Introduction
This paper aims to make several interrelated arguments. The first is that the welfare state should be reconceptualized as having the potential to be inherently economically productive, insofar as it both reproduces healthy and fecund citizens and prevents costly social outcomes, which has historically been fundamental to its sustainability (Kangas et al., Reference Kangas, Palme, Kainu, Savinetti and A-J2020). The second is that we should reconsider the protective/productive policy distinction, which still prevails in much of the comparative social policy literature (e.g. Choi et al., Reference Choi, Huber and Kim2020; Hemerijck, Reference Hemerijck2017; Hudson and Kühner, Reference Hudson and Kühner2012; Lennartz and Ronald, Reference Lennartz and Ronald2017; Parbst and Wheaton, Reference Parbst and Wheaton2023; Prandini et al., Reference Prandini, Orlandini and Guerra2016; Ronchi, Reference Ronchi2016; Wang et al., Reference Wang, Abe, Kang, Ku, Ng, Peng and Zhao2024). Specifically, social policies that are traditionally thought to be consumption- maintenance- passive- protection or demand-side oriented should be seen as having irreducibly productive or supply-side implications (Nolan, Reference Nolan2013). Third, the ‘social investment approach’ should be viewed through a critical lens owing to its ambiguity, the conceptual stretching it has undergone, and its imprecise policy prescriptions (Busilacchi and Giovanola, Reference Busilacchi and Giovanola2023). As it currently stands, its emphasis on the need for new social investment strategies risks severing vital synergies and undermining the protective-productive efficacy of traditional social policies. A reconceptualized notion of social development, originally inspired by the work of James Midgley (Reference Midgley1995) and insights from the Global South, is proposed as a way to better understand the characteristics of policies in the Global North that may lead them to be simultaneously protective and productive.
The paper entails two main sections. The first begins with a brief preliminary discussion of the notion of inclusive developmentalism being advanced here, including how it differs from its prevailing use in the literature, and linking it to similar ideas and insights from authors based in the Global South. It continues by discussing highlights emerging from recent welfare state research, emphasizing its evolution over time, the lost focus on the once taken-for-granted productive role of social policy, and remaining gaps. Finally, the first section concludes with an explanation for the absence of robust economic (as opposed to political) explanations for the demonstrable success of the Nordic welfare states, which, while they have ceded some ground in their universal and generous social welfare provisions in recent years (Therborn, Reference Therborn2020; Skyrman et al., Reference Skyrman, Allelin, Kallifatides and Sjöberg2023), nevertheless remain outliers in their protective-productive achievements (Horn and Kersbergen, Reference Horn and Kersbergen2022). The social investment approach (SIA) is briefly critiqued as insufficient to explain the productive effects of existing social policies and as forgoing a deeper critique of capitalism in favour of a new economic rationale for social policy provision that promotes skill creation, skill mobilization, or skill preservation (Garritzmann et al., Reference Garritzmann, Häusermann and Palier2022; Hassel and Palier (Reference Hassel and Palier2023).
The second section of the paper explains how social developmentalist and related ideas can contribute to more robust explanations of the productive effects of social policies. Specifically, a critical perspective on social development is applied (Johnson, Reference Johnson2024a), not to formulate new approaches to harmonizing social and economic development – its focus to date – but rather to understand how existing social policies in developed welfare states may already do so. For illustrative purposes, the paper identifies and links developmentalist principles to social policies it tentatively defines as developmental welfare state policies (DWSPs). However, it also suggests more generally that all social policies can be assessed in light of such principles to better appreciate their likely productive contributions to society. Although the prospects of post-growth welfare systems are promising (Hirvilammi and Koch, Reference Hirvilammi and Koch2020; Büchs, Reference Büchs2021; Mastini et al., Reference Mastini, Kallisa and Hickel2021; Walker et al., Reference Walker, Druckman and Jackson2021; Paulson and Büchs, Reference Paulson and Büchs2022; Schulze Waltrup, Reference Schulze Waltrup2023; Laruffa and Nullmeier, Reference Laruffa and Nullmeier2024) and the ill-health of late stage capitalism as a driver of net social wage growth is well-established (Maniatis, Reference Maniatis2014; Moos, Reference Moos2019), there is still a vital need to better understand the productive consequences of social policies as we contemplate their future. While insights from the pioneering theorists spoke to how different forms of provision matter for social integration and citizenship (Adésínà, Reference Adésínà2015) they did not speak as clearly to economically instrumental outcomes.
The central contribution of the paper is to explain how a reconceptualized notion of social development, resulting from an effort to overcome its conceptual ambiguity, when applied to understanding productive social policy in modern welfare states, offers the possibility of surmounting a theoretical impasse in welfare state research. That impasse concerns the narrowing of welfare state effects to poverty reduction, so that theoretical progress in approaches to assessing welfare state effort have not advanced in a way that accounts for possible productive effects of long-standing social policies. In other words, there is no robust conceptual approach for thinking coherently about the Nordic countries’ apparent ability to defy the efficiency-equality tradeoff. Despite being historical exemplars of the social policy regimes in the Global North best able to deliver protective-productive outcomes, we know surprisingly little about why the policies seem to have worked in an economic sense. Attempting to build on the tradition of scholars committed to bridging comparative social policy and development studies (Devine et al., Reference Devine, Kühner and Nakray2015), this paper falls squarely within the reflexive tradition of global social policy scholarship and its invitation to traverse boundaries (Berten and Wolkenhauer, Reference Berten and Wolkenhauer2023).
Whence productive social policy in the global North?
Vital insights from the global south
In contemporary scholarship, both the terms ‘productivist’ and ‘developmentalist’ still tend to be associated with the East Asian welfare regime. (e.g. Mok et al., Reference Mok, Kühner and Huang2017; Powell et al., Reference Powell, Kim and Kim2020a), though recent research points to increasing diversification (Yang and Kühner, Reference Yang and Kühner2020).Footnote 1 East Asian productivism has historically emphasized investments in education and healthcare, flexible labour regulation, and strictly means-tested social assistance (e.g. see Gough, 2004). In the selective version of developmentalism, productivism implies the subordination of social policy to economic policy. The notion of inclusive developmentalism used in this paper is in line with that associated with the Nordic late industrializers and outlined by Kwon (Reference Kwon2007) as including productivism, universal social investment, and democratic governance. The latter recognizes that social policy contributes to the pre-conditions necessary for economic efficiency but does not speak precisely to how social protection policies do so or how they address free market shortcomings assumed away in economic theory. A critical perspective on social development is used to develop principles for thinking about productive aspects of existing social policies in the welfare states of the Global North (Johnson, Reference Johnson2024a).
Scholars working in the Global South context have long recognized the inherent interconnection between economic and social policies, emphasizing the latter’s transformative role in supporting production and innovation (e.g. Mkandawire, Reference Mkandawire2007). This perspective is epitomized in Mkandawire’s (Reference Mkandawire2001: 5–6) observation that labour is a ‘produced means of production.’ Scholars such as Adésínà (Reference Adésínà2015) have traced the insights of the pioneers in both the Global North and South who recognized the multiple tasks of social expenditure: “enhancing society’s productive capacity, protection, reproduction, and nation-building” (p.109). He argues that the ‘welfare state regime paradigm’ has narrowed the focus of the field to a set of social protection instruments, and he calls for a return to a wider vision of social policy. As Mkandawire notes, “for the past 30 years or more, social policy was not understood as a developmental issue. It was more about safety nets or anti-poverty measures to make structural adjustment more palatable, but it was not seen as central to the project of economic transformation” (Meagher, Reference Meagher2019: 24). While the central argument is that social policy is essential to development, “the role of social policy in development has not been taken seriously” (Gumede, Reference Gumede2018: 128). Gumede (Reference Gumede2018) concludes that “the question of the ideal mechanism for the practical linkages between economic and social policies (to bring about inclusive development) needs further thinking” (p.134).
The contributions of these scholars are wide ranging. Beyond recognizing that investment inheres even in areas that are traditionally seen as quintessentially the protection task of social policy, they see that transformative social policy is not simply related to the economy but also to social institutions, social relations, and human capability and functioning in which economic activity is embedded (Adésínà, Reference Adésínà2009: 112). Finally, they shed light on the interconnection between politics and social policy, which makes it difficult to separate them even analytically (Gumede, Reference Gumede2018. This focus, as we will see, has been pronounced in the overall comparative social policy literature and may help elucidate why the economic explanation of protective-productive social policies remains murkier. Despite its many contributions and nuanced appreciation of the complexities of social policy, like much of the literature, it too appears to rely on the implicit assumption that economic and social policy are separate and to invoke prevailing notions of social investment. Additionally, scholars writing from this perspective note that comparative social policy remains inherently statist with welfare regimes that lack fully developed welfare states or that possess alternative types of policy often being devalued (Midgley, Reference Midgley, Midgley, Surender and Alfers2019; Roumpakis, Reference Roumpakis2020). While a trenchant insight, this paper aims to develop tools for understanding the productive elements of existing statist social policies in the Global North, drawing on inspiration from the Global South.
The ‘Dependent Variable’: Still wedded to redistributionist outcomes
The academic history of the welfare state has been marked by a series of transitions from one phase to another. Regardless of the periodization one applies, this pattern of sequential or generational thinking is discernible (Mäkinen, Reference Mäkinen1999). The development of welfare states in the Global North has largely been evolutionary, continuous, and cumulative. Its study has been driven by the historical circumstances confronting it, with the need to justify the welfare state marking the latest challenge to the otherwise slow-moving theoretical world of regime typologies and path dependency. This legacy of gradualism stems from the fact that the welfare state emerged through complex and successive social and political processes rather than resulting from planning (Arts and Gelissen, Reference Arts and Gelissen2002). Amenta (Reference Amenta, Mahoney and Rueschemeyer2003) observes that in the 1980s and early 1990s, scholars of social policy and the welfare state agreed on the need to explain the adoption and expansion of major social programmes but differed in terms of theoretical explanations. Esping-Andersen (Reference Esping-Andersen2004) characterized welfare comparisons as centrally focused on explaining national differences in welfare state effort and type and assessing the distributional consequences of social policy variations.
In terms of classifying major studies in the comparative welfare state literature, following Kvist and Torfing (Reference Kvist and Torfing1996), the first generation of research focused on the emergence and growth of the welfare state, the second described dissimilarities among welfare states, and the third emphasized the welfare mix, focusing more explicitly on the outcomes of welfare states. Most recently, there has been a move away from using crude public expenditure measures to describe welfare state effort and toward typologies of welfare regimes (Powell et al., Reference Powell, Yörük and Bargu2020b), and also away from examining income-based measures of poverty and inequality as their main effects, toward a focus on broader notions of deprivation, well-being and capability (Hannah et al., Reference Hannah, Brown and Gibbons2020). Along the way, enabled by the creation of new cross-national databases, much effort has been focused on assessing welfare state retrenchment and their classification by regime type (Ferragina and Deeming, Reference Ferragina, Deeming, Nelson, Nieuwenhuis and Yerkes2022). With respect to the latter, there appears to be less consensus than previously in national classifications and fewer ‘pure’ national types (Powell et al., Reference Powell, Yörük and Bargu2020b), as well as a broadening of the scope of coverage in the welfare modelling business (e.g. Yörük et al., Reference Yörük, Öker and Tafoya2022) and advances in understanding social provision in emerging welfare states (Cruz Martínez and Bernales-Baksai, Reference Cruz Martínez and Bernales-Baksai2022).
Despite steady progress in our understanding of the welfare state and its effects, the shadow of the ‘dependent variable’ (Clasen and Siegel, Reference Clasen, Siegel, Clasen and Siegel2007; Andersen, Reference Andersen2007b) and ‘variable selection’ (Yörük et al., Reference Yörük, Öker and Yıldırım2019) problems continue to loom over the third generation and inhibit advancement to a fourth. The latter authors, in particular, bemoan the fact that variable selection for welfare modelling has emphasized case selection as opposed to theory, leading to under-utilization of welfare policy variables. As the central question has shifted from the emergence and persistence of welfare states to what they produce, what has been lost in the last several decades of research comes into sharp relief; namely, recognition of social policy as what Mkandawire calls an instrument of socio-economic transformation (Adésínà, Reference Adésínà2015; Meagher, Reference Meagher2019) or what Myrdal termed productive social policy and saw as a developmental tool (Morel et al., Reference Morel, Palier and Palme2012). While productive functions of social policy have been taken up in the context of developing countries (Gough, 1979, 1996), around social reproduction by feminist scholars (Fraser, Reference Fraser and Bhattacharya2017; Mezzadri et al., Reference Mezzadri, Newman and Stevano2022), in ecological work calling for preventative social policy approaches in a non-growing economy (Walker et al., Reference Walker, Druckman and Jackson2021), and in the SIA where policy prescriptions remain vague and the need for a new economic rationale for social policy provision is presumed (Hassel and Palier, Reference Hassel and Palier2023), it has been neglected in most welfare state scholarship in the Global North. Taking the theoretical possibility of productive outcomes seriously requires scholars to revisit how policy ‘effort’ is contemplated. Arguably, however, academic progress is hampered by the absence of a coherent conceptual framework for thinking through why social policies may not simply be redistributive but simultaneously protective and productive.
We know that welfare states reduce poverty and that there are cross-country differences in the mixture of public and private expenditure, market and post-tax/transfer poverty rates, and overall economic performance, despite often relatively similar levels of welfare state spending. Indeed, what happens within social expenditure can matter as much for reducing poverty and inequality as overall government spending (Garfinkel et al., Reference Garfinkel, Rainwater and Smeeding2010; Fonayet et al., Reference Fonayet, Eraso and Sánchez2020). Ultimately, however, the difficulty of thinking about what welfare states produce is a meta-theoretical problem that stems from a longstanding focus on distributional outcomes (e.g. Gornick and Smeeding, Reference Gornick and Smeeding2018; Sowula et al., Reference Sowula, Gehrig, Scruggs, Seeleib-Kaiser and Ramalho Tafoya2024) to the neglect of productive ones, given that most welfare states design their tax/benefit system to combat income poverty (Marx et al., Reference Marx, Nolan, Olivera, Atkinson and Bourguignon2015; Caminada et al., Reference Caminada, Wang, Goudswaard and Wang2019). This has constrained our ability to think systematically about policy efforts through a productive lens. Despite this, recent research has begun to explore the link between welfare states and productivity-related concerns like conditions for innovation and increased competitiveness (Hajighasemi et al., Reference Hajighasemi, Oghazi, Aliyari and Pashkevich2022) and has started to focus on the connection between social expenditure and economic growth (Cammeraat, Reference Cammeraat2020), including how level and type of expenditure can mediate the effects of growth (Sirén, Reference Sirén2024). However, where more theoretically ambitious efforts to examine economically beneficial impacts of social policy are being taken up, it is in the context of promoting new investment-oriented policies, which tends to uphold the passive-active dichotomy when discussing social protection (e.g. Hemerijck, 2013).
A dearth of explanations for productive social policy: Limitations of the SIA
Consistent with conventional economic logic suggesting a tradeoff between efficiency and equality (Okun, Reference Okun1975), some countries attain high economic performance accompanied by high poverty, while others achieve low poverty at high economic cost. Yet some countries, analogous to the bumblebee that can fly when according to simplified aerodynamic laws it should not (Persson, Reference Persson2005; Lindert, Reference Lindert2004), can achieve low levels of poverty alongside relatively high levels of economic efficiency, as the Nordic countries have historically been able to do (Czarny and Czarny, Reference Czarny and Czarny2021). While evidence for the negative impact of welfare states on economic performance is mixed, the productive benefits of social policy remain inadequately understood and theoretically unexplained, despite what is observed (Andersen, Reference Andersen2007a; Atkinson, Reference Atkinson1999; Greve, 2007; Hagen and Sitter, Reference Hagen and Sitter2006; Korpi, Reference Korpi, Kangas and Palme2005). While perspectives ranging from Keynesianism to various philosophical theories (e.g. T.H. Marshall, Reference Marshall1963, Reference Marshall1970) have been advanced to reconcile efficiency with equality, they are arguably left wanting in terms of specific policy or programmatic direction.
Productivism, as discussed above, is a term originally used by Swedish policy makers (Esping-Andersen, Reference Esping-Andersen, Misgeld, Molin and Amark1992; Kuhnle, Reference Kuhnle, Mishra, Kuhnle, Gilbert and Chung2004; Andersson, Reference Andersson2008), edges closer to a viable explanation, referring to policies that focus on material needs and investment in human capabilities and that promote participation in the economy (Midgley and Tang, Reference Midgley and Tang2001). In contrast to the Keynesian view, productivism views redistribution not simply as demand stimulus but as a pre-condition for economic efficiency (Esping-Andersen, Reference Esping-Andersen, Smelser and Swedborg1994), though how remains poorly-formulated (e.g. Kwon, Reference Kwon2007). In fact, as Mkandawire notes of Sweden, “in retrospect, maybe they were not aware of the developmental impact of what they were doing …but now they look back and they say ‘my God, a lot of the things we did actually helped’” (Meagher, Reference Meagher2019: 517). While a preventative approach has been impressionistically associated with the so-called Nordic model (Korpi, Reference Korpi1980; Ryner, Reference Ryner2007), in contrast to “reparation of damages caused by the realization of social and economic risks” (Fouarge, Reference Fouarge2003: 36), its exposition remains under-theorized. This is perhaps unsurprising given the consensus in comparative welfare state research that political actors, power relations, and institutions determine the design and generosity of social policy rather than being ‘functional’ or the direct result of ‘objective’ economic, social, or demographic problems (Häusermann, Reference Häusermann2018: 2–3). The indistinct definitional state of what constitutes productive social policy has undoubtedly played a role in enabling the neoliberal transformation and resulting retrenchment of Sweden’s welfare sectors (Skyrman et al., 2022).
One candidate for identifying the specific policies responsible for the Nordic anomalies is the Third Way (Giddens, Reference Giddens and Giddens1998, Reference Giddens2000, Reference Giddens2001). However, while this perspective reflects an attempt to selectively promote particular types of policies that seek to pursue both equality and efficiency (Andersson, Reference Andersson2009a, Reference Andersson2009b; Nikolai, Reference Nikolai, Morel, Palier and Palme2012), it is impeded by its a-theoretical and pragmatic origin as an electoral strategy (Ryner, Reference Ryner2010; Nelson, Reference Nelson2019). The Third Way idea emerged in the UK, where the focus was on demand-side Keynesianism and not social planning (Bonoli and Powell, Reference Bonoli and Powell2002; Ryner, Reference Ryner2002).Footnote 2 Its focus ‘on reconstructing the welfare state’ (Giddens, Reference Giddens and Giddens1998: 113) implied that social policy was not currently productive, though it is one of the inspirations for the social investment movement (Lister, Reference Lister, Lewis and Surender2004; Cantillon and Van Lancker, Reference Cantillon and Van Lancker2013). Indeed, indicative of concept stretching (Sartori, Reference Sartori1970) and a polysemic discourse (Béland and Cox, Reference Béland and Cox2016), Morel et al. (Reference Morel, Palier and Palme2012) note that “the social investment perspective…covers under the same umbrella a ‘social democratic’ approach, inspired by the example of the Nordic welfare states, and a ‘Third Way’ approach which represents an ‘Anglo-liberal’ view of social policy” (p.19). The social investment perspective has roots in both a neoliberal view of social policy and a much older Nordic legacy of investment thinking reflected in the productivist ideas of Gunnar Myrdal from the 1930s (Lindh, Reference Lindh, Morel, Palier and Palme2012), which never coalesced into a programmatically defined policy paradigm.Footnote 3 The question remains whether the SIA offers guidance on how existing social policies support productive welfare state outcomes or if another explanation is needed.
The social investment state is about modernizing the welfare state in response to new economic realities and social risks (Morel et al., Reference Morel, Palier and Palme2012), creating enabling and activating policies (Häusermann, Reference Häusermann2018), and pursuing growth through a flexible but well-protected workforce (Hassel and Palier, Reference Hassel and Palier2023). Theory building has focused on the politics of social investment policy, as reflected in Horn and van Kersbergen’s (2022) notion of the Nordic social democratic coalition being a ‘political flywheel,’ but despite theoretical progress (Garritzmann et al., Reference Garritzmann, Häusermann and Palier2022) considerable ambiguity around social investment’s exact meaning persists. While advancement has been made in fleshing out how compensatory and capacitating policies are complementary, interdependent, and have outcomes beyond redistribution (Hemerijck and Huguenot-Noël, Reference Hemerijck and Huguenot-Noël2022; Hemerijck et al., Reference Hemerijck, Ronchi and Plavgo2023), social investment policies are still seen largely as distinct in the sense that some types of social spending do not generate a return (Leoni, Reference Leoni2016). Whether social investment comes at the expense of social protection policies or ‘with’ as opposed to ‘against’ traditional social protection, depending on the emphasis on new or old social risks, remains unclear (Busilacchi and Giovanola, Reference Busilacchi and Giovanola2023). The latter argue that the SIA has put pressure on the traditional model of social protection, creating conditions for a change in the gist of welfare state provisions. They argue for strengthening its moral foundation based on basic social rights protections to prevent their erosion. Inclusive developmentalism emphasizes what Fleckenstein et al. (Reference Fleckenstein, Lee, Choi, Choi, Fleckenstein and Lee2021)) characterize as a fundamental critique of the concept of social investment – namely, moving beyond the notion of integrating passive and active social policy due to the impossibility of distinguishing between them (Nolan, Reference Nolan2013).
While this view embraces the Keynesian notion that efficiency can be reconciled with equity and that the approach associated with Nordic social democracy has worked for political reasons, political support ultimately depends on economic success. The economic rationale for this success – why existing social policies have worked as well as they have for as long as they have – is not clear. These policies do not simply represent short-term interventions in response to discrete and limited market failures or efforts to sustain domestic demand but rather imply a more fundamental theoretical critique of capitalism, its simplifying assumptions, and the limits of the market. Understanding the often unintended, productive function of social policies in welfare states requires knowledge of the circumstances or conditions under which they may be a pre-condition or pre-requisite for economic development. Absent this, the SIA’s ambiguity and its pursuit as an intentional strategy at the EU-level (Kvist, Reference Kvist, De La Porte and Heins2016) is perilous insofar as it renders existing, traditional social policies vulnerable where policy change is pursued without recognizing the latter’s productive dimensions. Social investment is not new, but the reasons that traditional social policies have served as investments with productive implications are unclear. Applying inclusive developmentalist ideas to the established policy lexicon of the Global North may enable us to think in a more theoretically grounded way about principles associated with productive elements of traditional ‘protective’ social policies.
A developmentalist contribution to understanding productive welfare state policy?
This paper has argued that approaches to measuring effort in comparative welfare state research do not adequately differentiate or relate important types of welfare state spending through a productive contra-redistributionist lens. The challenge for those interested in the productive impact of social policy is to explicitly reconstruct the rationale for traditional forms of social policy, as much as to offer rationales for new forms of social policy, by thinking in a more systematic and predictive theoretical manner about how productive outcomes could relate to the way welfare state effort is conceptualized. Appreciating the deeper productive dimensions of what is still broadly seen as compensatory policy is where the contribution of social developmentalist ideas may lie. In the spirit of work aimed at exploring developmental aspects of social policy in the Global North (Kangas and Palme, Reference Kangas, Palme, Kangas and Palme2005; Kwon et al., Reference Kwon, Mkandawire and Palme2009), the paper briefly argues that it is possible to decipher and recover the developmental aspects of social policies that prevail in the welfare states of the Global North. Doing so implies a process of abduction, or inference to the best explanation, by speculating about the mechanisms that explain observed outcomes in the wake of underdeveloped theory (Minnameier, Reference Minnameier, Bergman, Paavola and Pietarinen2010, Reference Minnameier and Magnani2022).
In the absence of compelling explanations for Okun-defying outcomes, policy-level heterogeneity across countries can be better understood using a social developmentalist-inspired theoretical framework. In particular, social development insights may aid in identifying and understanding how different policy dimensions of the welfare state interact. Returning to the impasse discussed earlier, comparative social policy research lacks a theoretically coherent productive rationale for thinking about welfare state effort while it is similarly clear that social development theory has not been fully integrated into social policy thinking in the developed world. The latter requires focus, refinement, and application to the welfare state context, while the former begs theoretical guidance regarding welfare policy variables. The policy-relevant principles that support exploration of the productive effects of existing social policies, discussed below, encourage analysts to rethink dichotomies – to see policy as interactive, cumulative and synergistic rather than to confine their thinking about effort to regimes or specific and discrete policies that entail either a productive investment or passive consumption, based on which we should then seek an optimal mix.Footnote 4
The social development perspective, which traces its roots to a fragmented literature, has remained theoretically underdeveloped and largely undefined in programmatic terms (Midgley, Reference Midgley1995, Reference Midgley2003; Midgley, Reference Midgley, Fitzpatrick, Kwon and Manning2006). Johnson (Reference Johnson2024a) synthesized various streams of developmentalist thought into a set of policy-relevant principles to devise expectations about existing types of social policy that are likely to function as protective-productive policies and that rest on economic assumptions that differ substantially from the mainstream (Johnson, Reference Johnson2024b). He redefined Midgley’s (Reference Midgley1995) notion of social development, combining it with related perspectives to illuminate how social policies could support conditions favourable to sustained socioeconomic development and what Myrdal might characterize as its reproduction. The author incorporated the characteristics that Midgley (Reference Midgley1995: 25–28) associates with social development but challenged his idea of it being separate from other institutionalized approaches to promoting social welfare, including social administration (which is inextricably linked to the modern welfare state), contending that existing social policies could have unintended or implicit connections to economic (re)development. The author applied what he referred to as the critical perspective on social development, not to formulate new approaches to harmonizing social and economic development – its focus to date – but rather to understand how existing social policies in developed welfare states of the Global North may already do so.
Johnson (Reference Johnson2024a) identified three barriers to applying social development ideas to thinking about productive social policy in the welfare state. The first, related to productivism, dealt with the way that social and economic policy is integrated; the second, related to social investment, pertained to the extent to which all social expenditures have potential benefits; and the third, related to universalism, concerned the way that policies interact. Drawing on central insights from the unified socioeconomic planning approach of Myrdal (Reference Myrdal1974), emphasizing how – in line with insights from feminist thought and scholars in the Global South – welfare systems provide reproductive factors, and applying them to the welfare statist perspective (which offers a lexicon for comparing social policies), the social developmentalist principles discussed below were derived to clarify thinking about the types of social policy in the Global North that may be both protective and productive. More fundamentally, this reconceptualized notion of inclusive social development suggests that productive elements may inhere, to varying degrees, in all existing social policies.
In a developmentalist sense, social policies have inherent implications for capabilities, opportunities, endowments, assets, and the like (see De Munck and Lits, Reference De Munck and Lits2017). These traits may be embedded in existing spending categories that simultaneously have investment and consumption aspects, have effects that vary cumulatively or interdependently, and should be considered synergistically and interactively; where economic and social processes are fundamentally related within the same policy. Economic performance can arise from expanding investments when free market allocations are inadequate. Indeed, abduction, in the case of the bumblebee, infers that social policies may well be meeting developmental needs that would otherwise go unmet, compelling a more fundamental critique of free market capitalism (Johnson, Reference Johnson2024b). A critical perspective on social development allows us to take a conceptual step toward understanding why this could be the case. When the inherently productive aspects of protective social policies become clearer, their indispensability and rationale for preservation as a foundation on which to build additional investment-oriented policies become apparent. The paper now briefly discusses these developmentalist-inspired principles and how they may appear in traditional protective social policies.
Applying developmentalist principles to conventional social policy types
While the following developmentalist principles are merely suggestive at this stage of conceptual development, their implications begin to come into focus when applied to thinking about key social policy categories in developed welfare states (Johnson, Reference Johnson2024a). Highlighting the contingent and preliminary nature of these ideas is recognition of the fact that terms like universalism (Budowski and Künzler, Reference Budowski and Künzler2020) and universalistic social services (Martinelli, Reference Martinelli, Martinelli, Anttonen and Mätzke2017) remain fuzzy and contested. One way to translate these principles into the welfare state policy lexicon is to conceive of them in terms of their qualitative aspects, including mode of delivery (e.g. in-kind or cash), benefit eligibility requirements (i.e. whether a programme is means-tested or universal), quantitative aspects (e.g. expenditure level, replacement rates), and focus (e.g. function and demographic target). The author’s research focused on searching for developmentalist elements in common types of social expenditure and asking whether these policies were associated with low levels of development-inhibiting poverty and high levels of economic activity, measured as reducing post-tax/transfer poverty without decreasing pre-tax/transfer (market) earnings.Footnote 5 The developmentalist lens allows us to speculate about whether social policy does more than transfer or redistribute income and to think differently about what existing ‘protective’ policies deliver and how they do so.
Johnson (2014, Johnson, Reference Johnson2024a) derived several developmentalist principles, which are believed to have logical connections to key social policies:
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• “Adequacy of provision to ensure high quality” suggests that DWSPs should be generous (i.e. the proportion of GDP spent on social expenditures should be relatively high) because only with generous policies can there be an increased likelihood of both quality and coverage (see the example of ECEC in León et al., Reference León, Ranci and Sabatinelli2019).
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• “Prevention of future social costs as part of a long-term perspective” suggests that expenditures on family policy, especially policies that improve family functioning when children are young, are likely to yield greater returns over the long-term than policies directed at amelioration of problems after their onset (where the success of the Heckman Curve is dependent on broader, quality investments e.g. Rosholm et al., Reference Rosholm, Paul, Bleses, Højen, Dale, Jensen, Justicce, Svarer and Andersen2021).
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• “Activation that reduces disincentives and maximizes the ability and incentives to earn” argues in favour of family policies that enable market participation (e.g. provision of child care or assistance with purchasing it) and active labour market policies (ALMPs), which relies on investments to enable employment (which, also requires deeper investments in appropriate industrial policy and planning as well as labour market regulations (see e.g. Taylor-Gooby et al., Reference Taylor-Gooby, Gumy and Otto2015).
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• “Access to goods and services,” especially those that guarantee future capability, suggests that in-kind benefits are more likely to ensure positive returns than cash benefits.
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• “Maximization of the utilization of resources” also argues in favour of in-kind benefits. If in-kind benefits are seen as being of high quality, they are likely to result in high benefit uptake.
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• Relatedly, “guaranteed consumption of developmentally beneficial goods and services” supports both in-kind and universal benefits. The universal concept should guarantee access, which should lead to increased consumption, while in-kind provision can ensure the consumption of developmentally beneficial goods in a way that cash benefits cannot.
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• “Entitlement based on relationship to economic development (not strictly need, contribution, or citizenship)” argues in favour of universal benefits where resources bear such a strong relationship to economic development that they should not be based on income or status; where entitlements arguably have positive economic consequences by addressing non-actuarial and interrelated risks (interrelated in that prevention of costs and maximization of resources requires multiple investments). The provision of such basic goods for all citizens is effective where it is likely that a wide range of social conditions may have economic consequences due to the coefficient of interrelation.
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• “Inclusiveness based on increasingly stochastic risk/instability” also argues in favour of universal benefits because, in addition to the traditional risk factors for poverty, increased uncertainty or unpredictability across the life course relative to earlier historical periods makes insurance more cost-effective and suggests that to prevent problems, individuals should not have to already be low-income before being entitled to benefits.
These principles, which are summarized on the left side of the Figure 1 below and connected to DWSPs, in the form of common policy categories, on the right side of the figure, are expected to be associated with protective-productive outcomes. While only illustrative, they support the development of hypotheses to explain the outcomes historically present in Nordic bumblebees and to examine whether similar household-level patterns occur across countries. The principles translate into a greater emphasis on in-kind and universal transfers, high overall levels of social expenditures on benefits to families and children, as well as investments in active labour market policy. To elaborate, one would expect to see minimal means testing in developmentally essential areas, policies that are non-stigmatizing and ensure uptake and access, and incentives and indicator targeting as opposed to sanctions and minimalist transfers, which may be harmful to dependents in a developmentalist sense (Barr, Reference Barr1998: 267–269, Atkinson, Reference Atkinson1999: 6–11). DWSPs are not primarily conditional on work but rather reflect an active state role in redistributing assets or endowments, equalizing opportunity, and providing universal services across the life course.
Figure 1. Linking principles and policies.
While some scholars have called for new productive policies that have to be constantly recalibrated to adjust to changing conditions (e.g. Hemerijck et al., Reference Hemerijck, Ronchi and Plavgo2023), what we might term here inclusive welfare developmentalism suggests that broad universal investments may be preferable on the assumption that free markets chronically under-invest and externalize social costs (Johnson, Reference Johnson2024b). The empirical challenge lies in both determining how existing policies and programmes that are often seen as passive actually distribute production-enhancing services, opportunities, and endowments, and whether there is an optimal combination of these policies. Identifying DWSPs is about using cross-national comparative research to decipher how existing policies constitute a productive investment that may be unintended or unrecognized at present.
As alluded to above, inclusive welfare developmentalism suggests that policies are multifunctional or interactive and cumulative, and simultaneously investment and consumption-oriented or synergistic (Delamonica and Mehrotra, Reference Delamonica and Mehrotra2006, Reference Delamonica, Mehrotra, Hujo and McClanahan2009; Mehrotra and Delamonica, Reference Mehrotra and Delamonica2006). For example, policies that improve nutrition will also improve learning, and improvements in learning may also improve nutrition. Similarly, policies that increase education may also contribute to the development of infrastructure that can improve the investment climate, which may further encourage investments in education and other skills (Fouarge, Reference Fouarge2003).Footnote 6 This logic hearkens back to the virtuous circle logic of Myrdal (Reference Myrdal1957). Social outlays are more likely to be considered productive social investments if it is recognized that a broader range of factors, such as family conditions, are seen to mediate the return on these investments (Karoly, Reference Karoly2000; Tham, Reference Tham2001), even if, like unemployment insurance, regarded as mere compensation (Emsellem et al., Reference Emsellem, Stettner and Donner2008; Sjöberg, Reference Sjöberg2010; Lawson, Reference Lawson2015, Reference Lawson2023).
Social policies may have both a discrete impact on poverty and labour market outcomes and, in the circular causation logic of Myrdal (Reference Myrdal1974), a combined non-additive, non-linear impact that is greater for both aspects together than each separately. The mode of transfers or benefits, and the way in which they are combined, have implications for moral hazard as well as productive gains over time. Combining cash benefits with means-tested benefits may result in lower uptake in developmentally important areas, whether due to inaccessible or poor-quality services or to a lack of knowledge among potentially eligible people, reluctance to accept what may be perceived as charity, or complex administrative procedures (Pestieau, Reference Pestieau2006). If different benefits have different uptake or consumption characteristics, there may be costs associated with gaps in coverage or lost benefits attached to forgone future productivity. In this sense, certain populations may be more likely to benefit from in-kind benefits than others (Nygård et al., Reference Nygård, Lindberg and Nyqvist2019).
Several interactive effects may be particularly important from a developmental perspective. Just as the lowest rates of post-tax/transfer and market poverty may be correlated with individual DWSPs, these policies could positively interact. In-kind benefits that are universal may have a stronger anti-poverty effect together than either variable alone. The reason for suspecting an interaction between universal and in-kind benefits is that they may collectively or synergistically have a stronger impact on guaranteeing the consumption of resources that are inversely related to developmentally relevant poverty while also diminishing distortions and information requirements. As argued in Johnson (Reference Johnson2024b) DWSPs may minimize economic distortions and the effects of limited information, providing a range of goods and services that support productive economic activity while minimizing the social costs of poverty.Footnote 7
Economic and social processes are inextricable, and DWSP suggests that distribution may positively impact production. Given the popularity of the SIA, persistent austerity pressures, and the pervasiveness of neoliberal ideology, scholars need to understand explicitly how social policy distributes more than mere income (see Kaufmann, Reference Kaufmann2007) as well as the role played by market institutions (Gornick and Parolin, Reference Gornick and Parolin2021; Cantillon, Reference Cantillon, Nelson, Nieuwenhuis and Yerkes2022). Transfers involve not only income, resources, or commodities but also, if often implicitly, they have implications for wider capabilities, access, and the like, in terms of what they deliver and how they do so. DWSP cautions against income -targeting and rather suggests a focus on the prevention of poverty. The conventional economic approach does not necessarily support these policy implications because of assumptions it accepts regarding perfect competition but that abductive observations call into question. Scholars need to engage more deeply with economic orthodoxy to understand why anomalous outcomes occurred in the classic Nordic cases and, perhaps, elsewhere for particular households. It is important to explore the economic underpinning observations that underlie DWSPs, contrasting assumptions of the standard economic and social developmental approaches and the types of policies each approach supports (Johnson, Reference Johnson2024b).
Conclusion and discussion
The social policies of the welfare state should not be seen, as in the Third Way perspective, as merely a compensatory response to the social costs of capitalism but also as contributing to sustainable economic development and growth. Given the larger political economic tradition in which cross-national research is embedded, the author noted the absence of a detailed social democratic political economy that explicitly links social and economic policy and how this intersected with the theoretical impasse of welfare state research. Reconsidering the disparate ideas of social development in the context of new challenges facing the welfare state, I distilled developmentalist principles that offer criteria for thinking about the productive aspects of existing social policies. Situating developmentalism in an older classical political economic tradition emphasizes the implausibility of thinking about distribution and production separately, which conceptually grounds thinking about the productive benefits of social policy.
Clarifying the value of social developmentalist ideas may increase opportunities for policy-relevant learning across societies that are comparatively quite diverse. The critical perspective on social development has the potential to help policymakers think in more nuanced yet comparative ways about shared policy approaches and their interaction. It suggests that social policy resource transfers are neither simply about consumption nor production but that they entail both aspects simultaneously, so policy analyses and debates should not be carried out as if certain transfers are only about passive distribution and consumption while others are about active investments. To the extent that individual policies do both synergistically and cumulatively, social expenditures cannot easily be re-channelled from passive to active social policies. The political economy tradition reminds us that the economic and social are fundamentally inextricable, especially insofar as a wide range of social conditions may have economic consequences, rendering mainstream economic assumptions about the market’s ability to provide questionable.
It may be misleading to look for either an exclusively developmentalist regime or specific policies that are singularly developmentalist. Despite the difficulty of examining interaction effects, it is clear that policies should not be evaluated in isolation from one another, but rather their complexity embraced (Cantillon, Reference Cantillon, Nelson, Nieuwenhuis and Yerkes2022). While regime thinking retains value (Ferragina et al., Reference Ferragina, Seeleib-Kaiser and Spreckelsen2015) it risks obscuring important policy details and limits the possibility of learning based on common metrics. Very narrow cost–benefit analysis that attempts to hold all other policies constant could risk committing epistemological errors if there are synergies associated with particular policy combinations. Moreover, there are likely to be significant economic benefits to preventing poverty that we do not yet fully understand. To the extent that certain social policies simultaneously possess both protective and productive effects, scholars should resist the allure of proposals that invoke narrow visions of social investment at the risk of devaluing traditional social policies whose productive effects remain, at best, partially understood.
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