The Welfare State
It was not until after the Second World War that the Welfare state took its mature form. It is safe to say that before becoming the actual Welfare State, its first attempt was the Poor Law. The Poor Law defended the support to poor people, back in 1815. This law affirmed that each parish had to look after its own poor and that people in need and unable to work should be given money in order to survive. However, the cost of the Poor Law was increasing year after year. Around 1830, the cost had increased extraordinarily, and consequently, its criticism started. It was criticised in terms of encouraging people not to work and to have children that they could not afford to take care of, as they were getting not enough money, provided by the middle and upper classes. So in 1834 the Poor Law Amendment was designed to reduce the cost of looking after the poor, by stopping money going to them, exceptionally in specific conditions but people did not react well to it for many reasons. As a result of collective discontentment, riots and attacks to workhouses were organised by the population and anti-poor law committees were set up. Such consequences led to the decline of that law. Followed by its crash, the Beveridge Report of 1942 intended to rectify the weaknesses of the previous. The Report was seen as the cornerstone of the welfare state because the foundations for the modern welfare state were laid by the same. This means that, with the collateral damages caused by the war, a lot of people were left in miserable living conditions and the United Kingdom was deprived and poor, encountering itself in a state of sheer devastation where a lot of work was required to re-raise it. In an atmosphere of relief after the war, a climate diffused with an idealism for a new, more just society, welfare legislation had bipartisan support. There was definitely a clear sense of rebuilding a better Britain. Hence, facing the situation and with the task of finding solutions to make it happen, Beveridge sets out a plan to rebuild the nation and proposes a more comprehensive system of social insurance. He then identifies five issues that needed to be tackled in order to initialize the process of reconstruction: disease, poverty, ignorance, squalor and unemployment. The Report remained at the core of social security system for a quite long time until gradually starting to erode. As an insurance scheme it failed to cover many contingencies, therefore it was unable to adequately respond to the social needs it was supposed to deal with. Finally, the Welfare State emerges in the years of 1945 to 1950, and although it built on the services that had existed before the war, it was a radical departure from the previous system. Its development is closely related to the process of industrialization and the social problems generated from it. Furthermore, one of the main causes that precipitated the implementation of Welfare States around the world was the crisis of Neoliberalism. As Neoliberalism defended free market and non-intervention of the state in productive activities, a set of issues started to raise and prejudicing the economy. So in a response to the crisis of the early twentieth century, of which the First World War and the economic depression of 1929 were a symptom, the ideology of welfare state is to put into action certain social measures that basically would benefit everyone in society, as it believed that the well-being of a nation, entirely and not individually (as in Neoliberalism that defended privatization), would promote economic growth and therefore end recession. Its origins are also linked up to the growing tension and social conflicts generated by the “liberal” capitalist economy.The proposals of the new system were the promotion of social security, National Health Service, free education, council housing and full employment. It is a system whereby the state undertakes to protect the health and well-being of its citizens, especially those in financial or social needs, by means of grants, pensions, loans and other benefits. Here, the state interference is allowed to provide these social services, paid by taxes. Aiming to fight the social inequalities caused by the war and looking forward the end of economic crisis, the system of welfare state is a state perspective for the social and economic field. Therefore, in this view, the state is the agent that promotes and organizes social and economic life, providing individuals with essential goods and services throughout their lives. The welfare state brought a set of benefits to society in general as it helped reduce poverty. In terms of Social security, this system promotes the support to families in need and with more than one child, providing a specific amount of money to them, weekly. Unemployed people were getting paid for at least six months, and were still getting paid in case of sickness. Regarding health, the NHS was introduced where health services were no longer private but free to everyone. This is in general something with extreme importance as it contributed to reduce social segregation, where only the most privileged ones had the facility to afford health services whereas the poor were exposed to death due to more serious illnesses, resulting from the inequality of wealth between the two classes, rich and poor. Moreover, the welfare state not only directly affected individuals but also indirectly affects the nation as whole through improving the health of the country. When it comes to Education, the majority of the proposals of the welfare within the 1944 Education Act, were assumed to be accomplished since the positive impacts on society had clearly become present. Citizens become more educated and therefore able to get better jobs, which in turn strengthened the economy as it made it grow by decreasing unemployment and having more money to invest. Differently from the war times, the employment rate had risen and less people were depending on the government. Council Housing was another welfare measure that contributed to a more equilibrated society where more houses were built reducing the homeless rate and providing good housing and care for all children deprived of living normal home lives.
Through its comprehensive system of social insurance, the welfare state impacted the economy positively as it secured economic growth that was noticed for a specific period. Furthermore, beyond promoting a well-being society and reducing social inequalities, it provided the infrastructure to support and develop intangible assets of individuals that could be potentially used in the creation of economic value, in the form of a strong workforce supplied by necessary skills demanded in the modern knowledge economy. From the 1950s to 1980s, the states of the leading countries in the global economy remained with the welfare state system. The severe effects of the wars and Great Depression were reversed, and poverty was significantly reduced, in general. To support such assumption, there is the example of the USA where poverty rate fell to 12% in the early 70s. In Europe, similar situations came into evidence too. In fact, Denmark, which adopted the same system, is considered to be one of the happiest countries in the world due to its well-being as a country, provided by the welfare. ‘It’s the goods! All the yearnings, hopes, dreams and theories of socialists for the past half century have been crystallised into a practical economic formula. Equity for the “lowest common denominator” I was staggered by its comprehension” (Insurance clerk, Newport).
Regardless of how beneficial to the nations, and its engagement to fulfil certain social needs, the welfare state did not seem to accomplish its goals effectively. From the 80s onwards, several countries went through strong economic crisis, feeling the urgent need of a reformulation of macroeconomic policies in force and also Europe is an example as it “provided broad based welfare for its citizens but were struggling with relative high levels of unemployment” (Palgrave Macmillan, Global Political Economy, page91) at this time. Thus, governments realized that welfare was unable to lift people out of poverty, as it unintentionally sought dependency within societies where individuals were growing accustomed to living a facilitated life by the welfare and having benefits. The underclass was then refusing to work and abusing the benefits system. As a result of these events, the welfare state become an impossible economic burden.
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