A chapter of Globalisation and Welfare State

Keywords: Distributional Economics; Social Policy;

Bill Sutch characterized the progress of nineteenth and early twentieth century New Zealand in a book title of Poverty and Progress (and also The Quest for Security).(1) Certainly there was poverty in that period, which was a major driving force for social and institutional change. It would be foolish to compare the hardships of those times with those of today. As we shall see in Interregnum 1, a major development in the 1970s was recognition that poverty was simply an absolute notion of hardship but a relative one, so that rising affluence did not automatically eliminate it. Yet there is much to be learned from the earlier poverty and policy debates.

This chapter, then, is not a history of poverty up to the Second World War. Sutch and some fine successor research provide that.(2) Rather, some topics are examined to provide a background and an introduction to subsequent developments. What went before has shaped what happens today, and the future.

Classical Maori

This book does not give excessive prominence to the issue of Maori poverty for two reasons. First, the Maori policy issue is not just a matter of the Maori being markedly poorer on average than the non-Maori. The issues are much wider than to summarize them as `Maori equals poverty’. But second it is equally misleading to summarize the situation as `poverty equals Maori’. Certainly the incidence of poverty is far higher among the Maori than the non-Maori, but because there are more non-Maori, there are more poor who are not Maori. That there are many non-Maori who are poor, emphasizes that it is wrong to use a specifically Maori explanation – racism, their genetic of cultural inheritance, or their history – to explain all poverty. This study draws attention to Maori poverty, where it is appropriate to emphasize its high incidence, or where (rarely) it differs from non-Maori poverty, but also where the Maori experience provides insight to general issues.

One such insight is that the classical Maori, before the arrival of the Europeans, had no welfare state. This is both an obvious point yet one worth mulling over for it emphasizes that in New Zealand, as elsewhere, the welfare state is a recent development, associated with a particular sort of economic organization – sometimes called `industrial society’ but also, perhaps partly in response to the increasing domination of the service sector, called (market) `capitalism’.

This is not to say there was no hardship in classical Maori society. The indications are that it was an affluent, even benign, life compared to others at the time. For instance it appears that the life expectation for a Maori in the seventeenth century was similar to the life expectancy of Europeans at the same time.(3) But on occasions natural disasters or warfare would have made life difficult and hard, as it did elsewhere.

There was also inequality in Maori society, both an inequality between Maori iwi (or tribe) (4) living in regions with differing levels of natural abundance, but also within iwi. We do not have any quantitative measures of that inequality, but it seems likely that the within iwi inequality would have been substantially less than the inequality in today’s New Zealand society, although we can but speculate upon whether there was as much regional inequality.

Why did the Maori have no welfare state, despite inequality and hardship? One sort of answer is to observe there was no Maori state, but a series of confederations (waka), subgrouped in turn into iwi, hapu (subtribe), and whanau (family, often extended family). But perhaps it was also because there was no need for a comprehensive national welfare system.

Instead necessary transfers of resources to deal with hardship occurred at the community level – at whanau, hapu, or iwi. Many of the transfers would have been informal – as happens in today in the Maori and non-Maori families, based on mutual relationships. As higher social units were involved, the transfers would have had a more formal element, regulated by the rangatira (chief) whose mana (authority) was based upon his generosity. (5) A key god was Rehu of generosity, acknowledge at the meal table by the giving of thanks to him. The system of transfers depended upon reciprocal obligations and kinship, the still evident at the beginning of any hui (formal meeting) where as a matter of course there is a tracing of common links through whakapapa (genealogy) and experiences. Of course, there are parallels in non-Maori societies all over the world, especially within extended families. What appears unusual to the standpoint of industrial society is this occurred at every level in such pre-industrial societies.

There is a second way of thinking about the lack of a welfare state in Maori society. Although they had a complex process of exchange, which amounted in some respects to barter and trade, there was no money – no medium of exchange.(6) This is not just a question of social technology. It also reflects a change in human relations within a society. As Ronald Coase, whose insights have markedly changed the ways economists have thought about markets in recent decades, pointed out that markets and money enable individuals to transact with others with whom they know very little. (7) This both extends the economic reach of each of us, and yet diminishes us. It makes possible the globalization of the world economy, and by doing so reduces the mutuality and obligation of lives based upon relationships which involve a degree of the sort of intimacy we associate with kinship.

Thus the welfare state is a response to the diminution of this traditional life. Those who demand a greater dependence upon the family as a resolution to some of the issues which confront the modern welfare state, overlook that it has been a response to the economic development where the role of the (extended) family or whanau has been markedly diminished, and where economic relations are increasingly dominated by the cash nexus. One may be nostalgic about (some aspects of) the past, but that does not mean that its solutions to social problems are relevant to the future.

Early Settler New Zealand

There must be few examples where this is more evident than nineteenth century New Zealand. The majority of Europeans immigrants had left their families behind. Many established their own families, but not all could or would. According to the Population Census, at the turn of the century there was still only around 90 non-Maori women for every 100 men. Among those of over 60 years old, the ratio was 63 women to 100 men. We may be reasonably sure many elderly had no children, or no children in their locality, or even in New Zealand, to support them.

This problem of lack of families for support was not new to the European societies from whence most of the migrants came,(8) but the alternative institutions in the old countries were not readily transplanted. The creation of a parish based welfare system was unacceptable to those who wanted a secular state, and that there would be no established church. In any case the myth was that many of the migrants had fled the English poor laws, and had no wish to reestablish them in their new country.

During the nineteenth century, New Zealand struggled along with private provision of support for the needy, but not very successfully. As Sutch and Margaret Tenant show, initially there was little alternative than for the state to deal with those in destitution by either ignoring them or providing some limited public charity. In 1885 a Hospitals and Charitable Aid Act had been passed which incorporated the term `charitable aid’ into the nation’s law, and which distinguished between the deserving and undeserving poor (sometimes quite vengefully).(9) The first welfare state of the settlers was a residual welfare state.

The 1880s were a period of social hardship, the deepest part of The Long Depression which led to the reforms of the 1890s (illustrating Sutch’s thesis of poverty leading to progress). Perhaps the most extraordinary contribution during this period, was colonial Treasurer Harry Atkinson’s 1883 proposal for – what even decades later appeared to be – a comprehensive welfare state. He wanted a compulsory levy to be collected by employers from workers and paid into a national insurance fund. (Contribution rates were to be higher from the age of 16 to the middle twenties, when payments would be reduced as family responsibilities took over.) There would be benefits to be paid to the sick, widows, orphans, and the elderly.(10)

The scheme received little support at the time, but was largely implemented in 1938 as the Social Security Act. There is a modern ring to Atkinson’s `the only effectual remedy against pauperism seems to me to be not private thrift of saving, but cooperative thrift or insurance, and to be thoroughly successful … must be national and compulsory.’ But the New Zealand population was at that time too fluid, because of international and interregional migration, to have made such a grand scheme workable.

One might speculate as what might have happened to the development of the welfare state if there had been more support for Atkinson. It may well have evolved from the scheme that Atkinson appears to have had in mind – of a general contribution and an entitlement by membership of some category – to one where there was individual contributions and entitlement was based on the individual’s past contributory record. By the time the retirement issue was be addressed in 1898, the contribution option was irrelevant, for the elderly were in need despite there being no national insurance fund.

Another debate which became prominent in the 1880s also cut across the possibility of a contributory system. On what basis was someone entitled to state support? The residual welfare state of the poor law, had entitlement based on need – dire need – and those in need to some extent forfeited some of their rights as a citizen. The alternative view at the time, and today, was that entitlement was by right of citizenship (although that is not the language of the time), and that beneficiaries retained the same rights and prerogatives of a citizen – maintained their dignity.

The debate was not settled in the 1890s. Fiscal constraints favour the first option, while human considerations and a detestation of the poor law favoured the second. The aged pension introduced in 1898 was a compromise, and at the time involved the humilation of public acknowledgement of one’s circumstances and destitution to obtain it.(11) But over the years the rules drifted towards the entitlement by citizenship based upon membership of a category. The introduction of further categorical benefits for widows and orphans in 1911, for the blind in 1924, and so on, reinforced this trend.

The story we have told has no reference to the Maori. That partly reflects the historiography, for there is no comprehensive study of the Maori and social security. But it also reflects that while the two peoples were living in the same land for much of the time before the middle of the twentieth century they were living in different societies. It is not until the Social Security Act of 1938 which gave the Maori the same entitlements, and the urbanization of the Maori after the Second World War that integration begins.

Children of the Poor

The 1938 Act was precipitated by the hardship of the interwar depression, especially of the early 1930s, but had developed out of the social welfare system which had begun forty years earlier with the 1898 Old Aged Pension Act. Note how the option of a contributory system in which entitlement was based upon past contributions was largely cut off since the pension system already in place was category based, while a residualist option based on need and destitution and a lack of acknowledgement of the dignity of the recipient was far from popular.

Commentaries on poverty over this period are largely anecdotal, appearing in political rhetoric, or in literature. It is beyond the scope of this study to provide a comprehensive overview, but one is both of significance, and instructive in itself. Even its origins have the elements of myth.

Since the Land Wars civil disturbances in New Zealand have been infrequent. One of the most famous was the Queens Street Riot of 1932, which precipitated a number of literary works.(12) One was Children of the Poor, first published anonymously, but subsequently acknowledged to be the work of Labour politician John A. Lee. Partly autobiographical the novel has precipitated at least four other major works. Erik Olsen has written a Lee biography, while Mervyn Thompson turned Lee’s novel into a play. The novel also provoked a response Not So Poor, from Lee’s mother, Isabella. Her editor, Annabel Cooper gives yet another account of the events in the preface.(13)

While there is disagreements over the facts of Lee’s childhood, the fascination is the contextual interpretation of those facts. Isabella wrote in response to Lee’s portrayal of a children trapped into grinding poverty for which there was no escape. Her account is that the poor had a dignity and respectability. This tension remains central to both an understanding of the poverty experience, and of poverty policy. Ironically Lee was able to escape, whereas his mother never escaped, even if she maintained her dignity.

Ethnographic and Quantitative Research Methods

Behind anecdote and literature there is the ethnographic approach to poverty studies (and indeed social investigation generally). Ethnography is the direct observation of the activity of a particular social group (in this case some of the poor), and the description and evaluation of that activity. In its strongest form, social anthropologists would live with the community, although it is rare for poverty researchers to be as poor as their subjects.

The methodology does raise a series of problems: how representative are the groups selected, to what extent does the observer (often unknowingly) impose a conceptual framework over the study which, in effect biases the outcome. We may recognize this in Lee’s Children of the Poor. How common were the events that Lee describes? And even his own mother disagreed with his interpretation. These issues are no less acute for social scientists using a more ethnographic approach.

We shall see that from the 1970s an alternative approach based upon quantitative methods evolved. This might be called the macro-analysis of poverty for it enables us to see the big picture – of how many poor there are, what characteristics they are associated with, and even perhaps what are the causes of poverty. But they never capture the reality of the experiences of the hardship and destitution that goes with the quantitative measures what may be objectively observed. One cannot but compare Isabella Lee’s account of her life, with that which Cooper patiently compiled from official records, and wonder some of the humiliation which Isabella glosses over, say in regard charitable aid, is a matter of presentation and to what extent it was too painful to record or remember.

There are hundreds of ethnographic accounts of poverty in New Zealand, although most are not particularly academic or systematic. But nor are the experiences they record. That only a selective few are reported in this study does not mean they are unimportant. Behind the statistics and policies are people. Children of the Poor was a powerful and influential tract, whatever one may think of its inherent methodology.

Next Chapter Ch 4: The Social Significance of Unemployment

Endnotes
1. Sutch (1969, 1966). (Both were first written in the late 1930s and early 1940s, although revised and republished in the 1960s. By then his thinking had moved on to Colony or Nation (1968). See also The Responsible Society (1971), for his later views on social welfare, and a book which influenced the 1972 Royal Commission on Social Security.
2. Including Bassett (1975), Hanson (1980), Munro (1996), and Tennant (1989).
3. Pool (1991).
4. The English equivalents of Maori terms are inevitably approximate. They are familiar in everyday New Zealand discourse, but are given here to guide non-New Zealand readers.
5. Note that the welfare state also involved transfer of people as when a child or dependent moved from a poor to a rich house.
6.Firth (1959).
7. Coase (1994).
8. There were small groups of Chinese and Indian settlers too.
9. Tennant (1990).
10. Basset (1975:111).
11. See Locke (1984:122-125) for a description of the obtaining of a pension.
12. Including Mulgan (1940?), Mason (1996?), and Edwards (1972?), as well as Lee (1936)
13. Lee (1934). Olsen (1977), Thompson (198?), Lee (199?). I understand that Isabella’s memoirs were also turned into a play produced in Dunedin.