The Rise and Fall of the Welfare State

The Rise and Fall of the Welfare State

Asbjorn Wahl Translated by John Irons

PlutoPress www.plutobooks.com

First published 2011 by Pluto Press 345 Archway Road, London N6 5AA www.plutobooks.com Distributed in the United States of America exclusively by Palgrave Macmillan, a division of St. Martin's Press LLC, 175 Fifth Avenue, New York, NY 10010 Copyright © Asbjorn Wahl 2011; English translation © John Irons 2011 This translation has been published with the financial support of NORLA. The right of Asbjorn Wahl to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN ISBN

978 0 7453 3140 9 Hardback 978 0 7453 3139 3 Paperback

Library of Congress Cataloging in Publication Data applied for This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin. 10 9 8 7 6 5 4 3 2 1 Designed and produced for Pluto Press by Curran Publishing Services, Norwich Simultaneously printed digitally by CPI Antony Rowe, Chippenham, UK and Edwards Bros in the United States of America

CONTENTS List o f figures and tables Preface

ix xi

1 Introduction Freedom and equality Who owns the welfare state? Power and polarization The non-historical approach About the book

1 4 8 11 14 17

2 The power base Historical background The class compromise System competition The content and ideology of the compromise Restraining market forces A broader concept of the welfare state

20 22 25 31 33 35 39

3 The turning point Globalization - or market fundamentalism? Deregulation The economy of madness Privatization Three phases - three stages Monopolization and corruption What went wrong?

43 43 45 48 55 59 60 64

4 The shift in the balance of power Attacks on the trade unions The end of the class compromise The employers failed in Norway The undermining of democracy Deregulation and privatization

66 66 71 73 75 78

v

VI

CONTENTS

Forms of organization and management Supranational agreements and institutions The myth of the powerless state

82 85 89

5 The attacks Poverty and increasing inequality Pensions under attack But Norway is best ... Crisis and shock therapy The transformation of welfare

93 98 101 107 115 121

6 The brutalization of work Labour as a commodity Brutalization and exclusion The demands of neoliberalism Social dumping Driving forces Abolish workfare policies! Loss of welfare?

126 127 130 137 142 145 150 154

7 The misery of symbol politics The workfare fiasco Blessed are the poor? From power struggle to legal formalism

159 160 165 171

8 Challenges and alternatives Changes to power relations The struggle is already on The European Union as a barrier Internal political-ideological barriers Politicization and revitalization A new course! Freedom

178 179 183 188 192 198 204 208

Notes Bibliography Index

213 225 235

FIGURES AND TABLES F IC U R E S

2.1 The power of private capital was limited via wide-ranging state regulation 3.1 The comprehensive regulations of private capital have been removed 3.2 Growth in GNP per capita globally 3.3 The relation between financial assets and GNP globally 3.4 The relation between financial transactions and international trade in goods and services per day 4.1 Unemployment in a number of major industrial countries 4.2 The wage share of total income (factor income) in the EU15, Germany, the United States and Japan between 1975 and 2006 5.1 The development of income inequality (the Gini coefficient) in Norway, 1 9 9 4 -2 0 0 5 6.1 Percentage of the Norwegian population between 16 and 66 receiving a disability pension

36 46 47 49 51

68 70 108 132

T A B LE S

4.1 Level of unionization in selected countries (as a percentage of the work force) as the neoliberal offensive made its impact 4 .2 Annual average tax level as a percentage of GNP in OECD countries, 1 9 9 0 -2 0 0 2 4.3 Income and taxation for Norwegian divisions of multinational companies, 2 0 0 2 6.1 Effects on health and working environment of various types of insecure work vii

69 80 81 139

To Anja and Vegard

PREFACE This is an updated and partly newly written, translated version of a book I published in Norwegian in 2009. My aim with the book is to challenge conventional interpretations of the welfare state. I do this by linking the analysis of social development, welfare and work with more fundamental power relations in society. Such analyses have been in short supply over the last few decades. At the political level our experience is that fundamental causes and driving forces in society are non-issues, while symbol and symptom politics flourish and political spin doctors do whatever they can to deceive us. The critical potential of social science is in a poor state, while an army of social scientists in institutes of applied research are mass-producing superficial descriptions of isolated social phenomena - to the great satisfaction of their employers. The book is also meant as a warning about the threats to the social progress which was won through the welfare state, if we are not able to resist the offensive by market forces and regain and reinforce democracy in our societies. As I have been working on the manuscript, these threats have increased enormously across Europe and the Western world. Particularly in the European Union, we have seen not only attacks on social protection and public services but direct massacres of them, in the countries most strongly affected by the economic crisis. While the financial crisis contributed to delegitimizing neo­ liberalism and the current economic model, our experience is that neoliberals and financial capital are still running the show. Rather than regulating the speculation economy, they therefore seem to be using the opportunity to complete their ‘silent revolution’ by forcing further privatization and cuts in public budgets on countries in deep economic crisis. In the European Union we are seeing frightening developments in the direction of a more authoritarian regime, where economic and political power is being further de-democratized and centralized through the so-called Euro Plus Pact and new legislation on economic government and enforcement mechanisms (popularly called ‘the sixpack’, since it contains six pieces of legislation). This more than anything else illustrates the current defensiveness and weaknesses of the labour and trade union movement, the deep political crisis on the Left and the lack of ambitious alternatives to the current economic model. It is therefore a matter of urgency to

X

PREF ACE

develop our analyses of the situation, our alternative social models, as well as our strategies and tactics to achieve our aims. The time is ripe to build broad social alliances and to organize resistance against the current onslaught on the best parts of our societies. In this book I have given some indications of how this can be done, and I therefore hope that it will contribute to inspiring activities in this direction. I would never have been able to write this book without my almost 30 years of experience in the Norwegian and international trade union movement. Not least, the last nearly 20 years of service in the International Transport Workers’ Federation, in the Norwegian Union of Municipal and General Employees and in the broad Norwegian alliance, the Campaign for the Welfare State, have been decisive for my comprehension of power structures and other social relations. I am therefore greatly indebted to the trade union movement, which is still the foremost defender of ordinary people’s rights, influence and dignity in the world of work as well as in society in general. Unmentioned but not forgotten are many Norwegian friends who have given me a great deal of advice and suggestions, useful and constructive comments and encouragement during my work on this book. These have been a great help. Particularly, I should like to thank my union, the Norwegian Union of Municipal and General Employees, as well as the Norwegian government-funded, non­ commercial foundation NORLA (Norwegian Literature Abroad), both of which contributed financially to the translation of the book. Many thanks also to the staff at Pluto Press, who have been very positive, helpful and professional throughout the process. Finally thanks to John Irons, who translated the manuscript from Norwegian and delivered promptly in spite of some late submissions from the author. Last, but not least, warm thanks to Solveig, who has commented, supported and encouraged me from the beginning to the end and helped me to keep the inspiration alive all along - in spite of the fact that the work has detracted from many evenings, weekends and holidays. All the responsibility for details as well as the totality of the book lies of course with me, including all weaknesses and any mistakes that still exist. Asbjorn Wahl Oslo, July 2011

INTRODUCTION Jan e1 is 49 years old and lives in a medium-sized Norwegian town called Moss. She is on an 80 per cent disability pension. She was awarded this in September 2 0 0 7 , after just over three and a half years of being tossed back and forth in the system. The story she has to tell me over a cup of coffee is not a happy one. The problem is that I have heard a good many other similar stories in recent years. They are the stories of people who struggle with their health, then their self-confidence and their self-image, and finally have to face the toughest fight of all - the machinery of the welfare state. Jane was employed for 30 years. She started early, as a welding apprentice at the legendary shipyard Nyland Vest in Oslo. After three years, her back gave out. She had a long period of illness and had to quit her job. The doctor even advised her to apply for a disability pension, but she declined. Jane wanted to be back at work. After almost a year, she managed to get a job on the Norwegian State Railways (NSB) as a station inspector at Lillestrom station. She stayed with the railways for 25 years, at various locations and in various functions - lastly as a head of transport in the freight transport company CargoNet. Throughout, she liked her job, liked her colleagues, and liked the solidarity and the environment of which she was a part. However, her health never fully recovered after her back injury at the shipyard. Jane has been in a lot of pain, but she has learned to live with it, as she says. In 1985, her doctor diagnosed ankylosing spondylitis, since when she has gone to physiotherapy once or twice a week. This enabled her to muster the necessary strength to go on working for so many years. From around 2 0 0 0 , however, her absences owing to illness

1

2

T H E RI SE A ND FALL OF T H E WELFARE STATE

steadily increased - and for longer and longer periods. In 2004, it all came to an end. Jane contacted the Social Security Office. She would have preferred to go on working, in a 50 per cent job and with a half-pension. This was impossible, according to the National Insurance Service - ‘You can forget about all that,’ she was told. First of all, she had to try rehabilitation. She was trans­ ferred to the Norwegian Employment Service. The story after that is too full of details for it to be retold here. The main content is as follows. Jane filled in great numbers of forms, and the same forms a great number of times. Again and again she had to obtain doctors’ certificates. Cooperation between the various public services was nonexistent. Her ankylosing spondylitis diagnosis was rejected. She never met those medically responsible at the National Insurance Service during the three and a half years the process took. Despite this, she was given a new diagnosis, fibromyalgia, without any examination. Nor did she ever meet her caseworker at the National Insurance Service. ‘I was well received at the insurance service. They were helpful, friendly and supportive. My health situation, though, declined. I got a 20 per cent job in Moss that was extremely flexible and things went fine. The service finally recommended me to apply for a disability pension for the remaining 80 per cent. Then the company I was working for closed down,’ Jane relates. That left her out of a job, and the rehabilitation money dried up. She asked the insurance office what she should do. They told her she could get financial advice at her bank, and she was to contact the social security office for subsistence. She did not do so. ‘I thought it was just a matter of a couple of months, so my old man and I agreed that we could try and get by with our savings and his income. We also knew that a demand would come from the Social Security Office to sell off what we had. Furthermore, like most other people, I’ve got a block about going there.’ It turned out to be much longer than Jane imagined, for at the National Insurance Office they still doubted her diagnosis - first spondylitis and then fibromyalgia - because the diagnosis was so diffuse. She went through another round of rehabilitation, a stay at a spa which only made things worse, and a final battle to get the National Insurance Service to revive her application for a disability pension, which they had shelved without her approval. After a further five months, she had her 80 per cent disability status approved - in September 2007.

INTRODUCTION

3

‘It feels bad to be treated like that. The worst thing is that you are under suspicion the whole time. That makes you feel small,’ Jane says. ‘They succeeded in making me start to doubt myself. It was as if their job is not to help but to uncover things and work against people. They are dealing with vulnerable people. We need help, support and consolation. The mere fact that I never ever met my caseworker one single time .... ‘The illness is tough going. My body is stiff. My bones and muscles ache. My joints swell up. I am in pain 24 hours a day. It’s often difficult to get up in the morning. In addition to all that, you have to face the defeat of not being able to work any longer. If you don’t have a job, you’re nothing. You get isolated. In many people’s eyes, living on a disability pension is the same as sponging on the state. You soon get to notice that. ‘I regard myself as having plenty of resources. Even so, I’ve had to work hard to keep myself afloat mentally during this period. I often wonder how people with fewer resources than I have managed to cope with all this. If people think it’s easy to get a disability pension, they’ve got another think coming. It’s not easy to get through that eye of the needle. It can finish off anybody.’ Finish off anybody? Aren’t we talking about the Norwegian welfare state? Well, Jane got her 80 per cent disability pension after a battle of just over three and a half years. That is precisely why the welfare state’s income guarantee exists, to help you when you have problems. But shouldn’t welfare be about something more than cool, economic rationality, and something other than suspecting people? Hasn’t it got to do with values, solidarity, care and quality of life - especially for those who need it most? I talked more with Jane, about what can possibly have created this situation. Is it the people who work at these offices, is it the bureaucratic impersonality - or can we glimpse some underlying policy? She felt it was probably a combination. There is a skewed power relation between the system and the individual as a client. People are forced to be positive, humble and submissive. They have to do as the officials say, otherwise they risk losing their benefit. ‘There are some people there who ought not to be there,’ says Jane. ‘But I have also noticed there are discussions going on and political proposals that want absence and disability pensions reduced. As if you can decide that there is to be less illness and infirmity. From that angle, the situation also reflects a form of political pressure.’

4

T H E RI SE A ND FALL OF T H E WELFARE STATE

FR EE D O M A N D E Q U A L IT Y

Does Jane’s story, and her final remark, mean that there is political pressure to weaken the welfare state? How is it done, in that case and why? That is what I want to examine closely in this book. For the discussion to be meaningful, however, we have to delve deeper into the material. We have to take a closer look at what the welfare state is, how it emerged, its content, development and present-day situation. What various interests are we able to identify, linked to the struggle for the development of the welfare state? The debate has already been going on for a long time. Countless works have been written about the welfare state, or about the various welfare models - for the welfare state has several variants. They can be categorized in different ways. In the European Union, they talk about the European social model,2 while the focus in Scandinavia is often on the Nordic model, which is regarded worldwide as being the most advanced version of this social model. Both, however, are generalized common terms for social models that developed in Western Europe and the Nordic countries respectively, especially after the Second World War. As we will see later, there are also more fine-meshed categorizations. In actual fact, we are looking at a number of various models that developed within the framework of strong nation states. They were nationally rather than European or Nordic-based - with their differing traditions, specific characteristics and power relations. In Spain and Portugal, even fascism survived until well into the 1970s. On the other hand, the different welfare models also displayed many similarities when it came to history, global power relations and cultural traits. The western European welfare states were the result of a quite specific historical development, one in which a comprehensive shift in the balance of power between labour and capital formed the basis of a redistribution of power and wealth in society. Since the power analysis is fundamental to an understanding of the welfare state in this book, I do not intend to focus all that much on the distinctive national characteristics, but rather to concentrate on the power-political common features. Since my own anchorage is in the Nordic model, this will be a central point of reference, although developments and experiences from other European welfare states (which also have strong similarities with developments in countries such as New Zealand and Australia) will also be included. With the often elevated role the Nordic model has acquired, especially

INTRODUCTION

5

within the trade union and labour movements, it will be of special interest to see how this model has fared in its encounter with the neoliberal offensive and the large-scale changes of power relations that resulted from this. The welfare state is an issue which creates an ideological divide, mainly between the Right and Left in politics. So let us take a quick look at this m ajor schism - and at the problems with arguments on both sides. Historically, the welfare state represented great progress in people’s general living and working conditions, one unrivalled in human history. People’s health, life expectancy and social security developed enormously in a relatively short space of time as the welfare state emerged during the twentieth century. And what is perhaps even more important, it made it possible for people to hold their heads high. As humiliating charity was gradually replaced by universal social rights, people no longer had to stand cap in hand when hit by accidents, illness or unemployment. Individual risk was made collective - with a degree of economic and a social security that no previous generation had experienced. For that reason, the welfare state achieved unusually strong support from ordinary people. Liberals often claim that personal freedom and collective security are diametrically opposed. They see the individual as being opposed to the collective, freedom as being opposed to equality, in meaning­ less ideological constructions. For the struggling labour movement, freedom and equality were one and the same thing, bound together by mutual solidarity. Freedom, security and solidarity constituted one organic whole. Via the dearly bought historical experiences of the labour movement, it has also become obvious that there is no freedom without security, and no security without freedom. Without solidarity we could not achieve either of them. The insecure, anxious individual cannot be free. It is beyond my comprehension that the enormous concentration of power in the hands of a small group of capitalists is unproblem­ atic for liberals, whereas the organization and collective struggle of workers to resist this concentration of power is seen as a threat to freedom. As far as I can see, nothing during the past century has contributed so much to individual freedom as the labour movement’s collective struggle. Poverty, need and misery are the anti-poles of freedom, just as much as political, cultural and other forms of suppression. The labour movement fought a battle on both fronts.

6

T H E RI SE A N D FALL OF T H E WELFARE STATE

Modern neoliberals have become less overtly ideological. Over the past couple of decades, they have focused more on efficiency and so-called economic rationality. High public expenditure and generous welfare arrangements sap economic growth and innova­ tion, they claim. They talk about sewing cushions under people’s arms, removing the incentives people need if they are to do their best, needing more competition and more market, but less tax, a smaller public sector and greater income differences. The poor must become poorer to be motivated to make an effort. The rich, we are told, need the opposite. Let us test out these neoliberal myths regarding the negative effects of the welfare state by taking a look at statistics. A Canadian research institute (the Canadian Centre for Policy Alternatives) published a report in 2006 that compared high-tax and low-tax countries on the basis of social and economic indicators (Brooks and Hwong 2006). Table 4.2 in Chapter 4 has been taken from this report. It shows how various Organisation for Economic Co-operation and Development (OECD) countries are grouped regarding their levels of taxation. In particular, the report compares those groups of countries that lie at opposing ends of the spectrum. The main conclusion is clear: Findings from this study show that high-tax countries have been more successful in achieving their social objectives than low-tax countries. Interestingly, they have done so with no economic penalty. (Brooks and Hwong, 2006, p. 7) Assertions from the neoliberal camp that high public expenditure saps economic growth and innovation have no scientific basis, then. From other sources as well - including various UN bodies - reports and measurements have been published in recent years which confirm that the Nordic high-tax countries score well, when it comes to both social and economic criteria. The authors of the Canadian report looked at 50 different criteria for social development. The Nordic high-tax countries scored considerably higher than the Anglo-American on 29 of them, as well as somewhat better on a further 13.3 The low-tax countries only scored higher on seven criteria, and here the differences were insig­ nificant. Compared with the low-tax countries, the results showed that the Nordic high-tax countries scored better within such areas as these:

INTRODUCTION

• • • • • • • • •

7

The proportion of poor people was considerably lower. The elderly had considerably higher pensions. Income was distributed significantly more equally. Economic security was considerably better. Infant mortality was considerably lower. Life expectancy was considerably higher. Trust between people was considerably greater. Trust in public institutions was considerably greater. People had considerably more leisure time.

Many critics also admit that the Nordic countries, or high-tax countries, have better social security and economic equalization, but claim that we pay a high price for this because of lower economic growth and a lesser capacity for innovation and renewal. The Canadian survey, based on comprehensive and recognized interna­ tional statistics, did not confirm such a tendency. O f the 33 economic indicators investigated, the Nordic countries scored highest on 19, and the Anglo-American on 14. Over the 15 years to 2 0 0 6 , for example, economic growth was slightly higher in the Anglo-American countries than in the Nordic countries, but the differences were small and restricted in time-span. In addition, the Anglo-American countries had a slightly higher total production during the same period and considerably more growth in employment. On the other hand, the Nordic countries scored slightly higher when it comes to • • • •

gross national product (GNP) per inhabitant GNP per hour worked (i.e. productivity) total labour participation rate creativity and innovation (measured using international indexes).

Neoliberal myths about the welfare state, about taxation and the inefficiency of the public sector, thus have little basis in the real world. In general, it is not the arguments that are the most problem­ atic thing about the right-wingers and liberals in this area - these are relatively easy to refute. The problem is the economic and political power they represent, something that enables them to get their view across even when their point of view does not hold water. At the same time, they promote their version by increasingly dominating commercial media and by using their well-paid spin-doctors - as well as by buying ‘research-based’ conclusions from neoliberal think tanks.4

8

T H E RI SE A ND FALL OF T H E WEL F ARE STATE

When the welfare state has been under pressure and subject to massive attacks in country after country in the past decades, it is not, in other words, because it has been unable to deliver. There are admittedly weaknesses and problems to do with the welfare state. This does not, however, weaken the fact that those countries that have developed the most advanced forms of welfare state (the Nordic countries) score best on both social and economic criteria. This should indicate that there are other reasons than intentions to create ‘the good society’ that account for the attacks. More than anything else, this shows that the welfare state comes into existence and finds its form and its content through the fundamental class struggle in society. An important task will therefore be to identify how the different class interests are expressed in the welfare state as a social model. Furthermore, maybe the time is ripe to challenge the neoliberals more strongly about the relation between freedom and equality. Is it true, for example, that a fight for equality will constitute a threat to human freedom in today’s United States, or can it be a more important problem that the richest 1 per cent now own a larger proportion of the country’s wealth than the 90 per cent at the bottom of the ladder (34.7 per cent and 29.9 per cent respectively) (Brooks and Hwong 2 0 0 6 , p. 9)? The Canadian report stated at any rate that ‘Americans bear incredibly severe social costs for living in one of the lowest-taxed countries in the world’ (ibid.). In saying this, the report implied that the famous American high court judge Oliver Wendell Holmes was right when he once said, ‘Taxes are what we pay for civilized society’ (p. 35). W H O O W N S T H E W E LFA R E STA TE?

The popularity of the welfare state is probably its best success criterion. As it developed - particularly in the Nordic countries from the end of the Second World War up to well into the 1970s, it represented enormous progress for the majority of the popula­ tion. It got rid of poverty. It redistributed incomes. It gave people economic security in illness and old age. It gave everyone access to free education and health services. It extended democracy and gave people legal rights to a number of welfare measures and welfare services. And it was collective and built on solidarity - it was universal. So there can hardly be any doubt that the welfare state was successful. It was so successful that politicians across the political

INTRODUCTION

9

spectrum argue about the copyright. The trade union and labour movements have long regarded it as their legitimate offspring, something that probably accords with the predominant view in society. In recent years, however, representatives of the political Right have also tried to claim their legal share of ownership of the welfare state. The right-wing ideologist and head of the Norwegian neoliberal think tank Civita, Kristin Clemet, dismissed the idea in an article that the welfare state is a left-wing or labour-movement project, for example. It is ‘for better or worse, the result of a number of political compromises,’ she claimed (Aftenposten, May 5, 2007). The question many people are now asking themselves, however, is whether the welfare state will survive the present right-wing political project - the neoliberal offensive - and the ensuing crisis. Here views differ considerably, within as well as outside the labour movement. Some people believe the welfare state is intact, that the offensive of market forces has not essentially changed its fundamental aspects. Welfare state expenditure has increased, and the deregulations and market adjustments that have been carried out since about 1980 have, in their opinion, basically been necessary adjustments in order to equip the welfare state for a new age. The Norwegian Institute for Labour and Social Research (FAFO), which is close to the leader­ ship of the Social Democratic Party, represents this position.5 In that respect, it not only shares but also legitimizes many of the right-wing assessments of recent market reforms in the welfare state. Others, including myself, hold the view that the welfare state has been put under immense pressure. During the last 20 to 30 years it has been subject to lasting attacks from strong economic and political forces, though at different strengths in the various countries. Important political regulatory measures have been dismantled, public pensions have been weakened, access to public welfare insti­ tutions has been narrowed, universal schemes have been replaced by means-testing, user contributions have increased in size and scope, and private economic interests have invaded important areas of the welfare state. One of the most serious attacks on our welfare model is the currently ongoing transformation of its content. Among the most dramatic changes in this direction that we have experienced over the last couple of decades is that a growing number of people are being excluded from participation in work and society, and that the causes of this are increasingly being individualized. The so-called workfare policies are one of the strongest manifestations of this tendency. Here, the victims of unemployment, a more deregulated

10

T H E RI S E A N D FALL OF T H E WEL F ARE STATE

labour market and a more insecure society are met with moralizing demands to pull themselves together, to get up in the morning and find themselves a job. At the same time, we have in the past decades witnessed an explosion of economic and social inequality and poverty in the European welfare states. Those for whom the welfare state should primarily exist, those who should be met with warmth and care in a difficult situation, become instead victims of a growing regime of suspicion from the elites in society. Jane from Moss is an excellent example. That the situation of the welfare state is perceived as differently as the above positions suggests has to do with conflicting analyses and assessment within, at any rate, three areas: • The analysis of the emergence of the welfare state. What relations in society made possible this development of a capitalism with a human face - as the welfare state is often characterized? • The conception of what the welfare state is. Is it first and fore­ most the sum of a number of public institutions and budgets, or do more fundamental changes to power relations in society make up the core of the welfare state? • The perception of the neoliberal offensive - or globalization, as many people refer to it. Is it a necessary result of technological changes and ‘postindustrial’ trends in the economy, or does it to a greater extent express deliberate strategies on the part of strong economic interests in society that wish to reshape society in their own image? There is general agreement that the welfare state as a historical phenomenon must be linked to the development of the social pact, or the major historical compromises between labour and capital in the twentieth century. In that sense, maybe some of the right-wing ideologists have a point - as a participant in the compromise, does the right wing have part-ownership of the welfare state? The crucial thing here is how we perceive both the class compromise and the welfare state - and, in particular, the connection between them. Was it the shift from confrontation to cooperation between the trade unions and the employers, between labour and capital, which was the driving force behind the emergence of the welfare state, as many present-day social democrats would claim? That is one of the question this book will discuss - with a critical eye. Another major issue is the present-day development of the

INTRODUCTION

11

welfare state. Where does it stand, where is it going - and what will decide its future? How do deregulation, privatization and what many call globalization affect the development of the welfare state? And what effect will the present economic crisis have on it? Is it correct, as for example many close to the Social Democratic leader­ ship in Norway tell us, that the welfare state is intact and continuing to improve, that ‘most things are now pointing in the right direction’ (Dolvik, 2 0 0 7 , p. 38)? Does the welfare state represent a higher level of civilization that will survive, despite increasing market power and the depoliticization and deradicalization of the labour movement or should we fear that the welfare state will be nothing more than a brief interlude in history? P O W ER A N D P O L A R IZ A T IO N

My point of departure is that the welfare state is under threat. This applies not only to individual aspects of the welfare state but to the entire social model. How, though, can this be reconciled with the success criteria I have just ascribed to the welfare state - especially the Nordic model? For the Nordic countries continue to top the league table in all international surveys. The problem is that all the teams in the league table are being weakened. Or to use another image, we still have a cabin on the upper deck, but it is the upper deck of Titanic, and the ship as a whole is sinking. Deregulation, increased power of capital, neoliberalism - and their legitimate offspring, the financial, economic and social crises - constitute a formidable threat to what is the very core of the welfare state. Very few people in the media and mainstream political parties, however, are prepared to admit this today - not in the Nordic countries at least. Many share a somewhat superficial optimism on behalf of the welfare state. One of the reasons for this is that they clearly operate with a very narrow understanding and definition of this social model, an understanding that to a great extent delinks the welfare state from fundamental economic and social power relations. The analysis of power has to a large degree been lost from the discussion of the welfare state - as it has within the broad labour movement. It also seems as if there is the idea, still in the Nordic countries, that attacks on the welfare state are taking place elsewhere, but not here. Because of this, the neoliberal offensive of the past 20 to 30 years is dismissed, or certainly underestimated. According to Veggeland (2007, p. 45), however, Anglo-Saxon neoliberalism

12

T H E RI SE A N D FALL OF T H E WEL FARE STATE

has penetrated the Nordic countries more than such continental European countries as France and Germany. The question of power has to a great extent disappeared from the ongoing social debate. In mainstream media, social development is apparently delinked from the interest-based power struggle in society. Political fights are increasingly becoming a choice between isolated individual proposals, all of them put forward with the very best of intentions. Fundamental analyses of power relations and insights into the basic role of the interest-based conflicts in society are in short supply. Media commentators rather tend to resort to a superficial textual analysis while politicians increasingly fall into a competition for who can score rhetorical points. This lack of focus on power relations and power structures in society contributes to veiling the threat to the welfare state. Politically speaking, it limits insight into what is actually taking place under a surface of more or less well-meaning political rhetoric and good intentions. It does not make matters easier that practi­ cally all the political parties subscribe in their programmes - or at least in their rhetoric - in one way or other to the welfare state. Can something everyone is in favour of really be under threat? The following is an excellent formulation of this phenomenon: The further development of the welfare state in Norway, well assisted by the ‘grey wave’ and the oil fund, has now been elevated to a kind of national common icon which no party with govern­ ment ambitions would dare tamper with. The Progress Party has realised this. From having begun as a movement against taxes, duties, public intervention in the market and abuse of pensions and benefits, the party has decided to try to take over the role of the Labour Party by outbidding its competitors when it comes to promising more and better welfare for all, except immigrants - a classic populist strategy. (Dolvik, 2007, p. 38) This, then, is how a right-wing Social Democratic think tank contributes via its ideology production to dissociating the welfare state from the fundamental power relations in society. Is it not precisely via such a depoliticization of the welfare state that it becomes possible for right-wing populist parties to appear to be defending it? When the welfare state is measured only by counting the millions on public budgets, it becomes correspondingly easy to appear to be the defender of the welfare state by suggesting a few

INTRODUCTION

13

extra millions. If the author had instead chosen a power-analytical approach to the welfare state, he might soon have realized that the right-wing populists’ programmed economic policy, structural policy and policy towards the trade unions and the labour market would inevitably lead to a frontal attack on the European social model - in other words, on the welfare state. As we shall see later in the book, there have been a number of attacks on the welfare state and important welfare arrangements in all Western countries. One of the things that creates political confusion is that many of the measures that have weakened welfare arrangements have been carried out by governments where both social democrats and parties to the left of them have been involved. The same parties, however, do not admit that this is what they are doing. They are caught up in the logic of the current neoliberal model. Because of the lack of in-depth political analyses and insight into power relations, cutbacks, privatizations and more authori­ tarian control regimes are being presented as ‘necessary adaptations to developments’. This also makes it easier for right-wing political parties to appear to be defending the welfare state. In Sweden, Denmark and the United Kingdom, we have seen how the traditional conserva­ tive parties have exploited this. They have presented themselves as defenders of the welfare state - not without a certain degree of electoral success. Beneath the surface of rhetoric, however, the attacks on the welfare states continue as before. This does not, by the way, differ much from when social democratic parties argue that their market-oriented reforms are crucial ‘to save the welfare state for future generations’. I would, on the contrary, argue that if the present-day power relations and prevailing developments are allowed to continue, much of the social progress of the welfare state could be lost more rapidly than most people realize. The symptoms are already more obvious than we would like to believe, even beneath the banners of the most successful, Nordic model: increased poverty, greater social and economic inequality, an increasing exclusion from school, work and society, more drug abuse and mental problems, more violence and a suicide rate that has stabilized at a higher level than previously - just to mention some of the most distressing tendencies. It is not that everybody is becoming worse off. If that had happened, resistance would have been greater. Nor is it that we are returning to a situation like the one that existed prior to the emergence of the welfare state. Most of the services provided by

14

T H E RI SE A N D FALL OF T H E WEL FARE STATE

the welfare state are necessary in a developed capitalist society. The main problem is the formidable polarization taking place in society, where an increasing number of people are being ostracized and excluded. The differences are widening in one area after the other - within health, education, work. Social inequalities are now being more systematically reproduced in schools than for a very long time. Differences in life expectancy between different social groups are increasing. Poverty has been on the increase ever since the neoliberal offensive of around 1980. At the same time, many people are doing well. They are attractive in the labour market, and they have greater control over their work and a greater influence over their general living conditions thanks to a well-bolstered private economy. They have seen advances in health, education and social position. This stratum of the upper-middle class also happens to dominate the media and the social debate, creating the illusion that this is what society looks like. Additionally, an accumulation of wealth is taking place within a small stratum at the top of the social ladder, a stratum we have not seen the likes of since the growth of the welfare state got underway. This concentration of prosperity naturally also means a concentration of power - power to take decisions that have major consequences for other people, for society and for the environment. Thus, a polarization is also taking place within the arena of power. These growing symptoms of a society with increasing inequalities have become much more obvious in past years to all those wishing to see them. The contrast between the growing numbers of beggars and drug abusers in the streets of major cities and the ostentatious wealth of the social elite confront us ever more openly and more stridently. The contrast between the sprawling leisure-time castles the billionaires build for themselves and the problems our children have financing their first humble dwellings in the big cities is no less illustrative. This development is of course in no way anchored in democratic decisions. No one has ever tried to get elected on ‘promises’ of such a development. Rather the contrary. Thus, the yawning gap between top and bottom in society also effectively contributes to promoting a feeling of powerlessness and apathy among people. T H E N O N -H IS T O R IC A L A P P R O A C H

Are the trade union and labour movements aware of the menacing dangers? Important sections of the trade union movement appar­

INTRODUCTION

15

ently are. Broad alliances have been formed and large-scale struggles and campaigns have been conducted to combat and seek to repel the attacks on the welfare state in recent years. In other parts of the trade union movement, and particularly in the political section of the labour movement, however, depoliticized analyses, delinked from power relations, are the order of the day. This is most obvious when this social model is presented to the outside world. For the welfare state has become such a success that attempts have been made to export it. Representatives of trade unions and political parties of the labour movement throughout Scandinavia repeatedly recommend the Nordic model as an alterna­ tive to both developing countries and former Eastern bloc countries in Europe. Do like us, they say: set up a common national project, establish tripartite cooperation, go in for social dialogue and build welfare for people. This will also stimulate economic growth. When sections of the world’s economic and political elite met for their annual World Economic Forum in Davos in January 2011, the Nordic model was even put on the agenda as a success project - for everybody to copy. The analyses that come with these attempts to export the welfare model, however, reveal a non-historical, superficial understanding. They seem to disregard the underlying necessary conditions for the emergence of the welfare state and, not least, the limitations that are inherent in today’s neoliberal regime. Under the present balance of power, every attempt to set up welfare states in devel­ oping countries will of course be impossible if it does not go hand in hand with major changes in power relations in society. To promote tripartite cooperation as a driving force to establish welfare states in developing countries independently of the actual power relations represents in this context a mix-up of causes and effects that makes it all meaningless. We will look more closely at this in the next chapter. However, I repeatedly encounter this specific, and extremely distorted, narrative of the origins of the welfare state. The head of the Norwegian Confederation of Trade Unions (LO), Roar Flathen, is a central representative and exponent of this non-historical way of interpreting the social partnership ideology: There are several reasons why Norway is a welfare state and why we have a strong, healthy Norwegian economy. A strong contributor to achieved results is what we refer to as the Norwegian - or the Nordic - model, i.e. the way in which we cooperate and solve challenges. This cooperation we call tripartite

16

T H E RI SE A N D FALL OF T H E WEL FARE STATE

cooperation. By tripartite we mean that we, the trade unions, cooperate with authorities and employers. This cooperation has also been referred to as collective common sense.6 John Monks, general secretary of the European Trade Union Confederation (ETUC) at the time of writing, apparently thinks along similar lines when he refers to the fact that the three largest developing economies in the World - China, India and Brazil - are being in search of new social models. His advice to them is that ‘the European expe­ rience is more relevant for them in an age crying out for sustainable development than the American business model, which favours the economic over both the social and environmental dimensions’/ Kristin Halvorsen, leader of the Socialist Left Party in Norway, and the then minister of finance, had the same message when partici­ pating in an OECD meeting in Paris in May 2006. She made use of the occasion to do a little advertising for the Nordic model: In the EU, there is increasing interest in - and discussion of - the Nordic model, and Halvorsen is in no doubt why this is the case. ‘The Nordic welfare model is not only just, it is also productive. We have managed to create a more flexible labour market than many other countries,’ she says. France is one of the countries where there is a lively debate as to which social and economic model one ought to strive for - at both the national and European level. ‘I am quite sure that France, which is facing this issue and experiencing large social mobilization in relation to reforms, would gain considerably from introducing a culture that is more cooperation-oriented,’ Halvorsen says. (N ationen , May 23, 2006) On whose behalf Halvorsen is talking when she emphasizes that we have managed to create a more flexible labour market must remained unsaid. That she is somewhat boastful about the Nordic model is not unjustifiable. It is when she talks as if social models are something one can take down from the top shelf, rather than being a result of historical and social processes, shaped by a lengthy struggle between conflicting interests, that the whole thing becomes meaningless. And it becomes increasingly meaningless the further to the left in politics we go. Historically, the Left has precisely been characterized by its system-critical approach and insight into power relations. Here, the entire problem of power disappears in magnani­

INTRODUCTION

17

mous advice to introduce a more cooperation-oriented culture. It hardly made much impression on the right-wing populist French president, Nicolas Sarkozy, and on increasingly aggressive forces of capital and the Right. In this non-historical ideology of cooperation, the Nordic welfare state is also presented as if it is in an eternal linear progression for the better. The Nordic model was, is and will be a success, appar­ ently - ‘to everyone’s advantage’, as the saying goes - independently of what takes place in the way of economic and political reforms in society, or how power relations change. So it is a question of getting this success exported to the rest of the world.8 The neoliberal era, from about 1980 onwards, with the removal of capital control, deregulation of markets, privatization, contract­ ing-out and market orientation of the public sector, outsourcing and offshoring, brutalization of work and the exclusion of more and more people from school and society does not seem to have had any influence on this representation of the situation and future of the welfare state. It almost looks as if the success of the welfare state has been carved in stone. Attacks on, and the undermining of, the welfare state exist to a very small extent in this perception of society. Most changes have to do with modernization and adaptation to a new age. In other words, a depoliticization is taking place of both the main areas I have described above - the analysis of the origins of the welfare state and the understanding of its development during the recent neoliberal era. When the emergence of the welfare state is portrayed as a result of consensus politics and tripartite cooperation, it is delinked from the power struggle and the many social confrontations that were a precondition for its development. When people trivialize the ongoing attacks on the welfare state, they also dissociate them from the formidable power shift taking place nationally and globally in the present age. This depoliticization makes it easier for those attacking the institutions of the welfare state and the public sector to argue that this is being done to modernize and defend it. For, despite everything, no attacks on the welfare state have been made without it being claimed that the purpose is to defend and safeguard welfare institutions for future generations. ABOUT TH E BO O K

In this book I want to challenge these oversimplified perceptions of the welfare state. This social model, developed in a highly specific

18

T H E RI SE A N D FALL OF T H E WEL FARE STATE

historical situation, cannot be assessed independently of its social and historical origins, and independently of the power relations that made it possible. If we really want to understand the potential of the welfare state, its present-day development and perspectives, we need a profound analysis and understanding of the distinctive characteristics of this social model. I want to try to bring this out via an analysis of the emergence of the welfare state, focusing on the shift in the balance of power which was necessary and using a broad concept of the welfare state (Chapter 2). Furthermore, I want to take a closer look at how these power relations have changed as a result of the neoliberal offensive from about 1980 onwards (Chapter 3). Then I will show how strong capital interests and neoliberals have been fighting to undermine the most important institutions that maintain the welfare state, in other words, the trade unions and democracy (Chapter 4). What we are at present experiencing is in many ways a social revenge, where the economic and political elite in society have gone on the offensive in order to reconquer privileges they lost through the democratization, regulation and redistribution of the welfare state. Based on the broad concept of the welfare state, I will look in more detail at how this has contributed to weakening important welfare institutions (Chapter 5). The most central battleground of all, the world of work, it is given particular attention (Chapter 6), where in particular the role of the workfare policies in undermining the welfare state from within is central to the discussion. Here, I will also look at why Jane from Moss found that meeting what was supposed to be a generous welfare state resulted more in humiliation and suspicion. Following that, I examine how the lack of any power-political analysis of the welfare state has its political equivalent in symbol and symptom policies where the causes and driving forces underlying growing problems in society are ignored, while the symptoms are mercilessly attacked - and with practically no positive measurable effect (Chapter 7). Subsequent governments’ alleged fight against poverty and against exclusion from the labour market are eloquent expressions of this development in the Nordic countries. The lack of positive effects of these policies therefore almost inevitably leads to these fundamental social problems being individualized. Instead of attacking the driving forces behind the problems, an increasingly repressive policy of disciplining is therefore developed towards the victims of a society that increasingly excludes people. Social developments have social causes. Attacks on and attempts

INTRODUCTION

19

to undermine welfare and democracy are not the results of natural laws. The fact that the trade union and labour movements as well as other progressive forces are on the defensive at present does not mean that things will remain this way. In the final chapter (Chapter 8), I therefore focus on the challenges and possibilities the social opposing forces are up against. What are the barriers, and how can the neoliberal offensive be combated, the historical advances of the welfare state be defended and new, ambitious targets be set? This cannot happen through woolly plans and well-meaning inten­ tions or via symbol and symptom policies. It calls for comprehensive mobilization. The struggle must be based on concrete analyses and experiences gained under the new conditions - including a revival of the political-ideological struggle, a broad alliance policy, the development of real alternatives to the neoliberal reforms, and by the trade unions achieving increased political autonomy. Those who want a society based on solidarity, mutuality and community are facing major challenges. Thirty years of neoliberalism have dramatically changed power relations. The financial crisis, and the subsequent economic and political crisis which is unfolding as I write, have brought us into a qualitatively new situation. It is no longer mere attacks on the welfare state that are taking place in many European countries, but a sheer massacre. The situation is serious. One possible effect is pessimism and apathy, but this is not a necessary reaction. The situation also opens up possibilities for the converse. Insight into what is necessary is a prerequisite for a realistically anchored optimism. Societies can still be shaped, and reshaped. Let us look at the conditions - and the opportunities.

2

THE POWER BASE In order to gain a picture of the welfare state as a phenomenon and a concept, we need to start with a historical outline. How has the welfare state emerged? How has it acquired its distinctive form and content in our society, and what historical driving forces have contributed to its development? In the present context, it is only possible to provide a rough outline, but this is a necessary prerequi­ site if we are later to be able to analyse and understand present-day challenges, threats and possibilities. Historically speaking, the welfare state as a phenomenon is linked to two key lines of development: the rise of the labour movement and the breakthrough of political democracy. Both contributed to fundamental changes in power relations in society. They are closely intertwined, as the labour movement as an organized force was also crucial for the development of political democracy - not least the introduction of universal suffrage. Despite this, it can be useful for many reasons to look at them separately - especially when it comes to the strategies to attack them, something I look at more closely in Chapter 4. As mentioned, a power analysis is crucial if we are to under­ stand the development of the welfare state. The welfare state both assumed and contributed to a comprehensive shift in power relations in society. The main conflict was between the predominant interest groups of rising industrial capitalism: in other words, between labour and capital. The welfare state did not represent the victory of the one over the other; it was a compromise between them. Like any compromise that has to satisfy interests that are partially contradic­ tory, the welfare state is thus both full of conflicting interests and potentially unstable over time. Since the development of the welfare state is so closely linked to shifts in power relations in society, it must be understood as something more than the sum of welfare institutions and public budgets. It must be perceived as a more comprehensive construc­ tion, one in which new power relations permeate all levels of society. With the labour movement as the decisive driving force, the social achievements of the welfare state must also be assessed in the light of the aims and vision of a different and better society which this 20

T H E POWER BASE

21

movement developed in its programmes and slogans. The aim of the labour movement was a society free of exploitation and oppression, a society where people were free to develop their creativity and inventiveness and where they themselves - democratically - could form the conditions under which they lived. The welfare state is often one-sidedly viewed as an accumulation of social progress for the labour movement and the great majority of the people. It can be a useful exercise, however, to try to see the welfare state from the capitalist side. As a compromise between the main forces in society, the welfare state will naturally also reflect the interests of the capitalists in this compromise. It is important to bear in mind that the capitalists have strong interests in, for example, how the reproduction of labour power takes place, what qualifica­ tions future workers acquire via schooling, and how social stability is maintained. In addition, it is vital for local planning and infra­ structure to be optimally geared to production, distribution and the creation of added value. In a technologically and organizationally advanced form of capitalism these elements are of great importance for effective operation and a maximum return on investment. Many representatives of the global South add a further dimension when the welfare state is being discussed - how it positions itself historically in the global economy. Two aspects are pointed to. First, the welfare state as a phenomenon has been limited to industrialized, capitalist countries in the N orth.1 Second, much of the prosperity that is admittedly more evenly distributed in welfare states had (and still has) its origin in the exploitation of the global South. These are significant points, ones that raise a number of important issues. That the welfare state is strongly linked to the rise of industrial capitalism, and thereby to a growing and increasingly well-organized working class, seems to be clear. This restricts the geographical scope of this social model. The exploitation of the global South raises more wide-ranging questions. Did this exploitation contribute to making comprehensive compromises between labour and capital easier in the North, since there was more wealth to be shared? If so, the uneven development between North and South played an important role for the establishment of the wide-ranging class compromises that underlay the rise of the welfare states. Probably even more important is the fact that the exploitation helped prevent development in the South through low prices for both raw materials and labour. And this raises the question of soli­ darity between the trade union and labour movements in the North and social forces and movements that fought (and still fight) for

22

T H E RI SE A N D FALL OF T H E WEL FARE STATE

liberation and development in the South. These are challenges I meet up with to an increasing extent when discussing with researchers and political activists of the South. They more than suggest that a lack of solidarity with social struggles in the South on the part of dominant sections of the labour movement in the North is connected to the fact that workers in the North very much ‘made do’ with their better conditions - which had, among other things, been created via exploitation of the South. These questions have been given far too little space in the discus­ sion of welfare states and developments in general in the North, and precious little research exists on the theme. However, there is every reason to take such issues seriously and look more closely at these challenges. This especially applies to the question of solidarity - or lack of solidarity - between popular movements in the North and South. Maybe the neoliberal offensive of the past 30 years and the ongoing economic crisis have created the basis for a new social alliance policy between North and South? H IS T O R IC A L B A C K G R O U N D

In a historical context, both the trade union movement and the welfare state are relatively new phenomena. Both of them arose out of industrial capitalism, with waged labour as the predominant form of productive activity. The capitalist mode of production meant that workers were separated from their means of production. Craftspeople owned their own tools and controlled the product of their labour themselves, but industrial capitalism led to the tools and the means of production being taken over by the factory owner, the capitalist, while the workers were left with only their labour power. The product of labour belonged to the capitalist, while the workers received wages as payment for their labour power, which was thereby transformed into a commodity on a labour market. The workers responded to this in two ways: first, by organizing themselves so as to weaken or neutralize competition between them on the labour market, and second, by establishing and struggling to put collective insurance schemes in place which meant that people were financially compensated if they were not able to take part in waged labour - in the event of illness, accident or old age. Both were measures designed to reduce the negative effects of labour having become a marketable commodity. Workers have a need to think of themselves as whole human beings, but the capitalist mode of production means they are only valued as labour power.2

T H E POWER BASE

23

The struggle for welfare arrangements was, in other words, a response to the exploitation, the social insecurity and the human degra­ dation that accompanied the rise of waged labour in a capitalist labour market. This development was further aggravated by the fact that capi­ talism, ever since it became the predominant mode of production in our societies, has swung from boom to bust and from bust to boom in a never-ending cycle. This has given rise to an extraordinary amount of need and misery in the periods of economic crisis. The worldwide depression of the 1930s in particular contributed to increasing popular demands for political intervention in the market. The social struggle was thus basically about redistributing the resources and the production result of society, or about distrib­ uting them in a way that differed from that of the market. Seen as such, the struggle for social security and welfare services was from the very beginning directed against the market and its tendency to concentrate power and wealth in the hands of a privileged economic elite. The level and content of the arrangements that were developed in order to increase social security - in other words, the welfare state - thus became a result of the power relations in society, of relative strengths in the social struggle. How, though, do you achieve a shift in power relations in society? From the labour movement’s point of view, it was of course a question of organizing, social mobilization and economic struggle, with strikes as the ultimate weapon. To change power relations on a more long-term basis, however, is also a question of gaining and extending democratic control over resources, production process, infrastructure and the labour market. Much of the social and political struggle in our societies has been about these issues, ever since the labour movement emerged as a new force. It is also here that the welfare state acquires its qualitative content. Understandably enough, it has to do with more than just the scope of social security and social services - no matter how important these are in themselves. It is interesting to note that the first public welfare arrangement came into being before the labour movement itself was strong enough to gain government power. The first ideas of state social responsibility were drawn up by the Right, as a response to the rise and radicalization of the labour movement, but also as a response to needs in the economy. In Germany, which was the first country in an international context to consider welfare arrangements in a public framework, it was, for example, the ‘Iron Chancellor’ Otto von Bismarck who promoted such policies. There were two basic underlying reasons.

24

T H E RI SE A N D FALL OF T H E WELF ARE STATE

First, a brutal working environment under the new capitalist relations of production was having a highly deleterious effect on workers’ health and welfare. In several areas, the labour force was actually being decimated by a systematic breakdown of people’s health, something which threatened the supply of labour power to the many new mines and factories. This meant that the state had to introduce measures to ensure the reproduction of labour power, to ensure there would be sufficient labourers in the future. Second, the burgeoning organization and radicalization of the workers, among other things through the development of socialist ideas, led to a fear of opposition and revolt. Public protective and welfare measures were therefore introduced to appease the workers and in that way dampen radicalization in the swiftly growing labour movement.3 This led to the first labour protection laws and minimum social support schemes taking shape and being developed into the first concept of a social state. The fact that Bismarck at the same time banned the new Social Democratic Labour party underscores the real nature of his political stance. Before the political parties of the labour movement became important power factors in society - from the latter half of the nine­ teenth century onwards - in many countries the social-liberal parties introduced an active period of social reforms. It was in this way, for example, that labour protection laws and compulsory occupational and workplace-based insurance schemes along German lines were introduced into the Nordic countries. It is important to note that the social support schemes that were introduced during this first phase, before the labour movement itself had become a strong force in the political system, were absolute minimum schemes based on a means test. It was the deserving poor who were to be helped - and the support schemes were to help integrate the workers into the established order: [S]ocio-political measures were a means to consolidate the market economy by moderating it, and thereby protect the bourgeois state from conflict. ‘Integration’ became a means - and an ideology - for those who wanted to preserve the existing order.... ‘Social legislation,’ Arthur Balfour said, ‘is the most effective antidote to socialism.’4 (Seip, 1981, pp. 2 2 -3 ) The first social reform period ebbed away, however, in the early twentieth century. It culminated with the struggle for the eight-hour

T H E POWER BASE

25

day, with victory finally gained in 1919 in the wake of the Russian revolution, when the capitalists had to make concessions to a strong, radicalized labour movement in Western Europe. The following period was characterized by strong social confrontations. In Italy, Portugal, Germany and Spain, fascism and Nazism gained ground, inflicting serious, historic defeats on the growing labour movement. In the Nordic countries, there was a different development which resulted in broad social compromises between labour and capital. In the Nordic countries too, however, the period from the end of the First World War to the middle of the 1930s was strongly affected by social confrontations. The development of welfare stagnated, while mass unemployment created widespread need and misery. When the post-war depression began to bite, from 1920 onwards, the employers went on the offensive. Under pressure from the economic crisis on the one hand and the political waves in the wake of the Russian revolution on the other, both the capitalist forces and the state made several attempts to curb and quell the trade union movement. In Norway, the strong anti-unionist Jailhouse Acts of 19275 and the employers’ major lockout of 1931 were the most obvious expressions of this tendency. There were several compre­ hensive industrial conflicts. The employers established organized strike-breaking (in their world called ‘freedom of labour’), and police and soldiers were used against striking workers. The immediate results of these struggles were limited. Despite bad objective conditions, however, the Norwegian trade unions managed to introduce a counter-offensive from around 1927. This resulted in strong organizational growth, particularly among forestry workers (the Norwegian Union of Forestry and Land Workers was founded in 1927) and among growing groups of commercial, office, hotel and restaurant workers. After the Norwegian Labour Party was able to form a government6 for the first time in 1935 in a crisis coalition with the then Farmers’ Party, union membership increased further. Along with important international tendencies, this contributed to a shift in the balance of power, which was to be of decisive importance in the subsequent development of society. It was then that the real construction of what we now know as the Norwegian or Nordic welfare state model began. T H E C L A S S C O M P R O M IS E

The welfare state is not, however, a mere product of a shift in power relations in general. It is a result of a quite specific historical

26

T H E RI S E A ND FALL OF T H E WE L F ARE STATE

development in the twentieth century when international events and national developmental features interacted. In addition to the rise of the trade union and labour movements, the repercussions of the Russian revolution also had a strong impact. The effects of the social pact (also referred to as the class compromise) are essential for an understanding of the welfare state as a phenomenon. Before taking a more detailed look at this development, however, we ought to look more closely at what a class compromise actually involves. It can also be useful not only to look at the compromise from the perspective of the trade union and labour movement, but also to try to take into account the reasons why the other side were prepared to make such a compromise. This requires us to distance ourselves from the predominant present-day perception in the most consensus-oriented parts of the labour movement, that a collective common sense has taken over, one that is above the class contradic­ tions in society. We should rather consider the employers’ possible tactical and strategic reasons for entering into such a compromise - that is, the role the compromise played in the class conflict. A compromise between social classes is not something new. There are plenty of examples of this through history, at both the small and the more large-scale level. Every wage negotiation that ends in a wage agreement, for example, is a compromise. Many people have also found from experience that the willingness to compromise in employers is related to the strength and unity of the trade unions with which they negotiate. The willingness to accept a compro­ mise is linked to the wish to avoid an alternative that is deemed worse - the interruption to production as the result of a strike, for example. The same applies to the capitalists’ willingness to enter into more comprehensive compromises - in institutionalised bi- and tripartite negotiations. Here also, the willingness to do so increases when the labour movement strengthens its position and even perhaps threatens the established order. In this regard, it was hardly a coincidence that the first internationally institutionalized tripartite organization, the International Labour Organization, was established in 1919, at a time when attempts to spread the Russian revolution to Western Europe were still on the agenda. The willingness to compromise on the part of the capitalists must therefore be seen in the light of the class contradiction, as a part of the interest-based struggle. A compromise is chosen as the lesser of two evils, in a situation where someone wants to avoid, or fears the outcome of, a confrontation. To approach your adversary and

T H E POWER BASE

27

show a declared will to ‘work together for common goals’ can help to weaken the radicalism of the adversary, and lead to a stronger integration into - and acceptance of - the existing order. In addition, it becomes possible to operate within other areas at the same time, so that in the long run a party willing to compromise can weaken the strength and fighting power of its adversary. In the dominant parts of the labour movement, the historical class compromises of the twentieth century are judged mainly on the basis of positive experiences with the welfare state. Instead of seeing both the class compromise and the welfare state as results of a very specific historical development, there is a tendency to generalize the experiences far beyond what is reasonable. In addition, explana­ tory models are established that are more political-ideological than historically warranted, something which results in dubious causal relations. There are strong indications that the capitalists have a far more tactical relationship to compromise than the relationship the labour movement eventually developed. On the basis of the actual balance of power which evolved during the first decades of the twentieth century, particularly in Northern Europe, entering into a more comprehensive social compromise became a reasonable alternative to a confrontation with an uncertain outcome. Seen from this point of view, the compromise represented more a tactical manoeuvre for the owner of capital than a higher level of ‘collective common sense’, if by the latter we mean a long-lasting historical recognition that cooperation is to be preferred to confrontation. With this as our general point of departure, we will now look more closely at how the class compromise of the twentieth century actually developed. Despite more direct class confrontation in the first part of the century, the struggle between labour and capital developed in many countries more into a form of static warfare where no one was able to make any significant advance. The capitalist camp was unable to crush the trade union movement, but the latter also had problems in conquering new positions. In many ways, it became a trench war of attrition - which was one of the factors that contributed to a broad compromise between of the main social forces in society. Also contributing to this situation was the fact that laissez-faire capitalism7 was experiencing a considerable crisis of legitimacy as a result of the depression of the 1930s. The entire system was discred­ ited as a result of this worldwide crisis, one that had given rise to mass unemployment, considerable social need and misery - and, ultimately, fascism and war. So with increasing intensity demands

28

T H E RI S E A N D FALL OF T H E WE L F ARE STATE

were being made for political intervention against unbridled capi­ talism, with massive calls for peace, social development, work for all and political control of the economy. This was also the background when the Beveridge Report, which formed the basis of the British welfare state, was launched in 1942. The report, with the unassuming name Social Insurance and Allied Services , was drawn up by a committee led by the senior civil servant, economist and politician William H. Beveridge. Its content was surprisingly radical - not least because Beveridge was a liberal politician, and the report had been commissioned for a government led by the Conservative Winston Churchill (who had admittedly also included the Labour Party in his national coalition government and his war cabinet). In the report, the war was not only seen as a national war of defence, but it was also made clear in banner headlines that this ‘revolutionary moment in the world’s history is a time of revolutions, not for patching’. The report declared its intention to fight the ‘five giants on the road to reconstruction: want, disease, ignorance, squalor and idleness’. Despite resistance from Conservatives inside the govern­ ment, the report was published - and rapidly became popular reading. More than 10,000 copies were sold in the first month, and a cheap edition was even published for distribution among the armed forces. Although Churchill disliked the report, it was given an overwhelmingly positive response by the majority of the Labour Party, some of whom even saw it as an important contribution to the fight for socialism (Page, 2 0 0 7 , pp. 1 1 -1 2 , 2 0 -1 ). Very little of the Beveridge Report was implemented during the war. The Conservatives were sceptical and felt unable to give priority to such costly reforms in a time of war. Representatives from Labour pressed for reforms, but it was not until-there was a majority Labour government from 1 9 4 5 -5 1 , with Clement Attlee as prime minister, that things really began to move with the implementation of the welfare state, with the National Insurance Act (1946) and the National Health Act (1948) as the jewels in the crown. The Beveridge Report was not only of great impor­ tance for the United Kingdom, it also became a model for the development of welfare services in many countries, including the Nordic. In the United Kingdom it is often discussed to what extent a class compromise, or a consensus, was established between the leading forces in society during the Second World War. There was certainly no formalized compromise, as took place in the Nordic countries.

T H E POWER BASE

29

Even so, there can be no doubt that the common context - the depression of the 1930s, the war experiences, the need to strengthen war morale in an otherwise extremely class-ridden society, as well as the radicalization of the labour movement - played a decisive role in persuading both the Conservatives and the employers to accept much of the social restructuring that took place and that had the Beveridge Report as its point of departure. There is little doubt that a radicalization of the labour movement also took place in the United Kingdom in this period. Page (2007) points out that at the end of the war, left-wing newspapers made up half the market, as against 30 per cent in 1930. The fact that the number of strike days increased year by year, even during the war (with the exception of 1 9 3 9 —40), points in the same direction. The following extract from the Labour election manifesto in 1945 can also explain why some capitalists would like to dampen radicalisation via social reforms and compromises: The Labour Party is a Socialist Party, and proud of it. Its ultimate purpose at home is the establishment of the Socialist Commonwealth of Great Britain - free, democratic, efficient, progressive, public-spirited, its material resources organized in the service of the British People. (quoted in Page, 2007, p. 27) When the leaders of the victorious nations met at the Bretton Woods conference8 at the end of the Second World War to discuss the organization of the post-war economy, the demands of the labour organizations and other popular forces were thus clear: an end had to be put to unbridled, crisis-ridden capitalism. The capitalists had already acknowledged that compromises had to be made, and in several countries work was underway to regain trust in and legiti­ macy for the existing economic order via comprehensive reforms. Under the existing balance of power between labour and capital, the Keynesian model9 of regulated capitalism was the one that achieved hegemony at and after Bretton Woods. The social pact, however, had begun to be institutionalized in parts of Europe as early as the 1930s, with the trade union movement entering into comprehensive agreements with employers’ associations, especially in the north. After the Second World War, large parts of the rest of Western Europe followed suit. From a period characterized by hard confrontations between labour and capital, developments now entered a phase with a high degree of

30

T H E RI S E A N D FALL OF T H E WELFARE STATE

industrial peace, bi- and tripartite negotiations and a policy of consensus. It was this power relation within the framework of the compromise between labour and capital that formed the basis for the development of the welfare state. The class compromises developed over time. Even so, there were often concrete events that formalized the establishing of these compromises. Denmark came first - with its September Settlement after a widespread lockout as early as 1899, when the employers were admittedly on the offensive, but proved unable to inflict the serious strategic defeat on the trade union movement they had wished. In Sweden, it was the Saltsjobad Agreement between the trade union movement and the employers in 1938. In Norway, it was 1935 more than any other year that symbolized the establishment of the compromise. It was then, as mentioned, that the Labour Party came to power for the first time in history, supported by a coalition with a majority in parliament. Another crucial event in Norwegian working life which took place that same year has enjoyed less attention in the discussion concerning the development of the welfare state, but perhaps it was of just as great significance: the signing of the first General Framework Agreement, colloquially named the Constitution of the World of Work, between the LO and the Norwegian Employers’ Association (NAF). The events of 1935 heralded a new situation in a number of areas. The far-reaching compromise between labour and capital was decisive for the development of society. The war experiences, with national unity and much stronger elements of economic planning in many countries, contributed to strengthening this tendency in the post-war years. On the basis of this class compromise, the most important arrangements and institutions in today’s welfare state were put in place in the course of roughly three decades after the end of the Second World War, something which also structurally contributed to institutionalizing the compromise. It is important to recognize that this class compromise between labour and capital was a result of the increasing power in society that the labour movement had achieved in the period prior to the compromise. The employers and their organizations had not been able to defeat the trade unions. Under the then existing balance of power, the employers association therefore decided to recognize the trade unions as representing the workers and to negotiate with them. The peaceful coexistence between labour and capital was, in other words, based on a strong labour movement - a strength that had

T H E POWER BASE

31

been acquired via the struggles and confrontations that preceded the compromise. An important factor in this connection is, of course, that the capi­ talist economy experienced over 20 years of stable, strong economic growth after the Second World War. As mentioned, exploitation of the South, via cheap raw materials and labour, contributed to this strong growth, making it easier to share the proceeds between labour, capital and a rapidly expanding public sector. The steady increase in prosperity and the important welfare reforms that the economic growth gave room for were the prerequisites for the continuing support of the compromise from the trade union movement. With this as our point of departure, how should we consider the Right’s insistence on its rightful share of the ownership of the welfare state? Do they have a point? The capital and right-wing forces were clearly part of the historical compromise that laid the foundation for the development of welfare capitalism. Even so, it is perhaps a good idea to maintain a low profile in this context. Just as employers cannot really take credit for wage increases that they reluctantly concede in the wages struggle, so right-wing forces should not take credit for welfare arrangements they just as reluctantly had to accept in the name of the class compromise. S Y ST E M C O M P E T IT IO N

An important characteristic of the historical situation concerning the development of the welfare state and the class compromise was the existence of a rival economic system in the Soviet Union and Eastern Europe. As the British historian Eric Hobsbawm has pointed out in his seminal book Age o f Extremes (1997), this was a decisive prereq­ uisite for capitalists in Western Europe being prepared to accept a compromise with the labour movement. The analysis is based on the assumption that a well-organized and radicalized working class in large parts of Western Europe were sympathetic to socialism, and that a raw, inhuman capitalism could strengthen this tendency. The capitalists of Western Europe feared a possible confrontation over power in society, and should such a confrontation become a reality, they were afraid that the Soviet Union would come to the rescue of the workers. For that reason, they were more accommodating when it came to accepting comprehensive welfare arrangements, at the same time as the social democratic parties were seen by many10 as the most important bulwark against the Soviet Union and communism. The

32

T H E RI SE A ND FALL OF T H E WELF ARE STATE

development of welfare capitalism helped to damp the radicalism in the labour organizations in the West, while also contributing to strengthening the position of the social democratic parties in the labour movement. Even though the possible threat from a radical labour movement in the West grew less, the continuing cold war between East and West still played an important role. For those in power in the West, especially in Western Europe, it was still of great importance to have broad backing for the Western capitalist model, in order to be able to maintain a clear front against the Soviet Union and the Warsaw Pact. Lindert (2004) points to another interesting phenomenon of a similar nature. The Catholic Church and the Catholic, Christian Democratic political parties in Europe had initially been highly critical of public welfare. Their stance was that the church and the family should take care of such things. After the depression of the 1930s and the two world wars, however, a change took place. Redistribution by the state now became for these parties an important means of creating a more just distribution - and it would as such counteract the threat from communism (Lindert, 2 0 0 4 , p. 15). It is also interesting to note that the welfare state was never an explicit aim of the labour movement before this model of society started to be realized.11 The aim laid down in the programmes of many trade unions, as well as of the communist, the socialist and the social-democratic parties, was socialism - the contradictions between the parties had to do with how this aim could be achieved. It was precisely because the capitalists in Western Europe feared an increase in support for socialism that they gave in to so many of the demands made by the labour movement. The possibility of a further radicalization of the labourjnovement and a more intense struggle for power was, then, a prerequisite for the capitalist camp accepting any form of social compromise with the labour movement. Paradoxically enough, the failed economic and political model in the East thus helped to humanize capitalism in the West.12 Such highly time-determined power relations naturally impose serious limitations on welfare capitalism as a phenomenon. The welfare state as a compromise between social classes is presented in widely different ways by the various interests repre­ sented in the compromise. From the point of view of the labour movement, it was seen as a step in the direction of the vision of a different society - one without exploitation and suppression, a

T H E P OWER BASE

33

society of freedom: in short, of socialism. From the capitalist point of view, the picture was the exact opposite: social reforms were intended to stem the tide of socialism. To stick to the expression of the British Conservative politician Balfour, the welfare state was seen as ‘the most effective antidote’ to socialism. Bearing this in mind, it is easier to understand both the demands of the right-wing ideolo­ gists for co-ownership of the welfare state and the attacks being made on it. This historical outline has been at a very generalized level. In actual fact, developments varied considerably in the individual countries. Both the Nordic model and the European social model actually consist of a number of different welfare models. National peculiarities, differences in traditions and the balance of power played their part - although there were nevertheless important common features. The key point here is that system competition and the Cold War enhanced the will of the capitalists to make a class compromise in Western Europe, as a means of increasing workers’ support for the market economy and of dampening radicalization in the labour movement. Now, more than half a century later, we can probably conclude that both the welfare state and the capitalist strategy proved quite successful, but that the capitalists had the last laugh. T H E C O N T E N T A N D ID E O L O G Y O F T H E C O M P R O M IS E

What, then, was the historical compromise between labour and capital all about? W hat was gained and what was sacrificed on the altar of compromise? Let us take a closer look at what the compromises meant in the Nordic model, where they were most clearly formalized - via nationwide agreements, so-called General Agreements, between the trade union movement and employers. Even though there were and still are important differences in the labour market models within the Nordic countries, there exists a high degree of similarity in what constituted the core of the historical compromises between labour and capital. Despite the fact that a number of the trade union organizations had declared socialism to be their aim,13 we can conclude that from the trade union point of view, the class compromise meant in practice that people accepted the capitalist organization of produc­ tion, private ownership of the means of production and the right of the employers to govern - or ‘the right to manage and distribute work’, which became the definition of this prerogative.

34

T H E RI SE A N D FALL OF T H E WELFARE STATE

In exchange for what was achieved in the form of more welfare and better working conditions, the trade union movement also assumed the task of maintaining industrial peace, as well as highly centralized control of and restraint regarding wage disputes. To simplify somewhat, we could say that the welfare state and the gradually increasing standard of living were what the now quite peaceable labour movement got in exchange for giving up its socialist project, since the class compromise was solidly established within the framework of an - admittedly nationally regulated capitalist economy. The most important sacrifice made by the capitalists was that they had to recognize the trade unions, or in other words, accept trade unionists as representing workers, and negotiate conditions of work and wages with them. On the basis of the existing balance of power it was also on the cards that they would have to accept a much tighter control and regulation of markets, and that an important part of economic growth would have to be earmarked for developing comprehensive social welfare schemes. The maintenance of a high level of employment was also a key element in the policy adopted in the wake of the compromise, something that effectively contributed to strengthening the position of the trade unions in the labour market. The policy of the class compromise, which in reality led to the development of the welfare state, thus resulted in enormous progress in the standard of living and working conditions. This naturally gave rise to massive support from workers, leading to the gradual margin­ alization of the more radical and anti-capitalist parts of the labour movement. The attitude was that a crisis-free capitalism had become a reality! No more economic crises such as in the 1930s, no more mass unemployment, no more social need, no more the concentra­ tion of wealth among the rich and privileged, no more misery among people. The future seemed promising. The general idea spread that now a path had been found to a society with social progress and a more just distribution of wealth - without all the sacrifices attached to the class struggle and the constant social confrontations. Disputes between labour and capital were to a great extent resolved in a well-ordered and peaceful manner within a system of national laws and agreements. For very many people in the labour movement, this was the reformist road to socialism - and everyone could see for themselves and experience that it actually worked! The social progress formed the material basis for an ideology of social partner­

T H E POWER BASE

35

ship that was - and still is - deeply anchored in the national labour movements, and large parts of the European labour movement.14 It became the historical role of social democratic parties to administer this policy of class compromise. According to the social partnership ideology, as it was developed by the leading echelons within the trade union and labour movements, the social progress of the welfare state was not the result of the preceding struggles but of class cooperation and tripartite negotia­ tions in themselves. In this way, cause and effect get mixed up. For the welfare state is not a result of social dialogue and tripartite cooperation, as a great many people within the labour movement will have it. The major social advances, especially after the Second World War, represented more a harvesting period. As such, both the welfare state and tripartite cooperation were the result of a long period of social struggle and confrontations that shifted the balance of power between labour and capital in the course of the first half of the twentieth century (including the Russian revolution). In other words, it was the social confrontations of the preceding period, along with the continued organizational strength of the movement that made it possible for the trade union leaders to achieve what they did via peaceful negotiations and tripartite cooperation. What for the employers was clearly a tactical compromise in a very specific historical situation has, however, been presented by large parts of the labour movement as a lasting victory for collective common sense. Thus, the ideology of the class compromise has contributed to depoliticization and deradicalization within the labour movement. This has weakened the readiness of the labour movement to meet new attacks from capitalists, as we have experienced during the offensive of neoliberalism over the past decades - and as we can see as the working class and public welfare are being seriously attacked in an increasing number of European countries today. R E S T R A IN IN G M A R K E T F O R C E S

The golden age of the welfare state both contributed to and presup­ posed a real change in the balance of power in society. The increased strength of the labour movement was not only linked to better trade union rights and regulated labour markets: the general restric­ tions on market forces were more important. The discrediting of capitalism after the depression of the 1930s and the concessions of the capitalists via the class compromises paved the way for - and necessitated - considerable control and regulation of the market.

36

T H E RI SE A N D FALL OF T H E WEL F ARE S TATE

The power of capital was thereby limited - to the advantage of democratically elected bodies. Competition was curbed via political interventions in the market. Capital control was introduced, and financial capital was strictly regulated. Fixed currency rates in the international gold/dollar-based currency system made speculation in currency impossible. Through strong expansion of the public sector a great part of the economy was taken out of the market and placed under direct democratic control. In many countries, the setting-up of national industries and nationalization of important parts of the economy were carried out. Clement Attlee’s Labour government in Britain was among those that went furthest in that direction. After coming to power in 1945, it carried out a comprehensive nationalization programme which led to one fifth of the British economy coming under public control (the Bank of England, Cable & Wireless, coal and civil aviation in 1946, electricity and inland transport - including British Rail - in 1947, gas in 1948 and the iron and steel industry in 1949). Large sections of the economy were brought under direct political control in this way, at the same time as wide-ranging regulations of private capital were put in place (Figure 2.1). These included inter­ ventions like capital control, regulation of domestic investment, and

Investment and credit regulations

Capital controls

Labour laws/collective agreements

Trade protectionism

Fixed exchange rates

Huge public sector

Figure 2.1 The power of private capital was limited via wide-ranging state regulation

T H E POWER BAS'. e

39

the granting of licences and concessions. Theseqore than 50 per cent possibilities for capitalists to convert capital p^vian countries. In power. On the labour market, legislation on w o r s t e d in half the paid annual leave and employment regulation - aJ->ject to direct trade union movement’s own collective agreements - *ted private to increased protection and security for employees. The rbraCy and extended democracy and increased social security. r shift This general limitation of the power of private capital wa^ary prerequisite for the development of the welfare state. In particular capital control made it possible for governments to implement a welfare policy at the national level, without always being met with threats from the large companies to relocate their activities or to invest in countries with more investor-friendly conditions if their interests were ignored. To make it perfectly clear: it is not through the market but through political regulation that we have achieved highly developed welfare services. The form and content of the welfare state were and are in other words a question of social power! Broadly speaking, the welfare states are often divided into three different models: a market model (as in the United States), an occu­ pationally based model (as in Germany) and a universal, fully public model - the Nordic model.15 The first mentioned is considered the least developed, while the last mentioned is viewed by most people as being the most advanced. In many ways, we can say that it was the influence the trade union and labour movements managed to achieve in the various societies, along with different national traditions,16 that decided what level the welfare states eventually reached. In the Nordic countries, as in other welfare countries, the first welfare arrangements were of the social-liberal kind, where benefits were to be targeted to the deserving poor via a means test. Strong patriarchal attitudes lay behind these social benefit schemes, where public means-tested minimum schemes developed parallel with private charity. People had to stand cap in hand and beg for assist­ ance. It was the elites and upper class of society that - via punishment and reward - were to educate the lower ranks of society. With an ever stronger and more self-confident trade union and labour movement in society, the mutuality and human-rights-based attitudes gradually grew in impact. The humiliating means test was gradually done away with within most areas, in favour of equal rights for all. This meant that welfare policy gradually changed in nature, and particularly in the decades after the Second World War,

36

T H E RI SE A N P ''1

The power of cara democratically ele^ | interventions ircf 8 c financial cap;J 5' § internatiord t "2 ° & ° 2- * 3 currenc^ § ^ ^ S' a gre^ ft JE? SunJ> ^ g 5* « p cu a> - —

DF T H E WEL FARE STATE

erpinned the development of the ' virtue of their citizenship, were : welfare arrangements, and the ’ased on universal rights, ecurity but also the organization . . . Y niade completely public in the lore mixed in the other welfare 5 public pensions and sickness d t o b e sufficient enough for an e maintained, and private income 5aid maternity leave and leave to ____w uecome an important part of this

model. Apart from providing one of the world’s best social safety nets within an otherwise unstable capitalist market model, the Nordic welfare state has contributed to a comprehensive redistribution of wealth in society. Researchers have admittedly pointed out that the redistribution has taken place more among different groups of employees than between labour and capital, among other things via high taxation of consumption (VAT) and a relatively high income tax (Lindert 2004, pp. 3 Iff). In the latter half of the twentieth century, the expansion of the welfare state also contributed in two more areas that were vital for the development of society. First, large sections of caring work (nursery schools and caring homes for elderly) were socialized. Much of the care of children, the elderly and the sick previously carried out by housewives as unpaid work in the home was taken over by society and turned into paid work. This change helped both to relieve the workload of women in the home and to increase dramatically the need for labour, something which in turn opened up women’s mass entry into the world of waged labour. Welfare policy and public sector growth, combined with favourable maternity leave and social security schemes, thus made a fundamental contribu­ tion to liberating women from their economic dependence on their husbands. Second, important parts of the service sector, like public transport and utilities, were taken out of the market and put under direct political control, something that helped curb the influence of market forces in society in favour of decisions made by democratically elected bodies. This lessened the pressure of competition in the economy and acted as a corrective to wages and working conditions even in the private sector.

T H E P OWER BASE

39

Public expenditure at its highest made up more than 50 per cent of the gross national product in all the Scandinavian countries. In short, the political economy of the welfare state consisted in half the economy being taken out of the market and made subject to direct political control. The other half was a strongly regulated private market economy. This considerably strengthened democracy and reduced the pressure on the workers. It represented a power shift in society and constituted both a prerequisite for, and a necessary component of, the welfare economy. To sum up, we can say that the power-political development of the welfare state has rested on three main pillars: the early socialliberal ideas of the social state, the struggle of the trade union and labour movements, and the need of Western capitalism for popular support in the cold war against the Soviet system. A fourth pillar can also be added - the need of modern capitalism for a number of public services, an efficient infrastructure and qualified labour. This gives the welfare state a form that is diverse and full of contradic­ tions, one that can hardly be explained as the result of some form of collective common sense. Welfare arrangements can serve different interests and different needs. The form, content and level are deter­ mined by the economic, social and political power balance within which the arrangements are developed. A B R O A D E R C O N C E P T O F T H E W ELFA R E STA TE

The welfare state must then be gauged and assessed in relation to the struggle that is still taking place over what kind of society we want to develop. As a social model, it has acquired its form and its actual content precisely in the conflict that is constantly taking place between different interest groups in society - and that is sometimes openly expressed but at other times is more hidden. The welfare state can therefore not simply be defined as a sum of social institutions, public budgets and social benefits. Resources and organizational structures are of course important, but the level and content of the welfare state have first and foremost to do with power - with economic and political power, nationally as well as internationally. It is an expression of the relative strengths of the classes in society, which emerge as a result of the social struggle. This balance of power affects and leaves its mark on most areas in society. It cannot be read from public budgets all that easily. For that reason, it is necessary to operate with a broader concept of the welfare state.

40

T H E RI SE A N D FALL OF T H E WELFARE STATE

Traditionally, the welfare state is conceived as consisting of three main components: • collective insurance schemes (the social security system) • general welfare services (health, care, education) • social benefits (social assistance, housing benefits and so on). Other services are also included to various extents, such as water supply, refuse collection, energy supply, telecommunications and public transport, as well as labour market policy. The institutional­ ized relation between the so-called social partners and the role of the collective agreement system is also often included - at any rate, as an important part of the Nordic model, but also in what in EU parlance is referred to as the European social model. In this connection, the struggle for full employment has been of decisive importance for the strength of the trade unions compared with employers. In a broader concept of the welfare state we have to include even more aspects of society where important power relations find expression - with considerable significance for the development of society and people’s general living conditions. This means looking at such areas as the regulation of the movement of capital, the relation between the private and public sectors of the economy, ownership, control and management of society’s natural resources and basic infrastructure, and interventions into and regulation of other parts of the economy, such as the housing market and the energy market. In addition to an expansion of the core areas of the welfare state, there can hardly be any doubt that capital control and the regula­ tion of credit were of crucial importance for the development of society in the post-war years, and thereby for the possibilities people had to influence their general living conditions. With active control of the economy and an offensive redistribution policy, the welfare state also showed itself to be a highly effective way of organizing the reconstruction of countries after the war - in a situation with a scarcity of resources and a lack of many consumer goods. The social housing policy and social energy policy, for example, were crucial instruments in furthering this aim in Norway. The role of the Norwegian State Housing Bank and the fact that both interest rates and the price of electricity were politically determined helped protect people from the exorbitant prices and fluctuations of the market, which was of tremendous importance for people’s security and welfare. By removing mortgages from the private bank sector,

T H E POWER BASE

41

the Housing Bank was also an important tool for controlling interest rates as well as the economy in general. It is often the use of resources for social services in public budgets that is the criterion by which the various welfare states are assessed. To a somewhat lesser degree, the question of the extent to which services are provided by the public sector or via the market is included in the assessment. In the broader concept of the welfare state, not only resources but also quality, accessibility and organiza­ tion are important criteria. Naturally, there must be sufficient grants to ensure both the range and scope of welfare services necessary, and public welfare must also follow the general development of pros­ perity in society. The welfare state is not, however, simply a matter of money. That is not even always the most important thing. Let me illustrate this with an example. The country in the world that uses the greatest proportion of its resources on health services is the United States. Measured by Nordic welfare standards, however, it is hardly to be considered a welfare state. This most expensive health system in the world is not even able to serve its own population - 40 to 50 million people are not included, because they do not have private health insurance. Obama’s ‘one small step’ in the right direction is still only a pale imitation of the European models. Even so, the United States, in terms of quality, has one of the best health services in the world - for those able to pay. It also has some of the world’s best educational institutions - but not for everybody. When we talk about the welfare state, we are in other words not only talking about how many resources are used, or whether the quality of the services is high. Just as important is access to the services - that they are for everybody irrespective of their ability to pay. In other words, in a good welfare state the services are universal, everyone has a right to them, and they are financed for the most part according to ability to pay via taxation. In addition to resources, quality and accessibility we also have to look at the way in which welfare services are organized and come into existence. People who work in the welfare sector must feel themselves appreciated if they are to do their best. They must be met with trust. Their experiences and their competence must be made use of. Their commitment and creativity must be liberated, not bound and shut in by bureaucratic regimes of distrust and control from above. This is why the market-inspired organizational models of New Public Management are a threat to the welfare state (more about this in Chapter 4).

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T H E RI SE A N D FALL OF T H E WEL F ARE STATE

A weakening of the welfare state therefore does not necessarily mean that high-quality schools, hospitals and other welfare services disappear. A weakening of the welfare state means first and foremost increased inequality, and that these high-quality services become no longer accessible to everybody. This can take place by the market taking over a larger part of welfare, by increasing user fees so that fewer people can afford to make use of good services, by a means test reintroducing humiliations and servility, by increasing differ­ ences in income creating geographical ghettoes, with the local environments of the rich attracting the best welfare services. In our power analyses we must also take into account that the welfare state is the expression of a historical compromise between contradictory interests in society. This has given it a dual nature. On the one hand, parts of the welfare state (social security schemes, the redistribution of wealth, universal rights, free education and health services) represent embryos of what was the vision of the labour movement for a different and better society. In this context, the welfare state does not represent a new, fixed model of society but a very specific phase in historical development - a phase in the humanizing of society, made possible by increased popular power. On the other hand, other sections of the welfare state function as a social repair workshop for a brutal and inhuman economic system, one where failures and defects are compensated for (unemployment insurance, the stigmatizing means test, repressive social support schemes, and so on). Which of these two aspects of the welfare state gains in strength depends very much on the balance of power in society. As we shall see later (Chapter 6), we are at present expe­ riencing a strong tendency towards more repressive measures - not least in connection with the so-called workfare policies. Before examining this tendency in more detail, it is however necessary to take a closer look at the fundamental changes in the balance of power in society which underlie the pressure and constant attacks to which the welfare state has been subjected since about 1980.

3

THE TURNING POINT As the reconstruction and rebuilding of the economy after the Second World War came to an end, the post-war Keynesian1 regu­ latory economy ran into increasing problems. Unlike the previous economic situation, nations started simultaneously to experience a rise in stagnation and inflation (stagflation) as well as profit crises. In the 1970s, the currency crisis, the oil crisis and the crisis in raw materials contributed to remove any illusions people might have had that a crisis-free capitalism had been created. Spurred on by these economic crises, market forces went on the offensive, and the present phase of neoliberalism began. The 1970s thus marked a turning point in the consensus policy of the class compromise. From then on, capitalist forces changed their strategy, with the aim of restoring profitability. They demanded increased room to manoeuvre through the deregulation of the markets. This has led to a gradual retreat from the class compromise, retreats that have differed according to the situation in the various countries concerned. The overall direction of the tendency is the same, however, and it has resulted in a policy of increasing confrontation with trade unions - as well as attacks on the welfare state. I do not intend to go into detail concerning economic develop­ ment and the offensive of neoliberalism. These have been fully described elsewhere.2 The important thing here is that the 1970s represented an important watershed, one that would eventually shake the welfare state to the core. It is therefore necessary to take a closer look at some of the crucial tendencies of the past decades that can explain and shed light on issues that were of great importance for power relations in society, and thereby for the development of the welfare state. G L O B A L IZ A T IO N - O R M A R K E T FU N D A M EN TA LISM ?

First, however, we need to examine the much used - and misused - concept of globalization. In the social debate, this concept has acquired mythical status. Globalization is used as an explanatory factor for a whole range of developmental tendencies in society 43

44

T H E RI SE A N D FALL OF T H E WEL F ARE STATE

without any attempt being made to find out what underlies the concept. At the same time, globalization is presented as a kind of necessity - it is irreversible, almost a law of nature. One thing or another happens as a result of globalization. Alternative ways of acting are nonexistent. The task is simply to adapt to it. In this way, causes, driving forces and social processes are obscured. When, for example, we can read that ‘[t]he increase in disparity of income over recent years is due to a great extent to the increase in capital incomes that reflects the globalization of the economy and the development of the capital market’ (Flotten, 2007, p. 263), the actors and the different interests involved disappear from the picture. Is it an unfortunate side-effect of a necessary devel­ opment we are talking about, or can it actually be that increased capital incomes and redistribution from the bottom up are an important aim for the forces that lie behind the type of globalization we have experienced? Since globalization is such a vague concept, and because various actors interpret it in so many different ways, it is not used as an analytical concept in this book. Neoliberalism - or the offensive of capitalist interests - is a far more adequate concept for international economic development from around 1980. George Soros has been and still is a key actor within this economy, among other things as an active currency speculator. He characterized the development, especially the waves of speculation that have been part of it, as m arket fundamentalism , which he further defined as ‘a greater threat to open society than any totalitarian ideology’ (Soros, 1998, p. xxii). This development was naturally not a necessary result of technological changes and economic restructuring, as many will have it. Massive systematic political and ideological pressure lay behind it. The economic theories were developed by the so-called Chicago economists, headed by Milton Friedman and Friedrich von Hayek. Their extreme market liberalism and so-called supply-side economics then became the basis for a number of think tanks in Western countries: in the United States, for example, the Heritage Foundation, Hoover Institute, American Enterprise Institute and Cato Institute; in the United Kingdom the Centre for Policy Studies and the Adam Smith Institute; in France the Club de l’Horloge and GRECE. Private economic interests, in particular multinational companies, queued up to finance such institutions. In Sweden, the think tank Timbro has played an important role in this ideological tradition. In Norway, Civita is now trying to gain

THE TUR NING POINT

45

a similar position, but so far without the same success. The attempts of these think tanks to appear independent also become somewhat pathetic, since most of them have been financed by strong capital interests in society. Common to many of them is that they do not at all represent new thinking, as their name might seem to indicate. They mainly copy and reproduce the well-known ideological stock of ideas of the Chicago economists. While the ideologists of the Right tell us that democracy and free markets are mutually dependent on each other - indeed, almost one and the same thing - the Chicago economists had their first mission not in a democratic country but in Chile, soon after the CIA in 1973 had helped generalissimo Augusto Pinochet to power in a coup against the democratically elected president, the socialist Salvador Allende. There the systematic oppression of the trade union and labour movements was so extensive that the restructuring of society based on the interests of capital could be carried out without too much resistance. Thus, Chile was transformed into a social experimental laboratory for the Chicago economists - with massive deregulations and privatizations (Martin, 1993). This shock therapy3 was extremely unsuccessful. A great many privatized companies had to be renationalized. Where theories clash with reality, however, it is reality that is wrong, according to the neoliberals, so new rounds of privatization followed. Neoliberalism did not achieve any global hegemony, though, until Margaret Thatcher became prime minister in the United Kingdom in 1979 and Ronald Reagan became US president in 1981. Under their leadership, the international financial institutions, the International Monetary Fund (IMF) and the World Bank were shaped into key instruments in the new offensive of market forces. Since then, the World Trade Organization (W TO), regional institutions such as the European Union, the rich men’s club OECD and such bilateral and regional trade agreements as the North American Free Trade Agreement (NAFTA)4 have followed up this economic and political restructuring of our societies. D E R E G U L A T IO N

Partly because of a politically weakened labour movement, neolib­ eralism conquered the world in the space of a decade. The political and ideological hegemony it achieved was used to implement a swift, systematic deregulation. In the course of a couple of decades, we therefore saw the system of fixed currency rates being abandoned,

46

T H E RI SE A N D FALL OF T H E WE LF ARE STATE

capital control being done away with and markets being deregulated and liberalized, along with a redistribution of wealth - from the bottom up this time. In addition, there was widespread privatization and outsourcing. Much of the complex system of regulations that had previously been used to tame market forces was now phased out (Figure 3.1). In that way, the m ajor part of the economic and material basis on which the welfare state had been built, its very power base, was quite simply removed. It is this neoliberal policy which has been given the name of the Washington consensus. The single most important political decision to promote the global expansion and free movement of capital was the phasing out of capital control. The circumstances surrounding this dramatic change in economic policy were illustrative of the de-ideologizing and deradicalizing of the trade union and labour movements - and of the political climate change that was taking place. Capital control was first done away with in the United States in 1974. The United Kingdom followed suit in 1979, and the 1980s saw Japan and the rest of the then European Economic Community (EEC) doing likewise. The fixed exchange rate system was already abolished, and capital was given a free rein. This trend swept across the world, without any resistance worth mentioning from either the political Left or - come to that - from the trade union movement. It is this unlimited right to move freely across all borders that gives capital such an enormously powerful position. When capital can freely leave a country, it acquires a kind of right of sanction or veto over the country’s politics. We move from a situation with a certain degree of political control of the economy to economic control of politics.

Attacks on labour laws and agreements

Reduced public sector

Figure 3.1 The comprehensive regulations of private capital have been removed (compare with Figure 2.1). This is the situation after 30 years of neoliberal reforms

47

THE TUR NIN G POINT

This development represented a dramatic turn in international economics, with industrial capitalism changing into financial capi­ talism. The editor of the American periodical Monthly Review , John Bellamy Foster (2008), characterizes this as a completely new phase in the history of capitalism. While capitalists under the regulatory economy sought first and foremost to get a return on their capital via investments in the real economy, financial investments have gradually taken over. Furthermore, the expected return on invest­ ment has increased enormously, far beyond what is normal growth in the economy. The deregulation of the economy was justified by claiming it was necessary in order to regain economic growth. When the barriers to the free movement of capital were removed, it would flow to where the return was highest. This would produce higher economic growth and thus greater prosperity for all. As we now know, the reality was otherwise. As Figure 3.2 shows, the growth rate has been declining ever since deregulation increased around 1980, and it has never been anywhere near the growth achieved when the regulatory economy prevailed. Instead of increased growth, prosperity and development for the world’s population, we have instead been left with a completely meaningless, destructive casino capitalism - including widespread 4.0 3.5 3.0 2.5

2.0 1.5 1.0 0.5

0 1960

1970

1980

1990

2000

Figure 3.2 Growth in GNP per capita globally Source: World Commission on the Social Dimension of Globalization (2004).

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T H E RI SE A N D FALL OF T H E WEL F ARE STATE

currency speculation and the development of so-called financial instruments which do not contribute any added value to society. Through the financial and economic crises of recent years, this form of capitalism has rather contributed to a massive devaluation and destruction of values. At the same time, it has led to a redistribu­ tion of wealth without parallel in the history of humanity - from the public to the private, from labour to capital, and from the poor to the rich. Public as well as private poverty has increased alongside an increasingly strident wealth in the elites of society. In other words, the redistribution which the development of the welfare state represented has been turned upside-down. T H E EC O N O M Y O F M AD N ESS

The destructive effects of economic deregulation have been more than demonstrated by the economic crisis that has raged since it was triggered by bad housing loans in the United States in 2007. These loans, however, were not the cause of the crisis, merely a symptom of an economic system that has crisis as part of its nature. It was not the first financial crisis after the deregulation of the capital markets in the 1980s, but it has been the deepest and most serious so far. How do the neoliberals themselves react to seeing their economic theories collapse around them? Do they come forward and apologize ' to the millions of people who have suffered from this economy of madness? Do remorse, penances and the acknowledgement of their own fundamental mistakes characterize the debate? Nothing of the kind. We can distinguish between three main types of reaction: • Some of them understandably choose to lie low, extricate them­ selves from the debate and give priority to taking care of their money - while they continue to speculate, thereby exacerbating the crisis. • Others underline the specific nature of the situation, that mistakes have been made, but claim that they have nothing to do with the deregulated capital markets. • The most unyielding neoliberals have their standard answer ready. We need more deregulation! There are always some remnants of regulations here and there, and they are the cause of the crises. Politicians continue to interfere in the markets. That is the problem.

THE TUR NING POINT

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This third position was already summed up by Karl Polanyi in his major work The Great Transformation : This, indeed, is the last remaining argument for economic liber­ alism today. Its apologists are repeating in endless variations that but for the policies advocated by its critics, liberalism would have delivered the goods; that not the competitive system and the self-regulating market, but interference with that system and interventions with that market are responsible for our ills. (Polanyi 2001, p. 150) Things look different in the real world, however. The German economist Joachim Bischoff states in his book about the global financial crisis (2008) that the sum of the world’s financial assets before the financial crisis broke out was more than three times as large as the world’s total gross product, whereas they were roughly equal in 1980 (Figure 3.3). With such an explosive growth of financial capital, most people (today, at any rate) realize that something had to go wrong. Monopolistic financial capital has achieved hegemony in the current phase of capitalism, and is as such decisive for how the economy develops. A desperate hunt for profit, artificial financial bubbles that will inevitably burst, crises 180

C N P globally

160 Financial assets

140 120 100

80 60 40

20

1

0 1980

1995

2000

2005

2006

Figure 3.3 The relation between financial assets and CNP globally. While these were roughly equal in 1980, financial assets were about three and a half times greater at the outbreak of the financial crisis in 2006. Source: Bischoff (2008).

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T H E RI SE A N D FALL OF T H E WELF ARE STATE

and meltdowns of economies become necessary elements of this economy of madness. According to another German economist, Jorg Huffschmid (1 9 4 0 -2 0 0 9 ), the enormous growth of financial capital and financial transactions over the past 2 0 to 30 years has most clearly been expressed via four key developmental tendencies (Huffschmid 2008): • The comprehensive redistribution of incomes which has taken place - from the bottom up, among other things via consider­ able tax relief for the wealthiest in society. The rich have become richer and the poor have become poorer, and the share of wages in overall income has decreased in the United States, the European Union and Japan by 4 per cent, 10 per cent and 15 per cent respectively from 1975 to 2 0 0 6 .5 • The establishing of enormous pension funds, not least with public, tax-funded pensions (so-called pay-as-you-go models6) being increasingly replaced by funded models. • The deregulation of credit markets. This has led to most of the limitations on loans from banks being removed, something which contributed to an explosion of loans and a further increase in financial investments and speculation. • The international liberalization of capital movements - especially the abolition by the politicians of capital control in country after country Together, these developmental tendencies have created an enormous surplus of financial capital in a desperate hunt for profitable invest­ ments, which in turn has led to a speculation economy that is unparalleled in history (Figure 3.4). The result has been a rapidly increasing instability in the world economy. The financial crisis of 2 0 0 7 is, as mentioned, the most serious so far, but there have been a number of considerable crises over the past couple of decades (Mexico 1994/95, Southeast Asia 1997/98, Argentina 2001/02). O f these, the crisis in Southeast Asia was the most extensive, until the world was hit by the worldwide crisis of 2007. The Southeast Asian crisis was an object lesson in how the deregulated, free flow of financial capital contributed to forcing large parts of the world economy to its knees. It started with economic problems in a number of the countries that are referred to as the ‘Southeast Asian Tigers’. These problems led to large-scale speculative attacks on the countries’ currencies and economies. Such problems are aggravated

THE TUR NING POINT

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12,000

Financial transactions

Trade in goods and services

Figure 3.4 The relation between financial transactions (left) and international trade in goods and services per day in today’s deregulated financial markets, measured in billions of Norwegian kroner. Nothing similar has ever been seen before in the history of capitalism. About 25 years ago, the two columns were roughly the same size, and before deregulation started in the 1970s, the column on the right was ten times as high as the left-hand column. During the regulation of the welfare economy, in other words, there was practically no speculation. Source: Skarstein (2008, pp. 184-6).

to a great extent by the tendency of financial acrobats to perform collectively when they extract themselves from a country with problems. Almost 100 million more people were driven into poverty in Asia alone (A ftenposten , September 16, 1998), while the financial crisis spread further to Russia and Brazil. In addition, there was the information technology (IT) bubble, which burst in 2 0 0 0 . That was when financial capital shifted to the housing sector, which then became the next financial bubble to inflate, until it too burst in 2007. After this, sections of speculative capital moved on to natural resources and food, where prices were rapidly increasing, until the speculators were caught up in the global financial crisis which they themselves had helped create. At the same time, ever more sophisticated so-called financial instruments (derivates, futures, forwards, swaps) have emerged that are little more than pure speculation, often based on rather airy expectations of future share prices. Even the world’s richest man, the American investor and businessman Warren Buffett, warned about

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some of these instruments in 2 0 0 2 , calling them financial weapons o f mass destruction.1 Furthermore, there are the completely impen­ etrable speculation packages, with names few people had ever heard of and ever fewer understood the content of.8 Another method made use of by financial capital in its hunt for ever greater profits is the so-called realization of assets, where a productive company is bought up, asset-stripped and repackaged to be sold on at a far higher price. The realization of assets means, broadly speaking, realizing a higher profit for financial capital, but it often results in widespread negative effects on society. The very narrow, short-term interests of capitalists have become dominant in this system. The focus in companies has shifted from leadership to ownership, where measures and strategies are solely to serve an immediate return on investment. Naturally, such a development has a destructive impact on the world of work, particularly because of the short-termism and ruth­ lessness that characterize the new speculation economy. Investors aim for maximum profit in the shortest possible time. This leads to demands for reduced staffing, restructuring and splitting up organizations, as well as to attacks on working conditions and wage levels in the companies - something that damages both industry and society. Some people call this quarterly capitalism - a capitalism where the returns for the next quarter are more important than a long-term creation of added value. Behind the massive shift in power relations that the large-scale deregulation of the economy has contributed to over the last couple of decades we can identify certain powerful economic and political forces. The major multinational companies are naturally spearheading this development - with their newly won freedom from democratic regulation and control. Rather than being a law of nature, globalization thus is the result of strategic and political decisions in closed boardrooms in the multinational companies, the large financial institutions and government cabinets. In other words, beneath the murky surface of globalization an immense shift in the balance of power between labour and capital has taken place - this time in capital’s favour. Far into the ranks of the labour movement itself, especially in the political part of it, people were seduced by promises of easily achieved wealth, when economic growth in reality increased as a result of ever-larger arti­ ficial financial bubbles. Even Europe’s most radical government, the Red-Green Norwegian government, achieved the feat of allowing hedge funds to operate in Norway for the first time in history, only

THE TURNING POINT

53

a few weeks before the financial crisis became international in the autumn of 2008. A representative of the Labour Party justified this in the Norwegian parliament by saying that ‘the administration of financial funds help to create added value in the same way as traditional services industries as well as traditional manufacturing industries.’9 Speculators and financial traders are, then, seen as just as capable of generating value as are welders at a shipyard, engineers in the oil industry and assembly line workers in the food industry! In the early days of the labour movement, people learned in study circles that there is only one way to create value in a society, and that is via labour (in addition to the values which already exist in the form of natural resources, but which are also dependent on labour to be realized). Thus, so-called labour-free incomes cannot be anything else than the result of other people’s labour. The value added produced by financial speculators we can therefore very well do without. Viewed against the background of the struggle fought by the trade union and labour movements from the end of the nineteenth century until roughly the Second World War to curb the forces of capital and thereby make the birth of the welfare state possible, it should perhaps have attracted more attention that many representa­ tives of the modernized social democracy movement so uncritically praised contemporary developments. The leader of the Norwegian Social Democratic Party, Jens Stoltenberg, actually attacked those who were pessimistic about the future in an article published in the magazine Samtiden in 2006: It is not correct to say that the positive development and the pace of the changes only include the chosen few. On the contrary, increasing parts of the world are moving in a positive direction. My assertion is that the last 20 years of human history have given us greater freedom, greater prosperity and greater well-being for an ever-increasing number of fellow human beings than in any previous period. ... I believe we are on the way to a world where ever more people will experience freedom from need and fear, and where more people will realize their opportunities economi­ cally, culturally and emotionally. This is also the future vision of a welfare state which will reach everybody. In a globalized world we need a global welfare society. (Stoltenberg, 2 0 0 6 , pp. 92, 100) Whether the present phase of the so-called globalization, the

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T H E RI SE A ND FALL OF T H E WEL F ARE STATE

ongoing debt crisis, has made Stoltenberg reconsider his position, is difficult to tell. His analysis, however, does not point in that direction, delinked as it is from any analysis of power relations and conflicting interests. Globalization, or the neoliberal offensive as I call it in this book, represents in Stoltenberg’s world a ‘great step forward for humankind’ - not a threat to the welfare state, but something that will bring the welfare state to everyone! People should not, of course, oppose such a system; they should support it with all their strength. In Stoltenberg’s world, the financial and debt crisis is simply an exception rather than what it actually is - an inevitable result of the unleashing of market forces that Stoltenberg himself has played a part in implementing. Moreover, it is China, along with some of the ‘Southeast Asian Tigers’, that has shown the strongest economic growth in the world over the past couple of decades. And this has been achieved by not following the recipe of neoliberalism (the Washington consensus), but rather by maintaining strong state control and regulation of the economy. It is thus remarkable how the neoliberals take the credit for China’s enormous economic progress. This also applies to those on the Right who are otherwise so eager to tell us that market economy and democracy are Siamese twins. The reason for this is probably that there would be precious little left of the large global success of neoliberalism if China were kept out of the international statistics. The trade union movement was badly prepared to meet the neoliberal offensive. This was a result not least of the deideologizing and depoliticizing that had taken place within the trade union and labour movements in the golden years of the class compromise. The offensive quite simply did not agree with the social partnership ideology which had become so strongly rooted in large parts of the trade union movement, especially in Europe, where the European Trade Union Confederation (ETUC) has become the foremost defender of this ideology. Despite the fact that it was gradually drained of any real content, the social dialogue was, and still is, promoted as the most important way in which trade unions can exert their influence. Many converted to the fatalistic belief that ‘globalization has come to stay’. This became a sort of mantra within large sections of the trade union movement, and the prime task then became to adapt to this new reality. As attack succeeded attack, and frustrations about the lack of results in the social dialogue grew, the trade unions - understand­ ably enough - became somewhat more critical. From unequivocal

THE TUR NIN G POINT

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setbacks in many countries in the 1980s, the trade unions started to recover again during the 1990s. In a number of countries, there were at times quite comprehensive struggles, particularly where the social partnership ideology was historically speaking not as strongly developed and thus not as strongly institutionalized as in the Nordic countries. The most successful and impressive struggle was that of the French trade unions when, in autumn 1995, they managed to defeat the Juppe government’s package of cutbacks (more about this in the next chapter). Even so, generally speaking the 1980s and 1990s represented a serious setback for the trade union movement in the industrialized world. Trade union membership has seriously declined in many countries. For a long while, the Nordic countries were a positive exception as regards the level of unionization, and their figures are still the highest in the world. Here too, however, membership has dropped dramatically over the past few years, particularly in Denmark and Sweden, where neoliberal and neoconservative governments have openly acted to weaken the unions. Perhaps the most important thing is the fact that the crisis tendencies in the economy from the 1970s on, and the consequent change of strategy of the employers, completely changed the conditions for trade union struggle from what had been the case during the 25 to 30 golden years that followed the Second World War. This also calls for a change from the trade union movement - as regards ideology, policy and organization. P R IV A T IZ A T IO N

As a central part of capital’s global offensive, massive privatiza­ tion of public assets and services is taking place. The process really accelerated in the 1990s, when assets of about U S$850 billion were transferred from public to private ownership worldwide. The peak was reached in 1998, with 2 ,5 0 0 privatizations which totalled over U S$170 billion - more than five times as much as in 1990. The OECD countries contained 70 per cent of the assets that were privatized (Whitfield, 2 0 0 1 , p. 47; Brune, Garrett and Kogut, 2004, p. 196). In the second half of the nineteenth century, colonization was the answer to capital’s built-in never-ending need to expand. Today, though, geographical expansion does not seem to be the most important solution to this need. Most large-scale companies already have operations in most parts of the world. Sure, forced

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market openings, acquisition of companies and control of natural resources in developing countries are still central to their strategies.10 Nevertheless, the greatest potential for the expansion of private capital is now made up of that part of the economy that had been taken out of the market, in other words, the public sector - including the public sector in countries of the developing world. In that way, the policy of privatization is not only a result of the political and ideological struggle against the welfare state and market regulation, as many people correctly point out. It is also very much a result of systemic forces in today’s deregulated financial capitalism. Stagnation in the real economy, together with a redistri­ bution of wealth from bottom up, creates an increasing surplus of financial capital in search of profits elsewhere. The result is growing speculation and more or less hostile takeovers of companies, as well as a massive pressure to privatize. The desperate search for profitable investments on the part of financial capital is as such the most important underlying driving force behind the policy of privatization. Expanding into the public sector has thereby become an increas­ ingly important method for multinational companies seeking to conquer new markets. Some of the most expansive have precisely specialized in growth through takeovers of public undertakings. This has been particularly obvious with areas such as water supply, energy supply, public transport, and post and telecommunications. It was the United States and the United Kingdom that spear­ headed developments in this area too, by themselves privatizing and deregulating, but not least by leading the political and economic pressure on developing countries, by the use of shock therapy in Eastern Europe after the fall of the Berlin wall, and by representing a model for neoliberal reforms in the industrialized world. The IMF and the World Bank were and are used as effective instruments, while the OECD has operated as a neoliberal think tank for the rich countries. In Europe, the European Union has played a pivotal role. With its democratic deficit, it has shown itself to be a highly effective instrument in market-orienting Europe. Neoliberalism is even institutionalized in the constitution as the European Union’s economic system (more on that in Chapter 8). The 18 years of Conservative rule in the United Kingdom, from 1979 to 1997, were used to carry out a wide-ranging transforma­ tion of British society. Markets were systematically liberalized and deregulated. Most of the state-owned industry (Cable &c Wireless, Associated British Ports, British Aerospace, Britoil, Amersham

THE TUR NING POINT

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International), telecommunications (1984), public transport by bus outside London (1985), gas (1986), the British Airports Authority (1987), water and electricity supply (1990), the railways (1996) and nuclear power plants (1997) were affected. Within the health and social services sector, widespread privatization has taken place. The same applies to the prison service. Hundreds of thousands of publicly owned houses were sold off. Within the municipal sector, tenders were made compulsory for blue-collar work in 1989, while white-collar work was placed under similar legislation in 1992 (both these sets of regulations were abolished by the Blair government, as one of the extremely few areas reversed by the New Labour government after assuming power in 1997). The Conservatives managed to privatize about one quarter of all municipal services, while no less than 40 per cent of blue-collar work was placed in private hands. Alongside this, nine rounds of anti-trade-union legislation were implemented in order to weaken and make more difficult any opposition to this policy by the trade unions. Considerable privatization also took place in countries such as Italy, Spain, Germany and Japan. It is less known that the supreme example of the Nordic model, Sweden, was among the countries in Europe that liberalized, privatized, contracted out and marketoriented most, during this period - apart from the United Kingdom. It made almost no difference whether there was a right-wing or left-wing government in power. At the turn of the year of 2 0 0 6 -0 7 , the Swedish state only owned 1 per cent of assets on the stock exchange in Stockholm (Munkhammar 2 0 0 9 , p. 21), even though a number of public services had been converted into joint-stock companies and either wholly or partly privatized. The debt crisis of the developing countries in the 1980s,11 which the Western banks had effectively contributed to causing, was a golden opportunity for forcing these countries to adopt a policy that ruined their national economy and was socially destructive. Countries with a heavy debt burden had little choice when the World Bank and IMF offered their plans for structural adjustment, which consisted of deregulation, privatization, the abolition of currency and capital control, the removal of import restrictions, a shift to an export-oriented strategy, social cuts and the complete opening up to the free movement of international capital.12 The so-called structural adjustment programmes (SAP) contrib­ uted to a systematic redistribution of public expenditure from health and education to subsidies for export industry - often owned by

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multinational companies - and to paying off debts. Servicing debts became an efficient way for Western financial institutions to bleed these countries dry. The real rate of interest was four times as high for poor countries as for rich. Developing countries paid an effective interest rate of 17 per cent annually on their commercial foreign debt in the 1980s, while rich countries only paid 4 per cent (UNDP, 1992). Public health budgets were halved in Africa south of the Sahara and in many Latin-American countries during the 1980s. Multinational companies and local elites profited most from this. From 20 to 30 per cent of all foreign investments in the third world went on buying up privatized infrastructure in the 1990s. Another instrument that is less known, though no less important, in this neoliberal project is USAID, the US public institution for development aid. Under Ronald Reagan USAID was developed into a spearhead for deregulation and dominance for the United States and their multinational companies in the third world. In 1986, USAID sent a letter to 36 of its offices in the developing countries telling them that they had to ensure that ‘two privatizations per year’ took place in their host country. One of the means used was to finance employer organizations that could exert considerable pressure on the governments to introduce deregulation and privatization.13 As we recall, democracy and free markets go hand in hand! After the fall of the Berlin Wall in 1989, Eastern Europe became the main target for the IMF, the World Bank, USAID, Western think tanks and the Chicago economists. With its 180 million inhabitants, Russia was turned into a shock therapy experimental laboratory for the Harvard economist Jeffrey Sachs.14 It was a brutal and forced social transformation which led to gangster capitalism and a dramatic decline in both living standards and life expectancy. The average life expectancy for men decreased by seven years in Russia between 1988 and 1994 (Brunborg and Foss, 2002). The use of development aid and international institutions to promote and induce privatization in the developing countries has become a general phenomenon, with the Washington consensus being adopted in one rich country after another. The Nordic model is no exception here. Rather the contrary - via the W TO and in close cooperation with the World Bank and IMF, the Nordic countries have behaved and still behave as loyal, active co-actors in the pursuit of deregulation and market-orientation.15 An example of this is the so-called Norwegian Trust Fund for Private Sector and Infrastructure (PSIRU 2004). This World Bank fund is wholly financed by the Norwegian government. Its aim is to promote

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private interests in the basic infrastructure of the developing countries - including water supply. The present measures are often accompanied by a mild, development-friendly rhetoric, the only function of which seems to be to make the neoliberal policy more saleable. This supports what we have already pointed out, that the welfare state - including the most advanced, Nordic model - is first and foremost a question of power relations and redistribution of wealth within the countries involved, but that it has had little effect on the biased power relations and unequal development between the rich countries in the North and the developing countries in the South. T H R E E P H A S E S - T H R E E ST A G E S

The privatization of public companies in Europe has often taken place - and still does take place - in three phases and three stages, even though the pace varies from country to country and there are many exceptions. The first phase involves the privatization of state-owned industries (for example, the car industry in the United Kingdom and the steel industry in a number of European countries) and financial institutions (banks and insurance companies). These were already integrated into a competitive market, and with the change from market interventionism to neoliberalism the arguments for retaining such companies in state ownership vanished into thin air. In the second phase, public utilities (in other words, the basic infrastructure of society) are privatized: energy supply, water supply, telecommunications, postal services and railways. A great many European countries have been through this process. This form of privatization has provoked much more widespread debate and resistance than the privatizations of the first phase - especially on the part of the trade unions. Since this policy has been imple­ mented by all types of governments, no matter whether they have represented the right wing, the centre or social democracy, the trade unions and other social movements have generally speaking been on the defensive. The third phase of privatization has to do with such sectors as health, education, social care and pensions. It is in other words the core institutions or the last bulwark of the welfare state which are now under attack from strong capital interests and governments. The European Union of course plays a crucial part in this process. The demands for a harmonization of social schemes, qualifications and systems of subsidies in order to promote the free movement of labour between member countries, and thereby attain a much more

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flexible labour force, are used as a key argument for deregulating the remaining public services - and subsequently for privatizing them. This phase also fully involves the municipal level, since most of the welfare services are organized here. We have thus been pushed into a process in which the operation of an increasing part of municipal services is transferred to the private sector, mainly via competitive tendering. All in all, this development leads to a formidable transfer of public assets to private capitalists. The three stages of the actual privatization process apply first and foremost to the privatization of public utilities. The first stage has to do with the actual market being deregulated; every privatization process starts with such a liberalization. In the European Union, this took place most systematically via the establishing of the Single Market, which, via the European Economic Area (EEA) Agreement16 also came to include Iceland, Liechtenstein and Norway. The second stage occurs when these public companies are changed into joint-stock companies, which are normally still completely owned by the state. In the third and last stage, the shares are sold to private interests. The development of the telecommunications sector in many countries has typically been through these stages - first the deregulation of the market, then the restructuring into a jointstock company, and finally partial or complete privatization of the companies. An experience many countries have in common is that the governments, at each new stage, try to calm down the trade unions by assuring them that ‘we only want to go so far, and no further - privatization is out of the question.’ This particularly applies to social democratic governments. All experience, however, indicates that such promises last a couple of years at the most, until the next stage is on the agenda. The United Kingdom under Margaret Thatcher was an exception in this respect. She did not spend time moving through all three stages, but privatized important public utilities at greater speed. Her method of dealing with the trade unions was one of confrontation, not seduction, even though she was gradually forced to admit that ‘incremental change was preferable to “revolutionary” change’ (Page, 2 0 0 7 , p. 75). M O N O P O L IZ A T IO N A N D C O R R U P T IO N

A striking development in the wake of the policy of privatization is the large-scale monopolization within the markets involved - or the development of oligarchies (the term for when only a few companies

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remain in the same industry). We have particularly seen that when the tendering system is adopted on a large scale in a certain area, a remarkably swift monopolization on the private side takes place. This seems to be a built-in effect of competitive tendering as a process. When tendering was introduced in public transport in Sweden in the early 1990s, for example, it took six or seven years to restruc­ ture the industry from a forest of small, local companies (between 250 and 300) to a situation where there were three predominant companies which controlled almost the entire market. Two of the companies were rapidly taken over by multinational companies. In Denmark, the same development has taken place since the mid-1990s, and in France outside Paris the concentration had come so far during the same period that almost 100 per cent of public transport is in the hands of four powerful and financially strong holding companies.17 In many areas, a tacit division of the markets takes place between such multinational companies. They form cartels and make coop­ eration agreements in order to prevent and reduce competition worldwide - and gradually become powerful adversaries for local and county authorities that have become dependent on them because they have sold out their own undertakings and thus also done away with their in-house competence to organize such services. One of the largest actors on these markets is Veolia Environment,18 an international giant in the fields of water supply, waste disposal (where it was formerly known as Onyx), energy supply (Dalkia) and public transport (formerly Connex). The company is the largest private employer in France, and has specialized in taking over public services in all the areas mentioned and in all parts of the world. It has more than 3 2 0 ,0 0 0 employees in more than 70 countries, and a worldwide turnover of NOK 350 billion (2 0 0 7 ).19 Along with another French company, Suez (formerly Suez Lyonnaise des Eaux), Veolia controls no less than 70 per cent of all the privatized water supply in the world (Hall, 20 0 2 , p. 6)! Both belong to a small cluster of multinational companies that seek to take over public companies over a broad spectrum. There is, however, not always the cut-throat competition between these two competing giants that one might expect. They cooperate on tenders within a number of areas by establishing joint ventures. How they cooperate on the same board in one town, yet keep tenders a secret from each other when competitors in the next town, is a problem we are not going to investigate further here.

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In waste disposal, the world market is dominated by only four companies - including subsidiaries of the two French companies mentioned. A few years ago, the figure was eight, but the four others have been taken over by the remaining giants. In both energy supply and public transport, the same concentration is taking place. From scarcely owning a single bus outside France in the early 1990s, Veolia Transport has advanced to being the world’s largest private company in the public transport sector (Hall 2 0 0 2 , p. 7). Just recently (in March 2 0 1 1 ), Veolia Transport merged with another French-based major international actor in the field of public transport, Transdev. After the merger, this transport company has become a real giant, with 124,0 0 0 employees in about 30 countries and an annual turnover of just over €8 billion. The markets are systematically monopolized, something that naturally helps to weaken the competition the neoliberals are so eager to emphasize. The result is of course increased market control by these companies. Despite all rhetoric in the opposite direction, maximum competition is not precisely what the companies are yearning for. They want maximum profits - and monopoly profit does not differ from any other profit except that it is often larger. In the wake of the tendering system and the increasing takeover by the multinational companies of public services comes corruption. A British research group, the Public Services International Research Unit (PSIRU20) at the University of Greenwich, has followed this tendency over a number of years and is among the world’s leading experts in how privatization and contracting-out lead to monopoli­ zation and corruption. Over the past 10 to 15 years, the group has published a number of reports which have documented that corrup­ tion and illegal price cooperation have gone hand in hand with the penetration by multinational companies of one area after another, and in one country after another, as public services are opened up to market competition. The Office of Fair Trading in the United Kingdom has ascertained, among other things, that one of the methods of avoiding competi­ tion is via ‘an agreement between certain private sector companies that for each contract only one of them will make a realistic bid, with the result that contracts would eventually be shared out among them’ (PSPRU, 1996, p. 14). Another method is to come with an under-bid which does not even cover their own costs, in order to squeeze out competitors, the argument being that in the long run this will pay off, once a monopoly situation makes it possible to make an extra profit.

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The following illustrative example applies to the Onyx company mentioned earlier. The company was represented in a number of municipalities in southern England when the markets were opened up. On a number of occasions, the company was closely scrutinized by the authorities. It had a steadily growing deficit that reached more than £ 1 2 million in the space of just three years, 1 9 9 2 -9 4 . A BBC documentary broadcast in winter 1995 showed that this and other companies operated with under-bids with the aim of pricing out the municipalities’ own companies and gaining long-term control. Each year, the parent company paid the difference. Without that, Onyx would rapidly have gone bankrupt (PSPRU, 1996, p. 15). In public services this is known as cross-subsidizing, and it is strictly forbidden. In the private sector, it takes place on a huge scale and is naturally completely legal, with the multinational companies at the forefront. Few other companies have the financial strength to operate in such a way. The regulations, in other words, favour the multinational companies, while the public sector and small local companies are the losers. When Onyx found out that a British firm was winning more waste disposal contracts than it was, it quite simply bought up the troublesome competitor, UK Waste Control. After having studied these tendencies over many years, PSIRU has concluded that the corruption that comes in the wake of priva­ tization and contracting-out is not just something that happens in a few cases, but has to be seen as part of the political economy of privatization policy (Hall, 2 002, p. 12). In a report on the relation between privatization, multinational companies and corruption, the following, among other things, were ascertained: The incidence of bribery does not support the common thesis that it is solely a problem of politically lax cultures, especially in developing countries. On the contrary, it is increasingly driven by the powerful economic incentives which are created by contracting-out and privatisation; it is practised by multinational companies, in OECD countries and developing countries alike, and even on their fellow multinationals. (Hall, 1999, p. 4) Privatization and the contracting-out of public services were first carried out - and on an unparalleled scale - in the United Kingdom. This means that this country also has the most experience. Based on this experience, the British police very much support the view of the researchers. The police estimated that in 1996 there were 130

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instances of serious economic crime in the public sector in the United Kingdom further stating that: The overwhelming majority of corruption cases in Britain are connected to the award of contracts. Compulsory contracting-out in local government, and the new Private Finance Initiative have produced an explosion in the number of such deals. ( Guardian , October 3, 1996, quoted in Hall, 1999, p. 8) It is therefore incorrect to claim, as do many supporters of contracting-out, that it does not matter if it is public or private organizations that provide services, as long as public authorities are those responsible. To open up the public services to commer­ cial interests via contracting-out effectively contributes to changing power relations in society. When the profit motive is introduced into public welfare services - which initially have completely different aims - this results in a number of negative side-effects. Later, we will see that it also has a decidedly negative effect on workers. W HAT W EN T W RONG?

The aim of this chapter has been to show how most of the market restrictions that the trade union and labour movements and their allies achieved through their struggle, as a prerequisite for the devel­ opment of the welfare state, have already been phased out or are under attack. We are witnessing what the US historian Christopher Lasch has called the revolt of the elites (1996), and which we could just as well call the revolution o f the rich. The Swedish journalist Dan Josefsson has characterized it as a coup d ’etat in slow motion.21 All such expressions, in their various ways, underline that what is taking place is an act of revenge, or a massive struggle from above. Strong economic forces are carrying out a formidable offensive in order to gain control over increasing parts of the economy. The economic and political elites are in the process of reconquering privi­ leges which were lost in favour of comprehensive social progress for the majority of people in the golden age of the welfare economy. W hat, then, has gone wrong? How has this been allowed to happen? Why is a model of society which, despite its weaknesses, has represented great social progress for millions and millions of people, now being attacked and undermined? The most important reasons can be summarized as follows:

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• The class compromise was not a stable situation. It was a compromise in a concrete, specific historical situation. However, the basic economic and social relations of capitalism remained intact, first and foremost because the enormous concentration of property and ownership of the means of production were allowed to remain in a few hands. • What could have been an important, although short-term tactical, compromise on the part of the trade unions turned into a long­ term strategic objective. The class compromise and its legitimate offspring, the welfare state, gradually became an end in itself, not a step on the path towards social and economic emancipation and a deeper and extended democratization of society. • The ideology of the class compromise has proved to be wrong. Democratic control of the economy was not achieved, crisis-free capitalism was not created, and the class struggle was not over. • The labour movement was taken by surprise by the neoliberal offensive. Instead of mobilizing to defend what had been achieved through the welfare state and to further develop the social strug­ gle, large parts of the trade union and labour movements were pushed on the defensive. Their leaders clung to the class compro­ mise, gave concessions at the negotiating table, and themselves took on board vast amounts of the neoliberal ideology. There is no reason to moralize about this development. There are reasons why it turned out as it did, and it is also possible to both understand and explain the political and ideological effects of the specific historical development we have undergone. The most important thing is to analyse and gain insight into the causes and underlying driving forces of the backlashes the labour movement has been - and is being - exposed to, and, not least, to learn from them and to try to act in accordance with the new experiences. In the next chapter, we shall see how the considerable economic and political changes have actually influenced, and still influence, the struggle for power between the most important interest groups in society.

1

4

THE SHIFT IN THE BALANCE OF POWER The emergence of the labour movement and the breakthrough of democracy were crucial for the development of the welfare state. They contributed to restraining the interests of private capital and to promoting political regulation, including regulation of the economy. A comprehensive return of power and resources to the economic elite of society can therefore hardly take place without the trade unions and democracy being weakened. That is precisely what we have experienced since the neoliberal offensive, from about 1980 onwards. In this chapter I take a closer look at how that happened. A T T A C K S O N T H E T R A D E U N IO N S

The strength of the trade union movement has to do with many factors: the political-ideological level, the degree of organization, the strength of its opponents, the level of unemployment, the regu­ lation of capital and markets, the existence of social alliances and the political balance of power. In most of these areas, the tendency of the 1970s and 1980s was discouraging. Crises and more aggres­ sive employers created a completely new situation for trade unions, which were deeply rooted in a consensus-oriented negotiation system, based on a relatively stable capitalism with regular, high economic growth. However, signs of a political change led to protests and attempts to build opposition within important parts of the trade union movement. If society was to be rapidly shifted in a neoliberal direction, it was therefore clear that the trade unions had to be weakened. In both the United States and the United Kingdom, where the economic and political offensive started, this led to widespread confrontations between the governments and trade unions. These confrontations were decisive for the following developments. In both countries, the trade union movement suffered historic defeats that had devastating consequences, the effects of which were long-lasting and extended well beyond the countries’ own borders. 66

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In the United States, Ronald Reagan confronted the air traffic controllers when 13,000 of them went on strike in August 1981. They were given the choice of going back to work within two days or losing their jobs. The 11,000 or so that defied this threat were sacked, and military personnel was used to control air traffic. The sacked controllers were never allowed to return to their jobs, and their trade union was crushed in the conflict. This gave the unions a shock, not only in the United States but also worldwide. In 1984, it was Margaret Thatcher who decided to have a general showdown with the trade unions when her government approved a comprehensive closing of coal mines and the sacking of 20,000 coal miners. The National Union of Mineworkers responded with a strike that became extremely bitter and lasted almost a year, ending with the miners’ defeat. She later also had a showdown with the dock workers and the graphical workers. Combined with Thatcher’s extensive anti-union legislation,1 these defeats led to a huge weakening of the British trade unions, which were almost halved from 1979 to 1995 (from an organizational percentage of almost 60 to just over 30). The quashing of the strikes in the United States and the United Kingdom, along with mass unemployment and new economic and political conjunctures, inspired employers all round the world to make widespread attacks on trade union positions. They attacked on several fronts: • by restructuring and splitting up companies, and thereby also worker organizations and trade unions • by undermining existing laws and agreements in workplaces • by using industrial and political pressure as well as lobbying to have such laws and regulations reversed • by pressing for a policy that increased unemployment and thereby weakened the negotiating power of trade unions (see Figure 4.1) • by directly confronting the trade unions whenever this was felt to be ‘necessary’. The most extreme measure adopted, especially in the United States and the United Kingdom, was organized union busting.2 Specialized consultancy firms were hired by companies to prevent unionization and to undermine and curb existing trade unions. To an increasing extent, governments sided with the employers, and contributed through legislation that weakened the trade union movement. This anti-union activity still flourishes in the United States.

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A report from the International Trade Union Confederation (ITUC) says: An entire USD 4 billion industry exists in the United States consisting of enterprises assisting employers to undermine trade union organizing or collective bargaining. A recent study found that 82 per cent of employers hire these high-priced ‘unionbusting’ consultants to fight organizing drives including through coercion and intimidation. Consultants employ a wide range of tactics, including many that skirt the law. (ITUC, 2010, p. 5) The report concludes as follows regarding the right to organize in unions: For most workers in the private sector the right to join or form trade unions and to bargain collectively with their employer is effectively denied by the failure of the law to protect workers from the anti-union activities of employers. Moreover, large groups of workers are excluded from this right such as many

USA —-x—• japan *__Germany ^ United Kingdom - *■ - France — ♦— Italy

Figure 4.1 Unemployment in a number of major industrial countries. In all of them, unemployment was lowest at the end of the regulatory economy period (1970). It increased considerably under neoliberalism, particularly in France, Italy and Germany. Source: ILO.

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public employees, agricultural workers, domestic workers and independent contractors. The right to strike is recognized but restricted. The use of strike-breakers is permitted. Many of the anti-union tactics used by employers are allowed by law, and even when employers act illegally, the penalties are too weak and the judicial system too ineffective to deter them. (ITUC, 2010, p. 7) From around 1980, the international trade union movement suffered a historic decline. This can be seen from the level of unionization in most of the industrialized countries (see Table 4.1) - with the Nordic countries being the sole exception.3 For many trade unions this decline has continued until the present day. In the European Union, the total level of unionization now is 23 per cent. The German trade union confederation has lost 48 per cent of its members since it peaked in 1 9 9 1.4 The situation in the private sector is even weaker than these figures indicate, since the organizational level there is lower than in the public sector. Where this trend has been most pronounced, the proportion of workers covered by a collective agreement has become dramatically low. In both the United States and New Zealand, the figure is now 15 per cent. In the United Kingdom, Canada, Australia and Japan, it is under 50 per cent, while in the Nordic countries and a number of other countries, mainly in Western Europe, it is still over 70 per cent. In both Germany and the Netherlands it is on its way down, and at Table 4.1 Level of unionization in selected countries (as a percentage of the work force) as the neoliberal offensive made its impact Level of unionization Norway Sweden Denmark France Italy United Kingdom Germany Austria Australia Japan United States

1980

1985

1995

2001

57 78 75 19 50 53 35 52 49 31 23

57 81 77 14 42 44 34 52 47 29 18

56 85 76 10 38 32 29 41 35 24 15

52 78 75 10 35 29 23 36 24 21 13

Source: Lismoen and Stokke (2004, p. 19).

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%

Figure 4.2 The wage share of total income (factor income) in the EU15, Germany, the United States and Japan between 1975 and 2006. The redistribution from labour to capital has been enormous, illustrating in convincing fashion the shift in the balance of power that has taken place. Source: Huffschmid (2008).

present it lies somewhere between 50 per cent and 70 per cent. All of these figures are for the formal labour market. In addition, the so-called informal sector is rapidly growing in many countries (ILO, 2008, pp. 3 6 -4 0 ). The fight for increased flexibility in the labour market has been one of the employers’ other main strategies. This involves a weakening of working time regulations and collective agreements, reduced job protection, increased use of contracting out and agency workers, more part-time work and the undermining of a number of other trade union rights. The redistribution of wealth from labour to capital has been considerable, as shown in Figure 4.2. It also says a great deal about the situation when the right to an eight-hour day that a radicalized trade union movement in Europe drove through in the wake of the Russian revolution has, 80 to 90 years later, been lost by large groups of workers. In other words, quite a dramatic decline has taken place.

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T H E E N D O F T H E C L A S S C O M P R O M IS E

Employers and more or less neoliberal governments used the shift in the balance of power to implement a swift, systematic deregulation of the markets and a weakening of public welfare arrangements, something that contributed further to tipping the power relations in society in favour of capital. While capital control and other market regulations were being removed, large parts of the European trade union movement were more or less perplexed. The employers’ change of strategy - from consensus to an increasing degree of confrontation - was incomprehensible within the consensus-oriented ideology of the class compromise. That was not how things should happen! In Germany, the trade union movement attempted in the mid-1990s to re-establish the class compromise, or tripartite coop­ eration, although this was admittedly on a basis which the unions acknowledged was more defensive than before. The leaders of the powerful metalworkers’ union, IG Metall, launched a large-scale project with the slogan ‘Alliance for Work’ (Biindnis fur Arbeit). In the new compromise the trade unions offered to drop their demand for an increase in real wages if they were given a job guarantee. Unemployed workers could be engaged at a wage below the minimum rates of the collective agreement. The government should shelve its plans for social cuts. The trade unions would open up the possibility of more flexible working hours. Under the new power relations, however, the concessions offered by the trade unions were not of any particular interest to the employers. The new head of the German employers’ association, Hans-Olaf Henkel, was an unyielding critic of the social market economy. The class compromise was clearly no longer necessary for the capitalists. He referred to the fact that ‘social peace and political stability have also been achieved in other countries, for example in Great Britain’5 - in other words, a situation where stability had been achieved by effectively curbing the trade union movement. The so-called collective common sense, which according to some people was a characteristic of the social partnership, was thus replaced by the employers by an interest-based struggle which was just as much based on common sense. The compromise proposal from the German trade unions was rejected (in April 1996). The employers and Helmut Kohl’s Conservative government then launched attacks on trade union rights as well as on social security (including paid sick leave). But it

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was not until Gerhard Schroder’s coalition government between the Social Democrats and the Green Party (1 9 9 8 -2 0 0 5 ) that workers’ rights and social security were exposed to more wide-ranging attacks.6 Worst hit were unemployment insurance and the social safety net. Pensions and disability benefit were also weakened. The rejection of the comprehensive compromise proposal and the attacks on social security led to a reorientation within 1G Metall. The union acknowledged that the situation had changed and that the trade union movement had to find other ways of operating. It now focused more strongly on mobilizing its own members, and active efforts were made to forge alliances with other movements and groups outside the trade unions. Because of this, IG Metall has become one of the most active trade unions within the new social forum movement that has sprung up worldwide since the first World Social Forum was organised in Porto Alegre in Brazil in 2001 (more about this in Chapter 8). After the marked decline in the 1980s, important parts of the trade union movement in Europe started to recover again in the 1990s. The first major victory against the neoliberal offensive was won in France. There militant traditions are stronger, and the class compromise is less institutionalized than, for example, in the Nordic countries. In November and December 1995, workers - especially those in the transport and the public sector - went on strike against the plans of the Alain Juppe government to cut public budgets and undermine the welfare state. Tens of thousands of public employees filled the streets daily in Paris and other major cities in a harsh confrontation. The gigantic demonstrations aroused international attention, and the conflict was in the process of developing into general resistance to neoliberalism and the global offensive of capital. The strike also received massive support from public opinion and was actually on the point of devel­ oping into a general popular revolt when Prime Minister Juppe, after three and a half weeks, gave in and withdrew the major part of his anti-social reform plans, which had incidentally been justified by the need to conform with the EU Maastricht criteria.7 In Italy, Greece and Germany too there were occasional largescale strikes and demonstrations by trade unions during this period,8 but without the trade union movement being able to attain a more offensive position. The situation was made no easier by the fact that the collapse of the social pact also led to a political and ideo­ logical crisis in social democratic parties. With a passivized general membership and an increasingly self-recruited leadership that was

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on its way into the elite of society, these parties quickly adapted to the prevailing neoliberal agenda, if in a slightly milder form than the original right-wing version.9 T H E EM P LO Y E R S FA ILED IN N O R W A Y

In Norway too, employers were clearly inspired by the failure of the strikes in the United States and the United Kingdom and by the new political conjuncture. During the collective agreement negotia­ tions in 1986, the trade unions were to be put in their place. The Norwegian Employers’ Association (NAF) deliberately tried to provoke a strike, in order to respond with a large-scale lockout.10 The objective was to remove a quite strong and indexed minimum wage guarantee and thereby open up the possibility of greater wage differences. However, the lockout ended with a formidable defeat for the NAF. They had misjudged the actual balance of power in Norway - and not least the lack of unity in their own ranks. Furthermore, the employers were rather late in attempting to inflict a defeat on the trade unions. Three years previously, in 1983, unemployment had risen to 80,000, which was quite high by Norwegian standards. The year after, however, the Conservative government removed credit control. This led to a massive increase in loans from banks, and to a partially artificial increase in economic activity, which in turn led to a boom and practically full employment prior to the lockout in 1986. Such a situation, as is well known, is not particularly favourable for employers seeking confrontation. That much of this artificial boom later collapsed, when the effects of the government’s deregulation were felt with full force through a debt and bank crisis in 1990, is another matter. By that time, the defeat of the employers in the lockout was already a fact. Later, NAF and its successor, the Confederation of Norwegian Enterprise (NHO), have on several occasions included in their programme the wish to weaken the position of the trade unions, among other things by a greater degree of local and individual wage formation (Berntsen, 2 0 0 7 , pp. 241 ff.). However, the defeat of 1986 has scared them from going all out for full confrontation on this issue. Nor was the need to do so as strong as time passed, since the Norwegian Confederation of Trade Unions, from 1992 to the turn of the century, itself initiated a tripartite cooperation on income policy, with moderate wage increases. In addition, taxation on dividends was removed completely by Gro Harlem Brundtland’s Social Democratic government. Combined, these measures meant

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that both shareholders and business leaders could increase their income and wealth considerably in the succeeding years. Furthermore, a well-oiled economy, with decreasing unemploy­ ment, contributed to wage increases which reduced the level of conflict in the labour market. The raw material-based Norwegian economy did well in the international boom of capitalism of the late 1990s and the first years of the new century. Combined with a high-tech oil-related supply industry that can deal with a high wage level, this contributed considerably to mitigating a latent conflict of interests. On the periphery of the Norwegian labour market, however, social dumping, systematic violation of labour laws and harsh exploitation of workers in low-paid service industries are on the increase. The at times somewhat compliant attitude of the trade union movement has probably also contributed to putting a damper on aggression from the employers - among other things, by the LO accepting some increase in flexibility and that wage formation should be subject to the competitiveness of export industry. In that way, the policy of consensus has in a way had a prolonged life in Norway, even though the balance of power there too has shifted towards capital, mainly because capital control and other important market regula­ tions have been removed. This has given the employers a strong card, both tactically and strategically, that can be played when dealing with trade unions. The indications are therefore that employers in Norway are simply waiting for an occasion when they can put the screws on tighter. Many of them are especially working hard at the moment to get in place a government dominated by the Conservatives and the right-wing Progress Party at the next general election. There is, at any rate, little to indicate that it is a more advanced, collective common sense of the Nordic model that contributes to the more favourable situation in Norway. We can get this confirmed by visiting a neighbouring Scandinavian country, Sweden. There, formerly cooperative employers have demonstrated both greater strength and a more aggressive attitude towards the trade unions. Among other things, they openly declared in 1992 that they had broken with the social partnership model, while they withdrew overnight from a large number of tripartite councils and committees in Swedish society. They subsequently refused central negotiations with the LO, preferring negotiations at business or company level. The governments, both Social Democratic and right-wing, have helped to privatize, to weaken and to restructure the welfare state - to a far greater extent than has been the case in the other Nordic countries.

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T H E U N D E R M IN IN G O F D E M O C R A C Y

To be able to market-orient and weaken the welfare state to a significant extent, and to make bottom-up redistribution possible, it is not sufficient, however, to weaken the strongest buttress of the welfare state in society, the trade unions. Democracy must also be weakened, as most of the institutions and services of the welfare state have considerable support in the population. There has never been a popular demand for privatizations and cuts. Rather the contrary - such measures are often met with resistance from large groups in society. It is strong economic interests, along with their fellow players in political parties and elites, that have been the driving forces behind attacks on and market orientation of the welfare state. There are several examples where market-oriented governments that want to reduce the public sector have been unsuccessful, or only partially successful, because of popular resistance and voter reactions.11 Democratic elections and decision-making processes can therefore constitute important barriers to attacks by market forces on social security and public services. Pierson (1994) points out that cuts to social security in the United States and the United Kingdom came in particular where the groups involved were weak or could easily be demobilized and manipulated. Lindert (2004) concludes that the means of democracy, especially universal suffrage, have been crucial both to the introduction and the level of social support schemes and important welfare services, and to preventing their being cut back. The possibility for voters to use their votes to stem or prevent cuts or a weakening of public welfare is, however, dependent on the power the popularly elected bodies have to govern the economy, and of course, that there are political parties prepared to resist such a policy. We can therefore expect that those who want to reduce the public sector and dismantle public welfare will have a certain interest in weakening democracy - by draining it of content, or by getting round democratic processes. This might sound dramatic, but, as we shall see below, such processes have taken place over a considerable time. Much of the debate about the relation between the economy and policy has to do with precisely this - how much policy, in the sense of democratic decisions, is able to control or influence what is most important for the development of society: in other words, the economy. Business leaders are regularly warning against political interference

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with industry. Statements made by the Norwegian multibillionaire Stein Erik Hagen in December 2 0 0 7 can serve as a good example: ‘Businessmen ought to stay out of politics and keep shop instead. And politicians ought to stay out of the shop. That’s best for all concerned’ (Dagens Nceringsliv, December 29, 2007). This is precisely about draining democracy of content. Hagen’s assertion that ‘Businessmen ought to stay out of politics’ is, however, hard to take seriously, since he himself has poured millions of Norwegian kroner into the parties of the political Right during recent general election campaigns. The statement illus­ trates well that increased market power does not dampen political ambitions. Rather the contrary - more power whets the appetite. His views can scarcely be interpreted in any other way, when after 25 years of neoliberal development and a large-scale shift of power from politics to the market - a policy from which he has personally made a fortune - in the same interview he stated that things are now ‘worse in this country than ever before’ and that we are ‘moving in a socialist direction, as in former Eastern Europe’. One of the most widespread agents of neoliberalism, the British weekly periodical the Econom ist , was quick to welcome the increasing impotence of politicians under neoliberalism when, in an editorial, it made this clear: Financial markets have become judge and jury of economic policy­ making. ... the effect [on governments] of losing some of it [their power] has been beneficial all round: the markets provide a healthy discipline which in the long term will encourage better economic policies and performance. ... the power of governments over their economies has traditionally been based on the ability to tax, the ability to print money and the ability to borrow. A liberalised and globalised capital market limits the abuse of all three powers. If a government tries to tax business too heavily, firms will simply shift their production elsewhere. Likewise, if a government borrow recklessly or allows inflation to creep up, investors will seek refuge in another currency. For workers, companies and savers, a govern­ ment’s loss of such powers is reason for cheer, not fear: all that is being lost is the power to pursue damaging policies, and practice economic deception by letting inflation rip. ... Wise governments learn to work with markets, not against them. ( Econom ist , October 7, 1995, pp. 6 and 38) Such anti-democratic tendencies are nothing new in history, and it is

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worth taking them seriously. It is, however, not all that often we see so open a tribute being paid to the impotence of politics, and thus democracy, as presented here, and it is clearly met with sympathy by parts of the elite in society. One of the main conclusions of the government-initiated Power and Democracy project (concluded in 2003) in Norway was precisely that democracy has been weakened at the expense of increased market power and increasing judicialization. ‘All in all, more power has been transferred to bodies and actors that are not politically responsible and cannot be subject to an election,’ the project leader concludes, for example, in a newspaper debate (Dagens Nceringsliv, March 1, 2004). The same problem was also described in the political platform of the Red-Green government that won the election in Norway in 2005: Democracy is under pressure. Decisions are increasingly being transferred to actors in the markets, to financially powerful private individuals, organizations, bureaucrats and others who are not responsible to the people in elections. This leads to dimin­ ishing trust, a feeling of powerlessness and to less involvement and participation by people in general in issues related to society. <www.regjeringen.no/upload/kilde/srnk/rap/2005/0001/ddd/ pdfv/260512-regjeringsplatform.pdf, s. 2 8 > (accessed August 23, 2011) The neoliberal Professor Rune Sorensen at BI, the Norwegian School of Management, however, tends to follow the same direction as the Econom ist in an article in which he polemicizes against the Power and Democracy project’s conclusions: In an individual-oriented perspective, however, a number of the fragmentation phenomena can be conceived as democratic gains, precisely because they remove the possibility for direct popularly elected control or limit the political agenda. ... Furthermore, the sale of shares in public enterprises can be assumed to involve a disciplining of political governance, because one can less easily give orders to companies in individual cases. (Sorensen, 2 0 0 4 , cited in Eilertsen, 2 0 0 5 , p. 4) Thus, in the more extreme versions of neoliberal ideology, the free choice of individuals (consumers) on the market is the prime expres­ sion of democracy. Popularly elected, representative democracy must

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then be excluded or limited in order to promote - yes, democracy! To what extent popularly elected, representative democracy must be limited before democracy in this way is made perfect remains unsaid, but the process is certainly underway. In the following, I will briefly outline three important tenden­ cies that contribute to weakening and undermining democracy in society: • political withdrawal via deregulation and privatization • political prevention via new forms of organization and management • political bypassing via supranational agreements and institutions. The first two tendencies represent a retreat since these political measures restrict the area for democratic decisions. The lastmentioned means that controls avoid (or rather bypass) national, democratic decision-making bodies and processes. These become inoperative. This takes place when important decisions for social development are imposed from the outside, for instance via legisla­ tion from the European Union or the EEA, or as a result of secret negotiations at the W TO . D E R E G U L A T IO N A N D P R IV A T IZ A T IO N

A great many of the regulations we have in present-day society have been introduced as a result of trade union and social struggles to protect workers, women, children and the environment against the excesses of free-market capitalism. The major social advances we experienced in the heyday of the welfare state were imple­ mented precisely through political regulations. Workers secured their interests and fought to attain increased power in society via regulations and via increased public ownership. To regulate, in this context, means to introduce laws and rules which limit the influence of capital and market forces, and which also give increased power both to democratically elected bodies and to workers and their organizations. Deregulation and market liberalization therefore lead to the opposite - to the abolition of such tools for democratic influence, social security and trade union rights. Decisions are transferred from the political system to the market. This gives increased power to capitalists and multinational companies. The removal of capital control is the one decision that has meant most for the shift of power relations in recent

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decades. It has strengthened the power of capital in relation to both governments and the trade union movement. In every country, capital is needed for investments and economic development. When capital is privately owned, and the movement of capital cannot be limited by political legislation (through capital control), there is only one way left to attract investments: it must be made sufficiently attractive for capital to stay in the country preferably a bit more attractive than in other countries. Thus, the possibility for governing the national economy in a democratic way is restricted. First, this gives capitalists increased power over policy, since they can threaten to relocate existing activities, or at least make future investments in other countries if their demands are not met. This is what are often referred to as exit strategies. In this way, financial capital in particular can sanction policy. No government dare challenge financial capital in such a way that it results in capital flight. So politicians often state that their budgets and proposals must satisfy the expectations of the financial markets. This is one way in which power is shifted from democratically elected bodies to financial capital. Second, it gives employers increased power in relation to the trade union movement. Threats of relocation, which can be more or less real, are used to reduce wage demands and force through restructuring, increased flexibility, weakened labour legislation, or other unpopular decisions. It was, for example, in this way that the multinational company Kraft Foods pressed the workers at the chocolate factory Freia in Oslo a few years ago to accept night shifts. If their proposal was turned down, the company said, it would rather invest in other European countries. Third, it leads to increased tax competition between countries. Governments are pressed to reduce the burden of taxes and dues on companies in order to improve their conditions and make things more attractive for investors. Multinational companies exert such pressure in all countries, something which leads to a downward taxation spiral. All in all, it means that capital contributes less and less to the common purse. An important source of finance for the public sector - for the welfare state - is, in other words, gradually drying up. Political room to manoeuvre is restricted and public services are undermined. In this way, the fight for competitiveness develops into being not just one between companies and products, but also one between social systems. As Table 4 .2 shows, countries fall into distinctly different groups

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when it comes to the welfare model. The Anglo-American countries have a tax level of 2 8 -3 5 per cent, the continental countries mainly have an intermediate level, while the Nordic countries have 4 5 -5 0 per cent - with the exception of Norway, which has broken away from the Nordic community in this area and come down to the continental level. It is also interesting to note that the countries that have experi­ enced the strongest attacks on their public welfare schemes over the last couple of decades, such as the United Kingdom, New Zealand and Australia, are also among the countries that, as their point of departure, spend the lowest proportion of their resources on social security and public services. In other words, the attacks are strongest where the welfare state is weakest. It is in other words not the size of the welfare state alone that unleashes the attacks. The indication is rather that it is power relations, the balance of power between the various interest groups in society, that is the deciding factor. The attacks are strongest where support for the welfare state is weakest, not necessarily where the costs are greatest. The criticism of the costly welfare state emanated not from the heavily burdened OECD welfare states of the Continental and Nordic traditions ... but rather from the ‘less advanced’ or ‘less expensive’ Western liberal welfare states such as the UK and the

Table 4.2 Annual average tax level as a percentage of GNP in OECD countries, 1990-2002 High taxation Sweden Denmark Finland Belgium France

Medium to low taxation 50.5 49.0 46.2 44.9 43.4

High to medium taxation Austria Netherlands Italy Norway Germany

Canada United Kingdom New Zealand Greece Portugal Spain

35.7 35.5 35.4 34.0 33.6 33.0

Low taxation 42.3 42.2 42.1 41.9 36.5

Source: Brooks and Hwong (2006, p. 12).

Ireland Australia Switzerland United States Japan

32.6 29.8 28.0 28.0 26.8

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Table 4.3 Income and taxation for Norwegian divisions of multinational companies, 2002 Company

Operating receipts (N O K)

Taxation

Shell Canal Digital GlaxoSmithKline Findus Norge Alcatel Norway

4.4 0.9 0.8 0.6 0.6

0 0 0 0 0

Source:

M orgenbladet

billion billion billion billion billion

(April 23-29, 2004).

USA. The OECD legitimized the criticism and scepticism through the wide-ranging report The Welfare State in Crisis. The book promoted strongly the strategy of deregulation, outsourcing instead of in-house provision of welfare services, marketdriven solutions in the public sector, and contracting as a new management tool. (Veggeland 2 0 0 7 , p. 49) The tax debate does not only have to do with how much tax is to be paid, it is also concerned with who is to pay it. It is a well-known phenomenon that the most expensive welfare models are financed via high, progressive taxation on labour, as well as to an increasing extent via indirect taxes that are actually regressive. Corporate taxes are not higher than in other comparable countries: in the Nordic countries, for example, they range between 25 and 28 per cent (OECD, <www.oecd.org/dataoecd/26/56/33717459.xls>, accessed August 2 3 , 2011). The OECD average is actually somewhat higher (on 20 1 0 figures). Furthermore, large multinational companies have great possibilities for avoiding taxation. It can therefore be inter­ esting to see what the multinational companies pay in corporate tax in Norway. To what extent are they suffering under the pressure of the specifically Norwegian, brutal tax levels , as business leaders and right-wing politicians like to call them? From articles in the weekly newspaper M orgenbladet in spring 2 0 0 4 we gained an overview of what a number of the multinational companies’ divisions in Norway paid in tax. The results are shown in Table 4.3. The burden of taxation seems to be bearable! Similar investigations in Denmark have given similar results.12 The free movement of capital across borders has, on such evidence, considerable economic consequences. The rapid movements of

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capital, with frequent changes of ownership, also lead to shifts in power relations in companies. The Swedish trade union for municipal employees experienced some years ago what it can mean when both companies and trade unions become victims of swift money transfers by the multinational companies. The British company Stagecoach had taken over one of the largest bus companies in Sweden, Swebus. Over a couple of years, the trade union made energetic efforts to get in place a European Works Council within Stagecoach - in accord­ ance with the EU directive. After this eventually succeeded and the first meeting had been held, Stagecoach sold its stake in Swebus, which meant that the union had to start from scratch once more. FO R M S O F O R G A N IZ A T IO N A N D M A N A G E M E N T

The public sector has undergone comprehensive restructuring over the past decades - more than the private sector, in fact. A Norwegian survey in 2 0 0 7 showed that many more of those employed by the state than in the private and municipal sector had been through organizational changes, rationalization or efficiency drives, down­ sizing, outsourcing or closures. O f all those asked, 47 per cent had experienced internal organizational changes, whereas the figure for state employees was no less than 61 per cent. Corresponding figures for rationalization and efficiency drives were 37 per cent on average and 50 per cent for those employed in the state sector (Braten, Andersen and Svalund, 2 008). The choice of forms of organization and management in the public sector is of crucial importance for democratic government and control. By changing public undertakings into joint-stock companies and through privatization, for example, democratic bodies are cut off from direct influence.13 It has been a declared political objective for politicians from the right, the centre and social democratic parties alike to keep politicians at arm’s length from public enterprises. In addition, the public sector has been presented as meaninglessly bureaucratic, laborious, rigid and lacking incentives for the employees to make an extra effort. A particularly British phenomenon (also much used in Ireland) is the use of so-called quangos (quasi-autonomous non-governmental organizations). These are bodies, or committees, set up by the government, but formally not a part of the state. They can be assigned to govern everything from local schools to state enterprises. The use of these bodies, with their arm’s length from politicians, increased sharply after Thatcher came to power in 1979. Hundreds

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of quangos have governed large sections of the public sector in the United Kingdom. Their boards are characterized by a heavy prepon­ derance of private business leaders. Only some of these bodies are subject to public audits. The quangos thus represent a de-democratizing of government, reduced transparency and accountability, and a weakening of control as to how public means are spent. They have constantly been the subject of debate in the United Kingdom, and yet no change in this tendency could be noted when Tony Blair came to power in 1997. They carried on being used under New Labour’s third way, like so many other of Thatcherism’s neoliberal reforms. The same happened with the so-called New Public Management (NPM) theories and methods, which within a short space of time conquered the hearts and minds of bureaucrats and politicians who were ensnared by the neoliberal rhetoric. The concept was launched by the British political scientist Christopher Hood, who today is a professor at Oxford University. He launched the term NPM in an article in 1991 (see Hood 1991), in which he also introduced the interpretation of the concept that has since been generally accepted: NPM is not a cohesive theory, but a cluster of reforms that have been introduced in the public sector since the 1980s. The reforms lead by stages to the public sector becoming as similar as possible to the private sector, thereby paving the way for further privatization and contracting-out. These theories about management and organization in the public sector originally came from the Anglo-American countries, and they became an important part of the neoliberal offensive. The German professor Wolfgang Dreschler14 gives a very concise description of the phenomenon: NPM is the transfer of business and market principles and management techniques from the private into the public sector, symbiotic with and based on a neoliberal understanding of state and economy. The goal, therefore, is a slim, reduced, minimal state in which any public activity is decreased and, if at all, exercised according to business principles of efficiency. NPM is based on the understanding that all human behavior is always motivated by self-interest and, specifically, profit maximiza­ tion. ... [I]t shares with STE [standard textbook economics] the quantification myth, i.e. that everything relevant can be quanti­ fied; qualitative judgements are not necessary It is popularly denoted by concepts such as project management, flat hierarchies,

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customer orientation, abolition of career civil service, depolitization, total quality management, and contracting-out. NPM comes from Anglo-America, and it was strongly pushed by most of the international finance institutions (IFIs) such as the World Bank and the IMF. It originates from the 1980s with their dominance of neoliberal governments (especially Thatcher and Reagan) and the perceived crisis of the welfare state, but it came to full fruition in the early 1990s. NPM is part of the neoclas­ sical economic imperialism within the social sciences, i.e. the tendency to approach all questions with neoclassical economic methods. (Dreschler, 2005) There are two important driving forces behind this tendency. First, the multinational companies were pressing for new markets and investment possibilities, new areas where they could get a return on their investments. The idea was that if the public sector resembled the private as much as possible, it would be easier for private companies to take over large parts of the services in municipalities and the state: health, education, care, energy, water and so on. The concrete market reforms are often introduced in stages so as to avoid too violent protests from workers and inhabitants. Second, those behind these reforms were of the opinion that increased competition combined with certain management methods from the private sector was best, quite independently of whether this could be justified objectively. It was a purely ideological point of view, in other words. The reforms have consequently been accompanied by much well-meaning rhetoric. The introduction of new accounting systems in the public sector is one of the means used to promote this development, but this has attracted less attention and discussion than the actual forms of organization. These new accounting systems have particularly been used in the United Kingdom, Australia and New Zealand.1>> By introducing private sector accounts into the public sphere a situation is created which structurally fosters increased market orientation and outsourcing, while also facilitating future priva­ tization. This tendency is promoted worldwide via the so-called International Financial Reporting Standards (IFRS). These standards are in turn prepared by the International Accounting Standards Board (IASB). This is a private, so-called independent organization which is dominated by representatives from international consul­ tancy agencies and multinational companies, who of course have

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a strong personal interest in how these accountancy systems are developed. Internationally, experiences with NPM have been much debated - and controversial. In the academic world, the dominant under­ standing now is that these theories are on their way out. Like so many of the armchair theories neoliberal economists brought with them, NPM does not work all that well in practice. One thing the NPM reforms in particular have led to is considerable bureau­ cratization, binding large resources to competitive tendering and purchaser-provider processes. Internally in the organizations, we have seen the introduction of reporting regimes which swallow up much of the time employees should have used to carry out their primary tasks. Dreschler (2005) even goes so far as to say that ‘[w]e have no empirical evidence that NPM reforms have led to any productivity increase or welfare maximization’. In spite of this, we are seeing public reforms still very much being implemented according to NPM models. State bureaucrats who were trained in these theories and systems, politicians still under the influence of the neoliberal hegemony and strong economic interests still wishing to expand into the public sector all make sure of this. Workers are subjected to ever stricter control from above, and the work environment is ruined by these reforms (more about this in Chapter 6), while democratic control of public services and institutions is weakened. S U P R A N A T IO N A L A G R E E M E N T S A N D IN S T IT U T IO N S

Democratic bodies at the local and national level constitute barriers for the global offensive of capital. The democratic processes are time-consuming, or in other words inefficient, it is said, and they often create a ‘misplaced’ resistance to privatization and market orientation. Supranational bodies with weak democratic anchorage, a lack of public transparency, secret negotiations and unclear accountability are therefore acquiring an increasingly important role as attractive alternatives for international capital interests and their governments. Political decisions of vital importance for the develop­ ment of society are therefore being taken to an increasing extent by regional and international bodies - without the democratic processes that include debate by an informed public, public consultations and political majority decisions. We have previously mentioned the role of the World Bank and IMF. Despite regular self-critical reports and statements that they

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have changed their direction, these institutions continue to press for deregulation and privatization (Bull et al., 2006). They conceal critical reports (Broad, 2007) and use economic pressure, in the form of conditionalities when giving loans, in order to force their policy through. Many Latin American countries paid off their loans and declared that they no longer wanted to have anything to do with these institutions. From 2 0 0 5 to 2 0 0 8 , unpaid loans to Latin America dropped from 80 per cent to 1 per cent of the IM F’s total loan portfolio. Several Latin American countries are in the process of establishing their own organization of cooperation, ALBA,16 a common trade currency, SUCRE, and their own regional development bank, Banco del Sur.17 The IM F and the World Bank had for a long time suffered a legitimacy crisis, and both institutions had increasing problems in finding borrowers for their funds (Bello, 2 0 0 6 ). T h is spring, the IM F total loan book was less than 10 per cent of what it was just four years earlier, causing it financial difficulties and to look into cutting back on staff,’ the British newspaper the Guardian wrote in its editorial (on October 2 9 , 2 0 0 8 ). Many people thought that the financial crisis would further undermine the legitimacy of the inter­ national financial institutions, since it was precisely the policy that these institutions had prescribed that had led to the worst crisis since the 1930s. However, that was not what happened. Financial capital was saved and, because of a lack of counter-forces and alternatives from the Left, it is now actually dictating the way out of the crisis. Particularly in Europe, this has led to a policy of massive cuts that are deepening the crisis for most people. At the same time, Western governments have seized the chance to revive the role of the IMF as a lender to crisis-ridden governments and executor of brutal austerity policies. In Europe, the European Union and the EEA seem to be the most important supranational institutions that are contributing to de­ democratization. It is widely acknowledged that the European Union as an institution suffers from an enormous democratic deficit. The elected parliament has limited power, even after the Lisbon Treaty granted slightly more autonomy, while the least democratic of all EU governing bodies, the Commission, stands out as the most powerful one. Via the economic and monetary union of the European Union (EM U),18 the de-democratization of economic policy was to a great extent institutionalized, while financial capital strengthened its hold through the establishment of the European Central Bank which

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is out of democratic control. In one area after the other, further­ more, decisions are being taken that restrict the political room to manoeuvre at the national and local level. An example from recent years can illustrate this. In 2008, the European Union approved a new regulation19 which, with a few exceptions, requires member countries to use tenders for public transport contracts. This meant that local communities were deprived of the right to decide for themselves how they wanted to organize their public transport. The same had previously been done in relation to energy supply, public procurement, the use of public subsidies and so on. The free movement of capital, the freedom of establishment and EU competition rules have priority over all other considerations - including the right of local communities to determine for themselves how to organize their affairs. The undemocratic nature of the European Union as an institution was also eloquently illustrated by the way it handled the rejection of its proposed constitution in referenda in France and the Netherlands (2005). Rather than accept the vote of the people, the constitution was minimally altered and renamed the Lisbon Treaty before a new round of ratification was started - without risking the judgement of the people via a referendum this time around. Because the Irish constitution has a democratic insistence on letting all such decisions be put to the people, this failed once more, however. Despite this, the conclusion was not that the Lisbon Treaty had been rejected, as the European Union’s own rules stipulated further ways of bypassing democracy were sought, as has been done on a number of previous occasions when people in various countries have ‘voted wrongly’. The same applied this time, and a new refer­ endum in autumn 2 0 0 9 , with massive Yes propaganda, managed to make the Irish people give up and ‘vote correctly’. Alongside the European Union and the EEA, it is the W TO that at present is the most important organization for supranational governing. It too however has had its legitimacy weakened after the repeated collapse of the present round of negotiations (the so-called Doha round, after the name of the capital of Qatar, where the negotiations on a new agreement were initiated at the Ministerial Conference in 2001). W TO is not just about trade, as its name might suggest. The organization regulates economic relations that reach far beyond trade policy - and always in accordance with the interests of multinational companies. One of the prime aims of the W TO is to remove trade barriers. In practice, however, it appears that W TO is

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extremely selective when it comes to which trade barriers it seeks to remove. Intellectual property rights, for example, are important trade barriers, in addition to the fact that they hinder technological transfer to developing countries. W TO does not, however, seek to remove such barriers. On the contrary, it fights for extensive protec­ tion of such rights, in accordance with the interests of multinational companies. Furthermore, strong forces have for several years pressed for a further expansion of the W TO mandate. Investments and public procurement are two of the areas that have been hotly debated, something which, among other things, contributed to the collapse of the Ministerial Conference in Cancun in Mexico in autumn 2003. As demonstrated in the previous chapter, the search by financial capital for profitable investments contributes to demands for the deregulation and privatization of public services. Such demands often meet with resistance from people at the local and national level. Not least because of this, strong economic interests seek to deregulate these services via agreements at the international level. The W TO ’s General Agreement on Trade in Services (GATS) plays a key role in this connection. As its point of departure, the agreement contains an obligation to gradually liberalize trade in services via successive rounds of nego­ tiations.20 If we are to take the text of the agreement seriously, it is thus not a question of if but when public services are to be deregu­ lated and market-oriented - and thereby opened up to multinational companies and free competition via GATS.21 If a government should wish to reverse such a deregulation, the agreement makes this virtually impossible.22 Seen as such, the agreement can be compared to a one-way street with no stopping. In both the United States and the European Union, business interests in the services sector have played a key role in the develop­ ment of GATS. Both the American Coalition of Service Industries (CSI) and the European Services Forum (ESF)23 have actively lobbied in the W TO negotiation process. They have not only consulted but also helped draw up demands and proposals in the negotiations just as business interests in all countries are involved in formulating the national requests (which are also kept secret from the people). Education is one of the largest - and thus most attractive - areas in the public sector that private interests want to get their hands on. This sector has therefore naturally also been in focus during the GATS negotiations. The aim is to open up the education sector to international competition and freedom of establishment, or in

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other words to make education a commodity in a global market. An informal interest group (contact group or friends group, as it is called in the W TO) with the revealing name the Norway Group, led this work for a number of years. Norway helped run this group, something its people were not told about by the then centre-right government but found out from an Australian government official. When the Red-Green government came to power in 2005, however, this activity came to an end. For a long time, Norway has been an international leader in getting education included in the W TO ’s free-trade agreement. As early as 1994, Gro Harlem Brundtland’s Social Democratic minority government, with Gudmund Hernes as minister of education, had the entire Norwegian primary and secondary education sector included in GATS. Only four other countries went as far as Norway: the Czech Republic, Slovakia, Sierra Leone and Lesotho. Until now, this has not had any particular consequences, since as yet there is no well-developed international market in primary and secondary education. All negotiations in the W TO are conducted in secrecy. We therefore run the risk that public welfare services, for which large parts of the population have fought for decades, will covertly be opened to international competition by various governments via GATS. The procedure is also such that it is almost impossible to prevent - or alter - the final W TO agreement when it is presented to parliament in due course. For then it is ‘take it or leave it’ - the agreement has to be either approved or rejected in full. Who dares take the responsibility for that - after years of negotiations? Via all these international institutions and agreements, in other words, an institutionalization of neoliberalism as the global economic system is taking place. The consequent de-democratization of society is a very dangerous and wide-ranging process. T H E M Y TH O F T H E P O W E R L E S S STA TE

A common assumption among critics of the neoliberal offensive is that the increasing power of the market has led to a weakened state. It is a likely conclusion, since we can easily observe that government regulation of the market has been weakened. But is the theory of the powerless state correct? Have we not in recent years - via the financial crisis that started in 2 0 0 7 - had hands-on instruction in how states have intervened to save banks, financial institutions, profit and capitalists? Maybe even capitalism itself?

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A number of critics have over the last few years rejected the myth that the state is being weakened as a result of market expansion.24 It is actually possible to claim the opposite: that capital now - more than ever before - is dependent on the state to achieve maximum profit in a global market. It is the states that are carrying out further liberalization and privatization. It is the states that are negotiating an increasing number of regional and international agreements in favour of the multinational companies and financial institutions. The states have not abdicated to capital forces. On the contrary, they have to an ever-increasing extent become tools in the interest of capital. The state, then, has not become powerless. Rather, it has changed character. We must distinguish between the various roles of the state - the state as an arena for welfare and democratic processes on the one hand, and the state as a power apparatus and guarantor of the existing economic order on the other. It is the latter role that has gradually been strengthened - and changed - over the past couple of decades, while the former has been weakened. The state is being placed under increasing pressure by more intense international market competition and by the free movement of capital across national borders. The fact that it is being exposed to increased pressure and system coercion does not of itself mean that it is weakened. It can just as well lead to it becoming stronger - but as an instrument for the economic interests that have strengthened its position. As demonstrated above, there is only one way for a country to attract investments when capital control has been abolished, and that is to establish a capital-friendly environment. To prevent capital flight and economic stagnation, the state makes every effort to introduce such a regime. This can of course meet with resis­ tance from other interested parties, such as workers, environmental interests, and people in favour of a high level of taxation in order to safeguard their social security. A strong state is then ‘needed’ to force through cuts and a capital-friendly regime. When capital control and other important market regulations were abolished, the measures the state can use in order to defend the national economy changed. We still have a strong, intervening state, but to an increasing extent on the premises of capital and the market. This mainly applies, however, to the economically dominant countries. States in developing countries in particular have a completely different, subordinate position in the international power structure. In such countries we find that the state is weakened

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because the market is strengthened and because the states are not strong enough to promote the interests of their own national capital in the face of the dominant economic centres. With increased market power and an ever increasing number of decisions made at the supranational level, we thus arrive at a situation where the state is de-democratized, at the same time as it is forging ever stronger links with the major companies and employers’ associations. The nature of the state ultimately reflects the balance of power between the dominant classes in society. Trade unions and other popular organizations are driven onto the defensive. The political arm of the labour movement is in a deep political and ideological crisis. With the increased competition that results from the free movement of capital and ever more global markets, states are more and more becoming instruments for ensuring the competitiveness of national capital. The global competition is not restricted to the price of commodi­ ties and services from the individual companies. In a deregulated, borderless capitalism the total economic and social relations in a country play an ever more important role for its competitiveness. A country therefore competes not only on labour costs and produc­ tivity but to an increasing extent on broader social costs - in other words, on the level of the welfare state.25 A country can strengthen its competitiveness by reducing total labour costs, including public social costs. This also means that if the international struggle for markets and resources becomes ever sharper, the attacks by the state on social security and services will become stronger. Since there is no popular support for such a policy, this can mean that the state increas­ ingly develops in a more authoritarian direction. This can lead to increasing attacks on fundamental trade union rights, such as the right to organize, negotiate and take industrial action. This is what we are witnessing within the European Union at present. In 2 0 0 0 , the European Union launched its Lisbon strategy, the objective being to become the most competitive, knowledgebased economy in the world before 2010. Without expressing it openly, this meant that the European Union was to become more competitive than the United States (and be increasingly able to compete with China, as that country began to climb the high-tech ladder). Now that the ten years have passed, without the European Union being anywhere near achieving such a target, desperation is growing among the European political and economic elites, which are losing ground.

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In every advanced economy - the United States as well as the European Union - the service sector now takes up just over twothirds of the economy. The predominant sections of this sector are labour-intensive: in other words, labour costs account for most of the expenses. If competitiveness is to be enhanced, in other words, these labour costs have to come down - as far as the European Union is concerned, to roughly the level in the United States. Efforts are made to achieve this by exerting formidable pressure on making the labour market more flexible (at present the European Union is attempting to make this sellable by using the concept of flexicurity26) and by reducing total labour costs. For this purpose, the low wage rates of the new member states in Central and Eastern Europe are made use of to carry out comprehensive social dumping in the West. In addition, social security costs are under attack, for example via cuts in pensions, increased user fees and the weakening of other welfare arrangements. The four new judgments passed in 2 0 0 7 -0 8 at the European Court of Justice (see Chapter 6), which without exception have limited the legal possibilities for trade unions to take industrial action, must also be seen in this context. It is not, then, only national states that resort to more repressive measures in this situation. The supranational EU state is moving in the same direction - and probably to a greater extent, since its democratic anchoring is much weaker. The present debt crisis, especially in Europe, can accelerate this tendency dramatically. Payment is now being demanded for the crisis packages that were approved in order to save the financial markets - not by financial capital, but by the population. This calls for an enormous redistribution of wealth in society and it can hardly be implemented without a further weakening of the trade union movement. This means we can fear the emergence of more authori­ tarian regimes with stronger attacks on and suppression of the trade unions than before, and with the defence of private property and capital power as its top priorities. The question is whether the trade unions are prepared for this. To base ourselves on collective common sense, the social part­ nership ideology and so-called social dialogue between the social partners in such a situation, when employers are making head-on attacks, would at any rate be a risky exercise.

5

THE ATTACKS At the time of writing, the battle for the welfare state is raging throughout the European continent - and in other parts of the world as well. The financial crisis and the subsequent debt crisis have dramatically changed the situation. Now it is not only attacks on welfare services via gradual cuts or isolated privatizations. In a number of countries it is beginning to look more like a regular massacre of public welfare systems. If nothing else, this provides us with an object lesson in how the new power relations in Europe are turning the welfare state into a highly vulnerable victim. Financial institutions and the rich are spared, while public sector wages and pensions, social safety nets and welfare arrangements are being attacked on a broad front. We will discuss this in more detail later. The attacks on the welfare state did not begin with the financial crisis, and it may prove useful to take a closer look at how the neoliberal offensive has changed important aspects of our society over the past couple of decades. First, though, a few words about what a weakening of the welfare state means. Its form and content, as I have shown, are a result of the struggle between different interest groups in society. During the neoliberal era from about 1980 onwards, power relations have dramatically changed in favour of increased market power. The attacks on welfare services are an inevitable result of this shift in the balance of power. The welfare state has been systematically weakened and under­ mined by cuts, privatizations and restructuring. The potential of the new power relations has not been exhausted, however. Institutional inertia, the possibility of influencing politics via the use of the popular vote and public resistance have hampered this phasing-out process. Despite this, the financial and economic crises are now being exploited by the economic and political elites as an excuse to intensify their attacks. The fact that the power base of the welfare state has been weakened does not mean that we risk ending up in a situation similar to what existed before the welfare state emerged, when social expenditure was a much smaller proportion of the GDP than

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it is today (social transfers made up well under 5 per cent of the GDP in all OECD countries right up until the Second World War - Lindert 2 0 0 4 , p. 11 ff). Society has changed a great deal since then; the material welfare of society has increased considerably, and present-day economies and production forms are completely dependent on many of the welfare state services. The undermining of the welfare state is not only reflected in cutbacks, however, but also in tendencies such as increased indi­ vidual responsibility for risks, more authoritarian control, social exclusion, increasing poverty and inequality in society - as well as the increased commodification of labour (Esping-Andersen 1990, p. 35 ff.). Furthermore, the struggle for the welfare state will influence how it is organized and managed, how it is stratified, as well as how the quality and level of services develop - through the level of privatization and competitive tendering, the extent and size of user fees, the transition from universal to means-tested schemes, and so on. With increased market power, many people are also experiencing having less control over their work, more brutalized working conditions, more limited access to decent housing - with an accompanying general increase in social problems. In other words, our understanding of what constitutes a welfare state is crucial for our assessment of its status. Here I intend to base myself on the broad concept of the welfare state outlined in Chapter 2 - a concept that is far more comprehensive than the sum of welfare institutions and expenditures in public budgets. M ost people in our part of the world have a positive attitude to welfare and the welfare state.1 A highly developed welfare state thus becomes identified with a more secure and better society to live in. The welfare state has to do with our fundamental living conditions. It is part of the humanization of society. For most people it has a strongly qualitative dimension. At the same time, we have to take into account that from the very beginning the welfare state has clearly been the result of a social compromise. Its form and content derive from the interest-based struggle in society, and the balance of power between these interests is still decisive for its shaping. The development of the welfare state can thus go in different directions, with increasing expenditure not necessarily meaning an increase in welfare for members of society. When unemployment rises in a country, for example, so does welfare state expenditure, but we can hardly conclude that welfare increases for the people of that country as a result. Unemployment is considered negative - especially by those affected - even though it is compensated for by unemployment benefit.

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The same applies to the exclusion of labour for other reasons. Benefit and pension expenditure for people who have been excluded from the labour market has strongly increased in the Nordic countries over the past 30 years. One reason for this is that more people, via their link to the labour market, have earned pension rights. Many, however, have been pressurized into early retirement because much of the work in society has become increasingly demanding. It hardly qualifies as a blue stamp for society, for a welfare state, that this involuntary exclusion - and the resulting costs for health and pensions - is rapidly increasing. Of course, social benefits reduce negative effects and ensure a certain financial security, but they do not remove the causes of the growing problems. In this connection, it is also important not to confuse prosperity, frequently measured in terms of economic growth and GDP per inhabitant, and welfare. The two can pull in the same direction, but the opposite can equally well be the case. To what extent increased prosperity leads to increased welfare depends both on how the increased prosperity comes about and how it is distributed. The power relations in society are the decisive factor, in other words. There are many indications in present-day society that the price many people have to pay for economic growth - tougher competi­ tion, faster and more frequent reorganizations, a more demanding and brutal working life (see Chapter 6), at the same time as an economic elite is creaming off the best part of this increase in pros­ perity - tends to undermine rather than strengthen welfare - in the sense of the quality of life for large groups.2 Not everything that we define as public welfare services has been unilaterally fought for by the trade union and labour movements and their allies in a battle against reluctant capitalists. By its very nature, the welfare state is double-faced, with many of the welfare state services being absolutely necessary for the economy to function efficiently. This naturally applies to such services as public transport and a rational public administration - but also to education, for example. This is more than ever the case in today’s economy, where large parts of our advanced industries need employees with a high level of competence. Capitalists and employers therefore have a strong interest in there being a highly developed education system. Education is seen as one of the core welfare state services, repre­ senting one of the largest items on public budgets in all highly developed countries. Even if there is considerable agreement about the need for a good education system, this does not prevent the education sector from being the subject of strongly divergent views

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among various groups in society. On a broad front, neoliberals have endeavoured to conquer the education sector - and to a great extent they have succeeded.3 The struggle has not only - and perhaps not mainly - been about how large the grants from public budgets are to be. To what extent education as a welfare institution is weakened or strengthened must therefore also be assessed on the basis of a number of other, qualitative criteria. In other words, we have to look more closely at objectives, organization, content, extent and level. We must ask such questions as: W hat are the effects if private interests, with or without a profit motive, are allowed to run our schools? How are we to secure equal opportunities for pupils from different social backgrounds? W hat qualities is it important to foster in schools, and how should we set about it? Should school content primarily fulfil the needs of the economy, or should it have more comprehensive aims? Peter Sutherland, former director-general of the W TO and chairman of BP, headed a work group in the European Roundtable of Industrialists, which had a clear message: ‘Responsibility for training must be assumed by industry once and for all ... education should be considered as a service to the economy.’ (Kalaftides 2 0 0 1 , p. 27). We ought additionally to ask ourselves what is wrong with schools when they so systematically produce people who are stamped as losers. How should schools react to their values being undermined by dominating tendencies in the outside world - through commercial advertising and the media, through the attempts of elites to line their own pockets, and so on? Developments in these areas are concretely formed through the struggle between the different interests which seek to influence schools. My point here is to underline that welfare institutions can both be attacked and weakened without this being visible in public budgets. The content and the way contradictory interests express themselves should also be taken into consideration. Even if it is not sufficient to measure the welfare state by adding up figures in public budgets, there is nevertheless a tendency to do precisely that. In my view, it is to a great extent such assessments that account for many people - both researchers and politicians in the Nordic countries - crying out ‘The danger’s over!’, since ‘no party with government ambitions dare tamper with’ the welfare state, and ‘most things are now pointing in the right direction’ (see also Chapter 1, page 12). In their highly interesting analyses, Pierson (1994) and Lindert (2004) also conclude that the welfare state has managed extremely

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well to deal with the attacks from the Right, ever since these attacks began around 1980. Popular resistance weakened the attacks in both the United Kingdom and the United States, and it proved difficult to implement a swift, systematic reduction in social benefits.4 Pierson’s conclusion that the welfare state is an island of relative stability would, however, seem to be greatly exaggerated, since he also points out that income differentials have increased strongly in both the countries mentioned. Welfare programmes have on the whole continued, in his opinion, although housing allowances and unemployment insurance have been reduced. Universal programmes have been more exposed than means-tested ones. Cuts came where the affected groups were weak or could easily be demobilized. The trade unions have been weakened in both countries, something that can easily lead to further cutbacks in the future, he emphasises. It is an important lesson that neither Reagan nor Thatcher succeeded in implementing their most drastic plans to swiftly and brutally reduce national social expenditure. That Pierson’s and Lindert’s views are exaggeratedly positive despite this is the result of at least two factors. First, they are coloured by the fact that the implemented cutbacks, which were serious enough, were far from fulfilling the governments’ considerable ambitions to rationalize welfare services. Second, Pierson and Lindert also operate with rela­ tively narrow definitions of the welfare state, where social benefits are mainly used as the main measure. As I have argued above, the quality and content of the welfare state is dependent on far more than that. For example, the comprehensive privatisations, structural changes and anti-union legislation of the Conservatives were of much greater significance for the development of the welfare state than the cuts in social benefits. Third, it is obvious that governments, based on the then balance of power, found it expedient to implement the changes in stages, reform by reform, rather than risk more widespread unrest via a more brutal, or ‘revolutionary’ upheaval. After all, they had the wind behind them. Neoliberalism was in the process of gaining hegemony, both ideologically and as a practical economic policy. An important conclusion we can draw from Pierson’s and Lindert’s accounts, however, is that popular resistance helps. The former makes the important point that establishing public welfare services also contributes to creating one’s own supporters - via the employees and users of such services. Strong union organiza­ tions in the public sector, well-organized groups of users and their supporters among social movements and voluntary organizations

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have therefore been crucial in countering or limiting attacks on public welfare services. We have seen this in many countries. This is naturally an extra source of irritation and a further incentive for the political Right to fight for privatization, competi­ tive tendering and outsourcing. In addition to constantly conquering new areas for capitalist expansion, reducing the number of public employees also becomes an important goal in itself - as a way of weakening support for left-wing political parties. In the following, I will examine more closely how the attacks on and undermining of the welfare state have found expression in some of its central arenas - particularly poverty, social inequality and regarding the pension systems. Since the view exists that the Nordic model has to a great extent been immune to such attacks, I give this special mention. Further, I will identify some of the main features of the massive attacks on the welfare state that are taking place at present, in the wake of the financial crisis and the public debt crisis in Europe. At the end of the chapter, I will sum up the qualitative change the welfare state is experiencing under pressure from new power relations. P O V E R T Y A N D IN C R E A S IN G IN E Q U A L IT Y

The fight against poverty and for social and economic equality has been a key issue in the development of the welfare state. In its heyday, both inequality and poverty were reduced. That the gap between the richest and the poorest has increased dramatically in Western countries over the past decades, and that the number of the poor has risen rapidly, are two of the clearest indications that the social progress of the welfare state is being reversed and that it is being weakened as a social model. Wealth is no longer being redistributed top-down, but bottom-up! This accounts for an important part of the polarization that follows in the wake of the neoliberal offensive. The gap between rich and poor and the number of people below the poverty line have both grown over the past two decades. The increase is widespread, affecting three-quarters of OECD countries. ... Income inequality increased significantly in the early 2000s in Canada, Germany, Norway and the United States. (OECD: <www.oecd.org/dataoecd/48/56/41494435.pdf>, accessed August 23, 2011) It is mainly a question of not absolute but relative poverty in our

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part of the world - in the welfare states.5 Poverty is then defined as an income level that is regarded as unacceptable in relation to the normal living standard in a particular society. The OECD has set the relative poverty line at half the median income,6 while the European Union operates with a definition of 60 per cent of median income. O f the 500 or so million EU inhabitants, 85 million were regarded as poor according to this definition in 2 0 0 7 (in other words, before the financial crisis). This was 17 per cent of the population. There is, however, considerable variation within the EU, with Latvia and Romania heading the list with 26 per cent and 23 per cent poverty respectively. In the United States, the figure is even higher. Child poverty is higher than the average in the population, no less than 20 per cent for the European Union in total (source: Eurostat). The elderly are also harder hit than others. According to Macarov: more than one in three children (4.4 million) [lived] ... in poverty in 1997/98 in the United Kingdom. This figure is based upon a poverty line of 50 percent of the median income. Under the American poverty formula, 20 percent of the children in the United States are poor, followed by (according to their own formulas) those of Australia, Canada and Ireland - some of the most ‘developed’ countries in the world. ... [I]f 60 percent of the average wage is used as the poverty line, then the number of the aged in poverty ranges from 6 percent in the Netherlands and 15 percent in Sweden to 34 percent in the United States and 58 percent in Australia. (Macarov, 2003 pp. 3 0 -1 ) Like Macarov, this tempts us to ask, ‘How is it possible, during a period of unparalleled prosperity, that the richest countries in the world are content to allow ten to fifteen percent of their populations to live in abject poverty?’ (2003, p. 11). Although poverty is still considerable, and increasing, in the rich countries, the most striking tendency over the past 30 years even so is the enormous concentration of prosperity in the social elite. This has reached astronomic dimensions in the United States. Here are some revealing data. In 2 0 0 5 , the income of the 1 per cent richest households was as large as that of the bottom 60 per cent. Property was even more unequally distributed. Here the 1 per cent richest households had more than the bottom 95 per cent (Sklar, 2010). The 74 single individuals who ‘earned’ over US$50 million in 2009 had an average income that year

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of almost $520 million each - or $10 million a week! In total, these 74 persons had as much income as the 19 million lowest paid in the United States (Johnston, 2010). This can hardly be characterized as anything else than a symptom of a sick society. Even though the Western European countries do not have differ­ ences at the extreme US level, the tendency has been the same - those who are poorest are lagging further behind, while the richest 10 per cent in particular have increased their lead. This does not only apply to countries like the United Kingdom and Ireland but also to the more egalitarian Nordic countries. In the United Kingdom, the differences widened particularly rapidly during the 1980s (the Gini coefficient7 increased from approx. 0.27 to 0.37) under Thatcher, since when they have remained at the high level. The poorest 10 per cent have done very badly in the United Kingdom - even during the last decade under a Labour government. In the decade from 1998, their real income actually decreased by 12 per cent, and it only represented 1.3 per cent of the country’s income, while the richest 10 per cent have 31 per cent at their disposal. In addition, the latter have enjoyed much stronger growth in their income than any other group in society during this period. Over the past decade, the richer half of the population has appropriated 80 per cent of the total income increase in the United Kingdom, with half of this going in turn to the 10 per cent richest (The poverty site, <www. poverty.org.uk/09/index.shtml>, accessed August 23, 2011). In their pioneer work The Spirit Level. Why equality is better for everyone (2009), Professors Richard Wilkinson and Kate Pickett have proved that the growing gap between the rich and poor in society has a more widespread negative impact on people’s health and welfare than we might immediately expect. Increasing inequality intensifies various kinds of social problems, and the negative effects do not only hit those at the very bottom of the hierarchy: It has been known for some years that poor health and violence are more common in more unequal societies. However, in the course of our research we became aware that almost all problems which are more common at the bottom of the social ladder are more common in more unequal societies. It is not just ill-health and violence, but also, as we will show ... a host of other social problems. Almost all of them contribute to the widespread concern that modern societies are, despite their affluence, social failures. (Wilkinson and Pickett 2009, p. 18)

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Professor Vicente Navarro (2004) came to a similar conclusion, stating that the increasing differences we are at present witnessing in the world have a highly negative influence on the health and quality of the life of the entire population. He too has shown that it is the inequalities in themselves that create these negative effects. In other words, it is the differences between social groups and individuals and the lack of solidarity the inequalities create. Since neoliberal reforms increase economic and social differences, and social differences in turn create larger social and health-related problems, the conclusion must be that neoliberalism is both a health hazard and socially destructive. P E N S IO N S U N D E R A T T A C K

The pension system is one of the main pillars of the welfare state. It is one of the largest items in state budgets, and its organization and size are crucial for the standard of living of the increasing number of elderly in our societies. For that reason, it comes as no surprise that the new power relations have led to strong attacks on the pension systems in most industrialized countries. In a great many countries, comprehensive cutbacks and restructuring of the pension system have been implemented; in others, reforms are just around the corner. The international finance institutions, the effectively neoliberal think tank the OECD, and the political Right have laid the premises for reforms. An influential report of the World Bank from 1994, Averting the Old Age Crisis, played an important role in promoting the new principles for the pension systems. These have tended towards more privatization, increased individualization of risk, bottom-up redistribution and stronger integration with the growing and ever more powerful financial capital. In most OECD countries, pensions are a combination of various contributions. A basic public pension is supplemented by various forms of occupational pensions, topped up perhaps by private pension insurance. In addition, there are many different types of early retirement pensions as well as disability pensions for those who are unable to work any longer for health reasons. For many people, general means-tested social benefits, or special means-tested benefits (such as housing benefits, winter fuel payment and transport costs) are also actual contributions. The fact that the number of the elderly in society is increasing in relation to the number of those in active work is used as a main

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argument for implementing changes. We might perhaps believe that better health and a higher life expectancy were a qualitative development that was worth celebrating, but the ‘grey wave’ or ‘the demographic time bomb’ tend instead to be used as a bugbear. The scare tactics are used that this will threaten state finances and be an insurmountable burden for those at work, who will have to pay for the increasing pension costs via higher taxes. Is there any basis for this bugbear? Streissler (2009) notes that if productivity within the European Union increases moderately and the work participation rate reaches 70 per cent before 2060 (the approved European Union target is 75 per cent before 2020), the current pension systems would be sustainable. Even if the situation differs in the various member countries, public pension expenditure will not increase more than from 10.2 per cent of GDP today to 12.6 per cent in 2 060. So there is no reason to conduct scare propaganda. This can easily be catered for through mutual financing via the tax system. Streissler also points to another interesting argument for retaining the public pension schemes: Public systems are, in general, more growth-supporting than private ones, insofar as they act counter-cyclically. In times of financial crisis public systems act as safety nets keeping up domestic consumption. In private systems there is both the risk of incomes and consumption dropping at the same time as the financial markets and of firms getting into difficulties because during a crisis they cannot afford to pay their contributions. In defined benefit systems these risks are mainly a burden upon firms, while in defined contribution systems these are risks carried by the individual. (Streissler, 2 0 0 9 , p. 4) Another thing is that the costs of administration of private occu­ pational and supplementary pensions are, based on experience, much higher than those of public pensions. Furthermore, insurance premiums in addition have to contribute to financing the billions of profit made by the insurance companies. So this is also a redistribu­ tion policy - from the employees to the ‘fat cats’ and shareholders of the financial institutions, or, to quote Minns and Sexton, ‘Pension privatisation is not really about pensions at all, but about extending capital markets and the free movement of capital and changing the role of the state’ (2006, p. 35).

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This redistribution policy is bad enough. It is even worse that workers in the hardest occupations are those that will lose most - those who injure their health in heavy, exhausting jobs, who therefore have to retire early whether they want to or not, and in addition have the lowest life expectancy. The new pension systems are now often so organized that those who leave early are punished economically. This is the workfare policy transferred to the pension system. In this way, the labour movement’s concept of solidarity is being replaced by suspicion from the economic and political elites. Instead of protecting people against the insecurity of the market, the pension system is now to contribute to exposing people more strongly to the market. Whereas just two decades ago, welfare policies for the unem­ ployed, sick, disabled and elderly were perceived as a counter to, or insurance against, ‘the market’ and its failings, now many govern­ ments use such policies to support or bolster ‘the market’ itself. (Minns and Sexton, 2 0 0 6 , p. 3). Pension systems have to be seen in close correlation to the actual economic models. There have been clear differences between an Anglo-Saxon and a continental European pension model. In the former, a flat and relatively low public basic pension has been the norm, with supplementary schemes often operated by private pension funds or insurance companies. Such supplementary pensions are then dependent on the return on the private investments. A compul­ sory occupational pension, introduced by a Labour government in the United Kingdom in 1975, the State Earnings Related Pension Scheme (SERPS), was later emasculated by the Conservatives: Partly on cost grounds and for ideological reasons, the Conservative Government of Ms Thatcher radically reformed and virtually dismantled SERPs in 1986 (the so-called Fowler Reforms). The aim was to reduce the future cost of SERPs but also to reduce the state’s role in pension provision by allowing people to contract out into a private pension plan. (Mayhew, 2 0 0 1 , p. 20) The possibility of rejecting SERPS in favour of private pension schemes developed into a widespread scandal, with millions of workers being enticed by insurance companies to buy pension insur­ ances where large parts of the premium payments were lost. This led

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to large compensation sums. SERPS was further weakened under the M ajor government in 1993 (Page, 2 0 0 7 , p. 94), and was later totally replaced under Blair by a far more limited State Second Pension. The workfare ideology has thus also underpinned the British pension reforms - irrespective of the government in power. In continental Europe, the state has been responsible for more comprehensive pension schemes, in which both the basic pension and occupational supplementary pensions have been included. While the Anglo-Saxon model has basically been based on accumulated pension funds, the continental European has comprised ‘pay as you go’ systems. With the neoliberal reforms, however, continental European models have gradually gravitated towards the Anglo-Saxon one. The main bones of contention in the new reforms have had to do with: retirement age, public or private organization, funded or ‘pay as you go’, defined contribution or defined benefit - and the size of the pensions. The aims and driving forces behind the neoliberal, regressive reforms can be summed up in the following four points: Retrenchment

One of the main aims of governments, the European Union and the IMF is to reduce public pension expenditure. This is achieved by cutting the level of pensions, raising the retirement age,8 or via economic incentives to get people to stay longer at work, for instance reducing the size of the pension if someone leaves early and then gradually increasing it. It is also achieved by increasing the length of time it takes to earn a pension, such as requiring 40 years of work to earn a full pension instead of the former 30 years. The way pensions are regulated is another means of achieving this. If pensions were formerly regulated in accordance with the increase of wages and salaries, they can be changed so that they follow price rises (as in the United Kingdom) or a combination of wage and price rises (as in Norway). Redistribution

It is being claimed that there must be a greater correspondence between what the individual contributes and what is got back. This weakens the redistributory effect that was often built into the post-war pension systems - particularly in the continental and Nordic models. Reforms are therefore more in the interest of those with high salaries than those with low ones. In reality, redistribution is turned upside-down, since the differences in life expectancy are extremely large - and increasing - between various social groups

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(there is a difference of 12 years, for example, between some eastern and western parts of Oslo). Many of those who carry out the most unhealthy jobs are thus punished three times over - first by a greater frequency of getting worn out earlier and health problems, then by having pensions reduced because of having to leave work earlier, and finally by the length of retirement being shorter because of a low life expectancy. Increased individual risk

Collective public pension schemes were meant to guarantee security in old age. Via the reforms, increased emphasis is being placed on private pension schemes as well as a longer earning time for gaining a full public pension. Defined benefit occupational pensions are changed into defined contribution ones, where future pensions are dependent on the return in the financial markets. In this way, responsibility and risk are shifted from the collective to the indi­ vidual, while the individual’s bank accounts and private wallet become more important for security in old age. Strengthening o f financial capital

The transition from ‘pay as you go’ systems to the establishment of a pension fund involves stronger market dependence and a strength­ ening of financial capital. Pension funds and insurance companies are among those that have contributed most to the explosive growth in financial capital over the last decades, as described in Chapter 3. Worldwide, pension funds represent assets corresponding to more than 40 per cent of the world’s GDP in the years up to the financial crisis. In both the United States and the United Kingdom, private pension funds make up the largest institutional owners on the stock exchanges, with more than 30 per cent of shares in both countries (Minns and Sexton, 2 0 0 6 , p. 5). The speculation economy would not be the same, in other words, without the private pension funds. Pensions are first and foremost a question of economic growth, productivity development, employment rates and redistribution policy. What the situation of pensioners basically depends on is what the economy is capable of bearing at the moment they become pensioners. What they have saved is of little importance for what resources a society has at its disposal at any particular time. This helps conceal the fact that the crucial thing is the redistribu­ tion policy here and now. The transition from ‘pay as you go’ to

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accumulated pension funds is thus primarily a measure to promote the interests of financial capital - not those of pensioners. A pension reform according to the most advanced welfare state principles would have been based on a guaranteed pension level which meant people could maintain their living standard and which was adjusted to keep pace with the increasing level of prosperity in society, and a top-down redistribution to ensure a decent minimum level. The supplement of an additional occupational pension would be completely superfluous. When all ordinary employees are to have it, the best and cheapest solution would be to incorporate the occupational pension into the common, public national insurance scheme - financed by insurance contributions from employers and employees. Everything would be based on a ‘pay as you go’ system, in other words, continuous taxation financing that would keep pension money out of the speculative financial markets. The ongoing pension reforms represent an important system change. They are based on the neoliberal ‘homo economicus’, which has as its point of departure that human beings consistently follow their self-interest - and are directed by rewards and punishment. Such a view claims that no one will be willing to do their best without economic incentives and pressure from competition. That is why making work pay has become a central slogan (as if it didn’t always do so). This is a view of humanity which does not have any scientific basis - it is a purely political-ideological construction. It also happens to be diametrically opposed to the solidarity traditions of the labour and social movements. The individual human being is social, values solidarity and is dependent on others. When popular forces gain power, they organize societies and welfare systems which are in accordance with these values - mutual and solidarity values. It is social elites that undermine these values, that replace them with suspicion and discipline, and that introduce management by economic incentives. The former leader of the Norwegian Labour Party, Reiulf Steen, has aptly characterized the Norwegian pension reform: It is called modernization and reform. If it is modern to introduce increased social inequality, the Labour Party should forgo being ‘modern’. Reform means changing things for the better. The proposed pension reform is a change for the better for those who are richest, and for shareholders in private financial institutions, but for the worse for the great majority of future pensioners. (Aftenposten , March 3, 2005)

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B U T N O R W A Y IS B E S T ...

What is then the situation like for the Nordic model, which is still regarded worldwide as the most successful? Norway, for example, is still one of the most egalitarian societies in the world. Without placing too much emphasis on international ‘beauty competitions’ of this type, it can be noted that Norway in 2 0 1 0 , for the eighth time, topped the UN Human Development Index. This is not because Norway completely deviates from international trends but because the country is managing to maintain its position, even though it too is moving in the wrong direction. Seen this way, we can confirm that Norway, along with the Nordic countries in general, is main­ taining its position on the upper deck - but it is the upper deck of the Titanic ! According to OECD criteria, 5.6 per cent of the Norwegian popu­ lation were poor in 2 0 0 5 . If we use EU criteria, however, the figure was 11.4 per cent (Statistics Norway 2 0 0 8 , p. 29). Corresponding figures for 1983 were 3 .7 and 8.0 (Flotten, 2 0 0 7 , p. 264). This means that poverty has stabilized in recent years at a level which is 2 -3 .5 per cent higher than that of the early 1980s, according to which criteria one uses. The number of children living in poor families doubled from 5 0 ,0 0 0 to 100,000 in just the first decade of the twenty-first century (Norwegian News Agency (NTB), December 16, 2010). As in the rest of the rich countries, the difference between top and bottom in society is also increasing under the Nordic model. In a short space of time, there has been a strong concentration of wealth in a small layer at the top of the social pyramid. The most important reason for this explosion in prosperity among the social elite is to be found in the rapidly growing capital yields. An everincreasing proportion of the creation of wealth in society is taken out in the form of capital yield, while the wages share has decreased correspondingly (as shown in Chapter 4). The distribution of capital yields is extremely uneven. In 2 0 0 4 , for example, the 10 per cent richest people in Norway received no less than 94 per cent of society’s total capital yield - compared with 70 per cent ten years earlier (Christensen, 2 0 07). A tax reform implemented by the Social Democratic government of Gro Harlem Brundtland in 1992 effectively contributed to this development, since it made it far more profitable than before to take dividends. Seen as such, this redistribution of wealth in society reflects the increasing power of capital forces in Norway, just as elsewhere, and

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0.33 -j

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Figure 5.1 The development of income inequality (the Gini coefficient) in Norway, 1994-2005 Source: Statistics Norway.

the shift to the Right of Social Democracy, under the deregulated, neoliberal economy. The result was that the richest 10 per cent of the population increased its share of society’s total income from 20 per cent to almost 30 per cent between 1990 and 2 0 0 5. The poorest 10 per cent saw their share reduced during the same period from 4 per cent to 3.3 per cent (Flotten, 2 0 0 7 , pp. 2 6 2 , 264). The distribution of assets became even more uneven. The 10 per cent richest households owned 66 per cent of the total financial assets in Norway in 1998 (Halvorsen and Stjerno, 2 0 0 8 , p. 37). The differences between the other income groups have changed little. It is the gap between top and bottom that has increased strongly. In Figure 5.1 we can see that the Gini coefficient has increased considerably in Norway over the past decade. This development led to the liberal newspaper D agbladet stating in a report in 2001 that ‘The picture-postcard image of Norway is cracking.’ Based on figures from a UN report, the newspaper concluded: The differences between rich and poor are markedly increasing in Norway. ... The difference between rich and poor now is larger than in countries such as Slovakia, Hungary and Austria. ... The only one of the 28 countries in the OECD that has a worse distributional tendency than Norway is New Zealand. ... The

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difference between rich and poor in the country’s capital [Oslo] increased by 9 per cent from 1986 to 1996 - just as much as in Thatcher’s London from 1979 to 1989. (D agbladet , July 12, 2001) Increasing poverty and inequality have of course led to an increased political awareness of these topics. So far, however, this has not resulted in effective countermeasures of any significance. On the contrary, there are tendencies for the growing social problems to be individualized, belittled and narrowed down. A sociology professor at the University of Oslo, Marianne Nordli Hansen, describes the situation as follows: The Norwegian political debate is, however, characterized by a number of misconceptions and myths. One is that the welfare state basically gives everyone equal opportunities. Another is that the development is going in the right direction, with fewer and fewer people in society being excluded. A third misconception is that misfortune and chance can explain why people become excluded. ... We can see a clear pattern. The poorer the parents, the greater the risk of ending up in all these forms of difficult life-situations. ... Results show that the aim of having a more just distribution of the benefits and positions of society has not been realized. ... There has been considerable focus on the consequences of poverty - that poor families have fewer consumer items than other people, and that they cannot take part in all forms of social activities. Our research indicates that there are far more serious long-term effects of growing up in low-income families. (.Aftenposten , July 19, 2008) This has taken place in a country where poverty was not a topic for a long period - until well into the 1990s.9 The Social Democratic prime minister Odvar Nordli, at a meeting of the Nordic Council of Ministers held as late as 1979, stated that poverty and social need had been eradicated from Nordic societies (Flotten, 2 0 0 7 , p. 254). This was probably a somewhat exaggerated claim, but it says a great deal about tendencies and priorities in society at that time. The social inequalities are now increasingly having an impact on education and health. In addition, we can also see - as Professor Nordli Hansen points out - an ominous tendency for social problems to be increasingly passed on from parents to children. This tendency can be observed within an expanding number of areas in

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society. Every fourth child of benefit claimants, for example, ends up receiving money from the social security office when they become an adult (Lorentzen and Nielsen, 2008). The reproduction of social inequalities is also growing within the education sector (Bakken, 2 010). With regard to health, the social debater and professor at the Institute of Social Medicine at the Norwegian University of Science and Technology in Trondheim, Steinar Westin, concludes that ‘health inequalities in Norway are greater than we previously believed ... and - most worrying - they are on the increase’ (2005, p. 3081). He also notes that the degree of social inequality between different parts of Oslo is now back at the level of the nineteenth century (Westin, 2 0 0 4 , p. 354). A formi­ dable redistribution has thus taken place - in favour of the rich. And economic power leads to increased political power, including the possibility of influencing development within a number of areas in society to a greater extent. To sum up, we can say that this Norway of poverty and inequality is facing the following serious challenges: • Poverty has increased over the past 25 years and has stabilized at a level that is 2 -3 .5 per cent above that at the beginning of the 1980s. • The social and economic inequalities between the richest and poorest have increased dramatically. While a growing proportion of young people are being excluded from school, work and soci­ ety, a small minority of the population is living in unrestrained luxury. • Poverty stayed at the higher level, and the social and economic inequality continued to increase in the years leading up to the financial crisis, despite an economic boom and low unemployment. • All political parties have expressly stated their aim to combat this increased poverty. M ost of the political parties also have as their aim to oppose social inequality - without this resulting in visible results of any significance. This is grist to the mill for right-wing populism. At the same time that poverty and inequality have increased, important changes have also taken place in Norway within other core welfare-state areas over the past decades. These have to do with reduced benefits and more system-oriented changes. In a couple of areas, welfare schemes have actually been strengthened. This

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particularly applies to family policy - mainly linked to rights that have to do with pregnancy and maternity leave. Pensions have also been weakened in the Nordic model. In Sweden, they became much more market-oriented in the m id-1990s, among other things because part of the compulsory pension was turned into a defined contribution model and because each individual could now choose in which pension fund to invest. In Norway, three new principles were introduced for public pensions in the 2000s: life-expectancy-based pension adjustment, indexation, and a pension based on all occupationally active years. The repres­ sive elements of workfare (see Chapter 6) were thus imposed, in the sense that people are punished economically for early retirement. Life-expectancy-based pension adjustment means that if the average age of the population is increasing, retirement age should also automatically increase - by eight months for every extra year. Indexation means that pensions from the time they start to be paid out are not to be adjusted to correspond to the increase of pros­ perity in the rest of the population, but by something between wage and price increases. A pension based on all occupationally active years means that pensions are no longer to be calculated on the basis of the 20 best years of income, as formerly, but on the basis of all years up to retirement. In the long term, these reforms will mean a saving of 20 per cent compared with continuing to use the former model. That represents a considerable reduction of the living standard of the elderly in relation to those at work. The arguments used to get the pension reform approved illus­ trate well what has happened in many countries. It was claimed that the costs of the present pension model would be too high, for two reasons. First, there will be fewer and fewer employees per pensioner. Second, we live longer and therefore need pensions for an increasing number of years. And that we cannot afford. Information the Norwegian government was not as eager to pass on was that during the same period (until 2050) purchasing power will more than double, according to the government’s own prognoses. This means that if people were prepared to accept an increase of purchasing power of only 8 0 -8 5 per cent, there would not be any problem in tax-financing the current better and more unifying national insurance scheme. No one was given this choice, however. Incidentally, it is also doubtful if the reform will reduce society’s expenditure on pensions, since people who can afford it will probably compensate for the reductions by using private savings

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and pension schemes. That share prices for a number of the major insurance companies shot up the day after the Norwegian pension settlement had been agreed on is perhaps sufficient indication. What the government and the political majority were actually approving was a tightening-up of that part of the pension costs which is financed through the public redistributive welfare system. We can see tendencies that elements of both the Anglo-Saxon and the more employment-based German-continental model are trickling into the Norwegian welfare system. The Danish professor Bent Greve has investigated how the relationship has developed between the universal, public services of the Nordic model and services that are established on the labour market, as happens in the more occu­ pational-based model. He finds tendencies - if not strong, then at least clear - that the latter are gaining in strength, and he concludes as follows: [T]he Nordic countries have changed track, from a clearly public supplier of welfare services to an increasingly mixed welfare model. ... This means that there is a risk of public welfare becoming something for the few. Welfare for the few can risk becoming bad welfare, while at the same time it can also influence the legitimacy of welfare states. (Greve 2 0 0 7 , pp. 2 2 9 -2 3 0 ) Another system change - admittedly slow and gradual, although unambiguous - is also taking place, with universal services being replaced by more selective and means-tested ones. The negatively loaded term means test , however, is no longer being used - it is now dressed up as targeting, tailoring and greater accuracy , although in reality it is the same. The argument is that universal schemes do not target the really needy accurate enough, but spread benefits around too thinly. For that reason they must be tailor-made, or in other words, meanstested. There is, however, no scientific basis for such assertions. On the contrary, there is solid historical experience and comprehensive welfare policy research which shows that those countries that have based their welfare policy on common, universal schemes also have the most equal division of incomes and the best benefit schemes for those who need it most in society. Conversely, it is in those industrialized countries that have intro­ duced low minimum standards and means testing - such as the United States, the United Kingdom and New Zealand - that poverty

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is most widespread. It was also in these countries that poverty increased most during the 1980s and 1990s. Means testing, in other words, does not help the poor - it represents an attack on them. Professor Steinar Westin states the following about this, based on a subreport to the World Health Organization’s (W H O ’s) latest health report (Closing the Gap in a Generation, CSDH, 2008): The basic question is if one will get more public health for one’s money using targeted benefits, i.e. by channelling benefits to those most in need and not to everyone. Some people, for example, wish to means-test child benefit here in Norway, and let only the needy qualify for one. The slogan has been: better targeting. This argument comes completely undone in the Swedish subreport, which is based on comparisons between health and welfare schemes in 18 OECD countries. Universal welfare schemes, insurance schemes for everyone, have the best effect on public health in both rich and poor countries. (.Adresseavisen , November 3, 2008) Even if it is the tendencies towards systemic changes that in the long term, will have the greatest significance for the Norwegian welfare model, simple cuts have also taken place within important areas. Restrictions or reductions in the old age pension (even before the pension reform), disability pension, child benefit, unemploy­ ment benefit, sick pay and social benefits (including the possibility of imposing a work obligation as a quid pro quo) have all taken place.10 As already mentioned, some improvements have also taken place, first and foremost in such areas as paid maternity leave. The struggle between market forces and democratic control has taken place in most economic and social areas during the history of the welfare state. The organization of society has been permeated by this power struggle. From the trade union and labour movement this was a struggle for economic and social security, for human dignity and for being delinked from the ups and downs and risks of the market. Two of the areas most affected by this struggle in Norway were the housing and energy markets. Developments in these two areas demonstrate clearly that when power relations in society change, when the market is strengthened at the expense of political government, as we have experienced during the last couple of decades, it has considerable consequences. The deregulation of the housing and energy markets is therefore a telling example of how the welfare state has been weakened during

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the neoliberal era. Norway had a social housing policy with strong political control and regulation - as it also had within the energy sector. Today, the market reigns in both these areas. Social housing policy was a central feature of the establishing of the welfare state after the Second World War. The Norwegian State Housing Bank was set up in 1946 and, for a period of 30 or 40 years, was the most important instrument in housing policy. It helped resolve the housing crisis. It made it possible to build housing of a socially decent standard and at an affordable price for ordinary workers. The methods used were subsidies and housing loans with a low, politically fixed interest rate and a long pay-off time. The aim was for housing expenditure not to exceed 20 per cent of an average industrial worker’s wages. There was hardly any area where an attempt was made to replace the logic of the market by such a comprehensive politically governed and welfare-policy-justified model as in the housing sector. In the 1980s and 1990s, the public housing policy was gradually phased out - under different political majorities. This led to the welfare-policy approach to housing gradually being replaced by a market-economic understanding, where housing was considered to be a purely economic issue. This change is also a telling example of how universal welfare is replaced by means-tested benefits. Generally accessible housing loans with a politically fixed interest rate were replaced by means-tested housing allowances for the needy. This represents one of the most dramatic setbacks to the development of the welfare state in post-war years. The deregulation of the electricity sector has a shorter history. Practically all production is based on hydroelectric power in Norway. Until 1990, the situation in this sector was characterized by public ownership - at the national and municipal level - and politi­ cally fixed prices. For a long time, there was even a two-tier system, where a minimum power requirement for heating and cooking was at a low price, while so-called over-consumption had to be paid for at a higher rate. In the early 1990s, however, the sector was deregu­ lated, and the social requirements were abolished. Electric current was turned into a commodity that could be sold on any market inside and outside the country. A power exchange was set up, and the price has since been decided by supply and demand, as well as manipulation of markets and the abuse of strong market control - in the familiar style. In 1998, a common Nordic market was set up, which later became integrated into a larger European energy market as the

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transmission grid was expanded. This led to increasing demands for privatization from the European Union, a pressure the Norwegian authorities until now have not given way to - particularly since resistance in the population is high. The result, however, has been strongly increasing prices for electricity, not least during the cold winter months, and this has left many people, especially the elderly, dependent on means-tested social benefits if they are to pay their growing energy bills. Thus, important parts of the Norwegian welfare state have been weakened over the past decades - with less predictability and security for people, also within the housing and energy markets. Despite Norway’s oil wealth, which has made the country an exception in a European context,11 we are seeing economic growth systematically being unequally distributed, from labour to capital, from poor to rich - and also from the public to the private sector. This means that all the redistribution mechanisms from the golden age of the welfare state have been turned upside-down - under the Nordic model just as elsewhere. As these tendencies accumulate over a number of years, it will lead to a widespread new distribu­ tion of wealth in society - and thereby to a further shift in power relations. C R IS IS A N D S H O C K T H E R A P Y

As already mentioned, the debt crisis in Europe has dramatically changed the situation for the welfare state. The development of the crisis is illustrative in many ways. First, it reveals even more clearly than before what enormous changes have taken place in the balance of power between labour and capital, and between the Right and Left in politics, over the past decades. Second, it shows how and to what extent the welfare states change form and content with the new power relations. Third, it illustrates how the crisis is now being exploited as an excuse to make massive, intensified attacks on the welfare state - as shock therapy. The debt crisis is mainly a result of the massive economic rescue packages introduced by governments to prevent a collapse of the world’s financial markets when the crisis hit Europe at full strength in autumn 2008. These packages were crucial in preventing an economic collapse after unrestrained speculation economies had been allowed to hold the field for a couple of decades. Many people, however, expected that the crisis, with its ruinous

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consequences, would mean the final goodbye to neoliberalism, spec­ ulation economies and the dominance of free market forces. This policy had led to a dramatic redistribution of wealth - from labour to capital, from the public to the private sector, and from the poor to the rich. The system was thus discredited - and now the politi­ cians surely had to realize that systematic deregulation, privatization and free-flow capitalism had failed - and had actually been directly destructive. The casino economy, of which Iceland became the most extreme example in Europe, had to be stopped. That jobs and the economy of entire countries are turned into gambling casinos where a small group of speculators are rolling in money at the expense of others is intolerable. In other words, the time had come for control and regulation. So people thought. But that is not what happened. The governments did not seize the opportunity to ensure increased democratic control and lasting public ownership of the financial institutions. There were admit­ tedly, in the wake of the crisis, a number of proposals about regulating the financial markets and imposing taxes on financial institutions and financial transactions. Such proposals, however, have increasingly been toned down and postponed until the future. This was well illustrated by the G 20 meeting in Toronto, Canada in June 2 0 1 0 , where the final declaration contained little more than the well-known neoliberal recommendations about removing further barriers to the free movement of capital, goods and services. Little was left of proposals to impose taxes and regulate financial capital. The deregulations have apparently given the forces of capital too much power in our societies, while at the same time the trade union and labour movements and the political forces of the Left have not managed to either mobilize any concerted opposition or develop any credible alternatives. Both what happened up to the crisis and what is now happening while the crisis unfolds reflect power relations in society. It is not common sense but the prevailing power relations that decide what ‘solutions’ are chosen. If reason had prevailed, governments would naturally have stopped the meaningless speculation economy via regulations, by gaining increased democratic control over banks and other financial institutions, and by prohibiting short selling, hedge funds and trading with various high-risk, so-called financial instru­ ments. They would have limited the free movement of capital across national borders and overturned a tax and duty system that lets the rich go free and encourages unrestrained speculation. Within the prevailing power relations, however, this was not a

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realistic policy. The neoliberals and speculators who contributed most to causing the crisis are still in the driving seat - even when the crisis measures are drawn up and the bills are made out. The result is that the losses become socialized while the gains become privatized - yet again. And then the speculators and financial insti­ tutions that have been saved by the state show their gratitude by making massive, speculative attacks on currencies and economies of the countries that experience the greatest problems in the wake of the crisis - in Western Europe particularly Greece, Ireland, Portugal, Italy and Spain. This pushes interest rates up and makes the crisis worse. In addition, austerity policies are implemented that further intensify the crisis. This is done by prescribing and implementing a pro-cyclic economic policy: in other words a policy that pulls in the same direction as the negative effects of the crisis, rather than opposing them. The interests of financial capital are given priority. As many people have pointed out, the European Union’s rescue packages are not primarily designed to save Greece, Ireland and other countries that might follow, but to help the German, French and British banks and financial institutions from which these countries had borrowed money. There is, of course, also an element of saving the euro in all this - and the European Union itself. The weaknesses of the euro as a common currency have become all too evident as a result of the crisis. The euro clearly had more of a political-ideological than an economic foundation. Now the differences are becoming more pronounced between dissimilar economies and dissimilar developments in productivity, especially between the strongly export-oriented German economy12 and the countries that have had a stronger focus on domestic consumption (such as Greece and Spain). Since Germany is the strongest EU economy, the country can push through its interests. So it is probably only a matter of how long the most crisis-hit countries will accept being coerced into an economic policy that only intensifies their problems. At any rate, the European elite fears that its project may founder, or, to use EU president Herman van Rompuy’s own words: ‘We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union.’ 13 The bill, on the other hand, is being made out to those who have contributed least to creating the crisis. While what is needed is stimulation of the economy, investment in infrastructure and in productive activities to

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create jobs, as well as a strengthening of the social security network, we are witnessing the opposite. The role of the European Union in what is now being enacted on the European continent is pivotal. In addition to the demo­ cratic deficit that is built into the EU institutions, they have to a great extent acquired their form and content during the neoliberal era. They are therefore dominated by the interests of capital, and financial capital in particular. Through the Lisbon Treaty neoliber­ alism is constitutionalized as the economic system of the European Union. If the interests behind are threatened, the European elite does not shrink from breaking its own treaties, as happened when the constitution was defeated, but also via the way the rescue packages emerged. In addition, Germany in particular is demanding that the Lisbon Treaty be changed using a fast-track method, in order to be able to introduce sanctions against countries that do not fulfil the EU Stability Pact (the Maastricht criteria, see Chapter 4). Governments, the European Commission, the European Central Bank and the IM F are using the crisis, in other words, to further reshape societies to suit the interests of financial capital. For example, the IMF is now prescribing the same measures for the debt-laden EU countries that have so far have been placed under administration by the IM F and the European Central Bank as they have formerly imposed on developing countries and the Central and Eastern European countries via the so-called structural adjustment programmes. Thus, they become the victims of massive privatiza­ tions, cuts and widespread attacks on public welfare services and institutions. This is a repeat of the policy of the 1930s - a recipe for depression and social crisis. The American professor James K. Galbraith summed up what this is all about in an article: A man from the IM F flatly told the prime minister George Papandreou that the only way out was to dismantle the Greek welfare state. ... Each ‘rescued’ country will get, in turn, just enough assistance to repay its debts. The price, each time, will be massive cuts in public budgets. The banks will be saved, but growth, jobs and the achievements of the welfare state will be destroyed. The IM F man gets his way. And the European recession grows deeper and deeper. (Galbraith, 2010) While unrestrained speculation and a formidable bottom-up redistri­

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bution of wealth contributed strongly to the crisis, Europe’s elite is now trying to give the impression that the problems are mainly the result of people living ‘beyond their means’. Myths are spread that pensions and public welfare are too generous, and that these are the causes of the crisis. In particular, the social elite and dominant media spread the myth of how working people in Greece had ‘awarded themselves’ privileges for which there was no real economic basis. This is then used as propaganda to legitimize widespread attacks on the welfare state, while financial capital is given protection. The fact that this message has dominated mainstream media and political life in Europe says a great deal about the existing balance of power - and about the political and ideological crisis of the Left. Paul De Grauwe at the Centre for European Policy Studies in Brussels has pointed out that any claims that it was exaggerated public consumption which created the debt crisis are far from reality: [T]he root cause of the debt problem is to be found in the unsus­ tainable debt accumulation of the private sectors. From 1999 until 2 0 0 8 , when the financial crisis erupted, private households in the eurozone increased their debt levels from about 50 per cent of GDP to 70 per cent. The explosion of bank debt in the eurozone was even more spectacular and reached more than 250 per cent of GDP in 2008. Surprisingly, the only sector that did not experience an increase in its debt level during that period was the government sector, which saw its debt decline from 72 per cent to 68 per cent of GDP. Ireland and Spain, two of the countries with the severest government debt problems today, experienced the strongest declines of their government debt ratios prior to the crisis. (De Grauwe, 2010) The European Trade Union Institute (ETUI) examined all the asser­ tions made about Greek workers who lived ‘beyond their means’. They concluded that the assertions were little more than a collection of lies and myths, and that they had little to do with reality. Work productivity, for example, increased twice as fast in Greece as in Germany from 1999 to 2009. According to OECD statistics, Greek employees work on average far more hours a year (2,512) than both Germans (1,430) and Norwegians (1,422). While a few occupational groups have a low retirement age, pensions are so low if people take early retirement that hardly anyone is able to make use of them. Only 30-40 of the 2 0 ,0 0 0 bus drivers in Athens, for example, have

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made use of the theoretical possibility of retiring at the age of 53. The actual average retirement age in Greece is therefore 60.9 for women and 62.4 for men - higher than in Germany, where consider­ able attempts were made to play up these myths. The French economist Laurent Cordonnier has also indicated that the public debt crisis is the result of a conscious redistribution policy: ‘Since the Thatcher-Reagan era, neoliberal governments have happily used the public debt - which has been incurred in order to be able to give tax relief to the rich - as an excuse for cutting public budgets, privatizing state companies, limiting welfare schemes and weakening the social security network’ (2010). The ‘solution’ of the European Commission, the European Central Bank, the IM F and the various governments now has to do with creating so much unemployment that wages and prices can be pushed downwards. Since the individual euro countries (and countries that have linked their currencies to the euro) can no longer devalue their currency, which would have been the most sensible thing to do in their situation, they have to implement a so-called ‘internal devaluation’ and thereby increase their competitiveness, it is claimed. Wages and working conditions, pensions and trade union rights are therefore exposed to severe attacks. Pensions have been cut by up to 1 5 -2 0 per cent, while the wage level in the public sector has been reduced by anything from 5 per cent (Spain) to over 40 per cent (in the Baltic). The situation is exploited for massive attacks on the public sector. In Greece, people who leave work in the public sector are not replaced, in Spain only one in ten is replaced, in Italy one in five and in France every second person. In Germany a cut of 10,000 public jobs has been approved, and in the United Kingdom half a million which in effect will bring about a further half a million job losses in the private sector. VAT is increased, dramatically in some countries, and benefits are reduced - particularly for the unemployed and the disabled - budgets are cut, labour legislation is weakened particularly job protection - minimum wages are reduced, universal rights changed to means-tested ones, as is the case with British child allowances, while taxation on capital is held steady or reduced. Collective agreements and union rights are being set aside - not via negotiations with trade unions but via government decrees and political decisions. At the time of writing, this has happened in at least eight EU countries (the Baltic states, Bulgaria, Romania, Greece, Spain and Ireland). This represents a new, dramatic situation in Europe. The former Wall Street economist, now professor at the

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University of Missouri, Kansas City, Michael Hudson, notes that a huge fight against labour is taking place: The EC is using the mortgage banking crisis - and the needless prohibition against central banks monetizing public budget deficits - as an opportunity to fine governments and even drive them bankrupt if they do not agree to roll back salaries. ... Join the fight against labor, or we will destroy you, the EC is telling governments. This requires dictatorship, and the European Central Bank (ECB) has taken over this power from elected governments. Its independence from political control is celebrated as the hallmark of democracy; by today’s new financial oligarchy. ... Europe is ushering in an era of totalitarian neoliberal rule. (Hudson, 2010) The enormous austerity policies and the attacks on the trade unions are, socially and politically speaking, a deadly cocktail - and the historical evidence, especially in Europe, is extremely frightening. A mutual solution to the crisis will require massive mobilization in order to change the power relations in society. That is why support for those who are now fighting to contain this cutback policy will be so crucial - no matter whether it is in Greece, Romania, Portugal, Ireland, Spain, the United Kingdom or some of the other countries that have been hardest hit so far. If the trade union and labour movement is unable to contain this development, it may be facing a decisive and historic defeat in Europe. T H E T R A N S F O R M A T IO N O F W ELFA R E

Power relations regarding the welfare state as a social compromise, then, have changed dramatically over the past decades - during the neoliberal era. This affects the extent, form and content of the institutions and services of the welfare state. Its development must be evaluated in relation to how it meets people’s needs and wishes. Seen from the point of view of the union and labour movement and the great majority of people, it has to do with the possibility to influence and govern our own general living condi­ tions. It has to do with developing a society where the economic, social and cultural needs of people are centre-stage. It has to do with limiting the individual risks connected to old age, illness and accidents. It has to do with the opportunity to develop our abilities and talents, not least via power and influence over the

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organization and content of work. It has to do with contributing according to our ability and achieving according to our needs. It has to do with freedom! So the attacks on the welfare state are not just - and in many instances not even first and foremost - a question of cuts. Attacks are also about changing the way welfare is organized, so that it serves other interests. The process of change is well underway in the following seven areas, in a manner which is gradually changing the welfare state from within, and which is weakening many of the qualities and the values that the popular struggle once brought into the development of society: Polarization

That the welfare state is weakened does not mean that everyone is adversely affected, but that society becomes increasingly polarized between the haves and the have-nots. Relatively large groups in society can, in a narrower sense, gain something from the welfare state being dismantled and undermined (although hardly as many as those who believe they can - just look at the United States, where over 70 per cent of the population have seen their economies dwindle during the neoliberal era). They gain materially, get better housing, larger holiday homes and more, bigger, faster and safer cars. Others lose out, and do so badly. Economic and social inequalities increase. Differences in health widen. Social inequalities are reproduced and become more deep-rooted within the education system. Via reforms of pension systems, the differences in old age become even greater. Etcetera. Individualization o f risk

Important parts of welfare policy have to do with protecting individuals and groups against various forms of risks people can be exposed to in an economic system based on waged labour. In other words, they involve a collective spreading of risk organized as universal social insurance by the state. First and foremost, this is achieved by guaranteeing income during sickness, unemployment and old age, but also via access to free health services. In many countries, a social housing policy also contributed considerably to reducing individual economic risk via politically fixed interest rates and long-term, predictable pay-off schemes. Now that these areas have either been considerably weakened or returned to the market, risk has once again been individualized. Higher user fees in the

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health services, reduced unemployment benefits, restricted access to disability pensions and so on have the same effect. Increased exposure to the market

This point is closely related to the previous one. Ever since the early days of the labour movement, an essential part of the social struggle has had to do with people protecting themselves against the ups and downs of the market, pressure from competition and unpredict­ ability. A great part of the economy was taken out of the market and made subject to democratic control. Workers were protected against the worst forms of exploitation on the labour market through comprehensive legislation which regulated the working environment, job security, working hours, the right to holidays and leisure time - and ensured a public employment service. Via deregulation and increased market power the pressure on large groups of workers has increased. Focus has shifted from protection to increased exposure to the insecurity of the market. This has taken place via widespread flexibilization of labour regulations - not least via the introduction of workfare policies (see Chapter 6). Redistribution in reverse

In its heyday, the welfare state contributed to redistribution at three levels - from the private to the public, from capital to labour, and from the rich to the poor. In all these areas, redistribution has now been reversed. This reversal is one of the most dramatic setbacks we have experienced in the development of the welfare state in the last couple of decades. Widespread deregulation, with increased power to the market and therefore to forces that have a centralizing and concentrating effect on power and resources greatly contributes to such a development. So does the shift away from progressive taxation to indirect taxes, of which VAT is the most important, at the same time as the progression itself is being reduced. This means that we move from a tax system with top-down redistribution to an ever flatter and more equal tax percentage for everyone. Furthermore, taxation loopholes are large for the very richest in society. The redistribution that was built into a number of social security schemes has been, and is still being, weakened. The reforms of the pension system lead unequivocally to a weakening of the redistributory elements. Under-regulation of, or cuts to, other social security schemes (child allowances, social benefits) pull in the same direction.

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The result is increasing poverty and growing social and economic inequality in society. From universality to means testing

Criticism of universal welfare services occurs regularly. They are not accurate enough. The fight against poverty, for example, must be tailored or targeted to those who need the different measures the most, in other words the worthy poor. Universal, social housing policy, which a number of countries developed in the decades after the Second World War, has been completely transformed into a system with hand-outs of means-tested allowances for rent and electricity as its main assignments. This has meant a full-scale return to the stigmatizing, distrustful and degrading sides of the policy. The tendency has been particularly obvious as regards the growing number of those excluded from work and society and made victims of the so-called workfare policy. From public to private models o f organization and management

The profit motive is increasingly gaining ground in publicly financed welfare services. This occurs via New Public Management, via budget and accounting systems that are transferred from the private sector, via purchaser-provider models, via the establishing of artifi­ cial markets through competitive tendering, and via schemes where the money follows the user. This directs attention and incentives to an increasing extent towards what pays in the narrow privateeconomy sense. In many countries, private insurance schemes are established where companies, as well as municipalities and other institutions, ensure that their employees avoid or jump queues in the health system should sickness or accidents occur. In this way, schemes are set up that step by step ensure that collective thinking and solidarity are eroded. The needs of the labour market are made superior to individual social rights. From power to powerlessness

Through deregulation and increased management by contract, power has been transferred from democratic bodies to the market and the legal system. Political governing of social development has diminished, in other words, and free competition and the right to establish are undermining the possibility for populations to decide for themselves over their society and their general living conditions via democratic processes and decisions.

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The same is taking place on the labour market. Capital’s e x it strategies (threats of relocation) are undermining employees’

influence and power at work. They are increasingly being exposed to top-down restructuring and reorganizing processes set in motion by external consultants rather than based on the experiences, quali­ fications and knowledge of the employees. Outsourcing, offshoring, downsizing and increased flexibility have weakened the power of both the individual employee and trade unions at the workplaces. Taken together, these changes lead to a complete paradigm shift14 in the development of the welfare state. It is being transformed. It is being undermined as an instrument for redistribution. It is being weakened as a tool to protect people from the insecurity of the market and pressure of competition, helping rather to increasing exposure to the market. Welfare institutions that were once tools to cater for people’s needs are being turned into producers of welfare services on a market. The form and content of the welfare state are undergoing change as a result of the considerable shifts that have taken place in funda­ mental power relations in society. This expresses the fact that market forces are permeating more and more areas in society. This is the greatest present threat to the welfare state - and the development has already come a long way. What is most important is what is happening in the labour market and at work. There a dramatic shift in power relations is taking place that is reversing much of what was achieved in the heyday of the welfare state in the first decades after the Second World War. That will be the theme of the next chapter.

r 6

THE BRUTALIZATION OF WORK As a trade union official in the Norwegian and international trade union movement since 1982, and with chief responsibility for operating the broad Campaign for the Welfare State (since 1999), I have for many years travelled all over Norway (and a great deal abroad) and taken part in innumerable meetings. At union meetings I have experienced a strong wish for more information about the economy of madness which is now undermining the values and societies people have developed over decades. People are inter­ ested in the underlying causes and driving forces - especially why important developmental tendencies have gone into reverse in a society where prosperity otherwise exceeds everything we have previously experienced. Nowhere have I met people who argued in favour of privatization, deregulation, competitive tendering or more neoliberalism. Without any insistence or pressure from below, it is quite obvious that this policy has been and is that of the elite. On the other hand, the development of work and working condi­ tions has been a theme in which many people have been strongly involved. This particularly applies to the increasing number of workers who are excluded from the labour market because of what we have named the brutalization of w ork.1 I have been presented with an increasing number of tragic stories from hard-working people who first had to fight against bad health and ever more demanding work, and then were met with a wall of suspicion and humiliation in the so-called ‘social support system’. Jane from Moss, referred to in the introduction to this book, is a typical example. It gradually became clear to me that it was the victims of workfare policies that were coming forward. There have been an unexpectedly large number of them over the years. It soon became obvious that the reality of workfare was something completely different from the rhetoric used about it. Workfare has nothing to do with creating jobs for people, which is the impression often created. Workfare does not focus at all on structural relations or power relations in the labour market or at the workplaces. The existing order is taken for granted. It is those who are outside the labour market that there is something wrong with. The Norwegian Institute for Labour and Social Research has summed this up well: 126

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The demands for certain standards to be met in the labour market offer less room for diversity, and the work thresholds have become higher. Not everyone fits in, and to remedy this, the main present strategy is to adapt individuals into becoming fully worthy employees. (Flotten, 2 0 0 7 , p. 281) This, then, is the present situation. ‘Not everybody fits’ into today’s brutalized work, so the main strategy has become ‘to adapt individ­ uals into becoming fully worthy employees’. A quite brutal reality is concealed behind this relatively bureaucratic power language. That the labour movement’s political parties have also to a great extent adopted this workfare policy is one of the clearest examples of how strongly the political hegemony has moved to the right. L A B O U R A S A C O M M O D IT Y

The brutalization of work and workfare are also central elements in the transformation of the welfare state. It is in the work process that the fundamental power relations of society are most clearly expressed. It is precisely in the organization of work, in the distri­ bution of the production results and in the conditions under which work is carried out, that the key conflicts of interest are enacted. It is in this arena that the most important struggles have taken place. It is here the power-political foundation for many of the arrangements and institutions of the welfare state has been laid. When labour under capitalism was turned into a commodity on the market, this also gave rise to a lasting struggle regarding the conditions under which the buying and selling of this commodity should take place. Wages and working conditions and the regula­ tion of working hours have been at the core of this struggle. This is not all, however. At various times and with varying strengths it has acquired a content that has gone far beyond this market transaction. There has always been a latent resistance among workers to being made a commodity - to being made dependent on an employer, or capitalist, who found you attractive enough to want to purchase your labour power. This resistance has found expression in at least three ways. The first is via the mainly political struggle for full employment, which contributed to weakening both competition in the labour market and the possibility employers had of playing off workers against each other. The second is via the struggle for increased power over

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the production process. This fulfilled the need to be an inventive and creative producer, not just labour power. The third is via arrange­ ments which could weaken the effect of only being a marketable commodity. This was achieved, among other things, via collective social insurance and by fighting for collective trade union rights. Most prominent here are the collective agreements, which have been the most important means of removing, or at least reducing, market competition between workers - first locally, later nation­ ally and now beginning at the international level. In other words, unionization has been central to this struggle. Only through joint organizing and collective action can workers remove the destructive competition that exists in the labour market, competition that would otherwise have meant that they - particularly during periods of high unemployment - would have to underbid each other in fighting for jobs. The first collective insurance schemes were also established within the trade unions, in the form of sickness benefit funds, burial clubs and similar solidarity schemes that could be made use of when people were affected by illness or an accident. The establishment of a monopoly on labour power via trade unions and collective agreements contributed to reducing competi­ tion in the labour market. This monopoly, together with the many universal welfare institutions that people fought to attain, further led to the nature of labour as a commodity on the market being weakened. In Esping-Andersen’s terminology this is called the decommodification of work, and it is emphasized as being one of the most important and distinctive characteristics of the Nordic welfare model (Esping-Andersen, 1990, pp. 21 ff.). The universal welfare institutions are thus at the centre of the main conflict between labour and capital, and will reflect changes in the balance of power between these forces in society. To the extent that such welfare arrangements or collective agreements are weakened - whether this takes place through the reduction of benefits or the transition to a more decentralized and individual fixing of wages - this process becomes reversed. This is what we have experienced over the past couple of decades as a result of the neoliberal offensive. The decommodification of work has thus swung over into its opposite, a recommodification of work, an increasingly open and unmediated exposure of labour to the market, with the growing risk and insecurity that inevitably follow. The deregulation of the markets that I have described in earlier chapters constitutes an important part of this tendency, contributing to creating ever tougher and more brutal working conditions and

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labour market for a great many people. The increasing competi­ tion, restructuring, work intensity, flexibility and insecurity that characterize large sections of working life are now contributing to a brutalization of work and exclusion of labour the like of which we have not previously seen in the history of the modern welfare state. This, to a greater extent than cutbacks, represents the most dramatic change in the present welfare state. These tendencies fail to be grasped, however, if we focus on measuring and weighing phenomena on the surface of society, or study public budgets. This can lead people to conclude, as do the superficial researchers that we have already referred to, that ‘most things are now pointing in the right direction’ (see Chapter 1). If we wish to grasp these fundamental changes, we must dig deeper. The tendencies must be analysed on the basis of a broader concept of the welfare state such as that outlined in Chapter 2, the emphasis being on the basic power relations in society and on changes that affect them. It is the very content of the welfare state that is changing. While the struggle of the trade union and labour movements has been about removing or reducing the risk and insecurity that resulted from labour becoming a commodity on a market, many of the reforms of the past decades have, then, moved in the opposite direction (increased flexibility, liberalization of labour protection laws, the weakening of working hours regulations, more local fixing of wages, and so on). The policy has changed from a society- and system-oriented fight for the right to work for everybody, to an individual-oriented demand that everybody shall work, whether they want to (which normally means that they can) or not. The trade union struggle to free people from insecurity and market force, and the creation of jobs to meet people’s needs, has thus been overshad­ owed by orders from above to adapt to and be at the disposal of an ever more demanding labour market. An interesting symbolic change which illustrates this realignment of welfare policy in Norway is that the word social is in the process of being purged from the public vocabulary. We no longer have a minister of social affairs, a social ministry or a social and health directorate. Now everything has to do with work, activation and adaptation - the problems being linked to the individual, not to society. When the social offices soon vanish into the new Norwegian Labour and Welfare Service (NAV), the word ‘social’ will also have disappeared at the local level. Social problems, on the other hand, will not disappear, only be redefined. Now everything has to do

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with individuals who have problems adapting to work - and society. The change, then, is not just symbolic. Daniel Ankarloo, a Swedish economist at the University of M alm o, describes this well: Social policy is no longer seen as a counterweight to the market, its role is rather described as a contribution to strengthening the market: competitiveness, education and flexibility are key words, and social security is being renamed benefit dependency. Social policy in this strategy is increasingly losing the appearance of de-commodification and is being more and more replaced by increasingly more open recommodification, i.e. greater dependency on the labour market. (Ankarloo, 2005, s. 75) This makes workfare one of the most important instruments for implementing the ongoing transformation of the welfare state. Before looking in more detail at the political content and role of workfare, however, we must take a look at what is actually taking place. B R U T A L IZ A T IO N A N D E X C L U S IO N

The brutalization of work, exclusion from the labour market and increasing social dumping are among the most important adverse effects of the power shifts which have taken place in society over the past decades. Many people have experienced that work pressure has become greater, that labour laws and agreements are often undermined and set aside in everyday work, and that uncertainty and insecurity at work have increased. More and more workers are being excluded from the labour market, and many people are feeling that harsher working conditions are pushing them towards disability pensions or early retirement against their will. There are of course also winners in the new labour market. As I pointed out in Chapter 1, a polarization of social and economic relations in particular is an essential feature of the ongoing tendency. Some do well, others lose out. The differences increase, and social solidarity is challenged by strong forces. The winners (in addition to society’s elite) are mainly to be found among employees with higher education or special qualifications that are in demand. In those parts of the labour market that are in search of high formal professional qualifications, the labour force normally has a strong negotiating position. It also has a strong influence on the

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organization of work, control of the work process and an agreeable salary level. In the media, these employees are often portrayed as representing today’s or tomorrow’s employees. In fact, they only represent a minority of the labour force. At the other end of the labour market an ever greater layer of low-paid workers is growing - particularly in the service sector. Here we see the opposite trend, where technology and work organization are used not to create varied and stimulating jobs but to drain work of content and to ensure greater control over workers. The Norwegian Labour Inspection Authority describes this polarization as follows: Much indicates that one can see the contours of a develop­ ment towards a split labour market, where a marginal group of workers has short-term unskilled jobs with worse conditions and working environment than other workers. (Norwegian Labour Inspection Authority, 20 0 7 , p. 29) It thus establishes that we are moving towards a clearly split labour market, but what it calls a marginal group is in fact a rapidly growing group. Elstad (2008) provided us with a useful insight into working under such conditions in a book about working in a hotel in one of the largest chains in Norway (Thon Hotels). The new conveyor belt workers at supermarkets who operate increas­ ingly automated cashpoint machines are another example of how technology and work organization promote monotonous, repetitive and health-destroying jobs. Organizational structures and techno­ logical solutions are not neutral - they very much reflect power relations. Elstad also reminds us that the future labour market will not only be about an advanced knowledge industry, as politicians, public figures and the media’s middle class seem to think. She sums up the situation in Norway as follows: In 2 0 0 6 , a total of 834,0 0 0 people were employed in occupa­ tions that required a qualification from higher education. A great many people were not. 166,000 were employed in offices, e.g. as receptionists, secretaries or mail-sorters. 5 7 4 ,0 0 0 were in sales and service jobs, 6 4 ,0 0 0 were farmers or fishermen. 2 6 6 ,000 were craftsmen, 177,000 were operators or drivers, 117,000 were in jobs to do with cleaning, washing up, waste disposal, or were

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security guards, messengers or auxiliary workers in industry. That makes a total of 1,357,000. (Elstad, 2008, p. 198) It is especially from these last-mentioned occupations that we find approximately 11 per cent of all people between 16 and 66 who at present are on disability pensions in Norway (see Figure 6.1). If we include all those receiving so-called work assessment allowance,2 we are close on 15 per cent. That is twice the figure of just over 20 years ago. Only about one third of workers in Norway remain in work until the normal retirement age of 6 7 (there is a negotiated pension scheme which makes it possible to retire at 62 at workplaces covered by a collective agreement). The National Institute of Occupational Health in Norway has summed up the situation for the working environment - as those in work actually experience it themselves. While a number of overloads - particularly physical and chemical - have become smaller in Norwegian working life, others have increased. And the overload is still large in a great many areas. The following are some of the most important overloads that have either increased or are very extensive (National Institute of Occupational Health 2008 and Statistics Norway 2007): • A third of the working population report that they have experienced

%

Figure 6.1 Percentage of the Norwegian population between 16 and 66 receiving a disability pension. The levelling out in the early 1990s was not caused by any special changes in working conditions, but was because the Social Democratic government limited access to these pensions. Source: National Insurance Administration/NAV.

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reorganizations that have affected their work situation in the course of the last three years. The proportion that report repetitive work (half the working day or more) has increased from 31 per cent in 1989 to 41 per cent in 2006. Two out of five experience pains in the neck, shoulders or upper back in the course of a month, and more than 60 per cent of these people say that such discomfort is wholly or partially owing to their job. 32 per cent have pains in the lumbar region or lower back in the course of a month. One out of five has pains in the arms or hands in the course of a month. 8 per cent have a particularly strenuous work situation, with high demands combined with low control over their own work situation and little support. One out of four experiences that they seldom or never get feedback from their superiors. One out of three feels physically exhausted each week after a completed working day. The proportion of those with sleeping problems owing to job worries has increased from 8 per cent to 11 per cent from 2003 to 2006. • Almost one out of three indicates that they incur their bosses’ displeasure if they make critical remarks about working conditions. • The proportion of those who experience bad relations between workers and management and among workers has increased. • About one out of five goes to work even when they feel ill four times or more in the course of a year. Another report (Braten, Andersen and Svalund, 2 0 0 8 , p. 132) states that four out of ten workers regard the tempo of work as a problem. Many of those at work, in other words, experience considerable overload, stress and burnout. In short, many signs indicate that something dramatic is happening in the labour market and in our relation to work. The three occupational groups that suffer most overload when all these negative factors are combined are cleaners, service personnel in hotels, restaurants and hairdressing, as well as chefs and kitchen assistants. For an increasing number of occupations, disability pension is now the most usual way of leaving work - not reaching normal

1

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retirement age. This has been the case for quite a long time for those in the cleaning profession. Drivers in both freight and passenger transport are similarly affected - as are an increasing number of people in the health, social and education sectors as well as industry and mining. Women leave work before men in most occupations. The most usual diagnoses are muscular and skeletal problems and mental illnesses. An increasing number of occupations are becoming so demanding that it is not possible for normally equipped people to remain in their job during a whole working life. In the 1990s, a new occupational group was added - oil workers in the North Sea. Many of them had to leave work when they reached their fifties, and 70 per cent of those who worked in the North Sea in the late 1990s were unable to stay in their jobs until normal retirement age.3 An inspector from the Norwegian Labour Inspection Authority suggested part of the reason for this when he noted that ‘time-pressure is the worst threat to health in the oil industry’ (Klassekam pen , February 17, 1998). A survey from 2 0 0 2 showed that low socio-economic status, low education, a low level of control of the work process and physically strenuous work were all non-medical factors associated with disability pension. Another survey showed that involuntary loss of work can increase the risk of disability retirement three to four times in the first succeeding years. ... A study of all the women who took disability retirement because of muscular/ skeletal problems in 1993 showed that three occupational groups accounted for a third of all cases: nursing assistants, shop assistants and cleaners. (Eriksen and Mehlum, 2007, p. 7) The media are of course very interested in tendencies in the world of work. There has been a particular focus on individuals from the small stratum of highly educated labour who have been exposed to the fashionable phenomenon known as burnout. This affects groups in so-called ‘new’ or ‘no boundaries’ jobs who are equipped with mobile phones and laptops and are at the disposal of their employers almost day and night, at the office as well as at home or elsewhere. Quite often, these are career-minded people who want to get on in the world and who give their job everything - until they break down and then appear in the weekend supplements of the newspapers with their story of ‘when I met the wall’. In this way, the tendency of the media to focus on individuals

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means that a widespread, growing social problem becomes indi­ vidualized. It is individual people who are unable to set boundaries for themselves. The considerable, serious problems of exclusion a n d disablement for a rapidly increasing number of employees in a hard-pressed working environment do not get the same media coverage. These problems are at best presented in the form of statistics, where concerns are more linked to the effects on public budgets and the national economy than to the human suffering behind the figures. Burnout, however, affects many people at work today. Representatives from a number of various occupational groups ‘hit the wall’ in different ways. Even though the media tend to focus on burnt-out individuals in the well-educated stratum of employees, the literature shows that the problem is much more widespread. It affects nurses and nursing assistants, teachers and social workers, workers in the building and construction sector, industrial workers and low-paid workers who have two jobs or work overtime far beyond the legal limit to make ends meet. They all contribute to the relatively new and growing statistics concerning burnout at work, although they are often diagnosed otherwise. For a great many of these occupational groups, the overload at work is considerable. Many experience ever more rapid reorganiza­ tions, imposed from above, from owners, management and external consultants. Many of these reorganizations have little justifica­ tion and are carried through with little real participation from the workers. Many reorganizations are felt to be meaningless. Professor Westin puts it like this: We doctors see at close quarters how the market-economic measures, reorganizations and rationalizations in working life fling people out into the welfare system like some gigantic centrifuge. After all the reorganizations and rationalizations they are left lying by the roadside, partly ill and incapable of working. (interview in Klassekam pen, April 12, 2006) Over the past couple of decades, large groups have been exposed to downsizing so as to cut costs and/or increase earnings. The pressure to rapidly tackle new technology and organizational forms is increasing, and many workers are subject to increased control from above. Via downsizing and tighter deadlines, work intensity increases. Many workers simply have to give up.

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The Survey of Living Conditions (2003) shows that workers who have been subjected to reorganizations and downsizing report more frequently that work demands have increased: 60.2 per cent of workers who had experienced reorganization and/or downsizing reported that there was an increased work-load per worker. ... Studies of such changes in the public sector reveal increased job stress, less job satisfaction and, in many cases, increased work-load. (Norwegian Labour Inspection Authority, 2 0 0 7 , p. 31) Many of those who experience serious burnout are hardly aware of it, because it is a concept that is little used in the occupations mentioned. Advisers, engineers, consultants and stockbrokers can get burnt out - cleaning personnel ‘only’ become disabled. They are used to people not lasting long in such jobs. They become excluded from work - and at the moment this is taking place on a massive scale. Many people, especially women, are also experiencing that their overload injuries are not being recognized as occupational injuries. They are humiliated and rendered suspect, as was the case with Jane from Moss (see Chapter 1). The attitude of suspicion which is built into the ideology of workfare greatly contributes to strengthening the myth that there is widespread abuse of the disability pension scheme. John Gunnar Mseland, professor of social medicine at the University of Bergen, however, points out that a disability pension is not something people can choose to take in today’s society: M ost people who get a disability pension have a long work career with repeated periods of sick leave and long periods of attempted treatment behind them before they are granted their disability pension. It is not as simple as many people seem to think to gain such a pension. (Masland, 2008) In addition to people experiencing burnout in demanding jobs, there is also a tendency towards growing marginalization - not least among young people. It has to do with ‘increasing demands regarding performance in a competition-exposed and hard-pressed labour market where more young people than before have to give up’ (Gogstad and Bjerkedal, 2 0 0 1 , p. 1452). A growing number are being removed as incapable of work (non-qualifiable is one of the cynical buzzwords that has entered the language within this

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field), and a growing number are thus also being excluded from welfare arrangements that are based on previous income. Today, almost 10,000 people under 30 years of age have disability pensions in Norway. From 2 005 to 2006, the number of disabled young people increased by almost 10 per cent - three times as fast as for the population in general. ... But the experts are in no doubt that some young people drop out simply because of challenges in the modern labour market .... A senior researcher at The National Institute of Occupational Health, Asbjorn Grimsmo, is concerned. ‘In today’s working life one has to give more and more of oneself, both when it comes to social skills, creativity and the ability to juggle with several roles at the same time. ... Some of the mental diagnoses given workers ought perhaps also to have been given to work,’ Grimsmo feels. (A-magasinet , April 13, 2008) T H E D E M A N D S O F N E O L IB E R A LIS M

Many people try to explain increased disablement and the level of sick leave among workers by claiming that the employment rate in Norway is so high. Thus, people who initially have a higher level of ill-health are included in the labour market. They have of course a point, especially when it comes to sick leave. When, however, we consider longer-term exclusion, the assertion can be countered by the following three arguments. • If it is as stated in laws and ceremonial speeches that work must be adapted to human needs and abilities, work must naturally also be adapted to those who happen to have a reduced capacity for work. • The greatest increase in the employment rate in Norway was in the first half of the 1990s, when mass unemployment was low. Exclusion from work, however, continued to increase strongly in the years that followed, after the employment rate had stabilized. So we are facing an increasing social problem. • The problem is not restricted to Norway. The employment rate makes practically no difference to the same tendencies being evident wherever neoliberalism has increased pressure at work. A European investigation supports this: The working environment in Europe has worsened as a result of harder competition and changed working conditions. ‘Warning

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bells ought to be ringing,’ says Raymond-Pierre Bodin, managing director of the European Foundation for the Improvement of Living and Working Conditions. The reason for concern is a new survey of health problems related to the workplace in the 15 member countries of the European Union. The institute has interviewed 21 ,5 0 0 people. This is the third investigation in a series of reports about the working environment in the European Union. The two former ones are from 1990 and 1995 ... The European investigation is very much confirmed by a report from the International Labour Organization (ILO) that was published last autumn. It showed that stress is an increasing problem in working life, and leads to burnout and depressions. (LOnytt , February 5, 2001) The suggestion is, then, that health and safety problems at work are related to more fundamental relations in the economy. Harder competition is not something that comes by itself - it is the result of deregulated markets. Job insecurity and uncertainty have to do with power and dominance relations at work. Professor Michael Quinlan of the University of New South Wales in Australia is one of the world’s foremost researchers into relations at work. He has carried out comprehensive studies of the connection between neoliberal employment reforms and their effects on the working environment and health. Along with Professor Philip Bohle, he has examined 106 studies of working conditions from all parts of the world. The conclusion supports the hypothesis that such reforms have negative effects on the working environment (Quinlan and Bohle, 2 0 0 9 ).4 Table 6.1 shows the connections. In an article in which the findings are presented the authors also state: A trend toward jobs that seriously impair worker health, safety and wellbeing, and may also have serious negative effects on the community, can hardly be regarded as the mark of a civilized society concerned with the welfare of its citizens. OSH research provides stark evidence of the deleterious effects of neo-liberal ideology and the work arrangements it promotes. (Quinlan and Bohle 2009, pp. 2 0 -1 ) Many people have pointed out that the fast-growing exclusion from

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Table 6.1 Effects on health and working environment of various types of insecure work Category of employment

Negative effect

Mixed effect

Nil or positive effect

Job insecurity/downsizing Outsourcing/homebased work Temporary work/leased work Total

53 23 15 91

3 0 4 7

5 0 3 8

(87% ) (100% ) (68% ) (8 6% )

(5% ) (0% ) (18%) (6 .5% )

(8% ) (07o) (15%) (7.5%)

Source: Quinlan and Bohle (2009, p. 11).

work does not coincide with a corresponding growth in ill-health in society. My response to that is that health problems and functional capacity are relative entities. They depend on how society and workplaces adapt to various people’s needs. The rapidly increasing exclusion from work is, in other words, not only owing to pressure increasing on the individual worker. It also seems as if employers want to get rid of workers at an earlier stage than before. The threshold for work participation has become higher, something the Norwegian government admitted in a white paper from 1998: It may be that demands at work have become tougher during this period, and that the threshold for work participation for people who for various reasons cannot function with full efficiency has become higher - in parts of working life at least. (St.meld., 1 9 9 8 -9 9 , p. 14) In terms of the national economy, it is of course meaningless that people with a partially reduced work capacity who still wish to work are sidetracked with disability pensions instead of being allowed to use their work capacity to create value for society. The increasing pressure from competition in the private sector and the pressure to attain ever more demanding economic objectives in the public sector, however, become powerful incentives for getting rid of workers who cannot give everything, who cannot give 110 per cent all the time. In manufacturing industry, much of this exclusion took place during the widespread rationalization waves of the 1980s. In the 1990s, however, a similar process also got underway in the public sector. A tendency towards underbudgeting, management based on narrowly defined economic criteria and constant demands for

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increased efficiency have led to the brutal exclusion of those who are unable to meet the ever increasing demands. The way in which the public sector reorganizes its activities partly by New Public Management (see Chapter 4) - only makes this process worse. One area after the other is divided up into small profit centres and their leaders are then assessed according to their margins. Preferably, of course, they should more than reach their targets if they are to satisfy management. This therefore functions as a strong incentive to get rid of workers who cannot make a full contribution. Increased demands for competitive tendering, effi­ ciency improvements, downsizing and outsourcing create insecurity and higher work intensity - and it is the politicians who make up the rules. According to Professor William Brochs-Haukedal at the Norwegian School of Economics and Business Administration (NHH), New Public Management methods lead: to very serious frustration among employees. It is an impersonal and authoritarian system of budgets, routines and targets that kill off their motivation and job satisfaction. ... The alienation of workers in the public sector - such as in the major health enter­ prises - must stop. NPM as a control tool must be phased out and forms of management that promote the involvement of workers in their jobs must be introduced. With the authoritarian NPM, employees have had to stop getting involved with their customers, clients, patients and pupils. NPM has no parameters for all the meetings between people that give meaning to everyday life. To get involved does not count. It is just even more fatiguing. And this kills off inner motivation. (interview in Ukeavisen L edelse , August 26, 2 0 0 9 , p. 48) The public sector was viewed formerly as a secure, good workplace, representing a part of the labour market that contributed to reduce the pressure on employees - first and foremost on those who worked there, but, via indirect influence, also on employees in the private sector. In recent years, the situation has in many ways been reversed. Market-inspired reorganization methods and organization models in large sections of the public sector contributed to a dramatic worsening of working conditions during the 1990s, as the following report makes clear: The number of workers who have become disabled in public administration, the school sector and state-owned enterprises

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such as the postal service and state railways (NSB) has increased by no less than 35.9 per cent since 1996. During the same period, the number of new disability pensioners increased by 16.8 per cent in the rest of the population. ... The increased pressure for efficiency savings and the brutal­ ization of work lead to more workers on disability pension. Furthermore, we see that the outsourcing of ever more activities leads to less flexibility to relocate workers with various overload symptoms, says the vice chairman of the Norwegian Civil Service Union, Tor-Arne Solbakken. (Aftenposten , April 17, 2001) New management methods, new forms of work organization, new ways of organizing companies and enterprises and pressure from increased competition have, then, had enormous importance for the development of the working environment and for people’s chances of remaining in their jobs.5 Stress and mental overload have increased strongly in society over the past couple of decades. ‘Depression is affecting more people, and younger people. ... 1 5 -2 0 per cent of the Norwegian popula­ tion have a mental health problem at any one time’ (Kolstad, 2008, p. 43). ‘Absence from work because of a “mental health problem” increased by 150 per cent from 1994 to 1 9 9 9 ’ (Gogstad and Bjerkedal, 2 0 0 1 , p. 1455). Generally speaking, it seems as if stress has become a massively pervasive illness.6 This was supported both by a public report (NOU, 2000) and by the Survey on Living and Working Conditions carried out by Statistics Norway in 1996 and published the following year. It was concluded in the latter that almost half of us experience so much pressure at work that we have no time for anything else than to talk about work or think about it during our time at work. Three out of four feel that their work tempo is governed by routines and deadlines. The number of workers who experienced high work intensity increased strongly during the 1990s. While 32 per cent of those employed described their work situation in such terms in 1989, the figure had increased to 37 per cent in 1993 and 44 per cent in 1996 (Weekly Statistics no. 47, 1997). Pressure increased, while the content of work worsened for a great many people. This not only contributed to increased stress and problems with keeping up, it also limited many people’s control and independence at work. The way work is organized reflects relations of power and powerlessness which are vital for the individual’s self-image.

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This represents a serious break with the tendencies of the early years of the welfare state. Then, many people experienced a long period of gradual improvement in working conditions - with reduced pressure from competition, shorter and better regulated working hours, greater job security, the introduction and consoli­ dation of sick pay, reduced work intensity and less stress. Many dangerous workplaces were made safer and working environment legislation was gradually improved. This took place at the same time as the employment rate increased, union rights were strengthened, workers gained greater co-determination both at their workplaces and in the companies, and so on. This does not mean that the working environment was ideal. Far from it - there were many problems and major challenges. The important thing was that the development was pointing in the right direction, that increased prosperity in society benefited everyone or at least nearly everyone. Working conditions and the working environment were gradually improved. This is where a serious break has taken place. The trend has been reversed, and the changes are so formidable in many areas that working people’s self-esteem is once more being exposed to serious attacks. S O C IA L D U M P IN G

In recent years, social dumping has become an increasing problem all over Europe. The prime role of trade unions and collective agree­ ments was to get rid of competition between workers on the labour market. The workers’ struggle to establish a monopoly on the sale of labour power was their answer to the employers’ monopoly on the ownership of the means of production. This resulted in national collective agreements, which established a common national wage level. Social dumping is about undermining this monopoly on the sale of labour power, so that employers can once again achieve a situation with increased competition between workers. In today’s Europe, it is in particular the large wage differences within the common labour market of the European Union and the EEA that are exploited by employers in order to promote social dumping and thereby undermine the wages and working conditions that have been achieved through negotiations by national trade unions. This problem has mushroomed over the last few years. The media report ever more serious examples of workers being blatantly exploited with regard to wages, working hours, health and safety

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and working conditions in general - and often living conditions as well. It has proved particularly attractive for employers in the richest EU/EEA countries to acquire labour from EU countries with the lowest wages, and to exploit them in order to undermine the conditions established in national collective agreements. The high-wage Nordic countries are seen as being very attrac­ tive in this respect. While trade unions in these countries welcome their European fellow workers, on the presupposition that they will adhere to the present laws and agreements, there are plenty of employers willing to exploit the situation. In such cases we see very little of the consensus policy, or so-called collective common sense, that should characterize the Nordic work model. The director of the Norwegian Labour Inspection Authority reported the following on the situation of the building industry in 2006: The Labour Inspection Authority has uncovered illegal conditions at every second one of the 700 construction sites inspected this year. ‘We have uncovered some quite grotesque conditions in these inspections,’ says Ingrid Finboe Svendsen, head of the Directorate for Labour Inspection. ... ‘Wages and lack of safety measures are one thing, but we have also seen unacceptable accommodation. We have seen foreign construction workers referred to factory premises for accommodation, without running water or heating.’ She adds that unscrupulous employers with foreign workers often operate with three versions of work contracts. ‘One version for us, another to the tax authorities and a third to the worker. We also know that some operate with agreements where the worker has to repay a proportion of the wages back to the employer,’ Ingrid Finboe Svendsen says. (.Adresseavisen , November 23, 2006) Also in the ordinary labour markets in the Nordic countries we have seen an increased tendency towards social dumping - especially in areas where trade unions are weak. In the hotel and restaurant industry, cleaning, the construction industry and the commercial industry a substandard state of affairs has long existed. A lack of work contracts, so-called on-call workers who are only allotted work assignments according to the changing needs of the employers, payment well under the levels stated in collective agreements and working hours in breach of existing legislation are well-known phenomena that young people and women in particular are exposed to.7

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Social dumping, in other words, does not only apply to the exploitation of foreign labour. It is not only a question of foreign versus national workers, but of power relations in society and at work. Increasing social dumping reflects precisely the fundamental changes in power relations that the neoliberal offensive has managed to implement over the past decades. More market, less democratic control, increased competition and more power to employers lead to attacks on pay and working conditions. Social dumping, then, is not something that accidentally happens now; it is the result of a shift in the balance of power in society. In many cases, social dumping takes place via systematic breaches of laws and agreements. Employers have proved themselves to be highly creative. In addition to false work agreements, referred to above, working hours are required that have not been legal since before the first labour protection acts at the end of the nineteenth century. Threats that foreign workers will be sent home in the event of disloyalty is another phenomenon that has been exposed by the media. According to the Norwegian Labour Inspection Authority, the working environment in the building and construction industry where labour immigrants are employed is characterized by: • a more frequent occurrence of serious breaches of safety regulations • a lack of documentation regarding pay and working conditions • a lack of work contracts • working hours far in excess of Norwegian regulations • wages under the minimum legal rates • appalling accommodation that violates a number of laws and regulations (Norwegian Labour Inspection Authority, 2 0 0 7 , p. 28) Much of the social dumping is, in other words, criminal practice. Even so, nine out of ten reports of social dumping are dropped by the police. Apparently, not all crime is equally important! A commentator in the Norwegian daily newspaper Nationen comes to the following conclusion: Society turns a blind eye to social dumping. When Poles, Lithuanians and other low-paid workers come in large numbers to Norway, breaches of work rules often take place. Yet nine out of ten reports to the police are dropped. That also sends a signal

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that it is not all that serious, as long as the labour is cheap and there is enough of it. (N ationen , August 23, 2006) In the area of social dumping we can also see how the undermining of democracy and attacks on trade unions go hand in hand. This is most clearly evident when we look at the four decisions taken by the European Court of Justice (ECJ) within the field of labour legislation from December 2 0 0 7 to June 2008 (further described in Chapter 8), which all went against the trade unions. These decisions effectively deprived the trade union movement of weapons and resources, and legitimized social dumping. Thus, democratically approved laws at the national level are being partially invalidated by a supranational - and far less democratically anchored - court of justice. Not surprisingly, employers are now using the judgments as much as they can in order to undermine wages and trade union rights - in other words, to further weaken the positions of the trade unions. With rapidly increasing unemployment in the wake of the financial crisis the trade unions are being further weakened, something that is eagerly exploited to an even greater extent by employers, governments and EU institutions. D R IV IN G F O R C E S

While tens of thousands of workers are excluded from work each year and social dumping is increasing, there is little focus even so on the real causes behind this development. M ost politicians and employers are narrowly engaged with the symptoms - with an unsavoury focus on the individual work ethic rather than on power relations and more deeply rooted developments in society. Not even the trade unions seem capable of looking very much under the surface (more about this in the next chapter). Here I first and foremost want to make connections between the considerable struc­ tural changes we have experienced in the economy and in society in recent years and the ongoing brutalization of work. We are witnessing a dramatic development when disability pensions are the most usual route to leaving work for an increasing number of occupational groups. Instead of individualizing the problem, moralizing about and stigmatizing those affected, I choose to look under the surface, to try to find the driving forces behind the increasing exclusion and marginalization of people in our society. In

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this chapter we are dealing with the world of work, but the tendency is also growing in schools and in society in general. This is impossible to understand unless it is linked to the funda­ mental economic and political developmental tendencies that during the past couple of decades have so strongly contributed to changing the power relations in society, and that thereby also determine the nature of work. The increasing pressure many experience at work, the increasing exclusion of labour and the rapidly increase in precar­ ious work are typical of neoliberal working environments in major parts of the world. The brutalization of work is not just something that happens - it arises out of actual power relations and political decisions. There are strong economic interests behind the changes in the economy, work and society that weaken workers’ protection. It is not difficult to identify the forces that in recent years have sought to weaken labour legislation, working hours regulations, pay and collective agreements. Spearheading them are employers and their associations - strongly supported by a broad spectrum of politicians. In many ways, the United States is the locomotive of this economic development. If my assertion about the connection between market liberalism and the brutalization of work is correct, we ought to see the strongest evidence of this in US society and working life. And there is little doubt or disagreement about this. It is there that the economic and social differences have increased most. It is in the United States that the attacks on working conditions and social security have been strongest - though the situation at the point of departure was admittedly already weak. It was there that Ronald Reagan started the neoliberal offensive with a frontal attack on the trade union movement when he defeated the air traffic controllers (see Chapter 4). Since then, the weakening of trade unions, deregulation and internationalization of the economy have had quite dramatic effects on workers. The United States has actually changed from being a high-wage country until the end of the 1970s to a low-wage country during the 1990s.8 Making the labour market flexible has created an army of workers who do not earn enough to maintain a normal life - the so-called working poor. There were 15 million workers, 18 per cent of the workforce, below the official poverty line in the United States in 1990, even though they were working 40 hours a week for 50 weeks of the year (Skarstein, 2 0 0 8 , p. 194). A great many of these have two or more part-time jobs and are constantly on the lookout for new opportunities, so that they can

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earn enough to meet their economic obligations and finance life for themselves and their families. In addition to what is often hard physical labour in many of these jobs, the situation also imposes a constant mental stress on these workers. They lose control over their own lives and feel increasingly alienated from society. To an increasing extent, they become marginalized and excluded.9 In Europe too, trade unions have been pushed back onto the defensive. Fourteen per cent of workers in the EU countries do not earn enough to cover their cost of living, and 25 per cent of all jobs are now considered to be precarious. Particularly in Italy, an explosive increase has taken place in the number of workers without fixed work contracts: 60 per cent of workers there now regard themselves as being in so-called atypical working conditions (Ricceri, 2 0 0 5 ). In Germany, the trade unions have been pressurized into accepting an extension of the working week from 35 to 40 hours in large sections of industry, mostly without any financial compensation. Furthermore, a large group of low-paid workers has been created, particularly within the service industries. Despite these setbacks, European trade unions have nevertheless managed to a greater extent than in the United States to defend wage levels and trade union rights. So the two continents have developed somewhat differently. While the figure for the working poor is largest in the United States, unemployment has been higher in Europe - at any rate until the financial crisis struck in 2008 and 2009. Now mass unemployment has reached levels that have hardly been seen since the Depression of the 1930s. In both continents, permanent jobs are increasingly being replaced by temporary jobs and full-time jobs by part-time jobs. Already by the end of the 1990s, such giants as General M otors, A T& T and IBM were no longer the biggest employers in the United States. They were overtaken by the employment agency Manpower, which now had the largest number of employees (Martin and Schumann, 1997, p. 168). The internationalization of production and the changed forms of competition that resulted from the deregulation of the movement of capital have made it easier for companies to shift production from one country to another. This weakens the potential counterforce that nationally based trade unions represent. The fact that the rapidly growing and incredibly mobile financial capital has also been given increased power to blackmail trade unions as well as national governments has furthermore made it more difficult for the labour movement to utilize its political power - should it still wish and be able to do so.

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As mentioned earlier, there is no doubt that the abolition of capital control constitutes the most serious attack on workers’ interests and power position in society over the past decades. This is what has made it possible for the multinational companies to employ a relocation strategy. They can move or threaten to move production and investments to other countries - a threat that is used for all it is worth, against both employees and the state. Formerly, the trade union and labour movements were able to fight successfully for new, stricter labour legislation, against the wishes and interests of employers, and then use such legislation as a tool to improve conditions in the workplace. Today, many employers can quite simply avoid existing laws by moving produc­ tion and investments to a country that has weaker trade unions, labour legislation and collective agreements. This so-called exit strategy does not by any means apply to all companies, and it is not used to the extent many claim. The threat of relocation, however, is used frequently - and with effect. Many large companies have used such threats. In shipping, this has been a reality for decades, ever since the use of flags of convenience mush­ roomed after the Second World War. In Germany, almost a million industrial jobs were relocated to countries with cheaper labour and lower taxes during just the first half of the 1990s (Balanya, Doherty, and Hoedeman et al., 2 0 0 0 , pp. 7 -8 ). The Volkswagen example from Germany in the late 1990s illus­ trates how the threat of relocation can be effective for employers. Car sales were good, and the company was planning to build a new factory with 5,000 workers. The factory could not, however, be built in Germany, according to management, because the costs were too high. There was of course an outcry that one of the key companies in what has been the German economic miracle in the post-war period intended to relocate in this way. IG Metall, which is considered one of the world’s largest and most powerful unions, entered into negotiations with Volkswagen. These ended in an agreement where the 5,000 new workers could be employed at less than tariff wage and with more flexible working hours than those justified by existing agreements. At the same time, the union gained certain concessions regarding training and participation in decision making. Volkswagen’s management got what they wanted by threat­ ening to relocate, and it was decided to build the factory in Germany (<www.eurofound.europa.eu/eiro/2001/09/feature/de0109201f. htm>, accessed August 23, 2011). Since working conditions and welfare in a society are so strongly

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dependent on the power relations in that society, the shift in the balance of power which we have experienced during the past decades is decisive for the increased pressure at work. I sometimes confront politicians with this, pointing out that it is their deregulation of the markets, market-orientation of the public sector and introduction of increased competition that contribute to the brutalization of and exclusion from the labour market. A surprisingly unified response has been: ‘But we take for granted that labour protection legislation is adhered to !’ This touchingly naive view of what it is that influences labour relations in a workplace is both highly revealing and frightening. If politicians believe that the iron law of the market can be increasingly let loose without this impacting on labour relations because of a few legal formulations, they have clearly lost sight of essential connec­ tions. As I mentioned in Chapter 2, the reining in of capital forces in the post-war era was far more important in promoting power and influence in the union and labour movements and thereby improving the working environment than any formal legal rights. Or, to put it another way, the regulation of capital and market forces contributed to giving real content to formal trade union rights. In a nutshell, labour-protection legislation with and without capital control are two completely different things. Let me illustrate this by a more concrete example. One of the activities in society that is most exposed to competition via tenders is cleaning - in both the private and public sector. The work is physically extremely demanding, and hardly anyone is capable of carrying out such a job throughout a whole working life up to normal retirement age. We know more than enough about what the introduction of tenders leads to. If a company wants to win such a tender, its costs must come down - that is the main intention of the whole operation. This systematically leads to the individual having to clean more square metres in a shorter space of time than before tenders were introduced. No working environment legislation can prevent the effects of this - it is like ordering more exclusion and earlier disability pensions for an increasing number of people. So despite strong legislation there are many who have to sacrifice their job on the altar of competition long before normal retirement age. When nurses burn out because of undermanning, and their strong sense of duty towards those who are ill and injured means they end up doing double shifts in order to compensate for this, it is not defective legislation that is the underlying cause. It has to

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do with defective implementation of the legislation and insufficient prioritizing of resources - although first and foremost it is caused by power relations that make it possible to exploit labour in this way. It is important to have good labour protection laws and collective agreements, but that is far from enough. Without a climate in society that approves or supports such measures, without democratic control and regulations that reduce the pressure from market competition, without power relations that make it possible to intervene against market forces, and without strong unions that can ensure that regu­ lations are adhered to, the result tends to be deteriorating working conditions. A B O L IS H W O R K F A R E P O L IC IE S !

Powerful forces in society are in the process of undermining and weakening many of the achievements that were made during the golden years of the welfare state. What is the answer of the politi­ cians to the dramatic situation we are facing? Their answer to the challenge is called workfare policies. These became the predominant social and labour market policies throughout the Western world in the 1990s. The origins are to be found in the United States during Ronald Reagan’s presidency, when the policies were labelled welfare-to-work. Since then, w orkfare has become the most used buzzword for this policy in Anglo-American countries, often as an alternative - or even as opposed - to welfare. It is not at all a bad neologism, for the workfare actually represents a breach with some of the fundamental principles of the welfare state. It constitutes the most important part of the welfare state paradigm shift I dealt with in the previous chapter. One of the rhetorical marketing slogans of workfare is m ake work pay. This is Orwellian newspeak10 that translates as, you will be punished if you are not able to work. Attempts are therefore sought to change social security and benefit schemes into the workfare system of punishment and reward. The workfare ideology underlies many of the comprehensive pension reforms carried out over the past two decades. While the labour market policy in the early phase of the labour movement was system-critical and based on the ‘right to work’, it is now system-loyal and based on individual incentives from above. This development has been made possible by the de-ideologization and demobilization that took place in trade unions in the post-war

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era (see Chapter 2). In the early days of the labour movement, it was precisely working people and poor people themselves who created their trade unions and political organizations in order to free them­ selves from market forces, exploitation and oppression. They were themselves important actors and subjects on the historical scene. Now the excluded and marginalized have become extras; they have become objects for political engineering by the economic and social elites. In the same way that the bourgeoisie in former ages sought to educate the lower classes by means of punishment and reward, today’s elite now use their economic incentives to ‘adapt individuals into becoming fully worthy employees’ (see the full quotation on page 127). The entire ideological foundation of workfare is based on distrust and suspicion. Even if this is not always expressly stated - that is not done in the age of information consultants and spin doctors - it is patently obvious in every context that it is a lack o f w ork ethic that is seen as the main problem. It is more than suggested by the media, right-wing populists, employers and leading politicians that this is what lies behind any increase in sick leave and disability retirement. One of the most unsavoury aspects of this policy is the massive denigration, suspicion and moralizing that many of those excluded from work have to face. Jane from Moss (Chapter 1) is just an example - I have met countless others who are in the same boat. Not only are they exposed to increasing insecurity and physical and mental pressure at work, they also have to put up with censorious looks and moral condemnations from the social elite and the media’s successful middle class - not to mention economic punishment disguised as incentives to increase work participation. All measures seek to imply that it is not the working environment that is at fault - it is you! In this way, one of the most widespread social problems of our time is individualized and turned into a right-wing populist divide-and-rule policy. Groups are put up against each other, and solidarity is weakened between people who have everything to gain from standing shoulder to shoulder. It is also necessary to point out the so little communicated fact that workfare doesn’t work - it does not at all fulfil what is its asserted aim (more about the effects in the next chapter). The policy, however, has important side-effects. It contributes to disciplining people, not only those with long-term illnesses and those on social benefits but also those still at work who feel their position in the labour market is insecure even so. Research, by the way, has also

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shown that in the countries where workfare policies have been used most, the effects have to a great extent been negative both for the poor and for workers. The US welfare-to-work programme, for example, contributed to increasing inequality in society and to weakening workers’ rights (Handler, 2000). Work moralism is not something new in history. In former ages, the focus on work ethic and economic incentives predominated in the attitude towards the unemployed and poor, as the following quotations make clear: Admittedly there was unemployment and hardship, but also moral failure: ‘that concealed behind this lies a great deal of unwillingness to work, laziness and idleness is certain,’ was one employer’s opinion. He could tell that the handing out of contri­ butions to the unemployed in Kristiania had led to a lack of workers, and that it was ‘practically impossible to get a worker to do any work’. ... Or, to quote a directive from the Ministry of Justice to the local authorities in 1932 to give public assistance at such a low level that it only just prevented people from ‘succumbing’, an expression already met with by the commission on the poor in 1853. (Seip, 1981, pp. 66, 76) Today’s version of the workfare policies, in other words, has strong historical roots. These attitudes were, however, combated by the labour movement, to such an extent that by the end of the 1930s unemployment was ‘recognized as an economic problem of the system, not a moral and individual problem’ (Seip, 1981, p. 94). The workfare policies, then, take us back to the 1920s and 1930s in terms of socio-political thinking. One of the most serious effects of this is that the organization and arrangement of work, along with a focus on power relations at work, has completely vanished as a topic in the public debate. In the trade union movement, in many businesses and companies there are still activities, projects and discussions about organization, power and management. These topics have, though, disappeared from the media, and attempts to have them discussed in central political circles are met with uncomprehending and impatient looks. The Swedish Social Democrat Ingemar Lindberg, who has become a trenchant critic of the neoliberal project, apparently experiences the same thing:

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The organization of work is one of the factors that most affects people’s health and well-being. It is here we can find the main cause of the health-related class differences that exist. The basic factors which determine this seem at present, however, to be taboo; it does not seem to be possible to raise questions about the employers’ right to manage. The weakening of the psycho-social working environment and mental health over the past 2 0 -3 0 years places power issues on the agenda. To question the existing order is not about discussing the moral quality of employers but about examining and correcting systemic faults. (Lindberg, 2 0 0 7 , p. 67) The main focus when the new Working Environment Act was passed in Norway in 1977, that work should be adapted to human needs and not the reverse, has disappeared from the agenda of the present debate. What remains is moralism, suspicion and discipline - and we have reason to fear that things will get worse as exclusion intensifies. Norway has some of the world’s most advanced working environ­ ment legislation. It was developed as a sophisticated tool for creating good work. In the light of present-day brutalization of work it is well worth citing a section of the Act: The working environment in the undertaking shall be fully satis­ factory when the factors in the working environment that may influence the workers’ physical and mental health and welfare are judged separately and collectively. ... The organization, arrange­ ment and management of work, working hours, technology, pay systems, etc. shall be arranged in such a way that the workers are not exposed to adverse physical or mental strain and that due regard is paid to safety considerations. ... The design of each worker’s working situation shall pay regard to the following: • arrangements shall be made to enable the worker’s professional and personal development through his or her work, • the work shall be organized and arranged with regard for the individual worker’s capacity for work, proficiency, age and other conditions, • emphasis shall be placed on giving workers the opportunity for self-determination, influence and professional responsibility, • workers shall as far as possible be given the opportunity for variation and for awareness of the relationships between individual assignments ...

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The work shall be arranged so as to preserve the workers’ integrity and dignity. Efforts shall be made to arrange the work so as to enable contact and communication with other workers of the undertaking. ... The workplace shall be equipped and arranged in such a way as to avoid adverse physical strain on the workers. ... Arrangements shall be made for variation in the work and to avoid heavy lifting and monotonous repetitive w ork.11 (Working Environment Act, 1977) It is hardly an exaggeration to claim that these ambitious goals are in the main being ignored in large parts of working life. The previously strong focus on the organization of work has at least disappeared. It is clearly no longer the case that work is to be adapted to human needs. Now it has become obvious (to the social elite) that ‘not everyone fits’. The task is thus rather ‘to adapt individuals into becoming fully worthy employees’ (as quoted earlier) in the increas­ ingly demanding working life as it develops. Today’s work demands , people say, as if today’s work was an objective entity, unaffected by power relations and economic interests. The entire political establishment is firmly behind the workfare policies. What, politically speaking, is most tragic is that in Europe the Social Democrats have been among the main architects of much of this political inheritance from Reagan’s United States. Most of the traditional left-wing parties have, with few exceptions, stuck together through thick and thin in favour of this oppressive work moralism. The right-wing parties can in the main enjoy the fruits from a distance. Even the trade unions have supported workfare, although critical voices are now beginning to be heard. L O S S O F W ELFA R E?

Much seems to indicate that the time has come to pose more funda­ mental questions about several aspects of the prevailing tendency in the world of work - including the massive pressure towards increased efficiency, increased productivity and increased economic growth. Both more efficient production and more efficient use of resources in society are important aims. Increased productivity in certain areas can liberate resources for other tasks that have high priority. Economic growth can help to make life better for more people - but not if we lose an overall view, and not without conditions. That is where the most important problems lie at present. The point is that we have to include the total costs, the

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expenditure side, of these processes. This particularly applies to social costs. Increased efficiency resulting from technological devel­ opment or better forms of organization - and that are not at the expense of the working environment, work intensity and quality is a goal well worth pursuing. Improvements in efficiency resulting from sheer downsizing, increased work intensity, shorter breaks and tighter margins are something completely different. That savings in one place can end up as increased expenditure somewhere else in the national accounts is something we have seen a great deal of as work intensity and competition have increased. It is, of course, a problem that we are dealing with two different budgets: savings take place in the company budget, while expenditure is part of the public insurance budget. It is not only in the trade unions that people have been interested in this phenomenon. After several rounds of a controversial efficiency drive and competitive tendering process for waste disposal in the municipality of Oslo some years ago, the managing director of the municipally owned waste disposal company said the following (admittedly not until he had already retired): I believe in competition, but there is another side to the picture. ... Speaking more generally, I would say that the required amount of physical effort has reached a point where house refuse collec­ tion is only a job for young people. ... There’s no point in saving a few kroner on waste disposal if the cost to the pension budget is twice as high. (Kretslopet no. 5, 1998) From the employees’ point of view these experiences are quite unequivocal - something that has strengthened the resistance to competitive tendering and other market experiments. Politicians and bureaucrats have learnt the cliche that it is a question of ‘working smarter - not harder’, but feedback from those at work is that it has become more intense. The fact that this takes place in industries and in occupations where exclusion and disability pensions are already the most usual way of ending a working life (in cleaning, for example), means it is not hard to guess what the result will be. Many of those affected experience it as a raw, cynical buy-and-throw-away mentality towards workers. Thus, increased market competition comes at a price. When I occasionally debate with economists, I am quite often confronted with the argument that if we implement measures that

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lead to reduced economic growth, this will lead to a loss of welfare for the population. This unusually narrow approach indicates that they are not operating with an adequate debit side in the accounts. Economists ought to do so. If economic growth increases as a result of increased work intensity, flexibility and pressure at work, but there are increased sick leave, health problems and exclusion as a result, we can end up with a considerable minus side in the accounts. If there is any positive final result at all, one thing is at any rate certain in today’s world - that a few people will make off with most of the pickings, while the others have to bear the brunt of the burdens. The probability is also large that the total result will be a negative one.12 In that case, it is not only humane but also economi­ cally gainful for society to adopt widespread measures to reduce the physical and mental pressure at work. Under the welfare economy people experienced a direct connec­ tion between economic growth on the one hand and a better quality of life and working conditions on the other. This connection was severed under neoliberalism. During the 1980s and 1990s, the economy continued to grow, although not as quickly as during the preceding period, but for a great many people this growth led to setbacks instead of further advances. Large parts of the population found that increasing growth and a pursuit of efficiency did not lead to a better life. Rather the contrary - uncertainty grew, the pressure on the individual increased, and physical and mental stress flourished in an ever more demanding - and for many more insecure - working life. This created - and still creates - discontent, a discontent linked to insecurity about the future, uncertainty in everyday life, less influence over the work process and a stronger feeling of powerless­ ness. At the same time, we can see a social elite that is exempted from the demands made on others, but that is constantly gaining new privileges for itself. These tendencies gradually contribute to undermining the legitimacy of the prevailing economic order. You do not have to be at a workplace lunch break for long nowadays before hearing people expressing their discontent and anxiety about these tendencies. Those in the political elite, and many too in the labour movement, are becoming increasingly less aware of what is going on in workplaces. Time after time their state­ ments reveal that they are far removed from the reality in which the majority of workers live. And this leads to a yawning gap between the political elite and ordinary people, with right-wing populists

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uninhibitedly fishing in the troubled waters of discontent that are being created. Increased efficiency, productivity and economic growth are, then, not something to be striven for or to support if the price of growth is greater than any eventual gain - and especially if the gain is dispro­ portionately creamed off by those at the top of the social pyramid, while the bill is footed by the workers. Can we really expect those who pay the price, those who bear the burden of the brutalization of work, to mobilize any enthusiasm for increased growth and effi­ ciency? Is it not more reasonable to expect that work motivation will fall drastically in such a situation - and with good reason? Many forms of illness and work disability under such conditions are really nothing more than the physical and mental defence mecha­ nisms of the body when encountering increasingly intolerable stress and pressure when at work. Illness, disability and a loss of work motivation can, in other words, be rational and understandable responses to the brutalization of work and the increasing inequalities in society. It is perhaps this that the elites of society are afraid of, since discipline and the whip are increasingly being used on workers, not least through the workfare policies. With the present debt crisis, increasing unemployment and the massive bottom-up redistribution of wealth now taking place in society, and which we described in the previous chapter, an even more repressive social and labour market policy is developing. Thus, the restructuring and dismantling of the welfare state intensifies as power relations are further shifted in favour of capital. This policy will not be changed from above, by the elites of society. All historical experience teaches us that it is only via a broad mobilization from below and a fundamental shift in power relations in society that any significant change can take place. And we must firmly place responsibility where it belongs - with the forces in society that promote the brutalization of and exclusion from work. If the struggle for power at work is lost, we can risk that the welfare state as we know it being reduced to a social workshop where the victims of a social and working life that is at best ruthless are repaired. This means saying goodbye to Social Europe as well as to the Nordic model. It is time to turn around. Stop the attacks on the victims of a brutal working environment. We should rather ask what is wrong with an economic system, a society and workplaces that produce problems such as those described above - to an increasing extent and alongside growing prosperity. What is it that prevents us from

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developing a society and a working environment where human abilities, needs, wishes and dreams are centre-stage? What is it that creates the great distance that now exists between the life we want to live and the life we are offered under today’s capitalist system? And where do we stand when it comes to identifying the driving forces and social causes that at present are leading us backwards into the future? This we will look at more closely in the next chapter.

7

THE MISERY OF SYMBOL POLITICS An analysis of the balance of power in society is crucial for devel­ oping political solutions - for the choice of alliances, strategies and tactics. The depoliticization and deradicalization of the labour movement, however, have weakened its analytical powers. If funda­ mental analyses of causes and driving forces in society are lacking, there is a danger that the political response will be symptom and symbol politics. This has increasingly been the case over the past decades. As more and more power has been transferred from politics to the market and the political room to manoeuvre has become constrained, potential space for symbol and symptom politics has increased. If politicians cannot deal with the causes, they can at least elucidate and implement comprehensive programmes aimed at combating the symptoms! The problem with such a shift from causes to symptoms is the lack of results. Social problems become ‘insoluble’. This gives rise to a contempt for politicians. When it is left-wing politicians who indulge in this sort of symbol politics, it naturally also contributes to weakening the view that it is the Left that, historically, has the greater credibility when it comes to combating social problems. This makes it easy for right-wing populist parties, who often channel the struggle against other groups instead of trying to deal with the real causes and driving forces of the problems. Over recent years, we have seen how symbol politics has spread in a number of areas in society - combating poverty, exclusion from the labour market, increasing inequalities in society, to name just some of the most central issues. First and foremost, symbol politics spreads to the areas where we witness the most negative effects of today’s unbridled capitalism. In these areas, things tend to move in the opposite direction to the proclaimed political aims. Despite this, political aims and methods that actually do not work often have an impressive staying power. The political elite does not allow itself to be influenced in any way by the lack of results - and there is an uncommon unanimity across the political parties. Another dangerous negative effect of this tendency is that social problems are individualized: if the policy to combat poverty does not work, it must be the poor who are at fault. If workfare does 159

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not manage to reduce exclusion from work, there must be something wrong with those who are excluded. If heads of industry continue to line their own pockets with monumental bonuses and share options, despite repeatedly being requested not to do so, it is not the system or power structures that is the problem but the greed of individuals involved. When the results of symptom politics fail to appear, an increas­ ingly repressive disciplining policy is therefore imposed on the victims of an ever more excluding society. That is the logical conse­ quence of pursuing individualized symbol politics. If these measures fail to help, they must naturally be made even more rigorous and numerous. If sick leave does not decline, or if the number of people excluded from the labour market and granted a disability pension is not reduced, the proposals come thick and fast: more control, more stringent regulations, a reduction of benefits and so on. In this way, policy in such areas gradually becomes more inhuman and reactionary, resulting in widespread dissatisfaction, apathy and an inability to act. The tragedy is that the policy is even promoted by those traditionally viewed as being on the political Left. The social democratic parties have themselves been the architects of much of the symbol and symptom politics of the past decades. Centre-left governments have showed just as little inclination to try and analyse or understand the problems of increasing poverty, exclusion and marginalization as more right-wing governments. The moral indig­ nation of some parts of the left wing on behalf of the poor does not, unfortunately, compensate for the serious lack of analysis of and insight into the more fundamental social causes of increasing social inequalities and marginalization. T H E W O R K F A R E F IA S C O

Let me return to where I left off in the last chapter - with workfare, which has played a key role in the transformation of the welfare state. There I criticized the political content of workfare. In addition to this criticism now comes the not insignificant fact that the real development of the labour market has broadly speaking been the precise opposite of what was intended by the policy. In other words, workfare has been a political fiasco - if judged by its declared aims. The aim of workfare has been to reduce the number of people on social security - and get them back to work. Disability pension is to be reduced, sick leave is to be brought down - the aim is to ‘make

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work pay’. People are to get the chance of maintaining themselves an excellent goal in itself, of course. It has just not been particularly successful for the groups that have been in focus. The overall spend on disability pensions has slowly but steadily increased. Sick leave has fluctuated but remained at a fairly constant level, although not particularly high. Long-term absence from work has actually slightly increased. The disabled people who have actively been demanding a job are nearly all still standing on the outside. But it still pays to work - as it always has. Various campaigns to create a more inclusive working life have virtually failed, because they are based on the same narrow, deficient perspective as the workfare policy itself. That is what happens if people believe that creating an inclusive working life is a matter of good intentions and well-meant appeals, not of power relations in society and at work. Nor have the trade unions managed to any particular extent to shift the focus away from the good intentions to the more fundamental driving forces behind the brutalization of work. There are hardly any other areas in society where this could have gone on for such a long time without giving rise to a serious discussion of the lack of success. The most striking thing perhaps is that politicians of the main political parties, who are completely unanimous in their support of workfare, continue to talk and act as if it was having the desired effect. It is in the process of turning into a kind of surrealist political theatre. For it does not seem to affect the politicians all that much that the huge gap between good intentions and what is actually happening in the world of work is growing wider and wider, making the rhetoric about workfare increasingly divorced from the reality of the tough economic facts of the workplace. Professor of Medicine Anders Gogstad summed this up matter-of-factly in this way: ‘It seems increasingly obvious that “the workline” based on the present guide­ lines has not led anywhere. Regulations and requirements in “the Rehabilitation White Paper” of 1 9 9 1 -9 2 have proved purposeless’ (D agbladet , June 19, 2000). There are several reasons that the problems of workfare have not yet gained their rightful place in the social debate. First, it is a non-trendy topic among the urban, postmodern higher middle class, who themselves have varied and stimulating jobs. They dominate the media and thus have a strong influence over the public debate agenda. Second, those who govern and those who are governed are increasingly being recruited from separate social strata. In other

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words, those who govern have little knowledge of people’s everyday problems. Third, those affected, themselves greatly influenced by the hegemonic ideas in society, tend to individualize and internalize the problem: I’m the one who’s not good enough; I’m the one who’s unable to master the new demands at work. A further reason for the lack of discussion is to be sought in the de-ideologization and depoliticization of the labour movement that took place in the era of the class compromise (see Chapter 2), The long-term effects of this tendency contribute a great deal to weakening political alertness to such symbol politics. In addition to this, workfare policy naturally also becomes more impenetrable in this age of spin doctors, since the message is dressed up in a rhetoric that effectively masks the real power relations in society. That is why the workfare ideology has become a shared concep­ tual framework for the political elite of society - cutting across the traditional Right-Left axis. The policy seems to have a disciplining effect among workers, and it contributes to privatizing responsibility for problems which are highly social. Both of these are well-known right-wing virtues. For the political Right, this is of course much preferable to the alternative, which could hardly mean anything other than a complete shift of focus - from placing the responsibility on the victims of brutalized work systems to highlighting the power relations in working life, something which necessarily would involve a system-critical approach. Nor in the trade union movement, which despite everything sees the effects of this policy much more at close quarters, has any fundamental criticism been made of workfare policy. There have been some critical tendencies, with dissatisfaction expressed about the effect of the policy in concrete instances, but criticism has often ended there. No one with any real weight has posed questions about what must be done with the power relations in society and at work to prevent exclusion and marginalization. Some of this might be because the trade union movement has limited itself to the employees’ situation to a great extent: its core constituency is those at work. This is a criticism that has occasion­ ally been raised against the trade unions by, for example, many of the poor, marginalized and unemployed who have formed their own organizations. There are, however, a great many members of the unions who are affected by exclusion from work, or from being viewed with suspicion and denigrated when they have problems coping with their jobs in an ever more demanding working climate.

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The lack of critical reactions from trade unions could also be a result of the misplaced strong loyalty that large parts of the movement feel towards the policies that social democratic/ socialist parties support at any given time. This loyalty has admit­ tedly weakened over past years, but without any change taking place regarding the individualizing, disciplining workfare policies. Without a doubt, the trade union movement would have gained from collecting and analysing the experiences of members who have been through the workfare apparatus in recent years, with a view to politicizing the area and developing a more humane social and labour market policy. What is so wrong with workfare? Why doesn’t it work? As I touched on in the previous chapter, it is because it does not address the causes of the increasing exclusion of labour. It goes for the symptoms. In this way, the politicians - consciously or unconsciously - promote what I would call the great illusion of work. If we fail to analyse, or if we actually attempt to deny the existence of, the power structures and driving forces that underlie the brutalization of work, we will naturally remain unable to combat this tendency. There are causes and there are effects, and if you want to influence the effects, you must - naturally enough - combat the causes. Workfare completely fails on its own premises. It is not true, as is claimed, that reduced benefit schemes provide an incentive to seek work. Rather, the opposite is the case. An increasing number of surveys show this. A comparative study indicates that it is not reduc­ tions of benefits but rather generous benefit schemes that increase the individual’s incentive to find work (Halvorsen and Stjerno, 2 008, note 53). Good social security gives people the much-needed self-confidence boost that enables them to become active players in society. The following analogy well illustrates the politicians’ role. When they let loose market forces and introduce ever more profit centres also in the public sector and an ever stronger quest for efficiency, while coming up with political tools that are one-sidedly targeted at the negative symptoms of this policy, it is like opening the floodgates and then forbidding the water to flow. M ost people understand that this is pretty futile. Measures, laws and regulations quickly prove lightweight when pitted against the economic iron laws of the market that are being let loose in one area after another of society. A report from the European Foundation for the Improvement of Living and Working Conditions comes to the same conclusion:

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The conclusion of the report is that none of the measures [implemented] during the 1990s has led to better health. Despite a number of laws and regulations in several areas, including minimum standards in relation to safety and rest, the working environment is worsening. Companies are trying to deal with increased competition on the world market. Even if working hours have been reduced, intensity and demands being made are greater. This leads to tighter deadlines and stress, the European Foundation concludes. (LO nytt , February 5, 2001) The measures, then, do not work because they are based on the illusion that you can reduce the problems by attacking the symptoms. A quite extreme example of this failed policy was in the case of the Norwegian postal service, Posten, which really was one of the bad guys in excluding labour during the 1990s. Sick leave actually increased after its campaign to try to reduce it (Aftenposten , September 11, 2000). The results of a brutal reorganization process could naturally not be mitigated by a well-meant campaign. The depoliticization of the brutalization of work and the indi­ vidualization of the causes are supported not only by the political elite and employers but also by a whole cluster of more or less genuine professions that are ready with their ‘individual mastering strategies’. Once again, it is not work that is to be adapted to human needs, but people who have to learn to tackle the burdens of an ever tougher working life. There is no lack of proposals, such as quitting smoking, fitness training, acquiring a personal coach or using Chinese chi gong techniques - not to mention the creative, generous advice of the then Norwegian minister of foreign affairs, Thorbjorn Jagland, once gave: to take up yoga, breathing exercises and physical training during working hours (N ationen , January 6,

2001 ). It can of course be useful in many areas to improve and hone our personal skills in order to be able to cope with and resist physical and mental overload. When the entire problem of increased pressure in working life is reduced to a question of individual mastery, it probably reflects to a greater extent the depoliticization of both the labour movement and society in general. It seems to be an aversion to getting to grips with the core of the problem, the brutalization of work we are experiencing in the wake of the letting-loose of market forces. The real proposals for more discipline and sanctions which have

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been advanced in recent years, and which come when symbol politics does not work, are however not just symbolic. They are extremely unequivocal and concrete, with serious consequences for those who happen to be affected by them. Even so, they are still only trying to deal with the symptoms. Among the many remedies suggested and partially implemented - we find stricter qualifying conditions for disability pension, reduced benefit rates,1 the introduction of a waiting period before the right to benefit is allowed, reduced sick pay, frequent retraining and changing jobs.2 The expressed concern of politicians has mainly been focused on expenditure to the pension budget - not on the consequences for those affected by the cuts. Workfare is based on a market-liberal view of human nature. It all has to do with hom o econom icus (see Chapter 5), whose focus is on maximizing his own interests, and who will not work unless he is encouraged via incentives to do so. Humans as communityminded, socially responsible beings, who wish to take part in the productive activity of society along with their fellow beings, do not exist in neoliberal ideology. It is an instrumental, reactionary view of human nature, completely at odds with what have historically and traditionally been the basic values of the labour movement. Nor does it have any solid foundation in research (Kohn, 1992). It is therefore serious when such a view has been allowed to spread without stronger reactions and countermeasures from the labour movement’s own ranks. In the history of the trade union and labour movements, improved working conditions and working environments are a result of social struggle. Every step towards increased welfare and better working conditions for working people has resulted from combating strong economic and political forces in society. Improvements have been achieved by curbing the forces of capital, intervening in the markets, reducing destructive competition and placing an increasing part of the economy under democratic control by society. Limiting the power of the market and improving working conditions were and are two sides of the same coin. Now, however, society’s political elite is attempting via workfare to replace the bottom-up struggle of the trade union movement by repressive, top-down social engineering. B LESSED ARE T H E PO O R?

The road from workfare to poverty is a short one.3 This is first because poverty is to a great extent linked to people who are outside, or only loosely connected to, working life. It is mostly people who

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are dependent on social benefits and various pension schemes who become poor, even though there are also an increasing number of low-paid workers who work hard to try to make ends meet. This especially applies to those affected by the housing boom - first and foremost in the large cities. Second, the workfare policy actually contributes to making the fight against poverty more difficult. This is well illustrated by the following quotation: In order to ensure that it pays to work, it is important to make sure that benefits do not increase more than wages in the lowestpaid sections of the labour market. Emphasizing workfare therefore means that Norwegian authorities have to find ways of solving the problems of poverty without increasing the level of support all that much. (Flotten et al., 2 0 0 7 , p. 89) The workfare ideology, which says that people must be punished economically if they do not have a job, thus becomes a barrier that prevents social benefits from rising to a decent level. If politicians start by claiming that it is people’s work ethic and will to work that are the main problem, it then becomes important to make life outside work as unpleasant as possible. The Gordian poverty knot described here by researchers faithful to the system is that ways have to be found to solve the problem of poverty without the poor getting more resources. That is truly a demanding task. That ‘wages in the lowest-paid sections of the labour market’ are to decide the size of benefits is another interesting aspect of the ‘making work pay’ policy. We could imagine a different approach to the problem - from a left or centre/left government at any rate - that public benefits are regulated so that they actually help prevent the emergence of an extremely low-paid stratum in society. That would make it possible to neutralize the development of an increasing number of working poor, a trend that has mushroomed as a social problem in the United States and is now invading European working life. We see tendencies for such low-paid groups developing within the Nordic model as well, mainly in service sectors where there is little unionization. Some people talk about the new burger proletariat, the name coming from those who serve hamburgers in the street vendor industry, although the problem is much more extensive than this. If we do not want such a development to take place in society, it is simply a question of setting public benefits at a level that makes it

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more difficult for cynical capitalists and employers to exploit weak groups in the labour market. The year 2 0 1 0 was designated the European Year for Combating Poverty and Social Exclusion. We could perhaps then have expected effective measures to be introduced to combat the widespread poverty, and poverty statistics to have begun to dip. This did not happen, however. There are still more than 80 million poor in the European Union, and the financial and economic crisis of recent years has led to more people experiencing economic insecurity and social exclusion. Precarious work is growing, as is the number of working poor. Nor has there been any lack of good intentions and aims during the EU poverty year. Comprehensive documents have been drawn up, and a number of non-governmental organizations (NGOs) and networks became involved in a common campaign over what they refer to as the fight against poverty and exclusion - but with a striking lack of results. Despite this, few question the content of these campaigns. Why did they not succeed, and why does no one ask the more fundamental questions - whether the campaigns were targeted towards the real causes of and driving forces behind poverty? Here too, however, the conclusion is clear: combating poverty has lapsed into mere symbol politics, where the sympathy expressed is great, but the will and ability to make real changes correspondingly limited. Poverty and exclusion from society and work have often been the focus of widespread debates. In election campaigns, we have not infrequently witnessed the rhetorical struggle between two government alternatives as to who has done and approved most. The problem has been that poverty has continued to rise, despite the actual governments’ professed efforts. It has all remained symbol politics. Voters have grown more and more tired of this rhetorical battle at the top political level, especially when they cannot see results of any importance after the great efforts claimed. We have not seen much in the way of more fundamental analyses of the underlying social forces and causes of poverty. On the other hand, we have experienced the unsuccessful combating of poverty being used to attack a cornerstone of particularly the Nordic welfare state - the principle of universality. Universal models are too expensive and not accurate enough, we are told. What are needed to combat poverty are measures that are directly targeted at the poor, tailored to their needs. In other words, it is time for means testing once more, but in the age of spin doctors, naturally with updated

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names for the concepts: targeting and tailoring. If the causes of poverty are neither to be uncovered nor combated, there are few possibilities left except to return to an - admittedly dressed-up version of the familiar charity to the worthy poor. This tendency has prevailed almost irrespective of the parties in power. Neoliberalism both as practice and theory has been so predominant that it has often been difficult to distinguish between policies towards the poor and excluded in Norway, whether the right, centre or centre-left were in power. Because of this, it was both surprising and ambitious when the new Red-Green Norwegian government stated in its government declaration in 2005 that its aim was to abolish poverty in Norway. This was part of a govern­ mental platform which at the time distinguished itself by being the most left-wing in Europe. (It must immediately be admitted that the competition has not been particularly great over the past decades.) It did not take long, however, before both the leader of the most radical party in the government, the Socialist Left Party, who had become minister of financial affairs, and the labour minister of the Norwegian Labour Party hurried to scale down people’s expecta­ tions. Both admitted that it would be difficult to achieve such a target. The promise to abolish poverty was reduced by the latter to an ambition that ‘lies several decades ahead’ (Bergens Tidende BT.Magasinet , July 29, 2 0 0 6 , p. 16). The Norwegian Red-Green government was completely right about it proving difficult to abolish poverty, for not much has been achieved. The main problem, though, is that the traditional left-wing parties do not possess any other analysis or understanding of the problem of poverty than the Centre or Right. No more profound analysis exists of causes, no system criticism - only superficial descriptions and an individualization of responsibility. In such a situation, the result can hardly be anything else than symptom and symbol politics. In one area politicians could actually - precisely via symptom politics - have contributed to making life easier for quite a few of the poor: by increasing social benefits. This does not help to combat causes or driving forces, but it can mitigate the effects for those affected and give them a more decent life. In Norway, the National Institute for Consumer Research worked out how much is needed to finance a quite unassuming existence in our society Existing social benefits lie well below this figure. Here it is neither mystifying globalization nor a lack of economic capacity that is the problem.

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But the politicians’ own workfare ideology forms an insurmountable barrier to increasing social benefits. It is not, then, simply for economic reasons that social benefits are not being increased, but through a conscious, cynical wish to keep social clients below the poverty line. If governments are to ‘make work pay’, they must make it economically unpleasant to be outside work. A lot can be said about this, but it is at any rate a conscious political choice. It is inhuman, it is cynical, and it is a flagrant breach of the promise-filled targets for combating poverty in the Red-Green government’s declaration - and in the policy of many other governments. There have always been opposing views concerning the fight against poverty in society. There have been two main positions: those who have linked poverty to more comprehensive develop­ mental tendencies in society, and those who have promoted a more individualistic and moralistic perspective. The polarized nature of the debate has to a great extent corresponded to that between the Left and the Right in politics. In an early phase of modern society, the conflict also found expression in the struggle between public, universal welfare on the one hand and private charity on the other. Even so, the debate concerning poverty has seldom been less polarized than it is today, mainly because the more comprehen­ sive social perspective hardly features in the debate any longer. There is large cross-party agreement concerning the individualistic approach, with the right wing having won the ideological battle. System criticism has fallen silent, something that can clearly be seen from the adopted policy of both the European Union and European national governments over the past couple of decades. Illustrative of this political degeneration of the Left is that when the Norwegian Red-Green government set up a contact committee for combating poverty in 2 0 0 8 , the secretariat was placed in a private, religious charitable institution. Since the debate about the nature and causes of poverty has raged for decades, can we perhaps look to history for good advice? The welfare historian Anne-Lise Seip noted that the debate about the justification of welfare and the causes of poverty is ‘a disguised debate about the economic system of a society, whether the partici­ pants realise this or not’ (cited in Westin, 1999, p. 4512). Let us look at what one of those who has realized this has to say. The major British Labour politician, author, economist and historian Richard H. Tawney (1 8 8 0 -1 9 6 2 ) initially had a rela­ tively moralistic view of poverty, but, after having worked both

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with socio-political studies and in actual support of the poor, he changed his view and became a key figure in the development of Labour’s structure- and power-critical approach to the problem. In his seminal essay ‘Equality’ from 1931, he notes something that left-wing politicians can still seek inspiration from: ‘The problem of poverty ... is to be studied first at its sources, and only secondly in its manifestations’ (cited in Seip, 1981, p. 20). Tawney’s realization was, then, that poverty as a phenomenon was strongly linked to power structures and power relations in society. He followed this up in his own political practice in the post-war United Kingdom, as was also done in post-war Norway. When Odvar Nordli, as Norwegian prime minister, proclaimed in 1979 that poverty had been eradicated in the Nordic countries (see Chapter 5), this was after a period of widespread curbing of market forces that reduced competition and therefore also the pressure on workers. At the same time, a far-reaching social redistribution policy was implemented - where housing and energy policy were particularly important, along with new pension and social security schemes. If politicians really want to abolish poverty, they can do well to examine why it was possible to do this successfully in the post-war era. Try following Tawney’s advice about beginning by studying the causes of poverty. A working hypothesis can at least be that there is a connection between the comprehensive regulation and control of the markets, redistribution policy and the reduction of poverty in society. In that case it is neither completely impossible nor illogical to propose that increasing poverty and increasing social and economic inequalities necessarily result from the deregulation of market forces. The conclusion might be that the problem of poverty can therefore not be solved via ‘targeted’, or in other words meanstested, measures within the framework of neoliberalism. This is a conclusion I personally support. Increasing social inequality, poverty and social problems are inevitable fellow passen­ gers when market forces are let loose in society. It is an essential hallmark of the capitalist economy that it contributes to concen­ trating and centralizing wealth and power in society - and the more so the more deregulated it is. If we wish to avoid this, these forces must be curbed and wealth politically redistributed. Through the abolition of capital control, capitalists acquired an effective means of avoiding or sanctioning a political redistribution of wealth. I am not alone in thinking this. An American liberal professor of economics expresses the following:

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McKenzie counsels that public spending on redistributive social benefits should be contemplated with the utmost care: ‘Otherwise, officials and policy makers can expect to find their fiscal troubles mounting as capital moves elsewhere or is created elsewhere in the world. Those who are concerned about the plight of the poor must realize that there are economic limits to how much society can do for the poor, given the mobility of capital.’4 (Gilbert, 2 0 0 4 , p. 53) I am not sure what standpoint McKenzie, an economic liberal, wishes to promote here. What he points out, however, is that there are limits to how much one can do for the poor ‘given the mobility of capital’. Whether conscious or not, built into this formulation is the idea that there actually is a possibility for change: poverty can be combated, but not without our also fighting to limit the free movement of capital at the same time. If similar assessments to those expressed by McKenzie underlie the lack of ability or will of the European Union and of various governments to combat increasing poverty and social inequality in society, it should be stated openly. If so-called globalization, in the sense of a power shift in favour of capital and deregulation of the market, prevents us from humanizing life in society and work and from combating poverty and widening inequality, it is necessary to put the problem on the agenda. Identifying the causes is a crucial prerequisite for being able to combat the problems. If we are going to combat poverty and the increasing inequality in society in a more fundamental way, symbol politics - which does not work - must be put aside. W hat is needed is a broad popular mobilization, where changes in power relations, regulation of markets and social redistribution must be the perspective. In the meantime, the symptoms of poverty can be mitigated to a certain extent via increased social benefits and by phasing out the repressive, disciplining policy that is expanding at present. FR O M P O W ER S T R U G G L E T O L E G A L FO R M A LISM

It is not only in politics that power analysis and power-related issues have disappeared from the agenda. There have been strong tenden­ cies in this direction even in the trade union movement, despite the fact that most of its history has precisely been about changing power relations in society. Much of this development is owing to the de-ideologization and depoliticization I have discussed earlier, which

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is part of the ideological legacy of the class compromise. Here, too, the tendency has been to focus more on symptoms than on causes and driving forces. There was - particularly in the 1990s - a strong tendency, for example, for the trade unions in the industrialized world to generally accept deregulation and liberalization of the economy, as long as they were accompanied by ‘social clauses’. These were regulations that were meant to protect basic trade union rights.5 Thus, the focus was more on formal legal rights and demands than on power relations and real interventions in the market. This took place nationally in many countries, but especially in such international institutions as the W TO and the World Bank, as well as within the European Union. This policy was not, then, about fighting market liberalization and the consequent shift in power relations in the economy and society, but about reducing the negative effects that the liberalization had on workers. The unions would, in other words accept market liberalization as long as people were spared its most adverse effects! It sounds paradoxical - and it most certainly is. There is furthermore very little to indicate that such a policy actually works in the real world. It is precisely the increase in market competition, intensification of work, splitting up of companies, outsourcing and contracting-out of workplaces resulting from the deregulation of the markets that have undermined trade union rights and working conditions. It does not help much to fight narrowly for a formal legal set of regula­ tions for as long as, for example, the W TO , through its neoliberal policy, strengthens precisely the forces in society that are causing the brutalization of work and the undermining of trade union rights. This fight against the symptoms of neoliberalism became wide­ spread in the international trade union movement in the 1990s. While broad social movements throughout the world mobilized against the neoliberal policy of the W TO and the establishing of a Multilateral Agreement on Investment (MAI),6 all efforts at the International Confederation of Free Trade Unions (ICFTU)7 were directed at getting a social clause written into the agreement. The systematic deregulation and liberalization of the world economy, which was the aim of these negotiations, was almost completely ignored. The European trade union confederations - particularly those in the Nordic countries - strongly supported this political orientation of the ICFTU. Understandably enough, this policy did not prove a success.

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According to the annual reports from both the ILO and the ICFTU/ ITUC, attacks on trade union rights worldwide have been on the increase over the past 15 to 2 0 years. These attacks have not occurred primarily because we lacked formal rights. In many places they have taken place despite there being relatively strict laws and regulations for work. As I have touched on earlier, the brutaliza­ tion of work is a result of deregulation and increased competition. Working conditions and trade union rights are, in other words, a result not first and foremost of formal legal regulations, but of power relations in society and work - as the struggle for the welfare state also was (see Chapter 2). In the power vacuum that arose as the trade union and labour movements were pushed back onto the defensive and weakened, and as market regulations were phased out, a new international tendency began to emerge. In order really to distract people’s attention from necessary regulation and the control of companies and markets, a whole new industry emerged that focused on so-called corporate social responsibility (CSR), or the establishment of voluntary ethical standards that companies promise to observe, but without enforce­ ment or sanctions - something of which the UN Global Compact is a good example. A number of multinational companies have joined the bandwagon, not least because CSR provides good PR and, at the same time, is completely non-binding. A whole host of academics earn a living from this industry, which is generous with its money. In this way, a number of research institutions - as well as many gullible NGOs - help to generate an ideological smokescreen that hides the formi­ dable shift of power taking place in the real world - in favour of the forces of capital. A number of national and international trade union organizations have also become deeply involved in this symbol politics. This is not always easy to understand, for the experiences of the trade unions are unambiguous. They show that multinational companies have a strong tendency to operate as chameleons, changing colour to merge with their surroundings. In countries where regulation and labour legislation is strict and trade unions strong, they can be cooperative. In other countries, with weak regulation and legislation as well as weak trade unions, they mainly use an aggressive employer policy - in true union-busting style if considered necessary. The Nordic collective common sense does not seem to have played a decisive role here either. The revelations of the Norwegian telecommunications company Telenor’s use of child labour under grotesque working

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conditions in Bangladesh in 2008 were an illustrative example. So much for voluntary social responsibility. As the results of this symptom struggle have failed to materi­ alize, this narrow approach to trade union rights has gradually been abandoned by growing parts of the trade union movement. The insistence on social clauses is still of course included, but it is now becoming part of a larger package where the main emphasis is on seeking to prevent further deregulation and liberalization of the economy. Public Services International (PSI) was quick off the mark among the international union federations, but other so-called global unions have now developed what is clearly a more systemcritical attitude, mainly towards trade policy and the W TO. In this field, it is now the Nordic trade union confederations that bring up the rear in the international trade union movement. Here, the position is still that the most important thing is to have social clauses written into international trade agreements, while fairly uncritically supporting further deregulation of the world economy via the same agreements - in the W TO and elsewhere - as long as ‘national export interests’ gain from this. This, with all due respect, is preferring solidarity with one’s own employers to international worker solidarity. Internationally, a broad coalition of trade union organizations from major developing countries are campaigning against proposals for further liberalization of trade in industrial goods,8 which they fear will lead to deindustrialization in their own countries. The Norwegian Red-Green government has partly been involved in developing these liberalization proposals, which are also supported by the Norwegian LO. Among the union organizations fighting against these proposals we find COSATU in South Africa, CUT in Brazil, as well as trade union confederations from Argentina, Egypt, India, Indonesia, Namibia, the Philippines, Tunisia and Venezuela. In summer 2 0 0 8 , this controversy came out into the open when the European Metalworkers’ Federation (EMF) joined the employers in the automotive industry in demanding tariff reduc­ tions in developing countries in the ongoing W TO negotiations. The metalworkers were clearly seeking to guarantee their own jobs via exports to other markets. A representative of COSATU attacked this demand, stating that it ‘is absurd and a sad day when the interest of business takes precedence over international worker solidarity’. He advocated that working people should not allow themselves to be divided when competing for jobs but should fight together for their common interests (Bank and Wahl, 2 008). This is a well-known

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principle from the history of the labour movement - and it should hardly remain history. A further area where symbol and symptom politics have come to dominate the international trade union movement is the ongoing campaign for ‘decent work’. This is of course a noble aim in itself, and it could have led to powerful international mobilization if the slogan had been given a clear content and a clear addressee. The problem is that the concept was launched completely independently of any concrete analysis of power relations and power structures. What is it that prevents us from developing decent working conditions? What conditions have to be fulfilled if work is to be made decent? What opposing forces exist? W hat is the strategy for developing decent work? Nothing is said about any of these things. This means that the demand, at worst, is rather like a sincere wish for good weather. That the most important present campaign demand from the international trade union movement was not even developed by the movement itself, but by the tripartite organization the ILO, speaks volumes. The ILO describes it as follows: Decent work reflects priorities on the social, economic and political agenda of countries and the international system. In a relatively short time this concept has forged an international consensus among governments, employers, workers and civil society that productive employment and decent work are key elements to achieving a fair globalization, reducing poverty and achieving equitable, inclusive, and sustainable development. ... The ILO works to develop ‘decent work’-oriented approaches to economic and social policy in partnership with the principal institutions and actors of the multilateral system and the global economy. (<www.ilo.org/global/about-the-ilo/decent-work-agenda/ lang--en/index.htm>, accessed August 23, 2011) This consensus between all actors is quite difficult to identify in the real world, especially where employers are strongest and the attacks on what can be called decent work are most widespread. What even so can help make the campaign meaningful is that quite a few national trade union organizations are themselves filling the concept with content and giving it a clearer addressee, as for example IG Metall in Germany has been trying to do. The demand for a ‘just transition’ to a low-carbon economy has been the latest addition to this type of policy development, now

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so prevalent in the international union movement. The insistence on having the expression ‘Just Transition’ written into the interna­ tional climate agreements has been the prime aim of the trade union movement within this field. In other words, the union movement is insisting that the comprehensive transition that admittedly must take place to the economy in order to prevent a catastrophic global warming must be just. It insists on employment, social security, influence over the transition as well as training and retraining in order to take over new jobs that might be created. These demands are all highly legitimate and excellent in them­ selves. The problem with the campaigns for a social clause, decent work and just transition is not the demands in themselves, even though some of them are unclear, but that they focus so one-sidedly on what I would call legal formalism. International trade union organizations are using enormous resources to get the expressions mentioned written into international agreements, while the real struggle to realize the content of these demands on the ground is lagging far behind - leaving out of the account, of course, the struggle for wages and working conditions that local and national trade union organizations are carrying out on a daily basis. If decent work and just transition are to be put into practice, it will have to take place via a broad mobilization of power in society, via the forging of strong alliances, via a confrontation with the opposing forces that have gained enormously in strength over the past decades. Only via a comprehensive change in the balance of power in society, especially between labour and capital, can these demands or ideals be realized. Strategies and policies to achieve this gain little attention in the international trade union movement. So its major challenge is to shift its attention from an exaggerated focus on legal formalism to a strong focus on power realism. Because of the lack of fundamental analyses of causes and driving forces in the development of society we find, then, that the political responses have a tendency to degenerate into symptom and symbol politics. We see this in the stigmatizing, disciplining workfare, we see it in the individualizing, moralizing fight against poverty, and we see it also in the fact that the trade union movement still has a long way to go in developing its system-critical potential. How can we escape from the misery of symbol politics? It is a question of changing perspective, from the symptoms to the power relations in society - where the causes and driving forces are to be found. I have already quoted the British professor Richard Wilkinson, who showed us that increasing inequality in society is

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negative not only for those affected directly but also for the state of health and the social problems of all society (see Chapter 5). In an interview he was asked how such inequality in health could be combated. His telling reply can conclude this chapter, before in the next I attempt to suggest some answers to the pressing question as to what can and must be done: Well, the quick solution I suppose, if you want to reduce income inequality, is simply redistribution through taxes and benefits. The disadvantage of that, however, is that just as they can easily be made more progressive, providing better safety nets, so they can also be easily reversed by successive governments. It is important that greater equality should somehow be more built into the institutional structure of our societies, in ways that it’s difficult for successive governments to undo. That means we need to be thinking much more fundamentally, for instance, about employee ownership or employee control of companies. The productive system is after all the source of wealth and the inequalities in its distribution. We need to find ways of democratizing economic life - in as many ways as we can. ... We have to recognize that health inequalities are not going to be solved with some quick or easy solution which leaves most of the social system unchanged.9 (<www.kritiskdebat.dk/articles.php?article_id=102>, accessed August 23, 2011)

s CHALLENGES AND ALTERNATIVES In this book I have attempted to show that the welfare state is first and foremost the expression of a particular power relation in society, and that the power base on which it rests is in the process of crumbling. Deregulation and the liberation of the forces of capital in the 1980s and 1990s have dramatically changed power relations in society The restructuring of production at an international level has altered the conditions for trade union and political struggle. The expansion of capital into constantly new areas - including within social reproduction - is creating new conflicts. The development from industrial capitalism to unregulated financial capitalism, with waves of speculation the like of which we have not seen in the history of capitalism, constitutes an enormous, ever-increasing threat to society and general living conditions. Attacks on the trade unions and the undermining of democracy have weakened the two most important tools people have for humane, social development. In the wake of this tendency, the welfare state is being attacked and transformed. Welfare schemes are being cut back. Redistribution from the public to the private sector is taking place. Mass unemployment persists. Work is becoming brutalized. Poverty and social inequality are increasing. Privatization and contracting out are giving the market - and the hunt for the highest possible profits - a greater place within the welfare services. Via comprehensive reforms, especially workfare policies, the content of important parts of the welfare state is changing. The entire welfare state is undergoing a paradigm shift. In addition, the financial/ economic crisis is now helping to intensify the discrepancies. The struggle which the trade union and labour movements as well as other popular forces once engaged in to gain public welfare had to do with establishing services and institutions that were to protect them against the risks of the market, power abuse, insecurity and fluctuations. Welfare institutions were therefore established outside the market, and the market itself was strongly regulated. Now, with markets deregulated to a great extent, we find that the increasing pressure and competition at work is no longer considered the problem. Rather the opposite. It is the victims of this development who are now being presented as the problem. Instead of inter­ vening in the market to reduce pressure or protect people against 178

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it, individuals are being pressurized to adapt themselves totally to a brutal work environment - with economic sanctions as an ultimate weapon. This is the humiliating, disciplinary nature of the workfare policy. C H A N G E S T O P O W E R R E L A T IO N S

In other words, all those who fight for a humane, social and unified development of society are facing enormous challenges. It is not the welfare state of the 1960s that is to be copied or revived. There is no turning back the clock. Furthermore, the welfare state is not a finished model that we can choose to make use of or not. Its various forms are the result of quite specific historical tendencies, where traditions, the level of development, the balance of power and struggles between the various social classes determine the content. It is the social progress that the welfare state represented that needs to be defended - and developed further. And first and foremost that means changing power relations in society. That is the main task. The post-war regulatory economics of Keynesianism became the solution to the crisis and depression of the 1930s. Some people apparently believe that such a policy will make a comeback, as an answer to today’s crisis. Indeed, certain people actually believed that Keynes’s ideas had already been brought back into favour when one government after the other took over failed banks in 2008 and inter­ vened with large-scale national recovery packages. Socialists and social democrats in Europe, with a certain degree of self-satisfaction in the midst of the crisis, claimed that now the Right had been forced to admit that strong public regulation was necessary. For example, the general secretary of ETUC, John Monks, felt that with the collapse of what he called ‘Goldman Sachs capitalism’ things had changed. Throughout Europe, ‘everybody is a social democrat or a socialist now - Merkel, Sarkozy, Gordon Brown ... The wind is in our sails.’1 Even the American neoliberal news magazine Newsiueek proclaimed over its entire front page that ‘We are all socialists now’ (February 16, 2009). These meaningless state­ ments did little more than expose superficial analyses and curious analytical conclusions. This is what happens when understanding is delinked from an analysis of power relations in society. The adoption of a Keynesian regulatory policy is completely different from the desperate implementing of public rescue packages in order to save financial markets - and maybe even capitalism itself. And, not least, there

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are large differences in the power relations that must be present in society for one or other line of development to be possible. There have not exactly been large-scale changes in power relations in recent years that could motivate any return to social-democratic regulatory policy. Rather the opposite. There are several possible paths out of the economy of madness that has reigned supreme in the world for a couple of decades, and that has now left us in the most profound economic and social crisis since the Depression of the 1930s. It is obvious that self-regulating laissez-faire capitalism has once more suffered a political and ideological defeat. Once again, states have had to intervene to save the system. This does not necessarily mean, however, that a New Deal is round the corner, or that it will be a benign, caring welfare state that will lead us out of the crisis. It could just as well be the opposite: an authoritarian, repressive state which uses quite brutal means to secure private property and vested interests. The speculators and billionaires who have profited from the release of capital from control and regulation are not queuing up to cover the astronomical crisis packages and to take responsibility for the massive economic clean-up that has to take place. It is ordinary people who have to foot the bill. Even though the trade unions have been considerably weakened and driven back onto the defensive, they are nevertheless the most important social force that can mobilize resistance against such a ‘solution’. To be able to carry out this bottom-up redistribution in society, the social elite may, in other words, find it ‘necessary’ to make further widespread attacks on the trade unions. Which way things go depends, now as then, on the balance of power between the various social classes. This of course means that it is possible to change track. The alternative to an authoritarian solution is a democratic solution. This, among other things, means that the crisis is used to rein in the forces of capital and particularly to disarm financial capital, to use the public sector to damp the effects and to stabilize the economy. It is the trade unions and other large-scale social movements that have the necessary potential to bring about solutions in this direction. More than mere symbol and symptom policies is called for, however. W hat is needed in order to really combat the rising social problems that have come in the wake of neoliberalism and the crises, to get back onto the offensive in the struggle for society once more, has been hinted at in this book. Let me sum up some of the important points:

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• It is important to recognize that if we are to combat poverty, we must study first its sources and only second its manifestations (see Chapter 7). Poverty is a systemic problem, so structures and power relations must be attacked if it is to be defeated. This accords with our experiences from the post-war period, when poverty was brought down considerably. And this took place in precisely the most active period of the regulatory economy, when capital control, market interventions and redistribution were at their height. • It has also been stated that there are limits to what society can do for the poor, given the free movement of capital (see Chapter 7). The freedom of capital to cross national borders constitutes a barrier to redistribution. If a government goes too far, capital can always shift to other, more capital-friendly countries. Capital’s exit strategies (see Chapter 4) limit the possibility of combat­ ing poverty and inequalities. The conclusion is that if we are to reduce inequalities in society, we must limit the free movement of capital. • It has also been made clear that the social and health-related consequences of increasing differences in society do not only hit those directly affected by poverty and social problems; the consequences are negative for all of society (see Chapter 5). Such differences cannot, however, be removed in any swift or simple way without the social system being changed more profoundly (see Chapter 7). • Lastly, I summarize in my model (see Figure 2.1) how compre­ hensive regulation of private capital was a precondition for a developed welfare state. The rapid dismantling of most of these regulations (see Figure 3.1) in the 1980s and 1990s showed us, however, that it was not sufficient to prevent a recession when the crisis of capitalism returned once more. A new social struggle cannot therefore limit itself to recreating a regulatory economy (the class compromise) of the 1950s and 1960s (‘the heyday of the welfare state’). Without taking the next step, which I see as a democratization of ownership in society, it will be impossible in terms of power politics to arrive at a more stable development, one where humane, social values and people’s needs determine the course of events. The above points underpin my view of the welfare state as being first and foremost the expression of power relations in society. The four main points also explain why governments that have expressed

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it as their aim to combat exclusion from work, increasing poverty and social inequality have had so little success. Even politicians of the traditional Left focus very little on the causes of the growing social problems. They almost fail to recognize - in open debate at least - that the free movement of capital is a barrier to redistribu­ tion policy. The need for more fundamental system changes is, in general, a theme that to a great extent has disappeared from their political agenda. On the other hand, we are experiencing a strong tendency for politicians to exaggerate their limited political sphere of action. Often, the imprecise and obscure concept of globalization is used as a reason - or an excuse - for their inability or unwillingness to act, as if there were irreversible natural laws at stake. In the European Union an in-house culture has developed of passing the buck, where governments are notorious for blaming unpopular decisions on EU institutions, even when they have personally been involved in taking those decisions. Fundamental changes to society in the direction I have indicated above cannot, however, be expected to come from governments and parliaments. Such changes, which presuppose a considerable shift in power relations, have never come from the top of any society in any historical phase. The economic, political and bureaucratic elites of society have taken good care of themselves and their own in the present system, with good salaries, good pensions and good career opportunities and power positions. Changes must be forced upwards from below, now as it has always been, and if the pressure today is not strong enough, the necessary changes will not take place - nationally or internationally. So the question is how this pressure can be increased, what important barriers we are facing, how the trade unions and popular forces can once again get on the offensive, and what visions we must ignite to be able to fuel the social struggles that face us. That is what the rest of this chapter will deal with. No ready solution will be provided. I am deeply sceptical of armchair theories in the form of manifestos from individuals who have found the answer. We need manifestos and programmes, but they must emerge from the struggle, in close contact with those involved in it. My presentation here is therefore based on insights and experiences I have gained from active work in the trade union movement, social movements and alliances over the past couple of decades - and they are intended as a contribution to the debate.

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T H E S T R U G G L E IS A L R E A D Y O N

Social struggles are a constant feature of our societies, dominated as they are by opposing forces, conflicting interests, and social and economic inequalities. Trade unions and popular forces, however, have mainly been on the defensive in these struggles over the past decades - ever since the air traffic controllers in the United States and the mine workers in the United Kingdom (see Chapter 4) suffered serious defeats. Much has been lost, but battles have also been won during this period. Furthermore, new groups, alliances and networks - at the local, national and international level - have constantly come into being. The 1980s represented a serious setback for the trade union movement, but in the 1990s important parts of the trade union movement in Western countries began to get over the shock of the neoliberal offensive. The fight of the French workers against the package of cuts proposed by the Conservative Juppe government in autumn 1995 marked a particularly important milestone.2 So did the massive successful strike carried out by the US trade union the International Brotherhood of Teamsters in the UPS transport company in autumn 1 9 9 7 ,3 and the conflict which the Maritime Union of Australia successfully waged against the Patrick ports company in 1 998.4 All these successful union struggles acquired an international dimension and helped people believe once more that it was still possible to win struggles through collective action. During the last couple of decades, we have also seen a number of local and national campaigns against privatization, contracting out and cutbacks to public welfare services. Trade union organizations in the public sector have often played a central role, with their inter­ national federation, Public Services International being extremely active, but broad alliances of social movement and community groups have also been involved. The fight against the privatization of water and water supply has been one of the most successful (Balanya et al., 2 0 0 5 ; Holland, 2003). Successful campaigns in Latin America (Argentina, Bolivia, Brazil, M exico, Uruguay) have been a particular source of great inspiration. There are, however, also examples of broad campaigns that have succeeded in preventing privatization or of getting water supply back into public ownership and control in Europe (for instance in Grenoble, Leipzig, Paris and Italy).5 An important aspect of many of the new campaigns and alliances that have emerged in the struggle against the privatization and

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commercialization of public welfare is that they have not contented themselves with simply defending the status quo, but have also demanded democratization, debureaucratization, higher quality and greater adaptation to users’ wishes and needs. Participatory democracy spread as an idea and model from Porto Alegre in Brazil, and is now also being used in a number of towns and municipalities in Europe (Vera-Zavala, 2003). The model municipality projects in Norway6 have commanded broad attention as a process run by trade unions and employees to improve and further develop public welfare services. In Newcastle upon Tyne, UK, it was also the employees and the trade union that initiated successful public service reform (Wainwright and Little, 2009). The struggle, then, is already underway. In one country after the other, organized opposing forces of various kinds and at various levels have come into being. To an increasing extent, these have sought contacts across national borders. The trade unions have for a long time had their own international organizations, which have to a certain degree been revitalized over the past 20 years as a result of the undermining of - and attacks on - wages and working conditions and union rights by neolib­ eralism. During the past 10 to 15 years, a number of new initiatives have sprung up that have displayed considerable creativity in establishing networks and coordination across national borders. So there is not onlygrowing resistance to so-called globalization going on, there is also a growing globalization of resistance. An important breakthrough within this area came with the broad alliance that was forged during the campaign against the so-called MAI Agreement,7 a campaign which succeeded in getting it scrapped in 1998. What particularly symbolized the qualitative change in the nature of the resistance, however, were actions that helped topple the W TO summit in Seattle in autumn 1999. Never before in history had so many people (there were 70,000 of us) from so many organizations, countries and continents demonstrated together in one geographical location. And it would never have been possible without comprehensive use of the internet - one of the global technological innovations. This new social movement, or ‘movement of movements’ as some people call it, subsequently made its mark via a number of growing protest demonstrations - against the W TO , the IMF, the World Bank and EU summits. Gradually, however, there was an increasing need not only to gather for demonstrations but also to discuss and develop alternatives to the neoliberal project. This led to the ideas about a World Social Forum.

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The new French counter-force organization Attac was one of those to take the initiative, along with Via Campesina, an organiza­ tion of small farmers and landless farm workers, along with trade union organizations and other system-critical organizations and institutions in both the North and South. The first World Social Forum became a reality in the small city of Porto Alegre in Brazil in late January 2 0 0 1 , symbolically enough at the same time as the World Economic Forum, which for many years had gathered together representatives of the world’s economic and political elites in Davos in Switzerland. Starting with 12,000 participants, the forum soon mushroomed to organizing events with up to 100,000 and 150,000 participants. For four to five days, these social forums buzzed and hummed with debates at conferences, seminars and political workshops, with fundamental criticism of the neoliberal project, with discussions of alternatives and counter-strategies, summaries of experiences and planning of campaigns and actions. It was via these forums that the most widespread coordinated political demonstration in world history was carried out - against the war in Iraq - on February 15, 2003, with 10-15 million participants worldwide. It was on the basis of these demonstrations that the new, expanding movement was characterized by the N ew York Times as the second superpower.8 This popular counter-force initiative grew extremely large and at a speed unrivalled by any other global movement in history - admit­ tedly without making much of an impression on our predominant media, which scarcely even registered the phenomenon, unless it led to street fighting or stone throwing by small fringe groups of the movement or by police provocateurs.9 Since its inception in 2001, the World Social Forum has acquired a number of offshoots at regional, national and local levels. The European Social Forum mustered about 6 0 ,0 0 0 participants at its first event in Florence in 2002 . The social forum initiatives injected new energy into the broad Left. After 2 0 years of neoliberal globalization, setbacks, pessimism and demobilization in many countries and areas, the social forums created new enthusiasm, new working methods, new mobilizations and new inspiration for hundreds of thousands of people. Ten years later, however, the situation is much more unclear. The most ambitious aspirations and ambitions which were developed after the ‘battle of Seattle’ have not been met. The social forum movement has not risen to become the ‘second superpower’. Even though a lot of important work and mobilizations are still going on under the

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umbrella of social forums in many parts of the world, the question of decline and crisis is being discussed more and more within these movements. There are many reasons for this crisis of the forums, currently very strongly felt in Europe (Wahl 2010b ), which have experienced a steady decline since 2 0 0 2 . The social forums developed partly as a response to the ideological and political crisis of the traditional Left, but they have not been able to compensate much for its weak­ nesses. The enormous shift in the balance of power which has taken place, the crisis of the Left and the lack of strong labour and social movements naturally also strongly influence the social forum movement. In spite of all the enthusiasm and good intentions, there is definitely a lack of theoretical and political clarity and unity, a lack of understanding of class relations, of the social conflict and the question of social power among many social forum activists and NGOs. While the traditional Left was and still is in a political crisis, many trade union organizations in the industrialized countries appear to be weakened, ridden by bureaucracy and deeply influenced by the social partnership ideology, with business unionism too in certain areas and a paternalistic attitude to trade union organizations and movements in the South. This led to many of the new movements writing off these organizations. The problem is that this led to some of them throwing the baby out with the bathwater, and the role of the working class as a potential social force also disappeared. With a lack of social mobilization, the focus therefore has to a large degree been on lobbying, symbolic manifestations and sign-on statements. However, with the social confrontations that are now on the increase after the economic crisis, such issues as class, trade unions, confrontation and power are more strongly on their way back into the social arena. If the social forums are unable to absorb these tendencies, there is a large danger that they will have played out their brief role. They represented important showdowns with rigid ideological and organizational structures on the Left, and have certainly contributed new working methods and principles that will be of great importance for future organization and coordina­ tion. It does not however look as if the social forums are seen as natural or necessary tools for many of the social forces that are at present combating authoritarian power structures and the dramatic manifestations of the economic crisis. When differences widen and attacks intensify, as can now be seen in many of the European welfare states, this also provokes increased

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resistance. That is why we have seen widespread and partially impressive mobilizations in Iceland, Greece, Portugal, Spain, France, Italy, Ireland and the United Kingdom. General strikes are back on the union agendas in many countries, particularly in Greece, where the population is being exposed to draconian measures that threaten their general economic and social living conditions. In Portugal, Italy, Spain and Ireland general strikes and mass demonstrations have also been carried out, though with differing degrees of strength and intensity. In Iceland, people took to the streets and via their impressive, long-lasting mobilization at the beginning of 20 0 9 , managed to bring down the government (the so-called kitchen tool revolution, because the Icelanders copied the Argentines in turning up with saucepans and lids). Subsequently, more than 90 per cent of the population rejected the submissive conditions of the centre-left government for repaying the speculators’ debts to British and Dutch banks. In the United Kingdom, students have started to fight against enormous, socially exclusive study fees, and the unions have mobilized wide­ spread demonstrations against the massive cutbacks in the public sector. In France, the trade unions, in an alliance with students, and other social movements, carried out an impressive fight against the government’s attacks on pensions in 2 010. If they failed to win the first round, this did at least lead to increased self-confidence, broad social alliances and a greater unity in the trade union movement. Without a doubt, we are entering a new phase of the social struggle and the fight for social welfare in Europe. The crisis polarizes differ­ ences, and confrontations are becoming more marked. Or, to use the words of the German trade union movement, ‘Coupled with continuing deflation, the threat of depression grows, breaking the ground for massive social and economic upheavals in Germany and Europe’ (DGB, 2 010). The outcome of these struggles is, however, extremely uncertain. The European social model, such as we know it from its heyday, has at any rate been abandoned in reality by the European elites, even if they continue to pay lip-service to it. The question is now whether the trade unions allied with other social movements will manage to defend the social progress gained via the welfare state, or if we will face a development towards a right-wing authoritarian and socially degraded Europe. There are both outer and inner barriers to the social struggle. These we will now have a closer look at. Even so, it can be useful to note that not all the spokespeople of capitalism feel confident about the outcome, as this quotation from Citigroup’s strategists makes clear: ‘At some

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point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich.’10 T H E E U R O P E A N U N IO N A S A B A R R IE R

In Europe, the European Union increasingly seems to be an extra barrier to economic and social development as well as to the social struggle. There are various aspects of the European Union as an institution that contribute to creating these barriers. First, we have the democratic deficit (see the mention of this in Chapter 4). This deficit has actually increased over the past years. The official message from the European Union and the governments of member states, supported by the ETUC and other sections of the European trade union movement, is the opposite. They claim that the Lisbon Treaty took a step in a democratic direction since the elected parliament gained increased influence in a number of areas. However, in the opposite direction we can see that member states, in the wake of the economic crisis, are almost being placed under administration by the ECB and the Commission - with drummed-up support from the IMF. The new proposal to introduce economic sanctions against a member state that does not follow the strict (and economically and politically destructive) M aastricht criteria (see Chapter 4, note 7) will further contribute to dedemocratizing the European Union as a supranational construction. Second, neoliberalism has been constitutionalized as the economic system of the European Union (in the Lisbon Treaty and earlier treaties). The free movement of capital and freedom of establish­ ment have been carved in stone in the European Union, with all other considerations subject to these principles - something we have also clearly experienced within labour legislation over the last few years (see below). Free competition on all markets is another funda­ mental principle of EU treaties. In recent years, this has increasingly also been applied to the services market, which differs from the commodity market in that the sale of services mainly has to do with the sale of mobile labour power. For a long time, it has been a common saying among many on the political Left in Europe that socialism is forbidden according to the EU treaties. With the Maastricht criteria and the new sanctions to force member countries to keep their budget deficit under 3 per cent and national debt under 60 per cent of GDP, traditional Keynesianism (or what we could call social-democratic regulatory

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policy from the post-war years) is also forbidden. This amounts to a further dramatic restriction on democracy in the EU member countries, and it represents a major step in the direction of a more authoritarian European Union. Third, the decision-making process of the European Union helps to make the above principles almost irreversible. While all nations have certain protective measures built into their constitutions, such as the need of a qualified majority (2/3 or 3/4) if the constitution is to be altered, in the European Union there has to be unanimity (100 per cent of the at present 2 7 members) before any alterations can be made. This means that the chances of changing EU treaties in a progressive direction via ordinary political work are virtually nonexistent. It only needs one right-wing government in one country to prevent it. Fourth, the existence of a common currency, the euro, in at present 17 of the 27 member countries contributes to putting many of the countries involved in an economic straitjacket. As long as the countries in the euro region experience highly diverging devel­ opment of their economy and productivity, and do not have any large, common budget to even out the differences, they will also need highly different currency policies. In the current situation, it is Europe’s ‘economic locomotive’ Germany in particular that gains from this, with its strategy of exporting itself out of the crisis, while the countries most badly hit by crisis and debt (Greece, Ireland, Spain, the Baltic countries and so on) are the losers. Since the possibility of devaluing is gone, these countries - with their greater domestic consumption and weaker competitiveness are then forced to implement a so-called ‘internal devaluation’: in other words, to strengthen their competitiveness via wage cuts and cutbacks in public social expenditure. This is certainly in accord­ ance with the European Union as a neoliberal project, but it is ruinous for the development and social situation of these countries. It was this that caused Michael Hudson (see Chapter 5) to state that the European Union is now using the crisis ‘as an opportunity to fine governments and even drive them bankrupt if they do not agree roll back salaries. ... “Join the fight against labor, or we will destroy you,” the EC is telling governments.’ This economic straitjacket can also easily contribute to developing contradictions between workers in countries with very different policy needs. Fifth, the uneven development in the various EU countries consti­ tutes a barrier to developing coordinated union mobilization and popular resistance to the neoliberal, reactionary policy. Even though

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much of EU policy is decided by EU institutions, it takes place in such a way that it is implemented in different ways at different times in the various member states. The attacks and weakening of the pension systems, for example, have taken place over a long time and in different forms from one country to the next - on the basis of recommendations from the European Union, but not direct legislation. This makes it impossible to create coordinated European mobilization against the attacks. The same applies to the EU privatization policy. The European Union rarely decides that a specific activity should be privatized. It decides to liberalize, and that more and more areas should be subject to its rules on competition. The market takes care of the rest, which results in privatization, as we have seen in energy, transport, telecommunications and so on. Also this therefore occurs at different times and in different ways in the various member states (including the EEA countries), which makes it difficult to mobilize coordi­ nated resistance across national borders. The European Union’s special legislation process constitutes a problem in itself - because directives do not become laws in themselves, for example, but the content has to be transposed into the member countries’ own legis­ lation - here too at different times and in different ways. As if that was not enough, EU legislation is also characterized by an almost impenetrable bureaucratic language. This is exploited by national governments and politicians, who often trivialize the effects of various legal proposals which later prove to have far more compre­ hensive, negative effects when implemented in a particular country. Sixth, the EU Court of Justice has assumed a more important role in recent years in reinterpreting and in reality extending its area of influence to some of the EU treaties and legislation - particularly in dealing with services (which means, mobile labour). This specially applies to the four judgments passed from December 20 0 7 to summer 2008 (the Viking, Laval, Riiffert and Luxemburg cases11), all of which contributed to limiting the trade unions’ right to take industrial actions, and also to promoting social dumping within the European Union. Before these judgments were passed, the prevalent view was that laws and agreements concerning working life lay outside the European Union’s domain. It belonged to the jurisdiction of the nation states. This argument, among others, was actively used by the government and the Social Democratic leadership when Sweden became a member of the European Union in 1994 - warmly supported by the leadership of the national trade unions.12 The

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Laval case was an eye-opener for large sections of the Swedish trade unions, for this and the three other judgments have made it clear that the exact opposite applies: labour market legislation is subject to EU legislation on competition, to the free movement of capital and freedom of establishment. Among other things, the judgments have led to the so-called Posting of Workers Directive being changed de facto from a minimum to a maximum directive regarding the wages and working conditions that are to apply for workers in companies in one member country who carry out work in another country. ILO Convention 94, which also seeks to ensure wages and working conditions in similar cases, is quite simply ignored by the court. Taken together, all this had led to a dramatic, serious situation in Europe. The development of the European Union in a more authori­ tarian direction and the limitation of the unions’ legal right to fight go hand in hand with draconian cutbacks, with massive attacks on wages, working conditions, pensions and public welfare in an increasing number of crisis-hit countries. While the establishment of the European Coal and Steel Community and the European Union were motivated, among other things, by wishes for peace in Europe - in the wake of two world wars that had had their origin there the present-day EU project of the European elites is contributing to a formidable economic, social and political polarization in Europe. The European social model is strongly being undermined. We are then faced with the paradoxical situation that the European Union as a peace project is now the factor that most threatens European unity - initially not on a national but on a social basis. That this may change into increased national contradictions in given situations is, however, something we cannot ignore. Bearing in mind the history of Europe, this is a dangerous game of playing with fire on the part of the European economic and political elites. In this situation, it is actually only the trade union and labour movements along with social movements that have the potential to secure a social, united Europe by fighting for common solutions and a development based on people’s material and social needs. Time is short, but the fact of the matter is that we are far from having a European trade union movement that can take on such a role at present, given the massive social mobilization which is required to be able to bring out necessary changes. With all the barriers just summarized, the question is also whether it is realistic to believe that the whole European Union can be changed via broad, pan-European mobilization. Perhaps we will have to do what the progressive

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Canadian professor Leo Panitch suggests in an interview which, in this particular case, is related to the economic crisis in Ireland: [T]he only real solution here is for Ireland to lead the way by defaulting on the debt, to do what Argentina did at the beginning of this century. But that will mean, and I hope it will mean, a much more radical set of responses in Europe, not only in Spain and Portugal and Greece, but much more broadly, whereby people are given a lead in terms of not just socializing the private banks’ bad debts but actually nationalizing the banking system and turning it into a public utility. It’ll mean breaking up the European Union, but reconstructing it on a basis of democratic and cooperative economic planning, where the money ... is actually allocated in a democratic way. (Panitch, 2010) IN T E R N A L P O L IT IC A L -ID E O L O G IC A L B A R R IE R S

While the European Union represents important external barriers to the social struggle, there are also internal barriers preventing the unions from fulfilling their historic tasks in the present situation. This particularly applies at the political-ideological level, but also in the form of traditions and organizational structures that are no longer as effective in dealing with the new challenges posed by the global, neoliberal offensive - including the international restruc­ turing of production, more precarious work, increasing migration and the deregulation of the labour markets. At the political-ideological level, the situation is strongly influ­ enced by the crisis on the Left, though also by the fact that social partnership and social dialogue have to a great extent been turned into a superior ideology in predominant parts of the trade unions - at both the European and the national level in many countries (including Australia and New Zealand). This means that social dialogue has acquired an elevated position as the actual means of promoting workers’ interests - delinked from an analysis of actual power relations and how these can further or hamper the chance of gaining ground. It is also delinked to a great extent from recognition of the fact that widespread social mobilization is necessary to back the actual demands. Criticism of social dialogue and the social partnership ideology is not in any way a criticism of trade unions discussing and negotiating with employers. They have always done so, and must continue to

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do so. The criticism has to do with the fact that this - as one of the many tools in the unions’ toolbox - has been turned into the main strategy, and in addition, that it transforms concrete experiences from a specific historical phase into general ideological guidelines. That social dialogue gave results in many countries, especially in the first decades after the Second World War, was precisely because of the shift in the balance of power that had taken place in favour of the working class and the trade unions in the preceding period. The class compromise and social dialogue were, in other words, both the result of mobilization, tough confrontations and a shift in the balance of power, while the present-day ideologized version is presented not as the result, but as the cause of the trade unions gaining increased influence. This understanding, therefore, leads to analytical short-circuiting, among other things when it comes to understanding social contradictions, or to cite ETUC, ‘The EU is built on the principle of social partnership: a compro­ mise between different interests in society to the benefit o f aW [my italics] (2007). Confronted by the massive attacks that employers and govern­ ments are now making against trade unions and social rights, such ideological assertions are of course now coming under increasing pressure. There is little doubt that the forces of capital in Europe have more or less withdrawn from the historical compromise with the working class, since they are now attacking on a broad front services and institutions that they formerly had accepted in the name of the compromise. Even so, the social dialogue in its elevated ideological version is still deeply anchored in leading forces in the European trade union movement, as is well illustrated by the following statement made by the general secretary of ETUC, John Monks. The point of departure was a reference to certain tendencies in US trade unions, where activists carry out campaigns for broad social objectives: There may be similar opportunities in Europe, says M r Monks, if unions can move beyond their old-fashioned enthusiasm for street protests to campaign for policy changes that broadly benefit workers. ‘Given the tough labour market, and desperate employers, this is not a time for huge militancy,’ he says. Instead, ‘it is a time to demand frameworks of welfare benefits, training consultations and to put in place fairer pay systems, so that when the economy does recover there is no repeat of the surge

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in inequality that took place in the past decade.’ (.Econom ist , March 12, 2009) The above statement was, it should be noted, made long after the financial crisis had led to greater polarization in a number of European countries. Just how Monks had envisaged achieving welfare benefits and fairer pay systems without using old-fashioned street protests, militancy or the like is not clear from the interview. Perhaps he meant it was possible to gain these by giving further concessions to the employers? Anyway, ETUC took the - even in their world - meaningless step of signing an extraordinarily weak joint statement with the various employer associations in Europe in connection with the preparing of the European Union’s 2020 Strategy. This took place in summer 2 0 1 0 , after the Greek workers had held several general strikes, the Spanish were preparing to strike, and preparations to combat pension cuts were in full swing in France. The statement supported: an optimal balance between flexibility and security .... Flexicurity policies must be accompanied by sound macroeconomic policies, favourable business environment, adequate financial resources and the provision of good working conditions. In particular, wage policies, autonomously set by social partners, should ensure that real wage developments are consistent with productivity trends, while non-wage labour costs are restrained where appropriate in order to support labour demand. [As regards public services] [accessibility, quality, efficiency and effectiveness must be enhanced, including by taking greater benefit from well balanced public-private partnerships and by modernising public adminis­ tration systems. (ETUC et al., 2010) To support restrained non-wage labour costs and to legitimize privatization via public-private partnerships in this way - in a situation characterized by crisis, increased polarization, confron­ tations and massive attacks on public welfare - confirms at any rate that submitting to the social dialogue in today’s situation can have an utterly demoralizing effect on those who want to fight against social regression. Even so, the subsequent development in Europe, with massive attacks on the trade unions, the setting aside of collective agreements and the reduction of most people’s living standards, has strongly contributed to sharpening the tone even

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of the ETUC. In a most unusually sharply formulated letter to EU commissioner for economic and monetary affairs, Olli Rehn, Monks writes: I am receiving reports from trade unions in Greece and Ireland about the role of your officials in implementing the EU/IMF rescue packages. The specific charge is that the Commission officials are ignoring social dialogue and collective bargaining processes and directly intervening in the labour markets of these countries. Dictates are being issued which are designed to lower living standards. Thus proposals are coming from the Commission which are designed to cut minimum wages and reduce ‘rigidities’, cut pension entitlements, make labour markets more flexible, and in Ireland’s case provide for wages to reflect ‘market conditions’. I should not have to remind you that this policy of detailed interference in labour markets tramples all over pious commission statements about the autonomy of the social partners, the importance of social dialogue and the specific exclusion in the EU treaties of a European competence on pay. In these circumstances, I request an emergency meeting with you to clarify matters and to warn that the ETUC will find it impos­ sible to support action by the European Union along these lines, or proposals on economic governance, and any new treaty which contains them, which resemble in some aspects the reparation (punishment) provisions of the Treaty of Versailles, and reduce member states to quasi colonial status. (letter from Monks to Rehn, January 11, 2011) The ITUC and global unions have also sharpened their tone in recent years and spoken in favour of far more comprehensive political intervention in the markets, the regulation of financial capital and the redistribution of wealth in society.13 At the political and rhetorical level, in other words, a certain radicalization of the inter­ national trade union organizations is taking place as a response to the economic crisis. Much remains, however, before this is followed up by a necessary social mobilization where the trade unions make use of their most effective tools to add weight to their demands. This is of course not the fault only of individuals at the top of the international trade union organizations, but a wider issue. The leadership of the ETUC, for example, comprises representatives from a number of national trade union organizations, and measures have broad support among them .14 Bearing the post-war class

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compromise in mind, it is possible to understand the basis of the social partnership ideology (Wahl, 2004). The thing is that changed power relations, crises and an intensified conflict of interests on the part of the forces of capitalism have removed the prerequisites for a continuation of this policy of consensus. The capitalists have changed their strategy, but the trade unions have not. One of the main chal­ lenges facing the trade unions today is for them to recognize this fact and to accept the consequences. Another internal barrier in many trade union organizations is their strong attachment to the traditional political parties of the labour movement. The political and ideological crisis on the Left has made many of these doubtful alliance partners. Social demo­ cratic parties (referred to as socialist parties in southern Europe) in countries where they have been in government for long periods developed from being mass organizations for the workers into being bureaucratic and establishment organizations, with a dramatic fall­ ing-off of membership as a result,15 and to parties where the party apparatus has increasingly been turned into political career ladders and election machines for a new political elite. In its heyday, the role of social democracy after the Second World War was to administer the class compromise: not to represent the workers against the capitalists, but to mediate between the classes - within the framework of a regulated capitalist economy. This analysis is supported by the fact that when the class compromise began to collapse around 1980, social democracy went into an ever deeper political and ideological crisis, one that is still evident. As organizations strongly integrated in the state apparatus, the parties rapidly changed as the state changed in nature under the neoliberal offensive (see Chapter 4), absorbing and being strongly influenced by the neoliberal hegemony. This has led to social democratic parties greatly contributing to the deregulation, privatization and attacks on public welfare services which we have experienced in the last couple of decades - no matter if it has been under the name-tag ‘the third way’, as in the United Kingdom, or ‘Die neue M itte’, as it was called in Germany under Gerhard Schroder. Illustrative of this tendency is that when social democratic governments were in a large majority in the European Union for the first and only time at the end of the 1990s, this did not lead to any change in its neoliberal policy. The trade union orga­ nizations have reacted in different ways to this political swing to the Right. In many countries, loyalty between the national federations and the social democratic party was maintained (Norway, Sweden,

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the United Kingdom). In other countries, the affiliation between the party and trade union movement has become weaker. In Denmark, the dominant trade union confederation - as the only one in northern Europe - has declared itself independent of the Social Democratic Party, but without adopting more radical positions. Certain trade unions, such as the British National Union of Rail, Maritime and Transport Workers, have broken with social democracy as an ideology and adopted a clearly more leftist position. In Germany, the attacks by the Schroder government on social welfare schemes led to a deep breach of trust between the trade union DGB and the social democratic SPD. Even though the party, now in opposition, is trying to approach the unions once more - as such parties often do when in opposition - this had only had a cool reception so far from the leader of the DGB: ‘The problem facing SPD, unfortunately, is that they are suffering from a lack of credibility. They sat in the government until September last year and approved many of the measures we feel are wrong. They still have a long way to go before they have regained our trust,’ says Michael Sommer. (Fri Fagbevegelse , October 8, 2010) In a few countries (France, Italy, Norway) where parties to the left of the social democrats have joined coalition governments with social democratic parties, the results have varied from negative to disastrous. Under the existing power relations, this has even led to left-wing parties being made hostages for a soft, neoliberal policy - supporting privatizations and the US war adventures (such as in Afghanistan).16 One of the most dramatic and dangerous conse­ quences of this policy, where the traditional parties of the labour movement engage in various degrees of neoliberal adaptation, is that trust in the political Left breaks down, and right-wing populism gains supporters. The most extreme manifestations of social democratic parties in government have most recently been seen in Greece, Spain and Portugal, where they have led the fight against trade unions and the welfare state. If it is so easy for them to do so, it is perhaps time now for greater parts of the trade union movement to reassess the role of the social democrats. It is difficult, at any rate, to imagine that their relationship with the social democrats can be the same again in Europe after these experiences. Or, as Zygmunt Bauman puts it:

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It has sold out to the right, and once it realizes this, it can ask itself what has created the entrenched distance between it and its natural supporters - the poor, the needy, but also the dreamers - in relation to what still remains of its principles. For it is no longer possible to vote for the left if the left has ceased to exist. (Bauman, 2011) The result of such a political development is not difficult to predict. The former chief editor of Le M onde diplom atique, Ignazio Ramonet, basing his remarks on the situation in Spain under the government of the social democrat Jose Luis Rodrigues Zapatero, says the following: And so, rejected by voters, this government will probably have lost power and hand over guidance of the country to the conser­ vative and populist opposition. In general that is what happens when leftist parties jettison their own values and opt for policies that are shamefully right wing, as we have seen in Germany, the UK, and more recently Sweden. (Ramonet, 2010) P O L IT IC IZ A T IO N A N D R E V IT A LIZ A T IO N

This shift to the Right and the political-ideological crisis of the Left mean that the trade unions themselves must adopt a more central, independent and offensive political role. It should not be partypolitical, but it should be political in the sense that it takes on more comprehensive assignments in the social struggle. The trade unions are not yet ready for this, but they have the potential, first and foremost because they organize those who, through their labour, create value in society. Such a development presupposes, however, that the trade unions themselves will undergo a process of change, especially because of the changes in the fighting conditions created by neoliberalism and the crisis, summed up at the beginning of this chapter. Parts of the trade union movement in Norway developed new tendencies in this direction in the early 2000s. A stronger politiciza­ tion of the fight against privatization, contracting out and neoliberal restructuring contributed to a clearer political-ideological polariza­ tion between the Right and the Left in politics. This had a mobilizing effect. In addition, new, broad social alliances were forged, also via

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the Campaign for the Welfare State,1'' the trade unions being the main force, although organizations of farmers, pensioners, students, women and various interest organizations for users of public welfare services also participated. The policy of privatization was rejected in favour of developmental models that were based on the actual competence and creativity of the public sector’s own workers, in close collaboration with the users of the services (for instance, the model municipality project mentioned earlier). The tradition in Norway had been for the trade unions to support one or more political parties at elections. Now, both local trade union councils and national trade unions have gone a long way towards developing their own political programmes or demands at the elections, based on the needs and experiences of their members. These were sent to all the political parties with the following message: We will support the parties that support our demands. At the 2003 local elections in particular this model led to a formidable election victory for the Left in Norway’s third-largest city, Trondheim (for this reason it has come to be known as the ‘Trondheim model’), where the parties that supported the trade unions’ 19 concrete demands won well over 60 per cent of the vote. Among the results was a complete stop to privatization, and a number of formerly privatized services were remunicipalized. At the parliamentary election in 2 0 0 5 , the national trade unions followed up on this model to a considerable extent. This helped to push the Social Democrats to the Left, where they were included for the first time in history in an alliance with a party even further to the Left (the Socialist Left Party). The result was an election victory and a centre-left government based on Europe’s most progressive government platform (but, as already mentioned, the competition is not hard). The Norwegian Union of Municipal and General Employees played a key role in the social alliance building that made this election victory possible. This union has also in general played an important part in seeking alliances outside the ranks of the actual trade unions, in supporting think tanks and initiatives in a wide range of the Left and in repelling the neoliberal offensive. The change of government in 2005 generated enthusiasm among those who had fought for a real new political course (this was a key slogan in the mobilization). The change of government led to the Labour Protection Law, which had been dramatically weakened by the previous, right-wing government, being re-established, the private-school law of the right wing being repealed and privati­ zation of the railway’s passenger traffic being halted. The local

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authorities were given increased resources to strengthen local welfare, and massive efforts to expand nursery schools were set in motion. Furthermore, the government withdrew its demand for liberalization of a number of service sectors in developing countries at the ongoing W TO GATS negotiations. Things did not continue as well, however, since the govern­ ment gradually returned to administering the system within the framework of the prevailing power relations. The trade unions and the broad social alliance had contributed with important, new political analyses. Despite this, the political independence of the trade unions was insufficiently developed for them to be able to act with independent mobilizing power towards their ‘own’ party in the government. The party leadership was therefore still able to play the loyalty card. In addition, the Social Left Party completely revealed its theoretical, political and strategic weakness, and was little able to act as a counter to the Social Democratic drift to the Right. The new political course that had generated left-wing enthusiasm thus gradually faded away. The limit to the government’s radical measures was apparently where it would actually be necessary to confront strong economic interests in society.18 Even so, the tentative efforts at a new orientation which the Norwegian experiences had represented showed that an alternative development was possible. A growing political independence of the trade unions, increased political-ideological polarization between the Left and Right, the establishing of new, broad social alliances, and the development of concrete alternatives to the neoliberal policy of privatization were the main elements of this new orientation. The experiences confirmed that the trade unions can take the lead and bring about other solutions, for example by imposing pressure on political parties in the labour movement and by influencing elections. At the European and international level, the trade unions are facing considerable challenges that will call for both organizational changes and new strategies and tactics. The changing composition of the working class, increasing immigration, the strongly rising proportion of precarious work, the lower membership figures of the trade unions in many countries as well as the development of unity between the trade unions in the South and North are among the most important challenges. The last-mentioned has to a great extent been characterized by paternalism and a strong European dominance, based among other things on power positions attained historically but also on their large economic resources. In recent

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years, however, we have seen an increasing self-confidence among strong trade union organizations in the South (for instance in Brazil, South Africa and South Korea), something that has had both a vital­ izing and a radicalizing effect on parts of the international trade union organizations. National deregulation, the free movement of capital and the crucial role of international and regional institutions in the neolib­ eral offensive necessitate a global perspective and coordinated resistance across national borders. Only in that way can we prevent working people from being pitted against each other, groups against groups, welfare level against welfare level, in capitalists’ border­ less struggle for increased profits and control. Coordination across national borders, however, calls for strong, active movements at the local and national level. There is no abstract, global struggle against neoliberalism. Social struggles become internationalized if and when local and national movements recognize the need to coordinate across national borders in order to strengthen the fight against opposing international and well-coordinated forces. International coordination presupposes that there is something to coordinate. To organize resistance and forge necessary alliances locally is, then, yet more important. Even though the barriers against Europeanizing the social struggle (see the discussion above) are considerable, we have seen increasing - though so far scattered - tendencies that trade unions and social movements have been able to organize comprehensive campaigns and actions across national borders. This happened, for example, on two occasions against the EU Port Services Directive (voted down in the European Parliament in 2003 and 2006) and against the Services Directive, which was admittedly not rejected but ending up somewhat modified as a result. The mobilization in a number of countries against the European Constitution (the Treaty of Lisbon) also acquired a certain European dimension, even though it was nationally based where it made an impact (France and the Netherlands - and later Ireland). The anti-democratic elites of the European Union refused, as is common knowledge, to accept these defeats. To prevent division of trade unions and other popular forces along national borders will be absolutely crucial in Europe in the years ahead. When Greece, as a result of the debt crisis, was placed under administration in 2 0 1 0 by the European Commission, the ECB and the IMF, we saw how a widespread campaign was set in motion to make the Greek workers responsible - especially in the

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German media. ETUC as well as the German trade unions were impressively swift in providing counter-information and support for the Greek trade unions. ‘Wir sind Griechen!’ (We are Greek!) said one of the leaflets handed out by the German trade union Ver.di in Baden-Wiirtemberg when it mobilized a demonstration in Stuttgart on June 12, 2010. If the trade union movement can manage to strengthen solidarity across borders in such a situation, this opens up new possibilities. If we want change and democratization, the financial crisis and the economic crisis have flung the door wide open. Through the develop­ ment of the crisis, the need for a new, radical political course has actually arrived uninvited (though not exactly unexpectedly). This presupposes, however, that the trade unions are capable of turning around - politically as well as organizationally. The immediate task will be to conduct a defensive battle against the massive attacks on welfare and the standard of living. In the long term, however, this will not be enough, as Smith so rightly points out: In whatever scenario there is a structural weakness of the workers’ movement, which gives the advantage to the government and the ruling class. The weakness is political and lies in the absence of a credible, visible political alternative to neo-liberalism. Such a political alternative is not a pre-condition for resisting attacks in the short term, perhaps even winning battles. But at a certain point the absence of a coherent alternative has a demobilizing effect. This problem predates the present crisis, but the crisis has made it a much more urgent question. W hat is necessary is the perspective of a governmental alternative incarnated by political forces that have a credible possibility of winning the support of the majority of the population, not necessarily immediately, but as a perspective. Such a political programme would involve orga­ nizing the production of goods and services to meet the needs of the population, democratically decided. That means breaking the stranglehold of finance on the economy, creating a publicly owned financial sector, re-nationalizing public services, a progres­ sive taxation system, measures that challenge property rights. (Smith, 2010) The vision of an alternative development of society is important, then, to provide inspiration and direction for the ongoing struggle against the crisis and social regression. It is not sure, however, that it is - or at least only is - the lack of alternatives which is the main

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2 03

problem. There are a great many elements for an alternative devel­ opmental model. The alternative to privatization is not to privatize. The alternative to increased competition is more collaboration. The alternative to bureaucracy and control from above is democ­ ratization and participation from below. Alternatives to increasing inequality and poverty are redistribution, progressive taxation and free, universal welfare benefits. The alternative to the destructive speculation economy is socialization of the bank and credit insti­ tutions, the introduction of capital control and the prohibition of dealing with suspect financial instruments. The list can be made much longer than this. More than a lack of alternatives, however, indications are that it is just as much a question of the ability and will to carry out the mobilization and to make use of the tools that are necessary to enforce these policies. To arrive there, a political showdown will be necessary with the ideological legacy of the class compromise - that deep-rooted social partnership ideology and belief in social dialogue as the best way of resolving social problems to the benefit of all, as the expression goes. For the massive attacks that the forces of capitalism, governments and the European Union are at present making on welfare and the standard of living in Europe cannot be explained or understood within the framework of the social partnership ideology. The working class, the trade unions and other popular forces are now facing a harsh power struggle - and it has been started from above. The tendencies to channel the response of the unions to these attacks into the political power vacuum that the social dialogue at present represents at the European level do little other than weaken the capacity of the unions to mobilize. From this angle, there is much to suggest that it is the ability rather than the possibility that is the most important challenge the trade unions are now facing. The time has come, in other words, to stake out a new course for the trade unions’ struggle, as was suggested by the Basque trade union organizations on January 27, 2 0 1 1 , when they carried out their second general strike in less than one year: We have come out to the streets, have gone on strike twice and will continue mobilizing. Because we do not want the future of poverty they have prepared for us. They threatened us by saying after the crisis nothing would be the same again. So making things different is in our hands. It is necessary to continue fighting for a real change, for a different economic and social model in which

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people are not being used to favour the economies of only a few, but a model in which economy works in favour of the society.19 A N EW C O U R S E !

While many people let themselves be duped by rosy promises of a bright future if only market forces could be freed from their fetters and regulations, we are now actually experiencing how the entire neoliberal project has been hit by a crisis - and at the same time it is threatening society, jobs and the environment. As a result of the most serious financial and economic crisis the world has seen since the 1930s, there is no longer only talk of a crisis of legitimacy but even talk of the possibility of the imminent demise of the neoliberal ideology, of it being buried in the same ruins of economic crisis, poverty, destitution and misery as the previous version. The question is what is to come afterwards. As I have shown in this book, this mainly depends on how the power relations in society develop. Irrespective of the governmental alternatives, trade unions and social movements must prepare themselves for a situation of being under constant attack, one where there will be a need to mobilize in order to defend the progress made over the welfare state, trade union rights and social rights. It is through such defensive battles that we can gain sufficient strength and unity to move on to an offensive phase - for an alternative development of society. The situation calls for more radical answers. From its own history, the trade union movement has important experience of how power and positions of strength can be won. These experiences can now be of great use. The following points are a contribution to the debate as to what should be done. Stop the speculation econom y

Once again, the capitalist economy has ended up in a financial crisis, followed by economic, social and political crises. The economy must therefore be democratized, financial capital must be tamed, and extensive regulations must be introduced. This was done after the world crisis of the 1930s. When these regulations were phased out again in the 1980s and 1990s, the floodgates were opened to the economy of madness. Capital control must be reintroduced, and short selling, hedge funds and all speculative financial instruments must be prohibited. The banks must be nationalized and turned into

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public utilities. Tax havens must be done away with and financial transactions should be subject to taxation. The public sector must be used to prevent mass unemployment in the wake of the economic crisis. Defend the progress o f the welfare state

The welfare state was and still is a social compromise - for better or worse. This means that it is a complex and many-faceted phenom­ enon. Important welfare arrangements have, however, contributed to humanizing society, ensuring equal access to society’s infrastruc­ ture, to health and education, and they have helped stabilize the economy. Privatization and competitive tendering must therefore be opposed, and privatized welfare institutions resocialized. The state must be democratized and contribute further to stabilizing the economy through public investment - in schools, hospitals and nursing homes, in housing, public transport and renewable energy. Public, universal services must be guaranteed through increased taxation of the rich. New Public Management - that failed elitist organization and management project - must be phased out. Fight poverty and social inequality

Poverty and social inequality increase as a result of markets being deregulated and capital being allowed to move freely across national borders. The unrestrained wealth being accrued at present by the social elite and the increased poverty also taking place are thus two sides of the same coin. Comprehensive regulation of capital and markets is necessary to get rid of the more fundamental causes of poverty. Redistribution of resources via progressive taxation, the increasing of social benefits and pensions, a social housing policy and free or more reasonable welfare services will give poor people a more decent life in the short term. Abolish workfare policies

The workfare ideology is based on a view of humanity which is contrary to that of the labour movement. Its proponents insist that ‘work must pay’ (which it always does), but in practice workfare means that people are punished for not having a job. Workfare policy is a tool used by the elites to discipline workers, and it has developed into systematically suspecting people who have health problems or problems in their working life. It further functions as an ideological barrier to raising social benefits to a decent level. Trade unions

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must confront this ideology and go back to their basic demand for the right to work and for work to be adapted to the needs of the individual. That means fighting against the brutalization of work that is taking place in an increasingly deregulated market, and in a public sector that is exposed to constantly increasing pressure. This means challenging power relations in the labour market and in the workplace. Strengthen trade unions

There is not a single country with a highly developed level of welfare that does not have strong trade unions. As we have seen (in Chapter 4), extensive attacks on the trade union movement were crucial for both Ronald Reagan and Margaret Thatcher in their further attacks on the welfare state. Trade unions can make mistakes, they can give in and enter into doubtful compromises where they should not, they can ally themselves with employers in narrow ‘business unionism’, they can create illusions about a so-called ‘social partnership’ and ‘social dialogue’. Despite all this, trade unions are indispensable if we want society to change. They are essential in the struggle for power in society. This is primarily because trade unions organize those who through their work create values in society. This gives them a strategic position that no other organization or movement can replace in a highly developed society. After economic crisis, depo­ liticization and deradicalization from the 1970s on, and after the crisis tendencies in the social forum movements that emerged in the vacuum that arose when the trade unions were pushed back onto the defensive, the time has once more come for the trade unions and the working class to take centre stage. This also means, however, that the trade union movement must adapt its own organization and policy so that it can organize the new masses of immigrants, informal and precarious workers as well as strengthen its political independence, challenge the opposing forces and meet their attacks offensively. Defend union rights

For a long time, there has been strong pressure on trade union rights. The four anti-union judgments of the EU Court of Justice (see Chapter 6 and above) represent a dramatic new development in Europe in this area. It is therefore necessary to defend the funda­ mental rights to organize, negotiate and take industrial action - as well as job protection. The undermining of working conditions by so-called flexibility (and the dressed-up version, flexicurity) must

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20 7

be opposed. The trade union campaign for decent work must be given concrete content, the opposing forces and barriers must be identified, and it must be linked to mobilization and an interestsbased struggle. The time has come for a keener battle for power in workplaces. Stricter regulation of working hours is needed, and the mushrooming of precarious work now taking place in Europe must be combated. Both the environmental crisis and considerations linked to a more just distribution of jobs internationally make it imperative for working hours to be reduced. A six-hour day should therefore be placed on the agenda. M obilize from below - form alliances

Fundamental changes to society have to do with changing power relations. This in turn presupposes considerable mobilization from below. There are no short cuts. Without a solid anchorage among its members, the leaders of an organization can never go against the current in the long run. Conversely, no leadership can in the long term resist coordinated pressure from below. Education, discussion and democratic decision-making processes will be crucial. To be able to confront and challenge the opposing forces it will be of vital importance to form broad, new and untraditional alliances. These can best be developed through the concrete social struggle. Brie (2010) has pointed out how central the struggle for public services is for forming such alliances: The formation of broad alliances must start where the interests of these very different social groupings overlap. This seems to be primarily the development of public services, public demo­ cratic participation and public oversight of the economy. These are, first of all, both important sources of income and areas of political action for the socially oriented middle strata; secondly, they provide opportunities for raising central demands of the wage-dependent strata; and third, they are the conditions for overcoming the exclusion of lower groups. Freedom and dem ocracy

A weakening of democracy has been an essential feature of the neoliberal offensive. The European Union in particular is strongly characterized by a democratic deficit, and currently also by clear authoritarian tendencies. Anti-democratic forces applaud the disci­ plining of politics by the market (see Chapter 4). Dedemocratization

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has resulted in fewer people voting at elections, political apathy and contempt for politicians. Representative democracy has shown itself to be insufficient to ensure that people have control over their general living conditions. For that reason, new forms of direct democracy are needed, with increased power to workers at the workplaces and a recapturing to the community of companies which have been made subject to the market through privatization and deregulation. To defend and expand democracy must be one of the most important battles of the twenty-first century. To promote this battle it is necessary to sharpen and polarize the ideological struggle, to mobilize behind political alternatives and to renew the battle for ownership and control in the economy. FR E E D O M

D o your duty, dem and your rights! This good old slogan from the early days of the labour movement was brought out once more by some of the most moderate leaders of the labour movement a few years ago. This was not because they were expressing any real anxiety about the weakening and undermining of union rights, but because they felt people were beginning to become too demanding. It was time to emphasize duty. Workfare and the policy of disciplining were to be legitimized via the use of the trade union movement’s own slogan from a different age and a different context. The opposite happens to be the case - people accept too much and demand too little in today’s society. I am not first and foremost thinking of larger flatscreens, more brands of detergent, no speed restrictions on the motorways or more types of electric toothbrush. I am thinking of questions to do with power and powerlessness, of people’s chances of influencing their own living conditions, of influence over the organization and performance of work, of democratization of social and working life. It is high time to take up the freedom tradition of the labour movement once again. This means a more fundamental system criticism and a focus on the power and ownership of the means of production, on the organization of work, or how the results of production are made use of. Then, concepts such as moderniza­ tion, renewal and restructuring can be given a new content and a new direction - necessarily in confrontation with neoliberalism and market forces. It means a policy for increased freedom for the individual through collective action. We also ought to take a detailed critical look at our recent history.

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How could depoliticization, first of the economy and then to a great extent also of politics, take place in the labour movement? What has become of the original ambitious aims of the labour movement to liberate the individual? At present, we can see that the capitalist development of the past decades has ended as it inevitably had to end - in a ruinous economic, social and political crisis, one where the negative consequences for people in general can be dramatic. How could the political parties of the labour movement agree so uncritically in the 1980s to such comprehensive deregulation? Is part of the explanation to be found in the one-sided distribu­ tion policy perspective that became so predominant in the post-war consensus? Thus, much of the social perspective and the actual question of power were lost from sight. It all became a question of economic growth and of distributing it, while power structures, power relations and authoritarian relations between people in production, at the workplace, got lost in the process. For indi­ viduals, personal freedom and control over their own lives are at least as important as just distribution. Emancipation is the ultimate objective - the possibility for individuals, along with others, to realize their own identity and personal aims. Freedom is something else, and more than can be achieved through material resources. It is a question of freedom not just from need, but also from exploitation, insecurity, subservience and powerlessness. We must go beyond the distribution policy perspec­ tive to contradictions linked to power relations between people which relate to the economic conditions in society. The path to freedom goes through joint action. It has to do with power, dignity and respect. Responsibility is only taken by the one who has power. Against the powerless, disciplining and coercion ‘must’ therefore be used. Workfare policies are a method that elites and those in power use to control those who are powerless. It is in production that power relations are constituted, not in consumption. ‘Despite everything, production is the source of prosperity and of inequalities in distribution,’ as Professor Richard Wilkinson expresses it (see Chapter 7). Unequal distribution in consumption, or increasing inequalities in society, derive from power and ownership relations in production. This is partly why moral­ izing about high salaries among the ‘fat cats’, followed by moralistic appeals for moderation, is a waste of time as long as power relations are not attacked. The labour movement has a proud history and tradition in its fight for freedom - freedom not only from material need but also from

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oppression, fear of authority and power abuse. Something got lost, however, during the depoliticization in the era of consensus policy. That is why the labour movement lost the freedom debate of the 1980s. Thus the labour movement itself - via its one-sided focus on the outcome of production result - consumption - contributed to facilitating the ideological victory of the right-wing parties, since they managed to turn all of us into being consumers - and nothing but consumers. In this perspective, it is only legitimate to pursue our interests as consumers as producers we only have narrow special interests! In the history of the labour movement it has been fundamental that the free development of each is a precondition for the free devel­ opment of all. Nothing has contributed more to giving the individual increased freedom in our society over the past hundred years than the collective struggle of the labour movement. The basically flawed thesis of the right wing, that individual freedom increases when democratic bodies reduce their control and regulation of markets, completely ignores the social power of capital and power relations in production. The market is presented as the free choice of consumers. This represents an idealization of the market, a denial of economic power and an individualization of social problems. If the welfare state is to be defended and further developed, social driving forces and power relations must be focused on. Democratic government and control are the most important tools for combating the power of the market, the speculation economy and the brutaliza­ tion of society and work. Democracy and welfare have throughout history been won in a fight against strong opposing forces. From being on the defensive, with a welfare state that is slowly changing character - and with growing groups that are being marginalized and rendered suspect - democratic forces can change course. In the midst of an economic crisis no one knows the outcome of, it is vital for social forces to change the defensive into an offensive. I give the final word to the Swedish radical social democrat Ingemar Lindberg, who concludes this book with an optimistic vision. He reminds us that there are alternatives: The present phase in the development of capitalism also offers the forces of the Left new possibilities. The workers too have action alternatives. Many analyses of globalisation ignore the potential power of the working class, which can grow via new union methods of working across national borders and which at the same time break down hierarchies and top-down control in their own union organisations. ... The present phase of

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globalised capitalism is characterised by a shift of power and a predominantly neoliberal conceptual model. It is not necessary to meet any of this with passive submissiveness. On the contrary, to be incensed at injustice is precisely the mobilising force needed to turn developments in the opposite direction. (Lindberg 2 007, pp. 11, 81)

NOTES 1 IN T R O D U C T IO N 1 2

3 4

5 6

7 8

S h e a c tu a lly h a s a d iffe r e n t n a m e , b u t is c a lle d J a n e in th is b o o k . T h e n a m e is in c o r r e c t, b u t th e r e s t o f th e s to r y is n o t, u n fo r tu n a te ly . T h e E u r o p e a n s o c ia l m o d e l is u sed a s a n u m b r e lla te r m f o r a ll th e v a r i­ o u s w e lfa r e m o d e ls in th e p r e s e n t E u r o p e a n U n io n . T h e te rm is p r o b ­ a b ly id e o lo g ic a l, a n d in te n d e d to c r e a te a E u r o p e a n id e n tity , r a th e r th a n b e in g an e x p r e s s io n o f a c le a r ly d e fin e d m o d e l. T h e A n g lo -A m e r ic a n c o u n tr ie s a r e th e U n ite d S ta te s , C a n a d a , th e U n ite d K in g d o m , Ir e la n d , A u s tr a lia a n d N e w Z e a la n d . A n a c tu a l e x a m p le : th e N o r w e g ia n n e w s p a p e r Klassekampen r e v e a le d (Ja n u a r y 7 - 8 , 2 0 0 9 ) t h a t th e th in k ta n k E C O N P o y r y h a d v irtu a lly ta k e n its fig u re s o u t o f th in a ir w h e n , in a r e p o r t fo r th e N o r w e g ia n E m p lo y e r s ’ A s s o c ia tio n , N H O , it e s tim a te d a p o te n tia l sa v in g o f N O K 6 - 4 0 b illio n if p u b lic se rv ic e s w e re t o b e c o n tr a c te d o u t. S e e , f o r e x a m p le , D e lv ik , F la t t e n , H e r n e s et al. ( 2 0 0 7 ) . F r o m th e N o r w e g ia n L O le a d e r R o a r F la t h e n ’s w e lc o m in g sp e e c h to a n in te r n a t io n a l tra d e u n io n w o m e n ’s c o n fe r e n c e a t th e L O E d u c a tio n C e n tr e a t S o r m a r k a (M a y 8 , 2 0 0 7 ) . S p e e c h g iv e n a t th e N a tio n a l U n iv e r s ity o f Ir e la n d , G a lw a y , A p ril 4 , 2 0 0 5 , a v a ila b le o n < w w w .e tu c .o rg / a / 1 0 4 4 > (a c c e s s e d J u ly 8 , 2 0 1 1 ) . S o m e N o r w e g ia n r e s e a r c h e rs (L o k e n , F a lk e n b e r g a n d K v in g e , 2 0 0 8 ) , w e n t o f f in s e a rc h o f th e N o r w e g ia n m o d e l a b r o a d . T h e y w a n te d to fin d o u t h o w it w a s e x p o r te d v ia d iv isio n s o f N o r w e g ia n m u ltin a ­ tio n a l c o m p a n ie s . T h e r e s u lt w a s d e p re s sin g , to th e r e s e a r c h e r s ’ g r e a t su r p r is e .

2 T H E P O W ER B A SE 1

2

3

E u r o p e , N o r th A m e ric a a n d J a p a n a re in p a r tic u la r c o u n te d a s p a r t o f th e N o r t h , a n d so a r e A u s tr a lia a n d N e w Z e a la n d , d e sp ite th e ir g e o g r a p h ic a l p o s itio n in th e s o u th e rn h e m isp h e re . T h is th e m e is d e a lt w ith in d e ta il in E s p in g -A n d e rs e n ( 1 9 9 0 ) , w h e re h e v ie w s th e ‘d e c o m m o d ific a tio n o f w o r k ’ a s a k e y p a r t o f th e s tr u g ­ g le b y th e la b o u r m o v e m e n t w h ic h fo u n d e x p r e s s io n in p u b lic w e lfa r e a r ra n g e m e n ts . In S e ip ( 1 9 8 1 , p . 1 3 ) th e fo llo w in g is c ite d : ‘T h e G e r m a n h is to r ia n G u s ta v S c h m o lle r , o n e o f th o s e w h o fo u n d e d th e “ V e re in fiir S o z ia lp o lit ik ” , a c k n o w le d g e d t h a t u n d e rly in g th is la y fear, f e a r o f a d e ep s p lit,

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4

5

6

7

8

9

10

11

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“ Z w e is p a lt ” , in th e p e o p le , a n d fe a r o f a r e v o lu tio n , a “ d e u tlic h g e n u g d ro h e n d e n so z ia le n R e v o lu t io n ” (Der Arbeiterfreund, 1 8 7 2 ) . In th e fe a r la y a sim p le m o tiv e : s o c ia l p o lic y w a s t o h a v e a p a c ify in g e f f e c t .’ A rth u r B a lfo u r w a s a B r itis h C o n s e r v a tiv e p o lit ic ia n , a n d p rim e m in is ­ te r fr o m 1 9 0 2 to 1 9 0 5 . T h e s ta te m e n t w a s m a d e in a sp e e c h h e g a v e in M a n c h e s te r o n J a n u a r y 1 6 , 1 8 9 5 , q u o te d in th e Manchester Guardian, Ja n u a ry 1 7 , 1 8 9 5 . A la w d e sig n ed to p u n ish th o s e w h o p r e v e n te d o th e r s fr o m w o r k in g in th e e v e n t o f la b o u r d is p u te s. T h e y c o u ld b e p u n is h e d w ith e ith e r fin e s o r im p r is o n m e n t fo r up to o n e y e a r. T h e a im w a s t o p r o te c t s tr ik e ­ b re a k e r s . T h e a c t w a s r e s o r te d t o in a n u m b e r o f d isp u te s b e fo r e it w a s r e p e a le d in 1 9 3 5 . T h e L a b o u r P a r ty a d m itte d ly fo r m e d a m in o r ity g o v e r n m e n t in J a n u a r y 1 9 2 8 , a fte r it h a d b e c o m e th e la r g e s t p a r ty in th e N o r w e ­ g ia n p a r lia m e n t. I t d id n o t , h o w e v e r, c o m m a n d a m a jo r ity , s o it d e lib e r a te ly d re w up a r a d ic a l g o v e rn m e n t d e c la r a tio n t h a t h a d n o c h a n c e o f b e in g a c c e p te d in th e p a r lia m e n t. A c c o r d in g to th is , th e g o v e rn m e n t w o u ld ‘a llo w its e lf t o b e g u id e d by c o n s id e r a tio n s in th e in te re sts o f th e w o r k in g c la s s a n d a ll w o r k in g p e o p le ’, a n d ‘to f a c ilita te an d p r e p a r e th e tr a n s itio n to a s o c ia lis t s o c ie ty ’ (c f. chttp:// n o .w ik ip e d ia .o r g / w ik i/ E d v a r d _ B u ll_ d .e .> , a c c e s s e d A u g u st 2 3 , 2 0 1 1 ) , T h e g o v e rn m e n t re sig n e d a fte r o n ly 1 8 d a y s in p o w e r a fte r its g o v e rn m e n t d e c la r a tio n w a s v o te d d o w n . Laissez-faire is a F r e n c h p h r a s e m e a n in g ‘le ttin g th in g s b e ’, a n d h a s b e c o m e a g e n e r ic te r m to d e s c r ib e u n re g u la te d c a p ita lis m w h e re th e s ta te in te rv e n e s a s little a s p o s s ib le . B r e tto n W o o d s is a to w n in N e w H a m p s h ir e , U S A , w h e re 7 3 0 d e le g a te s fro m a ll th e 4 4 a llie d c o u n tr ie s in th e S e c o n d W o rld W a r m e t in J u ly 1 9 4 4 to d isc u ss th e o r g a n iz a tio n o f th e p o s t-w a r e c o n o m y . N a m e d a fte r t h e B r itis h e c o n o m is t J o h n M . K e y n e s ( 1 8 8 3 - 1 9 4 6 ) , w h o h a d a g r e a t in flu e n c e o n h o w th e e c o n o m y w a s r e g u la te d in th e p o s t­ w a r p e r io d . A m o n g o th e r th in g s , h e p r e s c rib e d h o w p u b lic b u d g e ts a n d m a r k e t in te rv e n tio n s c o u ld b e u se d to s ta b iliz e th e e c o n o m y . H is m o re fa r-ra n g in g p r o p o s a ls , in c lu d in g th o s e to d o w ith a n o w n in te r n a tio n a l tra d e c u r re n c y a n d in te r v e n tio n s in th e e v e n t o f d is p a ritie s in th e tra d e b a la n c e b e tw e e n c o u n tr ie s , w e re h o w e v e r n o t fo llo w e d u p . In c lu d in g th e A m e ric a n C IA , w h ic h c o lla b o r a t e d w ith m a n y o f th e E u r o p e a n s o c ia l d e m o c r a tic p a r tie s in th e fig h t a g a in s t m o r e r a d ic a l fo rc e s . A c c o r d in g t o S e ip ( 1 9 8 1 ) , th e a c tu a l c o n c e p t o f th e w e lfa r e s ta te w a s f ir s t u sed b y th e a r c h b is h o p o f Y o r k , W illia m T e m p le , in 1 9 4 1 , a s a c o u n te r -c o n c e p t to th e N a z i t o ta lit a r ia n s ta te . T h e r o le o f th e S o v ie t U n io n in th is c o n n e c t io n m u s t n o t b e in te rp r e te d a s r u b b e r-s ta m p in g th e S o v ie t m o d e l o f so c ie ty . T h e m o s t im p o r ta n t th in g fo r c a p ita lis ts in th e W e s t w a s th e p o te n tia l t h r e a t to o w n e rsh ip o f th e m e a n s o f p r o d u c tio n t h a t th is m o d e l r e p re s e n te d .

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A c c o r d in g to th e c o n s titu tio n o f th e N o r w e g ia n L O (fr o m 1 9 2 0 ) , its a im w a s t o ‘w o r k f o r th e s o c ia liz a tio n o f th e m e a n s o f p r o d u c tio n ’. T h is s o c ia lis t o b je c t s c la u s e w a s re m o v e d in 1 9 4 9 , in th e h e y d a y o f c o n s e n s u s p o litic s . F o r a m o r e d e ta ile d d is c u s s io n o f th e id e o lo g ic a l le g a c y o f th e c la s s c o m p r o m is e , se e W a h l ( 2 0 0 4 ) . In s o m e c la s s ific a tio n s , th e M e d ite r r a n e a n c o u n tr ie s o f G r e e c e , Ita ly , S p a in a n d P o r tu g a l a r e tre a te d a s a s e p a ra te w e lfa r e m o d e l, a r u d i­ m e n ta r y w e lfa r e s ta te w ith w e a k s ta te in v o lv e m e n t a n d v e ry d iffe r e n t c o n d itio n s f o r v a r io u s g r o u p s in so c ie ty . D iffe r e n t in flu e n c e s fr o m P r o te s ta n tis m a n d C a th o lic is m a r e o fte n c ite d a s c o n tr ib u to r y c a u se s t o h o w w e lfa r e a ss ig n m e n ts w e re so lv e d in d iffe r e n t w a y s in N o r t h e r n a n d S o u th e r n E u r o p e .

3 T H E T U R N IN G P O IN T 1

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E c o n o m is ts d is a g re e a b o u t th e e x te n t to w h ic h a K e y n e s ia n a n ti­ r e c e s s io n p o lic y w a s a c tu a lly a d o p te d by g o v e rn m e n ts . T h a t is n o t , h o w e v e r, a t o p ic t h a t w ill b e p u rsu ed in th is b o o k . H a rv e y ( 2 0 0 5 ) g iv es a g o o d o v e rv ie w o f th e b r ie f h is to r y o f n e o lib e r a l­ ism . K le in ( 2 0 0 7 ) d e s c rib e s in d e ta il h o w s h o c k th e ra p y h a s c o n s c io u s ly b e e n u sed to p r o m o te m a r k e t c a p ita lis m g lo b a lly , n o t o n ly in C h ile b u t in a w h o le r a n g e o f c o u n tr ie s w o rld w id e , in c lu d in g E a s te r n E u r o p e a n d R u s s ia a f te r th e c o lla p s e o f th e S o v ie t U n io n . S in c e 1 9 9 4 N A F T A h a s b e e n a n a g r e e m e n t b e tw e e n th e U n ite d S ta te s , C a n a d a a n d M e x ic o . W e fin d th e m o s t e x tr e m e e c o n o m ic d iffe r e n c e s in th e U n ite d S ta te s . F o r fu r th e r in fo r m a tio n o n th is , se e C h a p te r 5 a n d B r o o k s a n d H w o n g (2 0 0 6 ), p. 2 1 . P a y -a s -y o u -g o is u sed a s a te r m fo r p e n s io n s c h e m e s w h e re to d a y ’s e m p lo y e e s c o v e r to d a y ’s p e n s io n e x p e n d itu re v ia th e t a x s y s te m , w h ile th e y th e m se lv e s w ill, in th e sa m e w a y , g e t th e ir p e n s io n s p a id fo r b y th e n e x t g e n e r a tio n o f e m p lo y e e s . It is a s o lid a rity s c h e m e b e tw e e n g e n e r a ­ tio n s th a t is n o t d e p e n d e n t o n th e se ttin g -u p o f fu n d s. T h is m e a n s it a v o id s th e in s e c u r ity o f th e f in a n c ia l m a r k e t w h ile a ls o n o t c o n tr ib u tin g to th e u n h e a lth y e x p a n s io n o f f in a n c ia l c a p ita lis m . M e n tio n e d in B la c k b u r n ( 2 0 0 8 , p . 8 1 ) . S tr u c tu r e d in v e s tm e n t v e h ic le s (S IV s ) a n d c o lla te r a liz e d d e b t o b lig a tio n s (C D O s ) a r e a c o u p le o f th e se ty p e s o f in s tru m e n t, w h ic h c o n s is t o f little m o r e th a n c o m b in a tio n s o f h ig h -r is k d e p lo y m e n t o f m o n e y , a ttr a c tiv e ly p a c k a g e d in g lo s sy p a p e r a n d w ith p r o m is e s o f fu tu re p ro s p e rity . R e p o r t o f a m e e tin g in th e O d e ls tin g e t (th e la r g e r d iv isio n o f th e N o r w e g ia n p a r lia m e n t), ite m n o . 1 , J u n e 6 , 2 0 0 8 , a v a ila b le a t:
216

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w w w .s to rtin g e t.n o / n o / S a k e r -o g -p u b Iik a s jo n e r / P u b lik a s jo n e r / R e fe r a te r/ C )d e ls tin g e t/ 2 0 0 7 -2 0 0 8 / 0 8 0 6 0 6 / l/ > (a c c e s s e d J u ly 2 8 , 2 0 1 1 ) . S h o u ld a n y o n e d o u b t th is , r e c o m m e n d e d r e a d in g is a r e p o r t o f th e E u r o p e a n C o m m is s io n fr o m 2 0 0 6 , Global Europe: Competing in the world, w h ic h to a g r e a t e x te n t d e a ls w ith h o w th e E u r o p e a n U n io n is to e n su re r a w m a te r ia ls fr o m a n d in c r e a s e d m a r k e t a c c e s s to d e v e lo p in g c o u n tr ie s . F r o m 1 9 6 0 to 1 9 8 2 th e t o ta l d e b t o f th e d e v e lo p in g c o u n tr ie s r o s e fro m U S $ 1 8 b illio n to U S $ 6 1 2 b illio n (Klassekampen, F e b r u a r y 2 , 2 0 0 8 ) . F o r ev ery d o lla r a d e v e lo p in g c o u n tr y o w e d th e I M F in th e e a r ly 1 9 8 0 s , th e c o u n tr y p riv a tiz e d p u b lic p r o p e r ty b y 5 0 p e r c e n t, it is p ro u d ly s ta te d in an I M F d o c u m e n t (B ru n e e t a l. 2 0 0 4 , p . 1 9 5 ) . T h e ‘s u c c e s s ’ is a s c r ib e d to t h e I M F ’s c o n d itio n a litie s , w h ic h in c lu d e d a p r iv a tiz a tio n r e q u ir e m e n t. F o r a m o re d e ta ile d a c c o u n t a s w e ll a s d o c u m e n ta tio n , see M a r tin (1 9 9 3 ). S a c h s w a s th e m a in a r c h ite c t o f th is b r u ta l s h o c k th e r a p y (see G o w a n , 1 9 9 8 ) . A s an U N e x p e r t o n e ffo r ts t o a c h ie v e th e M ille n n iu m D e v e lo p ­ m e n t G o a ls , h e h a s sp e n t r e c e n t y e a rs a s a n in te r n a tio n a l w o n d e rb o y in c o m b a tin g p o v e rty . It c o u ld w e ll b e a rg u e d t h a t th e r e is p le n ty o f c o m b a tin g s till t o b e d o n e b e fo r e h e h a s c o m p e n s a te d fo r a ll th e p o v e rty , s o c ia l n e e d a n d m is e ry h e is p a r tly r e s p o n s ib le f o r in R u s s ia . T h e N o r w e g ia n R e d -G r e e n g o v e r n m e n t a d m itte d ly a n n o u n c e d a c h a n g e o f th is p o lic y in its G o v e r n m e n t M a n ife s t o o f 2 0 0 5 , b u t s o fa r c h a n g e s h a v e b e e n o n ly c o s m e tic . W ith in a n u m b e r o f a r e a s , th e g o v e rn m e n t h a s ten d e d to m o v e in th e o p p o s ite d ir e c tio n , a n d h a s s tr e n g th e n e d its c o o p e r a tio n w ith th e W o r ld B a n k a n d I M F - u n d e r a m in is te r fr o m th e S o c ia lis t L e ft P a r ty ! T h e E E A a g r e e m e n t w a s r e a c h e d b e tw e e n th e E u r o p e a n U n io n a n d N o r w a y , Ic e la n d a n d L ie c h te n s te in in th e e a r ly 1 9 9 0 s . T h e a g r e e ­ m e n t m a k e s th e s e c o u n tr ie s p a r t o f th e S in g le M a r k e t , a lth o u g h su c h a r e a s a s fis h e r ie s , a g r ic u ltu r e a n d fo re ig n p o lic y a r e e x c lu d e d fro m th e a g re e m e n t. S o u r c e s : K r is t ia n s e n ( 1 9 9 6 ) , A le x a n d e r s s o n a n d A le x a n d e r s s o n ( 1 9 9 5 ) a n d a n in te rv ie w w ith t r a n s p o r t a d v ise r H a n s J a c o b E id e in Klassekampen ( O c t o b e r 3 1 , 1 9 9 6 ) . T h e n a m e o f th e c o m p a n y w a s V iv e n d i u n til 2 0 0 3 , a n d b e fo re th a t (u n til 1 9 9 8 ) C o m p a g n ie G e n e ra te d es E a u x . V iv e n d i s o u g h t t o b e c o m e a g lo b a l g ia n t w ith in th e m e d ia w o r ld , b u t s u ffe r e d a te r r ib le e c o n o m ic b a c k la s h w h ic h le d t o V iv e n d i (la te r V e o lia ) E n v ir o n m e n t b e c o m in g a n in d e p e n d e n t c o m p a n y fr o m 2 0 0 2 . I n fo r m a tio n ta k e n fr o m th e V e o lia E n v ir o n m e n t w e b s ite a t: < w w w . v e o lia .c o m > . T h e g ro u p w a s fo r m e r ly c a lle d P u b lic S e rv ic e s P r iv a tis a tio n R e s e a r c h U n it (P S P R U ), a n d it c o o p e r a t e s c lo s e ly w it h P u b lic S e rv ic e s In te r n a tio n a l.

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‘W e a r e u n d e r g o in g a c o u p d ’e t a t in s lo w m o t io n ’, a r tic le in Dagens Nyheter ( Ju ly 2 7 , 2 0 0 8 ) .

4 T H E S H IF T IN T H E B A L A N C E O F PO W ER 1

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D u r in g t h e 1 8 y e a rs th e C o n s e rv a tiv e s w e re in p o w e r, n in e ‘p a c k a g e s ’ o f a n ti-u n io n la w s w e re a p p ro v e d . T h is e ffe c tiv e ly c o n tr ib u te d to u n d e r m in in g th e p o s s ib ilit y f o r U K u n io n s to ta k e in d u s tr ia l a c tio n . L e v itt ( 1 9 9 3 ) g iv es a n in sid e a c c o u n t o f u n io n b u s tin g . M a r ty L e v itt p a r tic ip a te d a c tiv e ly in c ru s h in g t r a d e u n io n s in th e U n ite d S ta te s , b u t c h a n g e d sid e s a n d b e c a m e a n a d v ise r to th e tra d e u n io n s o n h o w th is p h e n o m e n o n c o u ld b e c o m b a te d . O n e o f th e r e a s o n s f o r th e h ig h le v els o f o r g a n iz a tio n in D e n m a r k a n d S w e d e n (as w e ll a s F in la n d a n d B e lg iu m ) is t h a t th e tra d e u n io n s a d m in is te r u n e m p lo y m e n t in s u r a n c e . R ig h t-w in g g o v e rn m e n ts in b o th c o u n tr ie s h a v e u n d e r m in e d th is s c h e m e , s o m e th in g w h ic h le d in S w e d e n to th e L O lo s in g m o r e th a n 2 0 0 , 0 0 0 o f its 1 .9 m illio n m e m b e r s in 2 0 0 7 - 0 8 . T h e o r g a n iz a tio n a l p e r c e n ta g e h a s th u s d e c re a se d t o a b o u t 7 0 p e r c e n t, w h ic h h o w e v e r is still v e ry h ig h w h e n v ie w e d in a n in te r ­ n a tio n a l c o n t e x t . A c c o r d in g to th e E u r o p e a n T r a d e U n io n In s titu te : < h ttp :/ / w w w .w o rk erp a r tic ip a tio n .e u / N a t io n a l- In d u s t r ia l-R e la t io n s / A c r o s s -E u r o p e / T r a d e U n io n s 2 > (a c c e s s e d A u g u st 2 3 , 2 0 1 1 ) . In te rv ie w in th e Financial Times (A p ril 2 5 , 1 9 9 6 ) , c ite d in W a h l ( 1 9 9 8 , p. 2 0 9 ). T h is e n d e d in a p o litic a l b r e a k a w a y t o th e L e ft, w ith a n u m b e r o f tra d e u n io n s h o p s te w a r d s in p a r tic u la r le a v in g th e S o c ia l D e m o c r a ts a n d fo u n d in g W A S G (W a h la lte rn a tiv e fu r A r b e it u n d S o z ia le G e r e c h tig k e it, th e E le c to r a l A lte rn a tiv e fo r J o b s a n d S o c ia l J u s t ic e ) . A m o n g th e b r e a k a w a y g r o u p w a s th e fo r m e r p a r ty le a d e r a n d m in is te r o f f in a n c ia l a ffa ir s O s k a r L a f o n ta in e . L a te r, th is g ro u p a m a lg a m a te d w ith th e E a s t G e r m a n P D S a n d fo rm e d th e s o c ia lis t p a r ty D ie L in k e , w h ic h w o n 5 3 s e a ts in t h e G e r m a n p a r lia m e n t in 2 0 0 5 . T h is fig u re r o s e to 7 6 a t th e 2 0 0 9 e le c tio n . T h e M a a s t r ic h t c r ite r ia s e t o u t c le a r e c o n o m ic r e q u ir e m e n ts in c o n n e c ­ tio n w ith th e in tr o d u c tio n o f t h e e u ro in th e E u r o p e a n U n io n . N a tio n a l d e b t w a s n o t a llo w e d t o e x c e e d 6 0 p e r c e n t o f G N P , th e d e fic it o f th e s ta te b u d g e t h a d to b e k e p t u n d e r 3 p e r c e n t o f G N P , a n d th e r e w e re s t r ic t r e q u ir e m e n ts r e g a r d in g th e lev el o f in fla tio n a n d in te r e s t r a te . T h e n e e d to m e e t th e se c r ite r ia m e a n t th a t m a n y g o v e rn m e n ts fo rc e d th r o u g h c u ts in th e p u b lic s e c to r a n d p r iv a tiz a tio n s . D u r in g th e 1 9 9 0 s a n d u n til th e f in a n c ia l c ris is o f 2 0 0 8 . W e lo o k m o re c lo s e ly a t th e r e a c tio n s t o th e c ris is in th e n e x t c h a p te r. T o n y B la ir ’s ‘th ird w a y ’ in th e U n ite d K in g d o m h a s b e e n se e n to b e th e

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m o s t m a r k e t-o r ie n te d v e rs io n . I t c o n tin u e d M a r g a r e t T h a t c h e r ’s p o lic y o f p r iv a tiz a tio n a n d did n o t r e m o v e th e m a jo r p a r t o f th e a n ti-u n io n le g is la tio n in tr o d u c e d b y h e r g o v e r n m e n t. A r e p r e s e n ta tiv e p r e s e n ta tio n o f th e th ird w a y c a n b e fo u n d in a c o m m o n d e c la r a tio n b y T o n y B la ir a n d G e r h a r d S c h r o d e r in 1 9 9 9 : < w w w .th e s a r g e a n ts .n e t/ th ir d -w a y -d ie n e u -m itte .h tm l (a c c e s s e d J u ly 2 7 , 2 0 1 1 ) . A c k n o w le d g e d b y th e th e n m a n a g in g d ir e c to r o f N A F , P a l K r a b y , in an in te rv ie w w ith Aftenposten ( M a r c h 3 0 , 1 9 9 6 ) . P ie rs o n ( 1 9 9 4 ) a n d L in d e r t ( 2 0 0 4 ) b o th h a v e d e ta ile d a c c o u n ts o f su ch in s ta n c e s . T h e D a n is h p a r ty R e d -G r e e n A llia n c e h a s f o r m a n y y e a rs in v e s tig a te d w h e th e r fo r e ig n c o m p a n ie s p a y t a x in D e n m a r k . T h e re su lts m a k e d e p re s sin g r e a d in g . A r e p o r t fo r 2 0 0 9 c a n b e fo u n d a t: (a c c e s s e d A u g u st 2 3 , 2 0 1 1 ) . S e e R u n e S o r e n s e n ’s r e m a r k a b o v e . A t p r e s e n t, a p r o fe s s o r a t T a llin n U n iv e r s ity o f T e c h n o lo g y , E s t o n ia , a n d a m e m b e r o f th e c r itic a l e c o n o m ic s g r o u p ‘th e O th e r C a n o n ’. A s s is ta n t P r o fe s s o r S u e N e w b u r y a t th e U n iv e r s ity o f S y d n ey , A u s tra lia , is o n e o f th e m o s t p r o m in e n t e x p e r ts in t e r n a tio n a lly o n th is is su e . S h e h a s f o r m a n y y e a rs w o r k e d o n th e s e a c c o u n ta n c y m o d e ls a n d h a s d e v el­ o p ed a p r o fo u n d c r itiq u e o f th e ir fu n c tio n a n d r o le w h e n u se d in th e p u b lic se cto r. Y o u c a n fin d r e fe r e n c e s t o m a n y o f h e r c o n tr ib u tio n s a t: < h ttp :/ / sy d ney.ed u .au / b u siness/ staff/ su en > (a c c e s s e d A u g u st 2 3 , 2 0 1 1 ) . A L B A sta n d s f o r A lia n z a B o liv a r ia n a p a r a lo s P u e b lo s d e N u e s tr a A m e r ic a , a n d w a s e s ta b lis h e d a s a s o c ia lly o r ie n te d c o u n te r w e ig h t t o th e U S -in itia te d F re e T r a d e A re a o f th e A m e r ic a s , w h ic h fo c u se s o n lib e r a liz a tio n , d e re g u la tio n a n d p r iv a tiz a tio n . In S e p te m b e r 2 0 1 0 , A L B A c o m p r is e d C u b a , V e n e z u e la , B o liv ia , N ic a r a g u a , E c u a d o r , D o m in ic a , S a in t V in c e n t a n d th e G r e n a d in e s - w ith G r e n a d a , H a iti, P a ra g u a y , U ru g u a y a n d S y ria a s o b s e r v e r s . B a n c o d el S u r w a s e s ta b lis h e d in 2 0 0 7 b y B r a z il, U ru g u a y , P a ra g u a y , E c u a d o r , B o liv ia , V e n e z u e la a n d A rg e n tin a . T h e e c o n o m ic d e m a n d s w h ic h fo r m e d th e b a s is f o r th e in tr o d u c tio n o f E M U , a n d th e r e b y th e e u ro a s a c o m m o n c u r r e n c y (th e M a a s t r ic h t c r ite r ia ), a re d e sc rib e d in n o te 7 f o r th is c h a p te r. R e g u la tio n (E C ) 1 3 7 0 / 2 0 0 7 o n p u b lic p a sse n g e r tra n s p o rt by ro a d a n d rail. A rtic le 1 9 .1 o f th e a g r e e m e n t s ta te s t h a t ‘M e m b e r s s h a ll e n te r in to su c c e s siv e r o u n d s o f n e g o tia tio n s . . . w ith a v iew to a c h ie v in g a p ro g re s siv e ly h ig h e r le v e l o f lib e r a liz a tio n ’. T h e e n tire a g r e e m e n t c a n b e a c c e sse d a t < w w w .w to .o rg / e n g lish / d o c s_ e / le g a l_ e / 2 6 -g a ts.p d f> (a cc e sse d A u g u st 2 3 , 2 0 1 1 ) . I t is a d m itte d ly c la im e d b y s o m e p e o p le t h a t p u b lic s e rv ic e s a re e x c lu d e d fr o m G A T S . T h e p r o b le m , h o w e v e r, is t h a t p u b lic se rv ic e s in th is c o n t e x t h a v e b e e n s o n a r r o w ly d e fin e d t h a t th e a g r e e m e n t o ffe r s v irtu a lly n o p r o te c tio n (see a r tic le s 1 .3 b a n d c o f th e a g r e e m e n t). A

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fu r th e r lim ita tio n o f p u b lic g o v e rn a n c e is to b e fo u n d in a r tic le 6 , w h e re it s ta te s t h a t im p o r ta n t p u b lic r e g u la tio n s m a y n o t c o n s titu te ‘u n n e c e s s a r y b a r r ie r s to t r a d e ’. A ll th e m e m b e r sta te s (o v er 1 5 0 a t p resen t) m u st a c c e p t th e w ith d ra w a l, p lu s th e re m u st b e e v en tu a l c o m p e n s a tio n fo r fin a n c ia l lo ss. I f su ch an a c c e p ta n c e is a ch ie v e d , th e c o u n try th a t w ish es to re m o v e o n e se rv ices se c to r fro m G A T S h a s to in c lu d e a n o th e r s e c to r o f th e sa m e size in th e a g re e m e n t, sin ce th e to ta l e x te n t o f lib e ra liz ed serv ices c a n n o t be red u ced . T h e la s t-m e n tio n e d (in itia lly c a lle d th e E u r o p e a n S e rv ic e s N e tw o r k ) w a s se t u p o n th e in itia tiv e o f th e E u r o p e a n C o m m is s io n ( !) , w h ic h a p p a r e n tly th o u g h t t h a t c a p ita l in te re s ts in th e se rv ic e s s e c to r w e r e to o w e a k ly r e p re s e n te d in th e E u r o p e a n U n io n (see B a la n y a , D o h e rty , H o e d e m a n e t a l., 2 0 0 0 , p p . 1 3 5 - 6 ) . S e e , f o r e x a m p le , W e iss ( 1 9 9 8 ) , M a r c u s e ( 2 0 0 0 ) , W o o d ( 2 0 0 2 ) a n d L in d e r t ( 2 0 0 4 ) . T h e r e is g o o d e x p r e s s io n in G e r m a n f o r th is : Standort Wettbewerb, w h ic h in c lu d e s a ll a s p e c ts o f a c o u n tr y ’s c o m p e titiv e a b ility : its s o c ia l s y s te m , its a ttr a c tiv e n e s s to c a p ita l, its c a p a c ity t o a t t r a c t a h ig h ly q u a lifie d la b o u r fo r c e a n d s o o n . T h e c o n c e p t o f fle x ic u r ity a tte m p ts to c o m b in e fle x ib ility a n d se cu rity , i.e . to c o m b in e f le x ib le la b o u r m a r k e ts a n d s o c ia l se cu rity . D e n m a r k is u se d a s a n e x a m p le o f a c o u n tr y t h a t h a s m a n a g e d to d o s o s u c c e s s ­ fu lly . T h e p r o b le m is t h a t in b o th D e n m a r k a n d th e r e s t o f th e E u r o p e a n U n io n it is th e fle x ib ility t h a t is in c r e a s in g , w h ile s o c ia l s e c u rity is b e in g w e a k e n e d . In la rg e p a r ts o f th e tra d e u n io n m o v e m e n t th e c o n c e p t o f f le x ic u r ity is th u s p e rc e iv e d a s a n a tte m p t t o d isg u ise re a lity . W ith in th e u n io n s it is p o p u la r ly r e fe rr e d to a s S e x p lo it a tio n , a c o n c e p t t h a t b e tte r d e sc rib e s w h a t is a c tu a lly g o in g o n .

5 TH E ATTACKS 1

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W e lfa r e h a s a d iffe r e n t m e a n in g in th e U n ite d S ta te s , h o w e v e r. ‘W e lfa r e ’ is u se d m o r e n a r r o w ly t o r e fe r to s o c ia l b e n e fits , a n d b e c a u s e th e c lie n t r o le is o fte n a s s o c ia te d w ith s h a m e a n d b e in g u n d e r s u s p ic io n , th e c o n c e p t is t h e r e fo r e p e rc e iv e d b y m a n y to b e n e g a tiv e . A c c o r d in g t o P a g e ( 2 0 0 7 ) , th is a ls o h a p p e n e d in th e U n ite d K in g d o m , p a r tic u ­ la r ly d u rin g th e tim e w h e n J o h n M o o r e w a s m in is te r o f s o c ia l a ffa ir s ( 1 9 8 7 - 8 9 ) in th e T h a t c h e r g o v e rn m e n t, s in c e h e ‘d id m u c h to e n su re t h a t th e te r m w e lfa r e c a m e to b e a s s o c ia te d w ith fe c k le s s d e p e n d e n c y , r a th e r th a n a p o s itiv e a s p e c t o f c itiz e n s h ip ’ (p . 8 8 ) . A n d th is is th e s itu a tio n b e fo r e w e in c lu d e th e s e rio u s e n v ir o n m e n ta l p r o b le m s w h ic h a r e lin k e d to la rg e p a r ts o f th e e c o n o m ic g r o w th . T h e y c a n fu r th e r c o n tr ib u te to r e d u c in g w e lfa r e f o r m a n y p e o p le , in b o th th e s h o r t a n d th e lo n g te r m (fo r e x a m p le , c lim a te p r o b le m s ). T h e s e p r o b le m s , h o w e v e r, lie o u tsid e th e m a in to p ic h e re .

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T h e fa s c in a tin g h is to r y o f th e n e o lib e r a l c o n q u e s t o f t h e e d u c a tio n s e c to r w ill n o t b e d e a lt w ith fu r th e r h e re . G o o d a c c o u n ts a n d e x a m p le s o f th is d e v e lo p m e n t a r e , h o w e v e r, t o b e fo u n d in K o h n a n d S h a n n o n ( 2 0 0 2 ) , A p p le ( 2 0 0 6 ) a n d D a le a n d R o b e r t s o n ( 2 0 0 9 ) . ‘T o r o ll b a c k th e w e lfa r e s t a t e ’, a ttr ib u te d to T h a tc h e r , is sa id t o h a v e b e e n o n e o f th e fo r e m o s t o f h e r p o litic a l a m b itio n s . In th e E u r o p e a n U n io n , s o m e o f th e fo r m e r E a s te r n b lo c c o u n tr ie s a d m itte d ly c o n tr ib u te w ith h ig h fig u r e s f o r a b s o lu te p o v e rty . T h is p a r tic u la r ly a p p lie s t o th e B a ltic c o u n tr ie s , P o la n d , H u n g a r y a n d S lo v a ­ k ia , a lth o u g h in su c h c o u n tr ie s a s P o r tu g a l, S p a in , G r e e c e a n d Ita ly a b s o lu te p o v e r ty is a ls o n o t ic e a b le (b e tw e e n 3 a n d 8 p e r c e n t o f th e p o p u la tio n ). S o u r c e : L e lk e s a n d Z o ly o m i ( 2 0 0 8 ) . T h e m e d ia n m e a n s t h a t h a lf o f th o s e r e c e iv in g in c o m e e a r n m o r e a n d h a lf e a r n le ss th a n th is v a lu e . T h e G in i c o e f fic ie n t v a rie s b e tw e e n 0 (w h e re e v e r y o n e h a s th e sa m e in c o m e ) a n d 1 (w h e re o n e p e r s o n h a s a ll th e in c o m e ). T h e E u r o p e a n C o u n c il m e e tin g in B a r c e lo n a in 2 0 0 2 a p p ro v e d ra isin g th e r e tire m e n t a g e b y fiv e y e a rs . T h e s h a re o f th e t o ta l p a y m e n ts f o r in c o m e r e p la c e m e n t t h a t w e n t o n s o c ia l b e n e fits w a s re d u c e d f r o m 1 1 p e r c e n t t o 1 p e r c e n t in th e p e rio d 1 9 5 0 - 1 9 8 0 (H v in d e n , 2 0 0 5 ) . T h is c h a n g e m e a n t t h a t r e c ip ie n ts o f s o c ia l b e n e fits , f o r th e fir s t tim e in 6 0 y e a rs , c o u ld b e m a d e t o w o r k a s a q u id p r o q u o f o r th e b e n e fit. N o r w a y - a lo n g w ith D e n m a r k - w a s th e f ir s t c o u n tr y in E u r o p e to (r e -)in tr o d u c e a w o r k o b lig a tio n f o r s o c ia l b e n e fits . T h is is w h a t th e r e s e a r c h e r Iv a r L o d e m e l re fe rs to a s ‘th e w h ip in th e w o r k f a r e p o li­ c ie s ’. It w a s a p p ro v e d b y th e r ig h t-w in g p a r tie s in th e N o r w e g ia n p a r lia m e n t in 1 9 9 1 , w ith th e L a b o u r P a r ty a n d th e S o c ia lis t L e ft P a rty v o tin g a g a in s t th e r e s o lu tio n . T h e L a b o u r P a r ty la te r c h a n g e d sid es a n d s u p p o r te d th e d e m a n d f o r a w o r k o b lig a tio n (a t its 1 9 9 5 p a r ty c o n fe r e n c e ) (L erd em el, 1 9 9 7 , p p . 9 , 3 2 , 4 3 ) . N o r w a y is th e o n ly c o u n tr y in E u r o p e th a t , e v e n a fte r th e fin a n c ia l c r is is , h a s a su rp lu s in th e n a tio n a l b u d g e t, n o n a tio n a l d e b t a n d a n o il fu n d (re n a m e d ‘N o r w e g ia n P e n s io n F u n d - G lo b a l’ in 2 0 0 6 ) o f m o re th a n N O K 3 0 0 0 b illio n (a p p r o x . € 4 0 0 b illio n ). T h e R e d -G r e e n g o v e rn m e n t o f G e r h a r d S c h r o d e r c a r r ie d o u t m a ssiv e a tt a c k s o n th e tra d e u n io n m o v e m e n t a n d s o c ia l s e c u rity th r o u g h A g e n d a 2 0 1 0 , a n d e s p e c ia lly th e s o -c a lle d H a r tz IV r e fo r m s , in th e e a rly 2 0 0 0 s . T h e s e s tr e n g th e n e d c o m p e titiv e n e s s a n d th e r e f o r e th e p o s s ib il­ ity fo r G e r m a n c a p ita l t o e x p o r t its e lf o u t o f th e c ris is - a t th e e x p e n se o f o th e r (E U ) c o u n tr ie s . A h ig h ly se lfish s tr a te g y fo r a c o u n tr y in a c o m m o n u n io n . F r o m a sp e e c h q u o te d in Telegraph b lo g s , N o v e m b e r 1 6 , 2 0 1 0 - chttp:// b lo g s .te le g r a p h .c o .u k / fin a n c e / a m b r o s e e v a n s -p r itc h a r d / 1 0 0 0 0 8 6 6 7 / th e h o r r ib le -tr u th -s ta r ts -to -d a w n -o n -e u r o p e s -le a d e r s / > (a c c e s s e d A u g u s t 2 3 , 2 0 1 1 ).

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P a r a d ig m s h ift is a c o n c e p t u se d in sc ie n c e t o d e s c rib e h o w m a jo r , n e w s c ie n tific d is c o v e r ie s c a n c o n tr ib u te to a c o m p re h e n s iv e c h a n g e in th e w a y p e o p le th in k .

6 T H E B R U T A L IZ A T IO N O F W O R K 1

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T h e a u th o r o f th is b o o k ta k e s th e r e s p o n s ib ility f o r h o w th e c o n c e p t o f th e b r u ta liz a tio n o f w o r k c a m e to b e e s ta b lis h e d . T h is h a p p e n e d , a m o n g o th e r th in g s , w h e n th e C a m p a ig n f o r th e W e lfa r e S ta te o rg a n is e d a la rg e n a tio n a l c o n fe r e n c e in 2 0 0 2 w ith th e title ‘T h e b r u ta liz a tio n o f w o r k u n d e r n e o lib e r a lis m ’. T h e c o n c e p t h a s b e e n c o n tr o v e r s ia l, a n d b o th th e m a in e m p lo y e r s ’ a s s o c ia tio n a n d a n e o lib e r a l th in k t a n k h a v e trie d to k ill it o f f - b u t w ith o u t s u c c e s s. R a th e r th e c o n tr a r y - th e c o n c e p t h a s fo u n d its w a y in to th e N o r w e g ia n s o c ia l d e b a te , m a in ly b e c a u s e th e r e a litie s t o w h ic h it re fe rs a r e r e c o g n iz e d b y so m a n y p e o p le . T h e th r e e N o r w e g ia n b e n e fit sc h e m e s k n o w n a s ‘b e n e fits d u rin g v o c a ­ tio n a l r e h a b ilit a tio n ’, ‘r e h a b ilita tio n a llo w a n c e ’ a n d ‘tim e -lim ite d d is a ­ b ility b e n e f it’ w e r e r e p la c e d in 2 0 1 0 by th e s o -c a lle d w o r k a s s e s s m e n t a llo w a n c e . It w a s te rm e d a n e ffic ie n c y m o v e , b u t f ir s t a n d fo r e m o s t it is a ste p in th e ‘r e c o m m o d ific a tio n o f w o r k ’ t h a t is ta k in g p la c e . In a c c o r d a n c e w ith w o r k fa r e id e o lo g y , th e a llo w a n c e is lo w a n d s u b je c t to ta x . A c c o r d in g to a fo r m e r le a d e r o f th e N o r w e g ia n A s s o c ia tio n o f O il W o r k e r s in N o r w a y (n o w S A F E ), T e r je N u s ta d , in Klassekampen, Febru ary 1 7 , 1 9 9 8 . It is th e e ffe c ts o n o c c u p a tio n a l s a fe ty a n d h e a lth t h a t h a v e b e e n stu d ie d . T r y g s ta d , L o r e n tz e n , L o k e n e t a l. ( 2 0 0 6 ) lo o k a t a n u m b e r o f m a jo r r e o r g a n iz a tio n s in th e s ta te in th e 1 9 9 0 - 2 0 0 4 p e r io d . T h e y d o c u m e n t a m o n g o th e r th in g s th e c o n s id e r a b le c o n s e q u e n c e s fo r th e w o r k in g e n v ir o n m e n t a n d f o r e m p lo y e e s. S tr e s s is n o t a n illn e ss in its e lf, b u t it c a n g iv e rise t o illn e ss. W h e n th e im b a la n c e b e tw e e n th e d e m a n d s th e in d iv id u a l e x p e r ie n c e s a n d th e ir a b ility t o liv e u p to th e s e d e m a n d s b e c o m e s t o o g r e a t, th e m e n ta l a n d p h y s ic a l o v e r lo a d c a n le a d to illn e ss. T h is is w e ll d e s c rib e d in E ls ta d ( 2 0 0 8 ) . F r o m a p e a k in th e e a r ly 1 9 7 0 s , r e a l w a g e s fo r e m p lo y e e s in th e U n ite d S ta te s h a v e fa lle n s te a d ily fo r 2 0 y e a rs , a n d th e w a g e le v e l h a s y e t to r e g a in th e 1 9 7 0 le v e l (H a rv e y , 2 0 0 5 , p . 2 5 ) . S h u lm a n ( 2 0 0 5 ) a n d S h ip le r ( 2 0 0 5 ) p ro v id e d e ta ile d , g o o d a c c o u n ts o f th e e x tr e m e ly in s e c u r e a n d b ru ta l w o r k in g c o n d itio n s t h a t te n s o f m illio n s o f w o r k in g p o o r o r lo w -p a id w o r k e r s in th e U n ite d S ta te s h a v e to liv e a n d w o r k u n d er. T h e E n g lis h a u th o r G e o r g e O rw e ll in tro d u c e d th e c o n c e p t ‘n e w s p e a k ’ in h is fa m o u s b o o k Nineteen Eighty-Four. T h r o u g h a n e ffic ie n t

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p r o p a g a n d a sy ste m in th e s o c ie ty p o rtr a y e d in th e n o v e l, tr u th b e c a m e c o m p le te ly d is to r te d : w a r b e c a m e p e a c e , a n d p e a c e w a r - a n d n o w p u n is h in g so m e o n e e c o n o m ic a lly f o r b e in g o u t o f w o r k h a s b e c o m e ‘m a k in g w o r k p a y ’ . T h e e x c e r p ts a re fro m p a r a g ra p h s 4 1 t o 4 4 , th o u g h th e n u m b e rin g h a s n o t b een in c lu d e d . M o s t o f w h a t is c ite d w a s f o r m e r ly a ll in p a r a g ra p h 1 2 , w h ic h w a s se e n b y m a n y a s a n o v e r a ll v is io n o f g o o d w o r k . W h e n th e A c t w a s re v is e d in 2 0 0 6 , h o w e v e r, a d iffe r e n t e d it t o o k p la c e . In a d d itio n , th e r e a re th e e n v ir o n m e n ta l p r o b le m s w h ic h , a s I h a v e m e n tio n e d e a rlie r, lie o u ts id e th e s c o p e o f th is b o o k , b u t w h ic h c a n c o n tr ib u te fu rth e r t o in c r e a s in g th e c o s t to s o c ie ty in c u rr e d b y th e p r e s e n t m e a s u re s.

7 T H E M ISER Y O F S Y M B O L P O L IT IC S 1 2

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B o th th e se tw o fir s t-m e n tio n e d c la m p -d o w n s h a v e b e e n im p le m e n te d in N o r w a y - b y a S o c ia l D e m o c r a tic g o v e r n m e n t - in 1 9 9 2 - 9 3 . T h is la s t-m e n tio n e d w a s su g g e ste d b y th e N o r w e g ia n w e lfa r e r e s e a r c h e r K a r e H a g e n ( 2 0 0 3 ) . It is in a w a y s tr a n g e h o w fre e r e s e a r c h se em s u n a b le to lib e r a te its e lf fr o m th e p r e v a ilin g p o w e r a n d d o m in a n c e r e la ­ tio n s in so c ie ty . H e re a ls o it is a q u e s tio n o f w h a t w o r k e r s c a n d o to a d a p t t o a w o r k in g life t h a t th e y fe e l is t o o h a r d . T h is is w h y h e su g g ests fre q u e n t r e tr a in in g a n d c h a n g e o f jo b s , s o t h a t it is p o s s ib le to v a ry w h a t y o u r b o d y a n d m in d a r e e x p o s e d to . O r to q u o te th e N o r w e g ia n d o c t o r a n d w o r k in g e n v ir o n m e n t s p e c ia l­ is t E b b a W e r g e la n d , ‘T h e w o r k lin e is o n e o f s e v e ra l r o a d s to p o v e r ty ’ ( 2 0 0 6 , p . 2 7 .) M c K e n z ie is a p r o f e s s o r o f e c o n o m ic s a n d m a n a g e m e n t a t th e U n iv e rsity o f C a lifo r n ia . T h e r e a r e e ig h t IL O c o n v e n tio n s w h ic h to g e th e r c o v e r fiv e c e n tr a l w o rk a r e a s . T h e s e a re d e fin e d a s th e w o r k e r s ’ b a s ic r ig h ts : th e r ig h t to o r g a n ­ ize (c o n v e n tio n 8 7 ) , th e r ig h t to n e g o tia te (c o n v e n tio n 9 8 ) , th e c o n v e n ­ tio n s o n fo rc e d la b o u r ( 2 9 a n d 1 0 5 ) , o n c h ild la b o u r ( 1 3 8 a n d 1 8 2 ) a n d o n e q u a lity b e tw e e n th e s e x e s ( 1 0 0 a n d 1 1 1 ) . N e g o tia tio n s fo r a M u ltila t e r a l A g re e m e n t o n In v e s tm e n t w e r e e n te re d in to b e tw e e n th e O E C D c o u n tr ie s a n d w o u ld h a v e m e a n t a d r a m a tic s tr e n g th e n in g o f in v e s to r s ’ in te re s ts . R e s is ta n c e w a s s tr o n g , h o w ev er, a n d th e n e g o tia tio n s c o lla p s e d in 1 9 9 8 . T h e n a m e w a s c h a n g e d to In te r n a t io n a l T r a d e U n io n C o n fe d e r a tio n (IT U C ) a fte r a m e rg e r w ith th e C h r is tia n -d e m o c r a tic - o r ie n te d W o rld C o n fe d e r a tio n o f L a b o u r in 2 0 0 6 . T h is a p p lie s to th e N o n -A g r ic u ltu r a l M a r k e t A c c e s s (N A M A ) a g r e e ­ m e n t. A m o n g o th e r th in g s , it r e g u la te s th e p o s s ib ilitie s o th e r c o u n tr ie s h a v e t o im p o s e ta r iffs t o p r o t e c t lo c a l p r o d u c tio n a n d e m p lo y m e n t. A ll in d u stria liz e d c o u n tr ie s h a v e m a d e u se o f su c h p r o te c tiv e m e a s u re s in

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a s ta r t-u p p h a s e . P r e s e n t-d a y d e v e lo p in g c o u n tr ie s , o n th e o th e r h a n d , a r e e x p o s e d to tre m e n d o u s p r e ssu re to p h a s e o u t su c h m e a s u re s . T h is o f te n r e s u lts in d e in d u s tr ia liz a tio n , in c r e a s e d u n e m p lo y m e n t a n d p o v e rty . In te rv ie w in Kritisk Debat [C r itic a l D e b a t e ] , n o . 3 0 , M a y 2 0 0 7 : < w w w . k r itis k d e b a t.d k / a r tic le s .p h p ? a r tic le _ id = 1 0 2 > (a c c e s s e d J u ly 2 8 , 2 0 1 1 ) .

8 C H A L L E N G E S A N D A LT E R N A T IV E S 1 2 3 4

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C ite d in ‘In fro m th e c o ld ? ’, Economist, M a r c h 1 2 , 2 0 0 9 : < w w w .e c o n o m is t.c o m / n o d e / 1 3 2 7 8 2 9 7 > (a c c e s s e d Ju ly 1 2 , 2 0 1 1 ) . C o v e r e d in W ik ip e d ia : < h ttp :/ / e n .w ik ip e d ia .o rg / w ik i/ 1 9 9 5 _ strik e s_ in _ F r a n c o (a c c e s s e d J u ly 1 2 , 2 0 1 1 ) . A r e p o r t o n th e s tr ik e b y M ic h a e l A lb e r t c a n b e fo u n d h e re : < w w w . la b o r e r s .o r g / Z M a g _ U P S _ S tr ik e _ 9 -9 7 .h tm > (a c c e sse d J u ly 1 2 , 2 0 1 1 ) . W ik ip e d ia h a s a c o m p r e h e n s iv e a r tic le o n th e d is p u te : < http:// e n .w ik ip e d ia .o r g / w ik i/ 1 9 9 8 _ A u s tr a lia n _ w a te r fr o n t_ d is p u te > (a c c e s s e d J u ly 1 2 , 2 0 1 1 ) . T h e W a te r J u s t ic e w e b s ite is a n im p o r ta n t r e s o u r c e c e n tr e o n a lte r n a tiv e s to th e p r iv a tiz a tio n o f w a te r : < w w w .w a te r ju s tic e .o r g >. In fo r m a tio n in E n g lis h o n th e M o d e l M u n ic ip a lity P r o je c t c a n b e fo u n d a t <w w w .fa g fo rb u n d e t.n o / fo rsid a / o m stillin g / a rk iv / M o d e llk o m m u n e r/ r a p p o r te r u tr e d n in g > (a c c e s s e d Ju ly 1 2 , 2 0 1 1 ) . S e e C h a p te r 7 , n o te 6 . S e e : < h ttp :/ / e n .w ik ip e d ia .o rg / w ik i/ S e c o n d _ S u p e rp o w e r> (a c c e s s e d J u ly

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T h is w a s th e c a s e , fo r e x a m p le , in G e n o a d u rin g th e m a ss iv e d e m o n ­ s tr a tio n s a g a in s t th e G 8 S u m m it in J u ly 2 0 0 1 , w h e n th e p o lic e s h o t a n d k ille d o n e o f th e d e m o n s tr a to r s . It la te r tr a n s p ir e d t h a t th e p o lic e h a d c o lla b o r a t e d w ith n e o -N a z i y o u th g a n g s , a n d th e th e n m in is te r o f th e in te r io r in th e B e r lu s c o n i g o v e rn m e n t w a s fo r c e d t o d is m iss th r e e h e a d s o f p o lic e . F o r e c a s t b y C itig r o u p s tr a te g is ts , q u o te d in S k la r ( 2 0 1 0 ) A g o o d p r e s e n ta tio n o f th e c a s e s is to b e fo u n d in L a v a l, V ik in g , R u ff e r t a n d L u x e m b o u r g , ‘L e t’s fig h t a g a in s t s o c ia l d u m p in g in E u r o p e ’ : < w w w . la v a lv ik in g ru ffe rt.e u > (a c c e s s e d Ju ly 1 2 , 2 0 1 1 ) . T h e sa m e th in g h a p p e n e d in N o r w a y , b u t th e r e - fo r th e s e c o n d tim e - th e re w a s a m a jo r ity a g a in s t E U m e m b e r s h ip a t th e r e fe re n d u m in 1994. T h is h a s a ls o fo u n d e x p r e s s io n in a n u m b e r o f s ta te m e n ts in c o n n e c tio n w ith in te r n a tio n a l s u m m it m e e tin g s . S e e , fo r e x a m p le , T U A C ( 2 0 0 8 ) . T h e r e a r e a ls o th o s e w h o u rg e m o r e o ffe n s iv e p o s itio n s , a s th e g e n e r a l s e c r e ta r y o f th e E u r o p e a n T r a n s p o r t W o r k e r s ’ F e d e r a tio n ( E T F ) , E d u a rd o C h a g a s , h a s d o n e w ith in th e le a d e r sh ip o f th e E T U C in r e c e n t y e a rs .

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INDEX A accounting systems, 84 Adam Smith Institute, 44 Afghanistan, 197 kftenposten , 140-1 air traffic controllers, 67 Alcatel Norway, 81 Alianza Bolivariana para los Pueblos de Nuestra America (ALBA), 86, 218n4-16 Allende, Salvador, 45 American Coalition of Service Industries (CSI), 88 American Enterprise Institute, 44 Ankarloo, Daniel, 130 Argentina, 50 asset realization/ stripping, 52 Attac, 185 Attlee, Clement, 28, 36 Australia, 4, 84 taxation in, 80 B Balfour, Arthur, 24, 33, 214n 2-4 Banco del Sur, 86, 218n4-17 Basque trade unions, 2 0 3-4 Bauman, Zygmunt, 197-8 Beveridge, William H., 28 Beveridge Report, 2 8 -9 Bischoff, Joachim, 49 Bismarck, Otto von, 2 3 -4 Bjerkedal, T., 136

Blair, Tony, 57, 83, 104, 217n4-9 Bodin, Raymond-Pierre, 138 Bohle, Philip, 138 Brazil, 16, 51 Bretton Woods conference, 29, 214n2-8 Brie, M., 207 Brochs-Haukedal, William, 140 Brooks, N., 6 Brundtland, Gro Harlem, 73, 89, 107 brutalization of work, 17, 126-58, 163, 206, 2 2 0 -ln 6 -l Buffett, Warren, 5 1-2 Bulgaria, 120

Campaign for the Welfare State, 126, 199, 221n6-l Canadian Centre for Policy Alternatives, 6 -7 Canal Digital, 81 capital -friendly national environment, 90 income from, 44 power of unregulated, 46 yields, share and distribution of, 107 capital controls, 36, 40 and national autonomy, 37 need to restore, 116, 181

235

neoliberal removal of, 17, 46, 50, 70, 78 -9 , 81-2, 147-8, 170-1 capitalists/capitalism accepted by workers under the class compromise, 3 3-4 capitalists’ attitude to class compromise, 27, 33 casino capitalism, 47-8 from industrial to financial capitalism, 47, 178 essential nature of, 22 gangster capitalism, 58 interest in socio­ economic issues,

21

laissez-faire, and crisis of legitimacy ill 1930s, 27 power limited by market regulation, 3 5 -7 short-termism of contemporary capitalism, 5 1 -2 caring responsibilities, 38 socialization of caring work, 38 cartels, 61 Cato Institute, 44 Centre for European Policy Studies, 119 Centre for Policy Studies, 44

INDEX

236 Chagas, Eduardo, 223n8-14 charity, private, 37 Chicago school of economics, 4 4-5 see also neoliberalism child(ren) labour, 173-4 life chances of poor, 109-10 poverty, 99, 107 Chile, 45 China, 16, 54 Church, the, 3, 215n2-16 Churchill, Winston, 28 Citigroup, 187-8 Civita, 9, 44-5 class compromise, 26, 30 -5 , 65, 70-1, 94, 194-6 (see also partnership model) class struggle, 8 Clemet, Kristin, 9 Club de PHorloge, 44 coal miners, 67 colonialism, replaced by privatization as source of investment opportunities, 55 communism, 31 Confederation of Norwegian Enterprise (NHO), 73 construction sector, 143, 144 consultancy companies, 125 on union busting, 67 Cordinnier, Laurent, 120 corporate social responsibility, 173 corruption, 62—4 COSATU, 174 creativity, national measures of, 7 credit control, 36 deregulation of, 50, 73 see also debt cross-subsidizing, 63 currency

exchange rates, 36 floating rates, 45 speculation, 44, 48, 50 -1 , 117 Czech Republic, 89 D

Dagbladet, 108-9 De Grauwe, Paul, 119 debt, national crisis of developing countries in 1980s, 57 crisis of 2010s, 92, 115-21 default option, 192 propaganda about causes, 118-19 debt, private, levels of, 119 see also credit democracy, 8 arguably linked to free markets, 45 bypassed by supranational agreements and bodies, 85-9 democratic deficit in the EU, 78, 86-7, 118, 188, 189, 2 07-8 democratization of ownership, 181 direct forms of, 208 necessary for development of welfare state, 20 necessary for permanent advances in equality, 177 need to strengthen, 2 0 7 -8 , 210 participatory, 184 and power, 39 undermining of, 18, 7 5 -8 , 83 Denmark, 13, 30, 55, 61, 197, 219n4-26, 220n5-10 depression (of the 1930s), 2 7-8

deregulation, 11, 17, 4 5 -8 , 78-82 of credit, 50, 73 of markets, 70, 128-9 see also under capital controls developing countries attempts to establish a welfare state in, 15 debt crisis in 1980s, 57, 2 1 6 n 3 -ll exploitation by the developed world, 21, 31 resistance to further trade liberaliza­ tion, 174 state power in, 90-1 disability pensions, 101, 132, 133-4, 137, 139 case history, 1-3 coverage reduced, 71 difficulty in obtaining, 1-3, 136 increased number of, 1 40-1, 161 downsizing, 135-6 Delvik, J. E., 11, 12 Dreschler, Wolfgang, 83^4, 85 E Eastern Europe, 56, 58 economic cycles and crises, 23, 48, 50 see also financial crisis (of 2007 onwards, debt crisis of 2010s) economic growth national levels of, 7 not achieved under neoliberalism, 47 pressure for increased, 154 economics Eastern European system, 31 Keynesian see Keynesianism

I ND E X neoliberal see neoliberalism pro-cyclical policies, 117 Economist, 76 economy after the Second World War, 31 in the 1970s, 43 speculation-oriented, 52, 56, 116, 117 transition to lowcarbon, 175-6 education, 14, 41, 95-6, 219n5-3 capitalist interest in, 21, 95 inequality in, 110 issues over, 96 privatization of, 88-9, 96 qualifications and work, 130-2 efficiency, 6, 82, 154-7 Elstad, L., 131-2 employer organizations, 5 8 employment see labour, work energy sector, 40, 57 market deregulation, 113-15 privatization, 59 see also oil industry equality and inequality in education, 110 growing inequality, 10, 13, 50, 98-101, 107-10, 122 in health, 110 of income distribution, 7, 8, 50, 97, 99-100 inequality exacerbated by globalization, 44 need to reduce inequality, 181, 205 negative social effects of inequality, 100-1, 176-7 in Norway, 107-10 and redistribution

under the Nordic model, 38 relationship to freedom, 5 in schools, 14 and the welfare state, 42 Esping-Andersen, G., 94, 128, 213n2-2 euro, the, 117, 189 European Coal and Steel Community, 191 European Economic Area (EEA), 60, 86, 216n3-16 European Economic Community (EEC), 46 European Foundation for the Improvement of Living and Working Conditions, 163-4 European Metalworkers’ Federation, 174 European Roundtable of Industrialists, 96 European Services Forum (ESF), 88, 219n4-23 European Social Forum, 185 European Trade Union Confederation (ETUC), 16, 54, 179, 188, 193-5, 202 European Trade Union Institute (ETUI), 119-20 European Union 2020 Strategy, 194 actions post financial crisis, 195 as barrier to economic and social development, 188-92 constitution, referenda on, 87 definition of poverty, 99 democratic deficit in, 78, 86-7, 118, 188, 189, 207-8 Economic and

237 Monetary Union (EMU), 86 European Centra! Bank, 86, 118, 120-1, 188, 201 European Commission, 86, 118, 120 European Court of Justice, 92, 145, 190, 206 European social model, 4, 40, 213n l-2 legislative process, 190 Lisbon strategy, 91 Lisbon Treaty, 86, 87, 118, 188, 201 Maastricht criteria, 72, 118, 188, 217n4-7 nature of financial rescue packages, 117 neoliberal influence in, 45, 56, 59-60, 118, 188 Port Services Directive, 201 Posting of Workers Directive, 191 poverty in, 167 Services Directive, 201 unionization in, 69 European Year for Combating Poverty and Social Exclusion, 167 exclusion government ‘fights’ against, 18 of labour, 95, 126, 129, 136, 138-9, 164 from school, 13 social, 9, 13-14, 17, 94, 124 from welfare arrangements, 137 exports see trade F families, policies related to, 111

238 fascism, 4, 25 financial crisis (of 2007 onwards), 11, 19, 48, 50, 86, 178 cuts following, 86 neoliberal responses to, 49, 116 outcomes of, 86, 116, 117-20 financial instruments, 48, 51, 215n3-8 failure to prohibit damaging, 116 need to prohibit damaging, 204 financial sector failure to control post financial crisis, 116 increasing role of, 47 need to regulate, 204-5 role of pension funds in, 105 financial transactions vs trade in goods and services, 51 Finboe, Ingrid, 143 Findus Norge, 81 flexicurity, 92, 219n4-26 Flathen, Roar, 15-16, 2 13n l-6 food, speculation in, 51 Foster, John Bellamy, 47 France, 12, 16-17, 55, 61, 87, 120, 187, 201 trade unions in, 71-2 freedom and equality, 8 labour movement seen by Right as threat to, 5 path to, 208-11 vs collective security, 5 Friedman, Milton, 44

INDEX Germany, 12, 2 3 -4 , 25, 37, 57, 72, 117, 120, 147, 187, 189, 217n4-6 Agenda 2010, 220n5-12 jobs lost to other countries, 148 politics in, 196-7 trade unions in, 69 -7 1 , 202 Gilbert, N., 171 Gini coefficient, 100, 108, 220n5-7 see also equality and inequality GlaxoSmithKline, 81 globalization, 4 3 -5 , 52 claimed to prevent governments from tackling poverty, 171, 182 and neoliberalism, 10 resistance to, 184 supported by the Left, 5 3-4 Gogstad, Anders, 136, 161 GRECE, 44 Greece, 72, 117, 120, 189, 197, 2 0 1 -2 Greve, Belt, 112 gross national product per hour worked, 7 per person, 7, 47 relationship to financial assets, 48, 49 Guardian, 86

inequalities in, 110 levels of, 14 mental health problems, 141 problems and work, 1, 24, 132-4, 138-42, 157 (see also disability pensions, sickness) problems resulting from stress, 157 recommendations to improve, 164 services, 41 suffering under brutal working environ­ ment, 24, 155 see also stress and burnout health and safety issues, 143, 144, 153 hedge funds, 52, 116, 204 Henkel, Hans-Olaf, 71 Heritage Foundation, 44 Hernes, Gudmund, 89 Hobsbawm, Eric, 31 Holmes, Oliver Wendell, 8 ‘homo economicus’, 106 Hood, Christopher, 83 Hoover Institute, 44 housing, 40 limited access to good, 94 loans, bad, 48 market, deregulation of, 113-14 for migrant workers, 143-4 prices and H speculation, 51 Hagen, Kare, 222n7-2 public, sold off, 57 Hagen, Stein Erik, 76 social, 114, 122, 124, Hall, D., 63 205 Halvorsen, Kristin, 16 Hansen, Marianne Nordli, Hudson, Michael, 120-1, 189 G 109 Huffschmid, Jorg, 50 G20, 116 Hayek, Friedrich von, 44 human rights, 37 Galbraith, James K., 118 health gender issues, 38 budgets in developing Hwong, T., 6 General Agreement countries, 58 care insurance, 4 1 ,1 2 4 I on Trade in Services Iceland, 60, 116, 187 care, privatization (GATS) see under World IG Metall, 70 -1 , 148, 175 of, 57 Trade Organization

239

INDEX

India, 16 individualization of problems and exclusion, 9, 18, 133-4, 151, 159, 162, 168 industrial action, 23, 25, 29, 30, 7 1 -2 , 203 confronted and defeated by government, 25, 67, 14 6 ,1 8 3 legal restrictions on, 69 strike-breaking, 25 industry, manufacturing, 139 nationalization in, 36 privatization of stateowned, 56 -7 , 59 infant mortality, 7 informal economy, 70 information technology, speculative bubble, 51 infrastructure private investment in, 57-9 see also telecommuni­ cations, transport, utilities, water insurance, private made unnecessary by comprehensive welfare state, 38 see also pensions insurance, social, 95 as core component of welfare state, 40 introduced by labour movements, 22 union schemes for, 128 workplace-based, 24 intellectual property rights, 88 interest rates control of, 41, 122 on debt of developing countries, 58 International Accounting Standards Board, 84 International Brotherhood of Teamsters, 183

International Confederation of Free Trade Unions (ICFTU), 172-3 International Financial Reporting Standards (IFRS), 84 International Labour Organization (ILO) 26, 138, 173, 175, 191 conventions, 222n7-5 International Monetary Fund (IMF), 45, 56, 57, 58, 84, 85-6, 118, 120, 184, 188, 201, 216n3-12, 216n3-15 International Trade Union Confederation (ITUC), 68 -9 , 195, 222n7-7 investment exit strategies of investors, 79, 125, 148 expected return on, 47 privatization providing opportunities for, 56 search for sites for, 56, 84 see also capital, financial sector Iraq war, demonstrations against, 185 Ireland, 87, 119, 120, 187, 189, 192, 201 Italy, 25, 57, 72, 120, 147, 187

J Jagland, Thorbjorn, 164 Japan, 72 economic policy, 46, 50, 57 Josefsson, Dan, 64 Juppe, Alain, 55, 7 1 -2 ,1 8 3 K Keynesianism, 29, 43, 179, 189, 214n2-9, 215n3-l

Klein, N., 215n3-3 Kohl, Helmut, 71 Kolstad, A., 141 Kraby, Pal, 218 Kraft Foods, 79 L labour force commodification of labour, 94, 127 common across Europe, 5 9-60 gender issues in, 38 struggle for full employment, 40 work participation rate, 7, 35, 137 labour market deregulation, 192 EU direct intervention in, 195 flexible, 16, 59-60, 70, 92, 129, 206 policy, 40 labour movements) see trade unions NEED labour protection laws, 24, 37, 70, 123, 148, 199 interpreted against trade unions, 145, 190 liberalization of, 129 violations of, 74 Lafontaine, Oskar, 217n4-6 Lasch, Christopher, 64 Latin America, 86, 183 Latvia, 99 Left (political), 5, 9, 13, 16, 98, 115, 116, 154, 160, 166, 182, 188, 197, 199 loss of trust in traditional parties, 197-8 new possibilities for,

210 political and ideological crisis of, 119, 159, 169, 186, 192, 196, 198

240 problems with analysis by, 16-17, 160 and social forum initiatives, 195 see also socialism leisure, amount of time, 7 Lesotho, 89 Levitt, Marty, 217n4-2 Liechtenstein, 60 life expectancy, 7, 14, 58,

101-2

differences in, 14, 104-5 Lindberg, Ingemar, 152-3,

210-11

Lindert, P., 32, 75, 9 6-7 living conditions/ standards, 34, 40 and welfare state, 94 LO see Norwegian Confederation of Trade Unions LOnytt, 137-8 M Macarov, D., 99 Major, John, 103 Manpower, 147 marginalization, 136 Maritime Union of Australia, 183 market choice preferred to democracy by neoliberals, 77 control by multi­ nationals, 6 1-2 deregulation, 70, 128-9 exposure to, 123 fundamentalism, 44 increased exposure to, 123 liberalization (as prelude to privatization), 60 model of the welfare state, 37 neoliberal reforms and, 9, 46 regulation, 34, 3 5-7

INDEX maternity leave, 38, 111, 113 Mayhew, L., 103 McKenzie, Richard, 171, 222n7-4 means-testing, 9, 24, 37, 42, 101, 112, 120, 167-8 synonyms for, 112 trend towards, 124 media, domination by the Right, 7 mental health problems, 13 see also stress and burnout Mexico, 50 Minns, R., 102, 103 Monks, John, 16, 179, 193-4, 195 monopolization, 60, 62 Monthly Review, 47 Moore, John, 219n5-l Multilateral Agreement on Investment (MAI), 172, 184, 222n7-6 multinational corporations, 52, 216n3-10 increased power of, 78 political behaviour of, 173 pressure for low corporate taxation, 79 role in structural adjustment programmes, 57-8 specific named, 61 taxation of, 81 and threats of relocation, 148 WTO acting to support interests of, 87-8 Maeland, John Gunnar, 136 N nationalization, 36 of banks needed, 204

and control of the service sector, 38 and renationalization after privatization, 45 Nationen , 144-5 Navarro, Vincente, 101 neoliberalism alternatives to, 19 becomes influential in 1970s, 4 3 -5 becomes more influential in 1980s, 45 economics propounding, 44 institutionalization of, 85-9 and the Nordic model, 5, 15-17 not destroyed by financial and debt crises, 116 policy only of the elite, 126 remaining arguments for, 49 as threat to welfare state, 9 -1 5 , 121, 128 and totalitarian rule,

121

views of, 5 -6 Netherlands, the, 70, 87, 201 New Public Management, 41, 8 3 -5 , 124, 140 need to end, 205 New Zealand, 4, 84, 108, 112 taxation in, 80 Newbury, Sue, 218n4-15 Nordic Council of Ministers, 109 Nordic model of the welfare state, 4 -8 , 11, 15-17, 2 5 ,3 3 - 5 , 37-8, 128, 167 attempts to export, 15 see also Norway Nordli, Odvar, 109, 170 North American Free

■ I NDEX Trade Agreement (NAFTA), 45, 215n3-4 Norway attacks on organized labour, 25 Conservative Party, 74 contemporary situation in, 107-15 economic policy, 52, 73, 168-9, 2 2 0 n 5 -ll employer attacks on trade unions, 72>-4 Farmers’ Party, 25 General Framework Agreement (Constitution of Work), 30 government of, 52, 8 9 ,1 6 8 -7 0 , 216n3-15, 220n5-10 Green Party, 52, 168 Labour Party, 12, 25, 30, 52 -3 , 168, 214n2-6 Labour Protection Law, 199 labour relations in, 30 model municipality projects, 184 as part of EEA, 60 pensions in, 106, 111 Power and Democracy project, 77 Progress Party, 12, 74 after the Second World War, 40 Social Democratic Party, 9, 11, 53, 73 -4 , 199 Socialist Left Party, 16, 168, 199, 200 taxation levels, 80-1 think tanks, 44 views of state, 15-16 Working Environment Act (1977), 153-4, 221-2n6-12 Norway Group, 89 Norwegian Confederation of Trade Unions (LO), 15, 30, 73, 74, 174

Norwegian Employers’ Association (NAF), 30, 73 Norwegian Employment Service, 2 Norwegian Institute for Labour and Social Research (FAFO), 9, 126-7 Norwegian Labour Inspection Authority, 131, 134, 143, 144 Norwegian Labour and Welfare Service, 129 Norwegian National Institute for Consumer Research, 168 Norwegian National Institute of Occupational Health, 132 Norwegian National Insurance Service, 2 Norwegian State Housing Bank, 4 0 -1 , 114 Norwegian State Railways, 1 Norwegian Trust Fund for Private Sector and Infrastructure, 58-9 Norwegian Union of Forestry and Land Workers, 25 Norwegian Union of Municipal and General Employees, 199 Nustad, Terje, 221n6-3 Nyland Vest, 1

O Obama, Barack, 41 offshoring, 17 oil industry, 74, 115, 134 1970s oil crisis, 43 oligarchies, 60-1 Onyx, 61, 63 see also Veolia Organisation for Economic Co-operation and Development (OECD), 6, 16, 45, 55, 56, 81, 99, 101

241 statistics, 98 organizational changes felt meaningless, 135 and increased work intensity, 135-6, 137-42 organization of work, 152-3 proportion of workers experiencing, 82, 132-3 Orwell, George, 2 2 1 n 6 -ll outsourcing, 17, 46, 70, 125 P Panitch, Leo, 192 partnership model, 10, 26, 29, 34 -5 , 192-3 collapse from 1970s on, 70-72, 74 entrenched in trade unions, 54, 192 institutionalization in 1930s, 29 undermined by employers, 70 see also class compromise Patrick ports company, 183 pensions, 38, 95 administrative costs, 102 attacks on, 71, 101-6, 120, 123, 187, 190 funds, 50, 105 levels of, 7, 119-20 models for, 103-4, 215n3-6 public systems, 101-3 regulation and indexation, 104 risks of private schemes, 102 Pickett, Kate, 100 Pierson, P., 75, 9 6 -7 Pinochet, Augusto, 45 planning laws, 36 Polanyi, Karl, 49 politics in Germany, 196-7 need for credible

242 alternative to neoliberalism, 202 in Norway, 198-9 (see also under Norway) policies needed to move on from crisis, 180-1, 204-8 political and ideological barriers to effective action, 192-8 political parties see social democracy/ social democratic parties, under countries, symbol and symptom orientation, 18, 159-77 and traditional Left parties, 196 Portugal, 4, 25, 187, 197 Posten, 164 poverty caused by the Asian financial crisis, 50-1 definitions of, 99 in the European Union, 2 1 9 -2 On5-5 focus on causes not manifestations, 181 and freedom, 5 government ‘fights’ against, 18 increasing levels of, 13, 14, 94, 98-101, 107 and means-testing, 112-13 in Norway, 107 policies to fight, 167-70, 205 public, increased, 48 relative, 98-9 and taxation levels, 7 and workfare, 165-6 working poor, 146, 166 power of capital dependent on state collusion, 90

I NDEX countable bodies, of capital limited by 77, 82 regulation, 3 6 -7 and the welfare state, ceded to capital by 4, 11, 75 deregulation, 46 and willingness to and the class compromise, 26 compromise, 30, powerlessness, public 32, 35 feelings of, 14 contemporary changes in patterns, 17-18 privatization, 17, 4 5 -6 , and democratic 5 5 -6 4 , 8 3 -4 , 115, 194 control of the campaigns against, economy, 39 1 8 3 ,1 9 8 -9 grabbed through corruption inherent weakening of trade in, 62-3 unions, 6 6 -7 EU policy on, 190 held primarily by need to oppose, 205 neoliberals and no popular demand right-wingers, 7 for, 75 ignored by the to provide investment contemporary Left, opportunities, 84 16-17 removing democratic labour power, 22 control, 82 lack of state, myth of, required under 89-92 structural lost by democratic adjustment bodies, 124 programmes, 5 7 -8 , neoliberalism and changes in, 5 three phases and not considered in stages of, 5 9 -60 social debate, productivity statistics, 119 11-12 protests and and poverty, 170 demonstrations relations between in the 1980s, 7 1-2 developed and against austerity developing world, measures, 187 59 in Genoa against G8, relations changed by 223n8-9 contracting out, 64 against Iraq war, 185 relations and loss of at Seattle, 184 capital controls, 46, see also industrial 81-2 action relations, need to public sector change, 179-82 attacks following debt of small group of rich crisis, 120 capitalists, 5, 14 expansion of public and social dumping, sector post Second 143-4 World War, 36 of the state vs market orientation, 17 individuals, 3 propaganda against, 82 and the struggle as proportion of between labour and economy, 39 capital, 20 reform initiated by transferred to unac­ unions, 184

86

INDEX security and insecurity in a capitalist society, 23 growing insecurity in society, 10 and pensions, 105 Seip, Anne-Lise, 152, 169, 213-14n2-3 service sector, 131, 188 public control of sections, 38 Q size of, 92 quangos, 82-3 social dumping in, Quinlan, Michael, 138 143 working conditions in, R 133-4, 149 Ramonet, Ignazio, 198 services, social/welfare Reagan, Ronald, 4 5 ,5 8 , access to, 41 67, 84, 9 7 ,1 4 6 ,1 5 0 , 206 as core component of Rehn, Olli, 195 welfare state, 40 resources, natural, mixed model for ownership and control provision, 112 of, 40, 56 privatization of, retirement 59-60 age, raising, 104, 111, trends in Norway, 220n5-8

restructuring, 82-4, 139-40 see also welfare state Public Services International (PSI), 174, 183 Research Unit (PSIRU), 62-3, 216n3-20

243 social development, 50 criteria for, 6 social dumping, 74, 92, 142-5, 190 social forums, 71, 184-6 problems and decline in, 186, 206 social movements, 97-8, 184 and social struggle, 183-8 social pact/contract see class compromise, partnership model social security benefits in Norway,

221n6-2

bill increased by pressurized working conditions, 95 as core component of welfare state, 40 need to increase level of benefits, 168-9 number of claimants, 110-11 132 ages of, 120 Sexton, S., 102, 103 reductions in early, 95, 101, 103, Shell, 81 provision of, 71 111, 130 shipping, 148 renamed benefit reasons, 133—4, 145 dependency, 130 sickness risk treatment of absence due to, 2, collectivized by claimants, 1-3 141, 161 welfare state, 5 user groups, 97 benefits paid during, individualization of, 1-3, 142, 165 socialism 94, 122-3 see also disability aim of trade unions, of private pension pensions, health 32, 33 schemes, 102, 105 feared by capitalists, Sierra Leone, 89 Romania, 99 32 Rompuy, Herman van, 117 Slovakia, 89 fleeting nature of Smith, M ., 202 Russia/Soviet Union, resurgence after social, threat to the word, 214n2-12, 216n3-14 financial crisis, 179 129 economics of, 51, 58 reformist road to, 34 social clauses, 172, 174 rival economic system socialist political social democracy/social of, 31 parties, 29 democratic parties Russian revolution, working-class as bulwark against 25, 26, 35, 70 sympathy for, 3 1-2 socialism and S Solbakken, Tor-Arne, 141 communism, 3 1-2 Sachs, Jeffrey, 58, solidarity ideological crisis in, 216n3-14 between movements 72-3 Sarkozy, Nicolas, 17 in North and South, involved in attacks on Schroder, Gerhard, 71, 22 welfare state, 13 196, 197, 217n4-9, human value of, 106, role and stance of, 220n5-12 165 196-8

244 as route forward, 207 among trade unions, 174 Sommer, Michael, 197 Soros, George, 44 South, the see developing countries Southeast Asia, 50 Tiger economies, 5 0 -1 , 54 Soviet Union see Russia/ Soviet Union Serensen, Rune, 77 Spain, 4 ,2 5 , 57, 117, 119, 120, 187, 189, 197 spin doctors, 7 stability, social/political, capitalist interest in, 21 Stagecoach, 82 state, the authoritarian tendencies, 90-1 various roles of, 90 Statistics Norway, 141 Steen, Reiulf, 106 Stoltenberg, Jens, 53-4 Streissler, A., 102 stress and burnout, 132-8, 141, 147, 221n6-7 strikes see industrial action structural adjustment programmes, 57-8, 118 SUCRE, 86 Suez, 61 suicide, rates of, 13 supranational agreements, 85-9 Sutherland, Peter, 96 Sweden, 13, 44, 55, 57, 111, 190-1 employer-trade union relations, 74, 82 Saltsjobad Agreement, 30

T Tawney, R. H., 169-70 taxation of consumption, 38 corporate, 79, 81, 218n4-12

INDEX on dividends, 73, 107 of financial transactions, 205 havens, 205 income tax, 38 international competition over, 79 levels and social objectives, 6 -7 loopholes, 123 national levels of, 80 of the rich, 205 shift from progressive to indirect, 123 tax avoidance, 81 telecommunications, 60 Telenor, 173-4 Temple, William, 2 1 4 n 2 -ll tendering process, 57, 60, 87, 149 corruption in, 6 1-4 leading to monopolization, 61-2 undermining local decision making, 87 Thatcher, Margaret, 45, 60, 67, 82, 84, 97, 100, 206, 217n4-9, 220n5-4 think tanks, neoliberal in orientation, 7, 4 4 -5 , 56 ‘third way’, 196, 217n4-9 Timbro, 44 trade barriers, selective removal of, 87-8 NAMA Agreement, 222n7-8 resistance to further liberalization, 174 subsidies for exports, 57-8 see also World Trade Organization trade unions, 5 aims of, 21, 32 attempts to curb, 25 break with social democratic parties, 196-7

and collective agreements, 37, 6 9 -70, 120, 128, 132, 142 contemporary problems of, 186 decline in 1980s and 1990s, 55 depoliticization of, 15, 35, 54, 162, 171-2 development of, 22 employer tactics to weaken, 6 7 -9 , 73-4 failure to represent those not in work, 162 future policies for; 2 0 4 -8 future role for, 198-204 ideological crisis of, 91 legislation against, 57, 69, 190, 217n4-l level of unionization, 67, 69, 200, 217n4-3 as necessary for development of welfare state, 20 need to defend rights, 2 0 6 -7 need to strengthen, 206 neoliberal and capitalist undermining of, 18, 6 6 -70, 92, 120,173 in Norway, 25 oppression of/ confrontation by government, 45, 60, 66 political parties emerging from, 24 recognition of by employers, 34 recovery in 1990s, 7 1 -2 , 183 response to neoliberal threat, 14-15, 54 -5 , 65, 171-2 role in the class compromise, 34, 65

I NDEX in Scandinavia, 30 solidarity with developing world,

21-2

nationalization in, 36 neoliberal think tanks, 44 Office of Fair Trading, 62 pensions in, 103-4 poverty in, 112-13 privatization in, 56-7, 60, 6 3-4 protests in, 187 public sector in, 84,

in the South, 200-1 strength and ability to negotiate, 30-1 in the UK, 29 and the wider labour movement, 20 Transdev, 62 transport, public, 38, 57, 120 6 1 -2 quangos in, 82-3 taxation in, 80 EU tendering requirements, 87 UK Waste Control, 63 tripartite cooperation, United Nations 15-16 aDD Global Compact, 173 Trondheim model, 199 Human Development Index, 107 trust research by, 6 between people, 7 United States of America in public attacks on trade institutions, 7 unions, 6 7-9 attacks on welfare U provision, 75 unemployment brutalization of work, in the 1930s, 25 146 in the 1970s and economic policy, 46, 1980s, 67, 73 50, 56 benefits reduced, 97 health sector, 41 contemporary, 120, income distribution, 145, 147 8, 72, 9 9 -100, 122 and national neoliberal think tanks, expenditure, 94 44 policies to prevent, poverty in, 99, 205 112-13 statistics, 68 USAID, 58 as systemic or moral welfare in, 37 problem, 151-2 welfare-to-work United Kingdom, 13 programme, 151-2 attacks on trade UPS, 183 unions, 67 utilities, 56 attacks on welfare privatization of, 59 provision, 75 public control of, 38 Conservative Party, see also infrastructure 28, 5 6 -7 development of V welfare state, 28 value economic policy, 46, 50, 5 6 -7 destroyed by casino inequality in, 100 capitalism, 48 essential role of labour movement, 29 labour in creating, Labour Party, 28, 29, 53 57, 83

245 values, welfare state and, 3 Veggeland, N., 11-12, 80-1 Veolia Environment/ Transport, 61-2, 216n3-18 Via Campesina, 185 Volkswagen, 148

wages differentials within EEA and social dumping, 142 excessive for bosses and high earners, 99-100, 160 increases in, 74 international competitiveness in, 92 minimum, 73 negotiations, 26, 34 neoliberal attempts to drive down, 52,

120

policies, 194 poverty-level, 146-7, 166 public sector, 120 share of overall national income, 50, 72, 107 in the United States, 146, 221n6-9 War, Second World, 28, 29 Washington Consensus, 46, 54, 58 waste disposal, 62, 63, 155 water supply, 61 resistance to privatization, 183 wealth, redistribution of, 38, 50, 70, 92, 177 and pensions, 104 to the rich, 108, 116, 123, 157 welfare definitions of, 219n5-l

246 payments see social security religious emphasis on church and family providing, 32 versus prosperity, 95 fare state achievements, 8 claims to ‘ownership’, 8-9 conditions for emergence, 15 current trends in, 10-11 debt crisis and attacks o n , 115-21 depoliticization of analysis and understanding, 17 emergence of, 5, 8, 10, 20 history of, 20 -3 9 impact after Second World War, 40 Left and Right views of, 5 main components, 40 national levels of provision, 80—1 nature of, 10 need to defend, 205 not explicit aim of labour movement, 32 notional support from all parties, 12 right-wing claims to create/defend, 9, 12-13, 23 as specific phase of historical development, 42 three models of, 37 universalism and, 38

INDEX weakening by neoliberalism, 93 Wergeland, Ebba, 222n7-3 Westin, Steinar, 110, 113, 135 Wilkinson, Richard, 100, 176-7, 209 work content and organization, 131 'decent’, campaign for, 175, 207 hours of see working hours laws related to see labour protection laws organization of, 152-3 precariousness of, 146-7, 167, 192, 200, 207 see also labour force, labour market work, conditions of brutalization of work, 17, 126-58, 163, 206, 2 2 0 -ln 6 -l in developed world underpinned by colonial exploitation, 22 improved in early years of welfare state, 34, 142 negatively affected by neoliberalism, 52, 94, 137-42, 164 Norwegian legislation on, 153-4 problems reported with, 132-3 struggle to control, 127-8

workfare, 9 -1 0 , 18, 126, 130, 179, 220n5-10 barrier to adequate benefits levels, 166 failure of, 160 need to abolish, 150-4, 160-5, 2 0 5 -6 and pensions, 103, 111 working hours excessive, 144 extensions of, 147 national differences in, 119 need to regulate, 207 no boundaries to, 134 struggle to reduce, 2 4 -5 of those with two jobs, 146 weakened regulation of, 70, 129 World Bank, 45, 56, 57, 58, 84, 85-6, 101, 172, 184, 216n3-15 World Economic Forum, 15, 185 World Social Forum, 71, 184-5 World Trade Organization (WTO), 45, 78, 87-9, 172, 174 Doha round, 87 General Agreement on Trade in Services (GATS), 88, 200, 218n4-20, 218n4-21, 218n4-22 Seattle protests, 184 Z Zapatero, Jose Luis Rodriguez, 198