Social Mobility, Decommodification and Welfare

I attended a fascinating workshop on Thursday in Manchester, with a range of speakers discussing various aspects of social mobility. It was one of those workshops you’re really happy you attended. For me, it was very thought provoking, and it even gave me an idea for a workable journal article! The first keynote was by David Grusky from Stanford who, amongst other things, discussed how commodification exacerbates inequality, and therefore impedes social mobility. It is a question I had on the relationship between social mobility and (de)commodification I want think out loud about here.

With the increasing commodification of public services (which are ‘public goods’, and can be classed as needs), money becomes much more important in terms of access. It stands to reason, then, that the less money you have, the more difficult it is to access these resources. Although this holds true in general, it is not quite the case in liberal welfare states (such as the US, and of course the UK) where at the bottom of the pile there is some decommodification; at this point, it can be argued that money becomes slightly less important.

Decommodification can be thought of as the provision of services and goods independent of the market; a mechanism by which those who cannot access the market sufficiently (because of a lack of resources, for example). Of course, there are degrees of decommodification in which the market still plays a role. The NHS is an example of this, in that it is ‘free at the point of use’ but UK citizens and residents pay National Insurance contributions to fund it (private companies also provide some services within the NHS).  Decommodification is positive for social mobility, because in Marshallian terms it ensures that all citizens have the wherewithal to participate fully in society, which affords more opportunities for advancement. Yet it is (of course!) not this simple. No welfare state is fully decommodified, and the UK and US in particular are highly commodified (in line with the concept of market provision of welfare, disincentives and meagre benefits).

In such a system the level of decommodification that does exist is crucial. Grusky made the point that in the US (and we can say the UK), money is a little less important for those eligible for welfare assistance because there is some decommodification, which is qualified on the basis of means testing. Yet the relationship between means testing and decommodification is a tricky one, and it has a direct impact on social mobility. A pertinent example of this is the UK’s system of in-work benefits such as Tax Credits. These benefits are designed to supplement the incomes of those on low wages. As such, they become essential to the finances of many households who receive them. They are means tested as only individuals or households under a certain income may receive them. If you are eligible for Tax Credits you also become entitled to other things such as free dental treatment. For many, then, they are a lifeline but they also trap people in low-paid work.  In an interview I conducted recently, a couple said that one of them had been offered the choice at work of more money/hours or an extra week’s holiday. Almost everyone who was offered this took the holiday, because the extra income would have removed their eligibility for tax credits, which would have made them worse off overall. Therefore, there is a cut-off point where decommodification in a highly commodified welfare system is beneficial for social mobility.

For those like the couple mentioned above, social mobility is limited, but the barriers to their social mobility are, to an extent, artificially constructed because of the boundary between eligibility and ineligibility for in-work benefits. A modest pay increase would result in a substantial loss of earnings, to the extent that the rational economic choice in this context is to not take the pay increase. One would need a job that paid significantly more in order to absorb this shortfall, and the associated cost of living that would come with needing to pay for many services that were previously free or discounted.

So what can be done in this situation? Making the means test more lenient, so that more citizens are eligible for these decommodified services and goods, would cost the state a lot of money. It may also not solve the problem, as it would simply move the point at which people encounter the need for a larger increase in income to make any change in pay worthwhile. Grusky posited two options: increase cash transfers, which are not popular with the public, or decommodify. Personally, I would choose the decommodification route. But how to do this? The welfare state would need to be decommodified relatively extensively in multiple spheres in order to avoid the problems outlined above, and it is unlikely that the public would support this, at least not without an extensive debate and passionate defence of the extension of welfare provision. Furthermore, in the UK at least, there is a dual discourse of targeting and universalism. The welfare state is for all who need it, but those who do need it must fall into particular categories and satisfy particular criteria. For decommodification to work, there needs to be an extension of universalism. If the public think, by and large, the welfare state is universal, why would they support the extension of services? A related issue is that this universalism would mean that those who are relatively well-off would be eligible for assistance if they wished. This would also not be popular with a public that has been subject to increasing austerity in the face of the expansion of the wealth of a privileged few.

It’s a conundrum to which I have a strong normative answer, but no currently workable method of getting there. Perhaps a minimum basic income would be the easiest method of decommodifying the safety net further? But if prices simply rose in line with each citizen’s newly found income, it is unlikely to help much.  Perhaps, then, the answer doesn’t lie in the decommodification itself, but rather the process by which decommodification takes place. I better get reading…

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