In a truly surprising vision, Alexis de Tocqueville foresaw the consequences of what goes today by the term of “welfare” state in his Democracy in America: “I have always felt that this regular, mild and seductive kind of vassalage might be associated more easily than one is apt to assume with the exteriors of freedom and so becomes established in the name of the sovereignty of the people.”
In proportion to the degree to which the welfare state extends the scope of its services and administration, it loses in legitimate sovereignty and authority; but because it evolves—in that same proportion—towards a public assistance and public ownership state, it compensates for what it loses. In this way the Janus head of the welfare state makes its appearance. Its development is ominous; the wholesomeness of society itself as well as of the social structure is endangered. But it does not seem ominous to those who enjoy its fruits: for as long as the “fiscal” state continues to bestow welfare and security more and more widely, and as long as the beneficiaries have faith in its promises to go on doing so, they are perfectly content. Who are the “they” that have to pay for it? Superficially, “they” can be identified by means of steeply progressive taxes on income, wealth, and inheritance; it is possible, at first, to bleed the “haves” for the benefit of the “have nuts.” But there are limits to this process. As early as 1950, the British Chancellor of the Exchequer, Sir Stafford Cripps, felt obliged to warn his own Labour Party, which was then in power, that whatever wealth it was possible to skim off from the well-to-do to use for social purposes had already beets exhausted, so that henceforth anything that Labour wished to allocate for welfare and social security would have to be paid by the beneficiaries themselves. In Sweden the same thing has repeatedly been said by the governing party’s Minister of Finance and the President of the Central Bank. It has been expressed, yet again, in the warning given by the German Federal Chancellor and the President of the Federal Bank in reference to the “summer sales” during the election year 1965.
Let us not overlook either, though these are less obvious, the consequences of the redistribution occurring in the Western welfare state. Whether by taxation or by inflation, our wealth and incomes cannot be looted without creating the risk that the sources of saving and the means of capital development run dry. Governmental extensions of credit cannot substitute private building of capital, for here it is a question of “Real-Kapitalbildung:” something impossible to achieve other than through restraint in consumption. Credit facilities by way of the central bank have, indeed, some limited purpose insofar as unused capacity of productive capital and labor exists, otherwise such credit merely constitutes a focal point for inflation and leads to deficits in the balance of payments. When, therefore, the saving capacity within the private sector is weakened by over-consumption and by redistribution, the state itself becomes obliged to take measures for reducing consumption so as to make it possible for sufficient real capital to be formed.
The involvement of governments in general welfare and security policies, in particular, in their being faced today with the alternative of either inflation or unemployment, accounts for the hectic eagerness and efforts of governments to intervene. Professor Samuelson (in Full Employment, Guidepost and Economic Stability, American Enterprise Institute, Washington, DC, 1967) observes very aptly: “Every time the economy showed signs of flagging other programs were introduced. . . . Now almost in a hypochondriacal way, the minute the economy begins to flag the least little bit, the stops are pulled out in favor of expansion” (97). And in view of the time lag between action and success, there lie the implicit difficulties of those hectic efforts. To quote Professor Samuelson once more: “If what our right hand does today had its effect upon the economy tomorrow, we would have limited need of accurate forecasting. If what our right hand does today has actions nine months from today and nothing along the way can change that action, then it’s quite obvious that we must have some notion of what things are going to be like nine months from now” (100).
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Once again we are brought back to the essential question of whether capital formation by saving is to be a function of the state or be left to private initiatives. One might opt for the state, and as regards the formation of social capital—what is called the social overhead—it would be right to do so; but anything beyond that will tend to give the state excessive responsibility and power. Incidentally, the experience of the communist economy, especially in the agricultural sector, supplies us with examples of the monstrous miscarriages that are bound to ensue from a centralized, state-planned economy with its accompanying state monopoly of capital formation.
What is in question is not the transfer of responsibilities actually unable to be borne by individuals or social groups but the transfer of responsibilities which individuals or associations would in fact be able to bear, though they find it more convenient to transfer them to the state. Consequently the state may in fact accept these responsibilities, but it is not itself an initiator of production. It has to obtain from somewhere the means for meeting the costs of those responsibilities it has taken over. For reasons easy to understand, the legislative bodies are very willing to distribute welfare, but naturally they shy away when it comes to covering the costs, Experience to date shows that one way of escaping this is through inflation. In the opinion of some authoritative writers, inflation is built into the mechanism of a pluralistic policy and into the compromises which associations arrange, whether in the form of “low fire inflation” (Röpke) or as an accepted necessity for economic growth (Shelter). The institutional attraction of inbuilt inflation is also unmistakably evident in the fact that conflicts between associations are easier to resolve when inflationary trends exist than when prices and exchange rates are stable.
Responsibility for dependents used to bear too heavily on individuals, who have now been relieved by transferring much of it to their associations which follow suit by largely transferring it to the state, which turns it hack again by way of taxes or credit expansion. These processes of transfer back and forth are only partly deliberate and planned; the rest is happening out of necessity. In either case the incidence of the responsibility is largely unrecognized, if not anonymous, for there are temporary bearers of it who later transfer it to others or return it back whence it came. The responsibility may partially devolve upon anyone.
Thus, responsibility for the welfare of every possible kind of social group is largely split up and scattered. It is true that welfare taxation appears as one of the visible bearers of the responsibility, as do all the agents of monetary and credit policy, but they are no more than interim agents for the purpose. The anonymity of responsibility is a consequence not only of shifts in power relationships and of fortuitous transfers back and forth, but also results from the dynamics of the economic process itself. Often a particular group may not even know what consequences have ensued from its own handling of a matter, because these consequences may not be immediate, and they may not affect the group itself. They may have repercussions in any direction. Who is in a position to affirm with certainty just where protective duties, price increases, wage increases and reduction of working hours will ultimately hit? The pluralistic groups do not have to think about the general welfare; they are not founded for that purpose, they look after their own interests over periods of time that are relatively short because from their own points of view, prices, wages, interest rates and conditions of sale are their short-run problems. The range between the short and the long-term is perhaps the most questionable aspect of modern laissez-faire pluralism because by far the most extensive components of society are the strata that calculate and think in the short-term. The reasons for this are easy to understand, for it is inevitable that the associations to which they belong should be preoccupied with short-term policies.
Here the danger increases in proportion to the belief that, partly through applied science, progress must inevitably continue to open up wider horizons and scope for better and more secure living. Knowledge or intuition of the tragic side of human and social life is all too easily lost when the carpe diem sentiment of individuals, of groups or of society itself becomes the predominant ethos. “The man in the street does not notice the devil even when the devil is holding him by the throat” (Goethe).
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The shifting pattern of the pluralistic and of their repercussions on the welfare state provide so many points for attack on the general welfare, ethically submarginal thrusts and practices, that warnings of responsibility remain unheard even by those who would gladly hear them. This explains how it is that leaders of groups, even some whose personal integrity is beyond any doubt, are apt to display almost incredible moral laxity when they are representing organized interests. National socialism and communism are not alone in having supplied shocking examples of this prostitution of private by institutional morality. It seems, indeed, that in a direct proportion, as personal values become absorbed and dominated by the collectivities, there is a general tendency for private ethics to decay and be replaced by ideological empire building. And when this happens, who is to be blamed? Under such conditions it is only to be expected that the private ethos, threatened and overwrought, will be tempted to identify itself with the collective ethos. That is understandable; and so, likewise, is the seizing of opportunities to creep in underneath the collective ethos.
It is well known that all totalitarian systems, whatever particular form they take, suffer from a proliferation of illegal actions and private greed even though it has to be clandestine. The basic falsity of collectivism in its relationship to people and things collides head-on with the reality of human nature; and if people are prevented from rebelling openly they will do so illegally by way of black markets, racketeering, information, etc. The immorality inherent in forced collectivism is the acid that disintegrates the personal conscience.
When it happens that a special kind of collective ethos takes shape alongside and competing with the private ethos, the question arises what form and features it actually has. In considering this, we are led to perceive, it is precisely in the pluralistic phase of society that the term “social” has come into use as the designation of something which has now acquired the status of a dominant ethos. Now that the “social” evaluation outweighs any other, nobody can avoid being “social.” The employer obviously cannot; neither can the state, public opinion or the private household; still less can any kind of association do so. But what does “social” actually mean? In the nineteenth century there was no problem: The “social question” was taken to mean simply the “labor question.” Beyond this there was no occasion to ask what it meant until the beginning of recourse to the state as guarantor of social demands, which gave rise to the ideas of a “social state.” A lively controversy then ensued which has instigated some very valuable critical analyses. The popular saying that “social” means to get something for nothing describes it more graphically than any academic statement.
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The concept denoted by “social” was examined by Hayek (“Was ist und was heisst Sozial?” in Masse und Demokratie, edited by Albert Humid, 1957, Zurich). Hayek appositely draws a distinction in scope between “the social” and “the moral.” Ethical principles, he says, are not the result of discoveries but are the outcome from a process of growth and selection whereby experience begets discernment. Moral propositions “have acquired their authority through having proved more successful than other propositions, having stood the test better within the groups of people to whom they applied.” His definition of “social” is a very precise one: The requirement that we should behave in a social manner involves, he says, “consciously taking account of very remote consequences for our actions and basing our decisions on knowledge of the particular consequences likely to ensue from them” (75).
During the last few decades, however, the word “social” has come to be used ever more frequently in the place of “moral,” or even in the place simply of “good.” In compound expressions it nowadays retains little connection with the special characteristics of social forces; in particular, the contrast previously drawn between evolved structures and ad-hoc organizations has completely disappeared. Hayek did not deal with the question of why the ambiguous word “society” has come to be preferred to the concrete designations “people,” “nation,” or “citizens” although obviously it relates to the last mentioned. “The important point, as I see it, is that all these uses of the word ‘social’ imply that actions are performed with common and known aims but what those aims are is never stated” (79). “Thus, the obligation to behave socially loses its force because it undermines the rules of simple morality which are its own foundation” (78).
The primacy of the social ideal as a dominant ethos is anti-moral; its prevalence erodes the feeling of individual responsibility. “True social service does not consist of exercising authority or leadership, not even of sharing in a common effort directed towards a common goal. It consists of contributing to the general good which is greater than ourselves and which is able continuously to bring forth new benefits within a free environment.” (84). “Dominance by the social ethos is something to be fought against, because it weakens those forces that in actual fact promote the improvement of society. In this sense, much of what nowadays purports to be socially positive appears to me as anti-social in the deeper and truer sense of the word” (84).
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The supremacy of the social ethos raises question of how far it satisfies the needs of a dynamic economy; for the essence of what is “social” is not something that can drift freely about in economic space: It remains subject to economic preconditions insofar as it gives rise to costs. Or should this be put the other way around, by regarding what is “economic” as a dependent variable of what is “social?” As long as the social problem was identified with the labor question and treated accordingly—as it happened in the nineteenth century and continued into the beginnings of the twentieth—it enjoyed no higher status than that of a special problem encountered by governments and parties. The limits to the possible solution of the problem were clearly staked out by phases of liberalism, especially those of liberal capitalism. Since then, “social” has changed from designating a special case to designating the general case and the position has become such that many authors define the problem as being one of socio-political concern.
Professor H. Achinger thinks he has solved the hitherto baffling puzzle of what the word “social” in popular use is intended to mean—the solution being found quite simply in a resigned acknowledgment that “social is what social bureaucracies say it means,” (Sozialer Sicherheit, 58 ff., Stuttgart, 1953). We have reached a point where the social apparatus is itself the embodiment of social advancement and determines its direction (Achinger, Sozialer Fortschritt, no. 10, October 1959). He refers to what Alva Myrdal has called the “new era” in which every one of us will subject himself to the system and depend on it for his security from the cradle to the grave; social policy having risen in status from being the servant of society to being responsible for it; from being no longer merely an agency for rectifying undesirable conditions of life but the power that determines them. Here Mrs. Myrdal’s assumption seems to be that if a social security system is given precedence and authority over the economic process it can be conducive to harmony and agreement. But the epitome of “the social” as now displayed to us is in no position to offer itself as an economically rational, independent system. To justify calling it a system, its elements and modes would need to he assembled in accordance with some controlling principle in order to form a logically coherent whole, but without surrendering their separate identities.
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Everyone must surely agree that the “social idea” as now presented lacks any sort of claim to be regarded as a system. It is in fact no more than a haphazard growth of miscellaneous institutions and measures, influenced by historical accidents and resulting in a pattern which is as full of internal contradictions as of economic and social irrationalities. Its officialdom suffers from institutional rigidities and interdepartmental jealousies engendered by vested interests in functions and powers, and its implementation supplies us with a classic example of Parkinson’s Law promoting bureaucratic parthenogenesis. None of this amounts to a denial that present-day social policies and institutions also have positive features, such features certainly exist, hut their effects are far below the optimum in nation to their cost. Moreover, they provoke to a certain extent the seeds of diseconomies and injustice. Whatever Gunnar and Alva Myrdal may say, this istrue even in Sweden.
Why in fact has the ethos described by the adjective “social” become the dominant one? As a concept it was unknown both in classical antiquity and in the Middle Ages, as—by the way—was the concept corresponding to the modern term “society.” In both those eras the centers’ around which thought revolved were the polis and the res publica, what we call “social order” being taken for granted as something sacred which existed in obedience to natural law, something hierarchical, founded upon reverence (pietas) and righteousness (dike). The idea that society is open-ended and pliable did not occur either in classical or medieval times. There were, indeed, reforms attempted such as Solon’s seisachtcia in Athens and the land reform by the Gracchi in Rome; another example is the exodus of the Roman plebs (secessio in montem sacrum), but all such movements either postulated or endeavored to discern the existence of an objective order supported by a framework of rules. The urge towards dike, towards jus et justitia, was felt permanently; the urge to create a “new order,” to bring about a “revolution,” was not felt at all.
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In the late nineteenth century and well into the twentieth, the “social” meant a different sort of picture. Its origins may be recognized in the fragmentation of the Christian tradition and in that of liberalism as a world view and equally so of collectivism. Today, “the social” signifies a compromise between liberal capitalism and revisionist collectivism; in an age which has lost what Eric Voegelin called the “gnosis of salvation” it represents a pragmatic equation for the loss of hope in the transcendent. “The social” is in fact the designation of what remains as the terminal moraine of the nineteenth century: liberalism and socialism. Nowadays it has become accepted as the current coin even though no definite standard exists for its purchasing power.
“The social” is a category sui generis which belongs under the heading of what Toennies described as “society,” using that word in its precise sense. It is not personal but functional. The political environment in which it arises is that of egalitarian democracy, pragmatically inclined. Pragmatic democracy and laissez-faire pluralistic society correspond with and qualify site another.
We recall Goethe’s saying: “Edel sei der Mensch, hilfreich und gut”—“O that man be noble, helpful and good.” Can this be shortened to “O that man be social?” Linguistically, such a phrase rings hollow and is pointless. No child would describe its father as being “social.” Nor would that word be used by workers referring to a patriarchal or good employer; they might consider him a good or bad master, but not as being a “social” one. There is obviously no logical connection between being “noble, helpful and good,” and being “social.” It may be granted that the quality denoted by “social” has some sort of moral root and there may be a transition; but in present circumstances what matters is that to be “social” does not mean the same thing, save by accident, as being “noble, helpful and good.” Goethe’s saying applies at the personal level: “social” applies in contexts that are functional and impersonal. From the standpoint implicit in the use of the word “social,” human beings are not primarily persons, but rather individuals characterized by the fact that he or she happens to belong to some particular collective category—the fact that he or she is one of the workers, one of the aged, one of the sick, one of the accidentally injured, one of the unemployed, one of the expectant mothers, etc. Here too runs the dividing line between being “social” or being “charitable.”
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On one side of that linebenevolent helpfulness is extended to persons each of whom is recognized as a particular, irreplaceable entity. On the other side, certain sums of money are set aside by firms or by the state through its welfare agencies for “social purposes,” against which individuals have claims arising from the circumstance that they belong to certain designated groups claims which they are entitled to make repeatedly, as of right, even if the grants in question are of a free and private nature (such as Christmas bonuses, tea or coffee breaks), The depersonalizing of relations that occurs in an associatively organized society is nowhere more clearly highlighted than in the devaluation of private acts of kindness from man to man. In this context acts of charity no longer fall into the same category as arrangements for promoting assistance and welfare.
If something helpful is performed with even a minimal degree of regularity it is thereby re-categorized as “social,” in the sense that its beneficiaries are, regarded as having acquired a right or claim to it. This tendency is reinforced by the interest of the association concerned which feels that private acts of welfare threaten its corporate integrity or even the loyalty of its members. The effect is that interpersonal relations, and to a great extent charity, goodness, trust, even normal respect between persons, mutual obligation and helpfulness by man to man, yield precedence and significance to the promotion of what is “social” as an entitlement.
Here lies the profoundest reason for that undermining of the foundations on which all human society rests, that erosion of its common values, so often deplored. In the long run this will shatter also the validity and meaning of “the social,” which ultimately also is dependent on values and virtues fostered and cultivated by directly interpersonal relationships (Max Scheler, Formalism in Ethics and Material Value Ethics, Halle, 1916).