The Western Welfare State: Its Rise and Demise and the Soviet Bloc
by Prof. James Petras
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http://www.globalresearch.ca> Global Research, July 4, 2012
Introduction
One of the most striking socio-economic features of the past two decades is
the reversal of the previous half-century of welfare legislation in Europe
and North America . Unprecedented cuts in social services, severance pay,
public employment, pensions, health programs, educational stipends, vacation
time, and job security are matched by increases in tuition, regressive
taxation, and the age of retirement as well as increased inequalities, job
insecurity and workplace speed-up.
The demise of the 'welfare state' demolishes the idea put forth by orthodox
economists, who argued that the 'maturation' of capitalism, its 'advanced
state', high technology and sophisticated services, would be accompanied by
greater welfare and higher income/standard of living. While it is true that
'services and technology' have multiplied, the economic sector has become
even more polarized, between low paid retail clerks and super rich stock
brokers and financiers. The computerization of the economy has led to
electronic bookkeeping, cost controls and the rapid movements of speculative
funds in search of maximum profit while at the same time ushering in brutal
budgetary reductions for social programs.
The 'Great Reversal' appears to be a long-term, large-scale process centered
in the dominant capitalist countries of Western Europe and North America and
in the former Communist states of Eastern Europe . It behooves us to examine
the systemic causes that transcend the particular idiosyncrasies of each
nation.
The Origins of the Great Reversal
There are two lines of inquiry which need to be elucidated in order to come
to terms with the demise of the welfare state and the massive decline of
living standards. One line of analysis examines the profound change in the
international environment: We have moved from a competitive bi-polar system,
based on a rivalry between the collectivist - welfare states of the Eastern
bloc and the capitalist states of Europe and North America to an
international system monopolized by competing capitalist states.
A second line of inquiry directs us to examine the changes in the internal
social relations of the capitalist states: namely the shift from intense
class struggles to long-term class collaboration, as the organizing
principle in the relation between labor and capital.
The main proposition informing this essay is that the emergence of the
welfare state was a historical outcome of a period when there were high
levels of competition between collectivist welfarism and capitalism and when
class-struggle oriented trade unions and social movements had ascendancy
over class-collaborationist organizations.
Clearly the two processes are inter-related: As the collectivist states
implemented greater welfare provisions for their citizens, trade unions and
social movements in the West had social incentives and positive examples to
motivate their members and challenge capitalists to match the welfare
legislation in the collectivist bloc.
The Origins and Development of the Western Welfare State
Immediately following the defeat of fascist-capitalist regimes with the
defeat of Nazi Germany, the Soviet Union and its political allies in Eastern
Europe embarked on a massive program of reconstruction, recovery, economic
growth and the consolidation of power, based on far-reaching socio-economic
welfare reforms. The great fear among Western capitalist regimes was that
the working class in the West would "follow" the Soviet example or, at a
minimum, support parties and actions which would undermine capitalist
recovery. Given the political discredit of many Western capitalists because
of their collaboration with the Nazis or their belated, weak opposition to
the fascist version of capitalism, they could not resort to the highly
repressive methods of the past. Instead, the Western capitalist classes
applied a two-fold strategy to counter the Soviet collectivist-welfare
reforms: Selective repression of the domestic Communist and radical Left and
welfare concessions to secure the loyalty of the Social and Christian
Democratic trade unions and parties.
With economic recovery and post-war growth, the political, ideological and
economic competition intensified: The Soviet bloc introduced wide-ranging
reforms, including full employment, guaranteed job security, universal
health care, free higher education, one month paid vacation leave, full pay
pensions, free summer camps and vacation resorts for worker families and
prolonged paid maternity leave. They emphasized the importance of social
welfare over individual consumption. The capitalist West was under pressure
to approximate the welfare offerings from the East, while expanding
individual consumption based on cheap credit and installment payments made
possible by their more advanced economies. From the mid 1940's to the mid
1970's the West competed with the Soviet bloc with two goals in mind: To
retain workers loyalties in the West while isolating the militant sectors of
the trade unions and to entice the workers of the East with promises of
comparable welfare programs and greater individual consumption.
Despite the advances in social welfare programs, East and West, there were
major worker protests in East Europe : These focused on national
independence, authoritarian paternalistic tutelage of trade unions and
insufficient access to private consumer goods. In the West, there were major
worker-student upheavals in France and Italy demanding an end of capitalist
dominance in the workplace and social life. Popular opposition to
imperialist wars ( Indo-China , Algeria , etc.), the authoritarian features
of the capitalist state (racism) and the concentration of wealth was
widespread.
In other words, the new struggles in the East and West were premised on the
consolidation of the welfare state and the expansion of popular political
and social power over the state and productive process.
The continuing competition between collectivist and capitalist welfare
systems ensured that there would be no roll-back of the reforms thus far
achieved. However, the defeats of the popular rebellions of the sixties and
seventies ensured that no further advances in social welfare would take
place. More importantly a social 'deadlock' developed between the ruling
classes and the workers in both blocs leading to stagnation of the
economies, bureaucratization of the trade unions and demands by the
capitalist classes for a dynamic, new leadership, capable of challenging the
collectivist bloc and systematically dismantling the welfare state.
The Process of Reversal: From Reagan-Thatcher to Gorbachev
The great illusion, which gripped the masses of the collectivist-welfare
bloc, was the notion that the Western promise of mass consumerism could be
combined with the advanced welfare programs that they had long taken for
granted. The political signals from the West however were moving in the
opposite direction. With the ascendancy of President Ronald Reagan in the US
and Prime Minister Margaret Thatcher in Great Britain, the capitalists
regained full control over the social agenda, dealing mortal blows to what
remained of trade union militancy and launching a full scale arms race with
the Soviet Union in order to bankrupt its economy. In addition, 'welfarism'
in the East was thoroughly undermined by an emerging class of upwardly
mobile, educated elites who teamed up with kleptocrats, neo-liberals,
budding gangsters and anyone else who professed 'Western values'. They
received political and material support from Western foundations, Western
intelligence agencies, the Vatican (especially in Poland ), European Social
Democratic parties and the US AFL-CIO while, on the fringes, an ideological
veneer was provided by the self-described 'anti-Stalinist' leftists in the
West.
The entire Soviet bloc welfare program had been built from the top-down and,
as a result, did not have a class-conscious, politicized, independent and
militant class organization to defend it from the full-scale assault
launched by the gangster-kleptocratic-clerical-neo-liberal-'anti-Stalinist'
bloc. Likewise in the West, the entire social welfare program was tied to
European Social Democratic parties, the US Democratic Party and a trade
union hierarchy lacking both class consciousness and any interest in class
struggle. Their main concern, as union bureaucrats was reduced to collecting
members' dues, maintaining internal organizational power over their fiefdoms
and their own personal enrichment.
The collapse of the Soviet bloc was precipitated by the Gorbachev regime's
unprecedented handover of the allied states of the Warsaw Pact to the NATO
powers .The local communist officials were quickly recycled as neo-liberal
proxies and pro-western surrogates. They quickly proceeded to launch a
full-scale assault on public ownership of property and dismantling the basic
protective labor legislation and job security, which had been an inherent
part of collectivist management-labor relations.
With a few noteworthy exceptions, the entire formal framework of
collectivist-welfarism was crushed. Soon after came mass disillusion among
the Eastern bloc workers as their 'anti-Stalinist' western-oriented trade
unions presented them with massive lay-offs. The vast majority of the
militant Gdansk shipyard workers, affiliated to Poland's 'Solidarity'
Movement were fired and reduced to chasing odd jobs, while their wildly
feted 'leaders', long-time recipients of material support from Western
intelligence agencies and trade unions, moved on to become prosperous
politicians, editors and businesspeople.
The Western trade unions and the 'anti-Stalinist' Left (Social Democrats ,
Trotskyists and every sect and intellectual current in between), did yeoman
service in not only ending the collectivist system (under the slogan:
'Anything is better than Stalinism') but of ending the welfare state for
scores of millions of workers, pensioners and their families.
Once the collectivist-welfare state was destroyed, the Western capitalist
class no longer needed to compete in matching social welfare concessions.
The Great Rollback moved into full gear.
For the next two decades, Western regimes, Liberal, Conservative and Social
Democratic, each in their turn, sliced off welfare legislation: Pensions
were cut and retirement age was extended as they instituted the doctrine of
'work 'til you drop'. Job security disappeared, work place protections were
eliminated, severance pay was cut and the firing of workers was simplified,
while capital mobility flourished.
Neo-liberal globalization exploited the vast reservoirs of qualified
low-paid labor from the former collectivist countries. The 'anti-Stalinist'
workers inherited the worst of all worlds: They lost the social welfare net
of the East and failed to secure the individual consumption levels and
prosperity of the West. German capital exploited cheaper Polish and Czech
labor, while Czech politicos privatized highly sophisticated state
industries and social services, increasing the costs and restricting access
to what services remained.
In the name of 'competitiveness' Western capital de-industrialized and
relocated vast industries successfully with virtual no resistance from the
bureaucratized 'anti-Stalinist' trade unions. No longer competing with the
collectivists over who has the better welfare system, Western capitalists
now competed among themselves over who had the lowest labor costs and social
expenditures, the most lax environmental and workplace protection and the
easiest and cheapest laws for firing employees and hiring contingent
workers.
The entire army of impotent 'anti-Stalinist' leftists, comfortably
established in the universities, brayed till they were hoarse against the
'neo-liberal offensive' and the 'need for an anti-capitalist strategy',
without the tiniest reflection over how they had contributed to undermining
the very welfare state that had educated, fed and employed the workers.
Labor Militancy: North and South
Welfare programs in Western Europe and North America were especially hit by
the loss of a competing social system in the East, by the influx and impact
of cheap labor from the East and because their own trade unions had become
adjuncts of the neo-liberal Socialist, Labor and Democratic Parties.
In contrast, in the South, in particular in Latin America and, to a lesser
degree, in Asia , anti-welfare neo-liberalism lasted only for a decade. In
Latin America neo-liberalism soon came under intensive pressure, as a new
wave of class militancy erupted and regained some of the lost ground. By the
end of the first decade of the new century - labor in Latin America was
increasing its share of national income, social expenditures were increasing
and the welfare state was in the process of re-gaining momentum in direct
contrast to what was occurring in Western Europe and North America .
Social revolts and powerful popular movements led to left and center-left
regimes and policies in Latin America . A powerful series of national
struggles overthrew neo-liberal regimes. A growing wave of worker and
peasant protests in China led to 10% to 30% wage increases in the industrial
belts and moves to restore the health and public educational system. Facing
a new grassroots, worker-based socio-cultural revolt, the Chinese state and
business elite hastily promoted social welfare legislation at a time when
Southern European nations like Greece , Spain , Portugal and Italy were in
the process of firing workers and slashing salaries, reducing minimum wages,
increasing retirement age and cutting social expenditures.
The capitalist regimes of the West no longer faced competition from the
rival welfare systems of the Eastern bloc since all have embraced the ethos
of 'the less the better': Lower social expenditures meant bigger subsidies
for business, greater budgets to launch imperial wars and to establish the
massive 'homeland security' police state apparatus. Lower taxes on capital
led to greater profits.
Western Left and Liberal intellectuals played a vital role in obfuscating
the important positive role which Soviet welfarism had in pressuring the
capitalist regimes of the West to follow their lead. Instead, during the
decades following the death of Stalin and as Soviet society evolved toward a
hybrid system of authoritarian welfarism, these intellectuals continued to
refer to these regimes as 'Stalinist', obscuring the principle source of
legitimacy among their citizens - their advanced welfare system. The same
intellectuals would claim that the 'Stalinist system' was an obstacle to
socialism and turned the workers against its positive aspects as a welfare
state, by their exclusive focus on the past 'Gulag'. They argued that the
'demise of Stalinism' would provide a great opening for 'democratic
revolutionary socialism'. In reality, the fall of collectivist-welfarism led
to the catastrophic destruction of the welfare state in both the East and
West and the ascendancy of the most virulent forms of primitive neo-liberal
capitalism. This, in turn, led to the further shrinking of the trade union
movement and spurred the 'right-turn' of the Social-Democratic and Labor
Parties via the 'New Labor' and 'Third Way " ideologies.
The 'anti-Stalinist' Left intellectuals have never engaged in any serious
reflection regarding their own role in bringing down the collective welfare
state nor have they assumed any responsibility for the devastating
socio-economic consequences in both the East and West. Furthermore the same
intellectuals have had no reservations in this 'post-Soviet era' in
supporting ('critically' of course) the British Labor Party, the French
Socialist Party, the Clinton-Obama Democratic Party and other 'lesser evils'
which practice neo-liberalism. They supported the utter destruction of
Yugoslavia and US-led colonial wars in the Middle East, North Africa and
South Asia . Not a few 'anti-Stalinist' intellectuals in England and France
will have clinked champagne glasses with the generals, bankers and oil
elites over NATO's bloody invasion and devastation of Libya - Africa's only
welfare state.
The 'anti-Stalinist' left intellectuals, now well-ensconced in privileged
university positions in London , Paris , New York and Los Angeles have not
been personally affected by the roll-back of the Western welfare programs.
They adamantly refuse to recognize the constructive role that the competing
Soviet welfare programs played in forcing the West to 'keep up' in a kind of
'social welfare race' by providing benefits for its working class. Instead,
they argue (in their academic forums) that greater 'workers militancy'
(hardly possible with a bureaucratized and shrinking trade union membership)
and bigger and more frequent 'socialist scholars' forums' (where they can
present their own radical analyses . to each other) will eventually restore
the welfare system. In fact, historic levels of regression, insofar as
welfare legislation is concerned, continue unabated. There is an inverse
(and perverse) relation between the academic prominence of the
'anti-Stalinist' Left and the demise of welfare state policies. And still
the 'anti-Stalinist' intellectuals wonder about the shift to far-right
demagogic populism among the hard-pressed working class!
If we examine and compare the relative influence of the 'anti-Stalinist'
intellectuals in the making of the welfare state to the impact of the
competing collectivist welfare system of the Eastern bloc, the evidence is
overwhelmingly clear: Western welfare systems were far more influenced by
their systemic competitors than by the pious critiques of the marginal
'anti-Stalinist' academics. 'Anti-Stalinist' metaphysics have blinded a
whole generation of intellectuals to the complex interplay and advantages of
a competitive international system where rivals bid up welfare measures to
legitimate their own rule and undermine their adversaries. The reality of
world power politics led the 'anti-Stalinist' Left to become a pawn in the
struggle of Western capitalists to contain welfare costs and establish the
launch pad for a neo-liberal counter-revolution. The deep structures of
capitalism were the primary beneficiaries of anti-Stalinism.
The demise of the legal order of the collectivist states has led to the most
egregious forms of predator-gangster capitalism in the former USSR and
Warsaw Pact nations. Contrary to the delusions of the 'anti-Stalinist' Left,
no 'post-Stalinist' socialist democracy has emerged anywhere. The key
operatives in overthrowing the collectivist-welfare state and benefiting
from the power vacuum have been the billionaire oligarchs, who pillaged
Russia and the East, the multi-billion dollar drug and white slave cartel
kingpins, who turned hundreds of thousands of jobless factory workers and
their children in the Ukraine, Moldova, Poland, Hungary, Kosova, Romania and
elsewhere into alcoholics, prostitutes and drug addicts.
Demographically, the biggest losers from the overthrow of the
collectivist-welfare system have been woman workers: They lost their jobs,
their maternity leave, child care and legal protections. They suffered from
an epidemic of domestic violence under the fists of their unemployed and
drunken spouses. The rates of maternal and infant deaths soared from a
faltering public health system. The working class women of the East suffered
an unprecedented loss of material status and legal rights. This has led to
the greatest demographic decline in post-war history - plummeting birth
rates, soaring death rates and generalized hopelessness. In the West, the
feminist 'anti-Stalinists' have ignored their own complicity in the
enslavement and degradation of their 'sisters' in the East. (They were too
busy feting the likes of Vaclav Havel).
Of course, the 'anti-Stalinist' intellectuals will claim that the outcomes
that they had envisioned are a far cry from what evolved and they will
refuse to assume any responsibility for the real consequences of their
actions, complicity and the illusions they created. Their outrageous claim
'that anything is better than Stalinism' rings hollow in the great chasm
containing a lost generation of Eastern bloc workers and families. They need
to start counting up the multi-million strong army of unemployed throughout
the East, the millions of TB and HIV-ravaged victims in Russia and Eastern
Europe (where neither TB nor HIV posed a threat before the 'break-up'), the
mangled lives of millions of young women trapped in the brothels of Tel
Aviv, Pristina, Bucharest, Hamburg, Barcelona, Amman, Tangiers, and Brooklyn
...
Conclusion
The single biggest blow to the welfare programs as we knew them, which were
developed during the four decades from 1940's to the 1980's, was the end of
the rivalry between the Soviet bloc and Western Europe and North America .
Despite the authoritarian nature of the Eastern bloc and the imperial
character of the West, both sought legitimacy and political advantage by
securing the loyalty of the mass of workers via tangible social-economic
concessions.
Today, in the face of the neo-liberal 'roll back', the major labor struggles
revolve around defending the remnants of the welfare state, the skeletal
remains of an earlier period. At present there are very few prospects of any
return to competing international welfare systems, unless one were to look
at a few progressive countries, like Venezuela, which have instituted a
series of health, educational and labor reforms financed by their
nationalized petroleum sector.
One of the paradoxes of the history of welfarism in Eastern Europe can be
found in the fact that the major ongoing labor struggles (in the Czech
Republic, Poland, Hungary and other countries, which had overthrown their
collectivist regimes, involve a defense of the pension, retirement, public
health, employment, educational and other welfare policies - the 'Stalinist'
leftovers. In other words, while Western intellectuals still boast of their
triumphs over Stalinism, the real existing workers in the East are engaged
in day-to-day militant struggles to retain and regain the positive welfare
features of those maligned states. Nowhere is this more evident than in
China and Russia , where privatizations have meant a loss of employment and,
in the case of China , the brutal loss of public health benefits. Today
workers' families with serious illnesses are ruined by the costs of
privatized medical care.
In the current world 'anti-Stalinism' is a metaphor for a failed generation
on the margins of mass politics. They have been overtaken by a virulent
neo-liberalism, which borrowed their pejorative language (Blair and Bush
also were 'anti-Stalinists') in the course of demolishing the welfare state.
Today the mass impetus for the reconstruction of a welfare state is found in
those countries, which have lost or are in the process of losing their
entire social safety net - like Greece , Portugal , Spain and Italy- and in
those Latin American countries, where popular upheavals, based on class
struggles linked to national liberation movements, are on the rise.
The new mass struggles for welfarism make few direct references to the
earlier collectivist experiences and even less to the empty discourse of the
'anti-Stalinist' Left. The latter are stuck in a stale and irrelevant time
warp. What is abundantly clear, however, is that the welfare, labor and
social programs, which were gained and lost, in the aftermath of the demise
of the Soviet bloc, have returned as strategic objectives motivating present
and future workers struggles.
What needs to be further explored is the relation between the rise of the
vast police state apparatuses in the West and the decline and dismantling of
their respective welfare states: The growth of 'Homeland Security' and the
'War on Terror' parallels the decline of Social Security, public health
programs and the great drop in living standards for hundreds of millions.
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Received on Wed Jul 04 2012 - 11:13:18 EDT
