually and patiently implementing a whole new version of a socialist welfare state.

It should be no surprise that over 87 percent of people in China approve of the direction in which the most powerful socialist country in human history is headed, even while fully aware of the many problems they face.

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Reflections on the Danish Election result: Danish People’s Party the child of the welfare state

For a small country like Denmark, the results of the recent election may not seem important, but they may be read as harbingers of the situation in Scandinavia more generally. Initially, the results may seem depressing for anyone with sympathies vaguely on the Left. The ‘blue block’ seems to to have won the election with the slimmest of margins, 90 seats to the ‘red block’s’ 89 seats. Why depressing? The Danish People’s Party (DF) has won more than 21 percent of the vote, becoming Denmark’s second largest party in the Folketing (parliament). This is the party that has campaigned on three issues for the last 20 years: anti-Muslim propaganda, a wider xenophobia and a rhetoric of watching out for the ‘little people’ who are ‘suffering’ from the EU’s policies. This party has now become the king-maker, nominating Lars Løkke Rasmussen of the centre-right Ventre Party as Prime Minister.

But let us look a little deeper into the election results. The Social-Democrats actually improved their standing, cementing their position as Denmark’s main party. They now command about 27% of the vote. However, their various allies in a conventional bourgeois democratic system did not get enough votes to get the ‘red block’ coalition over the line. The second most popular party is the Danish People’s Party (as I mentioned, with more than 21% of the vote), a kind of neo-fascist bunch with a populist appeal. The two main parties would seem to be the antithesis of one another. But at a deeper level, they have much in common. Both have played the xenophobia card. The Social-Democrats have pointed the finger at ‘Eastern Europeans’ as the bane of Denmark, while the People’s Party likes to target Arabs, Muslims and people with obvious skin colouring that is not white.

Why are they so close to one another? I suggest it has to do with the infamous Scandinavian welfare state. The Social Democrats have been the architects of the welfare state in Denmark (and also with similar parties in other Nordic states). The catch is that the welfare state can only function by means of strict controls as to who is eligible for its benefits. The boundaries have always been clear. The Danish People’s Party plays on that theme: they promise to care for those who have been disadvantaged by aggressive EU policies aimed at bringing in cheap labour to undermine the very structure of welfare state. In that sense, the Danish People’s Party is the child of the welfare state, laying bare its incipient xenophobia.

The upshot: the natural alliance should be between the Social Democrats and the Danish People’s Party, since the latter is the child of the former. In that way, they could easily form government (at more than 48% of the vote) with one of the other minor parties.

On the origins of the welfare state and identity politics

On of the better points from David Graeber:

Indeed, one could judge how egalitarian a society really was by exactly this: whether those ostensibly in positions of authority are merely conduits for redistribution, or able to use their positions to accumulate riches. The latter seems most likely in aristocratic societies that add another element: war and plunder. After all, just about anyone who comes into a very large amount of wealth will ultimately give at least part of it away – often in grandiose and spectacular ways to large numbers of people. The more one’s wealth is obtained by plunder or extortion, the more spectacular and self-aggrandizing will be the forms in which it is given away. And what is true of warrior aristocracies is all the more true of ancient states, where rulers almost invariably represented themselves as protectors of the helpless, supporters of widows and orphans, and champions of the poor. The genealogy of the modern redistributive state – with its notorious tendency to foster identity politics – can be traced back not to any sort of “primitive communism” but ultimately to violence and war (Debt, p. 113).

Towards a left critique of the welfare state

According to the tired old battle lines, a ‘left’ position is in favour of social welfare, of a system in which the less ‘fortunate’ are supported by the altruism of all. So if you are a lefty, you are supposed to hold to some form of the welfare state, which some deluded people equate with socialism. By contrast, a ‘right’ position (neo-liberal) holds that the state is a hindrance to the smooth working of the market. Therefore, the welfare state, or ‘nanny state’ as they like to call it, should be dismantled, so that the utopia of unconstrained market relations may realise its full potential.

Yet, these battle lines take place on a ground determined by the bourgeois state (the one-party state of liberal democracy), which ensures that we believe we are engaged in real debate, in a real struggle of ideas, but we are actually all playing the same game.

Various arguments have been put forward for the rise and establishment of the welfare state. One argument is that it was a response by capitalism to the growth of communism, a way of appeasing worker demands for medical cover, education, unemployment benefits and so on. Another argument is that the welfare state was the autonomous achievement of working class action in capitalist states. In this scenario, workers sought to reform the system to make life more bearable.

But what if we developed a properly left criticism of the welfare state? It would need to begin with a telling observation by Alain Lipietz; the welfare state ‘ensured that any person who could not earn his or her living could still be a consumer, because he or she could go on having a money income’. For Lipietz and others, the welfare state was a feature of post World-War II ‘Fordism’, a reconstruction and re-regulation of capitalism to ensure continuing and increasing consumption of the products of industry. If you work, we’ll give you occasional pay rises; but if not, we will ensure that the state pays you enough to keep on consuming.

Add to this the fact that the welfare state was initially conceived as operating within a nation-state and was thereby predicated on the fact that most people in the world are excluded from such a state. So you get situations now, in Scandinavia, as Christina points out, where xenophobia is based on the sense that new immigrants are coming to bludge on what is left of the welfare state. That is, the welfare state actually encourages xenophobia and racism. Thus, the populist right-wing position, in which support of the welfare state and xenophobia are part of the party platform, is entirely consistent.

Of course, what was envisaged as the welfare state in the 1950s and what operates now are quite different, and yet the modified welfare state remains a feature of political struggle. Yet the point remains that the welfare state is a product of particular formations of capitalism. That would mean a left position would then entail the dismantling of the welfare state as part of the destruction of capitalism.

With thanks to Christina (Germany), Susan (Bulgaria) and, virtually, Alain (France) for talking some of these things through.