The Left, Social Security and Neoliberalism in Finland since 1970’s A Paper for the Joint NordWel and REASSESS International Summer School 2010 (State, Society & Citizen - Cross- and Multi-disciplinary Perspectives on Welfare State Development), Odense, 15–20.8.2010. Outinen Sami Doctoral student (NordWel-network) Section of Social Science History Department of Political and Economic Studies University of Helsinki Content Finnish Welfare State 3 The Left 4 Challenge of Neoliberalism 5 Social Justice and the Terms of Livelihood 9 Idea of Decommodification 13 Socialism and Welfare State Universalism 18 Consensus of Korpilampi 19 References 23 2 Finnish Welfare State The paradigm shift from the Keynesian welfare state to the neoliberal competition society has been a major social change in capitalist countries since 1970‟s. This paper deals with this issue in the Finnish context taking especially into account the viewpoint of the Left in the area of social policy. The paper is theoretical in the sense that I will connect the Finnish development for example to the ideas of universalism and decommodification and empirical in a way that I make some preliminary remarks to the nature of social policy under the challenge of the world-wide economic crisis and neoliberal ideas in the late 1970‟s. The main agencies in my paper are major left-wing actors such as leading figures of Finnish Social Democratic Party (SDP) and The Central Organization of Finnish Trade Unions (SAK). I will also make some preliminary comparisons to Sweden. Finland developed to the modern western welfare state since early 1960‟s as a result of rapid structural change from rural country to industrial- and service-intensive economy. The Finnish welfare state was built around the principles of economic growth, strong export industry, wage work and rational planning. The main tenants of Finnish welfare policy were earnings-related social benefits, widening public services and collective labour market agreements build on high union density since the late 1960‟s. State-owned companies possessed a strong role in the area of industrial production. Prices, wages, the movement of capital, interest rates, and rents were regulated by the state authorities and thus ultimately by the parliamentary political system partly in collaboration with labour market partners especially since the beginning of the “age of incomes policy” since 1968.1 There were many political reasons behind this development: The parliamentary majority of the Left in 1958–19622; consensus between employers and employees to make skilled factory workers as the most important group of Finnish economy by raising them to privileged role in labour markets and creating both income-related social security systems and active policy to support unemployed to find jobs; the victory of the Left in general election in 1966; the seizure of power of reform-minded trade union -bloc inside communist party in 1966; new co-operational relationship between the left- wing parties; the reunion of both social democratic party and blue-collar trade unions after the split which had lasted ten years and consensus-seeking in the Finnish society promoted by for instance president Urho Kekkonen. This development made possible the era of mainly centre-left governments from 1966 to mid 1980‟s, the creation of incomes policy -system which meant a collective bargaining about labour market questions, social security, social services, taxes and prices between employers, employees and the state since 1968. Also the power of trade unions increased after union density rose substantially and at the same time the Left gained rather strong political hegemony in Finland.3 1 See for example, Kalela, Jorma: Hyvinvointivaltion rakentaminen. In Pernaa, Ville–Niemi, Mari K. (ed.): Suomalaisen yhteiskunnan poliittinen historia. Edita 2005 (205–224) (Kalela 2005a), 205–221; Kettunen Pauli: Kirkuvan harmaa vuosikymmen. Työväentutkimus 2006 <http://www.tyovaenperinne.fi/tyovaentutkimus/tt2006/index.htm)> (27.4.2009) (Kettunen 2006a); Kettunen, Pauli: The Tension Between the Social and the Economic–A Historical Perspective on a Welfare State. In Ojala, Jari and Jalava, Jukka (ed.): The Road to Prosperity. An Economic History of Finland. Suomalaisen Kirjallisuuden Seuran Toimituksia 1076. 2006 (285–313) (Kettunen 2006b). 2 Uljas, Päivi: Kun Suomi punastui. Kansan sivistystyön liitto 2008, 117–152. 3 Kalela 2005a, 205–221; Kettunen 2006b. 3 The concept of welfare state emerged in Finnish public discussion in the 1960‟s mainly as a result of the book ”60-luvun sosiaalipolitiikka” (Social policy for the sixties: a plan for Finland) written by Pekka Kuusi. This was the case even if the influential social politician and researcher Kuusi himself disliked the concept. It is also worth to note that even if many politicians and supporters of the Left thought that the welfare state was an ideal way to connect capitalist effectiveness and social justice, the content of the welfare state policy caused political struggles between different representatives of different left wing fractions and trade unions as well as between different political parties and labour market organizations. Civil servants have also possessed substantial power as consultants of political decision-making in the field of welfare policy. Welfare state shouldn´t be considered just as a calculated project but as a result of several compromises between alternative and conflicting ideas and proposals based on knowledge and planning.4 The Left All socialist groups have since the first formulations of the ideology 200 years ago shared similar principal ideas such as promoting the general happiness and well-being in the name of mutual social responsibility, fighting against the division of the people to the rich and the poor, opposing the idea of competitive struggle between men to satisfy their needs by demanding collective regulation of the economy and trying to guarantee everyone‟s livelihood through social and economic civil rights and education.5 The most influential socialist ideology in Finland and Western Europe in the 20th century was democratic socialism. Already early representatives of democratic socialism saw the state as a key organization of economic planning, urged the need to improve workers‟ condition by bargaining with the employers and favoured nationalization as a mean to pursue economic development. They believed in representative democracy resting in universal suffrage and were ready to make compromises with other parties to develop welfare services and to take part in the formulation of the legislation of the capitalist state.6 After the Russian Revolution in 1917 and in the aftermath of Finnish civil war in 1918 the radical part of the Finnish revolutionaries, who lost the civil war, established in Moscow in the autumn 1918 Finnish Communist Party. Their goal was to make a revolution and to establish the dictatorship of the proletariat in Finland. The social democratic party instead took a revisionist mode by refraining from the idea of violent revolution and highlighted parliamentary political action as a mean to promote the interests of workers.7 Political struggle between social democrats 4 Kalela 2005a, 216 and 219; Kettunen 2006b, 296–297; Kettunen, Pauli: Oliko hyvinvointivaltio projekti. Ennen ja nyt 4/2001 <http://www.ennenjanyt.net/4-01/kettunen.htm> (9.9.2009) (Kettunen 2001a); Kettunen, Pauli: The Nordic Welfare State in Finland. Scandinavian Journal of History. Vol. 26, 3/2001 (225–247) (Kettunen 2001b), 227. The state or government are neither monolithic actors but according to Mitchell Dean ”Government is any more or less calculated and rational activity, undertaken by a multiplicity of authorities an agencies, employing a variety of techniques and forms of knowledge, that seeks to shape conduct by working through our desires, aspirations, interests and beliefs, for definite but shifting ends and with a diverse set of relatively unpredictable consequences, effects and outcomes.”. See Dean, Mitchell: Governmentality. Power and Rule in Modern Society. Sage 1999, 11. 5 Cole, G. D. H: Socialist thought. The Forerunners 1789–1850. A History of Socialist Thought. Volume I. MacMillan 1953, 2–46–8, 19–22, 247–280 and 302–303. 6 Cole 1953, 168–170; Cole G. D. H: The Second International 1889–1914. A History of Socialist Thought. Volume III, Part I. MacMillan 1956, 264–265 and 271–290. 7 See for example, Kettunen, Pauli: Poliittinen liike ja sosiaalinen kollektiivisuus. Tutkimus sosialidemokratiasta ja ammattiyhdistysliikkeestä Suomessa 1918–1930. Historiallisia tutkimuksia 138. Suomen historiallinen seura 1986, 90. 4 and communists intensified in Finland after the Second World War, when to communists were given full political freedom to act in Finnish politics. The ideas of democratic socialism were strongly supported by the governments in the Western Europe after the Second World War connected closely to the model of Keynesian welfare state and mixed economy. The main tenants of economic policy formulated by economist John Maynard Keynes were counter-cyclical policy to raise the demand to a level that ensured full employment also during the economic downturn, expansion of national production by increasing investments in men and machines, the primacy of the idea of economic growth, income redistribution, social security, participation of both workers and employers in industrial decision-making and even the nationalization of some sectors of economy.8 Income differences