Misnomers of a welfare state

The writer is a social development and policy adviser, and a

freelance columnist based in Islamabad.

That the state has to act as a benevolent provider is the logic behind the idea of a welfare state – and it seems that the current government has taken this diction too literally. The munificence shown by the government through its langar (soup kitchen) initiative is one such example of showing benevolence towards the poorest segments of our society.

However, the modern notion of welfare state is not about governments undertaking chartable acts but about governments formulating inclusive social and economic policies which deliver to the poor. It is about equitable resource distribution – to allocate adequate funds so that the basic needs of the poor are addressed.

The welfare intentions of a government can be gauged not by its charitable acts (something governments are not good at) but by its policy commitments towards comparative spending on basic needs like education, health, nutrition and shelter. Without a sound economic policy of inclusivity and equity, the government will end up getting an increased number of poor people in need of charity and subsistence support. With the current dismal economic situation, Pakistan is likely to create four million charity seekers on an annual basis and 67 percent of them will be in the rural areas of the country.

The government initiative to support a private foundation in establishing 112 langars will cater to the food needs of 0.14 million people in urban centres only. Imagine the fate of millions joining the ranks of charity seekers beyond urban centres, while the national economy is shrinking much faster than the expansion of langar programmes.

With the current GDP growth rate of 2.6 percent, the per capita income has already reduced to $1500 from $1650 at the start of year 2018; and as the economy will continue to shrink the per capita income will go further down. Pakistan’s economy has to grow at a rate of at least 4.5 percent to avert the potential economic collapse but the government does not seem to have any roadmap for economic recovery. Even worse than declining economic growth is the government’s obsession to continue with misplaced policy priorities.

The misplaced policy priorities are not limited to charity drives only; they also entail de-industrialization, regressive taxation, capital market liberalization, decreasing investment on essential infrastructure and social services and premature privatization of public assets etc. Hence the policy actions adopted by the government for macroeconomic stabilization are diametrically opposed to its political rhetoric of welfare state.

Let us explore some of the conceptual perplexities the government seems to be struggling with, in particular with its political idea of a welfare state. A brief background about the evolution of modern concept of the welfare state will help understand the political dilemma of the current government in its seemingly well-intended but wayward welfare-oriented efforts.

The idea of a welfare state is an invention of a capitalist nation-state which was promoted as a political bulwark against the socialist expansion of cold-war times. The idea of the welfare state was to create a political impression of capitalistic altruism and benevolence towards the poor as the best alternative to an ‘over-centralizing’ socialist economic model.

The welfare state became synonymous with increasing social spending to address the basic needs of education, health and shelter when a growing capitalist economy showed inadequate trickle-down benefits for those at the bottom of the socioeconomic pyramid. To ensure sound social spending it was imperative that the economy continued to grow with a reasonable pace to generate sufficient funds for financing social welfare programs. In this sense, a good welfare state cannot be established without ensuring constant economic growth and expansion of GDP.

A state with poor economic performance cannot afford to be a welfare state in a capitalist economic system with diminishing profitability and low returns on investments. Welfare funds come as a small margin of surplus value in a growing economy for the political management of society. When profits start to decline, welfare funds plummet and the state sometimes intervenes to manage the supply-demand equilibrium only.

To be precise, the welfare state becomes viable only in a growing economy with the capacity to finance subsidiaries and social protection support. In a state which faces economic crisis, austerity dominates economic thinking and social welfare funds are slashed as the first policy reaction.

During the Great Depression of the 1930s in Europe, the Keynesian model of state intervention was adopted to help manage the supply-demand equilibrium. During the best days of economic growth in the aftermath of the Second World War, the welfare state became a key social policy agenda of most of the developed economies of capitalist world. Capitalist economies in general hate the idea of the welfare state but when they invest in social welfare they do it as a strategy of political management to divert attention from political and economic alternatives. That is exactly why the idea of the welfare state lost its political favour in the post-cold war period when political and economic alternatives to capitalism lost their popular appeal.

However, the socialist model of public ownership of means of production and free access to basic services continued to define the Chinese economic growth model. The Western idea of the welfare state under capitalism is entirely different from the Chinese model where the state is responsible for providing basic services regardless of the performance of the economy. The difference is about the ownership of means of production of the capitalist and socialist systems which cannot be reconciled with political rhetoric only.

The social policy repertoire of a welfare state enacted by the PTI government is a strange combination of paradoxes ranging from the Chinese socialist model, Scandinavian capitalist model to a pre-modern charity driven and faith-based model of a welfare society. The welfare model of a pre-industrial Islamicate society cannot be juxtaposed with the Chinese socialist model and post-industrial Scandinavian model because they are entirely different and mutually exclusive systems of political and economic governance.

Historically, Pakistan has imitated what was prescribed by IFIs as preconditions for financial assistance and loans. Pakistan will continue to do so under the conditions set forth by the IMF for revenue generation to repay its debts. There will be no money left to spend on social welfare in the near future because the economy is in tatters and the state is under tremendous pressure to slash its soft social spending.

The most perplexing thing about the prime minister’s rhetoric of welfare state is its usage in an anachronistic fashion without giving a thinking pause to the idea of welfare. Pakistan needs political and economic reconstruction like China did back in 1949 if we want to tackle poverty like China. Turing an Islamic republic which has also been a client state of Western capitalism into a socialist economy like China will take a revolution to say the least.

One good thing about our prime minister is that when he comes back from a foreign tour he speaks highly of the country he visited. He was inspired by the Scandinavian model, the Chinese model, and the Indonesian model in addition to his genuine inspiration with the Islamic welfare state. It is always good to be inspired but acting on inspiration without knowledge is dangerous.

Email: ahnihal@yahoo.com

Twitter: @AmirHussain76