Destruction of the welfare state removes the framework of economic stabilizer – causes uncontrolled spiral of risks before we can gradually transition away from capitalism

Beveridge, Keynes and their contemporaries recognized the uncertainty, instability and anti-social tendencies that are generated by capitalist processes. And they designed the welfare state as an apparatus that would manage these risks, stabilize these booms and busts, and establish a framework of collective economic security in which individual risk-taking might proceed. But that welfare state is constantly being put under pressure by the capitalist processes and market forces that it seeks to constrain. Capitalist economies and welfare states have, to repeat a point made earlier, a “contradictory unity”. They require each other; they sustain each other; but they also undermine each other. Profitable capitalist action requires a supportive social environment and an enabling material infrastructure. At a minimum it needs socialized, educated, healthy workers—and the functioning families, schools and healthcare systems that produce them—as well as a dependable supply of resources, a transportation infrastructure, a population of consumers, and a politically stable, business-friendly environment. But left to its own devices, capitalism tends to erode and destroy these vital social and natural environments (Hobsbawm 1996). Its tendency is to commodify, consume, and expand in a competitive drive to accumulate—and these processes produce disastrous side-effects, as witness the current threats affecting the climate, the environment, natural resources, family life, and the physical and economic health of populations. Market capitalism is, in other words, an inherently “self-destructive social formation” which is protected from these dangers by the operation of anti-market and market-moderating processes. The paradoxical—one might say dialectical—consequence is that “capitalism depends vitally on the presence, essential but never guaranteed, of effective opposition to it” (Streeck 2012: 25). The result is that a resurgence of the power of capital and of free market forces is an ever-present danger to the social system within which capitalism exists. The neo-liberal project of dismantling collective institutions and regulatory frameworks in the name of untrammeled competition and market freedom may, as its critics insist, be pursuing an impossible ideal (Polanyi 1944; Peck 2010), but it carries the real dangers of economic and social collapse nevertheless, as the global crisis of 2008 has shown. To avoid self-destruction capitalism needs a set of countervailing forces. And “the welfare state” is the collective name we give to these forces. The social regulation of markets, the social insuring of workers, and the public provision of social services and protections—in short, the welfare state in one or other of its variants—is our established means of restraining the rampant opportunism and untrammeled pursuit of private gain that are the essence of free-market capitalism. Critics of this arrangement often describe the welfare state as a hindrance to economic vitality. From a sociological point of view, this is the exact opposite of the case: the welfare state is an essential means of sustaining that vitality. As my Durkheimian analysis is designed to indicate, the welfare state is an essential basis for human flourishing in capitalist society and an essential basis for capitalist flourishing in human society.