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Welfare and social exclusion

Political theory has responded to the central questions about redistributive welfare systems, their justification, and the institutional means for implementing them, raised by the political economy. This chapter traces the transition from welfare to social exclusion, and the various theoretical responses it has elicited. The idea that political justice should deal in issues about the distribution of roles and resources, presupposes a political community which corresponds to an economic system for production and exchange. The libertarian challenge to liberal and communitarian political theorists over welfare and social exclusion is to reconstruct a convincing version of social justice, one which retains the appealing aspects of individual autonomy, but deals with its undesirable social consequences. The liberal response attacks the libertarian account of justice by pointing out that it is not only when rights are violated that freedom is restricted.


Political theory has recently responded to the central questions about redistributive welfare systems – their justification, and the institutional means for implementing them – raised by the political economy of the past twenty-five years. In the post-war period, the consensus around sustaining minimum standards of income, health, education and housing assumed an entitlement to such guarantees (social rights) by members born into national communities of fate (citizens). Rawls in turn built these assumptions into his theory of justice, which provided a liberal endorsement for social democratic policies.1 His communitarian critics of the 1980s,2 while lamenting the decline of family, associational and religious life, did not fundamentally question the nature of the political community itself, or the duties its members owed each other.3

Meanwhile in the real world, the political agenda was being set by libertarians,4 with welfare states as their primary targets. In their emphasis on individual freedom, and the capacity of (global) markets to maximise this (while simultaneously optimising economic outcomes), they raised the possibility of self-governing communities of choice – selected by their members for the bundle of collective goods they offered and the tax rate this required. This challenge has provoked what might be called a post-libertarian liberalism, and a post-libertarian communitarianism, both of which attempt to supply political principles under which redistributive welfare provision for citizens can be justified. Yet as the work of Van Parijs and Etzioni respectively show, these analyses may not in practice be as irreconcilable as they appear at first sight to be. This chapter traces the transition from welfare to social exclusion sketched above, and the various theoretical responses it has elicited.

1 Communities of choice

The idea that political justice should deal in issues about the distribution of roles and resources, presupposes a political community which corresponds to an economic system for production and exchange. Within a closed system of co-operation, conceived as a kind of organism with interdependent parts, with each member’s life chances affected by the actions of all others, it makes sense to ask questions about how burdens and benefits should distributed, and to apply a single system of rules to all members of this clearly bounded community. Both liberal political theory (from Mill to Rawls) and the neo-Hegelian, Progressive Catholic and communitarian traditions (from T.H. Green to Walzer) developed arguments for softening and embedding capitalism. The concept of social justice emerged in both at the start of the twentieth century,5 and justified institutions for the democratic modification for market outcomes, on utilitarian, maximin or common good grounds.

Such ideas make less sense in a global economy, where citizens’ life chances are strongly influenced by transnational forces, and where they often have investments in other countries, or are employed by international corporations or work abroad. In such a world, it is far harder to devise a coherent version of politico-economic membership, or to justify a system of redistribution. For example, if industrial capitalists are free to close factories in the UK or Germany, and reinvest in new plants in China or Poland (for the sake of global productive efficiency, from which all ultimately gain, and low-income Chinese and Polish workers gain immediately), who – if anyone – should compensate redundant British or German workers? Perhaps the Chinese or Polish governments might owe the British or German part of their economic gain, but there is no institutional mechanism for paying this. And, in any case, there are also British and German citizens working in China and Poland, but paying taxes on their earnings in the UK or Germany.

All these developments point towards a new version of social politics, very different from the consensus around welfare collectivism that prevailed in the post-war era all over the advanced capitalist world and in much of the developing one. In the ‘golden age of welfare states’,6 it was taken for granted that citizens would look to nation-states for protection from the contingencies of the life cycle and the arbitrary outcomes of the labour market. The bigger and stronger the state, the more it was able to require capital and labour to submit to its redistributive plans, the more reliable was this protection, and the better the welfare dividend. But if states can no longer reliably offer this kind of protection, and if citizen-consumers can get better welfare returns in the global marketplace, then states must compete with each other to attract members and their resources, must tax and redistribute and provide only by agreement, and must clarify the terms of access and exit as well as those of voice.

Indeed, the institutional landscapes of almost all polities have been redesigned, to a greater or lesser extent, in the past twenty years to take account of this dynamic. The other side of the libertarian agenda, with its promotion of market freedoms, was the public choice programme, which reformed the public infrastructure as a space for rational economic action. Following the trail blazed by Tiebout,7 whose model of governance postulated small cities competing for mobile residents in order to ensure the efficient supply of local collective goods, the theory of ‘fiscal federalism’ has been deployed to break up national monopolies over welfare provision and to establish competing authorities (or contracted commercial providers) for each of the social services.8 In this new environment, voting with the feet – by moving to another jurisdiction – becomes the public choice equivalent of market preference and consumer sovereignty.

The declared aim of these approaches has been to hold down taxation and ‘tame the Leviathan’ of central government,9 but their effects have been most strongly felt by the poor. The theory of ‘clubs’10 assumes that individuals have different incomes and tastes, and that the efficiency savings that come with mobility are best achieved when groups who share the costs of collective goods are homogeneous. ‘The rich tend to want to be away from the poor, but the poor want to be in the same jurisdiction as the rich . . . There may be a tendency for zoning on the part of high-income groups to exclude the poor.’11

Some theorists have gone as far as to postulate self-governing, consensual territorial communities, with fully sovereign individual members (modelled on Locke’s theory of moral autonomy, property, political authority and governance).12 In practical terms, there is some evidence of the emergence of such ‘private’ communities, for instance in Israeli settlements, in ‘gated communities’ of white South Africans, and all over the US.A.13 Although they still rely on central and local authorities to provide certain goods and services (usually defence and legal order), they offer applicants specific packages of collective amenities, including schools, health clinics, residential care homes and other facilities, provided they can pay the asking price for houses, and the service charges.

This raises important issues about the appropriateness of nation-states as political units under evolving global economic conditions. After all, the present system of nation-states finally came into being after intense competition between these and empires, city-states and city-leagues,14 in the mid-seventeenth century. Nation-states adopted a concept of exclusive territorial sovereignty which was quite different from the versions prevailing in any of these other units. They succeeded because they were better able to create unified economies (with reduced transaction costs) to build legal systems, to mobilise their subjects for war and to empower each other through international treaties. None of these advantages may continue under present global conditions, though it will take a long time for the power of national political systems to break down.

Two aspects of national political authority are likely to be jealously guarded – control over entry by foreigners, and control over the redistribution of income. But even these might be adapted to be more consistent with the formation of communities of choice. On the one hand, nation-states might enable such communities to grant access to the workers they require, for efficient provision of the services members choose. Selective immigration by foreign workers (not granted welfare rights during their stay) could create a category of mobile employee that such communities might recruit at low cost. On the other hand, the state would retain responsibility for its increasingly totalitarian control over the lives of those citizens too poor (in terms of earning power) or too costly (in terms of health and welfare needs) to find a place in any community of choice. Hence the public sector could become, as it were, a ‘community of fate’15 for these outsiders, in which the regimes imposed by state officials would resemble the pre-war Poor Law, or (ironically) the conditions under state socialism, with compulsory labour as a condition for benefits, and little freedom for those receiving services.

So, a possible vision of a re-feudalised mid-twenty-first-century society emerges. Sovereignty has been divided between a number of authorities, all of which exercise some jurisdiction over the same territory. For most purposes and most citizens, the unit of membership and governance is the self-selecting and self-ruling community, which sets its own tax rates and determines its own form and level of public services. However, another authority (perhaps the nation-state) deals with the population who lack access to such communities, maybe through something like the Panopticon Villages foreseen by Jeremy Bentham.16 Finally, a supranational government deals with issues of migration, guaranteeing or supply of mobile workers between communities to staff essential services, and meet labour shortages. Of course, individuals might come under the jurisdiction of any of these at different periods of their lives. One pattern, for instance, might be a period as a migrant worker, which (if successful) would lead to entry into a self-governing community as a citizen, or (if unsuccessful) into the Panopticon sector as a pauper.

Such developments are foreshadowed in emerging political economy and social policy. The emphasis on conditionality and obligation for claimants and beneficiaries, and the popular pressure for increasingly tough enforcement, all point towards the Panopticon state. Meanwhile, European governments increasingly pursue a dual policy on immigration, presenting a Fortress front to asylum seekers (who are processed in camps, hulks or prisons), while actively encouraging migrants with skills required by their domestic economies, by giving them various forms of time-limited work permits. For example, the Irish government is currently running a television advertisement to recruit 50,000 workers in central Europe, and the UK minister for immigration has announced a spectacular U-turn on ‘economic migration’ (formerly a synonym for ‘bogus asylum-seeking’)17 by stating:

As with other aspects of globalisation, there are potentially huge economic benefits for Britain if it is able to adapt to the new environment. We are in competition for the brightest and best talents . . . Britain has always been a nation of migrants . . . Many immigrants, from all over the world, have been very successful here, bringing economic benefits to Britain as a whole . . . The evidence shows that economically driven migration can bring substantial overall benefits both for growth and economy.18

From an efficiency standpoint, such developments might have much to recommend them; but it is difficult to see how they can be justified from the perspective of equity. How do they stand up to scrutiny according to the criteria of social justice?

2 Social exclusion

As a response to the ideas and real-world developments identified in the previous section there have been attempts to redefine social justice as the basis for national welfare systems. Instead of a Rawlsian contract between all citizens guaranteeing social entitlements, these postulate contracts between the state and individual citizens, defining the responsibilities of each in welfare issues.19 On the one hand, those who receive assistance or services of any kind are required to demonstrate either reciprocal efforts towards independence, or a ‘genuine’ incapacity. Such obligations rest ultimately on the duty not to burden one’s fellow citizens unnecessarily,20 by passing on costs that morally should be borne by the individual or family.21 On the other hand, citizens have the right to expect the state to reach the quality standards and performance measures set by the commercial sector in its provision of benefits and services. Instead of shaping the market, by identifying the public goods undersupplied by commercial interests, and redistributing resources for the sake of equity, the state is required to submit itself to market disciplines, and to please ‘the demanding, sceptical, citizen-consumer’.22

In many ways, these new approaches adapt to the opportunities for individual mobility and choice in a globalised environment. As a recent UK government policy document acknowledged:

Society has become more demanding . . . First, confidence in the institutions of government and politics has tumbled. Second, expectations of service quality and convenience have risen – as with the growth of 24-hour banking – but public services have failed to keep up with these developments; their duplication, inefficiency, and unnecessary complexity should not be tolerated. Third, as incomes rise, people prefer to own their homes and investments.23

Already, the UK government has been forced to look abroad for staff to meet these demands. The largest occupational group recruited from overseas under its new policies, noted above, has not been computer experts but nurses,24 while teachers and social workers also figure prominently. The state itself, like the communities of choice it contains, must attract temporary workers who are not citizens in order to supply public services.

However, the most significant shift has been in policies for ‘activation’ of working-age claimants, changing benefits systems ‘from safety nets to trampolines’.25 Pioneered in the USA, the UK, Australia and New Zealand, these have now been adopted in almost all European countries, including those with such entrenched social protection systems as Denmark and the Netherlands.26 Theorists in turn have used the idea of social exclusion to advocate an approach to social justice that sees increased labour-market participation as the key to equal citizenship, in the face of mass long-term unemployment, and the emergence of a significant ‘underclass’ of ‘welfare dependents’.27 As Anthony Giddens puts it: ‘the new politics defines equality as inclusion and inequality as exclusion . . . inclusion refers in its broadest sense to citizenship, to the civil and political rights and obligations that all members of society should have . . . It also refers to opportunities and to involvement in the public space’.28 He goes on to suggest that ‘exclusion is not about gradations of inequality, but about the mechanisms that act to detach groups from the social mainstream’.29 This implies that welfare systems should focus on restoring them to employability and employment. ‘The cultivation of human potential should as far as possible replace “after the event” redistribution’;30 hence the aim is, as the New Labour government puts it, to ‘rebuild the [welfare] system around work and security. Work for those who can, security for those who cannot’.31 Inclusion consists in equipping claimants for a competitive labour market, and reforming the tax-benefit system to ‘make work pay’.

This shift reflects the success of libertarian theories in changing the social policy agenda of the 1980s and early 1990s, when the welfare state’s ‘rigidities’ and ‘barriers’ came to be seen as the problem to be addressed, and its version of equality dismissed as a ‘mirage’ (now in Gordon Brown’s words ‘a socialist nightmare’). In the Anglo-Saxon countries it implies that, redistributive systems should focus on ‘hardworking families with children’ through tax credits,32 targeted on the working poor, and leave them to work their own way out of poverty and exclusion. However, this addresses only one part of the dynamic by which citizens are relegated to the margins of society or the care of the state.

A fundamental tenet of the New Labour orthodoxy is that individuals and households must be free to exercise choice over welfare goods, and to improve their relative position through their own efforts. Equality of opportunity (a key New Labour value) implies social and residential mobility for the sake of efficiency and equity. But such mobility does not follow random patterns; citizens in pursuit of ‘positional advantage’33 move to more favoured residential districts, with better public facilities, and cluster around the best schools, health clinics, care homes and hospitals. In this way, society organises itself (through citizens ‘voting with their feet’) into homogeneous districts, where residents of like incomes congregate. Through residential polarisation of this kind, communities of choice make up the mainstream of society, while those unable to move, because they cannot afford the housing costs, remain in impoverished communities of fate on the margins (inner city ghettos or outer city social housing estates).

Furthermore, in the UK the Thatcher–Major reforms of the social services facilitated these developments. Under such new arrangements as the devolution of budgets to local units and the purchaser-provider split, schools, hospitals and care homes have an interest in attracting high-yield, low-cost pupils, patients and residents, and excluding low-yield, high-cost ones.34 Thus even public sector health and welfare facilities reinforce the tendency for the highest income citizens to gain exclusive membership of the best (private) social service amenities, while strategic action by middle-income groups produces a public sector hierarchy (or league table) closely corresponding to the income levels of service users. In this way, state-funded services come to operate as ‘clubs’,35 with strong professional interests in exclusionary practices; New Labour funding and regulatory systems tend to strengthen these pressures, and give even greater opportunities and incentives for citizens (including government ministers) to seek those schools or hospitals within the state sector that produce the best outcomes, even when this involves high transport or other transaction costs. At the other end of the scale, a fund-holding general practitioner practice in a deprived area of Edinburgh was recently advised by a firm of consultants it employed to devise the most efficient primary care strategy for its neighbourhood to get rid of all its current patients, and attract some better-off ones.

Exclusions of this kind cannot be overcome by national policies focused on increasing labour-market participation. The logic of collective action operates in such a way that, in the absence of the restraints on such strategic action as were exercised under post-war welfare states, citizens will group together in narrower mutualities for the sake of the shared benefits they can produce. These interdependencies are necessarily exclusive, because their benefits stem from the sharing of costs among members, and rely on each member making the necessary contribution to the association.36 And interdependencies are formed because of members’ common interests in gaining positional advantage over, or extracting ‘rents’ (monopolistic gains) from, those who remain outside the charmed circle of their exclusive interactions. Policies which promote low-skilled work do nothing to challenge these forms of exclusion; rather, they subsidise members of communities of choice to employ outsiders from communities of fate in service roles. This is recognised in the UK government’s assessment of its measures to tackle unemployment in deprived neighbourhoods (the Employment Zones and Action Teams). They are ‘identifying suitable vacancies in neighbouring areas and bringing the two together’. Additionally, they are tackling barriers to employment, including funding for transport to enable people to access nearby vacancies.37 In other words, residents of poor districts will be required to work in more affluent ones, to serve the needs of communities of which they are not, and probably never will be, members. This is not inclusion.

Furthermore, the institutional and financial changes that have allowed (or encouraged) public sector schools, hospitals and care homes to operate as ‘clubs’ further reinforce these disadvantages. The economic theory of clubs38 holds that members act together to internalise some of the costs of their association, and to externalise others by ensuring that they are borne by outsiders. Poor people not only endure the highest risks and costs connected with such social ills as pollution, the degeneration of urban infrastructure, housing squalor and social disorganisation; they also receive the worst in education, health care and social services, because higher-income groups act to attract most funding and the best professional staff for their facilities.

However, poor people have not been passive or acquiescent as these processes unfolded; they have developed individual, group and community strategies of resistance to offset their disadvantaged position. Research has shown how they countered the insecurities of the labour market (casualisation, falling wages, deteriorating conditions) and the means-tested benefits system (the delays and disentitlements of an increasingly complex and conditional process) by combining off-the-books work for cash with long-term claiming.39 By deploying the covert ‘weapons of the weak’,40 male networks exchanged information, traded in contraband or illicit drugs,41 or resorted to petty crime and hustling, while female networks supplied informal order and mutual support.42 In these ways, communities of fate evolved their own forms of collective action, at odds with those of mainstream society, filling the vacuum in their districts left by the withdrawal of the market and the state.

3 Theories of social justice

The libertarian challenge to liberal and communitarian political theorists over welfare and social exclusion is to reconstruct a convincing version of social justice – one which retains the appealing aspects of individual autonomy, but deals with its undesirable social consequences. Both schools of thought have started from a critique of the part played by rights in libertarian accounts of justice, where individuals are entitled to do what they want not only with themselves, but with ‘whatever external objects they own by virtue of an uninterrupted chain of voluntary transactions starting from some initial unrestricted private appropriation of objects previously unowned’.43

In the communitarian response, this critique argues that rights must always be balanced by responsibilities in any adequate account of a just society. The analysis draws on interactions within families, informal groups and voluntary associations, in which reciprocal exchanges are the stuff of co-operation for the common good. This is, of course, to be expected, since communitarians recommend that these should be the basic units of society, with the public authority acting only when they prove insufficient. As Etzioni puts it: ‘First, people have a moral responsibility to take care of themselves . . . the second line of responsibility lies with those closest to the person, including kin, friends, neighbours and other community members . . . As a rule any community ought to be expected to do the best it can to take care of its own.’44

On the face of it, this corresponds to the emergence of communities of choice, and justifies their exclusivity in terms of the voluntary nature of their collective provision. Since active participation in the meeting of social needs is a requirement of this version of social justice, such communities promote the good society. Like other communitarians, Etzioni focuses on the advantages of civil society organisations running schools and care facilities in each locality. However, this implies that both welfare provision and social inclusion fall within the province of moral obligation, binding individuals to particular groups through specific shared values, and moving them to contribute to the good of all.

But in the real world of communities of choice, such needs as education, health and social care are usually met by paid staff, and already in many cities public service professionals are single, short-term immigrants, recruited because indigenous staff with families cannot afford to live there on their pay. And communitarians are also remarkably coy about the coercion involved in welfare-to-work measures, which form the other part of recruitment to much low-paid social care work. In spite of the fact that his language of ‘rights and responsibilities’ was already being widely used in the USA and elsewhere to justify compulsion of claimants, Etzioni made no mention of this issue in The Spirit of Community. Instead, he resistricted himself to comments like, ‘all people, no matter how disadvantaged or handicapped, should take some responsibility for themselves’,45 and ‘honourable work contributes to the commonwealth and to the community’s ability to fulfil its tasks’.46

In later work, Etzioni has suggested that we all have a duty not to burden our fellow citizens unnecessarily, and that this moral duty should be enforced by the state – but that claimants should not be cut off from benefits altogether.47 Both the coercion of claimants to take employment, and the recruitment through these means of forced workers to meet social needs, seem to violate the principles of self-ownership and voluntary co-operation from which the benefits of community are supposed to stem.

The liberal response attacks the libertarian account of justice by pointing out that it is not only when rights are violated that freedom is restricted. Both internal and external endowments influence a person’s range of choices, as do economic exploitation and political domination, even when these stem from circumstances which libertarians would deem ‘rightful’. Hence Van Parijs concludes that ‘any restriction of the opportunity set is relevant to the assessment of freedom’.48 He goes on to argue that ‘real freedom is not only a matter of having the right to do what one might want to do, but also of having the means for doing it’,49 and that ‘real freedom-for-all . . . is all there is to social justice’.50

In order to fulfil the condition that each member of society should have the greatest possible opportunity to do what he or she might want to do, Van Parijs proposes an unconditional income for all (basic income), irrespective of their willingness to work, and at the highest sustainable level, subject to everyone’s formal freedom.51 Although most of this would be provided in cash, a ‘significant fraction’ would be supplied in kind, where it was ‘unanimously wanted and cheaper to deliver free of charge’.52 He justifies the substantial redistribution that all this would require by treating the ‘job assets’ of labour-market insiders as ‘employment rents’, gained at the expense of outsiders, thus standing on its head the notion of a moral obligation to take paid work.53

Although the basic income proposal by no means commands general support among liberals, it nonetheless has attracted considerable interest among political theorists. Van Parijs’s analysis is post-libertarian, in the sense that it does not postulate a society that is a system of social and economic cooperation, nor is his concept of social justice based on reciprocal obligations among members. However, the justification for redistribution does rest on the notion of a society that is bounded. For instance, in rebutting the libertarian version of justice, Van Parijs points out that, in a society consisting of an island owned by one person, and where it was too expensive or difficult for other residents to leave, the former could exploit and dominate all the latter.54 Lack of exit options define injustice in this case.

But one of the problems of social justice in a globalised environment is that some of the inhabitants of any real-world society would be able to leave it at relatively low cost, whereas others would not (either because they lacked the resources, or because of strong interdependencies with other residents). This is how the distinction between communities of choice and fate arises. Furthermore, the exit option open to owners of capital limits the scope for redistribution. Critics of the basic income proposal point out that, unless the level of income paid is sufficient for subsistence, the scheme loses many of the advantages for social justice claimed by Van Parijs. A small basic income would still leave those with low earning power open to exploitation, and would not give employers incentives to use their services efficiently. Without a strong state (by implication, one whose legitimacy rests on either a system of co-operation beneficial to all, or a moral consensus favouring the chosen principle for redistribution) the necessary contributions could not be collected – and the case for paying benefits to all without a requirement to work runs counter to popular moral intuitions.


In practical social policy terms the choice between conditional welfare-to-work approaches and the unconditional basic income principle is not as stark as the above analysis might suggest. The new politics of welfare in the USA and the UK is essentially concerned with an impasse that had developed during the Thatcher–Reagan years.55 Poor people were unwilling to give up their strategies of combining benefits claims with various kinds of informal economic activity, and taxpayers were unwilling to contribute more to assist the poor until they gave them up. Welfare-to-work schemes reassure the latter that their taxes are focused on deserving claimants, while trying to give the former better incentives to take formal work.

But in the longer term, there is still an unresolved problem of how to include (that is, share the costs of sustaining) citizens whose labour power is not required for the economic efficiency of the productive unit. This ‘surplus population’ has constituted a thorny problem in political thought since Malthus;56 if some citizens’ needs fall as costs upon the rest of the community, even during their ‘working’ years, how then can their continuous maintenance be justified? The traditional solution – that they should be the responsibility of their families – is scarcely viable when, as Malthus and others among his contemporaries57 recognised, such individuals tend to be members of larger-than-average family units, all of whom made claims upon the public purse (the ‘workless’ households of New Labour hagiography).58

The new politics of welfare addresses this problem by investing in the human capital of this sector of the population (increased spending on education and training) and through the systematic subsidization, via tax credits, of its employment. The fact that this policy has not been wholly successful (despite consistent falls in unemployment) is advertised in the recruitment of overseas labour for important economic tasks – not only in high-tech sectors, or even just in health, education and social care, but also for such mundane tasks as fruit and vegetable picking.59 The same trends can be seen all over the developed world. For example, in Germany, which spends DM45 billion on retraining unemployed people for labour market each year, there is increasing recruitment of central European guest workers for a similar range of tasks; and in the Czech and Polish republics, Ukrainians and Russians are imported to do manual work that citizens are now unwilling to take at the wages presently on offer. In other words, even in countries with extensive unemployment, neither compulsion nor retraining provides the most efficient means of supplying the labour power for performing society’s necessary tasks.

This in turn poses a question about the most efficient and equitable division of labour in social reproduction work.60 How much of it should be done by means of paid services and formal employment, and how much on an unpaid, informal basis, in families, kinship groups and neighbourhoods? Feminist theory (of citizenship and power relations)61 is understandably suspicious of any tendencies to relegate such tasks to the private sphere, where women have traditionally been exploited and dominated by men.62 But it asserts the importance of the politics of difference,63 the relevant difference here being a preference for the informal and moral economy of care, or at least the right to choose how to combine access to the public sphere with participation in society’s nurturing, civilising and socialising activities, outside formal employment.

Two problems are likely to present themselves sooner rather than later to governments of a New Labour stripe. The first is the problem of efficiency associated with social reproduction work, which forms an ever-growing sector of employment in advanced economies, but whose tasks (for instance, care of elderly and disabled people) are not susceptible to productivity improvements.64 Although the success of Third Way programmes has been closely linked with expanding (often part-time and female) employment,65 there must be limits to the extent to which this growth is consistent with the efficient use of labour power, especially when a large proportion of such work requires subsidisation through tax credits.

The second is linked to the latter point; eventually, the inexorable rise in the rates of credits paid (or tax-free earnings allowed) to individuals in low-paid work will come to equal the value of the (price-linked) benefits paid to those outside the labour market, despite the latter being rigorously tested for being in ‘genuine need’. Can it be equitable to pay no more to those who demonstrate unfitness for labour than to those quite capable of work, and actually earning? And is it right to penalise the many (housewives, volunteers, activists, students) who qualify for neither tax credits nor benefits? These questions point towards a move in the direction of something like a ‘participation income’,66 for which the relevant test is social engagement rather than employment – and the administrative complexities and transaction costs of this point further, eventually to an unconditional basic income for all citizens.67 This is not the direction in which New Labour policies have started, but it may be the one in which they will eventually, by a circuitous route, reluctantly stumble. Only this principle would allow low-earning workers the same choices about how to combine paid and unpaid work as are enjoyed by mainstream citizens.

This raises another question: to what extent does the concept of community provide an alternative approach to the problems of deprived districts, and a more plausible model of social inclusion? Here again, the new politics of welfare is ambiguous and ambivalent. Its emphasis on ‘social and economic regeneration’ (in the UK through such institutions as the Social Exclusion Unit, the Single Regeneration Budget and the New Deal for Communities) has hitherto been mainly top down and regulatory, focusing on the problems of areas such as crime, truancy, drugs, homelessness, and improving the housing stock. It has also (through programmes like the Employment Zones) up to now concentrated on creating formal employment, as much as possible in the private sector.68 In order to promote self-help and the mobilisation of residents, motivated to act collectively to pursue a better quality of life in their districts, a different approach would be required. Instead of enforcing training or employment, a basic income, even at a modest level, would more readily facilitate community and cultural activism in projects which were not economically self-sustaining. And local social services, instead of being tied into the policing of standards for child protection, or rationing resources according to categories of risk, would be required to support and empower residents for participation in such projects. There is some evidence for the viability of this approach,69 but it would be a major shift from current orthodoxies. It would also allow communitarian and basic income principles to be combined in novel ways.

These dilemmas are particular instances of the central political problem of the new welfare regimes. So far, they have gained electoral support by programmes for ‘tough love’70 – harsh, conditional, enforcement-orientated policies, in the name of taxpayers’ requirements, but based on paternalistic interpretations of the long-term best interests of the poor. However, what David Blunkett (in an unconscious reference to Lenin) calls the ‘working state’ is not sustainable in this form. The bifurcation into communities of choice and communities of fate that results from the logic of exclusive strategic action will require more and more toughness, and less and less love (as the growth in the prison population already attests). Recruiting ‘club servants’71 from abroad to do the dirty work for the members of communities of choice smells strongly of racism, especially when they are granted temporary work permits, and denied all social rights. Panopticon surveillance and enforcement as members of a pauperised underclass is the alternative destination for our most vulnerable citizens, if the new politics of welfare cannot discover more creative and inclusive solutions to these issues.


1 J. Rawls, A Theory of Justice (Oxford, Oxford University Press, 1971).
2 A. MacIntyre, After Virtue: A Study in Moral Theory (London, Duckworth, 1981); M. Sandel, Liberalism and the Limits of Justice (Cambridge, Cambridge University Press, 1982); M. Walzer, Spheres of Justice: A Defence of Pluralism and Equality (Oxford, Blackwell, 1983); C. Taylor, Sources of Self (Cambridge, Cambridge University Press, 1989).
3 C. Taylor, ‘Cross Purposes: The Liberal-Communitarian Debate’, in N. Rosenblum (ed.), Liberalism and the Modern Life (Cambridge, MA, Harvard University Press, 1989); W. Kymlicka and W. Norman, ‘Return of the Citizen: A Survey of Recent Work on Citizenship Theory’, Ethics, 104:2 (1994), pp. 352–81.
4 R. Nozick, Anarchy, State and Utopia (Oxford, Blackwell, 1974); M. Friedman and R. Friedman, Free to Choose (Harmondsworth: Penguin, 1980); F. von Hayek, The Constitution of Liberty (Chicago, University of Chicago Press, 1960).
5 W. Willoughby, Social Justice (New York, Knopf, 1900); L.T. Hobhouse, Elements of Social Justice (London, Allen and Unwin, 1922); A. Vincent and R. Plant, Philosophy, Politics and Citizenship: The Life and Thought of the British Idealists (Oxford, Blackwell, 1984).
6 G. Esping-Andersen, Welfare States in Transition: National Adaptations in Global Economies (London, Sage, 1996).
7 C. Tiebout, ‘A Pure Theory of Local Expenditures’, Journal of Political Economy, 64 (1956), pp. 416–24.
8 See for instance D.E. Wildasin, Urban Public Finance (Chicago, Harcourt Press, 1986); J.M. Buchanan and C.J. Goetz, ‘Efficiency Limits of Fiscal Mobility: An Assessment of the Tiebout Model’, Journal of Public Economics, 1 (1972), pp. 25–58; G.M. Myers, ‘Optimality, Free Mobility and the Regional Authority in a Federation’, Journal of Public Economics, 43 (1990), pp. 107–21.
9 W.E. Oates, Fiscal Federalism (New York, Harcourt Brace Jovanovich, 1972); W.E. Oates, ‘Searching for Leviathan: An Empirical Study’, American Economic Review, 75 (1985), pp. 748–57; J.K. Brueckner, ‘Property-Value Maximisation and Efficiency’, Joural of Urban Economics, 14 (1983), pp. 1–15.
10 J.M. Buchanan, ‘An Economic Theory of Clubs’, Economica, 32 (1965), pp. 1–14.
11 J. Cullis and P. Jones, Public Finance and Public Choice: Analytical Perspectives (London, McGraw Hill, 1994), pp. 297–300.
12 J. Locke, Two Treatises of Government (first published 1698), ed. P Laslett (Cambridge, Cambridge University Press, 1967), especially First Treatise, ss. 1–12.
13 F. Foldvary, Public Goods and Private Communities: The Market Provision of Social Services (Aldershot, Edward Elgar, 1994).
14 H. Spruyt, The Nation State and Its Competitors (Princeton, NJ, Princeton University Press, 1995).
15 C.E. Marske, Communities of Fate: Readings in the Social Organization of Risk (Lanham, VA, University Press of America, 1991).
16 L.J. Hume, Bentham and Bureaucracy (Cambridge, Cambridge University Press, 1981).
17 Home Office , Fairer, Faster and Firmer – a Modern Approach to Immigration and Asylum, Cm 4018 (London, Stationery Office, 1998).
18 B. Roche, ‘Migration in a Global Economy’, speech to the Institute for Public Policy Research Conference, 8 September 2000.
19 E. Erikson and J. Weigärd, ‘The End of Citizenship? New Roles Challenging the Political Order’, in C. McKinnon and I. Hampsher-Monk (eds), The Demands of Citizenship (London, Continuum, 2000), pp. 274–90.
20 P. 6, ‘Can the Obligations in Welfare-to-Work Schemes be Morally Justified?’ (Glasgow, Department of Government, University of Strathclyde, 2000).
21 Department of Social Security (DSS), A New Contract for Welfare, Cm.3805 (London, Stationery Office, 1998), p. 31.
22 DSS, A New Contract for Welfare, p. 16.
23 DSS, A New Contract for Welfare, p. 16.
24 J. Salt, ‘Labour-Market Recruitment to the UK’, paper given at a Home Office Conference, ‘Bridging the Information Gaps: Research in Asylum and Immigration in the UK’, National Liberal Club, London, 21 March 2001.
25 R.H. Cox, ‘From Safety Nets to Trampolines: Labour-Market Activation in the Netherlands and Denmark’, Governance: An International Journal of Politics and Administration, 11:4 (1998), pp. 397–414.
26 R.H. Cox, The Consequences of Welfare Reform: How Conceptions of Social Rights are Changing (Norman, OK, Department of Political Science, University of Oklahoma, 1999); A. Hemerijck, ‘Prospects for Effective Social Citizenship in an Age of Structural Inactivity’, in C. Crouch, K. Eder and D. Tambini (eds), Citizenship, Markets and the State (Oxford, Oxford University Press, 2000), pp. 134–70.
27 L.M. Mead, Beyond Entitlement: The Social Obligations of Citizenship (New York, Free Press, 1986); R. Lister, ‘From Equality to Social Inclusion: New Labour and the Welfare State’, Critical Social Policy, 18:55 (1998), pp. 217–29.
28 A. Giddens, The Third Way: The Renewal of Social Democracy (Cambridge, Polity Press, 1998), pp. 102–3.
29 Giddens, The Third Way, p. 104.
30 Giddens, The Third Way, p. 101.
31 T. Blair, Preface, A New Contract for Welfare (CSS), Cm 3805 (London, Stationery Office, 1998), pp. iii–iv.
32 G. Brown, ‘Why Labour is Still Loyal to the Poor’, Guardian, 2 August 1997.
33 F. Hirsch, The Social Limits to Growth (London, Routledge and Kegan Paul, 1977).
34 B. Jordan, A Theory of Poverty and Social Exclusion (Cambridge, Polity Press, 1996), chs 4 and 5; B. Jordan, The New Politics of Welfare: Social Justice in a Global Context (London, Sage, 1998), ch. 4.
35 Jordan , A Theory of Poverty and Social Exclusion, ch. 2; J.M. Buchanan, ‘An Economic Theory of Clubs’, pp. 1–14; D. Mueller, Public Choice II (Cambridge, Cambridge University Press, 1989), pp. 153–4; D.A. Starrett, Foundations of Public Economics (Cambridge, Cambridge University Press, 1988), pp. 48–52.
36 Jordan, A Theory of Poverty and Social Exclusion, ch. 2; Buchanan, ‘An Economic Theory of Clubs’.
37 HM Treasury, Pre-Budget Report (London, Stationery Office, 2000), s. 4.33.
38 Buchanan, ‘The Economic Theory of Clubs’; Mueller, Public Choice II, pp. 152–4.
39 E. Evason and R. Woods, ‘Poverty, Deregulation of Labour Markets and Benefit Fraud’, Social Policy and Administration, 29:1 (1995), pp. 40–54; B. Jordan, S. James, H. Kay and M. Redley, Trapped in Poverty? Labour-Market Decisions in Low-Income Households (London, Routledge, 1992); K. Rowlingson, C. Whyley, T. Newburn and R. Berthoud, Social Security Fraud (London, HMSO, 1997).
40 J. Scott, Weapons of the Weak: Everyday Forms of Peasant Resistance (New Haven, CT, Yale University Press, 1985).
41 B. Jordan and A. Travers, ‘The Informal Economy – a Case Study in Unrestrained Competition’, Social Policy and Administration, 32:3 (1998), pp. 292–306.
42 B. Campbell, Goliath: Britain’s Dangerous Places (London, Methuen, 1993).
43 P. Van Parijs, Real Freedom for All: What (If Anything) Can Justify Capitalism? (Oxford, Clarendon Press, 1995), p. 14.
44 A. Etzioni, The Spirit of Community: Rights, Responsibilities and the Communiarian Agenda (London, Fontana, 1995), pp. 144–6.
45 Etzioni, The Spirit of Community, p. 160.
46 Etzioni, The Spirit of Community, p. 264.
47 A. Etzioni, The Third Way to a Good Society (London, Demos, 2000), p. 31; see also A. Etzioni, The New Golden Rule: Community and Morality in a Democratic Society (London, Profile Books, 1997) and A. Etzioni, The Limits of Privacy (New York, Basic Books, 1999).
48 Van Parijs, Real Freedom for All, p. 23.
49 Van Parijs, Real Freedom for All, p. 4.
50 Van Parijs, Real Freedom for All, p. 5.
51 Van Parijs, Real Freedom for All, pp. 30–1.
52 Van Parijs, Real Freedom for All, p. 31.
53 Van Parijs, Real Freedom for All, chs 4 and 5, especially ss. 4.4–4.7.
54 Van Parijs, Real Freedom for All, p. 14.
55 B. Jordan, The New Politics of Welfare; B. Jordan with C. Jordan, Social Work and the Third Way: Tough Love as Social Policy (London, Sage, 2000).
56 T. Malthus, An Essay in the Principle of Population as It Affects the Improvement of Society (London, J. Johnson, 1798).
57 S.G. Checkland and E.O.A. Checkland (eds), The Poor Law Report of 1834 (Harmondsworth, Penguin, 1974); E.P. Thompson, The Making of the English Working Class (Harmondsworth, Penguin, 1965).
58 DSS, A New Contract for Welfare, pp. 9–10.
59 Roche, ‘Migration in a Global Economy’, pp. 2–3.
60 B. Jordan, P. Agulnik, D. Burbidge and S. Duffin, Stumbling Towards Basic Income (London, Citizens Income Study Centre, 2000), ch. 3; T. Iversen and A. Wren, ‘Equality, Employment and Budgetary Restraint: The Trilemma of the Service Economy’, World Politics, 50 (1998), pp. 507–46.
61 R. Lister, Citizenship: Feminist Perspectives (Basingstoke, Macmillan, 1997); R. Voet, Feminism and Citizenship (London, Sage, 1998).
62 J. Squires, ‘Feminist Visions of Political Citizenship’, in C. McKinnon and I. Hampsher-Monk (eds), The Demands of Citizenship (London, Continuum, 2000), pp. 35–50.
63 I.M. Young, Justice and the Politics of Difference (Princeton, NJ, Princeton University Press, 1990); A. Phillips, Democracy and Difference (Cambridge, Polity Press, 1993).
64 Jordan, Agulnik, Burbidge and Duffin, Stumbling Towards Basic Income, ch. 3.
65 G. Esping-Andersen, ‘The Jobs-Equality Trade-Off ’, paper presented to the summer school on Welfare States in Transition, European University Institute, Florence, 8 July 1999; Iversen and Wren, ‘Equality, Employment and Budgetary Restraint’.
66 A.B. Atkinson, Public Economics in Action: The Basic Income/Flat Tax Proposal (Oxford, Oxford University Press, 1995).
67 Jordan, Agulnik, Burbidge and Duffin, Stumbling Towards Basic Income.
68 Jordan with Jordan, Social Work and the Third Way.
69 M. Leonard, ‘Informal Economic Activity: Strategies of Households and Communities’, paper presented at 4th ESA Conference, ‘Will Europe Work?’, Amsterdam, 18–21 August 1999.
70 Jordan with Jordan, Social Work and the Third Way.
71 M. Breuer, T. Faist and B. Jordan, ‘Collective Action, Migration and Welfare States’, International Sociology, 10:4 (1995), pp. 369–86.
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