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Wednesday, 16 November 2011



One group of earlier economic thinkers replicated the sense of mutual obligations of medieval times. That sense meant that although a society is composed of discrete individuals, those individuals combine into a community that is larger than the sum of its parts. To keep that community together, individuals must be held accountable for all actions that can impair the community’s survival and growth. Activities that impair the prospect for growth and survival impose costs on society. This is the social obligations approach.

The social obligations approach to the social costs of labor represents an effort to gauge the impact of employment on the worker, the worker’s family and other members of the community. It includes the costs of maintaining the economic system as an on-going entity, including the provision of public services geared to help workers and their families. From this perspective, wages must be conceived as to enable workers to maintain themselves and their families in a standard of living to the community. A social-cost wage allows workers to develop their abilities and contribute to society in ways other than labor. In back of this perspective is an ideal of society as an ever-enlightening social system that encourages all of its members to improve their personal qualities and enhance the goodness of the community.

The social obligations approach has a checkered career in economic thinking. When it has been on the wane, the social insurance approach has been recommended as a way of compensating for the social costs of labor. In this approach, the actions of individuals in terms of their impact on society are considered as calculable risks, insurable on the basis of costs and benefits. Economic life in the capitalist system carries with it a number of risks, many of which can be covered with private insurance. If an action causes a high cost to a large number of individuals, the risk becomes too widespread for private insurance, and then governmental social insurance must cover those social costs.

The social obligations and social insurance approaches aim to protect workers from the risk of economic harm. The social obligations approach seeks to help workers as part of the web where mutual responsibility inherent to any community; it retains the medieval notion that help, based on the duty, to improve the capabilities of those persons being assisted. The social insurance approach offers help based on the calculation of costs and benefits. It aims at minimizing the sacrifice of helping individuals who are in trouble.

The social obligations are much broader concept than the social insurance approach. It holds that efforts to evaluate the social costs of labor through cost/benefit analysis must be framed by its progressive outlook. Socially, responsible programs of assistance must have in their mind the impact on the capabilities of the persons they are help to. Proponents of this method would question whether social insurance can meet this standard of social responsibility. More important, they would wonder whether social insurance schemes will function properly without their beneficiaries having a sense of social responsibility with regards to how they use their aid.

Modern economists recognize this lack of responsibility as a problem of moral hazard. Any form of insurance that cover risks will offer incentives to the insured to be careless about avoiding risky situations. Social insurance similarly encourages the insured to be heedless about how they work, since they will be if they lose their jobs. As a result, modern economic thinking gives lukewarm support to social insurance. This reference reflects a choice of values among economists.

Which of the two approaches an economic thinker adapts to indicate the degree of balance between the individual and the community he or she regards as essential? Community-minded thinkers will make much of the social obligations approach while those who stress individualism will ignore it. The modern transformation of the older concept of social costs as community obligations into a finely honed tool for examining environmental pollution on a cost/benefit basis manifests the individualistic disposition of modern orthodox economics. The problem with the standard of living was a large welfare issue to these thinkers, and it has social cost implications that kept them restless. This restlessness has been soothed by modern economists, who stress welfare as a function of consumption.

The standard living of an average Briton got better in 1939. National income per capita has risen from 44,65 pounds to 252,58 by 1980. Moreover, Britons have access to broader varieties of goods, can buy more exotic foods, travel regularly to other countries, and most own their homes. However, the development was not stable.

If one will assess the standard of living in order to keep track of the developments in Britain over the 20th century, according to the Dasgupta-Weale index, this index ranks the welfare and Human Development Index that characterizes the achievements of the desirable level of welfare. UK’s current welfare policy emphasizes individual’s responsibility and biases the role of the state towards promotion of equality on opportunity and the provision of services targeted on specific lower income or disadvantaged groups. However, some policy-makers and professionals in the public services adhere to a different understanding of the operation of state welfare that identifies problems as the outcome of structural inequalities and not as the failure to grasp opportunities. (: 2001) They therefore reject the emphasis on enhancing equality of opportunity promoted by the government.

The administration of the welfare state has undergone two major reforms since its inception. The first phase, covering the 1960s and 1970s, saw central government reformed in order to allow the planning and control of public expenditure by the Treasury. The aims of this reform were managerial efficiency and economic planning. The effect was to create a system in which the Treasury allocated resources to departments, and departments to services.

In the course of past Conservative administrations, the state provision of housing was similarly thoroughly refurbished with the early inception of “right to buy” and limitations on the capability of local authorities to create new housing in the early parts of the 80s, ensued by devolved legislation in “social housing” to business oriented housing organizations (, 1998). Right-to-buy laws tendered substantial monetary inducements for council tenants to acquire their dwellings from the appropriate local authority at a sizeable price cut which usually brings about the mortgage repayments which were inferior to rental imbursements. Without a doubt, subsequent increases in local authority to market rates presented a further encouragement to acquire. There has been a quick boost in home ownership, and succeeding divergence in tenure trends in United Kingdom since the institution of this law. Housing stock that subsisted within the state division was similarly caused to undergo market-oriented restructuring. (, 2000) Householders were presented with the chance to take part in an election on their aspiration to continue as occupants of their local authority. Local authorities were obliged to search for tenders for the administration of their housing properties, and recently formed housing organizations that had the right to create “social housing” and to throw out tenants.


Progress in Britain is presented by growth in the real income per capita which incarcerates the raises in consumption and command over resources in 1939. It significantly affects the welfare and which can be connected to the national income approach, for example, leisure and inequality. Leisure in 1980 is incorporated in taking clear account of the time spent for labour to generate income and the income level can be adjusted for changes in its distribution. Leisure is incorporated by taking explicit account of the hours worked to generate income and the income level can be adjusted for changes in its distribution.


These measures focus on the material aspects of high standard of living. There were dramatic improvements in life expectancy, infant mortality rates; the incidence of diseases such as tuberculosis and smallpox as well as the proportion of deaths occurring through these diseases, and from maternal mortality and childhood diseases has been achieved in Britain in 1980’s. These variables are incorporated into an indicator of health. Education during the 1980’s has shown significant improvements than in 1939. Compulsory primary education was introduced under Forster’s Education Act in 1870, but compulsory secondary education has been a feature of this century. Increasing numbers staying at school beyond the minimum leaving age has also fuelled increased ability to undertake further and higher education. Changes in the proportion of the relevant age groups in education are used as a measure of this progress.


However, capabilities and opportunities are not just enhanced by health and education. The ability to influence the determination of policy in one country has been recognized as important. This aspect of welfare has been incorporated into comparisons of living standards by  and  (1992) who consider political and civil rights alongside with the previously mentioned indicators. The electorate was widened in 20th century, Britain and the proportion of the adult population with the right to vote in elections measures this aspect of political rights. But some influence on one’s destiny also may be afforded by direct involvement in organizations, for instance, trade unions can exercise influence on terms and conditions of employment. Thus, membership of a trade union may afford greater determination of the day-today welfare experienced at work and this is included as a second measure.

Finally, accounts of 19th-century living standards have often emphasized the less tangible aspects of change that impacted on welfare. These aspects of living conditions are considered in this 20th century overview. In addition, some indicators reflecting beneficial changes are incorporated. More travel and communication is assumed to broaden horizons and enable contact with others, and the increased use of energy in households taken to signify greater comfort and the use of machinery to mitigate the arduousness of some household tasks.

The six components to assess and evaluate the living standards and evolution are; income and leisure, wealth and income security, health, education, political and workplace rights, and living conditions; and the aggregate over the 20th century.








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