The welfare state was a by-product of the Second World War. The National Health Service began in the Blitz, full employment in conscription. Postwar egalitarianism was an after-effect of mass mobilisation in war.
Look back to the nineteenth century, to the time between the end of the Napoleonic Wars and the outbreak of the First World War. That great era of peace in Europe was also a period of great inequality. The majority of the population lived from hand to mouth, and only the very rich were safe from sudden poverty. Today, nearly everyone is much better off. Yet the rackety existence of the majority is as far removed from the security enjoyed by the truly wealthy as it was in Victorian times.
In affluent, high-tech economies, the masses are superfluous – even as cannon fodder. Wars are no longer fought by conscript armies but by computers – and, in the collapsed states that litter much of the world, by the ragged irregular armies of the poor. With this mutation of war, the pressure to maintain social cohesion is relaxed. The wealthy can pass their lives without contact with the rest of society. So long as they do not pose a threat to the rich, the poor can be left to their own devices.
Social democracy has been replaced by an oligarchy of the rich as part of the price of peace.