All in the Family Debt
How Neoliberals and Conservatives Came Together to Undo the Welfare State
May 31, 2017
16 Min read time
How neoliberals and conservatives came together to undo the welfare state.
In 1601, as a succession of failing harvests left people jobless and hungry, and vagrants roamed across England, the Elizabethan poor laws were established to reassert control over the population. The poor laws distinguished between the impotent poor, unable to work and eligible for care in an almshouse; the able-bodied poor, who must be compelled to work in a poorhouse; and the idle poor or vagrants, who could be imprisoned or confined in a House of Correction. But before any recourse to the almshouse or prison could be activated, all three of these populations were subject to the principle of familial responsibility. In other words, before the parish took any action, family members would be compelled to provide as much support as they could. “The father and grandfather,” the law stated, “and the mother and grandmother, and the children of every poor, old, blind, lame and impotent person, or other person not able to work, being of a sufficient ability, shall, at their own charges, relieve and maintain every such poor person.” Familial responsibility, it was established, was the first line of defense in combatting poverty and improving social welfare.
By emphasizing the economic obligations of kinship, the family—not the state—became responsible for investing in the welfare of children.
The poor laws went on to see several iterations both in England and America. The early American colonies imported them virtually word for word and later incorporated them into state legal systems. But despite the many policy tweaks and changes that have occurred since, one element of the original poor laws has remained stubbornly in place: the foundational role of familial responsibility. Indeed, save for a brief respite in the 1960s, American social welfare policy and ideology has maintained a persistent—and damaging—attachment to that framework. Some ramifications are obvious—such as when legal relationships of spousal support and paternity are enforced without consent from either party—but some are more nuanced. The current crises of tuition costs and college debt, for instance, are the downstream effects of limiting a free public good and reinstating “familial responsibility.”
Indeed, many of the policy reforms after the Reagan revolution can be understood as an attempt to reinvent the imperative of familial responsibility in the new idiom of household debt. As policymakers imposed cuts to health, education, and welfare budgets, they simultaneously identified the family as a wholesale alternative to the twentieth-century social state. And as the responsibility for deficit spending shifted from the state to the household, the private debt obligations of family were defined as foundational to socioeconomic order. The family, not the state, would bear primary responsibility for investing in the education, health and welfare of children.
This return to Elizabethan poor law principles was made possible, in part, because of an unlikely alliance between neoliberals and social conservatives. Despite their differences on virtually all other issues, neoliberals and social conservatives were in agreement that the bonds of family needed to be encouraged—and at the limit enforced—as a necessary counterpart to market freedom. Though it is often overlooked in the literature, economic liberalism is as much concerned with familial responsibility as it is with personal responsibility, and the neoliberal emphasis on familial relations as a substitute for public relief is an unappreciated, but critical aspect of free-market liberalism. More than anything else, this appeal to familial responsibility sealed the working relationship between free market liberalism and social conservatism, very much defining the shape of social welfare in the contemporary era.
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When we take a close look at American social history, the rules of familial responsibility can be seen at work most clearly during periodic episodes of sexual revolution. By invigorating the poor laws’ emphasis on kinship, the state could contain the costs of evolving sexual mores by imposing marital and familial support as an economic obligation. That is, at each historical juncture where the legal obligations of family were somehow weakened or threatened by the generalization of divorce, the waning importance of marriage, or the liberation of slaves who had never been married, the poor laws would be reinforced to punish those who threatened to transfer the costs of their welfare onto the state.
One of the great victories of the American left in the 1960s was to almost completely expunge the last vestiges of the poor law tradition from the American welfare system. Throughout this decade, public interest lawyers associated with the welfare rights movement brought a series of test cases before the federal courts to challenge the array of moral regulations that bore down on unwed women in public assistance programs. Their explicit aim was to bring the “sexual revolution” in family law to the welfare poor. If the Supreme Court now recognized a constitutional right to sexual privacy, why would this right not be extended to women on welfare? If middle-class white women were escaping the dependence of the Fordist family wage by exiting the home, demanding equal wages and freer access to divorce, why would this freedom not be extended to women on welfare? And if marriage no longer counted in determining the legal status of middle-class children, why would the children of welfare mothers still be classified as illegitimate and punished for the sins of the parents? In a series of cases brought before the Supreme court between the 1960s and 1970s, almost every normative stricture on the welfare benefits paid to single women were overturned.
Despite their differences on virtually everything else, free-market neoliberals and social conservatives came together to fight the breakdown of family, albeit for different reasons.
But this development was profoundly unsettling to people across the political spectrum, and it is fair to say that it crystallized the enormous welfare backlash of the 1970s. It is in this period that you begin to hear the argument that public spending on welfare was making women too independent of presumptive husbands and fathers and thus effectively subsidizing the breakdown of the family. Writing at the end of the 1970s, the Chicago school neoliberal Gary Becker remarked that the “family in the Western world has been radically altered—some claim almost destroyed—by events of the last three decades.” He went on to list a familiar series of ills: from the rapid rise in divorce rates and female-headed families, to the decline in birth rates and the growing labor force participation of married women, which he claimed had “reduced the contact between children and their mothers and contributed to the conflict between the sexes in employment as well as in marriage.” Becker believed that such dramatic changes in the structure of the family had more to do with the expansion of the welfare state in the post-war era than with feminism per se—which could be considered a consequence rather than an instigator of these dynamics. Like many of his contemporaries, both neoliberals and neoconservatives, Becker singled out Aid to Families with Dependent Children (AFDC)—the “poor woman’s alimony”—as one of the primary causes of the breakdown of the family.
Becker’s abiding concern with the destructive effects of public spending on the family represents a key element of his microeconomics—but one that is consistently overlooked by the critical literature. Indeed, at different times and in different contexts, each of the key figures of American neoliberalism can be found invoking the idea that the “natural obligations” of family should serve as a substitute for the welfare state, that the “altruism” of the family represents a kind of primitive mutual insurance contract and serves as a necessary counterweight to market freedoms. From here derives the notion, now pervasive in American welfare practice, that the state has the right to identify and enforce legal obligations of marital support and child custody even when the parties concerned do not consent to or recognize this relationship. In the absence of a suitable family structure, the state is authorized to enforce the sexual contract just as it is authorized to enforce work.
As Governor of California in the late 1960s and 70s, Ronald Reagan leveraged similar arguments to launch a right-wing assault on welfare. He was one of the first to campaign against the gains of the welfare rights movement and the first to reinvigorate the state-based poor laws of familial responsibility as a guiding principle of social policy reform. Reagan targeted all kinds of state welfare—the California Welfare Reform Act of 1971 sought to revive old state laws holding family members liable for the costs of elderly care in state homes or the care of disabled children in public institutions—but he was primarily interested in mothers on AFDC. Echoing the poor laws, the idea was that wherever possible an “absent (biological) father” should be identified and made responsible for looking after a single mother and her children. Indeed, where necessary, the state should be empowered to enforce such responsibilities when they were not forthcoming of their own accord.
As president, Reagan attempted to translate his Californian project in welfare reform onto the federal stage, without success. Instead Reagan’s project was brought to final fruition by President Clinton, whose monumental welfare reform of 1996 effectively federalized the poor law tradition, turning America’s welfare bureaucracy into an immense national apparatus for policing and enforcing child support obligations amongst the welfare poor. The New Democrat Clinton achieved at a federal level what Reagan achieved only partially at a state level. Indeed, he went further: Clinton not only federalized the neoliberal principle of familial responsibility, he combined it with a social conservative focus on the active reconstitution of married, family life. His efforts in this direction later flowered into a multitude of pedagogical programs designed to sustain healthy marriages, responsible fatherhood and pre-marital abstinence amongst the welfare poor. Clinton’s welfare reform can be said to reflect both social conservative and neoliberal views on poverty management.
The United States has curtailed liberation movements that threatened to undermine the family and transfer the cost of welfare to the state.
Once you recognize that American neoliberalism proposes a revival and reinvention of the poor law principle of familial responsibility you begin to understand how neoliberals have been able to forge a working relationship with social conservatives over the past four decades—a relationship that otherwise appears enigmatic. Neoliberals and social conservatives are equally invested in the promotion and enforcement of legal family obligations, albeit for different reasons: neoliberals because they oppose the state subsidization of irresponsible lifestyle choices (sex outside of marriage, illegitimate childbearing and unprotected sex, all of which represent a potential burden on the state), neoconservatives because they see the bonds of family life as foundational to social order itself. In fact, this convergence of interests is nothing new. A similar alliance between classical liberals and social conservatives defined the so-called Gilded Age of late nineteenth century capitalism, also an era of triumphant laissez faire economics in which public relief was marginalized in favor of charitable systems of poverty management focused on familial responsibility. In some sense then, the contemporary alliance between neoliberalism and social conservatism recalls this earlier period of American life.
• • •
This alliance can be seen at work in a whole range of social policy arenas, where neoliberals and social conservatives have worked together to limit public spending and restore institutional authority by invoking the principle of familial responsibility. Higher education is a case in point. In 1960s America, both neoliberals and neoconservatives were alarmed by the militancy of the new student left and convinced that it could be explained by rising public spending on the sector, in much the same way that family breakdown could be attributed to increasingly generous welfare programs.
The creation of a generous federal grant and loan system under the Higher Education Act of 1965, along with a system of public universities offering tuition-free education, meant that an entire generation of students were able to go to college without relying on family support. This was also a period in which rising wages and expanding public services allowed young adults to attain financial independence earlier than any other time before or after in American history. Neoliberal and neoconservative observers of the 1960s were convinced that these unheard of economic conditions were responsible for the peculiar kinds of radicalism bubbling up on college campuses around the country. Reporting on conditions in the United States for the Trilateral Commission, the neoconservative Samuel Huntington infamously denounced the “democratic surge of the 1960s” with its “general challenge to existing systems of authority, public and private.” In one form or another, he observed, “this challenge manifested itself in the family, the university, business, public and private associations, politics, the governmental bureaucracy, and the military services. People no longer felt the same compulsion to obey those whom they had previously considered superior to themselves in age, rank, status, expertise, character, or talents.” And it was particularly visible on college campuses. “The single most important variable” shaping this dynamic, he ventured, was the democratization of higher education.
Neoconservatives would spend the next few decades railing against affirmative action and fighting a cultural war against the new minority disciplines of black, ethnic and women’s studies. Neoliberal economists such as Milton Friedman and James M. Buchanan also suspected some kind of causal connection between free public education and the inflated demands of the student movement, but advocated a somewhat more pragmatic and adaptive response to the problem. Drawing on the microeconomics of rational choice, they sought to show how the creation of free public goods such as education could act as a perverse incentive towards anti-authoritarianism, and conversely, how the pricing of these same goods could reverse such alarming trends. Neoconservatives and neoliberals were in agreement that the student movement could be neutralized only if free tuition was abolished and familial responsibility reinstated, but neoliberals found a way to soften the blow by simultaneously calling for an expansion of consumer credit markets.
In his 1962 publication, Capitalism and Freedom, Friedman argued that the returns to investment in education (in the form of higher salaries) accrued entirely to the individual student. Therefore the individual (and his or her family) should be held responsible for the costs of his education. Friedman agreed with many of his more Keynesian-minded contemporaries that there had been massive underinvestment in so-called “human capital” assets such as education and healthcare, but he believed that this failure could best be remedied through the liberalization of consumer credit markets. The fact that low-income students were unable to pay for a degree and thus discriminated against in the labor market could be attributed to “imperfections in the capital market,” that is, the absence of a liquid market in private student loans. He saw private credit markets as the most efficient source of funding for student loans and thought that government incentives to banks were the best way of stimulating this market—a model that Governor Reagan invoked to attack the funding structures of the University of California system and later used, as president, to overhaul higher education in the United States.
Clinton's welfare reforms turned America's bureaucracy into an immense national apparatus for policing the poor.
Gary Becker had a very similar position to Friedman but as a microeconomist was always much more attentive to the intimate, domestic underpinnings of “human capital” investment. Free public education, Becker argued, could be critiqued on the same grounds as the progressive income tax, which (in his words) “initially narrows inequality” but ends up raising the “equilibrium level of inequality…because families reduce their investments in descendants.” Translation: if you make education free, parents will stop investing in their children! If we could only turn off the spigots of government spending, then families would spontaneously rediscover their natural altruism and start investing in their children again. The argument was at odds with the available evidence, but it enabled Becker to identify private credit markets as a logical alternative to free tuition. In Becker’s ideal world, students would once again look to the family as a source of economic support, and yet the old stratifications of family wealth would simultaneously be deferred and elasticized by expanding opportunities for private debt. With a little help from government, the old poor law tradition of familial responsibility could be reinvented in the form of an infinitely elastic intergenerational debt.
When we look at the subsequent history of higher education funding in the United States, it is astounding how closely neoliberal reforms of the sector have followed the prescriptions set out by Friedman and Becker. Since Reagan’s reforms of higher education in 1980, federal policy has tended to diminish the spending power of Pell grants and to push instead for the expansion of federal and private student loans, (federal loans have until recently served to subsidize the private student loan market). At the same time, state governments have been chipping away at their investments in public universities so that institutions that were free for state residents before the 1980s have now become effectively private. The effect of this policy drift, as few would be unaware, has been rapidly inflating tuition costs and an enormous build-up of student debt. As movements such as Strike Debt have explained so well, inequality now tends to manifest in the form of differing degrees of debt servitude rather than outright exclusion.
What Strike Debt fails to take into account, however, is the fact that so-called private or personal debt very often takes the form of intergenerational, familial debt binding together young adults, parents and sometimes more distant relatives in webs of economic dependence that may last for decades. As tuition fees have skyrocketed and lending thresholds have been raised, both the federal government and private lenders have pushed students towards loans that are signed by parents and where the obligations between parent and child serve as a kind of substitute for secure collateral. As a consequence, a growing number of parents are finding themselves saddled with student debt well into old age, and the global market in securitized household debt is entirely dependent on our intimate obligations to each other. The fact that we are unwilling to abandon such familial obligations serves a highly useful anchoring role for the market in securitized credit, ensuring that consumer debtors remain wedded to a contract much longer than professional market players.
Today the effects of this shift in public finance is experientially self-evident. The New York Federal Reserve recently published a report seeking to account for the fact that a growing number of young adults are living at home with their parents well into their 20s and even 30s—a demographic trend it attributes first and foremost to college debt. The shift from public to private investment in so-called human capital has forcefully reinvigorated the importance of family debt networks and inherited wealth in the shaping of social destinies. The effect of more than three decades of neoliberal economic reform has been to reinstate the legal and economic function of the private family as the first line provider of welfare, very much in keeping with the four-hundred year old poor law tradition, but distinct inasmuch as it involves expanding opportunities for personal indebtedness. As a result, neoliberalism has reinvented the poor law tradition in the idiom of intergenerational debt. We can only escape the tyranny of inherited wealth by including kin within our own debt servitude. It is this predicament, more than rampant individualism, which defines the experience of our times.
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May 31, 2017
16 Min read time