Abstract
It is now over thirty years since Claus Offe theorised the crisis tendencies of the welfare state in late capitalism. As part of that work he explored ongoing and irresolvable forms of crisis management in parliamentary democracies: capitalism cannot live with the welfare state but also cannot live without it. This article examines the continued relevance of this analysis by Offe, by applying its basic assumptions to the response of the British welfare state to mental health problems, at the turn of the twenty first century. His general theoretical abstractions are tested against the empirical picture of mental health service priorities, evident since the 1980s, in sections dealing with: re-commodification tendencies; the ambiguity of wage labour in the mental health workforce; the emergence of new social movements; and the limits of legalism.