Rediscovering social investment in developmental welfare state ...

R E D I S C O V E R I N G S O C I A L I N V E S T M E N T I N D E V E L O P M E N T A L W E L F A R E S T A T E P O L I C I E S :
B A C K T O T H E F U T U R E
productive outcomes. I proposed criteria for helping define and identify what makes existing social
policies an investment.
I have argued that theories that explain the welfare states‘ development are more advanced than
those that explain its effects (at least its potentially broader effects). As a result, we do not know
enough about the benefits relative to the widely perceived costs of the welfare state. I surmised that
the promise of ongoing research has been hampered by viewing the welfare state as a response to
developmental problems and not also in part a source of development and contributor to
production. I concluded that there is a need to reorient research away from how countries cluster
together into regimes or mutually exclusive worlds and toward disaggregating effort at the policy
level based on theoretical expectations grounded on the possibility of productive (and not just
protective) effects. I formulated a set of principles reflecting this possibility and categorized, as
developmentalist, several mature welfare state social policy that I labeled DWSPs. This framework
compelled a reappraisal of the political economic roots of welfare states and what classical ideas
teach us about the limits of markets and role of the state. The analysis yielded limited evidence for
the predicted effects of policies that most closely express these developmentalist principles.
As rapid economic and social changes have unfolded at the advent of the 21st century—
accompanied by the internationalization of social policy ideas, opportunities for policy transfer, and
a trend toward hybridity—there has been a temptation to succumb to linguistically popular
discourses and pragmatic policy prescriptions. Policymakers should beware the enticing rhetoric and
alluring fads that periodically sweep through the social protection world. They almost always entail
simplifications that are too good to be true, promising returns that are premised on but rarely
recognize a host of contributing socioeconomic, institutional, and other factors that enable these
returns. The ongoing EU debate about the modernization of social protection and discourse
associated with the new social investment state threatens to distract us from contemplating the value of
traditional social protection policies and recognizing their developmental roots. I asked whether
universal and in-kind benefits—old social democratic preferences that contradict economic
commonsense—can be justified on the grounds of extensive market failures (especially information
failure), underutilization of human potential, costs associated with not preventing poverty, and
thereby a wide scope for merit goods.
This paper recognizes the potential in the notion of social investment but begs scholars to proceed
cautiously in its use. Advocates of institutional welfare states need to fully understand the way that
longstanding social policies have entailed and continue to constitute productive social investments.
Doing so hinges on our ability to understand the market failures for which they implicitly
compensate, lest what emerges from this most recent phase of welfare state thinking is an anemic
version of the once robust welfare state. The prospects for a social democratic as opposed to
neoliberal vision of social investment requires us to penetrate the opaque veil behind which vital
synergies, cumulative effects, and functional equivalencies are obscured and may be rendered
dormant or severed all together in the event that critical aspects of the welfare state are unwittingly
rolled back. Resisting the lure of Occam‘s razor, theoreticians and empiricists must work hand-inhand
to better understand how the traditional core of the welfare state cultivates, albeit in part
fortuitously, the productive soil of western societies.
C E N T E R F O R S O C I A L D E V E L O P M E N T
W A S H I N G T O N U N I V E R S I T Y I N S T . L O U I S
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