It was good to hear
Jose Harris on Radio 4’s marathon programme on the welfare state
yesterday morning. She supervised the
early stages of my PhD in 1977. I was
researching the origins of minimum wage legislation – not our current version
but the Wages Boards which were introduced by the 1909 Trades Boards Act and
abolished by the Conservative government in 1993. Winston Churchill, as President of the Board
of Trade, made the case for the 1909 legislation, saying, “It is a national evil that any class of His Majesty’s subjects
should receive less than a living wage in return for their utmost exertions”.
The campaigns leading to this first
intervention by the State to secure a minimum level of wages were focused on
women’s ‘sweated labour’ and were often dominated by the trade unions’ argument
that men’s wages should be a ‘family wage’ which supported women in their role
as wives and mothers. However, the most influential players at the time were in
fact a small group of employers who firmly believed it was not in their own, nor
in the wider society’s, interest to have large numbers of people living at
subsistence level. This was not so much
because they feared social unrest but because they feared the long-term damage
that subsistence wages and very poor working conditions were doing to society. Low wages created an inefficient unhealthy
workforce and unfair competition from employers who had no interest in the
general modernisation of industry.
This group of mainly
Quaker employers, led by George Cadbury and his newspaper the Daily News, won the argument against
those who they saw as irresponsible ‘laissez faire’ employers whose actions
might lead to short-term gains but which would be accompanied by increasing
poverty and long-term economic disadvantage.
My thesis was that it
was the influence of these employers that led to the State intervening to
prevent unfettered economic forces from driving down wages to poverty
levels. And I thought of this when
listening to the three hour programme on the welfare state yesterday morning. It was admirable of the BBC to devote such
time to the issue but – like almost all the current public debate on welfare
reform – there was very little mention of what is arguably the most important
one of Beveridge’s five pledges; the commitment to full employment.
This commitment was
crucial because without it the other four pledges become financially
unsustainable. Full employment requires
the State to take responsibility for what kind of economy we have instead of
leaving it to market forces. Beveridge
recognised this and his 1944 report Full
Employment in a Free Society proposed, as Jose Harris describes in her
biography:
A totally new kind of annual budget, which would use taxation, borrowing
and deficit-financing to determine the levels of public expenditure, business
investment and consumer demand.
After more than 30
years of governments taking less and less responsibility for our economy, the
viability of our welfare state is determined not by what we want for ourselves,
our families, our communities, but by the demands of global capital which in
pursuing the lowest production costs abdicates responsibility for the long-term
social consequences of low waged, low tax, low regulation economies.
It was the demands of
global capital which created high levels of
unemployment in areas previously dominated by industries which moved production
elsewhere in pursuit of lower wages. The
same economic forces are leading to an increase in insecure, low paid
work. These are the factors which
create long-term unemployment and reliance on benefits, not individual
characteristics of ‘malingering’ and ‘dependency’.
Unfettered global economic forces particularly affect those who employers would
not choose to employ unless there is a shortage of labour supply. And it is therefore the behaviour of employers
and investors that should be the focus of government policy, rather than the
hounding of people who have no option but to depend on benefits for their
survival.
I think Beveridge, if he were alive today,
would be pointing out that:
- high levels of secure employment, at
wages sufficient to sustain a reasonable standard of living, are incompatible
with the way our economy is currently configured
- a progressive taxation system is
incompatible with both the economic reality of, and the ideology associated
with, the requirements of global capital
- it is these factors which make a welfare
state, based on universal principles which delivers social and economic rights,
economically unviable (not the creation of a ‘dependency culture’).
Or to paraphrase an American president he
would be saying ‘It’s the economy, stupid’, not the welfare state that’s the
problem.
Most crucially, I
think he would be demanding that we recognise, confront and reform the dysfunctional
ways in which our economy is currently configured, and that he would insist that
such a challenge is necessary if we are to have a society which supports people
when they need it, rather than the ‘sink or swim’ kind of society which we are
rapidly becoming.
