Sociological Forum, Voi. 4, Ne. 3, 1989 The Relative Autonomy of the State and the Origins of British Welfare Policy’ Steve Valocchi? This paper assesses the relative influence of organizational vs. class power in affecting the timing and the shape of the British welfare reforms of 1908-1911. Rather than viewing these reforms as either the outcome of the direct pressure of business or as an internal response. from a newly bureaucra- tized state to solve social problems, this analysis finds more evidence fora perspective that emphasizes the more indirect, more mediated class biases inherent in the British state as setting the context within which action on wel- fare reform occurred. Specifically, I argue that state managers used their new- {y developed organizational capacity to shape the Liberal reforms according to their own purposes but these purposes were limited by several class-based factors. The historical conclusions point to a synthesis of the relative auton- omy approaches to the capitalist state advanced in the neo-Marxist work of Poulantzas, Offe, and Block. KEY WORDS: welfare state; class influences; organizational infuences; British Labour party; theories of the state. INTRODUCTION Defining the state and defining the nature of state power in capitalist so- cieties are centrat concerns in the sociological literature on the determinants of welfare policy. This literature tends to view the state in one of two ways: as a formal organization that operates according to internally derived rules, roles, and resources, or as an object of groups from a capitalist society seek- ing to use or shape the organizational features of the state for class-based ends. The current debate between neo-Marxists and neo-Weberians in this \An earlier version of this paper was presented at the 1988 meetings of the Eastern Sociological Society in Philadelphia, Pennsylvania. {Department of Sociology, Trinity College, Hartford, Connecticut 06106. 349 84.971 89/0000-0149506 00 @ 1989 Plenum Publishing Corporation350 Valocchi literature, for example, turns on which of these conceptions of the state most closely represents the policy-making process in democratic capitalist nations (cf. Quadagno, 1985; Skocpol and Amenta, 1985). In this paper I assess the relative influence of organizational vs. class power in affecting the timing and the nature of the British welfare reforms of 1908-1911. These reforms established the ideological and structural foundations of the contemporary British welfare system. This analysis demonstrates the inability of either an instrumental Marxist or a state-centered Weberian approach to explain the British welfare reforms. Rather, | find evidence for a perspective that emphasizes the indirect, medi- ated class biases inherent in the state as providing the organizational context within which the debate and struggle over welfare reform occurred. This per- spective integrates the theoretical propositions about the relative autonomy of the state in the work of Poulantzas (1973), Offe (1974), and Block (1977, 1980). In particular, I argue that state managers, that is, “the most powerful figures of the state apparatus, whether they be in the legislative, executive or judicial branches” (Block, 1979:83), used their newly developed organiza- tional capacity to shape the Liberal reforms according to their own purposes.? These individuals, however, were constrained by several class-based factors: by the class biases that influenced the construction and operation of the British state in the late 19th century, by the changing nature of working-class or- ganizations at the turn of the century, and by the growing presence of the Labour party in Parliament in the early 20th century. In other words, the state used its monopoly over the means of administration and coercion to craft a particular kind of welfare system and to gain a relative autonomy from the interests of specific business elites and labor organizations. State managers exercised this power, however, within a particular class context, and this context limited the ways in which they exercised that power. The British state has always been assumed to reflect rather directly the social and political interests articulated within civil society, Badie and Birn- baum (1983:121-125), for example, applaud a fairly fluid British establish- ment for its ability to govern itself using well-developed parliamentary institutions and traditions to negotiate agreements of common interest among dissenting interests. While it is true that, compared to other nations in Western Europe, Britain has both a small civil service lacking in specialized expertise Af am not arguing that state managers have completely distinct interests from forces in civil society. After all, government ministers are representatives of social groups and must, in part, consider these groups in the policy-making process. I am arguing that their participation in parliamentary politics and state institutions gives them another agenda that may not be isomorphic with the agenda mandated by their representative role.Relative Autonomy 381 and a limited set of economic activities under direct state authority, many accounts of the relationship of the British state to civil society tend to exag- gerate the ability of economic and social elites to govern themselves in a straightforward and nonproblematic way. Even in a nation where the state “has been minimal from the seventeenth century down to the present” (Badie and Birnbaum, 1983:123), I will argue that state managers have served as intermediaries (albeit dependent intermediaries) in the conflict between frac- tions of capital and the growing influence of the working class. In this sense, a case study of British welfare policy is a conservative test of the rejative autonomy thesis. If one can show the important role played by state processes that were relatively autonomous in nature in a context typically seen as soci- ety centered, then this would be strong evidence of the more general propo- sition about the relative autonomy of the policy-making process in capitalist societies. The beginnings of a national welfare system in Great Britain took shape with the Liberal welfare reforms of 1908-1911. The Liberal reforms estab- Jished centralized systems of relief for old age, accident, sickness, and un- employment based not on a test of destitution by local authorities but on national criteria and insurance contributions. The framers of the Liberal re- forms wanted to establish a minimum income for certain groups of workers or individuals (Churchill, 1909:82). This minimum now extends to alt wage earners and is the cornerstone of the British social security system (Furniss and Tilton, 1977:102). THEORY AND THE LIBERAL WELFARE REFORMS: INSTRUMENTALIST AND STATE-CENTERED ACCOUNTS There has been very little social science research that uses theoretical perspectives on the state to evaluate the causes of the Liberal welfare reforms. Two approaches are relevant to the purposes of understanding social policy vis-a-vis the relationship between economic power and state structure: the instrumental neo-Marxist approach of Ralph Miliband (1961)* and the state- centered neo-Weberian approach of Orloff and Skocpol (1984). Miliband (1961) sees the Liberal reforms as a product of class-conscious capitalists and their spokesmen within the state doing what is necessary to rationalize a capitalist economic order that has become increasingly unable to rationalize ‘Miliband refers only tangentially to the Liberal reforms in his sweeping account of the role of the Latour party in British politics in the 20th centucy. His general theoretical position, however, ‘thas been used by others in less systematic but more historically cletailed analyses (cf. Hay, 1981; Searle, 1971).352 Valocchi itself. In Miliband’s analysis, the reforms were necessary to increase the health and efficiency of the British labor force, to ally the interests of the fledgling Labour party more closely to those of the Liberal party, and most impor- tantly, to coopt the more dangerous elements of the working class (Miliband, 1961:22-23). More generally for Miliband, welfare reform is “part of the ‘ran- som’ the working classes had been able to exact from their rulers in the course of a hundred years” (Miliband, 1969:109-110). Miliband’s image of policy-making as an automatic reflection of the interests of class-conscious capitalists accords Political processes and state bureaucracy no autonomous power. By searching for and always finding some business interest or some politician with a business background or business perspective behind some political initiative, Miliband does not allow for the possibility that the state and its politics can constrain or redirect the interests of capitalists (or any organized interest from civil society) according to bureaucratic or political imperatives. In so doing, Miliband conflates individu- al bias with structural bias; that is, he ignores the possibility that structures can have class biases and that these biases serve to “select in” certain people or political perspectives while systematically excluding others. Orloff and Skocpol’s (1984) analysis does not minimize the importance of political process and state structure in understanding the timing and na- ture of the Liberal reforms. Their analysis stresses the unique sequencing of bureaucratization prior to democratization in Great Britain in establish- ing a nonpatronage-based capacity for the central state and in enabling po- litical parties to make programmatic appeals—such as welfare policy—to nationally organized blocs of voters in the electoral process. In Orloff and Skocpol’s view (1984:746), the Liberal reforms were “grounded in the logics of state building, in the struggles of politicians for control and advantage, and in the expectations groups have about what states and parties with specific structures and modes of operation could or should do.” This state-centered perspective seems particularly helpful in understand- ing the timing of the Liberal welfare reforms. The political and state reforms of the late 19th and early 20th centuries did enhance the capacity of political parties and the state bureaucracy independent of the interests of traditional social and economic elites in Great Britain, These changes, however, tell us little about the ideas and interests that guided and motivated this newfound capacity to act. To do this, one would need to examine the organized in- terests “for and against” welfare reform, and how political processes and state structures refracted those interests. More important, however, is Orloff and Skocpol’s neglect of the ori- gins of many of the administrative and political changes that carry the bulk of the explanatory power of their analysis. If these changes, for example, had class origins, and procapitalist biases were somehow institutionalizedRelative Autonomy 353 as part of these changes, then we wouid need to examine the policy-making process not simply as an interaction of interests and structures. In addition, we would need to “unpack” the notion of structure itself, and to understand the ways in which class biases are built into the state and the policy-making process. It is in this vein that the neo-Marxist work of Poulantzas (1973), Offe (1974), and Block (1977, 1980) becomes relevant: they deal explicitly with the ways in which states are class biased. Unlike Miliband and other in- strumentalist theorists of the capitalist state, Poulantzas asserts that states have the institutional capacity to act independently of the interests of individu- ai capitalists, and indeed, must act independently in order for state managers to serve as “the factor of cohesion of a social formation and the factor of reproduction of the conditions of production of a system” (Poulantzas, 1973:245). This function requires that state managers pursue policies that may oppose the interests of some segment of the capitalist class, and address some of the interests of the working class in order to guarantee the general condi- tions of profitable capitalist production and ensure the stability of a class- based social structure, Out of this process state structures evolve that some- how represent or institutionalize the class conflicts or class inequalities of the broader society. Although Poulantzas has identified an important struc- tural dynamic that uncovers a class agenda behind the seemingly neutral or- ganizational features of states, no other theoretical guidelines appear to further specify the ways in which these organizational features function to reproduce class structure in the policy-making process. Offe (1974) provides such guidelines through the concept of selective mechanisms. (Also see Gold ef ai. (1975) for a discussion of the early works of Offe and Poulantzas.) Offe asserts that all capitalist states have organiza- tional features that systematically exclude anticapitalist interests from the policy-making process, promote policies representing the interests of capitalists as a whole over specific capitalist groups, and support ideologies that “package” social policy in class-neutral terms. Administrative procedures, the organization of the state bureaucracy, and the division of labor across governmental units are important objects of investigation, for example, to the extent that one can identify how these features contribute to one or several of the selective mechanisms of the capitalist state. These are the internal mechanisms within capitalist states that give state managers a refative au- tonomy in the policy-making process. While Block would not disagree that the institutionalization of class conflict and the organizational features of states influence the shape of so- cial policy (Block, 1987: Ch. 1), he would stress that these internal features are buttressed by the external constraints of business confidence. According 10 Block (1977, 1980), the major structural mechanism that places limits on354 Valocchi the power of state managers is private control of investment and all forms of wealth. This private control makes state managers dependent on capitalists primarily for economic growth, social stability, and dominance in the world economy and state system (Block, 1980:231). The general conditions of profitable production and class rule are met simply because state managers monitor business confidence, and design and administer policy in such a way that gives state managers more control over this monitoring process. My analysis demonstrates that both internal and external mechanisms were at work in fashioning the Liberal welfare reforms. The first part of this paper is a class analysis of the British state prior to the passage of the Liberal reforms. It highlights the internal mechanisms of class bias: the ways in which the state acquired an enhanced political, administrative, and fiscal capacity’ for action and the ways in which this capacity was influenced by class-based processes. The second part of the paper deals more with the ex- ternal mechanisms: it describes the interaction of organized interests and state structure in the debate over welfare reform, and concentrates on the changes in business’s and labor’s attitudes toward state action and how those changes affected the policy choices of state managers. CLASS BIASES AND STATE CAPACITY In Britain a strong commercialized elite composed of both landed mag- nates and members of the industrial middle class was the dominant group that shaped the fiscal and administrative structures of the state prior to the na- tional welfare reforms (Anderson, 1965:16-19}. The urban working class had a more direct impact on the structure of representation of the British politi- cal system, forcing franchise extensions on reluctant political parties (Cowl- ing, 1967). Prior to the British reforms of 1908-1911, Parliament very rarely pro- posed national taxes to finance welfare reform. This hesitancy derived from the economic power of the commercialized landed elite (Ashford, 1986:68). This group saw their local tax rates increase throughout the early 19th cen- tury as land consolidation and enclosures made the peasantry increasingly dependent on the poor laws. Landed magnates whose interests turned more *For states to impose their policy objective on a population they must have fiscal, administra- tive, and political capacities that are not direcily dependent on the organized interests of groups from civil society. In addition, states must establish structures that organize and implement these capacities. Specifically, theses structures must have the ability to raise revenue (e., fiscal capacity), to make collective decisions that are viewed as legitimate by relevant political actors {j.e., political capacity), and to implement these decisions in a prescribed manner (i.e., administrative capacity).Relative Autonomy 355 and more on profits derived from rents and exports became increasingly un- able to control the costs of local relief; the last thing they wanted was na- tional taxation for welfare reform (Brundage, 1978: Ch. 1). In addition to these local pressures against national taxation, the cen- trality of British capital in underwriting domestic and foreign industrializa- tion made growing numbers of politicians wary of doing anything to jeopardize the value of the pound. These politicians simply mimicked the concerns of the lawyers and bankers that made up the finance-trading com- plex of the City of London (Gamble, 1983:56, 71-75). These lawyers and bankers were managing and investing the profits made from agricultural ex- ports and textiles by both landed and industrial elites. In 1868, the govern- ment made the Treasury Department the coordinating department of the civil service, thus institutionalizing the foreign investment concerns of the city within the policy-making process. This administrative change helped institu- tionalize concerns over expenditure and funding at every stage of the policy- making process. Prime Minister William Gladstone also pushed through Parliament in 1870 a public order that prohibited any authorization of in- creased spending unless that authorization came from the Crown (Gowan, 1987219). The interests of the commercialized elite also dominated the ways in which the British state credentialed the civil service and routinized many of the state’s administrative and policy-making functions. The 1870 Civil Serv- ive Reform Act, together with a number of public orders in the 1860s and 1870s, opened up the senior civil service to members of the middle class provided they obtained a classical education at either Oxford or Cambridge (Mueller, 1984; Shefier, 1977:436). These reforms changed the division of labor and responsibility in the policy-making process: they established a pat- tern of closed consultation between department heads and senior civil ser- vants apart from the systematic input of party Members of Parliament (MPs), and gave these civil servants a good deal of policy-making authority (Go- wan, 1987; Roseveare, 1969:227). One cannot understand these administrative changes without under- standing the broad-based national and international pressures for franchise extensions in the 19th century. With pressures to extend the franchise from both the middle and working classes, the Conservative-led governments in the mid-19th century did not want to repeat the violence associated with simi- lar attempts on the European continent (Gowan, 1987:15). Therefore, in con- junction with the gradual and limited extensions of the franchise, these governments passed administrative reforms that increased the access of the middie class to government posts in the upper reaches of the civil service, provided that the individuals gained a classical education and were exposed to the priorities of the Treasury Department in their training process. These356 Valocchi reforms enhanced the administrative capacity of the British state, tied that capacity to the investment priorities of the international capitalist market, and insulated that capacity from the growing diversity of Parliament. The rise of mass party organizations represented the major inroad made by the working class into what had been a closed political system staffed and controlled by landed elite. Although spearheaded by the middle class, the extensions of the franchise and the subsequent reform of the patronage- based party system were accompanied by working-class movements for broad- er political representation in Parliament (Cowling, 1967: Ch. 7). This acces- sibility to Parliament made political issues, previously debated and resolved by a small circle of landed elites, the object of party competition. Working- class access to parliamentary politics, however, was initially contingent on its participation in either of the two mass-based parties, the Conservative or the Liberal party (Shefter, 1977). By the early 20th century, the period prior to welfare reform, the Brit- ish state had an enhanced capacity to act. This enhanced capacity, however, was the result of an implicit alliance between a landed elite and an industrial elite to extend the market basis of society and to protect that basis from a restive working class. Although shielded from the process of policy-making, the working class did manage to gain a limited voice in party politics. This limited voice would prove crucial in prodding the Liberal government to over- come some of the fiscal constraints on national welfare reform. Implicit in the above description is a historically grounded illustration of Offe’s selective mechanisms. The changes in political and state structures, many of them motivated by the desire of elites to maintain control over state Processes, functioned in precisely the manner specified by Offe. These changes placed limits on the options available to state managers: limits on the kinds of expertise most readily available to state managers, limits on the fiscal fea- tures of any new policy proposals, and limits on the kinds of interests that needed to be addressed in any new policy initiatives. These limits on state autonomy help us understand why state managers responded to the general economic and social problems of the early 20th century, and to the class con- flicts emerging from these problems with a series of reforms that were, for the most part, self-financing, limited in coverage, and that involved very lit- Ue income redistribution. It is to these changes in British society and their impact on politics and policy that 1 now turn. CLASS POLITICS AND STATE ACTION There was a growing awareness in Britain beginning in the 1880s that the empire building of the past could no longer assure continued economicRelavive Autonomy 357 dominance (Briggs, 1961:245-246; Eley, 1984:103). The onset of a prolonged trade depression and increased trade union activity generated a number of intellectual challenges to the philosphy of economic liberalism. Prior to this time, both business and labor had accepted some version of the doctrine of economic liberalism: business tended to emphasize the extreme individual- ism of this doctrine; labor emphasized the noninterference of the state in the area of industrial relations. The challenges to this doctrine were of three kinds: first, a social im- perialism that sought to combine tariffs, imperialism, and social welfare policy in order to eliminate class conflict and unify the race. Industries that found their economic positions being eroded by international competition as well as some members of the Conservative party tended to subscribe to this view (Hay, 1981:119). A second challenge, dubbed the “new” liberalism, elabo- rated the conditions under which industrialism eroded individual liberty and advocated state intervention to restore and guarantee that liberty. This view was held by members of the business community in the more dynamic and monopolistic sectors of the economy, businessmen who were very influen- tial in the Liberal party (Harris, 1972:192-193). A final challenge to eco- nomic liberalism emerged in the new industrial unions. This philosophy, loosely referred to as “socialist collectivism,” sought to extend state inter- vention into the capitalist firm in order to democratize decision-making processes (Fox, 1985:177; Searle, 1971: Ch. 1). Although each of these philosophies received a political hearing in parliamentary debates on social and economic policy in the late 19th and early 20th centuries, only the new liberalism had any impact on the shape of the Liberal reforms. This was due to the already discussed features of the state that gave disproportionate control of policy development to senior civil servants and state ministers, These civil servants and state ministers came to view the new liberalism as the most palatable solution to the economic and social problems of the time: the civil service arrived at this solution through their training at Oxford and Cambridge; the state ministers through political expediency. Many educators at Oxford and Cambridge were attracted to the new liberalism espoused by the sociologist Leonard T. Hobhouse and the British journalist J. A. Hobson (Jenks, 1977:491). The philosophy of the new liber- alism held firmly to principles of individual autonomy and the integrity of the market as the foundation of social progress, but it superimposed on this foundation the notion that an interventionist state could shore up conflict among social classes, eliminate waste in the market, and ensure that the benefits of capitalism would not be squandered, wasted, or hoarded. This outlook produced such reform-minded civil servants as William Beveridge and Llewellyn Smith, the chief architects of the unemployment insurance program and industrial! relations policy, respectively.358 Valocchi Both men were senior civil servants at the Board of Trade. Although the responsibility for industrial relations policy and labor policy traditional- ly laid at the Home Office and the Local Government Board, the increasing association of these offices with punitive measures, and the demand in so- cial and political debate for coordinated treatment of labor and commercial issues, led state ministers to transfer the investigatory and policy develop- ment functions to an office associated with innovation and independent in- itiative in the area of tariffs and trade (Davidson, 1982:163, 174). Here is a good example of how organized interests from civil society changed the already-established process of policy-making. These civil servants saw their role as developing social policy that would incorporate diverse groups into the structure of social policy in a way that would preserve individual liberties yet mitigate class conflicts (Harris, 1972:285). Although these new ideas were present in several departments of the British state as well as among several Liberal MPs in the early 20th cen- tury, they did not gain a hearing among state ministers in Whitehall until Pressures of party competition and class politics forced these ministers to put welfare reform on the political agenda. Both parties vied for the vote of the newly enfranchised skilled work- ing class, eager to harness its growing organizational strength in politically desirable ways (Gilbert, 1966). The Labour party’s growing presence threa- tened to upset the delicate balance that existed between Labour and Liberal candidates in the two decades surrounding the turn of the century, During these decades, the Liberal party agreed not to put up candidates in certain districts where independent Labour candidates were running. In return, the Labour candidates elected maintained the party discipline of the Liberals {Moore, 1978:18). As the nature of working-class organizations shifted from an emphasis on skilled and craft workers to unskilled and semiskilled wor- kers, more Labour MPs rejected the program of the Liberals for one of their own making (Fox, 1985). In the field of industrial relations, they advocated increased freedom for trade unions, and in the realm of social Policy they advocated right-to-work legislation: this usually entailed state-sponsored pub- lic works programs at market wages (Eley, 1984:103). In the 1906 general election the Liberal party won a majority of the parliamentary seats and the ability to form a government. The Liberal vic- tory was not built on any specific promises of welfare reform. Once in office, Prime Minister Henry Campbell-Bannerman extended a vague preelection commitment by authorizing his cabinet to begin an investigation into the feasibility of old-age pensions. The subsequent Royal Commission undertook little original research and its proposals did not differ significantly from those of previous state investigations (Quadagno, 1982:185). This investigation would have probably suffered the same fate as previous half hearted attemptsRelative Autonomy 359 if two events had not communicated a sense of urgency to the Liberal cabi- net: first, the 1906 election brought into Parliament the largest numbers of Labour MPs, and second, a number of Conservative candidates overturned Liberal MPs in the by-elections of 1907 (Hay, 1975:46). The Labour MPs tried frequently to get right-to-work bills on the parliamentary agenda, and the by-election defeats by the Conservatives raised the specter of tariff re- form from these Conservative MPs. ‘The death of the prime minister in 1908 gave the Liberals the opportu- nity to restructure the cabinet, giving several ministries to individuals attracted to the new liberalism. Once this occurred, policy proposals flowed very quick- ly from Whitehall. At first glance, this account of the new liberalism seems consistent with the state-centered argument that the credentialing of the civil service and the subsequent reforms in party organization enhanced the capacity of the state and made possible the programmatic competition between political parties. The state-centered argument, however, ignores the class biases that made these reforms possible. The very existence of a closed circle of policy-making, essential to the development of the Liberal reforms, was the outcome of class- based processes. In addition, the new liberalism was selected into this circle due to its “attractiveness” to Liberal state ministers who needed to balance business concerns of efficiency and cost with working-class concerns of ade- quacy. The new liberalism was well suited to this task. This account, then, stresses both the selective mechanisms of Offe and the institutionalization of class conflict within the state of Poulantzas. In responding to pressures 10 act, state managers chose an ideology from among the intellectual alter- natives that, while palatable to the Labour party, cloaked elite interests in the language of societal cooperation and technocratic solutions to social problems. The new liberalism, however, was not determinant in shaping the Liberal reforms: some ideas were changed and some eliminated in order to conform to norms of business confidence. THE NEW LIBERALISM AND BUSINESS CONFIDENCE The Old Age Pension Act incorporated recommendations from the previous investigations of the past two decades. For the first time, relief for destitition in old age would come from central funds and not from the local poor rates. The Treasury, however, imposed a reduction of benefit and re- fused to underwrite the costs of additional reform without an increase in taxes (Heclo, 1974:88), This refusal fueled a budget crisis in 1909 when the Liberal government imposed a significant increase in the land tax and the inheritance tax over the staunch resistance from the House of Lords. With360 Valocchi the budget secured, the government moved quickly to formulate the proposals for unemployment and health insurance. Although the idea of the insurance principle came from the German insurance reforms of the 1880s, Winston Churchill, David Lloyd George, and several senior civil servants at the Board of Trade were convinced that the German reforms involved an element of state compulsion that the British people, particularly British employers, would never tolerate (Hennock, 1981:102). The insurance idea was molded not only to fit the broad outlines of the new liberalism, but also to address the de- mands of the already existing interest groups in the field of unemployment and heaith benefits. Both of these alterations occurred at the cabinet level with little significant input from Parliament (Heclo, 1974:78-83). The insurance principle enabled state ministers to broaden the reach of the state in a way consistent with balancing social needs and business con- fidence: it provided the means by which the state could bring together groups with diverse interests and coerce these groups to act in their own self-interest. State managers, however, were adamant that this coercion be mild: Chur- chill, along with civil servants at the Board of Trade and the Treasury, in- sisted that insurance financing must not require income redistribution nor interfere with the purchase of additional insurance in the market. In addi- tion, benefits and taxes in the insurance schemes were flat rate and selective: they were financed by a uniform tax on wages and profits, and were availa- ble for only a select group of industries and individuals (Quadagno, 1982:188). The National Insurance Act of 1911 granted a small benefit to individuals in the event of unemployment or sickness provided the individual was em- ployed in an insured trade, and had worked continuously prior to unemploy- ment or sickness. Winston Churchill echoed the minimalist role of the state in the insurance reforms in a speech on unemployment: “We have not Ppretend- ed to carry the toiler to dry land... . What we have done is to strap a life- beit around him” (Quoted in Bruce, 1961:154), Although class conflicts as mediated through the politics of the Liber- al-Labour coalition pushed the British state to act, the class biases institu- tionalized within the state dictated the nature of the reform. Not only was a “safe” ideology in the form of the new liberalism evoked to package class interests as general interests, but the closed nature of the decision-making process ensured that the investment concerns of the Treasury and the labor market concerns of the Board of Trade would be addressed, concerns very similar to what Block describes as business confidence. All in all, state managers acted relatively autonomously and extended their power in a struc- ture that made some actions easier than others, some policy options more feasible than others, and some ways of thinking more common than others. The health and unemployment reforms are good examples of this rela- tive nature of state autonomy. Neither health nor unemployment insuranceRelative Autonomy 361 was imposed on a clear field: Friendly Societies operated systems of health benefit for better-off members of the working class, unions operated sys- tems of unemployment insurance for their members, insurance companies sold sickness and death benefits to families, British doctors sold their serv- ices to Friendly Societies. State-sponsored insurance threatened to undermine the relationships built between these organizations and their clients. For the most part, however, state ministers and senior civil servants appeased these interests, and altered the original proposals without the need for these in- terests to use parliamentary machinery to voice their concerns (Gilbert, 1966). In some cases, private interests were not averse to state intervention as long as that intervention did not interfere with their autonomy. This was the case for the unions and the Friendly Societies. Although the unions initially op- posed national unemployment insurance, their opposition moderated when Churchill allowed the unions to administer the state plan for its members. Likewise, the opposition of the Friendly Societies and doctors moderated when they realized that national insurance would bolster rather than inter- fere with their authority. It was only in the case of health insurance when the government tried 10 transform a well-established private service into a public service that bus- iness opposition forced concessions. The insurance lobby forced Lloyd Ge- orge to drop his idea for a widows’ and orphans’ pension because the control of these pensions by the state would reduce a wife’s financial insecurity at ihe time of her husband’s death and thus interfere with the sale of funeral insurance by private insurance companies. These companies insisted on the right to set up “dummy” friendly societies that could apply for approval un- der the National Insurance Act and thus qualify as a distributor of state benefits. These “approved societies” could then employ the sales force of the insurance companies to sell private insurance as well as to distribute state benefits (Bruce, 1961; Gilbert, 1966). Although state ministers took the initiative in pursuing national policy and then engaged outside interests to go along, the above description indi- cates that the ability of state managers to realize their policy aims was in- deed limited: outside pressures were influential in changing the shape of the reforms. State managers may have defined the terms of the debate but these terms were not so stringent that they prevented outside interests from suc- cessfully pressing their claims. In this process, however, state ministers or the civil servants in charge of policy development did not support one in- terest against another nor did they solicit the viewpoint of groups who had not voluntarily reacted to the proposals. They simply let those who were better organized have greatest access provided that the demands of these groups did not violate the fairly broad tenets of the new liberalism. Of course, this procedure gave greater power to capital than to labor.362 Valocehi SUMMARY AND CONCLUSIONS This analysis has several implications for theories of welfare policy- making and theories of the capitalist state. First of all, the reforms were not the outcome of pluralist processes as reflected in Party competition and po- litical bargaining in Parliament. Only in the case of old-age pensions did the government rely on investigations commissioned by past Parliaments; all of the work for unemployment and health insurance was done either at the Treas- ury department or within the Board of Trade. Also, the interests that were well represented in Parliament, those for right-to-work legislation from several Labour MPs and for tariff reform from the Conservatives, were rejected by state ministers because they would involve excessive governmental interven- tion in capitalist markets (Harris, 1972: Ch. 5). Neither can these reforms be depicted as stemming from the desires of business elites to quell labor conflict or solve some of the technical problems of production, as an instrumental Marxist analysis would contend. Although some sectors of the business community favored national insurance legisla- tion, others opposed it; on the whole, very little business pressure was brought to bear on the policy-making process, Also, these reforms cannot be seen simply as the outcome of state- centered processes involving an enhanced bureaucratic capacity to solve so- cial problems. Although the structure of the state enabled state managers to ignore certain interests in the pursuit of their own agenda, it did not give state managers total power to develop and implement all aspects of this agen- da. The original proposals themselves bore the marks of class legislation in that commercial interests were well represented in the state through the prima- cy given to Treasury concerns and through the nature of the expertise most readily available to state ministers. Once proposals were developed, the in- sulated nature of the policy-making process allowed those groups that had the greatest stakes in the proposals to voice their discontent independently of normal parliamentary processes; their access to state managers was primar- ily determined by their economic power. This analysis depicts the Liberal reforms as the outcome of the relative autonomy of state managers. State managers were constrained in the policy- making process, not by the direct and concerted political pressure from either capital or labor but by the more indirect, more mediated class biases inher- ent in the newly credentialed British state and by the ways in which class conflicts were refracted by politics in that state. Specifically, the administra- tive changes of the late 19th century shielded crucial decision-making processes from the increasingly diverse and clamorous world of Parliament, and made state managers particularly sensitive to the concerns of the Treasury depart- ment in matters of social policy. Operating within this organizational con-Relative Autonomy 363 text (which simultaneously increased state power and selectively incorporated class interests), state managers responded to the social instability created by class conflicts between capital and labor in the early 20th century by im- plementing some of the ideas from the new liberalism flooding the bureaucra- cy from the Oxford/Cambridge-educated civil servants, Business interests, primarily the insurance industry, refashioned those aspects of the new liber- alisrn inimical to their interests. These conclusions point to a synthesis of the institutional approaches to the capitalist state advanced in the neo-Marxist work of Poulantzas, Offe, and Block. These theorists stress the importance of the state as an institu- tion that cannot be reduced to economic dynamics, yet at the same time can- not be completely divorced from a class society within which the state exists and derives its legitimacy. In a review of state theory, Block (1987:22) sug- gests we shift the focus of state analysis away from either state structure or class interests, and focus instead on their interaction: It seems more accurate to use an organic metaphor in which the state-society rela- tionship is controlled by a membrane that selectively permits some influences, ideas, and resources to pass in one direction or the other. Hence, when we seek to under- stand the capabilities of a parnicular national society, our attention is focused on the membrane, on the actual ways in which state and society interact. In the case of the Liberal reforms, this interaction was both protracted and dynamic. In Poulantzas’s terms, the British state developed as a “factor of cohesion” only when economic and political elites were confronted with challenges from below. in addition, many of the dynamics of this new state can be described using Offe’s concept of selective mechanisms. As the polit- ics of welfare reform unfolded, the new structures of the state made possi- ble the systematic inclusion of policy perspectives that reinforced business confidence, extended state power, and excluded perspectives that challenged both business and state control. The selection of the new liberalism from the variety of ideological alternatives is probably the best example of such a selective mechanism at work. Finally, this analysis demonstrates that many of the concerns of busi- ness were addressed quite casily by the structural constraints on state managers at the Board of Trade and the Treasury Department, and by the widespread acceptance of the new liberalism. When these internal mechanisms were not enough, however, as in the case of health insurance, the political pressure of economic elites was brought to bear on state ministers who altered the health provisions accordingly. This direct influence of one sector of business on the increasingly bureaucratic British state stands as both a necessary corrective to the approach taken here as well as a reminder to many theorists of the capitalist state: although the relative autonomy of the state is achieved mainly through the364 Valocchi indirect mediated constraints of class organizations and actors on state build- ing (the approach emphasized in this paper), the sheer power of elites who derive their power from the economic resources of capitalist society can, in exceptional circumstances, use these resources to directly affect political Processes. States are not autonomous; they are relatively autonomous. ACKNOWLEDGMENTS I would like to acknowledge the helpful comments of Robin M. Wil- liams, Jr., and the anonymous referees for Sociological Forum. REFERENCES Anderson, Perry 1965 “Origins of the present crises.” In An- derson and R. Blackburn (eds.), Towards Socialism. Ithaca, NY: Cornell University Press. 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