The Social Investment Paradigm:Achievements and Shortcoming

Joakim Palme Department of GovernmentUppsala University

In brief:

Unlcear achievementsas the major shortcoming

In sum:

AchievementsOn the research agenda On the EU policy agendaSDG Agenda can work in tandem SI paradigmAnalysis started:Diffusion by research, experts, policymakers networks

ShortcomingsNot combined with a macro-economic paradigmNot taxing enoughNot spending/investing enoughNot right institutional complementaritiesNo normative framework

Genealogy of social investment

Lessons from the 1930s

• The Great Crash and the Depression- Keynesianism emerging

• Crisis of the Population Question- social policy of reproduction, quality of population (Myrdal legacy)

The Golden Age of Capitalism• Putting Keynesianism to work• Rediscovering the gender agenda

The Neo-liberal turn and its paradigm• Rolling back of the State

The welfare state in crisis (OECD, 1980)

• Growth to limits• The unemployment problem• ”The need to see economic and social policies

together”• Is it possible to return to non-inflationary growth?• Research: Diagnosis vs. Prescription• Beyond redistribution, new priorities, full employment

without growth, welfare society

Goals of the welfare state

• Redistribution• Insurance• Reproduction (care services)• Investment• Savings

Social investments

Are about investing inan equal distribution of human capitalin order to promotea good economic life-cycle for alland reduce the pre-redistribution inequality

The Econonomic Life-Cycle and the a future for Social Investment?

Capability formation:A life course perspective

Publicly funded child-care invests in cognitive skills essential for life chances of children

Quality of compulsory education – PISA studies of core competencies: reading, mathematics, science

Skill needs in advanced industrial societies have changed –polarization among youth is a reality and a threat

The ”learning economy” requires a constant renewing of capabilities in firms and competences of workers

Lisbon Agenda and beyond

• Esping Andersen et al Why we need a new welfare state

• Giddens Third Way• European Social Model: Social inclusion

and equality of opportunity

The post-neoliberalism puzzle:Why is a large welfare state compatible with high in ranking concerning competitiveness and

investment climate?

Lehman Brothers and beyond

The Global Financial Crisis and its Aftermath

What potential for a social investment paradigm?

• Go beyond immediate responses to the GFC crisis not to reproduce the failures of the recent past

• Global crisis in the financial system may change our views on what is possible.

• Human capital investments getting less attention in the debate

• How can we rethink the future with the time horizon being prolonged by the issue of climate change?

The strategy EU2020 puts forward three priorities:

• Smart growth: developing an economy based on knowledge and innovation.

• Sustainable growth: promoting a more resource efficient, greener and more competitive economy.

• Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion.

Flaw of the EU 2020 Agenda:How can the sole focus on expenditure cuts, generate the

necessary revenue for a social investment approach?

The Social Investment Package

The Legacy of the ’old’ EU Commission (Andor)

Social Investment Package

• Social protection, investment, stabilization

• Recomendation on early child-hood• Youth Package• Employment Package• Elderly care• Stabilization via EU Unemployment

insurance component• ESF

Social policy opportunities

• Education and human capital formation as social policy

• Labour market policy and regulation as social policy

• Migration policy as social policy• Fiscal policy as social policy

Social investment as a paradigm?

Institutional complementarities• Services and redistribution and insurance

and investment• Investment and investment

(education and ALMP)• Emerging social policy paradigm in

search for a new macro-economic model

Social investment in a multilevel framework

• Nexus between social investments and welfare regimes

• The "embeddedness" in regimes has to be recognised

• European Social Fund as a driving force for social investments in the highly diverse welfare regimes

• Performance and results of the ESF interventions are highly dependent on this embeddedness

• The evaluation of results and effects to be fed into dissemination/ mainstreaming activities

The role of social innovation

• ’Swarm of bats’ or evidence based policy dissemination of best practise

• Mixed methods:- Comparative research- Case studies- Experiments

• Political economy paradoxes

Normative framework – equality of what

• Income - poverty, inequality• Capabilities/resources• Agency• Access to institutions:

of insurance, service and investment• Asset formation:

- human capital- social capital

Social policy in EU context, and beyond

Key concepts in EU• Social cohesion or social progress• Social inclusion• Social capital• Social investment and social protection• Social citizenship

Social investment approach is unattainable and elusive,

unless boldness and willingness to take political and other risks. This includes

raising enough taxes for massive social investment.