Abstract
It is five years since the global crisis of financial capitalism broke. This is sometimes seen as a purely external problem, one that visited a fiscal crisis from the outside on national welfare regimes. As various chapters in Social Policy in Challenging Times, an indispensable guide to the ruins, amply demonstrate the crisis was precipitated by mounting contradictions between national welfare regimes and global financialization, a shock experienced most acutely within neoliberal polities (chapters 1, 2, 3). From the opening shots in July 2007, the sub-prime mortgage crisis in the US reflected a political economy of welfare that prioritized private debt to social investment.
Despite being sold as an implacable neoliberal telos, the culmination of all human development, the commodification of welfare is an outcome of historically-specific social, economic and political processes. Debt-financed housing, for instance, achieved paradigmatic status in neoliberal welfare regimes by successfully imposing the specific interests of finance capital as if it expressed universal needs in ‘property-owning democracies’. The cost in social suffering is immense. In the US, almost 3 million properties were foreclosed in 2009 alone and one in six American workers was reported as unemployed or underemployed (chapter 13). In turn, the housing debt crisis broke the backs of investment banks, deepening the crisis of social existence throughout the system.
National and transnational policy responses in many cases exacerbated human inequalities within nation-states as well as between them (chapter 3). Despite a shift in rhetoric it seemed unlikely that the International Monetary Fund would change its spots (chapter 6). Indeed, the ‘credit crunch’ did not reverse the ‘corporate raiding of the common wealth’ (p. 76) but further rewarded what C. Wright Mills called ‘the higher immorality’ of the financial elite at the same time as eroding the tax base for public services and pushing inequalities to new extremes (chapter 4).
While not every consequence of this calamitous paradigm could have been foreseen, warnings that a house of cards was being built on quicksand were ignored as the voices of irrelevance. Perhaps the most extreme case of paradigm-myopia is represented by the Irish governing class who, with all the certainty of a decaying vision, insisted that today’s crisis would be remedied by yesterday’s failed paradigm (chapter 10). Like Nero fiddling while Rome burnt, mainstream politicians and commentators incanted that ‘the fundamentals’ of the economy were ‘sound’ in country after country.
For neoliberal regimes like the US (chapter 13), Britain (chapter 14), Ireland (chapter 10), and Iceland (chapter 11), an ideology of ‘sound’ economics justified a supply of mobile, flexible, low cost, high skill labour to service unstoppable global economic and technological shifts. By reducing the drag factor of regulation, progressive taxation and high welfare costs, the orthodox paradigm proclaimed, labour markets would be free to function at their most efficient.
But far from opening up a liberated zone of market enterprise free from ‘coercive’ state interference, as Karl Polanyi (2001) predicted in the 1940s, after an unfettered phase of commodifying social need the state is later compelled to save capitalism from itself.
Social policy is no longer a purely national affair. Institutions and ideological recipes are global in reach (chapter 5). As a global imperative, ‘pure’ markets are self-destructive, operating at huge social cost, eventually requiring large-scale emergency social assistance (chapter 6). Historically, few markets have been quite as unimpeded as global finance. Kevin Farnsworth (p. 254) notes with grim irony that the so-called ‘lame ducks’ of the British manufacturing industry were driven to the wall in the name of cost-efficiency while the ‘too big to fail’ financial industry is lavished with unheard of levels of state largesse and failing banks nationalized. Social welfare cuts are the price of corporate welfare.
Each chapter specifies how far the crisis has acted as a catalyst for the radical transformation of welfare regimes (chapter 2). State intervention included stimulus, bail-outs, ownership and changes to welfare entitlement. Yet many regimes appear to be ‘path dependent’, pursuing existing institutional and ideological trajectories: severe public sector cuts in relatively underfunded regimes (UK, Ireland, US, Japan, Spain) or sustaining more generous regimes (Denmark, Sweden, Finland, France, Austria and Belgium) (chapter 1). Advantage of the emergency has been taken furthest in places like Britain (chapter 14).
Here consideration also needs to be given to the mediation of austerity by the devolved polities of the UK. And while a number of contributors recognize the mediating role of political protest in shaping the response to the crisis (in Iceland for instance, chapter 11), in the other cases like the UK, students, anti-cuts campaigns and the riots in English cities of 2011 have so far made little impression on the austerity agenda.
In such cases, the ‘shock doctrine’ of ‘disaster capitalism’ (Klein, 2007) appears to have been well learned. Opportunities were seized to deepen neoliberal priorities through public services austerity at the same time as protecting corporate welfare (Farnsworth, 2011). Other regimes, like those of South Korea (chapter 7), Canada (chapter 13), the Nordics (chapter 12), and Germany (chapter 9) attempted to strike a fragile balance between neoliberal political economy and social rights at different moments within the world system. China, the hope of the global economy, took emergency action as much to sustain growth as to alleviate rural distress (chapter 8).
Contributors to this timely collection locate the crisis within long-run historical and institutional processes and ideologies. This perspective lends considerable depth and breadth to testable hypotheses about path-dependent ‘varieties of crisis’, while allowing for contingencies of policy and political responses to a still unfolding crisis five years on. This book is essential reading not only for a comparative understanding of the impact of the crisis on social solidarity but for divining the uneven but interdependent trajectory of global social policy itself.