Today, the close interlinkage between human wellbeing and environmental sustainability is indisputable. In this sense, sustainable wellbeing requires us to develop coherent and integrated social and climate policies. Such eco-social policies, as Ian Gough puts it in his latest book, need to “simultaneously and explicitly pursue both equity/justice and sustainability/sufficiency goals.” In view of this, social policy will need to be mobilized in order to trim the social cost that a transition to a green economy will require, as radical changes to our accumulation regime are a necessity in order for us to stay within our planetary boundaries.
In the early/mid-20th century, under Fordism, a strong complementarity between social and economic policy in the developed countries existed, which resulted in a sharp increase in social spending with positive social consequences accompanied by a high level of aggregate demand, steep economic growth, and macroeconomic stability. Yet, with the emergence and ascendancy of neoliberalism throughout the last two decades of the 20th century, which came with its attachment to austerity and fiscal discipline, social policy was re-conceptualised as a hurdle and framed as an obstacle to sustained capital accumulation – despite all evidence that it had paved the way for the market system to flourish for decades. It was as if social policy and the concept of sustainability were taken as fundamentally conflicting and, in the extreme, mutually exclusive.
Four decades of neoliberalism later, it has become apparent that austerity policies have ravaged public service provision through severe budget cuts and waves of privatization. Structural changes within welfare regimes have translated into broken social protection schemes that need fixing. Financial markets have taken over, providing private health insurance, fully funded pension schemes, student loans, and consumer credit to offset low and stagnating earnings and cutbacks in welfare benefits. This shift in social policy in the advanced economies has not stopped new blueprints for social policy to emerge in the Global South, where welfare regimes took too long to surface. Yet today they remain fragile and mostly limited to microcredit and state-sponsored cash transfer schemes, targeting poor and low-income families. As the backbone of social policy in the developing world, they have contributed to increasing monetization, strengthening the market-nexus and fostering financial inclusion.
Social policy, predominantly in the form of cash benefits, now serves as collateral for accessing the financial sector, especially loans. As collateral, it becomes an asset that guarantees loan payment and reduces the risk of default. Thus, a regular income flow ensured by the state in the form of retirement pensions, and all sorts of cash transfers (whether conditional or not) establishes a new link with the financial sector via debt and the acquisition of a growing range of financial products. Through public income transfer programs, social policy solves the problem of adverse selection. Therefore, it acts with a double strategy: risk reduction for creditors and expansion of access for debtors, now belonging to the logic of financialized accumulation. It is important to emphasise, consequently, that the efforts of newly independent nations in the 1960s and 1970s to introduce universal social policies – notably health and education provisioning systems – as part of several African countries’ nation-building strategy, have not been accomplished yet.
At this very moment, however, the challenges in promoting equality and wellbeing are immeasurably more defiant given the climate emergency. We know at this point that whatever progress we make towards decarbonization, it is out of question to envision a future that takes us back to Fordism and a further expansion of consumption, as the planet would not withstand it! Moreover, new risks, difficult to balance, are already looming, with the potential to make it even more difficult to reverse the degree of inequality that has worsened during the pandemic. Income and, notably, wealth inequality are on the rise, the latter mainly due to the spectacular valuation of financial assets during the pandemic. Furthermore, without question, the largest failing in social provisioning unmasked by the pandemic was the dimension of care. Care has never been integrated into social protection systems as a right and has been relegated to the private sphere. When not exercised by women for free as a family assignment or underpaid in the case of paid domestic work – often marked by racial exploitation –, it became a market provision subject to the logic of financial profits.
When the coronavirus pandemic hit, it provoked a grand rupture. All the same, it also seemed to offer a glimmer of hope about the possibility of reckoning with clearly broken social provisioning systems. Claims that a new social contract was imperative resonated across the political spectrum. Radical change was required. Still, the question is: what, if anything, has changed in the realm of social policy in response of the overwhelming economic and societal blow of COVID-19?
It is time now to examine whether governments are reframing their interventions to open the possibility for more far-reaching reforms in the post-pandemic period or whether they are just returning to normalcy; that is, back to pre-existing norms and practices that proved passé to respond to people’s needs and the climate emergency. What we know so far is that, under the pressure of global warming and finance, the restructuring of the social reproduction sphere will continue and surely at a faster pace than in the recent past. And, transitioning to coherent eco-social policymaking is unlikely to occur in a smooth or straightforward manner. As, for instance, Andreas Malm stresses: “a transition can only happen through intensive polarization and confrontation, or it will not happen at all”.
In this light, it is necessary for us to take stock of ruptures and new trends and to examine, collectively, how we can move forward in breaking with the supremacy of finance accumulation in the realm of wellbeing!
Lena Lavinas is a Professor of Welfare Economics at the Institute of Economics at the Federal University of Rio de Janeiro. She is currently a Leverhulme Visiting Professor at the SOAS Economics Department.
The next event of the Social Policy Seminar Series will take place on 19 April, 5-7pm, at SOAS. Find more details on our Events page.