Rediscovering the Developmentalist-Productive Roots of Welfare State Policies

Introduction

The growing stress on the productive potential of social policy provides a seemingly new economic rationale for its provision given the advent of the knowledge-based economy. However, it is arguably a mistake to assume that the majority of existing social policies need to be fundamentally adjusted to accommodate changes in the economic and social order. Instead, we need to better understand how long-standing policies have enabled and continue to facilitate adaptation to ongoing socioeconomic changes. Failing to do so risks severing or otherwise upsetting vital social policy synergies and undermining their efficacy. This paper highlights the key ideas from a dissertation that developed a conceptual framework for thinking about social policies in modern welfare states, which are at the same time protective and productive, already serving as social investments in people.¹ It primarily summarizes the rationale behind the search for “developmental welfare state policies” (DWSPs) and the value of bridging the welfare state and developmental literature, while only briefly sketching the logic behind their operation and effects, and their departure from traditional economic assumptions.²

The genesis of the idea began with the awareness that there were no obvious explanations for the observed ability of select countries with expansive social policies to prevent a range of social ills without experiencing unduly adverse economic consequences, akin to a bumble bee, whose aerodynamics seem to defy its odds of flight. Combining insights from the social development and welfare state literature, exchanges across which have been rare (Midgley, 2013), this paper sketches the theoretical explanation I developed for questioning the supposed inviolability of the efficiency–equality tradeoff and proposing that conventional social policies could be seen as both protective and productive. A major challenge in navigating these respective literatures is posed by inadequate definitions and conceptual ambiguity evident in their ideational histories. This paper references concepts such as developmentalism, social investment, productivism, and various derivations of these and so it is useful to present a partial conceptual lineage of the social development lexicon. Appendix A broadly situates various terms and concepts, and clarifies where they appear and generally how they relate to each other, to orient the reader to the way that they will be used in this paper.³ The denouement is that social investment ideas in social development thinking lack the coherence of the social policy approach but where taken up in the latter they have been dichotomized into protective versus productive policy, which leaves the provenance and political economic roots of social investment unexplored.

While research has examined the distributional effect of various welfare state policies on measures of poverty and related concepts of well-being, there is no widely accepted, theoretically coherent framework for devising systematic expectations or thinking predictively about how types of policy effort interact and relate to productive outcomes. This paper develops propositions about the positive economic implications of social policy, contrary to mainstream economic theory, by drawing on an older political economic tradition, which is largely distinct from Keynesianism and that informs developmental ideas.⁴ It does so by reconceptualizing social development, currently a loose collection of ideas, into a more cohesive and critical notion of welfare developmentalism that clarifies the inherent link between economic and social processes. By bridging the welfare state research of the Global North and developmental literature of the Global South—thereby overcoming the constraints of regime thinking and increasing the policy relevance of the former, while refining the diffuse nature of the latter—it is possible to identify developmental policy principles associated with the social investment or productive function of the welfare state and to speculate about the characteristics of existing social policies that permit them to be simultaneously protective and productive, and that I reclassify as DWSPs⁵.

This paper pushes beyond characterizations of social investment as a polysemic discourse (Jenson, 2010) or a new welfare state settlement contra neoliberalism (Abrahamson, 2010), to clarify the deep investment-oriented roots of what is often portrayed and treated as “old social protection” expenditure (Ronchi, 2016) or “compensatory” spending (Prandini, Orlandini, & Guerra, 2016). I argue that the question is not so much about the relationship between social investment policies and traditional social policies (Choi, Huber, Kim, Kwon, & Shi, 2020) but rather, about a more fundamental political-economic understanding of how and why traditional policies have, for many years, served a “preparing rather than repairing” role. The question going forward is one of a change in emphasis not in kind. Troublingly, the positive link between (presumably distinct) social protection and social investment policies appears to have weakened (Kim & Choi, 2020; Ronchi, 2018). Before the “policy package mix” can be considered in light of the uneven results of social investment policy, one has to grasp the existing investment function of traditional policies and how their productive potential stems from inherent failures in the market itself. More and better-quality social investment begins with understanding the true role of traditional social protection.

Background and the Central Problem

We can understand the history of the welfare state and its study as a series of periodic transitions from one phase to another, reflecting a pattern of sequential or generational thinking where the welfare states’ development has been fairly evolutionary, continuous, and cumulative. The perceived need to now justify the welfare state marks a stark challenge to the slow-moving theoretical world of regime typologies and path dependency.⁶ This legacy of gradualism stems largely from the fact that the welfare state emerged through complex and successive social and political processes rather than from planning (Arts & Gelissen, 2002). The advance of the social policy literature was due to the “relative agreement on what was to be explained, while there was disagreement over the possible explanations” (Amenta, 2003, p. 114). The problems now confronting the welfare state are not addressed by the two major questions on which welfare comparisons have focused: What explains national differences in welfare effort and welfare state type, and what are the distributional consequences of social policy variations? (Esping-Andersen, 2004).

Moving beyond earlier generations of welfare state research to answer new questions has been constrained by a lack of theoretical guidance as it remains largely focused on the protective effects of social policy, which restrains the field’s ability to explain the—often unintended—productive or social investment function of social policies.⁷ This inability can be traced to the fact that little dialog has historically occurred across the division of labor between poverty research and welfare state research (Cantillon, Van Mechelen, & Van den Bosch, 2004; De Janvry & Kanbur, 2006) as well as to the dominance of typologies (Arts & Gelissen, 2002), “the welfare regime inspiration,” and confusion about “ensuing policy choices” (Antonucci, 2010). Social investment as a discourse will remain plagued by theoretical ambiguity in terms of what it means and how it translates into social policy (Morel, Palier, & Palme, 2012) unless a developmental rationale for social benefits can elucidate why social policies may be a precondition or prerequisite for economic development (and hence sustainable growth).

Morel et al. (2012) note that “while the social investment perspective rests on a number of common themes, both at the ideational level and in terms of the policy instruments put forward, different aspects are given different emphasis by different thinkers and policymakers” (p. 17). The result is that it “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). This paper delineates the policy logic of the former, distinguishing its political economic roots by fusing insights associated with developmental ideas and welfare state concepts to clarify the productive consequences of social policy.⁸

Failure to address this ambiguity may reinforce the tendency to perceive the social investment approach as a new and discontinuous paradigm where one mistakenly identifies specific or discrete social policies as singularly productive, fostering their instrumentalization as either active or passive (Nolan, 2013). This disembedded approach overlooks the need to explain why the social policies of some countries have worked as successfully as they have for as long as they have. It is only by working out a political-economic explanation for the investment function of welfare states that social investment can be understood as fundamentally more than a new approach or “pallid Third Way version of social policy” (Esping-Andersen, 2002). There is a distinct need to move beyond acknowledging the possibility of limited market failures and vague calls for narrow government intervention and to return to affirmative engagement with both the productive possibilities of traditional social policy and the inherent limits of the market.⁹

A political economic tradition that allows decisions about distribution to have net positive effects on production implies the occurrence of market failures on a comparatively extensive scale, which supports the provision of merit goods based on wide-ranging information failures. In the standard economic view, market failures remain limited and second-best policy prescriptions tightly circumscribed by information limitations and the likelihood of economic distortions (Lipsey, 2007). Arguments for intervention due to limited market failure do not clearly indicate which types of social policies are likely to function as social investments (Greve, 2007) but rather are limited to those selective interventions that justify a residual welfare state. While the standard framework offers suggestions for human capital-enhancing initiatives directly related, for example, to education, it has little to say about classic social insurance or generous universal and in-kind benefits. Recognizing the role of distribution in production, contrary to the standard view, is necessary to resist the erosion of traditional social provision and its replacement by more circumscribed and narrowly targeted Third Way–style social policies.

Developmentalist insights from the Global South support a political economic rationale for productive social policy that is otherwise absent in the Global North. Examining policy-level heterogeneity using a developmentalist-inspired theoretical framework, it makes sense to search for developmentalist policy clusters as opposed to a productivist world (Holliday, 2000; Lee, & Ku, 2007; Room, 2002), social investment state (Giddens, 1998; Lister, 2004), or single policies that are exclusively productivist (Hudson & Kühner, 2009). While recent conceptual progress has been made in fleshing out how compensatory and capacitating policies are complementary, interdependent, and have outcomes beyond redistribution (Hemerijck & Huguenot-Noël, 2022, Hemerijck, Ronchi, & Plavgo, 2023) social investment policies are still seen largely as distinct, that is, some types of social spending do not generate a return (Leoni, 2016), and ignore developmental contributions.¹⁰ Appreciating the deeper productive dimensions of what is still broadly seen as “compensatory” policy is where the contribution of social developmentalist ideas lies.

The remainder of this paper addresses the conceptual ambiguity in developmentalist ideas, synthesizing developmentalist principles from various strands of social development thought (e.g., Midgley, 1995), which I apply to a welfare state literature that has inadequately conceptualized how productive social policies may work. Cross-national comparative research lacks a theoretically coherent productive rationale for the welfare state, while social development theory has not been fully integrated into social policy thinking in the developed world; the latter needs focus, refinement, and application, and former requires theoretical guidance and policy relevance.¹¹ I use social development ideas to decipher the developmental aspects of existing social policies in the Global North by reexamining the inherent link between social and economic processes. A more cohesive and critical notion of welfare developmentalism can help identify the productive aspects of existing social policies in developed welfare states, which may already in part harmonize social and economic development and function as social investments. The following section translates developmental insights into the welfare state context, providing a framework to derive expectations about potentially productive social policies.¹²

Overcoming Conceptual Ambiguity in Developmentalist Thought

Social development, one aspect of the construct I refer to broadly as developmentalism, arises from a variety of disparate perspectives (Midgley, 2003a, 2003b; Mkandawire, 2001) that have not coalesced into a cohesive, viable alternative to traditional economic logic. Social development is not a theory (Midgley, 1995) in that it is not composed of “a set of hypotheses or propositions, linked by logical arguments, and advanced to explain an area of empirical reality or type of phenomenon” (Jary & Jary, 1991, p. 519). The absence of a clear definition prevents its rigorous theoretical and practical application to understanding social policy. At present, it offers “no clear theory of how social policy acts on development-enhancing social factors to induce growth, nor agreement on patterns of growth that are most appropriate to meeting the spectrum of social goals that are now on both national and international agendas” (Mkandawire, 2001, p. 22). However, I believe it can be redefined and combined with other perspectives to illuminate how “social policies can (and often do) produce the favorable initial conditions that support economic development” (Mkandawire, 2009, p. 3).

Below are several characteristics of social development, according to the classic work by James Midgley (1995, pp. 25–28):

1. The process of social development is inextricably linked to economic development.

2. Social development has an interdisciplinary focus that draws on the insights of the various social sciences, especially political economy.

3. Social development invokes a sense of process; it is a dynamic concept in which the notion of growth and change is explicit.

4. The process of change is progressive in nature and reflects faith in the prospects of human betterment and social improvement.

5. Social development is interventionist in that rather than believing that social improvements occur naturally as a result of the economic market or inevitable historical forces, organized efforts will bring about improvements in social welfare.

6. Social development goals are fostered through various strategies to link social interventions with economic development efforts; these strategies reflect different beliefs or ideologies and a pragmatic viewpoint is required to synthesize them.

7. Social development is inclusive or universalistic in scope and not focused primarily on needy individuals.

8. The goal of social development is the promotion of social welfare, where social problems are satisfactorily managed, social needs are met, and social opportunities are created.

Social development can be formally defined as “a process of planned social change designed to promote the well-being of the population as a whole in conjunction with a dynamic process of economic development” (Midgley, 1995, p. 25). The basic requirements for attaining a condition of social well-being are “the management of social problems, the meeting of needs, and the enhancement of opportunities” (Midgley, 1995, p. 13).¹³ Midgley, perhaps its leading theorist, differentiates it from three institutionalized approaches for promoting social welfare: social philanthropy, social work, and social administration (i.e., social service or social policy, which is inextricably linked to the contemporary welfare state).

In Midgley’s (1995, p. 16) words, the key difference between the social development approach, which he acknowledges has not been widely adopted, and the other approaches, which have been widely adopted, is the attempt to “link social policies and programmes directly to a comprehensive process of economic development.” However, social development, which traces its roots to a fragmented literature, remains theoretically underdeveloped and largely undefined in programmatic terms (Midgley, 1995, 2003a, 2006). Despite relatively widespread agreement on the interdependence of social and economic development efforts, social development is a viewpoint that arises from a variety of disparate perspectives that have not yet coalesced into a uniform outlook.

In light of these concerns, this section focuses on clarifying what is meant by social development and seeks to forge a more cohesive and critical vision of welfare developmentalism and productive social policy. I follow the social developmentalists in “challenging the neoliberal claim that social expenditures harm the economy” (Midgley & Tang, 2001, p. 244). However, I use social development not to formulate new approaches to harmonizing social and economic development, which has historically been its central focus, but rather to understand how existing social policies in developed welfare states may already do so. This approach marks a stark departure from how social development has been used to date.

Social development scholars have noted the importance of systematically developing propositions about the conditions under which investments in human development have important returns (Beverly & Sherraden, 1997). Along these lines, other scholars have called for a comprehensive formulation of what critical social development practice involves in terms of social policy intervention (Midgley, 2001). I developed a critical perspective on social development that is somewhat distinct from social development theorists. I reconsidered the relationship between development studies and welfare state studies, synthesizing ideas from both and elaborating on what has been termed the inclusive strand of welfare developmentalism (Kwon, 2007; UNDESA, 1971). I redefine this perspective within the context of developed welfare states as the attempt to understand existing social policy interventions, the effects of at least some of which, in the Nordic case, appear to be at odds with neoliberal explanations. Combining developmental ideas with policy-oriented insights from welfare state research yields a coherent explanatory framework for understanding the productive (reproductive) effects of social policy in industrial countries.¹⁴

I can only very briefly summarize the history, evolution, and extensions of social development before discussing its limitations vis-à-vis existing social policy and the need for a theoretical synthesis (see Johnson, 2010, 2014 for detailed discussion). Social development emerged in the Global South around colonialism.¹⁵ Under Gunnar Myrdal, the UN Economic and Social Council articulated the first and only international statement of principles of social policy underlying what came to be known as the inclusive strand of welfare developmentalism in 1971. It reflected, for the first time, a unified socioeconomic approach to planning in developing countries, which transcended the narrow focus on economic growth in favor of integrating economic and social planning. Midgley suggests that this conception was explicitly based on a state-directed development process and was compatible with the ideals of modernization that prevailed in development thinking at the time. This criticism of the tendency in economics to draw a distinct line between economic and social phenomena, separating social development from economic development, was groundbreaking. Unfortunately, it failed to have a substantial impact on policy in developing countries due to adverse macroeconomic conditions and the ascendancy of neoliberalism.¹⁶

While the renewed focus of UN activity in the social development area has been on translating lessons from developed countries to developing countries, the focus of social some development writers has been on trying to develop it into a more comprehensive notion.¹⁷ Specifically, Midgley (1995) attempts to synthesize a wide-ranging development-related literature into a universal model that can be applied at local, regional, and national levels in both industrialized and developing nations. Arguing that welfare state policies have generally foundered in the Global South (Midgley, 2003a), he advocates an approach that relies less on direct government services and transfer payments. Instead, Midgley argues for harmonizing individual enterprise, the market, community participation, and governmental activities, where the state would help guide the process through investments in education, health, job training, and infrastructure.

Importantly, the focus on pluralism and pragmatism reflected in Midgley’s perspective contrasts with standard approaches in industrialized nations in which economic and social policy are largely bifurcated, and is a response to the neoliberals who argue that nearly all types of state intervention will lead to economic failures. However, this perspective uncritically, if implicitly, accepts economists’ characterization of existing social policy as largely unproductive. Both UN and academic contributions have focused on developing countries and the problems of underdevelopment and widespread poverty (Midgley, 1997) rather than understanding whether and how current social policies in Western nations serve to foster economic development.¹⁸ To be useful in helping identify developmental policies in Western industrial nations, the social development approach must be augmented with insights from welfare state research. I suggest that a two-track approach to social development, rather than a singular global model, be pursued; one that emphasizes the same productive logic of social policy but that recognizes the different sociopolitical contexts in which it is expressed (e.g., Dahl, Drøpping, & Lødemel, 2001).

Social development has begun to find currency with western welfare state researchers. This has been reflected in the increased application of conceptual tools—devised for the study of Western welfare states—to emerging welfare states (Gough & Wood, 2004; Holliday, 2000; Hort & Kuhnle, 2000; Kwon, 2005a). It has also been reflected to a lesser degree in the increased recognition of developmental elements within the industrialized welfare states, especially late industrializers (Dahl, Drøpping, & Lødemel, 2001; Kangas & Palme, 2005; Kurien, 2006; Kwon, Mkandawire, & Palme 2009; Ornston & Vail, 2016; Vartiainen, 2002). Exploration of developmental ideas has been slowed by a major divide between the study of welfare states in developed countries and descriptive work on social policies in developing countries (Mkandawire, 2001, 2006b, 2009, 2011), though dialog is increasing (Devine, Kühner, & Nakray, 2015). A linear theory of development has historically contributed to a one-sided emphasis on economic growth as compared to social development in the Global South (Mkandawire, 2001, 2006a, 2006b, 2009). In the Global North, it has meant that the importance of social policy to economic development, in both history and current context of developed nations, has not yet been systematically explored. The result has been a neglect of the importance of social policy to economic development as an ongoing reproductive process (Midgley, 2019).¹⁹ The tendency to see the welfare state as an end state (Therborn, 1987) has contributed to obscuring its role in development.²⁰

The application of social development to social policy, especially as it is conceived of in the welfare state, has been quite limited, largely because the model originated in the Global South (Midgley, 1997). Its extension to the Global North has largely occurred through the notion of welfare developmentalism. There are two major strands of thinking in welfare developmentalism, selective and inclusive (Kwon, 2005b). The selective view focuses on social policy mainly as an instrument for achieving economic development; this vision predominates in developmental state analysis focusing on Asia (e.g., Gu, 2006; Haggard, 1990; Johnson, 1982; Stiglitz & Uy, 1996; Wade, 1992) where state-led growth and intervention were focused on correcting conventionally understood market failures. The inclusive view of welfare developmentalism, which places equal emphasis on social and economic objectives, has been more at odds with conventional economic theory (in that equality was pursued alongside efficiency, often for political reasons) as in the case of Scandinavia (Esping-Andersen, 1992; Kuhnle & Hort, 2004; Vartiainen, 2002).

There have been several vague attempts to categorize the features associated with the inclusive strand of welfare developmentalism. From the neo-institutionalist perspective, Midgley (2003a) has identified three key programmatic features: an organizational framework at the national level to harmonize economic and social policies, the promotion of well-being through economic development (i.e., macroeconomic policies), and the promotion of economic development through productivist and social investment programs. Broadening the productivist theme, others associate productive welfare with characteristics such as a stronger state commitment to welfare; the view that all citizens should be covered by government welfare schemes; the equalization of life chances, social integration, democratic participation, emphasis on public investment in education, health, and institutions to promote labor market participation along with income and social safety nets for low-income families; comprehensive social insurance schemes; and development of active labor market programs (Kuhnle, 2002). Still others have summarized the key principles of inclusive welfare developmentalism as including productivism, social investment, and universalism (Kwon, 2005a, 2007).²¹

Critically, however, inclusive developmentalist principles (i.e., productivism, social investment, and universalism) are programmatically vague and not clearly linked to social policies that could result in protective-productive outcomes. Alone, they are unable to identify the developmental roots of existing social policies in modern welfare states and lack sufficient specificity to analyze the effects of existing social policies. In other words, these broad programmatic themes, which imply the productive potential of social policy and the possibility of harmonizing social policy with economic development, remain generalities and contain several important ambiguities. However, it is possible to infuse abstract principles of inclusive developmentalism with a more coherent, cohesive, and policy-relevant set of principles to identify and explain the investment-oriented effects of existing social policies.

A more thorough exploration of Midgley’s perspective illustrates the ambiguity of social development with respect to social policy. Specifically, Midgley’s work serves both to clarify the limits of social development and illuminate its explanatory potential when combined with broader developmentalist insights and ideas from comparative research. Midgley’s neo-institutionalism, which is firmly in the inclusive welfare developmentalism tradition, has been overly ambitious as a “third model of social welfare” (Midgley, 1995, p. 25) that transcends the residual-institutional approaches that have dominated social welfare thinking (i.e., welfare statism and social administration). While Midgley relates social development to aspects of institutionalism, he is generally critical of institutionalism insofar as he accepts that it rests on a tradition that bifurcates economic and social policy.²² As a result of this tendency to throw out the baby with the bathwater and general skepticism about the comparative approach to social policy in the Global North, there has been little interest in revisiting and reexamining existing institutionalist social policies to discern whether or not they have a developmental orientation or function (e.g., Midgley, 2004). The focus has been on advocating a variety of relatively new and innovative policies ranging from asset accumulation to developing microenterprises (Midgley, 1995, 1997, 1999) rather than creating a robust theoretical framework for thinking systematically about the types of social policies that may contribute to economic development across countries. A challenge for social development is to decipher and theoretically recover the developmental aspects of social policy in the Global North using the policy language and descriptive categories that prevail in the welfare state literature.

Taking Midgley as a leading exponent of the social development approach (and inclusive strand of welfare developmentalism), one can identify three central limitations vis-à-vis existing social policy that have inhibited the application of developmentalist ideas to the welfare state. The first, related to productivism, deals with the way in which social and economic policy is integrated. The second, related to social investment, deals with the extent to which all social expenditures have potential benefits. The third, related to universalism, pertains to the way that policies interact. Drawing on central insights from the unified socioeconomic planning approach of Myrdal (i.e., how welfare systems provide reproductive factors) and the welfare statist perspective (i.e., offering a lexicon for classifying comparative social policy), we can address these limitations and clarify thinking on the types of social policy in the Global North that may be both productive and protective.

There is a desire in social development to integrate economic and social policy considerations or to promote the overall well-being of society in conjunction with an ongoing process of economic development (Midgley, 1995). However, this view implies that the economic and social can exist separately from one another, the social needs to be integrated within the economic and economic development is possible without social policy. As Midgley and Tang (2001, p. 247) write, “developmental welfare requires a strong role for the state, not only in social welfare but in promoting economic development as well.” This type of language reflects ambiguity regarding the precise relationship between social welfare and economic development and suggests an inherent separation between the two. While social development seems to imply a more integral role for social policy, it only asserts explicitly that social development cannot take place without economic development and “that economic development is meaningless if it fails to bring about improvements in well-being” (Midgley & Tang, 2001, p. 246). It clearly suggests that “retrenchment in social welfare will impede economic development” (Midgley & Tang, 2001, p. 246), primarily because social welfare includes investments that make economic development possible. However, it does not explain in detail which social expenditure policies constitute social investments or are indispensable to economic performance. This view moves beyond bifurcation yet implies that it is possible to have strictly nonproductive maintenance-based social programs that have an unrecoverable depleting effect on finite resources (Midgley, 1997) in contrast to the possibility that existing policies may simultaneously have positive economic and social implications.

Social development supports the notion that social expenditures in the form of social investments contribute positively to economic development.²³ However, there is an unclear, contradictory view of the value of social expenditures in general. While social expenditures on “social service policies and programmes that are investment oriented and promote economic development” are emphasized (Midgley & Tang, 2001, p. 246), social development is sometimes juxtaposed with the “provision of social services, the payment of social benefits, and the intervention of professional personnel” (Midgley & Tang, 2001, p. 246). Some argue that welfare policies have focused excessively on the provision of benefits and that “social development favors instead programs that are investment-oriented and contribute to economic growth” (Midgley & Tang, p. 247). The ambiguous view of social benefits is confusing as it implies that social benefits are problematic in that they contradict the investment orientation of social development and simultaneously are helpful in that they contribute to economic growth. While reference is made to the need for remedial and maintenance oriented social services (Midgley & Tang, 2001), universalism is also invoked (Midgley, 1999). Thus, there is no systematic identification of appropriate social policies or attempt to apply existing benefit categories that correspond to the welfare state literature.

Finally, related to the preceding two points, social development tends to not see policies as cumulative and interactive, instead applying broad brush strokes when it comes to the institutional welfare model and terms such as entitlement rights (Midgley, 2000).²⁴ For instance, social development places little emphasis on entitlement rights and seems to associate them with altruism (Midgley, 2003a; Midgley & Tang, 2001) rather than distinguishing the possible productive importance of entitlements in certain areas and in combination with other types of benefits. Developmental policy effects may be the result of different policy interactions (or contingent upon these interactions) as opposed to being associated exclusively with developmental state regimes or even individual policies.²⁵ Rather than identifying how productivism and social investment may be present in current welfare state policy, the social development approach seems to assume that such policy does not exist but that it can be implemented through human capital, employment or self-employment programs, social capital, asset development, and removing barriers to economic participation (see Lennartz & Ronald, 2017 for more on the asset-based and social investment approaches in the welfare state).

Midgley’s notion of social development, by itself, is limited in helping us understand the potentially productive effects of social policy in the Global North. It is difficult to move beyond the conclusion that consumption-based income transfers do not entail investments than can enhance capabilities (Midgley, 2003a) or that “redistributive social welfare expends scarce resources on unproductive social services, maintains needy people in dependency, and stifles economic growth” (Midgley, 1999, p. 3). The principles of productivism, social investment, and universalism lack a clear theoretical exposition of (1) how economic and social policy are interconnected, (2) the efficacy of social benefits (and investment potential of consumption expenditures), and (3) the way in which social policies may be synergistically related. As a result, social development as currently conceptualized cannot identify the developmentalist roots of existing social policies in western welfare states.

Welfare developmentalism can make a more robust contribution to understanding protective–productive social policy if social development is thought of in less comprehensive terms. Rather than pursuing a global social policy approach that aspires to encompass both the developing and developed worlds, a two-track approach that recognizes the different sociopolitical contexts of the Global North and the Global South—while challenging neoliberal orthodoxy in both cases—is preferable. The comprehensive approach tends to implicate research in the Global North as neglecting the Global South and holds traditional welfare state policies at arm’s length. This overlooks important differences in the feasibility of state intervention and the value of not only poverty reduction but also poverty prevention. There is nothing inherent in social development that links it to improvement of welfare for the poor in contexts in which poverty prevention may be as important as poverty reduction (ESCWA, 2003; Kuhnle & Hort, 2004). Further, it overlooks the central developmentalist premise shared by both developing and developed countries. This is the view articulated by Myrdal (1974, p. 732) and on which I argue that the new critical perspective of social development should be based:

Well-planned redistributional reforms…can be productive by raising the quality of the labor force and/or by saving individuals and society from future costs. This holds true for even those rich countries which already have raised substantially the level of living of their least affluent strata.²⁶

A two-track approach to social development, based on this fundamental premise, can be used not only to inform development from the bottom up (i.e., contesting the mainstream orthodoxy imposed on developing countries) but also to understand how social policy may contribute to development from the top down (i.e., where there is likewise a role for challenging mainstream orthodoxy). This approach recognizes that while the theory associated with welfare state regime or typological thinking may not be sufficient for informing practical policy in developing nations (Midgley, 1997), social development can nevertheless be useful for understanding how economic development and social policy is functionally harmonized in the Global North. In this sense, developmentalist ideas remain applicable to developed nations. This dualistic approach to thinking about social development opens the door to considering how the insights of welfare state research can inform welfare developmentalism and contribute to more systematic expectations about comparable types of social policy. Building on Myrdal’s premise, it is possible to combine the insights of social development with those of welfare state research. Their complimentary insights enable us to move beyond generic developmentalist principles that are programmatically vague to more specific policy-relevant principles for thinking about developmental welfare and social policies together.

Midgley (2003a) correctly asserts that Titmuss, Marshall, and other theorists using the representational approach, separated the economic and social domains. However, Midgley’s (1999, p. 9) critique of the “compartmentalization of social welfare and economic development” in welfare statism has led to the assumption that welfare state conceptualizations of effort are incapable of accounting for the productive effects of social policy. This conflates the theoretical neglect of productive social policy with the absence of productive social policy. Discarding important aspects of the representational approach, it is mistakenly concluded that social expenditures in the form of consumption or maintenance are discrete from investment expenditures. Despite this limitation, the central contribution of developmentalism to welfare state thinking is the addition of productive outcomes to the traditional preoccupation with protective outcomes.

The welfare statist approach, while offering a descriptive lexicon for considering the types of policies that might constitute social investments, has not focused on productive outcomes, a point elaborated on in Johnson (2024a). Consider Briggs’ (1961) programmatic definition of the welfare state. He suggests that welfare states have three goals: (1) economic security (i.e., protecting citizens from common life risks by replacing lost income), (2) material sufficiency (i.e., providing a basic floor of social protection), and (3) basic services (ensuring access to critical goods and services). These goals correspond to three policy categories: (1) social security (i.e., insurance), (2) public assistance, and (3) services. In the traditional welfare state view focused on redistribution, it is not clear what is meant by the term’s sufficiency or critical goods and services. What is the difference between minimal and adequate, and to what does the term critical refer? A similar point can be made for Esping-Andersen (2000b, pp. 161 &163), who distinguishes “minimal needs” from a “luxurious second-tier, universally inclusive, earnings-related insurance scheme on top of the flat-rate egalitarian one” geared to the “discriminating tastes of the new middle classes.” It is not clear why or how, in policy terms, principles such as universalism and decommodification extended to the new middle classes “minimize social problems and maximize revenue income” (Esping-Andersen, 2000b, p. 163).

Myrdal’s version of welfare developmentalism emphasizes prevention and the internalization of externalized social costs in the economy (Pigou, 1929), where social organization or coordination is a prerequisite to economic efficiency (Stiglitz, 1996; Vartiainen, 2002). Social policy is a means of economic efficiency insofar as inequality, insecurity, and social risk entail costs (Esping-Andersen, 1985) and underutilized resources. Welfare systems are seen as preconditions for economic development and growth, providing economic systems with the productive factors that they require (Tomassi, 2005). Growth depends on and translates into human development, and human development depends on and translates into growth, ad infinitum (Ranis & Stewart, 2005). Implicit in this view is the idea that the individual citizen and household is not a self-contained source of development but that individual ability is developed with assistance from outside.²⁷ The idea of human development relates to the notions of capability, endowments, opportunities, assets, and the like, and implies that well-being is multidimensional. It also emphasizes building human capabilities, not simply income or expenditures. As such, it holds potentially extensive implications for policies and programs, suggesting that efforts to increase capabilities as well as efforts to improve opportunities are important (see De Munck & Lits, 2017 for discussion).

It supports a view that one cannot dichotomize social policies as either investments or costs in and of themselves. Policies may simultaneously have investment and consumption aspects (Esping-Andersen, 2002, 2003) whose effects may vary in combination (i.e., cumulatively or interdependently) with other policies. Developmentalism suggests a need to take account of the potentially synergistic nature of policies and recognize that policies must be considered in terms of the way they interact, not discretely. Economic performance and efficiency do not come exclusively from cutting costs but rather expanding investments (Andersson, 2005). For instance, if social risks entail associated costs and social investments are synergistic, perhaps this argues against selective assistance to those in need and in favor of preventing need. Further, rather than arguing against entitlements on the basis that they simply reflect passive consumption, it may be that this short-term consumption also reflects a long-term investment. A policy-relevant interpretation of welfare developmentalism suggests that the economic and social are often fundamentally related in the same policy, expenditures on benefits of various sorts are not inherently at odds with social investment, and developmentalist policy is interactive and synergistic. What does this view of welfare developmentalism suggest about the nature and beneficiaries of developmentalist policies?

Midgley (1999) offers examples of what productive social development programs should focus on, including cost effectiveness, human capital investments, social capital formation, individual and community assets, economic participation through productive employment and self-employment, removal of barriers to economic participation, and the creation of a social climate conducive to development (Midgley, 2001, 2003a; Midgley & Tang, 2001). Related work is suggestive of when and for whom social policies should be focused. It may be especially important to target benefits to key groups of people at critical periods of time. For example, Esping-Andersen (2002, 2005) identifies three vulnerable groups: (1) children and their families, (2) those amid work life, who may experience tensions between family life and paid work, and (3) the elderly. Relatedly, new and stochastic risks complicate traditional actuarial insurance (Esping-Andersen, 2000a; Hacker, 2008; Newman, 2008; Taylor-Gooby, 2004; Vandecasteele, 2011).²⁸ Finally, concerning how investments should be made, Gough (2000, 2001) suggests that there are tradeoffs and constraints involved in welfare state effort and effects, and contends, for example, that programs need to be directed at improving the supply of capital and/or labor rather than merely providing resources to some in need.

Based on the revised view of social development adapted from Midgley, the central premise of Myrdal’s unified socioeconomic planning approach, and insights from the welfare statist/social administration approach, I propose several policy-relevant developmentalist principles that are suggestive of the type of social policies that are likely to yield both productive and protective outcomes. While these principles remain nascent and provisional at this stage of theoretical development, their implications become more precise when applied to thinking about major social policy categories in developed welfare states. These principles include the following:

• Adequacy of provision to ensure high quality

• Prevention of future social costs as part of a long-term perspective

• Activation that reduces disincentives and maximizes the ability to earn and incentives to earn

• Access to goods and services

• Maximization of the utilization of resources

• Guaranteed consumption of developmentally beneficial goods and services

• Entitlement based on relationship to economic development (not solely need, contribution, or citizenship)

• Inclusiveness based on increasingly stochastic risk or instability

Drawing on commonly shared policy metrics from cross-national welfare state research, one can speculate about the types of social policies that most closely express or embody these principles. One way to translate social developmentalist ideas 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 program is means-tested or universal), quantitative aspects (e.g., expenditure level, replacement rates), and focus (e.g., function and demographic constituency). While I focus on a test of these ideas elsewhere (Johnson, 2024a), choosing for examination select aspects of social expenditure in particular policy areas, a full complement of DWSP dimensions might also include factors such as tax, financing and contributory structure, eligibility, coverage and replacement rate, and other institutional, occupational or regulatory characteristics as might be classified by Titmuss (1958).²⁹

The simple suggestion here is that existing policies that exhibit the aforementioned principles are likely to be associated with low levels of development-inhibiting poverty and high levels of economic activity. As discussed in Johnson (2024a), examples of policies that are believed to embody these policy-relevant principles are proposed to include relatively high expenditures on in-kind, universal, family-focused, and active labor market benefits. Based on developmentalist-inspired theoretical expectations about the types of policies likely to yield protective-productive outcomes, it should be possible to formulate expectations about the impact of variations in different policy combinations, discern their magnitude, and the way that they interact. The notion that existing types of social policy do more than transfer or redistribute income suggests that there is a need to pay closer theoretical attention in welfare state research to the productive aspects of what social policy delivers and how it does so (Johnson, 2024a). In light of anomalous country outcomes, as reflected in the Nordic cases, questions can be raised in an abductive sense about the likely shortcomings of traditional economic assumptions vis-à-vis social policy, strengthening the basis for thinking holistically about the productive role of the entire social policy apparatus, not merely activating social investment policies (Johnson, 2024b).

Conclusion

Developmental insights applied to traditional welfare state thinking enable a more profound appreciation of the productive function of common types of social policy, which are not typically thought of as having investment-type outcomes. The rewards of its application in this context should be apparent as should its sharpened purpose resulting from being tasked with addressing the clear dilemmas arising from welfare state scholarship. The synthesis undertaken here is mutually beneficial and has the potential to undergird both traditional welfare state policies against further diminution and support their establishment in developing countries.