The “Progressive” Welfare State Fantasy

Liberals are prone to conflate all forms of decentralism and self-organization with the right wing, framing the range of possibilities as a stark contrast between their own managerial-centrist approach on the one hand and Paul Ryan, Marvin Olasky and Newt “Culture of Dependency” Gingrich on the other.

A good example is Mike Konczal’s recent column “The Voluntarism Fantasy” (Democracy Journal, Spring 2014). Konczal repeatedly equates voluntary efforts with “alms given by the wealthy few to the poor” (Truman’s phrase). I know what he means by this. You can’t open up the “Community” or “Society” page of the local newspaper without seeing a bunch of Rotary Club yahoos attending “charitable fundraisers,” handing over giant checks and cutting ribbons. Guess what? I don’t like these people either. My idea of a “voluntary, private” welfare state is a lot closer to Pyotr Kropotkin’s Mutual Aid and E.P. Thompson’s Making of the English Working Class than to the United Way.

Konczal contrasts the 20th century welfare state with what came before — but his historical context doesn’t go back far enough. He is correct that the system of “private charity” that existed before the Great Depression was inadequate. But he fails to note the role of the state in still earlier times in suppressing a thriving ecosystem of self-organized working class mutual aid. As Kropotkin described the process in The State and Mutual Aid, the newly risen absolute states of early modern times suppressed the networks of free towns and horizontal institutions for solidarity and mutual aid like the guilds, on the grounds that — as the Roman jurists put it — associations between private citizens amounted to a state within a state and threatened its preeminence. Thompson recounted the British state’s suppression of working class friendly societies and fraternal organizations during and after the Napoleonic Wars because they were closely associated with radical movements like labor unionism and republicanism, and many forms of mutual aid (like sick benefits and unemployment insurance organized through working class mutuals) strengthened the bargaining power of labor. In fact unemployment insurance organized through working class mutuals frequently amounted, in practical terms, to a strike fund. So the British state’s wholesale suppression of working class mutual aid had a motivation quite similar to that of the Riot Act and Combination Act.

More recently, as described by Colin Ward, the emerging welfare state bureaucracy in Britain actively suppressed working class mutuals, seeing them as atavistic relics of an outdated era. Then when the welfare state came under attack from the Right, the alternatives it proposed all involved “privatization” of state agencies by selling them off to the highest corporate bidder. So in fact the state itself played a central role in reducing the alternatives to a choice between the bureaucratic centralized welfare state and neoliberal “privatization.”

Further, the welfare state as we know it is a fundamental part of the larger system of corporate capitalism. The 20th century welfare state did indeed, as Konczal argues, function as a corrective to the Gilded Age model of capitalism. And he’s entirely correct that the conservative Republican model of voluntary charity would have been insufficient to address the immense human costs of the Great Recession. But both Gilded age capitalism and the late capitalism that led to the Great Recession both resulted from the massive levels of state intervention from early modern times on which were required to create capitalism as a social system in the first place.

As Konczal himself puts it, the modern system of corporate capitalism resulted from a close partnership between government and big business. “From tariff walls to the continental railroad system to the educated workforce coming out of land-grant schools, the budding industrial power of the United States was always joined with the growth of the government.” For Konczal, this is a good thing. For me, this was intervention by the state to build an economy more centralized, more bureaucratic and authoritarian, more exploitative, and less efficient than what would have arisen naturally.

The most natural form for the Second Industrial Revolution — i.e., the introduction of electrically powered machinery into manufacturing — to have taken would have been a decentralized economy of local industrial districts, much like the Emilia-Romagna economy of our day. The original rationale for the Dark Satanic Mills was the need to economize on power from prime movers. Since steam engines were governed by very steep economies of scale, it was most efficient to build them as large as possible and then crowd a large factory with as many machines as possible all powered by belts running to a common drive shaft. The electric motor destroyed this rationale. It became feasible to build a separate prime mover into each machine, which meant machinery could be situated close to the point of final consumption, the flow of production could be scaled to the level of immediate demand, and the machines could be scaled to the flow of production. The ideal economy, given such an approach, would have been small shops with electrically powered, general-purpose machinery integrated into craft production, and frequently shifting between product lines as orders came in.

What we got instead, as a result of this “Progressive” government intervention, was an industrial model based on mass production, with enormously expensive specialized machinery that had to be run 24/7 to minimize unit costs by fully utilizing capacity. This meant divorcing production from consumption, and organizing the entire society around authoritarian supply-push distribution models to guarantee that the output would be consumed. It meant resorting to expedients like manipulative mass advertising, planned obsolescence, overseas imperialism to coercively open markets, and direct intervention by the state to utilize surplus capacity and create new industries (see David Noble, America By Design) as outlets for surplus capital. It meant a giant military-industrial complex and automobile-highway-suburbanization complex as sinks for surplus capital and output. And it meant an entire society organized around interlocking, centralized state and corporate bureaucracies controlled by the managerial-professional classes (whose ideology, by the way, became the basis of 20th century “Progressivism”).

The vulnerability of working people to the “Four Horsemen” — “accident, illness, old age, loss of a job” — results from the basic structural framework of capitalism, which the state played a large role in creating. The wage system itself, as the predominant source of livelihood, is a creature of the state. So are all the artificial scarcities and artificial property rights by which the economic ruling class extracts rents, profits, interest and bloated bureaucratic/managerial salaries from the working class.

The power structure underlying modern capitalism was created at the same time as that of the modern nation-state. Go back five hundred years or so to the same time the new absolute states were using their gunpowder weapons to defeat the free towns, and you find neo-feudal landed elites transforming themselves into agrarian capitalists, abrogating traditional peasant rights of land tenure, enclosing the Open Fields for sheep pasture (and later enclosing common wood, waste and pasture), and reducing the peasantry to at-will tenants. Capitalism was founded on the expropriation — the robbery — of the overwhelming majority of the population. This was coupled with the growth of virtually totalitarian social controls: J.L. and Barbara Hammond, in The Town Labourer, described the policies of the British state in the late 18th and early 19th centuries as taking apart and reconstructing British society the way an occupying army does a conquered population. The Combination Laws, along with assorted police state legislation passed under the various governments of Pitt the Younger, stamped out all freedom of association among the working class and were enforced by administrative bodies unencumbered by common law procedural guarantees. The Laws of Settlement amounted to an internal passport system which prevented workers from voting with their feet in search of better wages; but at the same time it enabled parish Poor Law authorities in overpopulated areas like London to auction off the surplus population from the poorhouses to industrial employers. In settler societies like the United States, government preempted ownership of vacant lands amounting to the majority of the territory and doled it out in enormous land grants to favored mining, logging, railroad and oil interests and land speculators. This enclosure of vacant land, coupled with monopolies on the issue of currency and a host of other entry barriers, protected employers from having to compete with the possibility of self-employment. Federal troops and state National Guards broke strikes on a regular basis.

So the actual dynamic we have here is: 1) the state set up a whole system of artificial scarcities, artificial property rights, monopolies, cartels and entry barriers, which enable an economic ruling class to extract rents of various sorts from the working population; and 2) the welfare state takes a tiny fraction of this surplus (previously extracted with the help of the state) and gives the most destitute of the working class just enough to prevent the disparities of wealth from undermining the levels of aggregate demand needed to keep the system running, and to prevent outright homelessness and starvation leading to political destabilization.

Welfare is an integral part of the larger system of capitalism, just as Konczal says. It’s yet another way in which the state socializes the basic operating costs and risks of capitalism, enabling capitalists to externalize these things on the taxpayer, while they privatize the artificially high profits for themselves.

To repeat, Konczal is correct that — given the existing model of corporate capitalism — a government welfare state is necessary to keep the system in operation. He is correct that, given the economic model we have in place now, a self-organized welfare state made up of the kinds of institutions chronicled by Kropotkin, Thompson and David Beito lacks sufficient resources to fully support the victims of existing capitalism. This is true because 1) the present model has robbed workers of much of the product of their labor and transferred it to the rentier classes so that workers have inadequate means to fund a robust working class welfare state, 2) because in many cases the capitalist state has suppressed such self-organized institutions as a threat both to capitalist labor-discipline and to the power interests of welfare state bureaucrats themselves and 3) the large-scale transfer of income from producing classes with a high propensity to consume to rentier classes with a high propensity to save and invest creates a chronic tendency toward economic crises and mass unemployment. But imagine a society in which most existing land rent, profit, interest, rents on copyrights and patents, and management salaries instead go to workers, and most work is done in local industrial economies immune to the boom-bust cycle, and picture the resources we would have to support our neighbors and comrades in such an atmosphere of abundance.

On top of that, factor in a production model based on extremely cheap micro-manufacturing tools, like open-source tabletop CNC machinery in garage factories, and land-efficient forms of food production like soil-intensive raised bed horticulture. Their effect is to make industrial production once again the affair of skilled craft workers using affordable general-purpose machines. With a major share of consumption coming from self-provisioning in the household sector and the near absence of debt servicing or land rent as a source of household overhead, and the reduced need for an income stream to pay such overhead costs, what income comes in is free and clear, and the distinction between being “employed” and “unemployed” becomes much less severe. The worker’s livelihood becomes much like that of the English cottager before Enclosure, living independently most of the time off the common waste and fen and kitchen garden, and only periodically working at wages for money.

Unlike both Konczal and the conservatives, we of the free market left want to abolish both the welfare state and corporate capitalism. Not only do we want to restore the self-organized working class institutions of social solidarity and conviviality as they once existed in the free towns of the late middle ages, but we want to abolish all forms of artificial scarcity and privilege, like absentee title to vacant and unimproved land, restrictions on competition in the supply of credit, and “intellectual property.” We want all wealth produced by labor, which is currently appropriated by landlords, usurers, capitalists and bureaucrats with the help of the state, to be kept by labor, so that all production is undertaken in response to demand and there is no tendency toward crises of overproduction, and so that we are no longer dependent on employers or governments for the wherewithal to fund a social safety net. We want an economy in which workers’ cooperatives, self-employment, and self-provisioning in the informal, gift and household economies predominate over wage labor as a source of livelihood. And we also want all centralized, hierarchical institutions to be replaced by voluntary associations.

Speaking for myself, I would be quite content to abolish the landlords’ and capitalists’ state-enforced monopolies first, and abolish the welfare state afterward. I see the welfare state as simply a secondary counteractive to the primary injustice of state-enforced rent extraction, and on a much smaller scale — a case of the capitalists’ state cleaning up the capitalists’ mess for them. But I see the welfare state nevertheless as an evil necessitated by the state-enforced model of capitalism, and ultimately destined to wither away along with economic privilege and exploitation.