Civitas Choice in Welfare No. 27 Community Without Politics A Market Approach to Welfare Reform David G. Green Civitas London, 1996 First published January 1996 © Civitas 1996 All rights reserved ISBN 0-255 36364-8 Typeset in Palatino 11 point Printed in Great Britain by St Edmundsbury Press Ltd Blenheim Industrial Park, Newmarket Rd Bury St Edmunds, Suffolk Contents Page The Author iv Preface v Summary ix 1 Introduction 1 2 The Ideal of Liberty: A Re-statement 4 3 The Three Inseparables and the Sources of Collectivism 38 4 The Welfare System: What is Going Wrong? 84 5 Making A Reality of Civil Association 113 6 Some Policy Proposals 135 iv The Author Dr David Green is the Director of the Health and Welfare Unit at the Institute of Economic Affairs. He was formerly a Labour councillor in Newcastle upon Tyne from 1976 until 1981, and from 1981 to 1983 was a Research Fellow at the Australian National University in Canberra. His books include Power and Party in an English City, Allen & Unwin, 1980; Mutual Aid or Welfare State, Allen & Unwin, 1984, with L. Cromwell; Working Class Patients and the Medical Establish- ment, Temple Smith/Gower, 1985; and The New Right: The Counter Revolution in Political, Economic and Social Thought, Wheatsheaf, 1987. His work has also been published in journals such as The Journal of Social Policy, Political Quarterly, Philosophy of the Social Sciences and Policy and Politics. The IEA has published his The Welfare State: For Rich or for Poor, 1982; Which Doctor?, 1985; Challenge to the NHS, 1986; Medicines in the Marketplace, 1987; Everyone a Private Patient, 1988; Should Doctors Advertise?, 1989; Equalizing People, 1990; Medicard: A Better Way to Pay for Medicines?, 1993 (with David Lucas); and Reinvent- ing Civil Society, 1993. Acknowledgements I have benefited greatly from comments made by several col- leagues, including Ralph Harris, Arthur Seldon, Professor Harold Rose, John Blundell, Colin Robinson, Robert Whelan, Lisa MacLellan, Nicky Tynan, Professor Peter Saunders, Professor David Conway, Tom Griffin, Sir Reginald Murley and Max Hartwell. This book is based on a report originally produced for the New Zealand Business Roundtable, and my greatest debt is to its Executive Director, Roger Kerr, from whom I have learnt a great deal. David G. Green v Preface ESPITE the collapse of communism and near-universal D support for a market economy over a planned economy, we are still at a crossroads between a free society and a collectivised order, chiefly because the state plays such a dominating role in health, education and welfare. The main purpose of this book is to examine whether there is a viable private, non-political alternative to the welfare state. To that end, it describes the ideal of private welfare which, before the advent of the welfare state, permitted the government an essential but limited role whilst the chief burden was assumed by the unpoliticised community. Inevitably, to suggest the possibility of a reduced role for government in welfare will provoke opponents to resort to the usual array of caricatures of ‘the market’. Conse- quently, the book also describes what I take to be the true liberal ethos and differentiates it from some modern doctrines which seem initially to resemble it. A market economy on its own is not enough. This is not to imply that a competitive market lacks moral legitimacy. Far from it, a system of voluntary exchange is based on respect for the prefer- ences of other people; and a market economy by comparison with a planned economy, helps to disperse productive resources, thus reducing the potential for the abuse of concentrated power and increasing opportunities for human creativity. Of equal impor- tance, wide property ownership means that people are not beholden to government, so that ‘public opinion’ means a genuinely independent sphere of thought which can develop without fear or favour. These are powerful arguments in its favour, quite apart from the happy coincidence that a market economy increases prosperity. But to put the matter at its simplest, a society which allows some people to become very wealthy must also place strong moral obligations on those who—whether through luck or judge- ment—are successful. They should be willing to come to the aid of the less fortunate. That is, the moral legitimacy of a free society vi COMMUNITY WITHOUT POLITICS rests not only on the attractions of liberty but also on acceptance of duty. Quite apart from the conviction that duties should attend success, the twentieth century has also taught us that, if welfare assistance is provided primarily by the state, it often makes matters worse. But we are not left with a stark choice between ‘state’ and ‘individual’ responsibility. Before the welfare state there was an older ethos of ‘community without politics’ which, until the twentieth century, was an indispensable element of classical liberalism. In short, champions of liberty divided responsibility three ways: there was, first, individual or family responsibility; second, the community as distinct from the state; and third, the government. The majority of the population assumed responsibility for fostering a ‘public but not political domain’ of duties to care for all those who were not able to support themselves for one reason or another. The establishment of the welfare state is often presented as a socialist success story as step-by-step the taxes for new services were dragged from a reluctant capitalist system. This theory holds true as an account of the ambition of socialists, but it exaggerates the reluctance of capitalists. Many of the rich wanted an ex- panded welfare state because they shared Bismarck’s calculation that ‘social reform’ was necessary to buy off the potentially rebellious workers. This tradition of Tory paternalism was quite at home with class-war collectivism because both traditions shared a fundamental assumption: that the masses needed to have their lives managed for them by the authorities. They differed only about who should lead: for the Tory paternalists those of the best breeding or demonstrated ability should lead; for Labour, the workers or their representatives should be in charge. Such were the dominant assumptions of the ‘age of collectivism’ which followed the collapse of liberalism early this century. But the political tradition on which Britain’s prosperity and respect in the world was built was very different. For hundreds of years the dominant political ethos in Britain had understood the purpose of government to be, not management of people’s lives, but creation of the conditions for self-management in mutual but voluntary co- PREFACE vii operation with others. We urgently need to renew our under- standing of the earlier ideal, which today is politically homeless. The collapse of communism signalled the end of the ‘age of collectivism’, and collectivists are busy reformulating their ideals.1 However, despite efforts to re-state their message in less economic terms, the political process continues to be the focus of their doctrine. For example, they typically call for more ‘caring’, but they measure the moral worth of individuals by the vehemence with which they demand that other people (the government) do something. Collectivists present their opponents as uncaring, as if there were only two choices: political caring or not caring. But the yardstick is not how vigorously people call for the govern- ment to act, but their willingness to give of their own time and energy to help others. Similarly, collectivists appeal to the human need for a sense of community or ‘belonging’ and they present their opponents as unconcerned about any such sentiment. But when collectivists speak of community they mean the political process. Moreover, the sense of belonging they advocate is that of followers under leadership. For the classical liberal, however, ‘community’ is no less important, but it does not imply a political obligation, rather it suggests a personal duty to set an example in the continuing struggle to uphold the moral and legal principles consistent with liberty. Thus, the new collectivism is about tapping into worthy sentiments —the desire to help, the desire to contribute to the common good, to belong—and politicising them. Current party-political divisions still hark back to the old war of ideas between champions of a planned economy and a market economy. Today’s challenge, however, is to understand the practical and moral limits of the political process, above all in the provision of health, education and welfare, where the political mind-set still dominates. Experience this century has surely taught us that political caring is a poor substitute for the mutual caring of civil society, and political solidarity an inadequate replacement for the sense of belonging that derives from free acceptance of a moral tradition to which all subscribe, rich and poor alike. viii COMMUNITY WITHOUT POLITICS David G. Green ix Summary 1 Introduction Q The welfare problem is not primarily financial but moral. The difficulty is not so much that the welfare state cannot be afforded, but that welfare programmes have tended to impair human character, above all by undermining the older ethos of ‘community without politics’. Q Before the nationalisation of welfare, responsibility was divided three ways: there was, first, individual or family responsibility; second, the community as distinct from the state; and third, the government. Q Claiming benefit was considered to be ‘letting the side down’ and instead of expecting the government to provide assistance, the majority of the population assumed personal responsibility for fostering a ‘public but not political domain’ which cared for all those who were not able to support themselves. Q The crowding out of this tradition of concerted but non- political action for the common good has had two especially harmful moral effects.