Redistribution in an Age of Neoliberalism: Market Economics, ‘Poverty Knowledge’, and the Growth of Working-Age Benefits in Britain, c. 1979–2010

Abstract

The expansion of cash benefits to low-paid workers has been one of the most significant developments in recent UK public policy. Since 1979, transfer payments to working-age households have trebled in real terms, helping to offset increases in wage inequality. Adopting a discursive institutionalist approach, this article argues that the growth of transfer payments partly reflects the influence of what John Kay has called ‘Redistributive Market Liberalism’ – the belief that poverty and inequality are best alleviated through income transfers outside the market. Although its roots can be traced back to the 1940s, Redistributive Market Liberalism came to the fore after 1979 in the context of a reaction against trade union power and renewed confidence in neoclassical microeconomics, and reached its apogee in New Labour’s child poverty strategy. The 2008 financial crisis, however, appears to have disrupted the ascendancy of this free-market philosophy and prompted a return to more interventionist forms of distributional politics.