Ian Greener, Social Policy after the Financial Crisis

 

Ian Greener, Social Policy after the Financial Crisis, Edward Elgar, 2018, vi + 217 pp, 1 78643 610 8, hbk, £75. The eBook is priced from £22 from Google Playebooks.com and other eBook vendors, while in print the book can be ordered from the Edward Elgar Publishing website.

The context assumed by this book is the world’s post-financial crisis ‘fragile and angry state’ (p. 1), and a widespread perplexity that governments are still in thrall to the economic system that caused that crisis and its political consequences. Following an introductory chapter, the book begins by suggesting that Bill Clinton’s presidency and Tony Blair’s ‘Third Way’ were not in fact particularly ‘progressive’, and that the financial crisis ‘has cast doubt on the way the West has organized its economies since the 1980s’ (p. 25).  Chapter 3 employs a conceptual framework that evaluates governance in terms of economics, social policy, scale of government, and mode of government, and finds that economics has shifted towards an amalgam between a competition model and a far from competitive financial services industry that now controls governments; that workfare has subordinated social policy to economic policy; that national governments have ceded power to supranational and subnational institutions; and that governance is now by a relatively closed oligarchy. Chapter 4 employs insights from behavioural economics to suggest that we are not economically rational and socially reasonable beings; finds that the way in which options are framed can significantly influence how we perceive and make choices; discusses the ‘paradox of welfare’ – that our wellbeing depends on us making good choices, but we aren’t in fact very good at that; that getting genuinely hard choices wrong can have significant detrimental effects; and that one-off decisions can be particularly important and particularly difficult. Chapter 5 begins to put together the insights of chapters 3 and 4. The combination of the power of corporations and our inability to make good decisions suggests that national governments need to regulate more; our inability to make good decisions, combined with the inequality and poor public services that tend to follow the subordination of social policy to economic policy, suggest that decisions about public services need to have longer term consequences in view; the power of capital and corporations does not mean that national governments are powerless; and raising taxes and better funding for public services remain viable options.

The second half of the book builds on the more general chapters of the first half by studying particular policy areas. Chapter 6 studies economic governance, and finds that the prevailing economic model, based on corporate dominance, results in demands for flexible labour markets and in governments serving corporations rather than vice versa. In this context, and in an era of growing inequality, public services are regarded as drains on the economy rather than as contributors to it. However, it remains possible for governments to enforce competition and tax laws; and if inheritance were to be tackled then inequality could be restrained and governance could become less oligarchic. Equality of opportunity and the stewardship of diminishing resources will be important components of the different economy that we need.

Chapter 7 applies the book’s general treatment to healthcare, and chapter 8 to education, but the more detailed chapter in which readers of this review might be most interested will be chapter 9 on social security. This chapter shows that the poorest have suffered stagnant living standards and greater labour market insecurity since the 1970s; that ‘corporate welfare’ – government support for corporations – has privileged corporations over individuals; that benefits for individuals are stigmatised whereas corporate welfare is not; and that benefits enable companies to reduce wages. (More might have been said here about the way in which means-tested benefits are dynamic subsidies, because they rise as wages fall, whereas unconditional benefits are static subsidies that do not rise as wages fall and thus have a smaller wage-depressing effect.) Increasing migration and other post-national trends challenge the stability and legitimacy of social security systems; increasing inequality drives increasing means-testing with all of its stigmatising consequences; and if we broaden the concept of ‘welfare’ then we find higher earning groups doing quite well out of prevailing low pay levels and the economic stabilising effects of unemployment benefits. (More might have been said here about the equivalence between income tax allowances and social security benefits.) Behavioural elements of social security are the framing of recipients as scroungers; the conflict between ‘customer’ terminology and the ways in which benefits systems control recipients; the complexity of benefits systems making choices hard to make; and previous bad decisions resulting in unwanted relationships with stigmatising benefits systems. When Greener discusses Basic Income as a possible response to this situation he quotes the Royal Society of Arts research that cannot show that there will be no net losers among low income households rather than the research from the Institute for Policy Research and the Institute for Social and Economic Research that shows that there are illustrative schemes that could avoid net losers. A little more research would have improved this section.

By combining a theory of governance with behavioural insights, this book offers an original perspective on the context in which social policy is done, on the challenges that social policy faces, and the on the options available. Chapter 9 in particular could be employed as a useful stimulus to further research on the feasibility and effects of Citizen’s Basic Income.

 

 

 

 

Footnotes

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