BSc thesis - Inequality in Political Perspective
The influence of electoral systems on redistribution: a historical approach
Name: Michelle van der Linden, s1636065 Instructor: Dr. Brenda van Coppenolle Word count: 8147
2 Table of contents
1. Introduction 3
a. Research question 3
b. Definitions 3-5
c. Scope of this research 5-6
d. Reading guide 7
2. Historical context 8
a. Introduction 8-9
b. United Kingdom 9-10
c. The Netherlands 10-13
3. The influence of unions on redistribution 14
a. Introduction 14-15
b. United Kingdom 15-16
c. The Netherlands 16
d. Conclusions 17
4. Electoral systems and the development of the welfare state 18
a. Introduction 18
b. United Kingdom 18-20
c. The Netherlands 20-21
d. Conclusions 21-22
5. The Great War and redistribution 23
6. Conclusions and recommendations for further research 24
3 Introduction
During the previous two centuries the political scope in Europe has changed drastically. Most Western European countries have adopted a proportional representation electoral system, and all Western European countries have implemented enhancing democratisation measures. There was a European outcry for more democratisation for all classes of the population. Socialism began to form during the nineteenth century, and the industrialization as well as urbanisation played a big part in its creation. It is often assumed that the change of the electoral system has brought far reaching changes - especially regarding economic redistribution.
Research question
Therefore, the main research question is: what is the influence of the electoral system on redistribution?
There has been research that has looked at electoral systems and its effects, though the results differ greatly. Iversen and Soskice (2006) have looked at the effect of electoral systems on partisanship, but have found that electoral systems seem to possibly have a direct effect on redistribution. Whereas Persson, Roland and Tabellini (2007) have found that the electoral rule has only an indirect influence on government spending, and that it mostly depends on government formation and political parties themselves. There is thus, so far, no broad consensus on the influence of electoral systems on redistribution.
Definitions
First off, some concepts must be defined in order to be able to research them:
Redistribution: the amount of social security measures people have access to (Manevska, van der Waal, Achterberg, Houtman & de Koster, 2010);
Electoral systems: The methods and rules by which the number of votes are counted and seats are distributed.
In this dissertation, only two electoral systems will be looked at: proportional representation (PR) and majoritarian/plurality systems. The main characteristics of these systems are described hereunder.
4
The electorate under a PR system belongs to a single national district, and each party gets their proportional share of seats according to the share of votes it received in the national district (Persson et al., 2007). PR is an electoral system characterized by, mostly, coalition governments, and splinter parties in parliament. Opposition is often strong in PR electoral systems. Also, PR systems are commonly found in smaller countries (Boix, 1999). This electoral system was introduced partly to settle disputes between different minority groups. On the topic of why the PR electoral system was introduced can be found in greater detail in the first chapter(s) of this thesis, fore it is of importance to understand the social
developments that preceded such an, supposedly, influential change. Once one understands why the change in electoral system happened, one knows what factors to look at to see further development concerning social policies, such as redistribution. PR was found much later as an electoral system, supposedly for sensible reasons that need to be looked at.
A majoritarian electoral system is a much older system than PR and voters are distributed under several single-member district. The seat in the district is won by plurality rule, or first-past-the-post. The plurality system encourages strategic voting, which in turn leads to something that looks like a two-party system. It often happens that one party wins the majority of seats in parliament. Therefore, majoritarian electoral systems are associated with single-party governments (Persson et al., 2007). Furthermore, majoritarian electoral systems have often smaller governments - and as a result of smaller governments - are assumed to redistribute less than under proportional representation (Acemoglu, 2005; Iversen & Soskice, 2006; McCarty & Pontusson, 2011). Not many countries still hold on to this system, which historic reasons can account for, but Anglo-Saxon countries have.
Now that the research question is well defined, it is useful to look at the assumption in existing literature on what would influence the amount of redistribution in a country. These assumptions are used to define the following research hypotheses:
1. The stronger/bigger unions are, the higher the redistribution in that country;
2. Electoral systems have an indirect influence on redistribution, through the development of the welfare state and the formation of the government.
These research hypotheses are introduced below.
Ad 1. An important social factor seems to be the extent of unionisation. Unionisation means the extent to which unions hold political power to influence social policies. According to the Power Resource Theory (PRT) unions are vital in the process of making governments
5
provide social protection and creating redistribution policies. Their influence would
according to this theory, mostly follow the lines of left parties in parliament. The assumption here is that the stronger and bigger the unions, the more the electorate will lean towards leftist social policies and thus vote for more leftist parties and thus create incentives for stronger redistribution policies. This leads the assumption: The stronger/bigger unions are, the higher the redistribution in that country (Iversen & Soskice, 2006).
Ad 2. It is generally understood that under majoritarian electoral systems there would be a tendency towards a more right-winged government, whereas under a proportional electoral system there would be a tendency towards a left-wing government. Besides this there is a widespread agreement on the view that more left-wing governments would
redistribute more than a more right-winged government would do. Logically, this leads to the assumption that under proportional representation electoral systems governments tend to redistribute more than governments would under majoritarian electoral systems. This last assumption is highly important for this thesis because it would mean that electoral systems do not have a direct influence on redistribution policies but it does have a direct influence on the formation of government and thus an indirect influence on the distribution policies in a country (Iversen & Soskice, 2006). This of course will be looked at in this thesis in a later chapter: Electoral systems have an indirect influence on the development of the welfare state and redistribution through the formation of the government.
Important to note here is what meant by the right and left scale. Right-winged means, in the context of the late nineteenth century and early twentieth century, in the UK the
Conservative party with mostly the established power’ interests at heart. On the left in the UK was the Independent Labour Party, established during the nineteenth century and representing the interests of the working classes. In the Netherlands, there were other political cleavages. Right wing at this time meant confessional or religious parties, Catholics and Protestants. Left-wing used to mean liberal and social parties. These four parties were already present before the change of electoral system, the Netherlands has thus always known a multiple-party system (MacLaren Carstairs, 1980; Hertogh, 1998).
Scope of this research
The countries that will be researched are the United Kingdom and the Netherlands, during the period 1834 – 1939.
6
The UK is used as an example of a majoritarian electoral system, the Netherlands is used as an example of a PR electoral system.
Until 1917 the UK and the Netherlands have been, regarding politics, quite equal. These countries have been chosen for this study because they had a quite similar electoral system until universal male suffrage was introduced, it is thus a similar systems design because it compares cases that are similar except from one crucial aspect; electoral system. Once universal male suffrage was introduced, the Netherlands switched to a proportional representation electoral system. Whereas the United Kingdom changed some electoral rules but the majoritarian electoral system was maintained (McLaren Carstairs, 1980). First it will be described why the Netherlands did change and the United Kingdom did not.
Considering the social factors that initiated such grave changes, is there a difference in redistribution in both countries considering the period from 1834-1939?
This period has been chosen because it could be stated that the redistribution policy of Western Europe started with the Poor Law in the UK in 1834. In the beginning of the 20th century, many Western-European countries started to demand more democratization, due to this demand many of these countries turned to a PR electoral system (Blais, Dobrzynska & Indridason, 2005). After 1939 World War II started with Hitler’s invasion in Poland and a massive occupation of Western-European countries, including the Netherlands. It is thus not a time where policies can be measured as if consistent with the social changes at that time. The Netherlands did not even have a government of its own really, fore it were the Nazis who ran the country.
After the electoral history of both countries has been unraveled, the assumptions previously described will be tested in light of the social historical developments in each country. Of course, these assumptions are drawn from recent examples. After World War II many political and economic institutions were set up, such as the Bretton Woods systems and the UN. These are all very influential organizations and because this thesis only looks at before the second world war, it does not have strong implications for what happened after the war. The research data are found in scientific literature written on the situation in terms of the economic, the political and the social aspects of society, in both countries.
7 Reading guide
The first chapter provides the necessary historical context for this research. The next chapters are about the consecutive hypotheses of my research. Each chapter starts with an
introduction, followed by a paragraph on the UK, a paragraph on the Netherlands and ends with conclusions regarding the hypothesis.
The final chapter entails the conclusions of this research and gives recommendations for further research.
8 Historical context
Introduction
Electoral systems all over Europe have gone through quite some developments, some more drastic than others. In this section there will first be looked at the general theories about the onset of change in an electoral system, general trends throughout the Western world. The Western world meaning Western Europe and Anglo-Saxon countries because Great Britain is also part of the latter as well as the former. Second, it will be illustrated how the United Kingdom did not change its electoral system like continental Western European countries did do. Third, the attention will fall on why the Netherlands did change its electoral system to a proportional representation system.
All throughout Europe change was in the air from the mid-nineteenth century onward. There was a widespread call for more democratic measures, which eventually lead to the adoption of a proportional representation electoral system, with Belgium being the first country to adopt it. From the mid-nineteenth century onward the idea of a proportional representation electoral system and was widely regarded as the most democratic electoral system (Blais et al., 2005). In the UK it was first introduced by Mr. Hare, though he did not get much support for his idea to make the entire country one constituency except from John Stuart Mill. Of course, at this time it remained more of a thought experiment since no country had ever adopted such a system (Steed, 1975). There were multiple democratic reforms during the late nineteenth and twentieth century, which often lead to the eventual adoption of proportional representation. The strengthening of parliamentary institutions for one, the extension of the franchise for parliamentary elections and the view that parliamentary representatives should actually represent the many different views and opinions of the
country (Blais et al. 2005). Boix (1999) also mentions a few phenomena of that time that may lead to change. He mentions the extension to universal suffrage as something that may lead to change. It is important to stress that indeed it may lead to change, it doesn’t necessarily have to. In most of continental Europe it did lead to change. In many countries, also the
Netherlands, the extension of universal male suffrage was simultaneously adopted with a PR electoral system. Extensions of suffrage are explained in a number of different ways by Przeworski (2009): it would be to preserve power of the dominant parties, it would be when interests of the franchised and disenfranchised groups conflict and the disenfranchised groups represent a credible threat. Furthermore, it would be extended when a country prepares to go to war and it would have been used to bring back easiness into the country after tumult from
9
disenfranchised groups. Other things that Boix (1999) mentions are the introduction of competitive elections, the massive political realignment among voters and the high turnover in party organisations. Only from the 1880s political parties began to form outside parliament - before it were established men within parliament and the public had little say in national politics - at least in the Netherlands (Aerts, De Liagre Böhl, De Rooy & te Velde, 1999).
It is theorised that new found parties are of great significance for a potential switch in electoral system. When new found parties are strong and they become the new dominant party, chances are that the country did make a switch towards a PR based electoral system. However, when the new found parties are not strong - regardless of the current party system - a switch in electoral system seems unlikely (Boix, 1999). To touch back on the effect of the adoption of universal male suffrage, it was quite significant. With the introduction, the
political competition changed. Now all of the sudden the rich were not the only ones anymore to determine what would happen to the country. The ideas of socialists finally stood a real chance one might argue to influence policy. Furthermore, the trend of urbanisation and industrialisation formed new political cleavages. It used to be rural-urban but now it became capital-labour (Boix, 1999). This of course shifted the whole political conversation.
United Kingdom
The isle of Great Britain is the only country in the early twentieth century in Western-Europe that did not make a switch to a proportional representation electoral system. Why is that? And does it mean that these ideas never stood any chance in the UK? And did nothing at all
change over the years? There are several explanations for why the UK did not move to a PR electoral system, but before that is illustrated it is important to know the developments within the country that preceded that.
Just like the other countries in Western Europe and the Anglo-Saxon countries, the United Kingdom knows universal suffrage. The extension of the franchise went in stages. The first began in 1832. During this year the franchise was increased by 49% in both counties and boroughs. There were still qualifications to be met, in counties one had to have 40
shilling in freehold. In boroughs the qualifications differed quite a bit, generally one had to have a building of the value of £10 per annum (MacLaren Carstairs, 1980). This First Reform Bill made the legal voting age 21 - though already introduced in 1649 by Cromwell for a select group of males (Caramani, 2000). The next stage happened in 1867 with the Second Reform Act. This act would again extent the franchise, and move representation towards more populous areas by using the so-called ‘limited vote’. The limited vote meant that
10
constituencies with three members - this being the greater cities - in which each elector was only allowed to cast up to two votes. The rationale behind it was that it would ensure representation of minority parties in larger cities. Nonetheless, it proved unpopular by 1885 and was abandoned again. Perhaps unsurprisingly, the third period of franchise extension was around 1884/1885. In 1884 some safeguards were approved that should protect established parties from the mass vote of the working class. The plural voting was nonetheless
maintained. A year later these measures were withdrawn with the Reform Bill in the House of Lords. In 1885 the Conservatives opted for single-member constituencies as a way to make sure minorities were properly represented. The plurality voting in two-member seats involved an element of chance, and it was believed that single-member constituencies would get rid of this element of chance. There was thus widespread support for the idea, which still shows as the UK today still holds elections through single-member constituencies (Steed, 1975; MacLaren Carstairs, 1980; Caramani, 2000).
It seems as if there was no discussion of proportional representation at the time. However, around 1884 the Proportional Representation Society was found on the ideas of Hare and Stuart Mill. It had some success, in 1908 the House of Lords approved the Municipal Representation Bill which provided proportional representation in local
government. Around the same time the bill was approved, the Royal Commission of Electoral Systems was established to enquire whether PR would be a good thing to adopt in Britain. The Commission found that the adoption of PR electoral system was a bad idea, it however recommended to adopt the alternative vote. The elections of 1918 were held under plurality voting - as they continue to do to this day - whilst plurality voting was rejected by the Speaker’s Conference, the House of Commons and the House of Lords. No one really understood why it had not changed to PR. MacLaren Carstairs (1980) does give an explanation for why it had gone this way. The entire nation was preoccupied with a constitutional crisis between the Commons and the Lords. The House of Commons never even debated on the findings of the Royal Commission, neither is there evidence that the Commission’s report had any influence on public debate.
The Netherlands
The Netherlands does have a proportional representation electoral system, though it used to have - until 1917 - a majoritarian electoral system, like the UK. The Dutch Parliament has gone through quite some developments during the nineteenth and early twentieth century. Since 1815 the Netherlands is officially a constitutional monarchy and it had an indirectly
11
chosen parliament. The upper house, for the Dutch eerste kamer, was filled with crown appointees for life. This included quite some Belgian nobility. At this time Belgium was still part of the Dutch Kingdom, though they gained independence since 1830. The lower house, known to the Dutch as tweede kamer, was chosen via indirect elections in which actually members for the provincial estates were chosen and they in turn designated members to the Lower House. This was the way until 1848. In 1848 democratisation measures were taken, now the Lower House was directly elected by a franchise consisting of 11-12% of the male population over the age of 25. The country was divided into two-member districts, one member for each a four-year term. Every two years one of the members was up for election. Thus there was a chance to renew the Lower House every two years (Daalder, 1975). At this time national politics was not a concern for the masses, it was about state law and civics. Furthermore - concerning civics - not the king was the dominant power in politics but parliament and its ministers were. (Aerts et al., 1999).
The Netherlands was roughly separated into four social cleavages: Liberals, Socialists who together formed the ‘left’ side of the political spectrum, and Calvinists and Catholics who formed the ‘right’ side. Though it should be noted that the socialists emerged in the 1880s, the others were earlier. These sides clashed over a number of policy issues, the most prominent being over school legislation. The Liberals - mostly - thought that the state should not subsidize any schools but public schools, because in their view religion should be
separate from education and politics. This dispute started in the 1870s, and started mass recruitment for each cause. It was lastly settled by the constitutional reform of 1917. Before this dispute was settled there were some electoral system changes made, in 1887 the country was divided into single-member constituencies, with the exception of municipality elections, and the representatives were chosen via a two-ballot system. After 1896 all constituencies returned to single-member elections, where the second ballot was confined to the two members with the most votes on the first ballot, this remained unchanged until the big reforms of 1917 (MacLaren Carstairs, 1980).
It is perhaps not so strange that the Netherlands has shifted to a PR electoral system. From the 1880s onward new social and political groups emerged, and the first political parties established. The Labour Party came into being, just like the Social Democratic Alliance in 1881. This was an extreme left-wing movement that wanted to overthrow the parliamentary system. In 1894 the Social Democratic Workers’ party was established, which represented the Social Democratic Alliance movement and very slowly retained some seats in parliament. It is perhaps surprising that under a majoritarian system the Dutch political field
12
knew so many political parties. Though it is mostly assumed that a majoritarian system favours a two-party system - like the UK where its been Labour and Conservative, this clearly never really was the case in the Netherlands. The PR system thus did not change much in this respect for the political field. Though the different social groups were not all in favour of extending the franchise to universal suffrage. The Liberals were divided, they wanted a literacy test and extend the electorate only to urban areas (where their base was) and not to rural areas. On the contrary, the Calvinists were in favour of extending the electorate to rural areas. Christian Historicals, an upper-class party, was opposed to any substantial
extension. The Catholics and Socialists were both OK with the idea of extension because they had seen that when it happened in Belgium their social group still had enough to say in
parliament.
Universal suffrage did not come overnight. The franchise was extended gradually and the census requirements were gradually lowered. Finally, after lowering the census
requirements in 1897, the step towards universal male suffrage was not that big anymore. The acceptance of PR came simultaneously with universal male suffrage in 1917, just as Blais et al. (2005) have seen in a broader trend. The prime minister at the time, Cort van der Linden, played a decisive role in the matter. He adopted the role of broker and made sure every party had something coming out of the final deal. He was the one who proposed to replace the districts by proportional representation. Van der Linden was convinced that all beliefs of the Dutch population would be expressed better in parliament. In other words, PR would give a fair place to existing groups (Aerts et al., 1999; Daalder, 1975). The adoption of PR was a big compromise for all parties. They sought to find a solution for the clash over financing (non-)public schools and universal suffrage. The result was that the religious parties, thus the political right, got their financial support from government for their schools, and the non-religious parties, political left, got universal male suffrage. The country became one
constituency in which new political parties could easily access. Thereby creating a splintered political field, and these parties could due to a rigorous list system, determine the course of parliament instead of individuals. In the UK individuals determine more, in the name of their constituency (Daalder, 1975).
Now that the Netherlands adopted PR as their electoral system, it took another sixteen years for the country to determine by law what to do with unallocated seats in parliament. They found in 1933 that d’Hondt’s system would work best for them. This system entails, in the case of the Netherlands, that if 19 or more seats are unallocated, all seats will be allocated by the highest-average formula. This system does favour large parties, though in practice
13
small parties are still represented in the Dutch parliament (Daalder, 1975; Caramani, 2000). In some literature it is assumed that PR electoral systems favour leftist governments because not only the rich have a vote anymore (Iversen & Soskice, 2006). Moreover, because people will most likely vote for the party that has policy ideas that will benefit them most, the mass will cause a shift towards left governments, meaning more socialist governments in most countries. This was not necessarily the case for the Netherlands. The religious parties will still the biggest parties for the most time - Dutch society at the time was strictly divided into roughly four different pillars; Protestant, Catholic, Liberal and Socialist. The religious pillars were the biggest. Therefore, a right-wing government would have been possible at all time. Nonetheless, these parties saw that it would be best to form a coalition with the liberal party mostly in order to keep most citizens satisfied with government (Aerts et al., 1999).
14 The influence of unions on redistribution
Hypothesis: The stronger/bigger unions are, the higher the redistribution in that country
Introduction
The influence of unions on redistribution is not self-evident. What is however clear is that in advanced democracies union members are more likely to be supportive of redistributive measures than non-union members (McCarty & Pontusson, 2011). What has also been clarified is that unions profit from proportional representation systems. This is because they need long-term assurances from the government, and when these rules and commitments are brought about by consensus it is more likely that they will last, less dependent of the
government in power (Cusack, Iversen & Soskice, 2007).
One of the more prominent theories that has analysed unions, among other institutions, is the Power Resource Theory. They view unions as decisive institutions in representing working-class interests. Together with left parties, unions are viewed as
responsible for making governments provide more social benefits and redistribute economic benefits better. If somehow in a country the redistribution is low or unequal, this would be a sign - according to the Power Resource Theory - that left parties and unions have failed in their tasks. The influence of unions is on redistribution indirect according to this theory. The influence of unions goes through left parties, meaning socialist parties. The Power Resource Theory also states that unions - thus also left parties - are unsupportive of economic and social policies that target long-term unemployment and the precariously employed (McCarty & Pontusson, 2011).
What many unions are after, besides better working conditions, is better wage regulation. The Marxist/Neo-Marxist theory and/or approach was of great influence during the nineteenth and twentieth century. This theory views the relation between workers and capital as a zero-sum game. And that there will always be class conflict. However, at the time this theory was thought off by Marx there was no such thing as a proportional
representational system. Thus, the working classes had no say politically up until then. There was thus at the time more basis for the theory than perhaps in the early twentieth century would have been. It is furthermore assumed that countries that have low coverage tend to experience higher levels of inequality. Unions are less important in these countries in influencing wage distribution. The opposite is also true in countries where there is a high coverage, it will experience more wage compression. However, this may cause union decline
15
which in turn cause a reduction of coverage and increase in equality (Visser & Checci, 2011). These tendencies may also be found in the UK or the Netherlands.
United Kingdom
Unions have quite a rich history in Great Britain. Guilds were formed during the Middle Ages and still very strong on continental Europe, but in Britain they vanished gradually far before the rise of unions as we know them now. Unions had quite a struggle to become legal in the first place. For many years after they were found they remained illegal in the eyes of the law. There were some societies that were accepted by law, this societies represented more
sophisticated workers such as sewers. Unions were conceived so effectively due to several reasons: the rapidly rising population, great labour mobility, immigration from Ireland, very low incomes, great economic fluctuations, and hostile law (Mathias, 1969).
Once unions did begin to take form it started with shipyard workers that started to take action collectively to improve their wages. When unions grew they were increasingly lead by leaders inspired by socialism. However, only in 1871 and 1875 acts were adopted that granted unions some rights. It granted them protection of their funds from liability for
damages in cases of tort, access to courts as ordinary associations, able to provide legal protection to its members who peaceably acted in trade disputes, strikes and picketing (Mathias, 1969; Pelling, 1963). Unionism became increasingly stronger when several conditions were met: there had to be immediate social problems that afflicted labour, when there was a longer tradition of industrial employment, employers had to face wide swings in prices during the trade cycle which created great pressure on wage retreat of times of
depressed trade, which in turn provoked an organized reaction. Lastly, in order for unionism to be strong employers had to be faced with export markets so much that they became very much aware of the cheap labour available abroad (Mathias, 1969).
As mentioned union leaders were often inspired by socialism. One more radical socialist was Mr. Hardie, founder of the Independent Labour Party. The Independent Labour Party has seen a rapid growth in 1893 and 1894 which was mostly due to the growing support for socialism in the working class. It goes without say that the Independent Labour Party has tried and provide representation for unions within parliament. Perhaps more surprisingly, there were increasingly more Members of Parliament that wanted to work together with trade-unions. Unions were very glad to form such bonds since unions leaders were
increasingly concerned that they needed stronger representation in Parliament. Also - quite unsurprisingly - new unions had no inhibitions about working together with socialists. Old
16
unions had more say in Parliament because they were represented well within the
Parliamentary Committee, though socialists were starting to take over key positions within these old unions and thus gain a stronger position in Parliament.
A crucial legal decision came in 1901, the Taff Vale decision. Taff Vale was a railway company that won the trial. The court ruled that unions are indeed liable in actions for
damages by employers for civil wrongs and that they should be compensated by union funds. Oddly enough, opposition to the decision helped the Labour Party to grow (Mathias, 1969). Lloyd George made another decisive decision; he fused friendly societies and trade unions into ‘approved societies’. Friendly-societies were more difficult to join and trade-unions did not always have the best name. So, when they became approved societies membership increased significantly, mostly in the lower grades of workers (Pelling, 1963).
The Netherlands
In the Netherlands unions have been mostly present since 1903. The Nederlandsch Verbond van Vakverenigingen (NVV) was an umbrella union who, together with associated smaller unions, organised economic actions and negotiated with employers on behalf of employees. The NVV got support for roughly the same causes in parliament via the SDAP - Sociaal-Democratische Arbeiderspartij. Nonetheless, the NVV tried to maintain some distance from the SDAP to not drive away potential members who did not support the SDAP politically, and in order to keep out of conflict within the political party. From around 1910 the SDAP and NVV were together the biggest representors of the socialist movement in the
Netherlands. The relationship between unions and state did grow gradually over the years. It mainly began during the Great War, when the unions could not afford the burden of
unemployment benefits anymore and the government chipped in. This way unions became an extension of social policy of the government and it was increasingly viewed as an ally instead of something one should fight against (Woltjer, 1992).
The NVV was very specific about the use of strike tactics. It should never be used as a political instrument or as deliberate breach of contract. It should only be used as a last resort, justified as Christian conscience to first exploit all other resources (Amelink, 1950). As perhaps already suggested, the Dutch unions were not as strong as the ones in the UK, though they might have been quite influential because the NVV represented so many smaller unions. Nonetheless, the Netherlands has had such strong local and regional governments that the national government could only do so much, most of the legislation regarding workers was developed on a smaller scale.
17 Conclusions
The hypothesis that the stronger/bigger unions are, the higher the redistribution in that country is should be rejected. Since the beginning of the 20th century, both the UK and the Netherlands had strong unions, but the Dutch unions had more impact on redistribution than the Unions in the UK. Therefore, the strength or size of the unions isn’t the determining factor. Based on my research, I would suggest that the unions in the Netherlands had more impact on redistribution because the Netherlands had a PR electoral system and a more consensus-oriented governance culture as a result of that. In a consensus-oriented culture, minority interests are well respected. The unions in the UK were embedded in a ‘winner takes it all’ governance culture that fits the majoritarian electoral system of the UK but doesn’t respect the minority interests well.
Hence, the governance culture in which the unions are operating seems to be a more important factor than the strength of the unions.
18
Electoral systems and the development of the welfare state
Hypothesis: Electoral systems have an indirect influence on the development of the welfare state and redistribution through the formation of the government
Introduction
There are not many general statements regarding the development of welfare states. One general statement about welfare policy is that it is in essence about redistribution from rich to poor. According to Moene and Wallerstein (2001) voters will support welfare policies to the point where their costs match their gains. Welfare policy is also about providing public insurance, though as will be made clear - views on who is to provide the insurance have changed over time. Welfare state is defined by Briggs (1961) as a “state in which power is deliberately used in an afford to modify the play of market forces…”. It is also often assumed that majoritarian governments spend less on public welfare than proportional representation governments (Acemoglu, 2005; McCarty & Pontusson, 2011). Though the direct influence of electoral systems is often disputed (Iversen & Soskice, 2006; Persson et al., 2007). The development of the welfare state would involve two main conditions: patterns of political coalition formations and the structuration of labour movements (Andersen, 1990). Andersen (1990) also warns that social policy is never neutral, it is often part of a larger campaign to either weaken or absorb socialist impulses, and to secure institutionalisation of social principles of organisation. In the following sections the cases of welfare state
development of the United Kingdom and the Netherlands will be examined. By doing so it can be roughly determined whether the change in electoral system was of direct influence on the extension of the welfare state. Lastly, there will be a short section on the influence of the first world war on the welfare state to see what such an exceptional time has done.
United Kingdom
The UK started relatively early with the development of the welfare state. Its development did not go rapidly, but it grew steadily. There was very early consensus that there should be a poor law system and that it was necessary that the public relief system should be run locally (Rose, 2003). Already in 1834 there were the first reforms regarding the Poor Law System. With this reform the relief system touched on all things that mattered in people’s lives, from wages and employment to marriage and education (Englander, 1998). In 1834 it was agreed that the relief should only be provided when there is proof of destitution. The rationale behind the reforms was that if workers had been relieved from pauperism, their self-reliance would
19
make them independent from poor law (Bruce, 1973). Around this time, the exact date is unknown, did the British government introduce an income tax. Britain was the first in
Western-Europe to introduce such a tax and could thus relatively early invest in social policy, the development went slowly though (Scheve & Stasavage, 2010).
During the nineteenth century it was customary that any form of social relief was provided by local initiatives. One of the publicly found initiatives was providing school lunches for children that did not have any. This initiative was later legislated into the Education Act of 1906. Though before that it was already established that parents did not need to pay anything for their children’s elementary education in the Act of 1891. There was not just development regarding social policy around education and food. From 1875 onward also housing were subject to more strict rules. The 1875 Act stated rules for environmental sanitary due to concern for people’s health. People in cities, especially the working classes, were living so tightly together that a lot of diseases swirled around in those areas. Obviously, these people did not have any money to spare to go to a regular hospital. For them there were poor infirmaries - often regarded as ‘state hospitals’ (Bruce, 1973).
Both the UK and the Netherlands’ their welfare state were strongly influenced by Germany’s welfare state in the nineteenth century. Here the general rule was that the government only intervened when absolutely necessary. Most social issues should be resolved via charity or private initiatives. This was a more persistent view in the Netherlands than in the UK. The isle of Great Britain knew much more state regulated social policies than the Netherlands during the late nineteenth and early twentieth century. Here it must be noted that the Netherlands started late but moved quite quickly afterwards. In Great Britain on the contrary there were multiple Royal Commissions installed that would have a look at different social policies regarding health, working conditions, pensions, housing and unemployment (Bruce, 1973). Regarding working conditions, for example the Ten Hours Act was adopted in 1847. Such legislation was often opted by a labour movement and/or in corporation with unions. Furthermore, working classes were most often object of social policies, not subjects (Andersen, 1990).
Both in 1834 and 1909 there was a Royal Commission assigned to investigate the Poor Laws. Though almost a century apart, both Commissions assumed that a laborer who was physically capable would find work and would earn a wage sufficient to maintain himself and his family. Only partially or completely disabled people had a right to social support because they could never manage to make a full wage (Englander, 1998). Though the Commission was assigned to investigate the Poor Laws again in 1909, its report was seen as a
20
general failure to address non-voluntary poverty by local authorities and the report was thus mostly disregarded (Englander, 1998). Luckily for the non-voluntary poor, in 1911 legislation regarding an insurance against unemployment was adopted (Bruce, 1973). As the twentieth century evolved the general standard of living significantly improved for most of the working population (Buxton, 1978).
The Netherlands
In order to see if the electoral system has any direct effect on redistribution measures one must look at a system that has changed. Before the Netherlands shifted to a PR electoral system the welfare state was not non-existent though it did come along relatively late. Nevertheless, when economic modernisation came, political parties had already established sufficient means and foreign examples to make the development go quicker than it went somewhere else (de Beus & van Doorn, 1984).
The very beginnings of the welfare state were via private initiative. Around 1800 the bourgeoisie began with the reforming of the poor relief system. They did this out of religious beliefs and wanted people to remember how important domestic happiness is. The initiative slowly died down, however, in 1854 a Poor Law was adopted. In this law was established that the poor should be helped by charities and only when these were deemed insufficient, the government would step in (de Rooy, 1979). Also known as the subsidiary ordening principle, meaning that group responsibility came first, and the government is only entitled and obliged to intervene when charity and private initiative is insufficient (Hertogh, 1998). In 1912 a New Poor Law was adopted, this time the poor relief should be given with the intention to get the poor back on their feet and make them independent from the relief system again. This relief system was supposed to be provided by private organisations (de Rooy, 1979). The Act of 1912 seems awfully similar to the rationale behind the Poor Law Act of 1909. One might thus conclude that this rationale was typical for that period of time.
The majority of Liberals, Protestants, Catholics and Socialists agreed that the state had to some extent the obligation to intervene in society via social policy. Though the newly emerged labour movement was not interested in renewing the poor relief (de Rooy, 1979). They were more concerned with increasing salaries and working conditions. After the Poor Law was adopted in 1854 it took quite a while before the next social policy was adopted. Only in 1901 was the Workmen’s Compensation Act agreed to. Only after the adoption of the proportional representation electoral system was social policy rapidly implemented. Before the PR-system was adopted the Liberals were one of the biggest parties under the
21
majoritarian system. The Liberals were able to take some democratisation measures, this was not necessarily easy as the Netherlands has always known coalition governments, with the education pacification and universal suffrage. The Liberals held a lonesome stance on wanting to increase the scope their democracy. At this time the confessionalists (Catholics and Protestants) were suspicious of any non-Christian, neutral state that the Liberals were trying to create. Socialists also were unsupportive of a bigger government, unlike general expectations, because they saw the state as an ally of the capitalist enemy. A bigger government meaning a government who regulates many aspects of civil life. Nonetheless, when the Liberals were politically marginalized after World War I, the Netherlands has mostly known religion-based governments and the social policies were rapidly developed. Irrespective of the governments being right-winged. (de Beus & van Doorn, 1984).
As previously mentioned, the Netherlands look at the German welfare system to inspire their own. The Confessional government wanted to lessen the appeal of socialism. They wanted to minimize the state its role in general and thus developed a system of social insurance that was operated by institutions that represented both employers and unions (Cox, 1993). It is perhaps not surprising that the Netherlands has put off a centralized welfare state for so long. The Dutch society was strictly divided into four cleavages, each provided some sort of relief system for its people. Perhaps for any non-Dutch citizen it is harder to grasp, but for example the protestants did not shop in De Bijenkorf because it was a Catholic run shop. Same for Catholics, they did not shop at V&D. Thus, both department stores have existed for a long time and were able to maintain a steady market position. So, the thought of going to a Catholic infirmary or charity seems ever too strange for any non-Catholic because every group could do everything on its own.
Conclusions:
The hypothesis that electoral systems have an indirect influence on the development of the welfare state and redistribution through the formation of the government cannot be rejected. There are a several factors that have played an important role in the development of the welfare state and redistribution. First, I have found that in Western Europe, several countries were developing a welfare state in the 20th century, inspired by each other. It seems that this was the spirit of that time to develop a welfare state and to redistribute wealth (to some extent). Irrespective of the electoral system. Second, a PR electoral system seems to have an indirect effect on redistribution because it contributes to a different governance culture. The countries with an electoral PR system are governed by coalitions in which left-wing parties
22
have a significant say, whether they had won the elections are not. In a majoritarian electoral system, countries are governed by the winning party. Left-wing parties don’t have a lot of influence if they didn’t win the elections. Therefore, it is through the coalition structure with well-respected minority interests and the consensus-oriented governance culture, which is inevitable in an electoral PR system, that the PR system has an influence on redistribution.
23 The Great War and redistribution
Introduction
During my research on the previous two hypotheses, it seemed more and more likely that the Great War had worked as a catalyst for the development of the welfare state and thus
redistribution. It may have had an even bigger impact on redistribution than the hypotheses that I have examined. Hence this paragraph on the impact of the Great War on redistribution.
Though the Netherlands remained neutral during World War I and the United Kingdom did participate, it must be examined in further detail because it was the first mass war ever
fought. In the Netherlands, the extreme circumstances resulted in the possibility to powerfully enforce an unemployment insurance, 1917, and an Invalidity Law, 1913. Not just that,
universal suffrage was also adopted in 1917, just like in the UK a year later, and it experienced the same episodes of working-class unrest similar to those in participant countries. In participant countries this makes sense, because it was most often the working-class having the physical burden. Even more rewarding to the working-working-class was the change towards a proportional representation electoral system in 1917, though a direct link with the war itself is hard to fabricate. It can be argued that because of such an exceptional time that the change in electoral system was easier to make. The UK reacted by raising an income tax of 8.3%. This was extremely high for that time. For the first time ever, the heavy financial burdens were placed on the top-income groups. A right-centered government adopted these taxes, unlike often presumed in literature. Such taxes are also demanded by the working-class, exactly because they had to carry the biggest physical burden. It must thus be clear that the income tax holds no direct connection with either a left or right-wing government. The UK adopted the Military Service Act in 1916, all men with the exemption of skilled men in key positions, were called out of the factories and to the front. Unions were nonetheless able to give ‘trade cards’ and create an exemption for some of their skilled workers (Scheve & Stasavage, 2010; de Rooy, 1979; Caramani, 2000; Pelling, 1963).
24
Conclusions and recommendations for further research
The first hypothesis that the stronger/bigger unions are, the higher the redistribution in that country is should be rejected. Based on my research, I would suggest that the unions in the Netherlands had more impact on redistribution because the Netherlands had a PR electoral system and a more oriented governance culture as a result of that. In a consensus-oriented culture, minority interests are well respected. The unions in the UK were embedded in a ‘winner takes it all’ governance culture that fits the majoritarian electoral system of the UK but doesn’t respect the minority interests well. Hence, the governance culture in which the unions are operating seems to be a more important factor than the strength of the unions.
The second hypothesis cannot be rejected. It seems that electoral systems indeed only have an indirect influence on policy via formation of government. Iversen and Soskice (2006) seem to be right, there is little to no evidence found in this research that electoral systems would have a direct effect on social policy. However, electoral systems do stimulate certain types of government. Whereas in a PR system, coalition governments and a consensus-oriented governance culture are practically inevitable, majoritarian systems tend to have single-party governments. The countries with an electoral PR system are governed by coalitions in which left-wing parties have a significant say, whether they had won the elections are not. So, it is through the coalition structure with well-respected minority interests and the consensus-oriented governance culture that is inevitable in an electoral PR system, that the PR system has an influence on redistribution.
It seems that the first World War (1914-1918) had an impact on redistribution. In the UK, the Great War has brought many changes, with the most radical one the implementation of an income tax for the rich. This way the rich were for the first time ever asked to carry some of the heavy burdens of war, mostly financially, and it changed the distribution of income and wealth (Scheve & Stavage, 2010). In the Netherlands the changes were far more drastic during the first World War. Denominational education was subsidized by the state, universal male suffrage was adopted and the entire electoral system changed from majoritarian to proportional representation (de Beus & van Doorn, 1984). The exceptional time of war opened windows of opportunity in both countries to accelerate the development of social policies and make redistribution fairer (Peacock, Wiseman & Veverka, 1967). These initial findings seem to indicate that the Great War was an important catalyst to redistribution and I would therefore recommend this as a topic for further research.
25 Literature
Acemoglu, D. (2005). Constitutions, Politics, and Economics: A Review Essay on Persson and Tabellini’s the Economic Effects of Constitutions. Journal of Economic Literature, 43(4), 1025-1048.
Aerts, R. A. M., Liagre Böhl, H. de, Rooij, P. de & Velde, H. te (1999). Land van kleine gebaren: een politieke geschiedenis van Nederland 1780-1990. Amsterdam: Boom.
Amelink, H. (1950). Onder eigen banier: beknopt overzicht van het ontstaan en de ontwikkeling der Christelijke vakbeweging in de begin-periode na de oprichting der eerste Christelijke
vakvereeniging en van de geschiedenis van de oprichting van het Christelijk Nationaal Vakverbond in Nederland. Utrecht: Christelijk Nationaal Vakbond.
Andersen, G.E. (1990). The Three Worlds of Welfare Capitalism. Princeton, NJ: Princeton University Press.
Beus, J. W. de, & Doorn, J. A. A. van, (1984). De interventiestaat: tradities, ervaringen , reacties. Meppel: Boom.
Blais, A., Dobrzynska, A. & Indridason, I.H. (2005). To Adopt or Not to Adopt Proportional Representation: The Politics of Institutional Choice. British Journal of Political Science, 35(1), 182-190.
Boix, C. (1999). Setting the Rules of the Game: The Choice of Electoral Systems in Advanced Democracies, American Political Science Review, 93(3), 609.
Briggs, A. (1961). The Welfare State in Historical Perspective. European Journal of Sociology, 2(2), 221-258.
Bruce, M. (1973). The Rise of the Welfare State: English Social Policy 1601-1907. London: Weidenfeld & Nicolson.
Buxton, N. K. (1978). Social Conditions in Britain between the Wars. The Economic History Review, 31(2), 311-312.
Caramani, D. (2000). Elections in Western Europe since 1815: Electoral Results by Constituency. London: MacMillan.
Carstairs, A. MacLaren (1980). A short history of electoral systems in Western Europe. London: Allen & Unwin.
Cox, R. H. (1993). The Development of the Dutch welfare state: from workers’ insurance to universal entitlement. Pittsburgh, PA: University of Pittsburgh Press.
Cusack, T. R., Iversen, T. & Soskice, D. (2007). Economic Interests and the Origins of Electoral Systems. The American Political Science Association, 101(3), 373-391.
26
Daalder, H. (1975). Extreme Proportional Representation: the Dutch Experience. In S.E. Finer, Adversary politics and electoral reform. London: Anthony Wigram (223-238).
Damgaard, E. (1995). How Parties Control Committee Members. In H. Döring, Parliaments and Majority Rule in Western Europe (308-325). Frankfurt: Campus.
Dudley, J. (1974). Poverty and Equality in Britain: A Study of Social Security and Taxation. The Economic Journal, 84(333), 233.
Englander, D. (1998). Poverty and Poor Law Reform in the Nineteenth Century Britain: From Chadwick to Booth, 1834-1914. London: Longman.
Hay, J. R. (1975). The Origins of the Liberal Welfare Reforms 1906-1914. London: MacMillan. Hertogh, M. (1998). “Geene wet, maar de Heer”: de confessionele ordening van het Nederlandse
sociale zekerheidsstelsel (1870-1975). ‘s Gravenshage: VUGA.
Iversen, T. & Soskice, D. (2006). Electoral Institutions and the Politics of Coalitions: Why Some Democracies Redistribute More Than Others. American Political Science Review, 100(2), 165-181.
Kenworthy, L. & Pontusson, J. (2005). Rising Inequality and the Politics of Redistribution in Affluent Countries. Perspectives on Politics, 3(3): 449-471.
Lange, P. (1984). Union Workers and Wage Regulation: the Rational Bases of Consent. In Goldthorphe, J. H., Order and Conflict in Contemporary Capitalism (98-123).
Lijphart, A. (1968). The Politics of Accommodation: Pluralism and Democracy in the Netherlands. Berkeley: University of California Press.
Manevska, K., Waal, J. van der, Achterberg, P.H.J., Houtman, D. & Koster, W. de (2010). ‘Sommigen zijn gelijker dan anderen’: Economisch egalitarisme en
verzorgingsstaatschauvinisme in Nederland. Sociology, 6(1), 3-25.
Mathias, P. (1969). The first industrial nation: an economic history of Britain, 1700-1914. New York: Scribner.
Mattson, I. & Strøm, K. (1995). Parliamentary Committees. In H. Döring, Parliaments and Majority Rule in Western Europe (249-307). Frankfurt: Campus.
McCarty, N. & Pontusson, J. (2011). The Political Economy of Inequality and Redistribution. In Nolan, B., Salverda, W. & Smeeding, T. M. eds. The Oxford Handbook of Economic Inequality (666-688), Oxford: Oxford University Press.
27
Moene, K. O. & Wallerstein, M. (2001). Social Insurance, and Redistribution. American Political Science Review, 95(4): 859-874
Peacock, A., Wiseman, J. & Veverka, J. (1967). The growth of public expenditure in the United Kingdom. London: George Allen & Unwin.
Pelling, H. (1963). A History of British Trade Unionism. London: MacMillan.
Persson, T., Roland, G. & Tabellini, G. (2007). Electoral Rules and Government Spending in Parliamentary Democracies. Quarterly Journal of Political Science, 2(2): 155–88.
Przeworski, A. (2009). Conquered or Granted? A History of Suffrage Extensions. British Journal of Political Science, 39(2): 291-321.
Rooy, P. de (1979). Werklozenzorg en wekloosheidsbestrijding 1917-1940: Landelijk en Amsterdams beleid. Amsterdam: Van Gennep.
Rose, M. E. (2003). The English Poor Laws, 1700-1930. The English Historical Review, 118(475), 247-248.
Scheve, K. and Stasavage, D. (2010). The Conscription of Wealth: Mass Warfare and the Demand for Progressive Taxation. International Organization, 64(4): 529-561.
Steed, M. (1975). The Evolution of the British Electoral System. In S.E. Finer, Adversary politics and electoral reform. London: Anthony Wigram (35-54).
Thelen, K. (2004). How institutions evolve: the political economy of skills in Germany, Britain, the United States and Japan. Cambridge: Cambridge University Press.
Visser, J. & Checci, D. (2011). Inequality in the Labor Market: Unions. In Nolan, B., Salverda, W. & Smeeding, T. M. eds. The Oxford Handbook of Economic Inequality (666-688), Oxford: Oxford University Press.
Woltjer, J. J. (1992). Recent verleden: de geschiedenis van Nederland in de twintigste eeuw. Amsterdam: Balans.
