This is our truth, tell us yours
Ian Duncan Smith and David Cameron apparently want to float the idea that individuals should be encouraged to save for the periods when they might be unable to work, because of ill-health, or unemployment. This is apparently, about encouraging individuals to take responsibility for their own welfare.
This is apparently a novel idea.
If you believe that, you are a fool.
The history of working class organizations from the seventeenth century is in part a history of working class men and women trying to find ways to manage their own welfare and to take responsibility for their future in the face of a society which is capricious, unpredictable and beyond their control. The rise of mutual organizations like Friendly Societies was a reaction to the near universal experience of the inadequacy of personal saving, alone, as a provision against risk. Friendly Societies built on bonds of affinity, either via trade or geography, enabled their members to share the risks of everyday life. Many English towns have a pub called The Oddfellows; it’s just one legacy of the flourishing world of provident and friendly societies in English history.
The problem of course is that the risks involved are potentially huge. Many friendly societies simply vanished out of history as the money ran out, or the world changed around them. So friendly societies and provident associations evolved rules of conditionality and eligibility, just as insurance firms do today. Conditionality determines what the insured party must do in order to make a claim; eligibility determines what life events or experiences are eligible for compensation. One of the next things friendly societies and provident associations did was to evolve complex actuarial tables and schedules of rates that let this manage the cost to their funds of each eligible life event. This was prudent and wise behaviour on the part of organizations run by, in the most part, working men and women.
In these ways our grandparents tried to take responsibility for life events, and they discovered the limitations of these mechanisms, and their weaknesses.
Simply put, the histories of friendly and provident societies is the history of failure. Either they failed financially, because claims outweighed resources, or they failed those they chose to serve by imposing conditions and limits upon eligibility that meant too many of their members fell through the gaps. In order to survive, provident associations had to merge and distribute risk more widely, or to specialize in easily predictable risks (life insurance, for instance – usually by way of the ubiquitous burial policy). Unlimited health insurance was undeliverable by any association, and unlimited employment insurance similarly, because these bodies could not either predict or spread the risk widely enough.
Incidentally, Gordon Brown’s recent book on Scottish devolution covers this issue of the sharing and distribution of risk well, even if some of the prose is leaden and directed too closely at a Scottish audience.
When our great grandparents chose a National Insurance scheme to provide rudimentary welfare benefits, or our grandparents chose a National Health Service, they weren’t abdicating responsibility; they were responding to their experience of the sharing of risk, and the inadequacies of voluntary provision. By accident, the experience of the 1930s welfare state hammered home these lessons. What we now call social security benefits were locally administered by Boards of Guardians, who were responsible for both raising enough money to pay the welfare benefits, and determining the conditions applying to claimants. Anyone who doubts that a national welfare state was a logical reaction to the experience of local solutions needs to read “‘Poverty, mass unemployment and welfare’, in Chris Williams and Andy Croll (eds), The Gwent County History: Volume 5, The Twentieth Century (Cardiff, University of Wales Press, 2013), pp. 207-227.” In a curious parallel with what has happened in Greece over the last three months, the local governors of welfare in Bedwellty, the Board of Guardians, were ejected from office for borrowing too much to meet the needs of their community, and replaced by outsiders required to force down the benefits paid, and to raise the income from local ratepayers to repay the debts.
The creation of a National Health Service and a welfare state was not an abdication of responsibility, but the product of experience, of the failure of all the other attempts at solutions. Labour’s problem is that it has forgotten so much of its history it cannot explain this, it cannot tell the stories of how its previous leaders came to choose state provision over the voluntary and individual solutions David Cameron seems to prefer. The payment of benefits by the state, on a national basis, looks like the worst possible solution until you look at all the alternatives, none of which are new, and all of which have failed in the past.
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