This paper sets out to reappraise the central principles upon which a revived welfare state could be constructed. In order to do this I will undertake three main tasks. Firstly, I will briefly review the rise of neoliberal policy in New Zealand which supplanted Keynesian demand management of the welfare state. In this section I will focus specifically on neoliberal policy development with respect to education. Secondly, I will examine the failings of neoliberal theory in its own terms, focusing on the themes of rationality and consumer choice, the efficiency of markets, its views towards the state and central planning, as well as the important issue of liberty. Finally, after examining some of the important criticisms of the traditional, bureaucratic welfare state, I will examine alternative possible models in terms of which a revised, nonbureaucratic welfare state could be constructed.