The temptation of honest mutuality

DAVID BYRNE examines the recommodification of the welfare state, and says mutuals must decide which side they are for – corporate capital or socialism.

“He who sups with the devil had best use a long spoon.” (Traditional)

We are at a crisis point in the trajectory of welfare capitalism. It is worth dwelling for a moment on that word ‘crisis’. Its origins are in classical Greek medicine and it describes a ‘turning point’, a stage that the patient cannot remain in. The patient must get better or die. Things cannot go on as they are. In the language of the new managerialism, it means “the status quo is not an option”.

In the case of welfare capitalism, it is important to realise that we are not dealing with a crisis which has a specific aetiology, a single cause. Rather we are dealing with something which has at least two causes and where the interaction of those causes with the general socio-political environment sets up the present situation. Understanding the complex way in which those causes interact with that environment is vital.

First, let me deal with the causes of the ‘temptation’, mentioned in the title of this piece, which those of us with a strong belief in mutual self-management are feeling. That certainly includes the present writer who, despite membership of the Green Party, much prefers the red and black of anarcho-syndicalism.

The institutional forms of welfare capitalism across western Europe, but particularly in the UK, are bureaucratic (a word which should never be used in a simple pejorative sense because bureaucracy can be a good thing), authoritarian, dominated by the interests of high status professional providers rather than of service users or lower status workers, and relatively inflexible. There are real problems with state welfare provision and many of those problems might be resolved by a much more mutual and cooperative dialogue between all providers (not just high status professionals exemplified by medical practitioners), and users of the services.

This could work along the lines of the participatory budgeting processes developed by the Brazilian Workers’ Party in Rio Grande del Sol, combined with worker-managed syndicates similar to those which deliver social care in Bologna. Indeed we have a historic model for exactly this kind of thing in the Peckham Health Centre, in south London, which was developed between the wars by members of the Socialist Medical Association. This was supposed to serve as a model for the post-war NHS but professional medical interests made sure that this did not happen. Instead we got an NHS substantially less democratic than the pre-war municipal health services, one very much dominated by medical interests, but at the same time universal, free and egalitarian in principle, if not always in practice.

The issue of universality is an important one. It implies equality of treatment for everybody. It is important to remember that Beveridge was originally appointed (in an effort to shut him up and get him out from under people’s feet) to review a highly diverse inter-war system of social insurance for income maintenance (pensions, unemployment benefits and sick pay) which was in part provided by trade unions and mutual friendly societies, and was a chaotic, unequal and expensive mess. The national bureaucracy established on his recommendations, to deliver a universal system of pensions, sick pay and unemployment benefit, is egalitarian in treatment, outstandingly efficient in terms of the relative costs of administration against money paid out, and takes full advantage of returns to scale. It is an appropriate national monopoly. If we think of universality as something which operates on a national scale then this is the way to do it, although there certainly should be some user engagement with the way it is implemented both nationally and locally.

However, health, education, social care, and the ‘urban services’ seem somewhat different. Here centralised insistence on common standards using the ‘command and control’ style of management is bitterly resented both by providers and consumers. Moreover, the standard of services, as understood by consumers, seems to bear at best a limited relationship to the auditing ranks announced by central authorities. At the same time the old professional domination of health and education is being replaced by a managerial domination which takes no more account of the needs and desires of those who actually use the services. In ‘urban services’ things have gone a lot further with the interests of development capital dominating urban planning, and with housing associations, originally established as part of the third sector, although not in general on mutual principles, becoming more and more like for-profit enterprises.

The idea of worker managed providers engaged in free and collaborative discussion with users of services – something like Ursula Le Guin’s anarcho-syndicalist, Antarres, in The Dispossessed – does represent an attractive alternative to present arrangements. The problem is that if we want to get there, in the words of that old Irish post- or even pre-ironic statement, we can’t start from here.

Global situation

The situation ‘here’ is one of continued global expansion of capitalist search for profits – of a continuing imperialism in which the ideological dominance of markets and business seems ever greater. To understand this situation we have to be very clear about what profit is. Profit is not an operating surplus in a mutual enterprise. It is the proportion of output expropriated in an exploitative fashion from the labour of workers by the owners of the means of production. This would seem an obvious thing to say in a piece for an ILP publication – I hope that it is. As Hobhouse, the source of Lenin’s ideas, well understood early in the last century, capital is forced continually to expand its reach into territories where the profit system does not apply.

There is a very good argument that the largest of such territories is the decommodified welfare state service system of western Europe – comparable in scale and potential revenues with China, currently being opened up by a Stalinist elite to the profit motive. In the UK alone more than five million people work in that system, many of them very highly skilled and productive professionals and technicians. That is more people than work in manufacturing industry. The overwhelming bulk of those people work in a way which does not generate profits. Often the systems in which they work were originally pre-capitalist and never generated profits. In other cases the systems were deliberately decommodified – the profit deliberately stripped out (although never that component taken as interest on money loaned) – such as happened with UK council housing guided by that ILP stalwart, John Wheatley. This is an enormous field for potential profits, if only private capital could become the employer of that labour.

It is very important to recognise that private capital does not need a re-established or new system in which individual people or households buy their welfare goods in a competitive market. In many ways, that is the last thing it wants because the costs of collection are enormous and the inequalities consequent on such fragmented markets are so large that they threaten public order. What private capital wants is for the state to collect the revenues and then pay capitalist corporations to provide the services. Corporate capital likes nothing better than to get its gob firmly clamped onto the public tit – ideally onto the only tit, as a monopoly. This is the project of ‘Public Private Partnerships’ as advanced by corporate capital and its hired mouthpieces such as the Institute for Public Policy Research (look carefully at where the money comes from to fund that outfit and remember that he who pays the piper calls the tune).

Capitalists – there are such persons – actively engage with ‘governance’, not least by funding new Labour and schmoozing with politicians, higher civil servants, local government chief officers, and compliant academics. Look at the career of Patricia Hewitt – ex lefty, then director of research for Arthur Anderson (not something to have on your CV post-Enron), and now Secretary of State for Trade and Industry. It’s a particularly blatant example of the way in which the new superclass cruises around the economic and political strato-sphere.

There are important international institutions which act to facilitate the re-commodification of welfare. The most important of these is the World Trade Organisation (WTO), working through GATS – the General Agreement on Trade in Services. Under GATS (there is immense detail but this simple proposition is what matters), once any service ceases to be a state monopoly it must be opened up to international competition among providers. Services are either provided only by states, whether local or national, or they must be opened up to corporate capital. They cannot be reserved for ‘not for profit’ provision. So far as the WTO and equivalent global dross such as the International Monetary Fund (IMF) are concerned, this is a good thing in utilitarian terms because the abstract theory of competitive markets says that competition and efficient private sector management will always improve provision and reduce costs.

However, the incommensurability of micro-economic theory with the real world is well illustrated by the case of Private Finance Initiatives (PFI) in the UK health service. PFI hospitals are noted for providing fewer beds than their public service predecessors, for poor standards of design and construction, and for generally being rubbish. The love of new Labour for business is so great that conventional rules for public private contracts, well understood by Christopher Wren and Samuel Pepys in the 17th century (which amount, essentially, to: “Watch those buggers like a hawk or they will steal you blind”), have been abandoned in PFIs. This bodes ill for what will happen if there’s a more general extension of PPPs.

Social forces

So profits reduce services – a very obvious point. We must also remember that in any service provided other than on a universal basis, there is bound to be an upwards differentiation. In other words affluent elites will purchase above the basic level to their own advantage. The continued running sores of private health care and private education are bad enough, on top of a generally high level of public universal provision, but this kind of differentiation is even more likely with corporate capitalist providers.

Where does this leave mutual provision? There are basically two sets of social forces engaged with the crisis in welfare capitalism. One is represented by corporate capitalism and its lackeys, and it is very strong indeed. The other is an amalgam of unions, anti-capitalist political organisations and service user groups. It is very disparate, has important divisions in its ranks, and is relatively weak – although it can win victories against the odds, as when tenants voted against taking Birmingham council housing out of local authority control. Perhaps the most important division is between those unions, especially UNISON, which are engaged merely in defending their members’ interests (which they are quite right to do) by defending the present system, but without acknowledging its faults, and others who recognise that we need to change present institutions and systems. Supporters of mutuality have to decide which side they line up with – corporate capital or (for want of a better word) the socialists?

I would stipulate an absolute principle – do nothing which serves the interests of corporate capital. Quite a lot of third sector style organisations – the New Economics Foundation comes to mind – seem to function really as ‘useful idiots’ for corporate capital, buying into capital’s criticisms of welfare without seeing where the recommodification of welfare will take us. That is not the way forward. We have a lot to sort out, and those who believe in mutual solutions have an important part to play in the anti-capitalist alliance. I would sincerely hope that the ILP, true to its traditions, knows which side to take.

David Byrne is a member of Tyneside Socialist Forum and a lecturer in the Department of Sociology and Social Policy at the University of Durham.


  1. […] David Byrne, from the University of Durham, who looked at the privatisation of the welfare state, and the potential of mutuals to deliver public services, asking, is this an opportunity or threat for democratic socialism. […]

  2. KonstantinMiller
    6 July 2009

    Hello. I think the article is really interesting. I am even interested in reading more. How soon will you update your blog?

  3. Summer 2002 - ILP
    24 February 2009

    […] movement, and questions what the ‘new mutualism’ can offer to radical politics in the future. The temptation of honest mutuality David Byrne examines the recommodification of the welfare state, and says mutuals must decide which […]

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