The Political Economy of the Welfare State footnote1 by Ian Gough is the third book to appear in a series of educational texts, ‘Critical Texts in Social Work and the Welfare State’, edited by Professor Peter Leonard. The series is located by Peter Leonard within the ‘crisis’ and its aim is: ‘to address itself to explanations of the crisis which relate to the immediate material reality experienced by State workers in the welfare field and to link this to the economic, political, ideological and historical context within which the crisis occurs’.footnote2 In his general introduction, Peter Leonard places an emphasis on the relationship of theory and practice, but within this scheme Ian Gough’s book is necessarily primarily theoretical. It is intended both as an account of the political economy of welfare and as a contribution to the Marxist debate concerning the nature of the capitalist state, a debate that has been engaged at a high level of theoretical sophistication for some years—in fact since the by now celebrated contributions by Ralph Miliband and the late Nicos Poulantzas which appeared originally in the New Left Review.footnote3 Both Ian Gough’s book and the series of which it is part—a series intended for students and for practitioners rather than for Marxist theoreticians—raise particular issues with which I as a teacher of social work students am concerned. They also raise more general issues to do with the relationship of the economic, the political and the ideological; and to do with the general response of the left to the advent of the Thatcher government.

Ian Gough’s book sets out to explain the ‘welfare state’ by means of Marxist political economy. This entails outlining both what Marxist economics is and the nature of the ‘welfare state’, since Gough’s task is to bring Marxist theory to bear on the elaborate edifice of social policy, fiscal arrangements, state intervention and ideology which combine to constitute what we know as the ‘welfare state’. The phrase ‘welfare state’ is itself a highly ideological, journalistic coinage, originally invented, it is believed, to be contrasted with the ‘warfare state’ of Nazi Germany.footnote4 As Gough acknowledges:footnote5 ‘The very term ‘the welfare state’ reveals the ideological nature of most writing about it. Put another way, the object of our study is defined in terms of a theoretical tradition which we reject. Nevertheless, the phrase has entered our language and for the moment we must continue to use it’.

Gough organizes his book round what he perceives as the two major contradictions within state welfare provision in capitalist societies (the book explicitly does not deal with socialist or with underdeveloped countries). The first of these contradictions is the simultaneous tendency for welfare provision to be both progressive and coercive; it does provide needed services, yet these may come in authoritarian forms and contain coercive elements; secondly: ‘the very scale of state expenditure on the social services has become a fetter on the process of capital accumulation and economic growth itself’. State expenditure on welfare supports capitalism yet simultaneously hinders it.

The opening chapters of the book constitute a careful exposition of the contradictory nature of the welfare state. Gough contrasts his own, Marxist, perspective, with the Fabian and functionalist explanations and accounts that have dominated the field of social policy and administration and points out how they tend either to stress the organismic and functionalist aspects of state provision (which responds to the ‘needs’ of capitalism) or to stress the subjective factors of personal choice, and pluralism. He then moves back in order to give a clear and accessible account of the Marxist approach to the capitalist economy, explaining what it says and what it claims to explain. In doing this he incorporates a necessarily condensed summary of the historical development of welfare provision in relation to the development of capitalism (the Factory Acts, the growth of public education and so on), and he makes passing reference to the role of ideology. He also sketches out briefly the historical divorce between bourgeois economics and bourgeois sociology and explains how Marxism overcomes this separation by rejoining the economic and the social that have been unnaturally divided in these disciplines. In other words, as Gough himself acknowledges, the scope of the book is ‘inevitably extremely broad’.

Having explained the Marxist method and approach, Gough then procedes to an account of the state in capitalist society and of the way in which political freedom creates the conditions in which exploitation can take place (itself a highly contradictory state of affairs). Having located welfare provision within this modern capitalist state, Gough is able to provide his own definition of the welfare state: ‘for the purposes of this work we shall characterize the welfare state as the use of state power to modify the reproduction of labour power and to maintain the non-working population in capitalist societies’.footnote6 For Gough, therefore, the welfare state is engaged in two actually separate or at least separable activities (although these are given a spurious unity since the distribution of the wage on which they immediately depend takes place within the family—an aspect of welfarism not discussed by him); these are the reproduction of the daily and of the generational labour force, and the redistribution of money goods and services to the non-working sections of the population (children, the old and the sick or otherwise disabled, as well as the currently unemployed and often housewives, they represent a majority of individuals). Gough then turns to the development of welfare state provision in modern capitalist societies and describes the unique combination of the meshing of the class struggle for ‘welfare’ goods and services with the centralization and growth of the power of the modern capitalist state. Then, following a clear account of the expansion of social expenditure—an account of how the welfare state is financed, what is financed and why it has expanded so greatly—Gough turns to the effect of this on the capitalist economy. Here, as in the account of the state, Gough discusses in an appendix the more difficult aspects of the debate amongst Marxist economists attempting to answer the questions: has the growth of welfare expenditure benefitted or harmed the capitalist economy; and has it promoted or fettered profitability and the accumulation of capital?

Finally, Gough returns to the current economic crisis and his book ends with an account of the reasons for the development of this crisis and an assessment of its likely consequences for the welfare state, suggesting that this is likely to be ‘restructured’ rather than ‘dismantled’; he also points out the fresh contradictions to which attempts to cut back welfare spending give rise since they are often harmful to industry (e.g. demand for consumer goods is cut back) and fail to cure the problems for which they were perceived as being the remedy. Lastly, in a brief ‘political postscript’ Gough raises the issue of ‘human needs’ as relevant in ‘clarifying what is positive and what is negative’ in welfare policies. He has earlier pointed to the lack of development of a Marxist theory of human needs; and indeed the work of Mary McIntoshfootnote7, who embarked on an approach to this question in two recent articles, would appear to be the only new work in this area.footnote8 (More generally, the domination of the field of social welfare, policy and administration by Fabianism and functionalism has reflected an absence in the works of Marx himself, where references to the problems of social welfare are confined virtually to brief ‘asides’ or remain highly schematic, as in the section in his Critique of the Gotha Programme.footnote9)

Surprisingly, perhaps, in view of his emphasis on the crucial nature of class struggle, Gough’s conclusions are faint and rather pessimistic. The ‘golden era’ of the welfare state—the postwar boom—has gone and with it too, perhaps, must go the welfare state as we know it; either accumulation and economic growth or political and social rights may have to be sacrificed.