CO

The welfare state is a system of institutions whose full extent almost no one grasps. It is unbelievably complex and in constant transformation; it is a watershed achievement in the history of societal development. It can be seen like the structure of a building that has a basement, a first floor, a second floor, and so on.

In the basement is care for poor people as it existed in pre-modern times, which often took place on the community level and tended to involve providing goods and services directly. On the first floor is the licensing of unions that are legally empowered to strike. Then on the second floor are the various forms of insurance — people pay so-called joint contributions and then obtain benefits in old age, when sick, and (in more recent times) when unemployed, and more recently still when in need of long-term care. On the third floor are benefits that are relatively new and not tied to work, such as child allowances. Also included here are services, such as those provided by the public education system, that are tied not to a person’s work but to their role as a citizen.

The welfare state’s functionality and feasibility depend on all of these systems, all of which are constantly being renovated. The roof of this building may or may not be leak-proof. This means that there must exist something approaching full employment. Full employment isn’t just important because the wealth of the nation, so to speak, must be secured through the prior spending of as much labor power as possible; it’s also important because the finances of the welfare state itself are, to a large extent, based on social insurance contributions and, to a lesser extent, on taxes.

The contributions can only be produced if there exists something like full employment. If it doesn’t, and we do not have continuously growing real income from full employment, problems arise. Therefore, we can say that the welfare state is a corrective to capitalist work society but is also dependent on its functioning.

A competitive relationship decisive for the emergence and development of the welfare state after World War II was the so-called rivalry among political systems [Systemkonkurrenz]. We would not have had a welfare stare in West Germany if Konrad Adenauer, the first postwar chancellor, had not falsely hypothesized that life over in the East might become more attractive in terms of both income and social security.

He claimed that the Communists could build a preferable society and that we had to be prepared for that and act accordingly. He had no idea of the Communists’ lack of control over their own system’s efficiency. His misconception was the driving force behind the welfare state.

In Germany in 1957 something happened that was unheard of, namely an adjustment of pensions. Pensions were no longer just calculated according to years worked and past income earned; they were also calculated according to presently earned income. This policy allowed Adenauer to win the 1957 election with an absolute majority. After the fall of Communism, pension adjustments ceased.

The expansive phase of the welfare state in postwar Germany lasted approximately thirty years, specifically from 1949–1974. This first phase was dominated by the idea of the social market economy in the name of justice: well-being for all, but also security for all against the backdrop of the Cold War. Then came a second phase in which capital and the conservative governments that became hegemonic in the United States and United Kingdom concluded that the system was getting too expensive for them.

Subsequently there was a development that was labelled as social investment policy. Here, the aim was no longer to serve social justice but rather to make investments that would pay off later such as investments in education, but also in other areas like housing and job creation. In social investment policy, “investment” means that social policy doesn’t aim at providing for the needy but rather at generally increasing the efficiency of the national economy.

The third phase of the development of the welfare state began after the end of state socialism. It was said that we, too, couldn’t afford welfare anymore and instead had to get the needy involved in providing their own security. “Activation” [Aktivierung] was the keyword, here. An extreme neoliberal author, Lawrence Mead, claimed that humans had five duties as “state and economic citizens,” and that when they didn’t fulfill these, they might as well perish. The softer variant of this idea is that citizens are responsible not only for the maintenance and preservation of their own earning capacity but also for their own security — in other words, they need to save.

You can’t rely on a pension because pensions are fixed at 40 percent of your income; the rest needs to come from savings, family, inheritance, and so on. What came next were health insurance deductibles, school and university fees, and even fees for kindergarten — a secondary commodification, i.e., a commodification of all of the services that the state had previously provided as benefits. In order to access these now, you have to pay up. That is what the term “activation” expresses. “You have to protect yourself,” “You have to establish your own ability to work.”

Such were the three phases of the postwar development of the welfare state, and the third phase was essentially driven by the end of state socialism. The Adenauerian fear that the rivalry among political systems would put us at a disadvantage is no longer there. Instead, state socialist thinking has lost all hegemonic potential. Capitalist welfare state thinking holds that work comes first, and that once someone has worked, they’ll be insured against unemployment, which was a big problem at the end of the 1920s.

State socialism has a completely different logic, viewing this sequence in reverse: first someone is made into a worker by receiving education, an apartment, and so on from the state. This happens without employment contracts; workers are employed by the state. Then they are formed politically and morally so that they become a loyal to the fatherland and the party. In other words, they’ll go along with the party’s decisions: the party looks after you, and for that you have to do something in exchange.