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Analysing Welfare Policy - Week4

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Slides for Second Year 'Analysing Welfare Policy' lecture on 'Political Economy of Welfare'

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Analysing Welfare Policy - Week4

  1. 1. Changing Political Economies of Welfare AWP Week 4
  2. 2. Session(s) Objectives <ul><li>  (1) To examine broad changes in economic ideas and economic policy </li></ul>
  3. 3. Session(s) Objectives <ul><li>  </li></ul><ul><li>(2) To critically assess the validity of key policy positions and theoretical paradigms relevant to economic policy </li></ul>
  4. 4. Session(s) Objectives <ul><li>(3) To assess the impact on welfare of changing approaches to economic management </li></ul>
  5. 5. Session(s) Objectives <ul><li>(4) To consider the power of the state in the face of a changing world economy </li></ul>
  6. 6. Session Overview <ul><li>  (1) Context </li></ul><ul><li>(2) History </li></ul><ul><li>(3) Theorisations </li></ul><ul><li>(4) Exploring Change </li></ul>
  7. 7. Part I – Context
  8. 8. Last Week <ul><li>Globalisation </li></ul><ul><ul><li>core ideas </li></ul></ul><ul><ul><li>competing interpretations of evidence </li></ul></ul><ul><ul><li>does it exist? </li></ul></ul><ul><ul><li>how can we know if it exists? </li></ul></ul><ul><li>What is reality? </li></ul><ul><ul><li>double hermeneutic </li></ul></ul>
  9. 9. Political Economies of Welfare <ul><li>Overarching ideational paradigm </li></ul><ul><li>Frames political action at given moment </li></ul><ul><li>Broad consensus – not total agreement </li></ul><ul><li>Parties compete at margins > </li></ul><ul><li>Differences important </li></ul><ul><li>Paradigm shifts occur > </li></ul>
  10. 10. Part II - History
  11. 11. Key Paradigm Shifts <ul><li>Post-war Welfare Consensus </li></ul><ul><li>Thatcherism </li></ul><ul><li>Third Way </li></ul>
  12. 12. Post-War Welfare Consensus <ul><li>increased state intervention </li></ul><ul><li>social rights of citizenship </li></ul><ul><li>Keynesian economics </li></ul><ul><ul><li>demand management </li></ul></ul><ul><li>full employment </li></ul><ul><li>economic growth </li></ul><ul><li>(male breadwinner model) </li></ul>
  13. 13. Post-War Welfare Consensus <ul><li>Marked a significant shift in PEW </li></ul><ul><li>New social contract </li></ul><ul><li>Catalysts: </li></ul><ul><ul><li>war </li></ul></ul><ul><ul><li>depression </li></ul></ul>
  14. 14. Consensus Under Pressure <ul><li>Sluggish economic growth </li></ul><ul><ul><li>stop-go cycle </li></ul></ul><ul><li>Rising unemployment </li></ul><ul><li>Stagflation </li></ul><ul><li>Structural weaknesses? </li></ul><ul><ul><li>productivity </li></ul></ul><ul><ul><li>innovation </li></ul></ul><ul><li>State Overload Thesis </li></ul>
  15. 15. Consensus Under Pressure <ul><li>IMF Crisis </li></ul><ul><ul><li>credibility </li></ul></ul><ul><ul><li>conditions > </li></ul></ul><ul><li>Corporatist Economic Structures </li></ul><ul><ul><li>industrial unrest </li></ul></ul><ul><ul><li>Winter of Discontent </li></ul></ul>
  16. 16. Thatcher & New Right <ul><li>Rolling back the state </li></ul><ul><li>Individualism </li></ul><ul><li>Monetarism (Supply Side) </li></ul><ul><li>Control of inflation </li></ul><ul><ul><ul><li>‘ unemployment a price worth paying’ </li></ul></ul></ul><ul><li>Markets as wealth generators </li></ul><ul><li>Marked Contrast with PWC </li></ul>
  17. 17. Thatcher & New Right <ul><li>Huge rise in unemployment </li></ul><ul><ul><ul><li>Foot: ‘the trick’ </li></ul></ul></ul><ul><li>Boom bust </li></ul><ul><ul><ul><li>Lawson’s ‘economic miracle’ </li></ul></ul></ul><ul><li>Crude economic policy </li></ul><ul><ul><ul><li>interest rates </li></ul></ul></ul><ul><li>High government borrowing </li></ul><ul><li>Little progress in cutting social expenditure </li></ul><ul><li>Weak government? </li></ul><ul><ul><ul><li>Responding to events rather than shaping them </li></ul></ul></ul>
  18. 18. Blair – Third Way <ul><li>Limits to state action – reform not retrench > </li></ul><ul><li>Rights & responsibilities </li></ul><ul><li>Beyond Keynes & Monetarism? > </li></ul><ul><ul><li>Inflation & employment </li></ul></ul><ul><ul><li>Progressive supply side policies </li></ul></ul><ul><li>Social policies as economic policies > </li></ul><ul><ul><li>Flexible labour markets </li></ul></ul><ul><ul><li>Human capital </li></ul></ul><ul><li>Modernised social democracy? > </li></ul>
  19. 19. Part III - Theorisations
  20. 20. Competition State <ul><li>Paradigm shift </li></ul><ul><ul><li>loose neo-liberal consensus </li></ul></ul><ul><ul><li>response to globalisation </li></ul></ul><ul><ul><li>competition state </li></ul></ul><ul><li>Economic Policy </li></ul><ul><ul><li>end of Keynes </li></ul></ul><ul><ul><li>supply side policies </li></ul></ul><ul><ul><li>control inflation & public spending </li></ul></ul><ul><ul><li>free markets </li></ul></ul>
  21. 21. Competition State <ul><li>Social Policy </li></ul><ul><ul><li>de-emphasise social rights </li></ul></ul><ul><ul><li>(responsibilities) </li></ul></ul><ul><ul><li>marketisation, privatisation </li></ul></ul><ul><ul><li>active labour market policies (workfare) </li></ul></ul><ul><li>‘ the competition state is the successor to the welfare state, incorporating many of its features but reshaping them, sometimes quite drastically, to fit a globalizing world’ </li></ul>
  22. 22. Post-Fordist Welfare State <ul><li>‘ relative to the earlier post-war period, social policy is becoming more closely subordinated to economic policy… and its delivery has been subject to a partial rollback of the state in favour of market forces and civil society’ </li></ul><ul><li>‘ [the] opening of national economies makes it harder to pursue social policy in isolation from economic policy’ </li></ul>
  23. 23. Keynesian Welfare National State Keynesian Full employment Closed economy Demand management   Welfare Welfare rights   National Primacy of national scale State Mixed economy State corrects market failures Keynesian Welfare National State Schumpeterian Workfare Post-national Regime Keynesian Full employment Closed economy Demand management   Schumpeterian Innovation and competitiveness Open economy Supply side policies Welfare Welfare rights Workfare Social policy subordinated to economic policy Downward pressure on social wage Attacks welfare rights   National Primacy of national scale Post-national Hollowing out State Mixed economy State corrects market failures Regime Increased role of governance mechanisms to correct market and state failures
  24. 24. Part IV – Exploring Change
  25. 25. Big Mac <ul><li>Political Economy important </li></ul><ul><ul><li>operate within a paradigm </li></ul></ul><ul><ul><li>conditions possibilities </li></ul></ul><ul><li>Variation within paradigm </li></ul><ul><ul><li>Different forms of SWPR </li></ul></ul><ul><ul><li>Different forms of Competition State </li></ul></ul>
  26. 26. Big Mac <ul><li>Key meso forces: </li></ul><ul><ul><li>Institutions </li></ul></ul><ul><ul><li>Policy Networks </li></ul></ul><ul><ul><li>Policy Transfer </li></ul></ul><ul><li>Interconnected, iterative </li></ul>
  27. 27. Changing PEWs <ul><li>Exogenous shocks key? </li></ul><ul><li>Windows of opportunity </li></ul><ul><li>Punctuated equilibrium </li></ul><ul><li>Ideas up for grabs at these times > </li></ul>
  28. 28. Conlcusion <ul><li>Political economy frames context... </li></ul><ul><li>...but context shapes political economy </li></ul><ul><ul><li>macro, meso, micro </li></ul></ul><ul><li>Interact with other elements of policy process and vice-versa </li></ul><ul><li>Ideas are important... </li></ul><ul><li>...but why and when? </li></ul>
  29. 29. &quot;The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back... Sooner or later, it is ideas, not vested interests, which are dangerous for good or evil.&quot; — John Maynard Keynes
  30. 30. < number of votes left right A B median Party Competition Model Scenario A
  31. 31. < number of votes left right A B median Party Competition Model Scenario B
  32. 32. <ul><li>‘ We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and even insofar as it did ever exist, it only worked on each occasion by injecting a larger dose of inflation into the economy, followed by a higher level of unemployment as the next step.’ </li></ul><ul><li>Jim Callaghan, 1976 Labour Party Conference </li></ul><
  33. 33. Public expenditure as a proportion of national income has more or less reached the limits of acceptability. Constraints on ‘tax and spend’ force radical modernisation of the public sector and reform of public services to achieve better value for money Blair & Schroeder <
  34. 34. “ Beveridge, like most of his contemporaries, was committed to full employment, delivered by Keynesian demand management. The assumption of enduring full employment held good during the 1940s and 1950s… [but] began to come apart as early as the 1970s… Today the assumption has completely broken down. Globalisation has placed a premium on workers with the skills and knowledge to adapt to advancing technology” Blair <
  35. 35. ‘ a significant redrawing of the boundaries of state activity. Rather than providing a generous safety net for the unemployed… New Labour sees the state’s role as stimulating their re-entry into the labour market’ Glyn and Wood <
  36. 36. “ In the economic sphere, looks to develop a wide-ranging supply-side policy, which seeks to reconcile economic growth mechanisms with structural reform of the welfare state. In the information economy, human (and social) capital becomes central to economic success. […] The principle ‘wherever possible invest in human capital’ applies equally to the welfare state – which needs to be reconstructed as a ‘social investment state’.” Giddens <
  37. 37. ‘ Third way politics, as I conceive of it, is not an attempt to occupy a middle ground between top-down socialism and free-market philosophy. It is concerned with restructuring social democratic doctrines to respond to the twin revolutions of globalization and the knowledge economy ’ Giddens <
  38. 38. ‘ If the paradigm ‘ain’t broke’, radical ideational suggestions to ‘fix it’, existing in the form of circulating ideas and other forms of political discourse, will not find practical expression within purview of the state. Only when a status quo is considered ‘broke’, and economic needs and political demands require change, can ideas be advanced to dramatically ‘fix’ it.’ Heffernan (2002: 750) <