Chapter 16 by gjjur4356


									                 Chapter 16

          The Decline of the
    Canadian Welfare State:
Policies and Implications of

           By: Gary Teeple
     Thursday, March 22, 2007

                  Presented By:
Charlene, Lily, Josie, & Melissa
   Hardly any aspect of life in the modern industrial nation
    is not affected by the welfare state.
   Since the 1970s, in every country that claims to have
    extensive social reforms, governments have made
    conscious efforts to undermine, retrench, or eliminate
   Neo-liberalism has created a new morality.
     Neo-liberalism is a set of policies, being adopted by
       governments around the world, that seeks to change
       every aspect of state intervention in society with the
       goal of privatizing all forms of property that embrace
       collective or co-operative elements.
What is the Welfare State?
The Welfare State
   The welfare state refers to a capitalist society in which
    the state has intervened in the form of social politics,
    programs, standards, and regulations in order to mitigate
    class conflict and to provide for, answer, or
    accommodate certain social needs for which the
    capitalist mode of production in itself has no solution or
When State Intervention
Becomes ‘The Welfare State’
   When class conflict, reduced to the contest between
    workers and the representatives of capital, presents a
    chronic threat to the stability of the system and has to be
    institutionalized and when the majority of social needs
    pertaining to the reproduction of the working classes are
    addressed formally, rather than informally, the welfare
    state has arrived.
Why and How the Welfare State
Comes About
   One cannot identify all the specific reasons and how they
    contribute to each coming of the welfare state.
   The shared premise of national reform programs was the
    development and rise to pre-eminence of industrial
    capitalism within the nation-state.
   The fundamental outcome of pre-capitalist modes of
    production was twofold:
     The creation of a capitalist labour market and working
      class, or the „freeing‟ of labour from its means of
      production and existing forms of bondage; and
     The breakdown of social institutions, labour
      processes, and communities that embodied to a
      considerable degree an integrated social, political,
      and economic life.
   The significance of this transformation was that it gave
    rise to objective needs that had formerly been integral to
    a way of life.
   It created new needs and new problems, which arose
    from and were associated with the capitalist labour
    market, the „freedom‟ of the worker, and new labour
   In itself, capitalism had no answers for these needs and
    problems; the answers were to come as imposed
   Examples: trade unions, new political parties, socialist
   As capital accumulation expanded, sufficient revenues
    allowed the creation of a social wage.
     Social wage – state-sponsored partial socialization of
       income from wages and salaries by means of
       premiums, taxes, and deferred incomes. The funds
       so created are used for redistribution from one class
       to another through transfers such as pensions,
       income supplements, or social insurance schemes.
   By the late 19th century, new technology increased
    productivity, and expanded markets had begun to
    increase the segmentation, stratification, and social
    mobility of the labour force.
   The conditions that underlie the modern welfare state fell
    into place in the aftermath of World War 2.
    The Modern Welfare State

   The welfare state became a
    political and economic necessity.
   The modern welfare state also
    known as the Keynesian welfare
    state. Derived in part from John
    Maynard Keynes.
     Intended to offset the business
       cycles of capitalism. This
       would be done by deficit
       spending in recessionary
       periods to promote public
       works, offset corporate
       expenses, and provide
       unemployment insurance.
   The welfare state represents 2 forms of redistribution.
     The general redistribution of deductions from wages
      and salaries to pay for schemes that assist the
      working class to reproduce itself.
     A certain redistribution of revenues upward in the
      social strata since the well-to-do make proportionally
      greater use of the more costly programs but contribute
      proportionally less income in their support because of
      the structure of tax regimes.
Social Citizenship and
   Social citizenship: notion that all members of society
    have an innate claim to certain social services and
    programs such as health care, education, senior‟s
    pensions, unemployment insurance and so on
   Concept of equality  equal status in the social realm.
   The instable labour market and restrictive nature of wage
    labour results in the demand for universal social security.
   A way to combat the commodification of labour power is
    to organize trade unions or protest state-sponsored
    social and economic reform.
   These efforts are referred to as a decommodification of
    labour power.
   Decommodification and principles of capitalism are
    therefore situated in opposition to each other.
   Existence of social net and union rights vs. competition,
    powerlessness, fear and poverty for the working class.
   Social citizenship represents the highest development of
    the principle of welfarism/social reformism.
   There are limits to social citizenship however  gains
    have always been temporary.
   Social and union rights often:
     do not apply to all categories universally; groups that
      are marginal to the labour force.
     boundaries of application are continuously subject to a
      fluctuating balance of class power.
     social citizenship is a response to demands of
      marginalized classes  compromise offered by the
      state and capitalist class.
     does not result in economic equality and does not
      challenge existing power relations.
The Welfare State in Canada
   Social reform in Canada prior to the 1940‟s did not
    contain development of continuity.
   1870‟s ushered in an era in which educational reform
    was substantiated.
   The Ontario Act (1871) introduced compulsory education
     state-sponsored primary-school education was a
    response to the Industrial Revolution and the need for
    the state to develop the working class.
   Starting in the 1880‟s, the efforts to provide workmen‟s
    compensation was introduced.
   Limit company liability .
   Prior to 1930‟s “public works‟” and municipal relief
    payments were employed to combat high unemployment
   Unemployment insurance was introduced in the 1940s.
   With the advent of the Great Depression, the state
    attempted to dissolve unions, arrest Communist party
    members and established “relief camps” (workfare for
    single, homeless and unemployed young men).
Present Structure
Modes of Financing
 This mode of delivery attempts to maintain national
  standards across the country in distributing federal
 Comprised of unconditional payments given to less well
  off provinces on an unconditional basis (amount
  determined by a formula).
 Examples: Established Programs Financing .

 Worked to transfer federal funds to provinces to increase
  growth of population and GNP.
 Canada Assistance Plan (CAP): cost sharing system in
  which provinces meeting criteria would be reimbursed for
  half of the cost of social programs.
 Premium payments (deductions from income).
The Nature of the Recipient
 3 categories:

 universal programs  apply to all individuals in a given
  unit (public education, Old Age pension).
 social insurance programs  provide benefits for making
  contributions or premium payments (worker‟s
  compensation, unemployment insurance, Canada
  Pension Plan).
 social assistance programs  based on needs or
  income assessment, provide income supplements to
  households whose income do not reach a certain level.
   Categories are usually based upon income security
    systems (does not take in account education or
   Categories do not include any of the reform initiatives
    that deal with the labour market or point of production
    (minimum wages, employment standards, etc.).
   Categories have no underlying rationale  essentially
    descriptive, no explanation as to who gets what/why
    programs are implemented.
The Welfare State and the
Capitalist Mode of Production
   Historically, one of the earliest arenas of intervention
    was at the point of production, the most immediate
    sphere of class conflict between workers and the
    representatives of capital.
   There are 2 main elements to this arena:
     Instituionalized in industrial relations acts or labour
      codes, which set out the terms for collective
     Those standards and regulations that are imposed by
      government on capital because of the unmitigated
      power it holds in the workplace.
The Decline of the Welfare State
   Economic reconstruction carried out with advanced
    Fordism in national economies, a consistent demand for
    labour, rising real wages, and expanding trade unions.
   In 1970, advanced Fordism was now being replaced by
    computer-aided processes whose productive capabilities
    were far superior.
   Changes in the labour market followed, not so much for
    the workers, who remained restricted by national
    boundaries, but for capital, which now began to search
    for ways to escape the high wages.
   For Canada, as for all industrial countries, the coming of
    the global economy has meant relatively less corporate
    tax and declining wages and so a declining social wage.
North American Free Trade
   Pressures arising from the Canada-United States Free
    Trade Agreement (FTA) and North American Free trade
    Agreement (NAFTA) are involved with global demands
    and policy reflections that are cutting back Canadian
    social programs.
   These treaties, which are intended to create single
    continental economy, present two areas of threat to
    Canadian welfare state.
The Decline of the Welfare State
in Canada
   By the late 1970s, the attack on the welfare state in the
    United Kingdom, the United States, and Canada had
    become visible.
   By 1980, it had become government policy in the U.S
    and in Canada.
   Provincial wage restraint laws were also promulgated.
   By the early 1980s gradual improvements in employment
    standards came to a halt and many began to cut back.
   Of the welfare state, the principal component for
    preparing the working class for the labour market is the
    educational system.
   The federal funding in 1996 opened the possibilities for a
    wider range of cutbacks at a quicker pace. (The
    introduction of the Canada Health and Social Transfer
    (CHST) combined the federal Canada Assistance Plan
    (CAP) and the established Programs Financing (EPF)
    into one fund).
   Globalization, brought pressure to transform the entire
    sphere of public property into corporate property.
   With the coming of the CHST in 1996, federal funding for
    health and post secondary education and the shared-
    cost social assistance programs would be combined in
    one block fund.
   Tax concessions advanced to RRSP contributors each
    year nearly equals the total amount spent on welfare in
   There is a different treatment of welfare receipts vs.
    RRSP contributors.
   Unemployment system first promulgated in the 1940s
    and expanded in the 1960s has suffered from continuous
    tightening of the rules for eligibility and declining benefits
    relative to the cost of living.
   Employment insurance (EI), as it is now called, is moving
    more or less rapidly toward a system of minimal income
    protection against unemployment.
   The Canada Pension Plan has always been structured
    mainly as a pay-as-you-go system, relying on the
    premiums of present-day workers to finance the
    pensions of the retired.
   In 1997, a law was passed to put the accumulating CPP
    fund more decisively into the hands of the corporate
   In 1998, an investment board was set up to take over
    this investment of a large and growing fund.
   The pensionable earnings of the working class had been
    put at the disposal of the corporate sector, whose only
    morality is that of the marketplace.
What is Welfare?
   Social assistance (welfare) is an income program in
   It provides financial assistance to individuals who do not
    have the necessary means to provide for themselves.
   Welfare was paid under the terms of the Canada
    Assistance Plan (CAP), but was recently replaced with
    Canada Health and Social Transfer in 1996.
   There are twelve different welfare systems in Canada -
    one designated to each province and territory.
   Despite the existence of twelve different national welfare
    systems, there are key commonalities between them all.
   There are complex rules that regulate all aspects of the
    system, which include:
     Eligibility for assistance.

     Rates of assistance.

     Amounts recipients are allowed to keep from outside
     The way applicants and recipients may question
      decisions regarding their cases.
 Based on general administrative rules that vary
   throughout the country.
 Applicants must be of certain age, usually 18-65.

 Full-time students with post-secondary education may
   qualify in some provinces only if they meet strict
   conditions. In other provinces, they cannot apply without
   leaving their studies.
 Single parents must obtain all court-ordered
   maintenance support that they are entitled to.
   Individuals with disability require medical certification of
    their conditions.
   Strikers are not eligible in most provinces.
   Immigrants must try to obtain financial assistance from
    their sponsors.
   Once applicants meet these administrative conditions
    they must take a “needs test.”
   This test compares the budgetary needs and any
    dependents with assets and income of the household.
   Welfare is granted to applicants whose non-exempted
    financial resources are less than the cost of basic needs,
    such as food, shelter, household and personal needs
    (and sometimes special needs).
Official Alternatives
   As a result of the cutbacks to the public-sector provisions
    of social welfare, there has been effective support of
    private-sector provision in the form of charitable
    donations or volunteer services and through
The Rise of Charities
   There are hundreds of charities in Canada with many
    more added each year, including educational facilities,
    hospitals and social services previously funded by the
   The size and role of organizations such as the United
    Way has immensely grown since the late 1970‟s.
   There are several important trends that account for this
    vast growth, which entail,
        The rapid increase in social needs like long-term
         structural unemployment, among other forms of
         social deterioration.
        Growing limits on further expansion of social wage
        The planned reduction of services of the welfare
   As these trends increase, the area of social reproduction
    involving aspects of health, education and social
    services, will be moved into the private market sector.
   The promotion of such institutions and agencies is a
    method of “privatizing” public facilities, in an attempt to
    shift the responsibility for the human cost of an inhuman
    system from the state to the individual, and to shift the
    method of restoration from the “social wage” to private
   Charitable donations act as a central function in society
    as it will eventually replace state provisions which
    evidently illustrates society as a marketplace does not
    provide basic needs of life, such as employment,
    housing, food, health care, etc., for all of its members.
   With the decline of the welfare state and the growth of
    charities, the marginalized will become increasingly more
    dependent on the good will of others.
   In the form of charity, social redistribution becomes a
    voluntary matter and a tax deductible, which means that
    the more that is given to charities, the less that goes to
    the state for redistribution.
   With charitable organizations becoming fundamental
    forms of social redistribution, the existing “social rights”
    and universal entitlements to state-funded social
    services will be lessened.
Systematic Privatization
   Policies of systemic privatization are becoming more
    common aside from charitable organizations.
   One process of privatization is the policy of incremental
    degradation of benefits and services.
   Public services are increasingly restricted by rising
    eligibility criteria, cancellation, disentitlement, contracting
    out, redefinition, transferred responsibility or declining
   Income benefits are taxed back or allowed to fall behind
    the rate of inflation.
   The objective of such policies is that, over time, pressure
    to meet minimum standards will be met by the private
   One example is that universities have experienced
    restrictions on grant increases, causing a rise in student
    fees, larger classes, declining facilities and the need to
    pursue private enterprises.
   The government also make use of incentive policies.
   The use of tax deductions is a widely employed form of
    inducement to move to the private provisions of benefits,
    as well as the privatization of pension plans and medical
   These incentives involve a form of subsidy to those who
    can afford private provision at the expense of those who
    are and will be completely reliant on state provision.
   The Poor and Transfer Payments Excerpt.
   In general, the three levels of government are moving
    away from state provision of social services and
    programs, especially those characterized as social
   Canada is increasingly illustrating a re-enactment of the
    concept of the “deserving” v.s. the “undeserving” poor
    and “targeting the needy.”
   The more these principles are practiced the more
    universal and social rights will be undermined, as well as
    the shift in responsibility of the individual rather than the
    state or corporation.
   Reasons for changes in policy and the encouragement
    of charities and privatization of social services and
    benefits, are as follows:
     To downsize the role of the government by reducing
       state responsibilities and the number of employees.
     To “open up” state sectors to private accumulation.

     To divert the revenues spent on health, education and
     To attempt to “discipline” working classes by
       undermining union achievements and eroding their
       social security with rising permanent unemployment.
   There are material causes, of course, behind these
    changes as well.
     The decline in state revenue.
     The shift in tax burden.
     The greater demand for capital.
   The global context of these changes is the economic
    necessity to “harmonize” national social security reforms,
    which constitute barriers of varying degrees to the needs
    of the international market.
   An apparent visible consequence for our society not
    providing for those without work is the high rate of
    unemployment (10% of the population – much higher in
    the Maritimes and Quebec).
   Due to free trade, new technology and global production
    the unemployment rate will not decrease.
   Currently, over two million Canadians receive social
    assistance payments (8% of the population), not
    including the homeless and working poor.
   Social assistance is not granted to everyone and does
    not even provide the basic cost of living, and for that
    reason food banks emerged.
   The rise in food banks were developed to supplement
    welfare and provide to those who have no other means
    of income.
   In 1991 there were two million individuals that received
    food, while 600,000 were regular monthly recipients –
    the number increases every year.
   Another issue is the high rate of homelessness that has
    enormously risen in the past decade.
   With attempts to make matters worse, the federal
    government continues to cut back affordable housing.
   Unemployment, welfare retrenchment, abolished social
    programs and privatized social services, just to name a
    few, have contributed to social disintegration.
   The development of privatization and the shifting of
    social services and income security programs to
    charitable organizations undermine the principle that the
    state has social obligations to its citizens, and avoids the
    existence and fulfillment of state social responsibilities.
   This is the primary achievement in the long attempt to
    improve capitalism.
   These developments represent the systematic abolition
    of the forms of collective property represented by the
    welfare state and its limited achievement of social
    citizenship, replacing these with the principles and
    practice of private property.
   Aside from global capitalism, there are alternative modes
    of production and new forms of resistance to capitalist
    expansion have begun to develop around the world.
   Resistance and co-operative alternatives will necessarily
    grow as economic inequality deepens and the ability of
    capitalism to provide for the material, let alone the
    human, needs of the populace declines and the
    experience and recognition of this inability expands.

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