The heralded end of welfare states is reminiscent of the 1980s when the neo-liberal regimes across the Atlantic cut public spending, rolled back the state, and propagated the idea of the welfare state as a public burden. The end result, at least up until the late 1990s, was not a drastic cut in welfare expenditure but a change in the balance of different welfare programmes. The proponents of the welfare state, in particular those arguing for the role of the state as a
guarantor of social equity, or equality, may not have been satisfied with this result but in fact had complacency about the fact that the size of the welfare had not been drastically reduced.
One of the most serious issues that attracted less attention from the perspective of proponents of the welfare state in the North was the implication of the changes in the balance of different programmes, and the nature of “publicly” provided social services. Universal elements in terms of coverage and quality of service and transfers were gradually reduced, and selectivity became a main approach in the public service provision. Together with these changes, the reinforcement or introduction of market principles in the public service provision and market criteria to structure, manage and evaluate the public social service programmes,
weakened role of the state in regulation of public services, and the privatization of potentially profitable public services were the representation of the radical break from the post war consensus on the social reform of which the welfare state was at the centre. The neglect in attention to this
fundamental change has led the proponents of the welfare state to understand these changes as just as “retrenchment of the welfare state”. This sort of complacency resulted in the deficiency in correcting the welfare states’ problems which made social service clients and others be tempted to believe that neo-liberal changes could be a solution such as a lack of democratic participation of the beneficiaries, increasing inequality in terms of quality of service and benefits, and bureaucratic professionalization. In a nut shell, all those concerned with social justice and equality in fact may have failed to recognize the imperative to radically redesign the welfare states in the way to strengthen its social aspect and address new challenges and risks.
At the centre of the failure of appropriate counteraction was that the proponents of the welfare state framed their ideas, theories, and policies within those they aimed to criticize. For instance, growth was consistently understood as economic growth, and productivity gains from social services were rarely taken into account in development strategy. Statistically, the welfare state was composed of a variety of expenditures which do not influence the economic growth rate. Increasing inequality attracted less attention than that of overall size of the welfare state. At best, inequality was only dealt with in the dimension of income and wealth. Distribution of status and power, a critical principle on
which post-war welfare state had been built, was not seriously regarded as a critical issue constituting the alternatives to neo-liberal policies. It was pity for the critics could not go further to suggest genuine alternatives to
address all the defects of the welfare states.
We are facing another attack on the welfare states, i.e. widespread austerity measures threatening the welfare state to the extent that some commentators worry about
the end of welfare states. This attack, however, may be just an extended form of the fundamental change in welfare states which have been with us since the 1980s.
What would be the critical issues of the genuine and constructive alternatives to neo-liberalism? The structural changes should be taken into consideration of alternatives. Conventional manufacturing sector which used to absorb the labour seem to have reached its limit in terms of absorption capacity. Many countries in the North are searching for a new engine of economic production. It should be
eco-friendly also. These structural changes have a significant implication of the labour market and consequently the welfare states. In addition, the current
labour market produces a large share of non-standardized forms of employment, and unemployment. The youth unemployment, as the previous postings have
highlighted, are the serious problems. And more politically awakened mass took the street and politicians are naturally pushed to produce short-term remedial policies rather than long-term policy for structural transformation. The new
solutions to the welfare states to these problems and challenges should be incorporated to the alternatives to the neo-liberal policies.
Then how to address these issues? One of the recommendations is to take a radical departure
from the subordination of the social to the economic. The most significant success of the neo-liberal was to subordinate the social to the economic by disembedding the “economic” from the “social”, and privileging the “economic”. It has resulted in the market where the unbridled profit incentive rules. Such forms of economies as community and association based moral economy in which the “social” is deeply embedded have been gradually crowded out by the expanding market economy. The term “economy” became equated with market economy and the
value of economic activities began to be judged only by the profit criteria. Increase of economic growth represented as GDP, which does not show economic well-being but the economic activity has been hailed as economic success.
Declining wage share coupled with the increase of speculative financial capital which is a significant failure of allocation of economic resources, has been put under the carpet. Another result is that social policy became an “after-thought” of economic policies. All the criteria to judge the validity of policy have been from the economic efficiency criteria (ex. the least-cost principle) and social policy itself has been judged by the economic efficiency criteria. Economic accounting is predominant in judging the efficiency and effectiveness of social policy programmes.
In this context, defending or renovating the welfare state should start from tackling the explicit and implicit forms of the subordination of the “social” to the “economic”. Economy should be reinterpreted and reorganised in the way to allocate resources, produce products, and distribute gains for the majority rather than a few, and social policy concerns, in particular inequality and poverty, should be systematically addressed by all policy sectors including
economic policy. Since economy by definition implies a planned activity to allocate available means towards reaching an end, when we accept the priority of social concerns, it is not a difficult job to formulate economy in
which “the social” is mainstreamed. In this sense, recently surging interests in “reviving economic planning”, in particular in Africa, are noticeable. In fact the discussion is still in initial stage, the core idea is to introduce planning ideas and practices for social progress.
Several experiences which offer valuable lessons to those searching for alternatives can be also found in both developed and developing countries. Firstly, over the last decades Attempts to measure the impact of the welfare state or social policy such as community confidence, social exclusion, and the environment have been made in both developed and developing countries. In particular social impact assessment as a part of integrated assessment in European countries, although in its infancy, is notable examples. Also notable are the subjective well-being (SWB)
and its related approaches. Developed over the last two decades, despite some problems, such approaches as SWB, the World Data of Happiness, and socially perceived necessities methods have shown a potential to establish a new methodology to measure the contribution of the welfare state to diverse social and economic dimensions. Despite limitations such as comparability, and cultural
biases, they have opened up the space of debate on the people centred approach to methodology of impact assessment. These efforts in the domain of
methodologies can help the governments to analyse the effectiveness of currently implemented social policies and institutions, conduct an ex-ante assessment of short, medium and long-term social policy plans, and establish a strategy to establish a wide range of social policies promoting equitable growth, political democracy and environmental sustainability.
Secondly, the new methodology can contribute to establishing a long-term planning of social policy which moves beyond needs-based assistance to rights-based social
security. Planning and its related policies and institutions, be it explicit or implicit, have been a driving force behind the welfare state development in advanced countries. The welfare states in Nordic countries which fully committed to universalism, comprehensive risk coverage, generous benefit levels and egalitarianism took a long time to reach their mature forms which we can find only after the mid-1960s. Decades of strong, even hegemonic, social
democratic rule played a significant role in establishing and maintaining long-term vision and plan to transform their liberalistic social policies into universal, comprehensive and egalitarian welfare states. The experience of developmental welfare states in East Asia also shows the importance of
universalism set as a goal to be achieved in the future, although it may not yet be a reality. National health insurance in the Republic of Korea, for instance, did not cover the entire population when it was first launched in the 1970s, but the programme was designed as a universal scheme which was intended to cover the entire population. The rationale of universalism within the policy design shaped the political discourse and became a driving force for achieving a fully universal programme. The challenge is to build methods and techniques for planning for a new social policy in a way that addresses all the new challenges
and risks explained above. A great deal of research done for developing countries after the Second World War was concentrated mainly around economic growth, focusing on available resources and projects needed to meet demand.
Social services were mostly ignored or at best supplementary to the policy for labour supply for economic plans. Setting the economic growth as a target based
on past experience and planning project based on the estimate of available resources was at the core of planning in those days. Should we include social and environmental goals as well as economic goals, we may need a new method and technique for planning. Microanalysis to deal with such questions as to what extent income distribution should be equal to stimulate efforts around education, savings and environmental protection becomes increasingly important, since the degree of subsidy to education, savings and environmental protection may have to be incorporated into the estimates for the planning of economic, social and environmental development.
Thirdly, historical experiences in the mix of private and public provision of social services may help us to establish a new approach to the private sector. The dichotomy of the public and private in a certain way becomes highly polemical
and leads us to overestimate or underestimate the nature and consequences of the public and private provision. It also leads us to treat the issue as a choice of “either/or. It is problematic since public welfare provision has always had some market elements. It is particularly problematic in the cases where the public and private mix is a main characteristic of the welfare provision we have to
deal with. In addition, private sector’s engagement with hitherto public social provision is expected to be more expanded given the prominent place of public-private partnership agenda in post MDG debate. This circumstance demands diverse strategies to deal with the private sector in different contexts. History shows that welfare state was built not by the destruction of existing institutions, but by the reform and renovation of the existing ones. In the
cases where the private and public mix does not make a social catastrophe, the challenge, therefore, would not be to completely reject the options offered by the private sector but to find a way to maximise the potential capacity of the
private sector to generate the public goods and services. In the case of wealth redistribution such as land to tiller reform, government also can force private capital of former land lords to invest in public goods and services with less
profit purpose, and utilise the potential of private sector to contribute to produce public goods and services. Strong regulatory capacity in a wide range of policy domains which narrow the gap between the public and private services in
terms of quality, accessibility, affordability should be the precondition for the private sector generating public goods and services. In the cases where there are fundamental failures of the private sector in providing social
services, and not many private sectors exist in the social service provision, the strategy to strengthen the state sector should be the option. Active participation of the empowered people to check the quality, accessibility and affordability of social services should be the precondition for this option.
Fourthly, we can also find new approaches to identify and increase productive gains of social policy programmes. The output of increased public social service such as more
educated citizens is not always translated into productivity gains. One of the major tasks of education system in many newly independent countries after the Second World War was to reform the contents of education generating the tendency to be averse to manual labour. Without supporting institutions linking social service and productive works such as the policy to promote investment in capital formation rather than speculation, occupational training for productive and job creating industry, and labour market policy to increase the wage share in income distribution, increased social service can result in more unequal and unsustainable economic growth. Cases of China, Brazil and South Korea can show some good examples of key institutions and policies to increase productive gains of social policy programmes.
Fithly, we are witnessing various attempts to establish strategies of the welfare state to address multiple new challenges. Climate change is among those new
challenges. Many approaches to social policy, in particular those in developing countries have rarely factored climate change related issues in social policy programmes despite inequality, poverty and quality of life are overwhelmingly
influenced by climate change and environment related disaster risk. Several policies such as forestry code, agro-business policies and transition from fuel subsidy to cash transfer show the awareness of environmental factor in social policy but the genuine impact of those policies on equality, poverty, and environment are still in questions. Incorporating largely abandoned issues such as attitude and behavioural changes in favour of tolerance, respect for
diversity, non-violence, solidarity, and trust is also crucial to equip social policy to respond to the multiple challenges. Conflict prevention or contribution to reconstruction of post-conflict countries is also the areas where social policy including both short-term food-aid type protection and
medium and long-term social assistance, insurance, and services can play a significant role as we can see in the cases of Afghanistan and Nepal. The establishment of strategy of the welfare state and social policy which more
adequately address the issues treated as non-conventional social policy issues is crucial in formulating alternative strategy.
Six, there has been a great interest in regional and global social policy in terms of financing, provision and regulation of social policy programmes, and some
developments on this front can be seen. In the past the welfare state and social policy was, in large measure, confined to national boundaries and the policy solutions have not successfully moved beyond the national boundary. Increased interdependence between countries such as capital, labour, technology, and environmental influence, social policy designed and implemented within a national context have more challenges which they have a limited control. Inter-national policies to address the issues of redistribution and protection as well as production are more needed than ever. Several examples to meet these challenges can be identified. One example can be found in an experience of policy transfer between nations and policy formulation within countries. In Nordic countries, in particular from around 1900 and especially from the 1930s,
inter-Nordic comparison and mutual inspiration generated from a long history of cultural community and communication have been important dynamic factors in the
development of welfare policies in the five Nordic countries Iceland, Finland, Denmark, Sweden and Norway. The recent phenomenon of solidarity networks such as the Bolivarian Alliance for the Americas (ALBA) on the formulation of education and health policies may be a contemporary example indicating the necessity of analysis beyond national boundaries. Analysis on regional or global forms of cooperation for “cooperative advantage” is particularly of importance since they tend to oppose competitive advantage suggested by market-driven development
strategies. Other examples are regional and global policies and institutions to address transmittable diseases, global or regional financing mechanisms to address inter-country imbalances and inequalities in many dimensions, labour
regulations to maintain the adequate labour standards for all, regional cooperation for the provision of water and electricity to name but a few.Paying attention to global and regional social policy is particularly important in the context of developing countries since social policy prescriptions for national social policy is increasingly being articulated by
global actors. New challenges, such as regional and national conflicts and climate change, increasingly demand for supranational social policies and mechanisms of global redistribution, global social regulation and global social
Seven, moving towards universal social service in developing
countries, in particular those emerging economies such as Thailand, Brazil and China with relatively fast speed shows diverse ways of reaching universal coverage with different challenges and opportunities. It is counter-evidence to
the linear understanding of universal welfare state, i.e. universal welfare scheme when you are rich, and challenges euro-centric understanding of universal welfare state, i.e. something similar to welfare regime theories. Implementing various kinds of cash transfers which demand the effort from the informal sectors, including community and family as conditions, and moving towards a universal system of education and health through the improvement of
social infrastructure can be a representation of the strengthened capacity of the state in regulating the non-public sector for development. The reinforcement
of gendered role in many cash transfer programmes, of course, should be critically examined in order to shape the state’s regulation for gender equality. Many questions related to this trend remain unanswered: Are we
witnessing an emergence of alternative welfare states and social policies in emerging economies? If it does, what are the nature of these alternatives and their consequences? How different are they? What are the implications for those
trying to catch up these countries? Answering this set of questions should be an important part of our endeavour to establish alternative framework.
And finally, we need to find appropriate policies and political strategy to empower people and realize the meaningful participation of people. Empowerment and participation are the buzz words of the both proponents
of neoliberal policies and their critics. The nature and degree are the key issues. Without providing adequate education and training to equip people with knowledge and skills to deal with policy issues, the empowerment and
participation may end up with a service to the powerful and the rich. Political strategy to reform political system in the way to make participation more meaningful is also crucial. For instance, the establishment of new constitutional foundations for the expansion of new social protection
programmes can be the establishment of a mechanism to redistribute status and power. With this strong constitutional element, people can claim benefits, and
bring cases to the judiciary process or political arena more actively. Measures of welfare state development should include an indicator for this dimension which assess the degree of empowerment and participation that results from
policies to redistributive status and power.
Extracting lessons from the experiences above and others is an important first step towards a constructive alternative strategy to renovate and rebuild welfare state. In this process, we should bear in mind one of the most important caveats: our conceptual, theoretical and policy framework should be radically different from that of neo-liberals. Otherwise, our alternatives again would serve the
extension of neo-liberal reforms of the welfare state.
United Nations Research Institute for Social Development
Palais des Nations, 1211, Geneva 10, Switzerland