Beyond Dependency or

Beyond Capitalism?

A critique of New Zealand’s drive

Towards Workfare.

David Bedggood,

Department of Sociology,

University of Auckland.

Private Bag 92019,

Auckland.

New Zealand.

Tel. 64 09 3737599 / 8617

Fax.64 09 3737439

Email <dr.bedggood@auckland.ac.nz>

1
ABSTRACT

The paper attempts to critique, from a Marxist standpoint, the move towards workfare in New

Zealand by examining the neo-liberal assumptions underlying the concept of ‘welfare

dependency’. Its focus is the “Beyond Dependency’ Conference organised by the NZ

department of Social Welfare, among other organisations, in April 1997, to promote the

ideology of ‘well-being’ resulting from work. The Beyond Dependency Conference brought a

number of ‘overseas’ experts to NZ as part of the Coalition Government’s drive towards the

Community Wage which is designed to replace the Unemployment Benefit. The paper

concludes that this is a clear move to provide an ideological justification for forcing the

unemployed into the reserve army of labour, in order to reduce the labour costs facing NZ

employers who must now compete in an open, deregulated market. The paper also critiques

the most common market-liberal responses to the market-liberal policies and finds that the

Keynesian assumptions on which welfare-liberalism rests, while always deficient in their grasp

of how capitalism works, have been outmoded by the demands of the global economy on the

NZ state. It concludes that a revolutionary transformation of the social relations of production

will be necessary in order to go beyond Dependency, and beyond Poverty.

INTRODUCTION

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 The purpose of this paper is to critique from a Marxist standpoint the underlying neo-

liberal assumptions of so-called welfare dependency and draw out the political implications of

this critique. The revival of a ‘market rights’ discourse that opposes ‘welfare rights’ discourse

draws on long-established arguments of classic free market theorists such as Hayek (1949).

The argument, in summary, holds that state provision of welfare services is a drain on private

savings, and therefore acts as a disincentive to innovation and hence economic growth. The

more familiar argument operates at the level of the firm where entrepreneur’s savings are

taxed. However, in Hayek’s language, all individuals are entrepreneurs including those who

sell their labour on the market. Hence the latest attack on welfare rights is dressed up

ideologically as a defence of the rights of individuals to become independent of the state and

self-reliant in finding work on the labour market. This is justified by appealing to the concept

of ‘civil society’ in which individuals take responsibility for their actions within a consensual

moral framework or ‘virtue’ (Murray, 1988; James, 1989; Green, 1993,1996; Jones, 1997).

While in general, ‘dependence’ on the state is defined as an impediment to market

rights, some welfare rights are conceded to the ‘deserving poor’ who cannot work for reasons

of child care, age or injury, as the basis for ‘targeted’ or specific state income support.

However, the precise question of whom is ‘deserving’ i.e. who can or cannot work, is now to

be under constant review, so that income support goes only to those who are proven to be

genuinely ‘dependent’. Those who are marginal, are “forced to be free to chose” - that is to

work (Kasper, 1996; Jones, 1997). Therefore, ‘Beyond Dependency’ reduces to getting

beneficiaries off state welfare and into private work where they learn to take responsibility for

their actions – including having children out of wedlock (Green, 1996:xiii; Morgan, 1995).

The promotion of the recent Beyond Dependency Conference (BDC) focussed on the

positive message of making individuals independent of the state in order to exercise their right

3
to freedom of choice in the market place. ‘Dependency’ is defined as a “growing, long-term

and cyclic problem with high human and economic costs”. There is a broad consensus that

‘dependency’ is a problem. Between 1985 and 1996 the working-age people who were

benefit-dependent rose from 8% to 21% (DSW 1996:6). Most of this increase was due to a rise

in unemployment. However, in the case of solo parents the numbers on the Domestic Purposes

Benefit grew from 10,000 in 1973 to almost 110,000 in 1996 (DSW, 1996:82). Clearly this far

outstrips population growth or that of age-risk groups. In fact never-married teenagers are less

than 3% of the DPB recipients and their number has declined by 7.8% in the five years before

1996 (McKenzie 1997:101).

Despite widespread agreement that the numbers and cost of those on benefits is rapidly

rising, there is no agreement that the ‘cause’ of this ‘problem’ can or indeed should be ‘solved’

by a shift to workfare. The most obvious explanation is that family crisis is caused by

economic and social crisis and that this accounts for the rise in benefit dependency rather than

a “cycle of dependency”. There is a strong correlation between high unemployment rates and

family breakdown in Maori and Pacific Island families (Davies, 1996; DSW. 1996:78)

Yet rather than debate the causes, and arrive at appropriate policy options, the focus of

the conference was that of “looking at solutions critically rather than just analysing problems”.

It is clear that the ‘problem’ was already conceived narrowly as welfare ‘dependency’, which

largely predetermined the proposed solutions directed at eliminating this ‘problem’. The BDC

can therefore be seen as an attempt to promote the market-liberal agenda outlined by the

Coalition Government in the DSW document Strategic Directions (DSW, 1996) to stop with

the fiscal drain of continued rising levels of dependency upon the state despite growth in the

economy and employment (ibid. 5). The assumption is that welfare dependency and family

breakdown are uniquely independent causes that have to be addressed by specific social

4
policies. Despite evidence which shows that ‘dependency’ is itself the effect of wider

economic and social causes, the DSW claims that: “Long-term or multigenerational

dependency adds stresses to people’s lives and exacerbates social problems such as child

abuse, domestic violence, youth offending, poor health and educational attainment. The

continued existence of high levels of dependency may result in the development of an

“underclass”, and generate social friction, stigmatisation, and loss of public confidence in the

welfare system.” (ibid 6).

This presumption of a “cycle of dependency” explains the general thrust of the

Coalition’s ‘Strategic Direction’ to move from “welfare to well-being”. This slogan packs a

heavy ideological load. “Welfare” is now redefined negatively as dependency, whereas

“wellbeing” is defined as the state of achieving “material adequacy, good future prospects,

good health, good family relations, happiness, self-esteem, and respect of others” (ibid, 7).

When we look at the BDC “solutions” and the international authorities “sharing and

extending ideas”, we get a clearer picture of what “wellbeing” means. Most of the big name

participants are known for their zeal in reforming state provision of welfare towards private

provision. For example, Frank Field, at the time, Minister of Welfare Reform in the British

Labour Government, argues that the “welfare state must be reformed in ways which encourage

honesty, labour market participation and self-improvement” (DSW, 1997:5). Perhaps the best-

known US participants were Jean Rogers who heads Wisconsin’s welfare programs, and

Lawrence Mead. Rogers’ contribution “Designing work-focused Welfare Replacement

Programmes’ reported positively of the success over ten years of the Wisconsin welfare

reforms (W-2). Rogers lists the ‘ten axioms’ that guide W-2. Among them is the axiom that

you only get paid for the work you do, so that the connection between performance pay is

established. But his does not prevent the use of short-term subsidised or unpaid work for those

5
on welfare including unwed teenage mothers and families where the youngest child is over 12

weeks of age (Rogers, 1997:68). The main thrust of Mead’s approach is captured in the title of

a recent article “Raising Work Levels among the Poor”. Mead is frank about the need for

compulsion to “enforce” the learning of the work ethic (1997:14). This is because he views the

failure to work as due to a ‘culture of poverty’ in the ‘underclass’ or in today’s jargon

‘intergenerational welfare dependency’ (ibid:11).

It is clear that for the keynote international participants at BDC, work is the road to

ending the culture of dependency and to individual self-reliance and social well-being. It is

this workfare reform path, as opposed to the left-wing “poverty lobby” and the right-wing

“radical revisionist” view, that is now the OECD trend (Snively and Gray, 1997). However, as

I shall argue below, there is nothing new or trend setting about making ‘work’ the central issue

in social welfare. The welfare state had its origins in reproducing wage-labour for the labour

market. The post-war Keynesian welfare state expanded to fulfil this role under conditions of

near full employment. So why is it that today the neo-liberal reform ideology of market rights

is considered more appropriate than the welfare-capitalism ideology that prevailed in New

Zealand over the post-war period? Why is it that a welfare system, which apparently could

deliver ‘well-being’ in the past, now stands accused of undermining well-being and making

generation after generation dependent on the state? It seems that rather than being the

independent variable, the welfare state is the dependent variable. Perhaps it is not individual’s

‘dependency’ on welfare that is the problem, but their dependency upon an economic system

that cannot create sufficient long-term jobs at decent wages and which cannot afford to pay for

levels of social security necessary to maintain a growing surplus-population or reserve army of

labour. Cast in this light, the ideological drive towards ‘workfare’ is an attempt to resolve an

6
insoluble contradiction by blaming the poor for their failure to take low-paid and demeaning

jobs in a system that cannot provide well-paid and meaningful work.

THE ATTACK ON WELFARE LIBERALISM

It is interesting that the market liberal ideological offensive “chooses” to rewrite the

history of the welfare state. From the standpoint of capital, seeking to replace welfare

discourse with market discourse, the post-war welfare compromise must be repudiated. The

revisionist position is that social welfare has always slowed down economic growth by taxing

investment and suppressing innovation. This attempt to conveniently rewrite history has the

purpose of undermining the whole theoretical and historic basis of the post-war welfare

consensus, and also of preventing any return to state intervention, in particular the revival of a

neo- or post-Keynesian approach to state management of the economy (Bedggood, 1996).

If we pursue this argument a bit further it becomes clear that ascendancy of welfare

liberalism over market liberalism is a consequence of the particular requirements of capital

accumulation at a given time. The post-war welfare-liberal discourse was rooted in the

normality of state interventionism. Not only was the post-war boom one in which the state

played a major role, the boom itself was the result of a massive international interventionist

effort during and after the Second World War. In New Zealand’s case the historic conditions

of capital accumulation in a small, dependent semi-colonial economy required heavy state

intervention from the start.

Marx, in his critique of the Wakefield plan for systematic colonisation, delights in

exposing the fact that Capital’s origins was not one of the “golden age” of self-sacrifice and

savings conjured up by universal Hayekian entrepreneurs. Rather it was a bloody, filthy

process of “primitive accumulation” involving the forcible dispossession of peasant peoples

7
from their lands, and their induction into the slavery of wage-labour (Marx, 1976:926). Marx

also recognised that the role of the public debt and taxation spread the risk of investment in the

infrastructure of new capitalist countries. It became a burden on the backs of its peasants and

workers, while ensuring that the profits and rents went into the pockets of the imperialist

rentiers and their local agents (Bedggood, 1980:41).

The argument can be made then, that in New Zealand’s history, it was the national

capitalists, as well as foreign finance capitalists, who have been most dependent upon the state

as its primary welfare beneficiaries. This went far beyond the pork barrel politics of the

colonial days to the massive state subsidies and state contracts which gave most local firms

their start in life. It should not surprise us then to find that it is these same capitalists, now

disclaiming any benefits in the past, who are also the main beneficiaries of the erosion of the

welfare state in its broadest sense. For example, during the process of restructuring of the New

Zealand economy after 1984, much of the restructured wealth of the land, state assets and

company assets, accumulated over a century of protectionism, were redistributed as private

wealth in the hands of those prominent members of the Business Roundtable (BRT) such as

Brierley, Fay, Richwhite, and Gibbs who loudly proclaiming the merits of the free market.

What explains this amnesia about the state and the dramatic shift from welfare rights to

market rights in the last 15 years? It can’t be that welfare was always a net drain on profits, in

fact it was necessary to ensure profits for a whole period. So why has the question of social

spending, and its supposed negative impact on work become contestable? How is it that

workers, once the unquestioned joint, if subordinate, beneficiaries with the employers of the

post-war welfare state, are now alone cast in the role of ‘welfare dependents’?

BEYOND DEPENDENCY: THE DRIVE TO WORKFARE.

8
 The ‘Welfare Dependency’ argument asserts that ‘dependence’ on welfare in itself

creates a culture of dependency and undermines individual self-reliance and the work ethic.

The expectation is that the requirement (i.e. the compulsion) to work will inculcate the work

ethic that is apparently missing among those who are ‘dependent’. However, there is no

evidence that increases in work output results from a stronger work ethic or self-reliance. Even

Mead’s evaluation of a range of work schemes cannot make this claim as he rejects voluntary

work schemes as ineffective and talks of enforced workfare as “going on welfare would

become like going into the army” (Mead 1997:16). But there is evidence that work output

increases with greater incentive to work, whether this is higher wages, fear of unemployment

or long-term job security (Roemer, 1997). In the absence then, of good jobs on decent wages,

workfare recipients are “forced to be free”, meaning of course, “free to work” (Kasper, 1996).

It seems that for the market liberals this element of ‘force’ is constitutive of ‘freedom’. It falls

within Hayek’s concept of ‘limited coercion’, “...to limit it to those fields where it is

indispensable to prevent coercion by others and in order to reduce the total of coercion to a

minimum” (Hayek, 1949:17).

The “limited coercion” of workfare results in cheap, non-unionised, compliant wage

labour, replacing more expensive and organised labour. As well as increasing work output,

workfare drives down wages, hence cutting labour costs relative to output. The belated

introduction of the Community Wage Scheme (Workfare) by the Coalition in October 1998

has already seen community workers working as Teacher Aides for NZ$21 a week, and the

teachers’ union concerned alarmed at job replacement and wage cuts (Sunday Star-Times,

1998). In its first month of operation 85 workers have failed work tests and had their benefits

reduced (NZ Herald, 1998). (Refusal to be interviewed for work, refusal to work, failure to

turn up on time, dismissal for cause etc a met with a range of reductions in the benefit from a

9
15% for minor offensives such as lateness, to withdrawal of benefits for 13 weeks for

persistent non-cooperation.) Workfare also results in tax cuts and hence increases savings and

investment.

All of these factors figure as supporting arguments in the drive of the market-liberals

towards workfare. In Hayek’s terms then, the “limited coercion” of workfare can be justified

as reducing the “total coercion” which takes place when state intervention allows unions to

collectively impose higher wages than the labour market can bear. It seems then, that once the

ideological smokescreen is penetrated, that workfare is a cynical policy of re-activating the

reserve army of labour so that it can fulfil its functions for capital accumulation.

Thus the neo-liberal drive from welfare to workfare is not something which falls from

the sky or right-wing economics departments. It is something which is constructed

ideologically to promote a set of values that serves the interests of the capitalist class at a

given period or conjuncture. If we look at the prime reason behind the arguments about

welfare dependency, it is the attempt to justify cuts in both labour costs and taxation costs on

companies, which now have to compete internationally to survive. The ending of domestic

substitution and the opening up of the economy means that the local conditions which

sustained the post-war welfare state are no longer operative. Instead we see that firms in New

Zealand must cut their local costs at all costs. Not only does this mean lower wage rates, but

also lower labour reproduction costs in the form of a reduced social wage (Bedggood, 1996).

Much has been done to dismantle the welfare state to cut social spending, and to

reduce local costs to an internationally competitive level (Kasper, 1996). However, there

remains a large slice of social spending which has proven difficult to cut back because the

changes in the economy have driven up rates of unemployment and benefit take-up and at the

same time increased the social spending on these items. The explosion of the Domestic

10
Purposes Benefit in NZ is giving the most concern to the policy makers. The rights of families

to maintenance, established in the welfare-capitalist period, has created a huge drain on social

spending. The failure to overcome this fiscal blowout is what is motivating the latest round of

ideological offensives to remove the remnants of welfare liberal barriers to the labour market

fulfilling Say’s law – supply creates its demand! (Jones, 1997). Stemming the tide of

solo/single mother ‘dependency’ and getting them to wage-work seems to be the immediate

priority (Baker, 1997).

What we see here is a long-term trend of the capitalist economy to create a surplus-

population, coming into conflict with expectations of welfare rights which were embedded

during the post-war boom period. For capitalism and its market liberal agents, while there is

no avoiding the growing surplus-population, the maintenance of this surplus-population is

“beyond the responsibility” of the state as it is a drain on profits. Therefore it is necessary to

shift people off welfare into low paying private sector jobs. This is presented as good for them

as well as society. The remaining ‘deserving’ poor must prove they are unable to work i.e.

‘work-tested’. Indeed willingness to work becomes the definition of ‘deserving poor’. Where

a layer of the surplus-population is ‘unemployable’ (i.e. untrained for available work) they are

stigmatised as ‘dependent’, the ‘under-class’, or criminalised. The costs of maintaining social

control of the under-class can be progressively privatised.

Against the ascendancy of market-liberalism we can identify three broad oppositional

schools of thought - neo-Keynesian, neo-Marxist and classic Marxist. For the purposes of this

paper I will not fully differentiate neo-Keynesian from neo-Marxist approaches (see

Bedggood, 1996).

BEYOND POVERTY: NEO-KEYNESIAN REDISTRIBUTION.

11
 There are a number of attempts to counter the ideology of ‘Beyond Dependency’. Most

are morally outraged by the new right’s offensive and offer a kinder, more humane attempt to

revive the welfare state, or at least defend what is left from further destruction. The problem is

not dependency but poverty, which given the correct social policies, can be eliminated.

Drawing on basic Keynesian economics, there is no reason, in theory, that a capitalist

economy, despite the impact of globalisation, cannot be managed to avoid the ups and downs

of the business cycle. Representative of this view in New Zealand are Bertram (1993), Bayliss

(1994), Kelsey (1995), Kelsey and O’Brien (1995), Easton (1996), and Boston et al (1997).

A number of these protagonists have come out vocally against the BDC as an exercise

in social engineering and/or ideological manipulation. The most dramatic public response to

the new right agenda of the BDC was that of the Auckland Unemployed Workers Rights

Centre. The AUWRC organised an alternative conference - “Beyond Poverty”. It claimed that

the voice of the unemployed and organisations representing unemployed were not being

listened to. Daily protests outside the BDC saw a number of arrests, but no representatives

were allowed to address the BDC.

The theme of most of the contributions at the alternative conference was that poverty

and unemployment was the deliberate result of the wrong economic and political policies

introduced by the 4th Labour Government after 1984, the National Government from 1990, and

the current National/New Zealand First Coalition government. Poverty could be eliminated if a

government responsive to the needs of the people introduced policies that would provide jobs,

a living wage and decent benefits (O’Brien and Briar, 1997).

It seems however, that when it come to paying for more humane social policies, most

current neo-Keynesian “solutions” to poverty, already concede the claim of the market-liberals

that tax rates should be flat or very modestly graduated. Is this the result of the victory of

12
market-liberal ideology or of the demands made by big business upon governments? It seems

that the language of market- liberalism has also infected liberal democracy and the confidence

of neo-Keynesian economics. But is that sufficient to win the day? Is it the ideology that

drives the reforms, or the need for the reforms that selects the appropriate ideology? These

ideological offensives are certainly effective because they legitimate the use the language of

the market and ‘civil society’ which equates higher taxation with an attack on the economic

freedom of every individual (Green, 1996; Jones, 1997)

However, what lies behind these efforts by the rich to evade, avoid and cut taxes, is not

some idea of what is necessary to further profits, but actual practices which allow them to

increase their profits. It is the drive to restore profits that has forced social democracy to

accept the restructuring of the economy. But does that mean that capitalists will necessarily

oppose a shift back towards a more state-centred, redistributional welfare-capitalist

‘alternative’, provided it stops short of nationalisation or threats to private property? Now that

welfare liberals concede most of the external constraints on the global economy, and the

virtual impossibility of re-nationalisation of key state assets, perhaps there still remains a

narrow margin in which liberal reforms may be able to restore full employment without

sacrificing economic growth? Or are these hopes of a watered down ‘alternative economic

strategy’ no more than neo-Keynesian pipe dreams? (See Bertram, 1993; Bayliss,1994;

O’Brien, 1994; Kelsey, 1995; Easton, 1997).

BEYOND CAPITALISM: MARXIST CRITIQUES OF KEYNES.

Most critics of Keynesian economics are from the right. A critique of Keynesian

economics from the Marxist left explains why such policies worked to boost profits for a

period, but then became a drain on profits (Yaffe, 1973; Mattick, 1969;Clarke, 1988;

13
Carchedi, 1991). The purpose of the critique is to prove that today no neo-Keynesian solution

that looks to state intervention or redistribution can restore jobs or wages sufficiently to

eliminate poverty. On the contrary, profits require poverty, and globalisation has made it

especially difficult for small states such as the New Zealand State to impose any social limits

on capital accumulation in New Zealand. These global conditions require an open, deregulated

economy, so that the remnants of the Keynesian welfare state are an unwelcome drain on

profits. Therefore, while it is important to defend the welfare state, rather than putting ones

faith in a reforming centre-left government, it is necessary to devise new strategies of

defending and extending the welfare state by mobilising the power of the working class and its

political allies to go beyond reforms and beyond capitalism. (Bedggood, 1996).

It is now widely recognised that Keynes adapted `neo-classical’ economic assumptions

to the period of capitalist slump in the 1920’s and 1930’s and looked to state spending to

provide buffers to the ups and downs of the business cycle (Pilling, 1986:60). If the

assumptions of the so-called neo-classicals do not hold up, then neither do those of Keynes. To

begin, the fashionable flaunting of Adam Smith masks some hidden truths. The ‘hidden hand’

may have maximised the general interest, but it was not expected to bring about an

equalisation of individual opportunity. Nor do the latter-day Smithians want to admit that

Smith was a classical, if somewhat inconsistent, adherent of the labour theory of value which

holds that value is the product of labour (Clarke, 1988:96).

The significance of this is not only to put in doubt the neo-classical assumptions, in

particular Say’s law, in which supply creates demand, but also Keynes attempt to use state

investment and state spending to a corrective to capitalists’ hoarding and “breaking” Say’s

law. Yet the problem is not the hoarding as such, but the reason for it, which is, in short, a

falling rate of profit arising out of insufficient production of surplus-value to return sufficient

14
profits. Therefore merely substituting state investment for private capital investment further

erodes profits. Keynes imagined that state monetary and fiscal policy could overcome the

unreliability of the capitalists. He didn’t realise that money is not just a means of account but a

measure of value and a store of value (Clarke, 1988:236-237). Inflation must sooner or later

devalue money as money capital and contribute to falling profits. But beyond that, state

intervention was seen as an attack on something even more fundamental - private property

rights.

This accounts for the hostility which the new right expresses towards state interference

in the economic choices of individuals who own private property and who are responsible for

investment and innovation. They are convinced that far from regulating supply and demand,

state intervention deters investment so preventing the market from matching supply and

demand. The market-liberals, following Hayek and Friedman thought that a return to the

market would allow market forces to act signals to private entreprenuers and overcome the

problem of efficient supply. However, as the market-liberals were re-asserting the market,

without realising it, they were also unleashing the law of value that devalues unproductive

expenditure, including state expenditure, in the restructuring of profitable production. What is

missing from both Keynesian and neo-liberal economics, is an understanding of the classical

and Marxist labour theory of value. It follows that Marx’s theory of capitalist crisis, of the role

of the state, including the ‘welfare state’ in the 20th century remains a mystery. (Yaffe, 1973;

Bedggood, 1980; Mattick, 1981; Clarke, 1994).

A full exposition of these theories is beyond the scope of this paper. For the purposes

of this paper the implications are these. Globalisation has integrated the world market, so that

MNC’s operate across many states and now no longer exploit state protective tariffs to the

same extent as during the post-war boom. What they require from host states is subsidies that

15
cut their costs to a minimum. New Zealand’s economy cannot sustain competitive

international firms unless its cost structure is competitive. This means cutting social spending

on a par with New Zealand’s Pacific and Asian competitors, of which some have virtually no

welfare spending at all. The economic imperatives are such that competitive advantage

requires the latest technology and a skilled workforce. This will see a dual labour market

emerge much more strongly, and a growing surplus population. The internationalised labour

market will reproduce itself out of its market income with virtually no reliance on a social

wage. This means that state provision of health, education and welfare will be cut back

regressively until profits are maintained. To achieve this and to contain opposition, the new

right has revived the classic capitalist discourse of rights and responsibilities as an ideological

cover to present these cuts as in the national, and individual interests.

The globalisation of capital also requires of host states the maintenance of political

order. It is therefore important for the cut backs on welfare to be presented as necessary for the

interests of individuals and also for the nation’s economic wellbeing. This is where the notion

of Welfare Dependency comes in. It presents individuals as free agents capable of achieving

self-reliance and market freedom at the same time as the availability of jobs and of state

provided education, health and other services is drying up. The obvious shortfall of jobs is not

blamed on capitalist social relations but on the inability of individuals to live up to their

market rights and duties. Thus workers are scape-goated and blamed for their inability to find

and keep jobs. Those who remain in jobs resent supporting those without jobs. Thus the

employed and unemployed are divided into hostile camps at the cost of working class

solidarity, and for the benefit of the capitalist ruling class.

CONCLUSION.

16
 The BDC highlighted the strategy of the market-liberals to cut back on social spending

in the name of individual ‘rights’. This strategy is rejected by welfare-liberals. They claim that

more ‘just’ policies can eliminate ‘dependency’ and poverty, by the provision of employment

and the redistribution of income. A marxist critique of neo-Keynesianism demonstrates that

the neo-classical assumptions of both the market liberals and the neo-Keynesians are flawed.

Neither understands the real causes of economic crisis, nor the limits imposed on state

intervention by the capitalist economy. The market-liberals ideal of the neutral state protecting

universal rights in a ‘civil society’ is revealed to be hypocritical and ideologically loaded. The

welfare-liberals’ belief in a class neutral state that can intervene to ameliorate inequality, is

shown to be naive and self-defeating. Therefore, if those who want to defend welfare and fight

for real freedom are serious in their purpose, they must first critique the unreal or utopian

assumptions of social democratic Keynesians and their neo-Marxist allies.

The collapse of Keynesianism has proved that no matter how you model variations on

the capitalist firm: the joint stock company, worker shareholdings, ‘stake-holder capitalism’,

the ‘democratic firm’, managerial revolution, separation of ownership and control, and so on,

there is no such thing as ‘market socialism’ or ‘peoples’ capitalism’. Under capitalism the

critical factor is that private gain is the incentive for economic agents to perform efficiently.

This necessitates the ownership of private property and thus the reproduction of capitalist

social relations. To go Beyond Dependency, and Beyond Poverty, means to go Beyond

Capitalism. It is necessary to recognise the fundamental, deep-seated causes of social

inequality that can only be removed by the political mobilisation of the working class and its

allies internationally, and by the revolutionary transformation of capitalist social relations.

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