Welfare State

Some, in fact many (and all neoliberals), talk of scaling back the Welfare State, but not many realise the its importance, or indeed its history and necessity.

The Arch-capitalist, Otto von Bismarck, created the forerunner of the modern Welfare State in the 1880s, providing Health Insurance in 1883, Accident Insurance in 1884 and Old Age Pensions in 1889. National Unemployment Insurance was introduced later in 1927. The measures that Bismarck introduced were a bulwark against Socialism, which was threatening the newly created, unified Germany. He recognised that workers would be attracted to Socialism if these benefits were not provided and revolution was possible.

In a way, the Welfare State is a consequence of capitalism and is necessitated by corporations not paying a living wage, while they themselves take advantage of tax laws to put their profits beyond the reach of the tax system. While 27% of the income of the poorest 20%  goes on indirect taxes (VAT, tariffs, etc - which no-one can avoid), only 14% of the income of the top 20% of the wealthy does.

Growth, which is a mantra currently filling the political airwaves in the UK, relies on a pool of available workers who are not currently employed - and they need to be looked after. The Welfare State is the mechanism by which this is achieved.

The advantage of the Welfare State is that it's a system of insurance that is bought in bulk and thus much cheaper than leaving it to individuals to fund. The USA, for example, is the only rich country that doesn't have a universal public health insurance system, but commercial health insurance is prohibitively expensive for many on the lower end of the pay scale. The USA, as a consequence, pays upward of 40% more on, for example, healthcare than similar, rich countries and, despite this, has the worst health record in the rich world, mainly due to the health system being fragmented and uncoordinated, making the benefits of bulk buying unachievable.

The Welfare State has become the means by which the state combats the natural insecurities that are inherent within capitalism in the pursuit of dynamic growth by reducing the resistance of the workforce to new technologies and working practices.