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Cooking the Books: Down with Welfare?

The Times (15 January) reported that George Osborne was to tell a conference organised by the think tank Open Europe that ‘Europe will face further economic woes if it fails to cut welfare spending’:

‘As Angela Merkel has pointed out, Europe accounts for just over 7 per cent of the world’s population, 25 per cent of its economy and 50 per cent of global social welfare spending. We can’t go on like this.’

He didn’t explain why not, but the implication must be that, to compete on world markets against the products made in countries which spend less on welfare, Europe has to reduce its welfare spending towards their levels. In other words, a race to the bottom.

One dictionary definition of ‘welfare’ is:

‘1. good health, happiness, and prosperity. 2. the maintenance of persons in such a condition; money given for this purpose.’ (OxfordReference Dictionary)

On this definition, Osborne was in effect saying that, due to competition on the world market, all countries are forced to reduce the ‘good health, happiness and prosperity’ of their population. What an indictment of capitalism! And what a confirmation of the futility of reformists’ attempts to make capitalism serve human welfare.

But is it true? One thing Osborne ignores is that ‘welfare spending’ is not motivated by a desire to improve human welfare but by a desire to improve the productivity of the workforce – a better educated, more healthy workforce feeling less insecure can produce more profits. This was in fact the capitalist rationale behind the introduction of the so-called Welfare State and why the drastic reduction of such spending to the levels in China or India which Osborne and Merkel seem to be proposing could prove to be counter-productive.

Osborne probably knows this and doesn’t regard such spending as an unnecessary burden that has to come out of taxes that ultimately fall on profits any more than he does military spending which also comes from this. For him, both will be part of the necessary costs of running capitalism. What he will be against is welfare for those who can’t or don’t work and so are useless from a profit-making point of view – the sick, the disabled, the mentally ill, the old, the unemployed and the unemployable. In short, the most vulnerable members of capitalist society.

The fact that welfare has become a dirty word for capitalism shows that it is not a system geared to improving human welfare. If it was, then as productivity increased (as it does slowly from year to year) more resources would be devoted to services and amenities that enhance the welfare of everyone. But this is not what happens. Far from it. The pressure is downwards not upwards.

The fact is that capitalism is a system geared to making profits and accumulating them as more and more profit-seeking capital. That’s the logic which is imposed on all countries through competition on the world market. In this sense Osborne and Merkel are right, but that’s a convincing reason to get rid of capitalism and to replace it with a system in which the welfare of all can and will be the priority. Which is only possible on the basis of the common ownership and democratic control of productive resources and the end of production for the market with a view to profit.