Social Policy Orientations: Neoliberalism vs Keynesianism - Essay Example

Name Class Unit Introduction For about 35 years after the Second World War, Keynesianism was the main paradigm used in gaining understanding to the economic activity and shaping the social policies. During this period, social protection and regulation was expanded (Palley, 2005). The mid 1970s saw a replacement of the Keynesian principles with the neoliberalism. This led to a reversal in the social and economic policies made under the Keynesianism. Through the Keynesian revolution the need of a large public sector in a given economy was supported (Mulvale, 2001). Under the neoliberalism, the market relations govern the new economic order. At the moment, social policies have changed profoundly under the rise of neoliberalism (Hemerijck, 2012). This essay analyses the statement that social policy orientation have changed profoundly since the mid-1970s due to the rise of neoliberalism. This will be critically discussed based on the key features of neoliberalism vis-à-vis Keynesianism. Firstly, the paper will analyse social policy under Keynesianism. Secondly, the paper analyses the points for and against the point of view. This is by critically discussing the key features of neoliberalism vis-à-vis Keynesianism. Social policy under Keynesianism According to Palley (2005) Keynes is considered as the founder of the welfare state. Based on the Keynesian economic, the welfare state was formulated. Keynes had rejected that a perfect competition in economy based on law of supply and demand would lead to full employment and there should be no government intervention (Morel, Palier and Palme, 2012). According to Keynesian, expenditure on the social welfare was an investment in human capital. This would enhance the country wealth through increased productivity. In case monetary expansion failed to save the country from recession, Keynes proposed use of public spending. Liberalism is guided through the Keynesian economics while the current conservative view on the social welfare is based on the free market economics (Mulvale, 2001). Before the adoption of the neoliberalism, there was low coordination on the social and economic interventions. There was discouragement on the public spending and little effort was done to coordinate the labour market and manpower (Visser, 2000). It can be proved that labour market interventions did not improve during the Keynesian period. The social welfare objectives were based on public policies created through the government. In the 1970s, the economic growth faltered and stagflation persisted. This led to trade-off between the economic growth and social policies. Mulvale (2001) asserts that the period marked the beginning of reduced government intervention. According to Palley (2005), the New Deal which was meant to institutionalise social Keynesian polices had failed despite being meant to compliment them. Analysis At the moment, neoliberalism has reduced the state regulation of the economic and social life as it was during Keynesianism. The Keynesian economics failed in offering remedies to the social and economic problems evidenced in the mid-1970s economic crisis (Palley, 2005). The 1970s was characterised by increased labour activism and struggles by the minority such as gays, lesbians and racial ethnic groups (Visser, 2000). Neoliberalism made a departure from the classic liberalism. The value of hard work, entrepreneurship and self-reliance was advocated and most of the aspects of welfare state were reduced. The welfare benefits provided under the welfare state were reduced (Hemerijck, 2012). Therefore, social policies orientation became changed. According to Mishra (2014), social welfare policies are best viewed from the lens of political economy. Under the Keynesianism, the government social programs were deemed best to cater for the disadvantaged (Coburn, 2000). This changed with the rise of neoliberalism in the mid-1970s. The change from the Keynesianism to neoliberalism led to the burden of the welfare being left to the private sector. The private sector was expected to assume more responsibilities which were a major shift from the government social legislation which was aimed at providing benefits to the citizens (Kus, 2006). Therefore, the move marked a major transition in the social welfare policies. Since the adoption of the neoliberalism, social welfare has changed and became a large business. There are a lot of human service corporations which provides social welfare in the market unlike during Keynesianism (Crouch, 2009). This is seen in the nursing care, substance abuse services, corrections and childcare. The social services privitisation has led to the government reducing its commitment to the social programs. The capitalist entrepreneurs under the neoliberalism have been establishing social welfare services as for profit in the private sector (Salamon, 1993). To sum up social policies developed to cater for social problems has developed to include the private sector which is a major change. Based on neoliberalism, social policy has been playing an important role in making the society stable. This is through modifying the market forces and reducing the social and economic inequalities which are generated by neoliberalism (Kus, 2006). To achieve this, the state had been forced to use two sets of activities. The first activity is to ensure that the state provides most of the social services. This includes the personal social services and benefits. The second activity is regulating the private activities with an aim of improving the lives of its citizens (Morel, Palier and Palme, 2012). This has made it possible for the society to live in a state where there is controlled balance. Despite the positive changes witnessed, neoliberalism has been accused of degrading the employment relations and the worsening circumstances of low wage workers. Some of the countries has experienced rising levels of unemployment and reduced job security as a result of neoliberalism (Mishra, 2014). Despite this, some of the countries such as France have been able to come up with market centred approach that has reduced the negative impacts of neoliberalism on social wellbeing (Kus, 2006). The current social policy orientation is based on minimal state intervention on the life of individuals (Alcock and Craig, 2009). The market determines the functioning of the everyday life unlike in Keynesianism. This is a proof that neoliberalism has the ability to change the social policies for better. The rise of neoliberalism has meant that social policies must face strong opposition. This is due to individualism and market oriented attacks in a market economy (Mishra, 2014). This was not evidenced under the Keynesianism due to the collective solidarity that was fostered by the welfare state (Palley, 2005). The support for the social policies has become an uphill task in some cases which can be related to the New Deal imperfect success (Alcock and Craig, 2009). The social policies have become a class struggle which is between the weak organised labour and the strong businesses. Conclusion To sum up, social policy orientations have changed profoundly since the mid-1970s due to the rise of neoliberalism. According to Keynesianism, investment in the social welfare was seen as an investment in the human capital which would enhance the country wealth. Neoliberalism changed the social policy orientation and based them on the free market economy. The faltered economic growth and stagflation led to welfare state being challenged. Economic growth had to be chosen at the expense of some of social policies. With the rise of neoliberalism, some of social welfare was transferred from the state to the private sector. The social policy developed at the moment modifies the market forces and reduce the social and economic inequalities which are generated by neoliberalism. Current social policy is based on the state having minimal intervention in private life unlike the Keynesianism social policies. Lastly, the change in social policies orientation leads to strong opposition due to individualism and market oriented attacks. References Alcock, P. and Craig, G. eds., 2009. International Social Policy: Welfare Regimes in the Developed World 2nd Edition. Palgrave Macmillan. Coburn, D., 2000. Income inequality, social cohesion and the health status of populations: the role of neo-liberalism. Social Science & Medicine, 51(1), pp.135-146. Crouch, C., 2009. Privatised Keynesianism: An unacknowledged policy regime. The British Journal of Politics & International Relations, 11(3), pp.382-399. Hemerijck, A., 2012. Two or three waves of welfare state transformation?. Towards a social investment welfare state, pp.33-60. Kus, B., 2006. Neoliberalism, institutional change and the welfare state: The case of Britain and France. International Journal of Comparative Sociology, 47(6), pp.488-525. Mishra, R., 2014. Welfare State Capitalst Society. Routledge. Morel, N., Palier, B. and Palme, J., 2012. Beyond the welfare state as we knew it?. Towards a social investment welfare state, pp.1-30. Mulvale, J.P., 2001. Reimagining social welfare: Beyond the Keynesian welfare state. Garamond Press. Palley, T.I., 2005. From Keynesianism to neoliberalism: Shifting paradigms in economics. Neoliberalism: A critical reader, pp.20-29. Salamon, L.M., 1993. The marketization of welfare: Changing nonprofit and for-profit roles in the American welfare state. The Social Service Review, pp.16-39. Visser, J., 2000. From Keynesianism to the Third Way: Labour relations and social policy in postwar Western Europe. Economic and industrial democracy, 21(4), pp.421-456. Read More