Socialism and dependence

[Ron Ecker]

It is a common argument of American "conservatives" (in the wake of fascistic, fiscally irresponsible Republican neocons and right-wingers who want the government on women's backs, I have no idea what "conservatism" in today's America has to do with conservatism other than fundamentalist religion) that "socialist" policies lead to dependence on the government, laziness, "welfare queens," etc. To what extent, if at all, has this proven to be true in countries with socialist governments?

[David Richardson]

It depends what you mean by 'socialist governments'. However, let's assume that Sweden's Social Democratic government fits the US description (not a very dangerous assumption!).

There's an election campaign going on at the moment, so this is a very hot topic here in Sweden, but the description of Swedes as being dependent on their welfare state has been losing a lot of its sting recently, since there are more and more issues on which a lack of government action has been criticised heavily. There was a storm in January last year, for example, which caused widespread havoc in the south of Sweden. The forests it destroyed were largely in private hands, and you didn't hear anyone arguing against the prompt and effective central government response. When the tsunami hit, on the other hand, it was on Boxing Day, early in the morning, here, and there's been a chorus of criticism (often coming from right-wing conservatives) about how terrible it was that the 'government' didn't spring into action and rescue Swedes stuck up trees on the other side of the world.

It's difficult to have an objective discussion about the issue, since the goalposts keep being moved. However, one abiding principle of Sweden's Social Democrats (who've been in power for most of the period since 1932) has been that the state levels the playing field, but private companies have to make the running (with state help, of course). In Stockholm, for example, one of the largest private bus companies is called Wedins. There aren't many Stockholmers who know that that company started in a shed beside the main road way up in the deprived north. The government enticed the local bus companies up there to work together to provide a daily bus service to the capital (with generous subsidies, etc), and Werner Wedins was one of them. They weren't big enough to run a bus every day, but they didn't have to, since there were a load of other companies working together. That provided the company with enough regular business for it to be able to expand, and they bought up local bus companies in the capital, and haven't looked back.

There's actually a very high level of entrepreneurship in Sweden (though the Swedish right haven't really noticed this), and there seems to be some evidence that generous social welfare payments have helped in this. The personal consequence of failure is less sharp, so people dare to take chances. There are plenty of 'start-up' courses, so if you do start your own business, it's very difficult *not* to have been trained in basic book-keeping, marketing, etc. If you're unemployed, and if the bureaucrats judge that you've got a viable business idea, you'll get a living costs subsidy for, I think, the first 6 months of trading to help you get on your feet.

I remember too when Volvo were considering setting up a factory in Uddevalla (outside Gothenburg) in the mid-1980s. The state built them a motorway and provided a load of other infrastructural help. When some more traditional businessmen and political opponents complained about this, the Industry Minister turned to the cameras and said, "If any of you want to set up a factory in a depressed area which will provide hundreds of jobs, just come to my office, and we'll set you up with a similar deal."

So, by my reading, there's a contradictory picture been painted of Sweden. It's got the reputation of being a high-tax, high-bureaucracy country with high state involvement in everything, with many people on the political right. If you look, though, at what an organisation like the OECD says about the country, you get a picture of a highly-adaptable place, where entrepreneurship is high and corporate taxes, in particular, are actually very low. The OECD sees Sweden as being one of the best places to do business in Europe, and the Swedish economy is back up in the top 5 or so. When you consider that Sweden was an economic basket case just a couple of generations ago (lost 25% of its population to emigration between 1880 and 1920, with the general difficulty of putting food on the table being a significant factor in that emigration), this is actually an incredible performance. Turkey was neutral during WW2 too, and I can't really see any reason why Sweden has been so successful (whilst Turkey has been relatively unsuccessful) apart from the policies Swedish governments have followed. Sweden might have been lucky, but it managed to use its luck in order to create lasting benefits for its population.

In comparison with the United States, we have one great advantage: health-care costs are borne collectively, which means that the provision of medical services is extremely efficient here (measured in terms of the amount of money which is spent on actual medical care, compared with administration).

There's a very high degree of consensus in Sweden about what a good society looks like. People here would prefer to pay relatively high taxes, and organise most services collectively, than to have a low-tax, low-service economy. For most of those years of Social Democratic control in the past, parliament sat for a three-year term, so the Swedish voters got plenty of opportunities to disagree with the way their society has been set up.

OK, that's my take on it - it'll be interesting to read what other people think.

Edited March 27, 2006 by David Richardson

[John Simkin]

It is a common argument of American "conservatives" (in the wake of fascistic, fiscally irresponsible Republican neocons and right-wingers who want the government on women's backs, I have no idea what "conservatism" in today's America has to do with conservatism other than fundamentalist religion) that "socialist" policies lead to dependence on the government, laziness, "welfare queens," etc. To what extent, if at all, has this proven to be true in countries with socialist governments?

It might surprise American members that Winston Churchill was easily defeated in the 1945 General Election. After all, he was seen as the man who “won the war”. He was defeated by an unassuming man (Clement Atlee) whose party had not been in power since 1931. In fact, Winston Churchill’s defeat was the largest suffered in the history of the Conservative Party. How could this have happened?

The main reason was that Winston Churchill was not trusted to implement the 1942 Beveridge Report. Churchill had commissioned Lord Beveridge to write a report on the best ways of helping people on low incomes. His report proposed that all people of working age should pay a weekly contribution. In return, benefits would be paid to people who were sick, unemployed, retired or widowed. Beveridge argued that this system would provide a minimum standard of living "below which no one should be allowed to fall". This was therefore the blueprint of Britain’s Welfare State.

The Beveridge Report became part of the Labour Party Manifesto. The idea was very attractive to the people and Clement Attlee easily defeated Winston Churchill in the 1945 election (Labour 393 seats, Conservative 197 seats).

The Beveridge proposals were implemented by the Atlee government. In 1946 parliament passed the revolutionary National Insurance Act that created the structure of the Welfare State. The legislation instituted a comprehensive state health service, effective from 5th July 1948. The Act provided for compulsory contributions for unemployment, sickness, maternity and widows' benefits and old age pensions from employers and employees, with the government funding the balance.

People in work, except married women, paid 4s 11d a week in National Insurance contributions. For the average worker, this amounted to nearly 5 per cent of their income. James Griffiths, the new Minister of National Insurance, claimed that it was "the best and cheapest insurance policy offered to the British people, of any people anywhere."

The government also announced plans for a National Health Service that would be, "free to all who want to use it." Senior members of the medical profession opposed the government's plans. Between 1946 and its introduction in 1948, the British Medical Association (BMA) mounted a vigorous campaign against this proposed legislation. In one survey of doctors carried out in 1948, the BMA claimed that only 4,734 doctors out of the 45,148 polled, were in favour of a National Health Service.

The Conservative Party and the major corporations also opposed the scheme. By July 1948, Aneurin Bevan had guided the National Health Service Act safely through Parliament. This legislation provided people in Britain with free diagnosis and treatment of illness, at home or in hospital, as well as dental and ophthalmic services.

The National Health Service was expensive and in April 1951, the Labour Chancellor of the Exchequer, Hugh Gaitskell, placed a shilling on every prescription and announced that people would have to pay half the cost of dentures and spectacles. As a result of this action, Aneurin Bevan resigned from the government.

It later emerged that Gaitskell was receiving money from the CIA’s Thomas Braden (head of the International Organizations Division).

The Welfare State was very popular with the British people and so to get elected, the Conservative Party had to change its policy on this issue. Winston Churchill took power again in 1951 but was unable to abolish the Welfare State. In fact, as far as I am aware, no country has ever removed the system once it has been introduced. That is why the American right is so much against it. In theory, all conservatives should be against things like the National Health Service. American critics are right to call it “socialized medicine”. Aneurin Bevan once said that the NHS is an example of socialism in action.

Although conservative politicians cannot remove the Welfare State in the UK, they can undermine the way it works. This began with the introduction of prescription charges. Another way is to under fund the system (Margaret Thatcher did this in the 1980s) or to privatize certain aspects of the service. This is what Tony Blair is doing at the moment with PFI (Private Finance Initiative). It is PFI that goes to the heart of the current Blair scandal.

See:

http://educationforum.ipbhost.com/index.php?showtopic=6382

David Low, Evening Standard (July, 1948)

[Derek McMillan]

It is a contradiction that conservatives actually want intense state control - anti-union laws, anti-terrorist laws which give sweeping powers to the administration, anti-abortion laws which limit a woman's right to choose yet claim to want to roll back the state because they intend to cut taxation by cutting social programs.

It is a contradiction that conservatives want massive and unprecedented state expenditure to finance wars and weapons programs and tougher "law and order" policies, yet want less waste in government.

And finally I must say that Americans who became dependent on the state in the wake of hurricane Katrina found out how undependable it is.

Edited March 27, 2006 by Derek McMillan

[Ed Waller]

Good points made by John and Derek.

It's only when the state steps into areas where there is the possibility to make money for the rich and/or large corporations that the Right throw their hands in the air in horror.

I spent a long time examining the period of history John mentions for my PhD. Naturally as part of that I had to look at USA's version of Welfare (medicare & medicaid). The limits on who could benefit under these schemes mean that for about 80% of people there was no government organised (in their terms 'socialised') medicine. Theyexpect everyone else to use their income wisely a purchase medical insurance. This gives some people in the insurance industry a massive income (i.e it's not efficient because not all of this money is spent on health provision). Insurance (as anyone who's bought it will realise) is priced relative to actuarial risk - the more at risk you are thanks to location, age, gender, occupation the more you will have to pay. So the poor (worst locations worst income diet etc) and at risk are quoted high premiums they couldn't hope to afford. It follows that the best insured are the least likely to need treatment, and hence there is a focus on cosmetic treatements that is less the case in countries with socialised medicine.

For the NHS in the UK, the Low cartoon doesn't tell half the story for dentists (in particular). The number of people fobbed off with spurious 'denial of service' ( ) tales is legion in the Mass-Observation archive and elsewhere.

Conservatives (in government and the civil service) have undermined the NHS from inception. The Treasury became apoplectic when it saw the actual cost of the NHS in 1949/50. It made certain that the subsequent budgets were fixed and developed a system to ensure the targets were met. Simply put, it guessed a level of inflation which was higher than it was likely to be in reality. This high figure was built into the spending plans of hospitals (last year we spent £100, inflation will be 5% so we'll have to buy 6% fewer things). This was exacerbated by the actual increases in drugs and dressings prices in the 1940s and 1950s that shocked even the Treasury. Apparently there was only so much taxation the country could stand for this type of project. This did not, however, apply to the Korean War.

It's also a surprise that BUPA, PPP and WPA all arose in the early years of the NHS, just as the insurance companies were (popularly!) sidelined. If the NHS were to be as Bevan had hoped, there would be no point in private medical insurance. How was it kept that way? I have a theory, which I'll save till someone wants to publish my PhD . For now, though, I'll point to a strange anomally. For the first decade or so, waiting lists changed little other than in the lengthening direction. This is despite the average stay in hospital falling dramatically with the increased use of penecillin and other treatments and the eradication of VD (STIs to younger viewers) as a hospitalising infection.

[John Simkin]

It is a common argument of American "conservatives" (in the wake of fascistic, fiscally irresponsible Republican neocons and right-wingers who want the government on women's backs, I have no idea what "conservatism" in today's America has to do with conservatism other than fundamentalist religion) that "socialist" policies lead to dependence on the government, laziness, "welfare queens," etc. To what extent, if at all, has this proven to be true in countries with socialist governments?

The claim that it leads to “laziness” is a common criticism of the welfare state. I suspect a large percentage of people in the UK share this view. There is no doubt that the younger generation view the welfare state differently to those who remember society before the introduction of the system. My mother was in her 30s when it was introduced. She was one of those who voted Labour in 1945 in order to get a welfare state. She had experienced the Great Depression in the 1930s. Her mother told her about how the government had not kept its promise to create a “land fit for heroes” after the First World War. It was felt that people could not trust the Conservative and Liberal parties to deliver this promise (they had formed a coalition government after the First World War).

My mother and grandmother were always reluctant to claim the benefits of the welfare state (my mother still holds this view). My mother’s generation thought the welfare state was only for those in great need (the unemployed, the disabled, etc.). I was brought up with this attitude (I was born days after the election of the Labour government in 1945). I have for example never been out of work since I left school at 15. I have therefore never claimed unemployment benefit. The important thing is that I knew it was there if I needed it. That is the important point about the welfare state being a “security net”.

My mother’s generation is often critical of young peoples’ attitude towards the welfare state. They all know of examples of people who claim unemployment benefit without appearing to be very interested in finding work. This is especially true of people who can only get unskilled work. With things like housing benefit, they are clearly better off than those receiving low wages. However, this is only true of a small minority. The vast majority want to be in work.

In my view, this is more a problem of low wages rather than too generous benefits. I believe a much larger problem is the unwillingness of those with money to pay a reasonable amount of taxation to fund the welfare state. Taxes on the rich are far too low to adequately fund the welfare state.

[David Richardson]

This is already a very hot topic in the Swedish general election campaign (they go to the polls in September).

The bourgeois parties (as the parties on the Right are called) have claimed that the 'welfare state is safe with them' … but at the same time, they state that they want to bring Swedish taxes down to the average either of EU countries or of OECD countries (there are different bourgeois parties and they haven't quite coordinated their stories yet). This sounds fairly unobjectionable, but it means cutting about 20 billion euros from the state budget … which can only be done by crippling the Swedish welfare state.

The bourgeois parties also want to 'stimulate employment' by drastically reducing benefits for people who're unemployed and on the long-term sicklist. One of the parties wants to introduce the same system of firing young working people which the French government is trying to introduce at the moment (hence all the demonstrations in Paris). This would have far-reaching consequences in Sweden, since, as in France, it's very difficult to rent a flat, take out a loan, etc, etc if you don't have a fairly secure contract of employment.

Swedish election campaigns don't usually get going until August, and many voters make their minds up only at the last minute, so it's early days yet. However, on the few occasions that the opposition has won in Sweden (whether Social Democrats or bourgeois coalitions), at this time of year they've usually had a clear lead in the opinion polls. At the moment, though, the blocs are more or less neck and neck. It looks, therefore, as if Swedish voters aren't buying the usual right-wing argument that you can only get rich people to work by showering them with money, but you can only get poor people to work by pushing them below the poverty line.

The fact that Carl Bildt's government in the early 1990s tried a carbon copy of Thatcher- and Reaganomics … and drove the country to the brink of bankruptcy in a few short months … is still in people's memories. We went through a very painful period of adjustment in the late-1990s, and the damage the bourgeois parties did last time is still in people's minds. The Social Democrats have been in power for 12 solid years now, though, so they're vulnerable to a feeling that it's time for a change.

If Sweden does go bourgeois in September, it'll be a sign that the Swedish love of the welfare state has been somewhat diminished. However, even if that does happen, it's far from certain that what people vote for is what they end up getting.

(BTW, the largest welfare recipients in Sweden are probably the Swedish private banks. When the economy went pear-shaped in 1992 - after only about a year of bourgeois 'government' - most of them nearly went bankrupt. These bold free-marketeers promptly turned to their 'get the state off our backs' friends in the government to demand subsidies. These got them out of difficulties and the banks are now extremely profitable … but somehow, they still haven't found time to reimburse the state for all the taxpayers' money they received. Still, that's how the free market works, isn't it.)