Posts Tagged ‘Old Age’

Shirley Williams on Milton Friedman and the Failing of Free Market Capitalism

May 25, 2016

SWilliams Book Pic

The supposed benefits of free market capitalism and deregulation are at the heart of the ‘New Right’ doctrines expressed in Thatcherism and Blairite New Labour. Thatcher took her credulous adulation of the free market from the American Chicago school of economics, most notably von Hayek and Milton Friedman. These doctrines became New Labour orthodoxy under Tony Blair following Labour’s defeat in the 1987 general election. Despite Gordon Brown, Blair’s successor, having lost the 2010 election, and the rise of Jeremy Corbyn from the Old Labour Left as leader of the party, Thatcherite ideals are still espoused and promoted by the Blairite faction in the Progress ‘party-within-a-party’ in Labour.

Yet even at the time Thatcher was implementing the free market reforms that have devastated the British economy and society, it was obvious to the majority of people on the Left that the free market simply didn’t work. Shirley Williams, the right-wing Labour MP, who left to form the SDP with David Owen, now merged with the Liberals, was one of them. In her book, Politics Is For People (Harmondsworth: Penguin 1981), she makes the following remarks and criticisms of Friedman’s grand notions of the effectiveness of the free market.

Professor Friedman, however, overstates his case – often to a ludicrous extent. There are many needs the market is incapable of meeting, because they are collective needs – for clean water, clean air, public health, a good transport system. The market is geared to individual demands and to individual purses; in meeting them, it does not count social costs or social consequences. Furthermore, there are individual demands that cannot be made effective because the individual cannot afford to satisfy them, typically, treatment for serious illness, chronic invalidism, care in old age. The market is a mechanics ill-adapted to the cycles of an individual’s life history, which move from dependence through independence back to dependence again, and also to the cycles of the economy. In his recent book, Free to Choose, Professor Friedman asserts: ‘Sooner or later, and perhaps sooner than many of us expect, ever bigger governments will destroy both the prosperity that we care for in the free market and even the human freedom proclaimed so eloquently in the Declaration of Independence.’ In an obvious sense, the Professor must be right. Total government, controlling the whole economy, would indeed be likely to destroy both prosperity and human freedom. But again his case is hopelessly overstated. In many European countries public expenditure constitutes 40 per cent or more of the gross national product. yet who is to say that Sweden or Denmark or the Federal Republic of Germany are less prosperous and less free than Spain, Argentina or Brazil, in which a much smaller proportion of the gross national product goes into public expenditure? Indeed the extremes of income and wealth characteristic of societies dominated by free market capitalism are not conducive to human freedom or to democratic political systems. Men and women without access to decent working conditions, education, housing and health do not fully share in their society. They are not accorded the human dignity that is intrinsic to the democratic process. their opportunities and their choices are crippled by the unequal distribution of resources. Even if such as country has some form of election, ostensibly based on a universal and secret franchise, the great disparities in economic power will influence the many who are weak to bow to the wishes of the few who are strong. (PP. 16-7).

And this is exactly what has happened. Britain has become much less democratic. Our leaders are rich and middle class elitists, isolated from the mass of the working poor in their own, sealed enclaves. The poor have become much poorer, and are increasingly seeing what few rights they have left stripped from them through Cameron’s reforms of the judicial system, trade union legislation and his assault on workers’ rights. Two decades ago there was a storm when someone announced that Monetarism had failed. Friedman’s free market economics are also an abject failure. They survive only because they sustain and empower a parasitical managerial class, ruling through elite privilege and toxic capitalism. It’s high time Friedman’s discredited ideas were very firmly dumped.

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Beveridge’s Outline Scheme for Social Security in the Report

May 3, 2016

I found this piece, the Heads of a Scheme for Social Security, of 11th December 1941, in Derek Fraser’s The Evolution of the British Welfare State: A History of Social Policy Since the Industrial Revolution (London: MacMillan Press Ltd 1973). In it, Beveridge lays out the various welfare benefits, which came to form the basis of the post-War Welfare State. The document runs as follows:

1. Assumptions: No satisfactory scheme of social security can be devised [except on the] following assumptions:

A. A national health service for prevention and comprehensive treatment available to all members of the community.

B. Universal children’s allowances for all children up to 14 or if in full-time education up to 16.

C. Full use of powers of the state to maintain employment and to reduce unemployment to seasonal, cyclical and interval unemployment, that is to say to unemployment suitable to treatment by cash allowances.

2. Unified Social Security: On these three assumptions, a scheme for social security is outlined below, providing for each member of the community basic provision appropriate to all his needs, in return for a single compulsory contribution.

3.Principle of Scheme: The principle of the Social Security Scheme is to ensure for every one income up to subsistence level, in return for compulsory contributions, expecting him to make voluntary provision to ensure income that he desired beyond this. One consequence of this principle is that no means test of any kind can be applied to the benefits of the Scheme. Another is that the Scheme does not guarantee a standard of life beyond subsistence level; men whose powers of earning diminish must adjust themselves to that change.

3. Needs: The needs to be covered are of seven kinds, including as one the composite needs of a married woman.

C. Childhood, provided for by allowances till 14 of it in full-time education, till 16.
O. Old Age, including premature old age, met by pension beginning from 65 for man and 60 for woman normally, but beginning earlier for proved permanent invalidity.
D. Disability, that is to say inability through illness or accident to pursue a gainful occupation, met by disability and invalidity benefits.
U. Unemployment, that is to say, inability to obtain paid employment by a person dependent on it and physically fit for it, met by unemployment benefits.
F. Funeral Expenses of self or any person for whom responsible, met by funeral grant.
L. Loss in Gainful Occupation other than Employment, e.g. bankruptcy, fire, theft., met by loss grant.
M. Marriage Needs of a Woman, including provision for:
1. Setting up of a home, met by furnishing grant.
2. Maternity met by maternity grant in all cases, and in the case of a period before and after confinement.
3. Interruption of husband’s earning, by his disability or unemployment, met by dependent benefit.
4. Widowhood, met by pension at various rates corresponding to nees and by credit of contributions for unemployment and disability.
5. Separation, i.e. end of husband’s maintenance by desertion or legal separation, met by adaptation of widowhood pensions.
6. Old Age, met by pension at 60, with provision for antedating if husbands earning capacity is stopped by old age.
7. Incapacity for household duties, met by grant to meet expenses of paid help in illness.
8. Funeral grant for self or any person for whom responsible after separation from husband. (pp. 265-7).

I realise that its assumption about gender roles now seem dated and sexist, with the assumption that the husband goes out to work while the mother stays at home to raise the family. However, regardless of its flaws and the continuation of poverty after the foundation of Welfare State, the system of payments laid out here by Beveridge did have immense success in tackling poverty.

And since the 1980s they’ve been under attack by the Tories. Under Thatcher and Major, the system of welfare grants that previously operated were replaced by loans. Welfare payments have also been increasingly cut, and conditions deliberately imposed so that increasingly fewer people are considered eligible for them. This has also been extended to disability payments, with the result that 590 people have died of starvation, poverty, neglect or suicide thanks to the cuts made by the Tories and their Lib-Dem enablers at the last parliament. And over a quarter of a million more psychologically vulnerable people have seen their condition made worse.

And thanks to these attacks on the welfare state and the abandoning of the Keynsian goal of full employment, 4.7 million people in our immensely rich country are now in ‘food poverty’.

Please remember this when you go to vote on Thursday. And don’t vote for the Tories or Liberal Democrats.