Public Arguments: The Crisis of the Welfare State

All over the world, lapel buttons inscribed communism have fallen like autumn leaves; but not only buttons marked communism, also those inscribed socialism. Thus, the collapse of “real existing socialism” in its stronghold in the former Soviet Union is still rippling through the structures of international socialism. Economically, this collapse was radical. It proved that as an economic theory socialism was fatally flawed. It indicated, too, that the socialist analysis of capitalist (and democratic) regimes was incorrect. According to the primal socialist theory, which had been presented as “scientific,” capitalism must necessarily fail—inevitably, without doubt. This so-to-say “indestructible scientific certitude” lent socialist theory the characteristics of a quasi-religious faith. With the collapse of its empirical correlative, this faith also collapsed.

But the collapse of that faith affected not only communism but all those other doctrines and ideals that were infused with socialist economic principles, including Western socialism and even social democracy. In the spring of this year, the Socialist Party in France received one of the most thorough electoral rejections in democratic history and, for all practical purposes, fell in ruins. Communist and socialist parties around the world have scurried to change their official names, usually to some euphemism such as “social democratic.” Yet, even supposing that these adjustments are being undertaken in good faith, it is doubtful that the social democratic ideal of Europe is invulnerable. Indeed, whether it is so, and to how great an extent, is now a burning question: Is there not today, beyond the crisis of socialism, a crisis of the welfare state, that is, of the very flower of social democracy? The fact seems undeniable.

What are we to make of it?

No less an authority than the Second Vatican Council in Gaudium et Spes, after having praised the new “body of social institutions dealing with insurance and security” that came into existence after World War II, and after having urged that “family and social services, especially those that provide for culture and education, should be further promoted,” issued a prescient warning, whose full force is only now becoming apparent:

Still, care must be taken lest, as a result of all these provisions, the citizenry fall into a kind of sluggishness toward society, and reject the burdens of office and of public service [69, emphasis added].

“Sluggishness”—that is the exact word. Already in 1965 a widespread uneasiness was growing. The Achilles heel of social democracy is that it cedes too much responsibility to the collective and thus, in large part, ignores what Pope John Paul II has come to call the “subjectivity” of the human person; that is, the very core of personal responsibility, on which human dignity is grounded.

Is it an accident, then, that the high unemployment figures in the Netherlands and Germany would be even higher, if all the currently unemployed workers who are collecting disability benefits for “bad backs” also were included? The false excuses and malingering which have everywhere dimmed the idealism of the social democratic state have made the latter prohibitively expensive. Plainly, the state also has been corrupting the populace, and diminishing the sense of personal responsibility, by offering benefits too generous to be resisted.

In social democracy, two errors against a Christian anthropology have been committed. First, idealists have overlooked the moral weakness that commonly vitiates a personal sense of responsibility—an observable fact described in the phrase “because of original sin.” (This is the only Christian teaching for which faith is not necessary because it is so amply confirmed in human history.) From this moral weakness, none of us is exempt. The benefits of the welfare state are far too easy to obtain and too attractive to resist. We come to feel (by a multitude of rationalizations) that the state “owes” us benefits, that we are as “entitled” to them as anybody else, and that we would be foolish not to take what is so abundantly offered, whether we need it or not. The welfare state corrupts us all. Given approval solely in the name of “the poor,” the benefits of the welfare state go mainly to the well-organized middle class, while the condition of the disorganized very poorest often deteriorates.

Second, in an exaggerated reaction against “individual-ism,” social democrats tend not only to overemphasize “community,” but also—too uncritically—to identify “community” with the “collective.” Then, as the primary agent of community, they choose the enlarged administrative state. Some do this even while warning themselves against the dangers embedded in the collective (that it denies the subjectivity of the person, for example).

Two results follow from these errors. On the one hand, the subjective sense of personal responsibility atrophies, breeding the “sluggishness” that the Vatican Council warned against. On the other hand, the administrative state swallows up the functions that previously were (and always should be) exercised by civil society. Mediating institutions have therefore become enfeebled, and the principle of subsidiarity violated, as the higher levels crush the lower.

All this brings to light precisely the fate that Alexis de Tocqueville feared would befall democracy in the modern world: that democracy would give rise to a “new soft despotism.” In place of those first generations of self-reliant democrats whom he so much admired, doing for themselves what in the ancien regime their ancestors had relied upon the state to do for them, the welfare clients of the future, Tocqueville foresaw, would yield to the soft maternal tyranny of the state—if only the state promised to care for all their slightest needs. In place of the self-disciplined, community-minded individuals of modern democracy’s beginnings—individuals who stoutly obeyed the “first law of democracy,” the principle of association—the democracy of a later time, Tocqueville warned, would dissolve into interest groups fighting for position to obtain favors from government. This entire passage from Democracy in America (volume II, book IV, chapter 6) ought to be memorized by every engaged citizen, for it exactly diagnosed the false arguments by which the self-governing communities of democracy’s beginnings could decline into despotism. Here is only a taste of his larger argument:

Having thus taken each citizen in turn in its powerful grasp and shaped him to its will, government then extends its embrace to include the whole of society. It covers the whole of social life with a network of petty, complicated rules that are both minute and uniform, through which even men of the greatest originality and the most vigorous temperament cannot force their heads above the crowd. It does not break men’s will, but softens, bends, and guides it; it seldom enjoins, but often inhibits, action; it does not destroy anything, but prevents much being born; it is not at all tyrannical, but it hinders, restrains, enervates, stifles, and stultifies so much than in the end each nation is no more than a flock of timid and hardworking animals with the government as its shepherd.

Not unlike Tocqueville, Pope John Paul II has also been an astute student of the democratic experiment, and has closely watched the worm of a self-destructive logic boring into it. His brief analysis of the crisis of the welfare state in section 48 of Centesimus annus is a masterpiece in miniature. This section appears in the chapter “State and Culture,” and follows brief sections that discuss, in turn, “a sound theory of the state”; the destruction of civil society by the totalitarian state; and the rule of law, together with the protection of individual and minority rights. Section 48 begins by noting that the activity of a market economy

presupposes sure guarantees of individual freedom and private property, as well as a stable currency and efficient public services. Hence the principal task of the State is to guarantee this security, so that those who work and produce can enjoy the fruits of their labors and thus feel encouraged to work efficiently and honestly.

The Pope then discusses rare but necessary interventions of the state in the economic sector. Even here, however, he emphasizes that “primary responsibility in this area belongs not to the State but to individuals and to the various groups and associations which make up society.”

According to the Pope, the State may have the duty to intervene in the economic sector in certain strictly limited circumstances. He does not yield to absolute laissez-faire. But he warns the State to keep its interventions brief “so as to avoid removing permanently from society and business systems the functions which are properly theirs, and so as to avoid enlarging excessively the sphere of State intervention to the detriment of both economic and civil freedom.” Immediately, there follow two long paragraphs on the crisis of the welfare state, beginning thus:

In recent years the range of such intervention has vastly expanded to the point of creating a new type of state, the so-called “welfare state.” This has happened in some countries in order to respond better to many needs and demands, by remedying forms of poverty and deprivation unworthy of the human person. However, excesses and abuses, especially in recent years, have provoked very harsh criticisms of the welfare state, dubbed the “social assistance state.” Malfunctions and defects in the social assistance state are the result of an inadequate understanding of the tasks proper to the state.

Here the Pope articulates three principles by which the interventions of the welfare state are to be limited: the principle of subsidiarity (first articulated, as an important encyclopedia of Vatican II makes clear, by Abraham Lincoln); the principle of evil effects; and the principle of personal moral agency.

The principle of subsidiarity is well known, often ill-understood, and even more often violated in practice. Here is how the Pope states it:

A community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need….

The principle of evil effects seems to be an expansion of the famous principle articulated by Adam Smith and recently by Friedrich Hayek: the law of unintended consequences. The good intentions of the State often go awry, due to the weak and often misguided epistemology of collectives, as well as to institutional arrogance. The welfare state gives rise to four unintended evils, in particular:

By intervening directly and depriving society of its responsibility, the Social Assistance State leads to (1) a loss of human energies and (2) an inordinate increase of public agencies, which (3) are dominated more by bureaucratic ways of thinking than by concern for serving clients, and which (4) are accompanied by an enormous increase in spending. [Enumeration added.]

The Pope’s third principle for criticizing the welfare state highlights the role of what Edmund Burke called the “little platoons” of human life:

In fact, it would appear that needs are best understood and satisfied by people who are closest to them and who act as neighbors to those in need. It should be added that certain kinds of demands often call for a response which is not simply material but which is capable of perceiving the deeper human need.

In other words, better than the Social Assistance State is assistance provided on a more human scale, by the self-governing institutions of civil society, in which the subjectivity of the persons giving help encounters the subjectivity of persons in need. Human need is seldom merely material. Cor ad cor loquitur. Abyss cries out to abyss, as the Psalmist puts it. There is a depth in each human narrative, over which the social assistance state merely glides and statistics merely skate.

In displacing the action of human charity, the social assistance state imports four evils worse than its purported cure. In displacing the “little platoons” that give life its properly human scale, the social assistance state generates a “mass society” that is impersonal, ineffectual, counter-productive, and suffocates the human spirit. In displacing the vitalities of a thickly rooted and self-governing civil society, the social assistance state diminishes the realm of responsible personal action.

Reflecting on section 48 of Centesimus annus, we see the many ways in which the modern welfare state has been—although well-intentioned—misconceived. Without question, it has done much good, particularly for the elderly, and yet in many countries its results for younger adults, and especially for marriage and family life, have been terribly destructive. For example, the proportion of children born out of wedlock has reached unprecedented levels in many nations, including the United States, Great Britain, and Sweden.

Indeed, this may be the most devastating piece of evidence in the case against the welfare state. Quite unintentionally, contrary to its intention, social democracy demonstrably destroys families even in cultures in which the family has been the primary basis of strength for millennia.

Furthermore, a growing chorus of voices—including leading Social Democratic voices (such as the late Gunnar Myrdal)—bewail the visible decline in personal responsibility, work habits, and moral seriousness. Sound habits are being lost; plain, garden-variety virtues such as decency, kindness, and personal reliability are widely deemed to be old-fashioned; and persons of sturdy character are being replaced by those to whom the ideal of character was never even taught. We have forgotten how to form a public culture that gives instruction in the virtues without which the free society cannot draw air into its lungs. In Southern Italy, for example, the penetration of government bureaucracies by nefarious forces that prosper on the enforced dependency of welfare clients has been noted even by the Pope himself.

There are several lessons to be gleaned from the experiment in welfare democracy these last 50 years:

•Human needs are more than material, and the concentration of the welfare state on material benefits and material security is misconceived.

•Terms such as “community” and “social” apply best to the little platoons of civil society rather than to the state.

•”Community” does not mean “collective”; like the totalitarian state, the collective not only is impersonal but crushes the subjectivity of true community.

•Apart from personal responsibility, no democracy can long survive; individualism rightly understood and nourished on public-spiritedness, as described by Tocqueville in Democracy in America, is as necessary to democratic as to Christian integrity.

•The main agent of social justice is not the state but, rather, civil society. To focus social justice primarily on the state is a costly error—costly both morally and economically.

•There is no question of doing away with the good achieved by the welfare state; but, surely, the welfare state could be made humane by a better conceived welfare program, using civil society as its proximate instrument rather than the state. What we are seeking is a new way. Between the excessive individual of laissez-faire and the excessive collectivism of social democracy, there remains to be discovered a new “third way”—a welfare society whose pivot is less the state than civil society; and in which the state’s method of operation is indirect by way of strengthening civil society, rather than direct by way of repressing it.

Some of the benefits of the welfare state—particularly, some of its social insurance schemes—do seem to contribute to a necessary sense of security and stability among populations that during the twentieth century have suffered quite enough turmoil. But a great mistake seems to have been made in anchoring these insurance mechanisms in a grand state apparatus that inevitably is bureaucratic and inefficient, rather than in more imaginative patterns that would have strengthened both civil society and personal responsibility. For example, might not Social Security savings for most of the elderly have been organized through the private sector, with state assistance (perhaps through vouchers) only for the indigent? And why was health insurance not vested in individuals through tax-exempt portions of their salaries, with a wide range of private-sector choices open to them as to how to invest their personal health funds? But under social democracy, the state has been assigned too much. The state takes up too much social space. The subjective human agent—and civil society—have been allowed too little space for the free exercise of personal responsibility and social invention.

Here a homely example may help. Suppose one has a neighbor whose daughter is retarded; to institutionalize such a child could well cost the state some $30,000 per year, whereas to allow the family a tax deduction of $5,000 per year might suffice to provide the necessary equipment and care at home. The latter arrangement saves the state money, strengthens the family, and helps the child in an intimate and incomparable way. Every aspect of welfare needs to be thought out anew in the light of these criteria: to use state resources only indirectly; to strengthen civil society; and to keep natural, organic human institutions (especially the family) as vital and active as possible.

The Moral Basis of Liberty

To summarize: the collapse of socialism in its heartland, followed by the grand defeat of socialism in France, is being followed by severe trembling along the foundations of the social democratic experiment. Everywhere, the welfare state has overpromised—and underachieved. It costs too much, and it is generating a “new soft despotism.” Unless social democratic societies are reformed on the basis of a more realistic and pragmatically sound humanism, the fate of democracy itself is in doubt. For the project of self-government depends on the capacity of citizens to govern their own passions, urges, habits, and expectations. If they cannot individually govern their own lives, how can they be successful in self-government as a republic? The answer is that they cannot be. The project of self-government is moral—or not at all. The moral dimensions of liberty must today be restored.

When we use the word liberty in the context of discussing the free society, we do not mean any liberty at all. As those French liberals knew who designed the Statue of Liberty that has graced New York Harbor since 1886, the liberte of the French Revolution (understood as licentiousness) called forth tyranny. True liberty, as Lord Acton said, is the liberty to do what one ought to do, not the liberty to do what one wishes to do.

Of all the creatures on earth, only humans do not act solely from instinct. We are made in God’s image, in that we alone are able through reflection to discern for ourselves our duties and obligations, and to assume responsibility for meeting them. Thus, to practice liberty rightly understood is to accept responsibility for one’s own acts. That is what gives humans unparalleled dignity.

In this spirit, the Statue of Liberty designed by French liberals showed a woman (wisdom) bearing in one hand the upraised torch of reason (above passion, ignorance, and bigotry) and in her other hand the book of the law.

As if to say: Ordered liberty is liberty under reason, liberty under the law. As the American hymn puts it:

Confirm thy soul in self-control,

Thy liberty in law.

The problem with the welfare state is that it has been so designed that it has become a substitute for responsibility, liberty, self-control, and law. Its administrative system has been deliberately constructed to be amoral (or “non-judgmental”). It neither demands nor rewards responsible behavior. It corrupts the virtuous, and pays equal benefits to those who spurn virtue. It treats citizens as if we were pre-moral beings; it makes passive clients of us all. It has been designed as though fashioning responsible citizens were not its concern. Indeed, it subsidizes irresponsibility, and thus makes a mockery, of those citizens who in an old-fashioned way still believe in their own capacities for independence, hard work, and self-reliance.

The Reconstruction of Free Institutions

For more than a century, socialism misled the human imagination by riveting attention on the state. Correspondingly, the mistake of social democracy lay in channeling man’s social nature into the state, and in suppressing personal responsibility and inventiveness. But the true dynamo of self-government among free peoples is not the state, but the person and civil society. Thus the pursuit of social justice today requires a new and more promising line of attack: close attention to personal responsibility and civil society. Public welfare systems need to be redesigned, so as to draw forth from individual persons, their families, and their associations, their best (most inventive, most creative) efforts. Wherever possible, state bureaucracies need to be replaced by the institutions of civil society. If social justice means “objective social arrangements,” it is not a virtue but a form of regime. If social justice is a virtue, it can be practiced only by persons. Today we need social justice as a virtue.

For serious democrats, humanists, and Christians and Jews, the underlying practical question is this: Does the welfare state draw out personal responsibility and creativity? Its demonstrated answer is, No, it does not. A better way lies in maximizing personal responsibility and greatly strengthening the mediating institutions of civil society.

Much serious thinking already has been devoted to re-establishing this bare intuition of a new mystique into a substantial politique. In such matters, the citizens of every democratic country must think for themselves and invent their own concrete solutions. Each of our democratic nations has more than enough to do, if democracy is to survive in the twenty-first century—a fate that is by no means assured.

Michael Novak

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Michael Novak held for many years the George Frederick Jewett Chair in Religion and Public Policy at the American Enterprise Institute and is now a trustee and visiting professor at Ave Maria University. He is a philosopher, theologian, and author, as well as the 1994 recipient of the Templeton Prize for Progress in Religion. He has been an emissary to the United Nations Human Rights Commission and to the Conference on Security and Cooperation in Europe. He has written over twenty-seven books on the philosophy and theology of culture, especially the essential elements of a free society. He also founded Crisis Magazine with Ralph McInerny in 1982.

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