The real road to serfdom

A critical facet to the rise of the social welfare state was the gradual rise of the labour movement as the organisational expression of the working class, and the parlaying of its social power to concrete political outcomes through the extraction of a social contract between capital and labour.

The social welfare state was intellectually founded upon an expansion of our conception of liberty, and of course by Keynesian economic theory.

It came to be understood that liberty equates to more than liberty from the arbitrary powers of the state. That a person could be said to be truly free if one had the opportunity to live an autonomous and fulfilling life, that the individual had "the right to a modicum of economic welfare and security; to the right to share in the social heritage and to live the life of a civilised being according to the standards prevailing in the society."

Without such one could not be autonomous and without autonomy one could not be free.

So it was that ideas of social justice came to increasing intellectual prominence.

Keynesian theory rejected the notion that a self regulating free market economy has the natural tendency toward full employment equilibrium. The Great Depression taught us that the market economy is prone to slumps, and may stay indefinitely in a condition characterised by mass unemployment. Because the market economy cannot fully employ resources state intervention and robust wages here too are also required.

Full employment was justified also on grounds of individual autonomy and social justice.

Hayek and a panoply of neoliberals, lavishly funded by corporate interests, understood that an assault on social welfare required an attack on these justificatory ideas and so it was that we saw The Road to Serfdom and all that.

The neoliberals represented that part of the corporate sector that never reconciled with the social contract between capital and labour.

As the New Zealand chapter of the Industrial Workers of the World pointed out long ago "any understanding between workers and employers is only an armistice, to be broken, when convenient, by either side."

It became both convenient and necessary for capital to break the social contract underpinning the welfare state in the mid to late 1970s and they justified this by trotting out the neoliberal ideas that were promoted by those of their number always opposed to that contract.

What might we say of the second expansion of state power?