Neoliberalism and Its Role in Undermining the Welfare State in Britain

Britain’s welfare is a concept that started to advance in the 1900s and onset of the 1910s and incorporates expenditure by the British government envisioned improve education, health, social security, and employment (Castles, Leibfried, Lewis, Obinger and Pierson, 2012, p 18). The British structure has been categorized as a liberal welfare state system. However, the rise of neoliberalism in the 1950s seemed to be against the British liberal welfare state structure. Therefore, this paper aims to explore the various ways in which neoliberalism undermined Britain’s welfare state.

Neoliberalism is a policy model that involves economics and politics and aims to transfer control of economic factors from the public to private sectors. Neoliberalism arose in the 1950s as a response to “Keynesianism”—the idea that states should exercise significant control on free-market capitalism through high taxes to provide public services, including unemployment benefits, education, and free healthcare, collectively known as the welfare state (Smith 2012). The theory is grounded on the idea that the government’s minimal interference in the free-market is the primary goal of politics. Neoliberalism policies tend to promote the mechanisms of free-market capitalism and seeks to place restrictions on government regulations, government spending, and public ownership.

In Western Europe, the “Welfare State” was part of the post-Second World War social settlement. However, the oil crisis that marked the 1970s saw the idea became challenged, and in 1981 OECD declared the welfare state to be in trouble. The era marked the beginning of neoliberalism turn in politics in Britain and across the world, occasioned by a shift from collectivism to individualism (Wikan 2015, p 3). Critical literature states that Thatcher-led British parliament was beginning the late 1970s, and the onset of the 1980s initiated large-scale privatization programs. The neoliberal revolution of neoliberalism led to a wave of privatization of State-Owned Enterprises (SOE) (Wikan 2015, p 5), as the government resorted to rendering substantial ownership of SOE to the private sector.

Indeed, according to neoliberalism theory, SOEs should be dismantled because of their restraining effects on individual freedom to do business. Besides the privatization, the critical literature review reveals that the primary feature of the spread of neoliberalism has been the obligation to dissemble the “Keynesian” welfare state and restrict redistributive taxation. (Sipahioglu, p 14; Lit, de-Olazábal, Montanaro and Slavev 2017, p 29). However, the action by Thatcher’s administration did not show evidence of conforming to neoliberalism ideology. Instead, the privatization policy implementation is said to have come in response to the economic challenges of the 1970s and the need to condense government expenditure (Kus 2006, p 489), which requires the economic policies to align to any conservatism or liberalism. The massive privatization that came with the wave of neoliberalism in the 1970s has resulted in excessive capitalism, which has faced criticism from all corners. Capitalism is associated with social inequalities, unfair distribution of wealth, and repression of workers, unemployment, social alienation, and economic instability (Glyn 2007). All these factors undermine the welfare state in Britain and other developed and developing economies that practice neoliberalism. Besides, the profound social divisions created by capitalism, unless addressed, will undermine communities and create social unrest. The realization of neoliberalism theory meant that a nation must abolish the welfare state (Kus 2006, p522). Such arguments from critical literature explain why neoliberalism is considered to undermine Britain’s welfare state and other parts of the world.

In critical literature on neoliberalism, social control, and state surveillance, Whiteside (2016) noted that neoliberalism is committed to permanent austerity or state retrenchment. In a disciplinary society, power is isolated and concealed in the conformity processes within the community. Discipline is transferred across various institutions, linking and prolonging them, and making them operate in a new way (Galič, Timan, and Koops 2017, p 12). By requiring fiscal consolidation, massive privatization of public goods, and cuts to social securities, austerity challenges the attempt to attempt to create social security and undermine the liberal and democratic foundation of society.

Foucault elucidates that a phenomenon linked and results from such a disciplining process is normation. This implies that neoliberal policies and procedures force and establish rituals, habits, and how things are done, therefore generating a norm of behaviors and conduct. In normation, the standard is central and sets what one must conform to and strive to achieve. The individualization process in disciplinary society is what Foucault term as “descending,” as opposed to “ascending,” as for sovereign or feudal societies (Galič, Timan, and Koops 2017, p 12). The citizens are measured against the established norms—they become fictional representatives, registered, and held against fictional norms (Galič, Timan, and Koops 2017, p 16).

Power structures in a disciplinary society are relocated and substituted by institutions such as schools and hospitals where behavior is being watched. Surveillance is an essential concept as the kind of re-shaping and molding emanates from an individual’s “competencies” measured by exams and record-keeping of their processes (Zuboff 2019, 69). The new and advanced information and communication technologies offer a highly automated systemic observation of individual data. An expanding quantity of data can be gathered through various platforms such as public institutions and social media, cross-reference, and organized rapidly than before. (Ragnedda, 2011). The forms of neoliberalism-linked social control and state surveillance further undermine the welfare state, advocating for state protection and promotion of the citizens’ economics and social well-being.

Sakellariou and Rotarou (2017), in their study, note that neoliberalism idea is generally geared towards a robustly market-based approach, emphasizing on deregulation, privatization, minimization of the state interferences, and the rise of individual responsibility. The retrenchment has translated into fewer, less controlled, lower quality, and more expensive healthcare and social services (Sakellariou and Rotarou 2017, p 3). The authors further argued that the neoliberalism process is leading to the decline in the welfare state duty for taking care of the citizens from the state to free markets, resulting in a broader disparity in both the level and the quality of care that the citizens receive (Sakellariou and Rotarou 2017, p 4). Neoliberalism health policy has translated into reduced healthcare services to near breaking point since its inception.

For instance, in the U.K., the pace of attacks on the principles and practices of the NHS has accelerated over the past years. The U.K. has substantially shifted healthcare resources from the public to private providers, which has centralized, concentrated resources to individual hands instead of promoting individual care capitalists’ extensive growth. NHS is currently faced with a shortage of available beds (Sakellariou and Rotarou 2017 p 5), an indication of broader challenges in the social care sector, and a direct result of the marketization of services.

Neoliberalism in Britain created the narrative of what Goffman termed as stigmatization, marginalization/exclusion of people perceived as the undeserving recipient of welfare, through selectivity. The stigma of the Elizabethan Poor Law is legendary in Britain. People who appealed for poor relief were the object of policies meant to prevent them from seeking help, marking them off from other “normal” society members. Titmuss maintained that stigma in a competitive society emanates from the endless selection and rejection people experience in the private sector—selectivity in the social services. For instance, residual welfare was meant to help people who cannot survive in the market society. Selectivity as the mechanism was the mode of application. Selectivity thus defined people who have failed in the competitive market. The dependency on social services created by the welfare state becomes stigmatizing as it identifies the lowest class in society—individuals who are dependent and dirty and regular (Spicker, 1984).  The stigmatization fostered a hierarchical relationship of inferiority and superiority in Britain, diminishing instead of strengthening the status quo of those identified as inferior and impacted in widening instead of decreasing social inequalities.  

In conclusion, the British structure has been categorized as a liberal welfare state system. However, the rise of neoliberalism in the 1950s seemed to be against the British liberal welfare state structure. Neoliberalism arose as a response against “Keynesianism.” Keynesianism advocated for a liberal welfare state where states provide resources such as education and health services through state-owned enterprises. Neoliberalism philosophy was for the dismantling and privatization of the state-owned enterprises because of their restraining effects on individual freedom to do business. Neoliberalism committed to permanent austerity or state retrenchment, which all undermined the existing liberal welfare state. The stigma of the Elizabethan Poor Law further advanced the neoliberalism. Selectivity was applied to mark and isolate marginalized groups from ordinary citizens who can cope in a competitive market.

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