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Marketisation of Social Care

The marketisation of social care will deliver efficient and equitable services. Discuss.


Social care refers to a number of different aspects of social life including health, education, economic security etc. In the 1940s universal welfare provision was initiated in Britain. Universal welfare deals with all aspects of the population’s well being and the services that the state provides (Marsh, et al, 2000). The welfare state in Britain and in most of the western world was predicated on the work of the economist John Milton Keynes. In the last thirty years there has been a shift from Keynesian economics to a Neo-liberalist post-welfare state (Hursh, 2005) Keynes believed that when times were hard the state should intervene by putting more money into the economy and stimulating employment. However by the late nineteen seventies when Margaret Thatcher came to power it was evident that post-war policies were no longer working and thus there was a shift to a market based economy and welfare provision (Giddens, 2001). The full employment that had been envisioned by the post-war government had not happened and there was also a corresponding rise in inflation. Jessop (2001) maintains that in response to these happenings Western states began to make changes in the ways in which social care and welfare were provided.

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The Marketisation of Social Care and Efficient and Equitable Services

Government leaders in Europe, Britain and America argued that the universal welfare provision that had existed since the Second World War was not working and what was needed was a return to the philosophy of a free market that had been the case prior to the war (Stiglitz, 2002). In 1979 the Conservatives won the election and Margaret Thatcher came to power. By this time arguments about a welfare state versus a free market economy had intensified. Introducing marketing principles into social care allow Governments to (hypothetically at least) improve services. It also enables a government to retain a greater degree of control (Stigliss, 2002). As a response to discourses on the value of a free market economy Regan’s Government in the United States and Thatcher’s in Britain began to introduce measure that would roll back the welfare state and control expenditure. This was done by the introduction of marketing and business strategies. In Britain the Government embarked on a massive process of privatisation because it was believed that public ownership of companies and the public sector generally inhibited and undermined market forces. It therefore follows, Stigliss argues, that there is a need to deregulate capital markets and to curb state spending. These policies stressed the importance of the internal market. Giddens (2001) says that:

…the momentum of Thatcherism in economic matters was maintained by the privatising of public companies… (this) … is held to reintroduce healthy economic competition in place of unwieldy and ineffective public bureaucracies, reduce public expenditure and end political interference in managerial decisions (Giddens, 2001:434).

It was believed that the introduction of market forces into social care would increase productivity and improve care while at the same time being cost efficient. It was considered the best way of allocating resources because free markets were considered to be self organising (Olssen and Peters, 2005). Within healthcare provision there was a shift from healthcare professionals and patients to the idea that there were service providers and there were clients (Giddens, 2001). Government discourses, both Conservative and New Labour have revolved around the notion that the introduction of market mechanisms would result in a more equitable system. However, policy making tends to be somewhat contradictory and Governments appear to give with one hand and take back with another. The instigation of NHS trusts has resulted in a somewhat haphazard distribution of care and there are inequalities across the system in some areas there are such discrepancies in care provision that commentators refer to a post code lottery, where the kind of care a person receives is determined by where they live.

Some commentators were of the opinion that the policies introduced by the Conservative Government were implemented to widen inequalities in society (Field, 1996). Thus Marx’s dictum that laws are made to serve the interests of those who already have power in society are extremely relevant here. The Community Care Act of 1990 further exacerbated inequalities most especially for women as it assumed that the women (who were the main carers in the home) would shoulder the extra responsibility of care (Abbott and Wallace, 1982). Field (1996) maintains that the increase in inequalities whereby the rich got richer and the poor poorer created a social underclass who were denied the same rights as others in society. Under the Conservatives the tax burden shifted from the rich to the poor, along with this, changes to the benefit system such as job seekers allowance placed a good number of people into a poverty trap. Alcock (1997) supports Fielding’s views and maintains that the roll back in welfare and changes in social care and benefits generally resulted in greater unemployment and a rise in the number of homeless.

The introduction of market forces into social care has had the effect of excluding some people from mainstream society and led to the setting up by the present Government of the Social Exclusion Unit in 1997. This Unit is an example of the contradictions engaged in by policy makers in a free market economy. On the one hand the general philosophical approach of both this Government and its predecessor has been on the responsibility of the individual. This is nowhere better expressed than in Labour’s New Deal Documentation which promises a hand up rather than a hand out. Young (1999) maintains that there is a move away from inclusive goals that are based on citizenship rights and this means a move towards policies that exclude some people. This results in people feeling undervalued and with no investment in society and this may be reflected in the rising crime among the young. Currie (1998) maintains that there are a number of links between social exclusion and crime. Shifts in the labour market and minimum wage and taxation policies result in a rise in the numbers of those living in poverty. Furthermore these things put added strain on family life and weakens social cohesion.


Clearly the introduction of market forces into social care has been problematic and has benefited some members of society at the expense of others. Pierson (1994) has argued that the attempts by the Thatcher and Regan Governments to roll back the welfare state were not entirely successful. He maintains that this was more difficult than they had thought and that governments were besieged by public outcry. Rolling it back was not the exact opposite of the expansion of welfare that governments had thought rather, Pierson argues

Far more than in the era of welfare state expansion…struggles over social policy become struggles over information about the causes and consequences of policy change (Pierson, 1994:8).

The New Labour Government that came into power in 1997 have continued the welfare reforms introduced by the Conservatives laid out their welfare to work policies in a 1998 Green Paper which have been further extended in policy documents such as the New Deal 2004 and Youth Matters 2004. These documents are aimed at getting welfare recipients back into work and reducing Government costs. It is arguably the case that the introduction of market forces into social care have not resulted in either better services or more equitable treatment. Rather these policies have reduced services and benefited the better off at the expense of the poor, a fact which has been pointed out by a number of theorists.

To what extent does a country’s welfare regime type influence the form of social care provision? Illustrate your answer with examples from two countries.


Welfare provision and spending on public services differs from country to country depending on the types of service offered. In many cases this will include housing, education, pensions and health (Giddens, 2001). There have been a number of different ways of conceptualising the welfare state. Marxist theories tend to take the view that governments provide welfare for the benefits of those in power i. e. investment in welfare is necessary to sustain a capitalist system (Stigliss, 2002). This will look at policies in both Finland and the United States to assess whether and in what ways the type of welfare regime that is adopted by a country affects the form of social care provision.

Welfare Regimes

The ideal model of welfare is one of universal welfare provision where the state provides for everything in time of need and health and education are fully financed by the state. Marshall (1960, 1973) viewed the development of citizenship rights as crucial to the emergence of a welfare state. Civil and political rights would be extended to the rights to education, healthcare and other service provision because everyone was entitled to a reasonable life and a reasonable income irrespective of their position in society.

Esping Anderson (1990) devised his tri-partite system of welfare provision through an investigation of welfare regimes in a number of different countries. He also evaluated the extent to which welfare services were unencumbered by the introduction of market forces. He looked at the ways in which welfare services were organised and delivered in different countries when making decisions about what group they fitted in. The models Esping Anderson identified were Social Democratic, Conservative Corporatist and Liberal. In the first example welfare subsidies are entirely state funded and are available to everyone (the notion of universal welfare provision) Most Scandinavian States follow this model. Within Social Democratic States such as currently exists in Finland, there is generally no influence of market forces but things tend to differ depending on the type of welfare provision in Finland during the 1990s the country was moving towards a neo-liberal regime where people received free primary health care but were required to pay something towards their secondary healthcare (Ball, 2004).

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In a Conservative-corporatist state such as pertains in both France and Germany welfare services are only marginally influenced by market principles but they are not equally available to everyone. Entitlement is dependent on a person’s position in society. The United States is an example of a liberal welfare regime where means tested benefits are only available to the needy. Giddens (2001) maintains that there is a high degree of stigmatisation attached to these benefits, one has only to see media representation of the American poor and needy to know that this is the case. Welfare is, in almost every case, sold through the market and this is due to the expectation that everyone should pay for their own care through the market as for example in the form of health insurance such as Medicaid. America is the only country in the world where people do not have automatic access at least to primary healthcare in times of greatest need (Navarro, 1986).

Navarro argues that when market forces are involved in welfare regimes and particularly with healthcare systems then there is a tendency for organisations such as drug companies to promote medicines and drugs that serve their own interests on the world market.

Monopoly capital invades, directs and dominates either directly (via the private sector) or indirectly (via the state) all areas of economic and social life (Navarro, 1986:243).

Mitchell (1991) identifies five main approaches to the analysis of welfare systems in different countries these involve a comparison of policy, inputs, production, operation, and outcomes. These involve what is intended, who pays for it, how it is run, how it is organised and who benefits. The American liberal regime relies on a laissez faire approach to welfare (Olssen, 2000) this is particularly evident in its stigmatising of those in receipt of benefits. The situation in America is not uniform however and some states do have state funded health schemes, what Klass (1985) has called decentred social altruism (1985:428).

In Finland, as in much of Europe, welfare provision has been dependent on social solidarity or the view that both the state and the society have responsibilities of care. Many welfare rights are dependent on people’s circumstances and so there may not be the equality within such a system as one might suppose and can lead to social exclusion. Health in Finland has been along institutional lines i. e. secondary health care for example can tend to be selective and based on circumstance. Soumen Ash (2005) however, maintains that:

The state of people’s health and welfare in Finland has steadily improved since healthcare and health promotion were established. The main challenges nowadays relate to disease prevention, mental health problems and the disparities in health, welfare among different population groups. Finnish health policy has become matched to international standards set by the World health organisation and the European Union (Suomen Ash, 2005)[1]

In the 1990s educational provision was affected in Finland by its moves towards a neo-liberalist or Conservative-corporatist state. More recently however the Social Democrats have again espoused the universal provision of education and this is now entirely free of market forces and subsidised solely by the state. Thus there has been a return to a welfarist view of education that is available to all and which operates to bring an end to the social exclusion that pre-dominates in elsewhere.

The United States may take a dim view of universal welfare provision but its educational policies are welfarist in that there is free basic education for everyone and it is subsidised by the state. People are responsible for their own further and higher education costs if they are not awarded scholarships. The United States spends a greater proportion of its GDP on education than most other countries (World Bank world development report, 1998) but its educational provision, while universal, is still greatly underfunded as is teacher training and this is reflected in the fact that its schools lag behind other countries (Nation at Risk Report 1983). Thus the Americans (under Clinton) introduced public/private partnerships in an attempt to inject life into their failing schools (Giddens, 2001). The introduction of market forces into education does not seem to have generated a great deal of improvement (Molnar, 1996). There has therefore been a huge growth in the private educational projects and it may be that this will prove a threat to the basic state education that has been on offer (Whatt, 1999).


The welfare regime that a country adopts does seem to have significant effects on its service provision. In Finland, where the Social Democrats have taken over what was a liberal state, commentators maintain that the health sector is improving and many countries would do well to take note of the improvements in the Finnish education system since the removal of market mechanisms in that area. America on the other hand appears to be going in the opposite direction. Never comfortable with the idea of welfare its liberal and laissez faire regime has now adopted market principles into its education system. The state system was seen to be failing dismally and now the private sector appears to be taking over. One can only wonder whether the United States will continue with policies that further exclude the already excluded or whether it will drastically order the type of welfare regime that is in operation.

[1] http://www.suomenash.fi/sivu.php?artikkeli_id=178

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