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Blog: The faults of liberal welfare states

26.11.2021: A normative postulate in the light of the COVID-19 pandemic

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By Niklas Waldner

 

The dismantling of the welfare state over the past decades led to the installment of a re-commodifying neo-liberal state, which is oriented towards competitiveness on the global market, thus minimizing taxes and regulations, as well as privatizing public services. This neo-liberal approach lead to progressive economization and commodification. Following Dux (2006, 14-16), I argue that a system in which all goods necessary for living have to be acquired on the market via monetary means is problematic for two reasons: Firstly, not all individuals are capable of selling their labor force at all times. Secondly, the market follows the logic of capital accumulation and profit maximization, and is thereby incapable of including everyone by default, since it only makes sense to include those individuals, whose inclusion holds the prospect of gain. The fact that the market is the basis for provision of necessary goods and the basis for integration into society, but is simultaneously unable to include everyone, suggests that the market is a problem for society.

In addition to being desirable from a justice point of view, as argued by Dux (2006), I argue that the inclusion of all individuals in the economic system, under conditions that enable participation in economic and cultural achievements of society, is a basic prerequisite for the persistence of any capitalist democratic societies. Seeing as populist parties often gain electoral support from groups, which perceive themselves as socially devaluated, as a result of being marginalized through socio-economic developments (Reckwitz, 2019: 280-281), mitigating these causes would go a long way. Certainly populism isn’t the end of the world, but Bourdieu (1998: 124-125) offers a similar, but more concerning, point of view. He argues that the result of the neo-liberal utopia is an order of competences and intelligences, whereby those who find themselves further down this hierarchy are constantly threatened with relegation to the unworthiness of job applicants. The resulting feelings of devaluation, fear of the future and political disillusionment often end up in the hopeful wake of the slogans of fascistoid extremism.

Conveying this normative standpoint to the current Covid-19 Pandemic and by examining case studies from authors such as Agarwal & Sommers (2020), Rho et al. (2020), Warner & Zhang (2021), Cantillon et al. (2021) and Greve et al. (2020), I further strengthen the argument, that the free-market economy or neo-liberal approach to political economy and welfare states is inequitable for contemporary market societies. The deficit in social policies has become blatantly apparent during the pandemic, especially in the United States. The United States remain an international outlier by not providing federally guaranteed paid sick leave (Rho et al., 2020; Warner & Zhang, 2021; US of Labour Statistics, 2020), as well as not providing federally guaranteed Medicaid access "for those too poor to purchase healthcare insurance on the market-based exchanges" (Warner & Zhang, 2021: 179). When healthcare and paid sick leave are not provided by the state, the neo-liberal approach to political economy starts to put the public health at risk, especially in times of a pandemic. Staying home when sick allows people to get well before coming back to work, effectively containing the spread of disease. Thus social policies such as paid sick leave help reopen the economy much faster, therefore disproving the laissez-fair liberal's argument that welfare states cripple freedom and efficiency (Esping-Andersen, 1990: 4). Further evidence from Warner & Zhang (2021) proves that implementing stay-at-home orders is much harder without paid sick leave policies, since it forces policymakers to reopen sooner, thus prolonging the pandemic. This goes to show that social policies are not only promoting public health but are also a much more effective way of restarting the economy. That way Warner & Zhang (2021) disprove the misconception that legislators have to choose between public health and restarting the economy. This dual role of social policies makes it so staggering that they do not exist on a federal scale in the United States.
Taking case studies of social policies in Europe into account (Greve et al. 2020; Cantillon et al. 2021) it becomes apparent that there is a much more sustainable solution. Especially the nordic welfare states (Denmark, Finland, Sweden and Norway) handled the economic downturn of the pandemic in an exemplary manner. Due to their already existing institutionalized and egalitarian welfare approach, the nordic welfare states managed to maintain their de-commodifying nature throughout the pandemic, thus not reproducing any inequalities caused by the pandemic.

At last, referencing Botta et al. (2020), Piketty (2014) and the European Commission (2016, 2020), I give an outlook on the practical implementation of welfare models: Long term solutions would include a more progressive taxation rate, as well as the elimination of tax havens for multinational corporations such as Ireland.

References

Agarwal, Sumit D. and Benjamin D. Sommers (2020), Insurance Coverage after Job Loss — The Importance of the ACA during the Covid-Associated Recession, The New England Journal of Medicine, 383:1603-1606, DOI: 10.1056/NEJMp2023312 (date accessed: 12.06.2021).

Botta, Alberto, Eugenio Caverzasi and Alberto Russo (2020), Fighting the COVID-19 Crisis: Debt Monétisation and EU Recovery Bonds. Intereconomics 55, 239–244, https://link.springer.com/content/pdf/10.1007/s10272-020-0907-z.pdf (date accessed: 09.05.2021).

Bourdieu, Pierre (1998), Der Neoliberalismus: Eine Utopie grenzenloser Ausbeutung wird Realität, in: Gegenfeuer 1, ed: ibid, Konstanz, 2000, UVK, p. 120-129.

Cantillon, Bea,  Martin Seeleib-Kaiser and Romke van der Veen (2021), The COVID-19 crisis and policy responses by continental European welfare states, Social Policy & Administration, 55 (4):326–338, DOI: 10.1111/spol.12715 (date accessed 12.06.2021).

Dux, Günter (2006), Moral und Gerechtigkeit als Problem der Marktgesellschaft, Wien, Picus.

Esping-Andersen, Gøsta (1990), The Three Worlds of Welfare Capitalism, Polity Press, Cambridge.

European Commission (2016), State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion, https://ec.europa.eu/commission/presscorner/detail/en/IP_16_2923 (date accessed 26.06.2021).

Greve, Bent, Paula Blomquist, Bjørn Hvinden and Minna van Gerven (2020), Nordic welfare states—still standing or changed by the COVID-19 crisis? Social Policy & Administration, 55 (2): 295-311, DOI: 10.1111/spol.12675 (date accessed: 12.06.2021).

Piketty, Thomas (2014), Das Kapital im 21. Jahrhundert, München, C.H. Beck Verlag.

Reckwitz, Andreas (2019), Das Ende der Illusionen: Politik, Ökonomie und Kultur in der Spätmoderne, Berlin, Suhrkamp Verlag.

Rho, Hey Jin, Shawn Fremstad, and Jared Gaby-Biegel (2020), Contagion Nation 2020: United States Still the Only Wealthy Nation without Paid Sick Leave, Center for Economic and Policy Research, Washington, https://cepr.net/wp-content/uploads/2020/03/2020-03-Contagion-Nation-2020.pdf (date accessed: 08.05.2021).

U.S. Bureau of Labour Statistics (2020), National Compensation Survey, https://www.bls.gov/news.release/pdf/ebs2.pdf (date accessed: 08.05.2021).

Warner, Mildred E. and Xue Zhang (2021), Social Safety Nets and COVID-19 Stay Home Orders across US States: A Comparative Policy Analysis, Journal of Comparative Policy Analysis: Research and Practice, 23:2, 176-190, DOI: 10.1080/13876988.2021.1874243 (date accessed: 12.06.2021).


 

WALDNER Niklas 2021
Bild: Niklas Waldner

Mein Name ist Niklas Waldner, ich bin 21 Jahre alt und studiere Politikwissenschaft (im zweiten Semester) und Soziologie (im fünften Semester) an der Universität Innsbruck. Zu meinen derzeitigen Interessenbereichen gehören Internationale Beziehungen, Politische Ökonomie und Populismus-Forschung.
Am Essay-Wettbewerb habe ich teilgenommen, weil mir das Schreiben wissenschaftlicher Arbeiten viel Spaß bereitet und ich mich darin bestmöglich verbessern möchte.
 
Niklas Waldner erhielt für seine Arbeit The faults of liberal welfare states: A normative
postulate in the light of the COVID-19 pandemic den zweiten Preis im Rahmen des Essay-Wettbewerbes Polarization and (Re)Integration. Political Upheavels of the Corona Pandemic (2021) des Instituts für Politikwissenschaft. 
 
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This article is a short version of the second-placed essay in the 2021 competition Polarization and (Re)Integration. Political Upheavels of the Corona Pandemic of the Department of Political Science at the University of Innsbruck.

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This article gives the views of the author(s), and not the position of the Department of Political Science.

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0).

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