to what extent can it be argued that neo-liberal ideas underpin the welfare agendas of all the main...

7/27/2019 To what extent can it be argued that neo-liberal ideas underpin the welfare agendas of all the main political parti

1/10

1117509 Word Count: 3284

1

To what extent can it be argued that neo-liberal ideas underpin the welfare agendas of all the

main political parties

Neo-liberalism has been in vogue for a sustained period in western politics. This paper will firstly

identify what neo-liberalism is, as a political philosophy and ideological driver, before applying this

understanding to the main political parties in the UK in order to ascertain whether indeed, neo-

liberal ideas underpin the welfare agendas of the main political parties. In so doing, it will be argued

that neo-liberalism to an extent, does underpin the welfare agendas of the main political parties; at

least, in the post-Thatcher years of the UK. However this answer is offered with the caveat that neo-

liberalism does not solely underpin the welfare agendas of the parties investigated. It forms part of a

wider framework which differs between the two parties observed. The main political parties will be

defined here as being the Conservative and Labour parties, not least because in the period examined

the Liberal Democrats have not won an election. Lastly, it will be argued that whilst this approach

has had a significant impact upon these parties, it cannot be seen as the sole causal factor in

explaining the current state of affairs within social policy agendas, but rather as part of a wider

global shift to markets.

Before we begin, it is important to understand what neo-liberalism is. Firstly, neo-liberalism can be

seen as a new take on classical liberalism hence neo-liberal. So we shall examine its liberal roots,

which can be seen most strongly influenced by writers such as Ricardo and more significantly, Adam

Smith (Page, 2005a, Ellison, 2008). Writing in conditions very different to our own, Smith offered a

radical new outlook for how to structure society, not along the aristocratic feudal lines of the past

but rather economic ones (Ellison, 2008, Evans, 2006). The two most important strands for us to take

from Smiths prescription can be seen as that of human liberty and the championing of free markets.

The liberal and neo-liberal conception of liberty is commonly referred to as negative

freedom. When Berlin (2002) refers to the history of western philosophy in establishing this, I argue

the origins he intimates to be Hobbess definition as [the] absence of external impediments

(Hobbes 2007:77). As Berlin (2002:170) puts it; *by+ being free . . . I mean not being interfered with

by others. This negative freedom can be seen in the neo-liberal approach, as championed by Hayek

(1944), which Plant (1990:8) helpfully spells out: The neo-liberals view of freedom is that it is

essentially negative, that is to say the absence of intentional coercion. In continuing this theme

Hayek, posited here as the intellectual heavyweight underpinning the neo-liberal endeavour,

described freedom in equally negative terms as independence of the arbitrary will of another

(1960:12). These examples help outline the freedom from idea behind negative liberty and are

crucial in following the logic for why to avoid the other form of freedom, which T.H Green referred


2/10

1117509 Word Count: 3284

2

aspositive liberty(Heywood, 1999). There is not time to fully outline the finer points of this position,

so will be adumbrated simply as freedom to, but is best seen as containing an idealistic abstraction

which Hayek argued was the first step on the road to serfdom (1944). Indeed, Hayek is not alone in

making this argument, as Berlin (2002) in his influential essay Two Concepts of Libertyoutlines in a

very similar fashion, that all forms of positive liberty, no matter how noble their intent, lead to

tyrannous unintended consequences. Where they differ however, is in Hayek offering his economic

philosophy based on negative liberty as a panacea, which Berlin would reject.

We have seen how liberals and their neo-liberal counterparts conceived of, and celebrated

freedom. For these thinkers the goal is how to maximise the individuals freedom, provided it comes

not at the expense of the liberty of others (Page, 2005a). The mechanism for administering liberty is

seen as the free market. This leads us onto the second key strand of Smiths classical liberalism ; that

of free markets being left unimpeded by interference, mirrored in Hayek s argument for neo-

liberalism.

Smiths invisible hand thesis that individuals motivated by self-interest unintentionally

create a harmonious order more effective than state planning (Barry,1990:62) is core to the

philosophy. This is reflected in Hayeks reworking in the notion of catallaxy (Hayek, 1960, Swift,

2006:19), another example of the ordo ab chao advocacy of the free market. State planning would

equate to an infringement upon the individual liberties of agents engaged in market activity. Thisposition is seen in the neo-liberal account. For Hayek, state interference is categorically wrong. The

Road To Serfdom (1944) can be read as an attack on any form of state planning or intervention in

markets, and, like Smith, the only form of coercion he would tolerate was from a minimal state

intending to prevent the arbitrary will of others limiting individuals, choice, action and liberty

(Hayek, 1944, Ellison, 2008). For Hayek and neo-liberals in general, the most equitable manner to

structure society was through private enterprise and free markets. With this in mind, one might ask

the question why would there be a need for a neo-liberal movement seeing as they seem to largely

recover classical liberal ground. The answer lies in the rise of the interventionist Keynesian welfare

state in the post-war years, which are seen to have economically undermined nation states as they

took increasing participation in the economy (Ellison, 2008). Furthermore Hayek (1944, 1960) argues

that attempts to plan the economy or redistribute wealth are, an infringement of personal liberty

and, distort market process which would benefit everybody if left unimpeded (Swift, 2006).

However, neo-liberals stop short of arguing for no intervention in market processes. For Hayek

(1944) and others such as Friedman (1962) and Minford (1991), they see some state action as


3/10

1117509 Word Count: 3284

3

necessary in the marketplace where it is unable to achieve a desired outcome. This can be seen in

the endorsement of the basic safety net approach and in instances referred to as the public good.

Friedman was very influential in the practical policies he posited for the neo-liberal programme. He

was prominent in implementing less than successful policies in nations such as Chile and Argentina

(Klein, 2008) but has nonetheless impacted upon British policy. He advocated the famous negative

income tax (Barry, 1990), combined with his flat tax which in contrast to the sliding scale tax

schema in the UK, appears extremely regressive. Moreover, he suggested welfare should not involve

state participation at all beyond administering the finance in the form of welfare vouchers, allowing

private enterprise to, in his mind, provide more efficient services and broaden the range of freedom

for the individual in enabling choice and an exit strategy for unsatisfactory service (Friedman, 1962).

For Friedman, any provision of welfare in kind, such as health, housing etc. involves the illiberal

principle that public authorities are licensed to select certain ends as being especially desirable out

of the whole range of ends that feature in a free and pluralist society. (Barry, 1990:65). This notion

is reflected in Hayeks thinking and can be seen as a core strand of neo-liberal welfare philosophy.

A brief overview of the neo-liberal welfare state critique is worth noting. The major issue

contains three issues relevant to this discussion: first, it creates monopolies that limit individual

choice for the majority of citizens who cannot afford the private option, and deprives them of an

exit strategy (Page, 2005a) which is argued to be intrinsically coercive (Hayek 1960, Plant, 1990).Second, the vast monopolistic bureaucracies are inefficient, resistant to change and thus stymie

innovation, placing onus on the producer rather than the consumer (Page, 2005a). Lastly, over-

generous welfare handouts cause recipient dependency where personal and familial responsibility

to participate in work would have prospered before (Ellison, 2008). From these findings we can

outline a neo-liberal typology for an ideal type welfare agenda:

No attempt to create social justice as it would be a mistake to do so. Minimal state participation in the delivery of welfare services, therefore minimal public

spending by the state.

Welfare delivery provision by private enterprise and not-for-profit sector Only in extreme instances where the free market would be unable to provide welfare

efficiently would state intervention be tolerated.

Welfare vouchers would be implemented to act as a form of safety net that would enablethose lacking the resources to enter the market to maintain autonomy and liberty when

consuming welfare products.


4/10

1117509 Word Count: 3284

4

These points would arguably underpin any political partys welfare agenda, were it ideologically

driven exclusively by a neo-liberal outlook.

There are some flaws in the neo-liberals idealistic outlook of markets being the key to liberty

that are worth noting here. Firstly, Friedman and Hayek appear to have little space in their thinking

for what happens when private producers fail. This could have serious consequences for the welfare

consumer if they relied upon the private sector which is less stable than publicly funded bodies, for

the very reason that one can lose all their investment in a private failure, whereas state funded

bodies cannot go out of business. The neo-liberal operates with a misguided faith in the market.

While Barry (1990:68) makes a strong case when arguing state welfare constitutes a loss of liberty,

no lip service is paid to the loss of liberty when welfare consumers lose their investment through

private failure. Indeed, is it even possible to have the sort of liberty that neo-liberals champion?

Could it be as (Plant 1990:7) argues that neo-liberals operate with a defective view of liberty, a

defective critique of social justice, and an over-reliance on the trickle-down effect as the means of

empowerment.?

The introduction of neo-liberalism into the British political agenda has largely been

attributed to the Thatcher government (Page, 2005a, Ellison, 2008). Indeed as Swift asserts, *Hayek]

was Thatchers favourite intellectual and a major influence on the development of the New Right in

Britain (2006:19). We will now observe the influence of neo-liberal ideology on the ThatcherConservative government in the domain of welfare. However, as Swift alludes, this New Right was

not simply a neo-liberal ideology, but was blended with neo-conservatism (Page, 2005a). Neo-

conservatism contains some tensions which ostensibly contradict the neo-liberal position. For

instance, the notion of state interference in upholding traditional moral value and ensuring

hierarchical and authoritarian relationships (King, 1987) runs counter to the logic of Hayek et al.

Despite these seeming incompatibilities, the differences should not be exaggerated" (Page,

2005a:244). Both were successfully combined into the New Right ideology, which maintained a

strong state, whilst attempting to maximise free markets and reduce the public sector as much as

politically possible. For King, neo-liberalism lies at the core of New Right ideas about economic and

social policy (1987:15), which therefore would include the New Rights welfare agenda.

This can be seen in the manner that Thatcher sought to shift public spending away from the public

welfare services, with limited success she managed to curb spending increases but was less

successful in overall budgetary reductions (King, 1987). Indeed, while Child Benefit was frozen in

1987-8, spending per pupil in education rose between the mid 1980s and mid 1990s (Ellison, 2011).

This can be argued to be as a consequence of the vagaries of the Torys economic policy, which


5/10

1117509 Word Count: 3284

5

contributed to two recessions that paralysed attempts to control unemployment benefits; tripling

spending between 1979 and 1985, before falling in the mid-1980s, only to rise again in the 1990s

(Ellison, 2011). As Charmley (quoted in Ellison, 2011:56) states the much vaunted cuts did not

happen under Thatcher, however this had more to do with a lack of sufficient support within the

party for her ideology, and the aforementioned erratic conservative economic policy (Ellison, 2011).

Moreover, as Minford (1990:71) argues the middle class floating voter ultimately decides what is

done. This notion of the floating voter the middle class voters who both parties will attempt to

please thus limiting the ideological scope of parties agendas helps explain why in politics one sees

a limitation in the scope of ideology in implementing policy. Indeed the intention to privatise bodies

such as the NHS, or at least open up to private revenue streams and activity, became difficult partly

because of its value for money in this period (Ellison, 2011). However was also because privatising

the NHS would have political costs that could damage the popularity with the government amongst

the 'floating' voter class (Ellison, 2011).

While some areas proved impossible, the introduction of marketisation mechanisms that mimic

free market practice, and the creation of quasi-markets into the public sector was implemented, as it

was deemed to be more cost efficient (Ellison, 2011:55), despite the evidence making it difficult to

prove this assumption. This process of marketisation became synonymous with the Conservative

governments welfare policy from the late 1980s onwards until New Labour took power in 1997

(Ellison, 2011). As Labour intellectual Le Grand (1991) outlines, marketisation or quasi-markets

represent an intention for the state to become primarily a funder (1991:1257) of welfare services,

purchasing from a mixed economy of welfare, enabling greater competition. In addition to this

Friedman-esque endorsement of market-based welfare, he outlines how vouchers may be given to

consumers to exercise choice (1991:1257). Marketisation, well falling short of the idea-type, does

certainly support the notion of a neo-liberal welfare agenda, however, not a purelyneo-liberal one.

New Labour took power in 1997 and as Bochel (2011b:272) asserts inevitably, the policies

of any incoming government will be shaped and limited by those of their predecessors. The

abandonment of the almost Marxist Clause 4 in 1995 (Page, 2005b) can be seen as part of a tacit

acceptance of neo-liberal market-based thinking indeed according to Hall, New Labour;

abandoned *their+ historic agenda and set about reconstructing social democracy as the best shell

for a New Labour variant of neo-liberalism (2012:17/8). He (Hall, 2003:2012) argues that New

Labour has attempted to use neo-liberalism in conjunction with social democratic objectives to

achieve social justice. This may seem paradoxical, certainly if one considers Hayek and others view

on social justice being a mirage based upon a category error of conceptualising society (Swift,


6/10

1117509 Word Count: 3284

6

2006). However, as Le Grand (1982, 1991) has demonstrated, the rationale of the welfare voucher

system Friedman was so fond of, could be utilised by the left to create a lopsided order which would

load higher value vouchers to less privileged individuals in order to make them more attractive to

private enterprise. Consequently, achieving greater socially justice.

Evidence of this neo-liberal strand of thinking in New Labour circles can be seen in their tougher

(Ellison, 2008:64) stance on welfare with a greater onus placed on individual responsibility which

resonates with the neo-liberal and New Right view of dependency and individual responsibility.

Moreover, programmes such as welfare to work appear more in keeping with the safety-net

approach favoured by neo-liberals than the paternalistic egalitarianism which Minford (1990)

insinuates as being in the Labour welfare tradition. In effect, New Labours shift to the middle

ground represents a tacit acceptance of the neo-liberal championing of markets. However, as

Martell argues New Labour had not simply donned the New Right jacket, but rather, Labour

modernization was about how new means could be found to further old ends ( quoted in Bochel,

2011a:2). Indeed, while New Labour certainly has not adhered to the ideal-type welfare agenda,

there is certainly an elemental neo-liberal underpinning of their welfare agenda. As Hall argues this

can be seen as combining economic neo-liberalism with a commitment to active government; In

effect, it is a hybrid of social democracy, which is subordinate to the dominant position afforded to

neo-liberalism (Hall 2003). This mirrors the Kings (1987) assertion that the Conservative New Right,

despite its blend, contained neo-liberalism at its core.

In wrapping up the New Labour neo-liberal assessment, it appears the sentiments that Barry

elucidates here can be seen best to summarise in the New Labour welfare agenda:

one positive conclusion is clear: that whatever welfare institutions and policies we have, and

undoubtedly some will be generated by the transmission of benevolent preferences through

the voting process, they should be directed towards making the market work better.

Barry, 1990:75

The post-New Labour Coalition government appears to continue this market based pseudo-

neo-liberal approach. Bochel (2011a:19) argues that Camerons conservatism is both a variety of

Thatcherism with Hayeks thought still lingering yet simultaneously and heavily draws on New

Labour/Third Way ideas (Bochel, 2011a). Evidence for the influence of New Labour can be seem in

for instance, the Coalitions continuation of unemployment welfare strategies designed to offer a

route back into work, along the lines of the safety-net conception of welfare (McKay and

Rowlingson, 2011). Indeed, Conservative economic and social policies appear likely to produce a


7/10

1117509 Word Count: 3284

7

small state with services provided by the private and not-for-profit sectors (Bochel, 2011a:19/20).

Such outcomes certainly fit with the neo-liberal ideal for a welfare agenda. Attempts at NHS reform

(see Ham et al2011) suggest this has an ideological element in keeping with the New Right approach

of Thatcher and Major governments. Moreover, the Coalition governments ability to transform an

economic crisis in the private sector into a crisis of overspending in the public sector can be read as a

clear ideological attempt to roll back the state in a manner even Thatcher had been unable to do

(Bochel, 2011b).

Neo-liberalism has had a distinctive impact on welfare in the UK. However as we have seen,

no government including even Thatchers stewardship implemented neo-liberal fundamentalism,

however key elements of neo-liberal thinking have undoubtedly influenced economic and social

policy-makers (Ellison, 2008:67) in recent decades. The best example is arguably the introduction of

marketisation, which has created a neo-liberal-esque element of competition into areas that have

previously been considered purely public. As we have seen, the ideal type welfare agenda does not

really fit with either the Thatcher and Major or indeed New Labour government s welfare agenda.

Nonetheless, threads of the neo-liberal approach have permeated both major political parties

welfare agendas, best observed in the marketisation or quasi-market approach to welfare.

Just as the success of Keynesianism and social democratic principles led to a post-war consensus in

Britain that lasted up until the late 1970s, as typified by the term Butskellism; where the politicalground had been shifted more and more toward statism, the post-Thatcherite era can be argued to

have created a new consensus, as Kerr (2009) argues - evidential in Mandelsons dictum we are all

Thatcherites now (quoted in Tempest, 2002). However as Mandelson elaborates, and echoed by

Ellison, this embrace of markets is not simply favouring the neo-liberal school of thought. Rather, it

is part of shift in the globally competitive world (Ellison, 2008); indeed, ideas reflect as much as

drive, economic political and social change (Ellison, 2008:67) . In many ways, the Third Way

approach could be seen as a more nuanced attempt to develop a welfare agenda more conducive to

the pressures of the global era.

Concluding, we have seen neither party has embraced a purely neo-liberal welfare agenda. For

Conservatives, it was part of their New Right strategy, and with New Labour, neo-liberal market

principles were combined with social democratic objectives in order to achieve a third way going

forward in a global age. These principles of markets, choice and freedom have deeply altered the

political landscape, to the point where to fight against them would appear pass. However, as

noted, the neo-liberal perspective should be seen more as part of a development of the welfare

dialectic, which will continue to evolve in an increasingly complex global era. That neither party has


8/10

1117509 Word Count: 3284

8

purely embraced a purely neo-liberal welfare agenda says something for the shortcomings of the

outlook, as well as the problematic of implementing politically impalpable ideas, which could lose

key electoral support.

Bibliography


9/10

1117509 Word Count: 3284

9

Barry, N. (1990) Markets, Citizenship and the Welfare State: Some Critical Reflections in Barry,N.

and Plant, R. Citizenship and Rights in Thatchers Britain: Two Views (London:Institute of Economic

Affairs, Health and Welfare Unit)

Berlin, I. (2002) Two Concepts of Liberty in Hardy, H. (ed) Liberty(Oxford:Oxford)

Bochel, H (2011a) Conservative approaches to social policy since 1997 in Bochel, N. (ed) The

Conservative Party and Social PolicyPolicy Press: Bristol

Bochel, H (2011b) The Conservatives, Coalition and social policy in Bochel, N. (ed) The Conservative

Party and Social PolicyPolicy Press: Bristol

Ellison, N. (2008) Neo-Liberalism in Alcock, P. et al The Students Companion to Social Policy (3rd

edition): (Oxford:Blackwell)

Ellison, N. (2011) The Conservative Party and public expenditure in Bochel, N. (ed) The Conservative

Party and Social PolicyPolicy Press: Bristol

Evans, M. (2006) A Short History of Society (Maidenhead:McGraw-Hill)

Friedman, M. (1962) Capitalism and Freedom Chicago: University of Chicago Press.

Hall, 2012 The neo-liberal revolution in Rutherfood, J. and Stephenson S. (eds) The neo liberal crisis

[online] available from: http://www.lwbooks.co.uk/ebooks/NeoliberalCrisis.html [accessed

26/03/2012]

Hall, (06/08/2003) New Labour has picked up where Thatcherism left off [online] Guardian.

Available from http://www.guardian.co.uk/politics/2003/aug/06/society.labour [accessed26/03/12]

Ham et al (2011) Where Next for NHS reforms? Kings Fund [online] Kings Fund. Available from:

http://www.kingsfund.org.uk/publications/articles/nhs_pause_paper.html[accessed 1/04/2012]

Hayek, F.A. (2001 first published 1944.) The Road to Serfdom, (London: Routledge)

Hayek, F. A. (1960) The Constitution of Liberty (London:Routledge)

Hobbes, T. (2007 first published 1651) Leviathan (Virginia:Wilder Publications)

Heywood, A. (1999) Political Theory: An Introduction (2nd

edition) (Basingstoke:Palgrave)

Kerr, P.(2001) Postwar British Politics: From conflict to consensus Routledge:London

King, D. (1987) The New Right: Politics, Markets and Citizenship Macmillan: Basingstoke

Klein, N. (2008) The shock doctrine: the rise of disaster capitalism London: Penguin

Le Grand, J. (1982) The Strategy of Equality (Hemel Hempstead: Unwin)

Le Grand, J (1991) Quasi Markets and Social Policy The Economic Journal, Vol. 101, No. 408 pp.

1256-1267
http://www.lwbooks.co.uk/ebooks/NeoliberalCrisis.htmlhttp://www.lwbooks.co.uk/ebooks/NeoliberalCrisis.htmlhttp://www.guardian.co.uk/politics/2003/aug/06/society.labourhttp://www.kingsfund.org.uk/publications/articles/nhs_pause_paper.htmlhttp://www.kingsfund.org.uk/publications/articles/nhs_pause_paper.htmlhttp://www.kingsfund.org.uk/publications/articles/nhs_pause_paper.htmlhttp://www.guardian.co.uk/politics/2003/aug/06/society.labourhttp://www.lwbooks.co.uk/ebooks/NeoliberalCrisis.html


10/10

1117509 Word Count: 3284

10

McKay, S. And Rowlingson, K. (2011) Social security and welfare reform in Bochel, N. (ed) The

Conservative Party and Social PolicyPolicy Press: Bristol

Minford, P. (1991) The role of the social services : a view from the new right In Loney, M. et al

(eds) The State or the Market[2nd

edition] (London:Sage Publications)

Page (2005a) The New Right: neo-liberalism and neo-conservatism In Bochel et al (eds) Social

Policy: Issues and Developments Pearson: Essex

Page (2005b) From democratic socialism to New Labour In Bochel et al (eds) Social Policy: Issues

and Developments Pearson: Essex

Plant, R. (1990) Citizenship and Rights in Barry,N and Plant, R. Citizenship and Rights in Thatchers

Britain: Two Views Institute of Economic Affairs, Health and Welfare Unit: London

Swift, A. (2006) Political Philosophy: A Beginners Guide for Students and Politicians Polity: Cambridge

Tempest, M. (10/06/2002) Mandelson: We are all Thatcherites now [online] Guardian. Available

fromhttp://www.guardian.co.uk/politics/2002/jun/10/labour.uk1[accessed 26/03/2012]
http://www.guardian.co.uk/politics/2002/jun/10/labour.uk1http://www.guardian.co.uk/politics/2002/jun/10/labour.uk1http://www.guardian.co.uk/politics/2002/jun/10/labour.uk1http://www.guardian.co.uk/politics/2002/jun/10/labour.uk1

to what extent can it be argued that neo-liberal ideas underpin the welfare agendas of all the main...

Documents