Roger Girod, Patrick de Laubier, Alan Gladstone (Eds.) - Social Policy in Western Europe and The USA, 1950-80 - An Assessment-Palgrave Macmillan UK (1985)

SOCIAL POLICY IN WESTERN EUROPE AND THE USA, 1950-80
An Assessment
This volume seeks to trace certain tendencies and developments in social

policy in Western Europe and the United States. In the first part, which is
general, Professor Girod recalls the objectives of social policy as well as
offering a number of scenarios or strategies for the future of social policy.
The social policy philosophy of Schumpeter, Hayek and Ropke, and their
current vitality, are traced by Professor de Laubier . Professor Delcourt , in
his chapter on Social policy-crisis or mutation?, presents a critical analysis
of various trends in social policy and in particular the elitist philosophy of
Hirschmann. The second part of the volume deals with particular national
experiences: Switzerland by Professor Tschudi; Sweden by Dr. Hartmann;
the United States by Professor Beneton ; and Italy by Professor Donati.
The book broadly covers the diverse range of subject matter encompassed
within the term 'social policy' and should be of great value both to social
policy practitioners as well as to those academics concerned with the fields
of economics, sociology and political science.
Roger Girod is Professor of Sociology at the University of Geneva . In the

fifties he founded the University's Department of Sociology, which is now
the largest in Switzerland. He is the author of Mobilise Sociale, Inegalite,
lnegalites and Politiques de l' Education, I'Illusoire et Ie Possible.
Patrick de Laubier is Professor of Sociology and Director of the

Department of Sociology at the University of Geneva . He has studied in
Paris and spent one year at Harvard. After four years at the International
Labour Organisation as research associate, he became a lecturer at the
University of Geneva. He is the author of L'Age de la Politique Sociale,
Une Alternative Sociologique Aristote-Marx and Introduction a la
Sociologie Politique .
Alan Gladstone is Acting Director of the ILO's International Institute for

Labour Studies and Head of its Industrial Relations Sector. Before joining
the ILO in 1958 he practised labour law in New York . He has taught or
lectured in several American and European universities and institutes. He
is the editor of Employers' Associations and Industrial Relations (with
J. P. Windmuller) and has published articles and monographs on com-
parative labour law and industrial relations.
SOCIAL POLICY IN
WESTERN EUROPE AND
THE USA, 1950-80
An Assessment
Edited by
Roger Girod, Patrick de Laubier and Alan Gladstone
in association with the

INTERNATIONAL INSTITUTE FOR LABOUR STUDIES
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Contents
List of Contributors vii

Introduction: Roger Girod, Patrick de Laubier and Alan Gladstone ix
1 Social Research and the Development of Social Policy Objectives 1

Roger Girod
2 Three Forecasts for Our Time 13

Patrick de Laubier
3 Social Policy-Crisis or Mutation? 27

Jacques Delcourt
4 Swiss Social Policy Since 1950 57

Hans-Peter Tschudi
5 Trends in the Social Policy Aims of the United States (1960-80) 71

Philippe Beneton
6 Social Policy in Sweden (1950-80) 91

Jurgen Hartmann
7 Social Welfare and Social Services in Italy Since 1950 101

Pierpaolo Donati
Index 112
List of Contributors
Philippe Beneton is Professor at Rennes University , France.
Jacques Delcourt is Professor at the Catholic University of Louvain,

Belgium.
Pierpaolo Donati is Professor of Sociology, University of Bologna, Italy.
Roger Girod is Professor at the University of Geneva, Switzerland.
Alan Gladstone is Acting Director, International Institute for Labour

Studies , Geneva, Switzerland and Head of its Industrial Relations
Sector.
Jiirgen Hartmann is at the European Centre for Social Welfare Training

and Research, Vienna, Austria and the University of Uppsala, Sweden.
Patrick de Laubier is Professor of Sociology at the University of Geneva,

Switzerland .
Hans-Peter Tschudi is Professor at the University of Basle and former

President of Switzerland.
Introduction
Social policy in the industrialised market economy countries is in a state of

crisis. The crisis is, perhaps, rooted in a vague, uneasy feeling that the
goal- once unquestioned - of the public provision of security and amenities
for the population at large may have been carried too far. But its
immediate cause is the fact that the constantly increasing expectations
engendered by the evolution of the welfare state and the general rise in
standards of living run counter to the financial constraints imposed on
social welfare budgets by increasing demands coupled with a narrower
contributions base due to the long recession and the consequent rise in
unemployment.
However, the question of financial constraints is only one aspect of the
crisis. The resistance of various non-formal social structures to the
mechanisms which constitute the main vehicles of social policy implemen-
tation is another. Unlike the formal mechanisms of social policy which are
created with a specific goal in mind, these informal social structures arise
spontaneously and embrace all aspects of social reality. They include, for
example, the political power framework, the lawsof the market, the family
and other societal structures which influence the development of one's
personality and attitudes, as well as the risks and uncertainties which
determine the course of one's existence. Of course these informal
structures do have negative effects, but they also serve to enhance the
development of societies and so constitute an indispensable social
mechanism , although a harsh one.
The law, the administrative apparatus and various other institutions are
among the social policy instruments which seek to attenuate the possible
injustices wrought by these informal structures but the impact of these
instruments is still very limited in the face of the complex and variable
influences of the informal system. This is why social policies often fail to
achieve their aims and indeed sometimes result in effects which are
antithetical to those aims. The chapters of this volume not only cover the
considerable progress made by social policy action but also contain many
examples which illustrate its negative effects. However, as negative effects
are very much a part of social policy action, they should no more influence
x Social Policy in Western Europe and USA
us to give up our efforts in the social policy field than the negative effects of
medicine would in the medical field. Rather , they should be a chal1enge
encouraging perseverance, innovativeness and ingenuity in the formulation
and implementation of social policy.
More positively, it might be contended that each obstacle which social
policy encounters increases the number of problems for which appropriate
solutions have to be devised. This is one of the causes of the constant
expansion of its field of action. Others include: the modernisation of the
conditions of life causing complications and imbalances of a type which did
not exist in traditional societies or even in our own societies of just ten or
twenty years ago; the increase in available resources in terms of finances ,
knowledge and manpower in the social professions-factors which make it
possible to undertake more and more work in this field; and final1y the
evolution of ideas which increasingly bring to the forefront of political and
social action social ills which had previously been unknown , ignored or
attributed to Fate .
Progress in research also contributes to the enlargement of the subjects
dealt with by social policy. This progress plays a particularly important role
when it comes to assessing the effects of various social policy programmes
on standards of living and the equitable distribution of various social costs
and benefits. Many measures which appear spectacular in terms of input
prove to be most disappointing when looked at in terms of output. The
education system is a case in point. As long as research in this area is
limited to drawing up tables on the development and improvement of such
systems and on the democratisation of access to education , the conclusions
appear quite optimistic. However, once research begins to go into the
cognitive effects of changes in the educational system and the impact of
these changes on social mobility, for example, the results are far from
encouraging. The same is true for many other areas.
The harsh economic climate since 1975, which fol1owed the exception-
ally favourable conditions of the post Second World War period, makes
the selection of priority aims for social policies which could provide
maximum positive effects with the minimum of negative repercussion at
the best possible cost both essential and urgent . However , it could be
contended that this issue would probably have arisen regardless of the
economic situation. The exponential growth of requirements and the need
to concentrate the available resources on aims that would allow for the best
possible breakthrough at every stage make it inevitable. Consideration of
this problem requires a more thorough examination of the relative
priorities assigned to various social policy objectives and a detailed
knowledge of the field of action and of its actual (and probable) effects.
The chapters of this volume deal with various aspects of this very delicate
question.
The chapters also examine social policy trends in the countries under
consideration . They show that while each country has experienced a
Introduction xi
different type of interventionist policy by the state in the social sphere , a

number of general trends can nevertheless be distinguished.
In the West the immediate post Second World War generation was truly
the product of a Protector-State, a state which needed but to reach into its
abundant resources produced by a thriving economy to multiply, eightfold,
the sums spent on social benefits for the citizens of the consumer society.
However , from about the end of the sixties, a new mentality emerged
gradually among the recipients of these generous benefits. While people
had become used to the benefits , the pitfalls of the system had also become
apparent. Protest arose in the midst of abundance and the systematic
organisation of guarantees against all risks. It became apparent that the
good society did not derive merely from the social security largesse of the
State. More recently, the present crisis has revived memories of harder
times, of uncertainty, unemployment and deficits, and protest has now
given way to apprehension.
The experience of such countries as the United States (with the election
of a politically conservative Republican administration) and France (with
the institution of a socialist government) at the beginning of the 1980s
demonstrate that different conclusions can be drawn from the lessons of
the 19705 and that, as far as social policy is concerned , options of an
ideological stripe are of considerable significance. It may be that politics, in
the noblest sense of the term , reveals its creative potential when faced with
a critical economic situation. In any event , recent experience confirms that
there is a choice and that history is not predetermined.
This volume in no way pretends to provide all the answers. In social
policy as elsewhere the essential point is not necessarily to rush to hasty,
often ill-conceived solut ions but rather to try to discover solutions by
listening to a variety of views and opinions, and thus to gain some idea of
what the crucial issues are. The following chapters do this by presenting
diverse views while seeking to pose the pertinent questions.
Four of the contributions are devoted to the development of the
problems and the aims of social policies in selected countries (i.e. USA,
Italy , Sweden and Switzerland). The other three deal with more general
matters, including crisis or change in social policy; forecasts by Schum-
peter, Hayek and Ropke ; current problems of the welfare state; and ,
finally, the contribution of scientific research to the choice of social policy
aims.
Earlier versions of the various chapters were originally prepared as
papers for a symposium held at the International Institute for Labour
Studies in 1981 with the co-operation of the Swiss National Commission for
UNESCO.
Roger Girod
Patrick de Laubier
Alan Gladstone
1 Social Research and the
Development of Social Policy
Objectives
ROGER GIROD
Let us begin with a few examples of social policy measures. Afterwards ,

we shall have to consider what relations exist between the objectives at which
such measures aim and social research or, to be more exact, what relations
exist between social research and the development of these objectives.
Following are two examples relating to families:
A. According to a report published in April 1979 on the main options of the
Eighth Development Plan in France , the country 's family policy concerns
all fields of government action : employment , income, protection of chil-
dren and young people, women's status , environment, etc. " The Govern-
ment has , since 1975, defined its objective in this field: to ensure that the
population is maintained at least at the same level." Among other meas-
ures, " financial aid to families, which constitutes partial compensation
for the cost of maintaining a child, has been revalorised... [such aid]
accounted for 4.5 per cent of the gross domestic product in France , placing
it ahead of the other eight Members [of the European Community]". The
Plan announced measures for strengthening such aid, intended primarily
to concentrate transfers to a greater extent on families most in need
thereof, "especially families with three children or more" . I
B. In the Federal Republic of Germany, "it was decided to create, with effect
from 1 July 1979, an optional four-month leave period to follow post-
natal leave (two months) and pay an allowance of up to DM750 per month
from public funds to compensate for loss of earnings during the four addi-
tional months" . 2
Two other examples follow, concerning education and vocational train-
ing :
C. Following the Congressional debates on evaluat ion reports in 1969, the
United States Government curtailed expenditure on the so-called Head
Start programmes (pre-primary education for children in underprivileged
2 Social Policy in Western Europe and USA
areas). The methodology reflected by these reports has , however, been

severely criticised. 3
D. In Belgium, there was a cut-back in 1979 in the "material resources made
available to university education ; at the same time, higher education in
institutes other than universities has received increased resources, and
under the law of February 1977 a new, longer form of higher education
course (four years) has been introduced. It is a course for industrial engi-
neers, who obtain their diploma in advanced institutes, whilst the diploma
for civil engineers continues to be conferred only at universities". 4
And lastly, two examples follow, relating to international migration:
E. In 1979, the Danish Parliament discussed the issue and decided to main-
tain the very restrictive legislation traditionally applied in the country, pro-
hibiting immigration from countries other than the EEC and Scandinavian
countries . 5
F. In Italy, some of the powers concerning migrat ion have been transferred
to the regions, where migrants boards are being set up on an increasingly
large scale and specific laws in relation to them are being adopted; efforts
to co-ordinate the measures taken at the regional level are under way. 5
These few examples will serve to illustrate the diversity of social policy
programmes and of the decision-making bodies involved. As regards the lat-
ter, mention should be made as well of decisions adopted by referendum, by
courts of justice and under international agreements concluded directly
between States or within the framework of the EEC , OECD, UN, ILO,
UNESCO, etc. International agencies also carry out activities of their own,
such as technical assistance, medical care, food, educational and vocational
training programmes . Needless to say, many social policy decisions are made
by the local authorities. Their activities are in fact, as a close examination
shows, almost entirely social in nature.
Objectives and goals

In the strictest sense of the term, an objective, in the field with which we
are concerned, should be a precise social target attainable within a given
period of time through the use of well-defined and tested means, which have
already been, or are to be, mustered. In practice, however, social policy pro-
grammes seldom include objectives so defined. In example A (family,
France) , one aspect of the projects is directed to a very clear social objective :
the maintenance of the population at the same level. This objective reflects the
intention to re-establish, at least, a certain birth rate as calculated by demo-
graphers . In a modern society like that of France , where health and medical
care have reached an advanced stage and infantile mortality is therefore low,
this rate should average 210 children for every 100 women. The Eighth Plan,
which includes the social policy programme in question , refers to this ratio as
the target to be attained .
Social Research and the Development of Social Policy Objectives 3
Even in this case, however, the objective is not altogether an objective in

the above-mentioned sense since no indication is given of the period allowed
for its attainment. The means proposed to that end amount to very uncertain
formulas. The most precise is financial aid to families, especially those with
three children or more. As for the rest, it is a question of improving certain
features of women's work and the environment and trusting that the Plan's
achievements as a whole may help to create material and psychological condi-
tions propitious for an upswing in the birth rate.
Even so, in a case of this kind, the objective is well defined. At least from
one angle - for an upswing in the birth rate is not the only target in sight. The
policy implemented should also contribute to greater family cohesion, to
improving education for young people, to alleviating the problems of the
elderly, to strengthening the country's economic and defence potential, etc.
The other examples given in the introduction consist of measures aimed of
course at specific targets : granting additional optional leave of four months to
mothers after the birth of a child, with compensatory income (example B),
achieving certain economies by slowing down the development of educational
programmes whose effectiveness is doubtful (C), stimulating certain forms of
higher education in preference to others (D), curbing immigration (E) or, on
the contrary, facilitating emigration flows considered beneficial and the con-
trol by migrants themselves over the framing of provisions affecting them (F).
These measures, however, are more instrumental or administrative than
strictly social in nature: e.g. certain new possibilities for maternity leave are
offered to any mothers who may wish to take advantage of them; educational
programmes are suspended. One country expects to foster the development of
a certain type of institution of higher education; in another, the police are
instructed to keep the frontiers closed to large groups of potential immigrants;
and in still another, the establishment of migrant boards is recommended . All
of these are basically organisational measures.
The social intentions behind these measures are not explicitly stated, even
though they may be fairly obvious : to stimulate the birth rate and make life
more agreeable for mothers of infants; to prevent too many young people
from embarking on programmes from which they will not derive much (and
devote the money saved to other and better purposes); to increase the number
of highly trained engineers ; to avoid the disadvantages considered inherent in
excessive immigration; to rationalise emigration and give migrants greater
possibilities.
Lacking, however, are (i) particulars about the extent of the achievements
expected in relation to the administrative objectives set- (how much will have
to be spent on maternity leave over the next year or two to be able to conclude
that the experiment is successful, how many students will be needed in the new
schools for engineers, how many migrant boards?) and (ii) particulars about
the social changes which these administrative measures should produce. What
impact should extended maternity leave have on the birth-rate curve and on
the welfare and home life of young mothers? How to determine whether the
new educational institutions contribute both to the personal development of
the students and the upgrading of their skills and to the sound functioning of
the economy and society? What tangible benefits are to be derived for the
country's population from a restrictive immigration policy? And in what ways
can the lot of workers going to work abroad be effectively bettered by the fact
that some of them will be members of regional migrant boards?
To the extent that such particulars on the expected social repercussions are
supplied, objectives as to (social) results can be formulated, in addition to
objectives consisting in improving the means.
In literature on social indicators and social policy evaluation, this distinc-
tion between objectives as to means and objectives as to results is a classical
one. The objectives as to means consist in desired improvements in the instru-
ments of action; the objectives as to results consist in improvements in the
quality of individual and social life. The first are a programme's inputs, the
second its outputs. The most important research relates to the indicators of
performance or results. It aims at determining whether or not an improvement
in the quality of life has been produced by implementing a policy . 7
The goals of a social policy reflect the values which, implicitly or explic-
itly, determine its orientation. This may be to maintain a status quo, rightly or
wrongly judged to be satisfactory, or to cause changes that will work towards
a state of affairs rightly or wrongly thought to be preferable to the existing
one.
In practice, conflicting interests and aspirations come into play and the
policy implemented is the result of compromises and shifting positions pro-
duced by an equilibrium of the forces at work. Social policy measures there-
fore have a de/acto orientation which is not the full expression of any particu-
lar philosophical aim. The goals suggested by philosophical thought act rather
as critical frames of reference and sources of reasoned inspiration in relation
to the action actually taken.
In this regard it is of interest to refer to some of the conclusions reached by
a group of experts! set up by UNESCO to consider the goals of education. Its
findings point to extremely useful distinctions between goals and objectives.
What they state on this subject was most aptly put by Mr. Charles Hummel,
formerly Secretary-General of the Swiss National Commission for UNESCO
before becoming permanent delegate of Switzerland to this international
organisation.
The goals, he said, spring in the final analysis from "philosophical reflec-
tions on man, on human existence in its historical context and on the systems
of relationships connecting man to nature and to the society in which he lives,
creates and acts. The concept of a goal implies that man is a being launched
towards a future which he hopes will be a better one". ' " [It is]"ideals-such
as truth, beauty, justice, liberty-which guide him in his effort to transcend
his own condition and himself... Contrary to goals, which always belong to
the world of ideas and, while they indicate fundamental orientations, are
never achieved, objectives... are aimed at concrete solutions to the problems
confronting societies" . 9
Social Research and the De velopment ofSocial Policy Objectives 5
Research and social policy

The applied social sciences are situated at the crossroads of two kinds of
activities-those intended to increase our knowledge about society and those
intended to provide solutions to social problems. They encompass the parts of
demography, economics, political economy, history, law, etc. that relate to
social problems, in addition to the parts of sociology that relate to the same
problems. Social policy is that part of the activities relating to social problems
which is the responsibility of the public authorities. Action to solve social
problems also depends on other "actors" : intellectual and ethical movements,
political parties and trade unions, ad hoc pressure groups, charity institutions,
etc. There is obviously a give and take between social policy and other aspects
of social action, through conflict, co-operation, reciprocal criticism, and
exchange of information.
Much social research work has no relation, and other such work only a
very tenuous relation, to action to solve social problems, whether exercised by
the public authorities or not. This is the case of research into the past , unless it
is intended to provide a better understanding of present trends. It is also-to
cite only two examples-the case of research on the sociological aspects of
purely aesthetical questions or questions of pure epistemology. That does not
of course prevent such work from being interesting ; or useful in its way.
When the research is of a high standard, it is intellectually enriching.
The applied social sciences may also produce interesting and intellectually
enriching works . They may , in addition, be directly useful for action . But we
are concerned here with social policy. The following chart may facilitate a
discussion of its relations with the social sciences.
The public authorities are framed to show that they are responsible for the
social policy. The other groups or bodies merely stimulate, criticise or carry
out the decisions from which the policy results or, in the case of the target
groups, of which they are the subject. The target groups are those whose situa-
tion poses a problem to be solved by a given social policy programme . Need-
less to say, in so far as possible the members of the target groups should not be
regarded as passive subjects but should be encouraged to take an active part in
improving their situation and hence to become involved in the action initiated
and supported by the social policy. In the examples given at the outset, these
target groups are families, more particularly young mothers , children in
underprivileged areas , students of higher education, workers who will work
abroad or wish to do so.
The crosses indicate the stages at which the participants are, as a general
rule, most active. The stages begin with an awareness of a problem and its for-
mulation. For example, the problem of the decline in the birth rate and its
impact on the economic potential, on the balance between the appropriations
for aid to elderly persons and other items of the national accounts, on the
human relations between generations , etc. The social sciences playa very
important role here. In typical cases, their role at this stage begins by research
spontaneously undertaken by researchers . Reports may then be commissioned
Actors Stages in the formulation and implementation of social

policy programmes
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Target groups x x
Public opinion x
Churches , political parties,
pressure groups, etc. x
Social workers
(private sector) x
Government departments,
public social services x x X x
Social research experts x x x x x x
x x
by the public authorities or possibly other bodies, from the moment when the
problem begins to stand out.
During the stage of legislative and executive decisions, as well as during the
stage of action in the field, social researchers continue to play an active part
through research undertaken on their own or through commissioned reports.
Such research provides additional information on the situation to be altered.
It may also help to facilitate decision-making processes, the transmission of
guidelines and information from the top to the base (and the feedback) and
information on the actual degree of change occurring in the machinery used or
means of action. Lastly, the social results may be evaluated by special
research.
The researchers also act as experts on decision-making' committees, etc.
Once the social problem has been posed, the action continues uninter-
rupted, as does the research , except in the hypothetical case that the problem
iseliminated. The machinery is in mot ion. The picture presented by the problem
and the purposes of action will be altered by the objective development of the
situation, of the notions and standards of well-being, of the political system
and by any increase in the means of action . They will also be influenced by the
performance of social policy programmes, whether systematically evaluated
or not. There is constant interaction among the actors.
The contribution of the social sciences to determining social policy objec-
tives is not without major difficulties. Three of these difficulties are discussed
in the following paragraphs.
Social Research and the Development ofSocial Policy Objectives 7
Macro-research and micro-decision

This distinction is similar to that which exists between macro-economics
and micro-economics. The latter is concerned with enterprises, households,
consumers' or investors' behaviour. Even the big corporations take fairly
detailed decisions. Such decisions aim at achieving results within the limita-
tions of the economic and social system, not at changing them. The ensuing
action is broken down into many specific measures taken at the level of each
administrative department, each workshop, each branch office. The greatest
service of the economic sciences to business is rendered by management
analyses and other forms of micro-economic research.
Macro-economic research on the other hand is concerned with general
facts, the development of the GNP or unemployment trends, and their causes.
It may render service of a practical nature to those responsible for the nation's
general economic policy. It should be noted in passing that the economic
sciences, though one of the most highly developed sectors of the social
sciences, are very far from giving policy makers a single, unanimous analysis
of each major problem or proposing a sure solution . The limited ability to
control economic trends is perhaps one of the clearest signs of the precarious
nature of the means available to men for understanding the mechanisms of the
dynamics of society and bending them to their will.
In this sphere, we are, unfortunately, closer to the medicine of Moliere
than to modern medical science.
Social research has always been, first and foremost, macro-research. In
dealing with social problems, i.e, situations that are not satisfactory, it tends
to concentrate on the underlying factors . Since macro-research operates at the
level of society as a whole, it concentrates on the most general, structural
causes of the problems. That at least is its usual propensity. It results in stu-
dies on the general causes of social inequalities, on the relations between the
development of social structures and trends in divorce, etc.
These general variables are difficult to control, or not controllable at all.
Even the most comprehensive social policy programmes-the policies on
physical planning and area development, housing, employment, income, edu-
cation, health , senior citizens, etc.-hardly succeed in controlling them, at
least as regards the social results that are sought. Many social policy pro-
grammes are on a smaller scale. These do not seek to change the situation as a
whole but to achieve limited results for the benefit of a particular social cate-
gory, a particular segment of the population, through sectoral action: to
increase family allowances, extend maternity leave, review the curriculum and
organisation of certain educational institutions or specific aspects of the status
of foreign workers, etc.
The most useful research for improving the design and execution of such
current programmes would , as Williams remarks in a work cited earlier,
be "micro-positive". It should say what works, within the limits of given
situations. 10
The situations are of course conditioned by the general context. It is inter-
esting and even essential to study these macro-social influences. The general
policy should attempt to control them, even though it does not as yet have
much hold over them. Such control is not within the possibilities of social
programmes limited to particular areas .
The best researchers however are hardly inclined to concern themselves
with elucidating " micro-positive" problems : why is a specific form of action
slightly more effective than others in making life easier for young mothers in a
given type of large housing developments in the Dusseldorf suburbs?-and so
on . They belong to professional social research circles, not to bodies engaged
in social action, and those circles centre their attention and esteem almost
exclusively on works that have something new and interesting to say about
macro-social phenomena.
Scientific delimitation and global diagnosis

Let us leave aside the question whether a scientific study in the highest
sense of the term-the search for real laws-is possible in the social field. It is
enough to note here that, provided certain rules are observed, actual situa-
tions can be objectively described and compared in order to bring out differ-
ences and similarities and single out certain factors that may provide a plausi-
ble explanation. Th is type of research may be called scientific, if only to
distinguish it from those work -often brilliant, illuminating and
stimulating-that reflect the writer 's thought and sensitivity more than pro-
viding an impersonal, matter-of-fact picture of certain verifiable properties of
the object examined. That objective research is possible is clear from the enor-
mous volume of stud ies on which the public and specialists alike quite rightly
rely. Current statistics, including items involving a highly elaborate method-
ology, are a case in point. A good example is the data given below on social
expenditure; they are the result of complex, in-depth research. Another exam-
ple is objective research concerning very recent history, research which pre-
sents the facts without attempting either to judge them or to explain them
according to undemonstrated or undemonstrable theories: the election of the
European Assembly in 1979, the competing programmes, the social distribu-
tion of the electorate according to the polls, the members elected, the essential
points of their statements in the discussions in Strasbourg, as well as a quanti-
fied estimate of the weight of their positions on certain decisions.
Some theories not only can be tested but even prove to tally closely with
the facts-for example, those of Clark and Fourastie on the relations between
increased labour productivity and rural migration or the growing tertiary sec-
tor. These theories deal objectively with major aspects of the structure and
evolution of modern societies. Another good example would be the theory of
LazarsfeJd on the role of opinion leader s in mass communication processes.
In many cases, however, excellent theories vie with others equally as good.
Moreover, theories evolve. It is the role of research to challenge even the best
put forward in a given age, so that other, more powerful ones, can come to
take their place. Nevertheless, such scientific theories are constructions that
shed more logical light on the facts in the present state of empirical knowledge
than mere conjecture, impassioned judgements or ready-made ideological
explanations.
Social Research and the Development ofSocial Policy Objectives 9
In order to arrive at the maximum exactitude and objectivity, the ques-

tions should first be delimited. Especially profound and convincing passages
on the subject are to be found in the works of Jean Piaget.!'
This does not mean that it is necessary to deal with minor subjects, as is
clear from the examples given above of data on the development of social
expenditure and the theory of the social impact of increased productivity.
Objective social research, however, deals only with a selected number of
phenomena, those whose existence and possible relationships can be studied
on a sufficiently experimental basts. It does not claim to encompass every-
thing .
Social policy, on the other hand, often stands in need of much richer
analyses of a situation: that of youth who stir up a long series of riots in a city
(motives, relationship between them and the environment, aspirations, etc.)
or that of pensioners in an old people's home (material, psychological, medi-
cal). Often little is known about most aspects of such situations, or only par-
tial and not very reliable information is available . The researcher called upon
for an analysis must do his best with what little is at hand . He will choose the
guideposts that strike him as most significant and establish between them rela-
tions which as a rule owe more to his mental categories and momentary
feelings than to a reckoned correlation of facts or other verifiable factors. In
this way, he works out something which he thinks renders the situation, seen
as a whole, in all its facets, intelligible. But the part of subjectivity, the
influence of mental attitudes, of ideological biases, on such research products,
is great and difficult to assess. The countless "white papers" on social ques-
tions usually include many such global diagnosis, while the social sciences
supply definite knowledge only on particular dimensions of the phenomena at
issue.
Probably the most prudent course, if available resources permit, is to have
several studies carried out by researchers working from different intellectual
approaches .
Research is relative, action definitive
The results of any scientific study give a picture of the reality. If the work
is sound, the accuracy of the picture can be verified, at least on a number of
important points . A sound social study can be used by the man of action as a
map for planning and steering his course . But he should not forget that it is a
partial and provisional picture and that other patterns of observation and
analysis may bring to light other aspects of the same reality. It should also be
remembered that tomorrow more thorough observations and far-reaching
theories will appear on the same subject. Researchers carryon an endless criti-
cal discussion amongst themselves; that is their job. It may be noted that
improving their methodology is often of greater professional concern to most
than substance. Their calling is to be more concerned about the tools than
about the facts .
The policy maker, for his part, must decide. He is bound to take sides,
while endeavouring as far as possible to bear in mind all the repercussions
which his decision will have on the human beings affected. The scientist offers
him only hypotheses. The policy maker ought to have certitudes. All he can do
is to bet, informing himself as thoroughly as possible and displaying good
sense.
A difficult dialogue
The dialogue between the scientist and the policy maker is rendered diffi-
cult by the differences in their approach and type of responsibility.
"The Welfare State today is experiencing an appreciable decline as a guid-
ing concept", as Patrick de Laubier recently wrote in his introduction to a
collection of studies by Sismondi. 12 The heavy expenditure entailed by social
policy and its increase" is challenged . The public has less confidence in the
programmes it is paying for. Economic difficulties compel more rigorous
choices.
In thesecircumstances social research findings, in particular the evaluation
of the actual performance of specific reforms or programmes, often furnish
arguments for the forces working to reduce the extent of social efforts.
Previously, the development of social policy machinery (means) was taken
as a sufficient proof of its success. This is less and less the case at present, at
least in countries where evaluation work is fairly common.
The often critical results of such work should not obscure the fact that
social policy in the past few decades has led to many noteworthy achieve-
ments: larger pensions for the retired, increases in other social benefits,
improved health and medical care, longer paid holidays, development of edu-
cation, etc.
An analysisof the impact of these results on various aspects of the popula-
tion's well-being (the results of results), however, is often disappointing.
Research findings of this type cannot help but increase the reservat ions of
part of public opinion and political circles about the programmes in question,
a part that may at times become a majority. An example I mentioned at the
outset was the curtailment of the Head Start programmes in the United States.
Other more general features of educational policies have also been called in
question by research over the past few years: longer term education and edu-
cation for broader segments of the population do not seem to lead to any tan-
gible rise-or evening out-of the actual level of knowledge or do much to
reduce the discrepancies in opportunities for employment. 14 Other research in
other fields has also shown that many hopes were excessive.
Seriousattention must be paid to such research work . It is only logical and
correct to reviewthe expenditure of time and money that has failed to produce
a sufficient impact, although such an undertaking may often run up against
taboos and meet with the resistance of powerful pressure groups.
The review should first concern the quality and real significance of the
research triggering the debate. Prudence would advise against any hasty
assumption that the quality is faultless or that the researchers' findings are
decisive.
Social Research and the Development of Social Policy Objectives 11
Mere differences in the method of calculation, to give only one example,

may alter the findings . When the influence of imprisonment on criminality is
measured by the usual method (a recidivist = a proof of failure), the results
are always disheartening. Very different findings, however, were recently put
forward by researchers who , in the course of surveys carried out in Chicago,
calculated the average frequency of offences over a given period of time. 15
Here it emerged that the average number of monthly arrests for every 100
juvenile delinquents who had committed serious crimes was two-thirds less
after imprisonment than before. True, 82 per cent of these delinquents com-
mitted at least one offence during the months following their release: hence,
according to the classical factor, virtually a total failure. But the other, more
realistic method points to a major improvement : these young people, though
they have not become perfect citizens, commit offences less frequently . The
debate goes on among specialists regarding the value of the two approaches in
question and other methods of analysis.
This is an extremely simple case: it was enough to change a single indi-
cator. In other cases, such as research to determine how the expansion of edu-
cation affects the GNP or what relations exist between broadening the basis of
education and discrepancies in social opportunities, more complex theories
and models come into play . It then becomes more difficult to assess the signi-
ficance of the findings at which the specialists arrive.
Notes
1 Rapport sur les principales options du VIII' Plan. report submitted by the French Govern-
ment to the Economic and Social Council (Paris, La Documentation francaise, April 1977),
pp.76-77.
2 Report on the development of the social situation in the European Commun ity in 1978
(Brussels-Luxembourg, April 1979), p. 148.
3 Walter Williams: Social policy research and analysis: the experience in the federal social
agencies (New York, Elsevier, 1971), 204 pp.; New York Times, 14 and 21 April 1%9; L.E .
Datta : "The impact of the Westinghouse/Ohio evaluation on the development of Project Head
Start ", in the publication edited by Clark c. Abt. : The evaluation of social programs (Beverly
Hills, Sage Publications, 1976), pp . 129-190.
4 UNESCO : Current major trends in education and the welfare of the child, p. IS. Interna-
tional Conference on Education, 37th Session (Geneva, 5-14 July 1979),3 May 1979,25 pp.
5 Report on Social Developments in the European Community, Year 1979 (Brussels-
Luxembourg, April 1980), p, 46; and Reports for previous years.
6 Except in the case of negative action (e.g, to reduce appropriat ions, maintain a
prohibit ion).
7 Richard Stone (prepared by) : Towards a system of social and demographicstatistics (New
York, United Nations , 1975), 187 pp.; Indicators ofperformance of educationalsystems (Paris,
OECD, 1973), 104 pp.
8 Which began its work in 1975 and will publish a report shortly.
9 Charles Hummel : Education today for the world of tomorrow (Paris, UNESCO, 1977),
pp. 14-15.
10 Williams, op. cit.
II Among Jean Piaget's numerous works on these problems, mention may be made here of :
"The placeof sciences of man in the system of sciences", in UNESCO : Main trends ofresearch in
the social and human sciences, part I: Social sciences (Pari s-The Hague, Mouton, (970), pp. I-57.
Reprinted in Jean Piaget: Epistemolog ie des sciences de l'homme (Paris, Gallimard, collection
"Idees", 1972; new edition, 1977),380 pp.
12 Sismondi: Quatre etudes sur la politique sociale et te developpement economique. Intro-
duction by Patrick de Laubier (Vevey, Delta/Paris , Masson, 1981), 106 pp.
13 Social protection expenditure in four European countries
FRG France Italy UK
(a) Annual average rate of increase of social

protection expenditure at 1970 prices
1962-1965 6.3 9.6 11.4
1965-1970 7.1 6.4 9.4
1970-1975 7.9 7.8 7.4 6.7
1975-1976 2.6 5.9 3.5 0.3
1976-1977 2.6 5.9 1.0 0.2
(b) Social protection benefits per inhabitant
in 1977in European units of account I 940 1420 640 760
(c) Social protection expenditure as
percentage of gross domestic product
1962 19.4 16.6 14.3
1970 21.4 19.2 20.0 16.3
1977 V.4 23.9 23.1 19.7
Social protection expenditure comprises all expenditure incurred in meeting the charges
arising from certain risks or needs, in so far as this expenditure gives rise to the intervention of a
third party-administration or public or private enterpr ise-without any equivalent counterpart
on the part of the beneficiary.
Social protect ion benefits comprise the part of social protection expenditure which is dis-
tributed to households.
Social protection expenditure does not reflect the entire social policy effort. It covers dis-
bursements for health, maternity, families, vocational training of adults , unemployment and
housing, but not education , for example.
Source: Social indicators for the European Community 1960-1978 (Brussels-Luxembourg,
Statistical Office of the European Communities, 1979), 234 pp.
14 Research work of Coleman, Jencks , Boudon and others. Roger Girod : Politiquesde l'edu-
cation: l'illusoire et le possible (Paris, PUF, 1981).
IS Surveyscarried out by Charles A . Murray and Louis A. Cox : Beyond probation : juvenile
correction and the chronic delinquent (Beverly Hills, Sage Publicat ions, 1979), cited by James Q.
Wilson: " What works? revisited: new findings on criminal rehabilitation" , The Public Interest
(New York), fall 1980, pp . 3·17.
2 Three Forecasts for Our Time
1. Schumpeter and he March into Socialism (1942)
II. Hayek and the Road to Serfdom (1944)
III. Ropke and the Third Way (1943)
PATRICK de LAUBIER
Introduction
Three exiled economists, reflecting during the war years on the probable
economic and social cond itions of the next generation , have handed down to
us forecasts for our time. Two were Austrians, Joseph A. Schumpeter and
Friedrich A. Hayek , then teaching at Harvard and the London School of Eco-
nomics, and one a German, Wilhelm T. Ropke, teaching at the Graduate
Institute of International Stud ies at Geneva. All three attached the highest
importance to freedom, an ideal temporarily abandoned by their countries .
Since become famous, these three writers made quite different, and at
times contradictory, predictions about society's economic and social evolu-
tion whose relevance to today 's world is easy enough for us to assess. Inevi-
table socialism, uncompromising liberalism, a third way-these were the
courses contemplated by Schum peter , Hayek and Ropke in the years from
1942 to 1944. In the Western countries they had in mind, the reality has often
turned out to be considerably different from the forecasts, but the major
orientations are still with us.
Socialism has not taken root in the United States, and in Western Europe
social democracy has come to terms with liberalism. As for the third course
envisaged by Ropke, th is has not led to a change of "civilisation" . However,
for some 30 years the social market economy, the welfare state and concerted
planning profited from unprecedented economic prosperity resulting in a con-
siderable rise in the material living standards in industrialised market
economy countries, of which Japan-overlooked understandably enough by
our forecasters at the time-has become one of the most brilliant examples.
Since the 1970s, economic, political and cultural crises have come to alter
the somewhat fabulous panorama of the postwar generation, at least in the

prosperous and free countries, giving way to other questions and giving rise to
other forecasts. Before considering these, however, it may be instructive to
look back at the earlier illustrious attempts.
I. Schumpeter and the march into socialism (1942)
An economist of Austrian origin, at one time a banker and Minister of
Finance of the newly born Austrian Republic, Joseph A. Schumpeter, in the
years from 1926 to 1950, taugh t political economy in his own country, then in
Germany (Bonn) and finally in the United States (Harvard). Aristocratically
romantic in his sympathies, subtle and complex in his reasoning, this author
of major works on economic theory and the history of economic thought I
devoted his energies between 1935 and 1942 to a work as imposing as its title:
Capitalism, socialism and democracy.
This unquestionable masterpiece begins with a striking portrait of
Marx-seen in turn as a prophet, a sociologist and an economist-and ends
with a historical sketch, as original as it is suggestive, of socialist parties. In
the body of the work, capitalism is dissected and its future examined at length
until the author, firmly though somewhat regretfully, reaches the conclusion
that mankind is headed towards socialism, even in the United States .
The reasons for the final triumph of socialism, according to Schum peter ,
are not economic but psychological and cultural.
In a strictly economic sense, capitalism had succeeded and , if the hostility
it had created was so great, it was because economic efficiency was no longer ,
as it had been for so many years in the past, inseparable from free enterprise.
The degree of economic rationalisation now attained would be put to the
service, as Schumpeter saw it, of a socialist ideal proposing egalitarian justice
to an enriched industrial society.
Poverty, according to Schumpeter , was disappearing in a country like the
United States where, with a 2 per cent annual rate of growth in disposable
income, per capita income would increase twofold by 1978, as compared with
1928. That rate, which had been recorded between 1870 and 1928, was highly
plausible during the next half century (1928-1978) . In these circumstances,
material poverty would be vanquished from the economic standpoint. 2
The legacy of capitalism would be inherited by socialism, defined as the
organisation of society "in which the means of production are controlled, and
the decisions on how and what to produce and on who is to get what, are made
by public authority instead of by privately owned and privately managed
firms" . 3
Schumpeter announces the inescapable advent of socialism in the indus-
trial countries, including the United States, at the same time as the probable
disappearance of poverty by 1978 in the United States.
Socialismtherefore would not be caused by absolute or relative poverty, as
Marx thought, but made possible rather by economic prosperity of capitalist
origin.
What has actually happened?
Three Forecasts for Our Time 15
Economic growth has been greater than Schumpeter foresaw, not only in
the United States but also in Western Europe and Japan. In 30 years the con-
sumption of goods and services has doubled in the DECD countries. 4
Socialism has not been established in the United States and, after a period
of expansion in Western Europe, social democracy has run into difficulty in
the countries where it had scored its greatest successes: Great Britain and
Scandinavia.
Poverty has not disappeared in the United States despite a 20-year struggle
using unprecedented means, and it still exists in most of the DECD countries,
although social security benefits increased eightfold from 1950to 1980.4
As regards the United States, which Schumpeter had especially in mind,
per capita disposable income rose from the index 100 in 1928 to 234 in 1978
(constant prices), but without doing away with poverty which, according to
official figures, affects 12 per cent of the total population and one-third of the
black population. Prosperity has benefited the middle classes above all, while
leaving to the fifth of the population made up of the poorest families only
5.4 per cent of the total income in 1978, as against 12.5 per cent in 1929. s
Allowance has of course to be made for definitions of poverty, which change
in absolute terms from one period to another, but this readjustment reflects
the objective fact that the degree of poverty is inseparable from a society's
normal standard of living.
The advance of the welfare state, and even some of the social measure peo-
ple have long taken for granted, have been seriously undermined by the eco-
nomic crisis of the 1970s and resulting unemployment. Liberalism is under-
going a revival and economic efficiency now appears more important than
the building of a society that, economically and socially, would be more
egalitarian.
Schumpeter did not claim to announce the future but only to show that
capitalism, despite its economic efficiency, was condemned by its cultural and
psychological vulnerability. It was the cultural aspect which struck him as
decisive. But, though this is a key point, the demonstration here is extremely
vague.
Two types of society are singled out by Schumpeter , the commercial
society and the socialist society . Capitalism is only one type of the commercial
society and owes its specific difference to the monetary and banking tech-
niques used. In practice, however, it is the most current type, so that the oppo-
sition usually made between capitalism and socialism obtains. Socialism is
defined as a system or institutional pattern in which the control over means of
production and over production itself is vested with a central authority. This
central authority may possibly be responsible to another body, such as a par-
liament, and its action does not rule out all latitude at the levelof implementa-
tion of decisions.
Schumpeter does not draw any basic distinction between collectivism,
communism and socialism; the Bolsheviks unquestionably are socialists
though this does not mean, as Schum peter adds later, that the Russian expe-
rience can be considered as a "full-weight realisation " of socialism. Neither
can socialism be assimilated to mere appropriation by the State of resources

and means of production for the very reason that the idea of appropriation
and even the notion of the State are inseparable from non-socialist societies:
the socialist phoenix is to rise from the ashes of the traditional State.
The weight given in this definition of socialism to the economic factor
depends, according to Schumpeter, on the importance attached to this vari-
able in the actual establishment of socialism. Let us say that the material cause
of socialism is economic but that its final cause is cultural. Planning itself may
be reduced to a formal cause.
"First and foremost ", Schumpeter writes, "socialism means a new cultural
world . " ~ In this sense, the final cause of socialism goes beyond economic s
itself, which is only a means to an end . It may be noted in passing that this
subordination of the economic factor to the socialist cultural ideal explains
why lessefficiency, as compared with capitalism, is not , within certain limits,
of decisive importance. It is sufficient that the necessary level be ensured,
which is precisely what the technical heritage of capitalism allows.
Now, what is the nature of this cultural world which socialism implies? At
first sight, there would seem to be abundant descriptions but, on closer exami-
nation, as Schumpeter points out, all this optimistic and moralising literature
boils down to a blend of Rousseau and Bentham. Other advocates of social-
ism are less verbose, whether out of a concern to avoid the cheap slogans or
to steer clear of useless controversy or merely because they lack imagination.
The result is no less disturbing. The socialist ideal thus characterised by its
"cultural indeterminateness"6 lends itself, according to Schumpeter, to all
kinds of regimes, from despotism to oligarchy to democracy. As for religion,
the most diametrically opposed positions seem possible, from theocracy to
militant atheism . The system may be permissive or ascetic, nationalist or inter-
nationalist , warlike or peaceful , racist or non-segregationist. No possibility
would seem to be ruled out. The socialist ideal, as a veritable cultural Proteus,
contrasts with the capitalist cultural world which, from the very fact of its rea-
lisation, shows much more precise features.
In the final analysis, pacifism and rat ionalism may be the attitudes most
commonly associated with socialism, but , rather than attempting to embark
upon a difficult literary genre, Schum peter prefers to refer the reader to the
truly great performer in this field, Plato, whose Republic retains all of its
power of suggestion.
Thus ends the short Chapter XV entitled "Clearing decks", immediately
preceding lengthy discussion of the socialist project from a technical stand-
point, where he argues that there is nothing to prevent the establishment of a
planned economy in the present capitalist countries, including the United
States . Schumpeter goes so far as to make a detailed comparison of the two
types of economic systems, analysing their economic efficiency and the prob-
lems of bureaucratic management and investment. He examines the condi-
tions for maintaining discipline, citing the Soviet experience, which showed
how the trade unions could be used for mobilising the working class.
However, he is unwilling to compare the two ethos behind capitalism and
socialism because of the cultural indeterminateness of the latter and also

because he regards each civilisation as a phenomenon whose oneness admits
of no comparison.
In the final analysis, Schum peter , who insisted on the fact that socialism
was essentially a cultural phenomenon and that everything depended on the
cultural aspect, offers only purely economic analyses, based on hypothetical
and deductive reasoning, of the heir of capital ism. The material cause sup-
plants the ultimate cause . The economist takes over and formalises a system
technically in order to declare it practicable, while the ideal constituting its
force of attraction is left untouched.
This "phenomenological" approach, which leaves the socialist cultural
world suspended in the air, as it were, is not without methodological advan-
tages; but it has one major disadvantage, in that it takes for granted what is
problematical, namely the nature of the future ethos in whose name the end of
an existing and highly complex system is announced . Moreover, Schumpeter
does not raise the question whether the designated successor of capitalism may
not, in turn, start to undergo a similar process of decline when it loses its pro-
tean character to take on a definite consistency or whether cultural contesta-
tion would necessarily be ruled out by its possible technical success.
The march into socialism as described by Schumpeter has unquestionably
had a start in the countries of the West with the growing prerogatives of the
welfare state over the last 30 years , but it is a march that is mitigated by the
relative failure of the social democratic model to clarify the socialist ethos and
by the appearance of a cultural contestation directed against centralisation.
Here, it is not the social policies themselves that are challenged but the exces-
sive bureaucratic nature of many welfare state policies. The fact that the cur-
rent economic crisis has given some credit again to the capitalist criterion of
efficiency remains a current or cyclical phenomenon; the confrontation of
ethos in whose name economies are organised is far more important. It must
be recognised that the decisive factor is indeed of a cultural nature, as Schum-
peter thought, but it is neither very scientific nor even very prudent to envisage
the triumph of an ethos of "indeterminate" civilisation on the basis merely of
techniques which could be used for completely different ends.
II. Hayek and uncompromising liberalism
Ten years after the Harvard economist, another writer, also of Austrian
origin, and professor at the London School of Economics since 1931,
recorded his position without alluding in the least to his fellow-countryman.
He also saw the march towards socialism coming, not as a fatal destiny but as
a threat of serfdom which could and should be avoided and had therefore to
be denounced.
Friedrich A . Hayek, Nobel prizewinner at the age of 75 (1974)and one of
the thinkers behind the current revival of classical liberalism, especially in the
English-speaking countries, did not set out in The road to serfdom (1944) to
suggest what tomorrow's society might be but rather to attempt a sociology of
economic ideas in the light of the lessons provided by the totalitarian regimes
during the period between the two wars. As a sociologist committed to con-
vincing his readers, especially his English readers, that political serfdom is not
the exclusive province of the Continent and that ideas have a logic of their
own that transcends national peculiarities and the most firmly established tra-
ditions, Hayek, in invoking the liberal heritage of the West, does not hesitate
to go back as far as antiquity. He dwells on the Renaissance as a genuine revo-
lution of the individualistic spirit, though he does not overlook Locke or the
great English liberals of the eighteenth century, Hume and Adam Smith . But
it is the nineteenth century that he regards as the privileged period which was
to see the realisation of what the preceding centuries had only served to pre-
pare : "The result of this growth surpassed all expectations. Wherever the bar-
riers to the free exercise of human ingenuity were removed man became
rapidly able to satisfy ever-widening ranges of desire . And while the rising
standard soon led to the discovery of very dark spots in society, spots which
men were no longer willing to tolerate, there was probably no class that did
not substantially benefit from the general advance. We cannot do justice to
this astonishing growth if we measure it by our present standards, which
themselves result from this growth and now make many defects obvious. To
appreciate what it meant to those who took part in it we must measure it by
the hopes and wishes men held when it began: and there can be no doubt that
its success surpassed man's wildest dreams." 7
Schumpeter did not question the economic success of liberalism, but he
stressed the psychological vulnerability of capitalism faced with a socialist
idea which, though culturally indeterminate, was heavy with the deceived
hopes of the industrialised societies.
Hayek in turn remarks that it is to its success that liberalism owes its
decline, not, however, because the merchant outlook was too limited for more
romantic aspirations but because of a culturally finer and socially more
demanding sensibility. Such a development, according to Hayek, is insepar-
able from liberalism itself and, to all intents and purposes, from the capitalist
market economy . As evidence, he invokes the Russian, German and Italian
experiences between the wars which, he claims, amply demonstrate that the
abandonment of economic liberalism leads inevitably to the advent of totali-
tarianism. People believe that they are serving social justice but, Hayek says,
they forget that the means immediately qualify the ends. "The dispute
between the modern planners and their opponents is, therefore, not a dispute
on whether we ought to choose intelligently between the various possible orga-
nisations of society; it is not a dispute on whether we ought to employ fore-
sight and systematic thinking in planning our common affairs. It is a dispute
about what is the best way of so doing. The question is whether for this pur-
pose it is better that the holder of coercive power should confine himself in
general to creating conditions under which the knowledge and initiative of
individuals is given the best scope so that they can plan most successfully; or
whether a rational utilisation of our resources requires central direction and
organisation of all our activities according to some consciously constructed
' blueprint' ." 8 It is not a question, as Hayek sees it, of defending a dogmatic
laissez-loire attitude but of encouraging competition for both economic and

political reasons. It would be illusory to think that a golden mean can be
found between totalitarian planning and competitive liberalism. Each has its
own logic and as soon as a choice has been made between the two, the inesca-
pable consequences follow. The advocates of centralised planning usually
assert that the trend towards planning is inevitable, arguing that the growing
complexity of the economy works to this end. Quite the contrary, Hayek
states, this complexity makes it imperative not to tamper with increasingly
delicate mechanisms lest the co-ordinators should be left with the task of
deciding the options according to their own preferences, which they would
impose on all in the name of rationality-their rationality.
While Schumpeter dissociates the fate of democracy from the type of
economic system adopted, Hayek rejects such dualism and links the lot of
democracy with that of economic liberalism. Citing the Webbs and Laski,
who claimed that democratic assemblies were unfit to legislate on complex
questions, Hayek sees dictatorship at the end of the road, even in the country
where the parliamentary system was born. It is not so much that democracy is
an ideal in itself as it is that democracy is enlisted in the service of domestic
peace and freedom. An authoritarian power conceivably might allow more
freedom than a democracy, but planning moves inevitably towards dictator-
ship in order to impose an ideal incompatible with economicfreedom and ulti-
mately with individual freedom .
The criterion of freedom, according to Hayek, is the Rule of Law, and it is
the Rule of Law that should provide norms of behaviour and the general rules
of which the State is only the instrument and in no way the originator. Care
must even be taken to ensure that the State does not becomea kind of institu-
tional moral authority, which would soon impose its views. Historically, the
movement of human societies has been "a movement from status to contract"
(Maine) and any step to restore the rule of status would be a step backwards.
The Rule of Law has nothing to do with legalism that could well be put to the
service of a dictatorship, but is the Rule which has always existed under dif-
ferent names : natural law, inalienable rights of the individual, human rights.
To say that planning will free individuals from overwhelming material
cares or that a decline in economic motives will lead to cultural development is
to overlook the fact that the individual's apprenticeship of freedom consists
precisely in organising himself his economic activities which are inseparable,
in practice, from his other human activities. Recalling that blindness was an
attribute of Themis, Hayek pleads insistently for a State that will forgo
arrogating to itself the master's eye and stop promising "greater equality",
which in all likelihood would turn out to be purely negative and result in dis-
content about the present state of affairs. A just price, for example, is nothing
but the result of competitive supply and demand; any other formula would
lead without fail to an evaluation and control of all activities, not only eco-
nomic but social as well.
Hayek does not argue that all intervention by the State is incompatible
with individual freedom. It is perfectly possible to guarantee a minimum
income and insurance against the main risks to which people are exposed on
condition that the market is not abolished and a systematic income policy
established that would end by doing away with free choice of an occupation.
In a word, we must opt for the commercial society if we are to avoid a military
society in the service of a global vision of the world .
As Hayek points out, an aversion for the bourgeois mentality and the
affirmation that the days of " economic man" are over paradoxically go hand
in hand with an exclusive insistence on purely economic measures for chang-
ing society. Here he has in mind economists like Schum peter, who state that
the crux of the matter is of a cultural nature but confine themselves to analys-
ing the economic aspects of the march towards socialism .
Lastly, in a final chapter on "The prospects of international order",
Hayek invokes at length the difficulties, insurmountable in his opinion, of a
world extension of planning, which would nevertheless be imposed in the
name of the ideal which its proponents defend at the national level. Should
such internationalism prove unfeasible, there is always the imperialism of
great powers to impose on other, weaker nations their conception of economic
and political rationality. In opposition to this type of imperialism, Hayek
advocates a federal organisation of nations which, to begin with , might be
limited to Western Europe and then gradually be extended to the entire world,
while ruling out any notion of the super State .
Writing at the same time as Schumpeter, Hayek and the author of Capi-
talism, socialism and democracy , each a teacher at a highly reputed institution
of Anglo-Saxon economic science, are both lovers of freedom and sympa-
thetic towards economic liberalism. The former, however, believes that the
advance of planning, which he denounces as a road to serfdom, can be halted,
whereas the latter is convinced of the inevitable nature of this process whose
final outcome he is careful not to describe, unable as he is to specify the cul-
tural ideal of the socialism to come.
For 30 years or so Hayek continued to develop the liberal thesis 9 and, after
receiving the Nobel prize for economics in 1974, the growing influence of his
ideas can be witnessed both in Great Britain (the Thatcher Government) and
in the United States (the Reagan Administration).
The line of thought set out in the series of articles which he published in
1938-39,and which were collected in 1944 under the title The road to serfdom,
came to full maturity after 40 years in the fundamental philosophical reflec-
tions on liberty expounded in Law, legislation and liberty (1974); but we may
well ask whether such apparent constancy and success do not conceal a deci-
sive analytical mistake since he has never ceased asserting that there is no
middle way between totalitarian planning and "invisible hand" liberalism. 10
The will to achieve greater social justice which, over the same 40 years, has
prompted an extraordinary development of social policies in the market eco-
nomy countries, Hayek calls a mirage . II There is nothing more real, however,
than government intervention in the countries of the West, where social
expenditure per head increased eightfold between 1950 and 1980 while dis-
posable income increased only twofold. 12
Hayek, unlike Schumpeter, is perfectly able to describe the cultural ideal

that should end by carrying the day if reason prevails: it is that of the nine-
teenth century, the golden age of liberalism. But that period, definitely a fer-
tile age, also saw the birth of modern socialism in its classical theoretical
expression (Marxism) . Nor should it be forgotten that the most famous econo-
mist of the Victorian age, John Stuart Mill, professed himself a socialist, at
least from the ethical point of view, and his Fabian heirs, whom Hayek writes
off, claimed that in advocating industrial democracy they were drawing the
logical conclusion, on the sociological plane, of a widely proclaimed ideal of
social justice. Here, the dualism of Hayek links up with that of Schumpeter,
who did not see a third way either 13 but singled out only two irreconcilable
principles: liberal capitalism and centrally planned socialism.
The last 40 years in the West have proved that the practicable
ways-whether the welfare state in the Scandinavian countries, the German-
style social market economy or French planning-have steered a resolutely
middle course. Even more liberal experiences, as in Switzerland or in the
United States in the 1960s and 1970s, afford instructive examples of social
policies failing to bear out either Schumpeter's or Hayek's forecasts.
III. Ropke and the third way
A German economist (1899-1965), professor at the University of Jena
(1928-29) and subsequently member of Chancellor Bruning's State Committee
(1930-32), Wilhelm Ropke was dismissed by Hitler in 1933 for his "anti-
national" liberalism. He then taught in Istanbul, from 1933 to 1937, before
being invited to take a professorship of international economic relations at the
Graduate Institute of International Studies in Geneva.
A man of subtle intellect and fervent views, Ropke found in Switzerland
not only an intellectual atmosphere that suited his temperament , at once tradi-
tionalist and liberal, but also a sort of model for society to which he con-
stantly referred. In the United States, Schumpeter thought he discerned there
the irremediable decline of capitalism and came, after a fashion, to join Marx.
In Great Britain, Hayek inveighed against the end of the liberal nineteenth
century and the heritage of Adam Smith. Ropke, like Sismondi a century ear-
lier in the same city, tried to find a middle way between the socialists and the
classical liberals. Like Sismondi before him, he brought ethical considerations
to his economic analyses which, in certain works like The social crisis of our
time (1943) or Civitas Humana (1944), are integrated into a truly global
approach to social questions drawing on both sociology and a philosophy of
history. The social crisis of our time unfolds as a vast investigation into the
source of the crisis of civilisation whose economic consequences of the 1930s
are only one of the characteristic manifestations. The author aims at an
assessment that will embrace both the cultural aspect and the sociological and
technical aspects .
In venturing into the history of ideas, Ropke concentrates on the last two
centuries, showing a predilection, not like Hayek for the nineteenth century,
but for the eighteenth century, though this does not prevent him from con-
demning the rat ionalist and revolutionary fruits of that refined age.
In attempting to account for the contradictions between the ideals of a

period and the historical achievements, he proposes an explanatory theory
which he calls historical interference: " History apparently always takes its
course in two phases, a phase of internal, mental incubation and a phase of
external, physical realisation, and as there is a great time lag between these
two, the most remarkable and confusing phenomena of interference result
from the coincidence of the realisation of an already completed mental proc-
ess of preparation with the incubation of a period that is yet to come." 14
According to this theor y, we are living today in a period of realisations
whose incubation goes back to the nineteenth century, which reaped the fruits
of the eighteenth century, liberalism, humanitarianism and measure. While
we may hesitate to pursue this line of reasoning and try to predict what legacy
the twenty-first century is likely to inherit according to Ropke's law of inter -
ference, we may at least ask what validity the explanation has when we look
back over the centuries. IS
Stigmatising the nineteenth century, Ropke evokes the ill-omened ideas
incubating during that period ; evolutionist determinism and the cult of the
colossal opening the way to collectivism and imperialism.
According to Ropke, collectivism is probably the outstanding phenome-
non of the twentieth century. A society, as he says, forms a whole and one
cannot advocate a liberal political system without having an economic organi-
sation that makes freedom possible .
More profoundly, the sociological and institutional features of a society
reflect a dominant anthropology: "Man is neither an ant nor a raving beast ;
he has chosen the more difficult path of twofoldedness which is full of ten-
sion, the path of 'unsociable sociability' .. . and only thereby has culture been
made possible. ... Man seeks the golden mean in his contact with society, not
too much, but also not too little ." 16 In a conflicting or, better said, competi-
tive world, the middle way must be opened up , avoiding both all-out dismem-
berment of liberalism and collectivist "hyper-integration".
Historically, capitalism is a form of market economy which, during the
nineteenth century, was gradually extended to the entire world. If the spirit of
this economy were to be summed up in a single phrase, it might be said that it
is a system where there is a "coupling of responsibility and risk (profit and
loss chance)" . 17
The heritage of feudalism has weighed heavily on capitalism, which has
retained some of its monopolistic traits except in a few countries like Switzer-
land where capitalism has not grown disproportionately and the plague of
proletarianisation has thus been avoided . "Infatuated as one was with every-
thing colossal and tightly centralised," writes Ropke, "one paid little atten-
tion to a more rational organisation of industrial production; without loss,
perhaps even with a gain in productivity, one could have kept down the size of
factories and enterprises, could have preserved and developed old and tested
forms of work while inventing new ones, could have increased the number of
independent businesses and of medium and small-sized factories, could have
maintained a healthy middle class and endowed the entire economic life with
more stability and soundness ." 18
Sismondi and Le Play 19 said much the same thing, but were not heeded.
Ropke, however, hoped that the disastrous political, economic and social
consequences of an "economist" mentality common to both liberalism and
collectivism would, after the war, provide a chance for a third way.
Regarding monetary problems and unemployment, he pointed out that
"the problem of economic stabilisation is seen in a completely false perspec-
tive if it is viewed as a mere problem of business cycle policy. Rather, it is basi-
cally a problem of the total economic and social structure , which in turn must
be seen against the background of the general crisis of civilisation" . 20
According to Ropke, private property should be rehabilitated by linking it
to personal work, centralisation should be combated and measures taken to
allow a much less anonymous economic and social fabric, a fabric which,
while not ruling out competition, would set limits to it, especially through
endogenous processes. The State can and should intervene in the economic
field, but its action should not be merely "conservative" since that would act
as a check to the vitality and drive of innovation. It should aim rather at facili-
tating the adaptation of the participants in economic life, providing them with
the necessary means for readjustment and rehabilitation and allowing them to
take the initiative in economic matters. Certain services of general interest
(transport, energy, communications) and possibly some sectors of production
(iron and steel) should , according to Ropke, be placed in the hands of the
public authorities if only to avoid private monopol y. State action should,
moreover, be guided by the public interest and not by pressure groups.
Ropke has a distrust for miraculous solutions that make programmes too
good to be true. Care should be taken about the remedies suggested lest the
litany of " pious and indiscriminate hopes" go on and on. Moreover, the
seriousness of what is at stake-peace and the humanist civilisation-prompts
one to propose bold solutions commensurate with the scope of the problem.
The course of action proposed, which Ropke calls the third way, ought to
favour the peasantry and craftsmen. Ropke is thinking here of the society
immediately at hand, Switzerland. In the United States, for example, handi-
crafts have all but disappeared, and in England the peasantry is only a
memory-so that neither Schum peter nor Hayek had much to say about these
social categories. The situation is otherwise in Switzerland, and Ropke
believes that the Swiss experience, where both centralisat ion and proletaria-
nisation have been avoided, may serve as a model.
In a sociological context of small working units, social policy no longer
has to have the character of sta te assistance it so often had during the nine-
teenth century. It should take on a new form, setting as targets for its action
not the symptoms but the causes: "The great and comprehensive task of wel-
fare policy" , Ropke says, "is really . .. to do away with the proletariat
itself. " 21 Traditional social policy should be left with the role of "standing
in" where necessary to deal with marginal situations . Rather than weighing
down social bureaucracy with manifold tasks-which, instead of helping to do
away with proletarianisation, ends by fostering it-it is essential to expand
employment by systematically encouraging the development of small and
medium-sized enterprises. A regulatory policy should also be applied to safe-

guard competition from monopolies of all kinds.
Social justice is equality ofopportunity, not arbitrary egalitarianism. Such
equality should be achieved by the State through an intelligent social policy,
but to want to impose egalitarianism can be little more than collectivist wish-
ful thinking.
In concluding, Ropke places his prospect of a third way in the context of
"an international new order" requiring not only domestic reforms at the
national level but also the establishment of a genuine world community of
States under the aegis of a group of dominant liberal powers.
What sets Ropke off from Schum peter and Hayek is the explicitness of his
forecast and, if we compare the ideas of the Geneva economist with what has
actually happened since the Second World War in the field of social policy, we
are bound to admit that of the three writers it is he who was closest to the
mark in predicting the future evolution. Intellectual mentor of Ludwig Erhard
(1897-1977), who was first Minister for Economic Affairs of the Federal
Republic of Germany (1949-63) and later succeeded Konrad Adenauer as
Chancellor (1963-66), Ropke exerted a definite influence on the development
of political and social policy in Germany and, by extension, on that of all the
Common Market countries .P The notion of social market economy (Soziale
Marktwirtschaft), for example, owes much to him, and the now classical dis-
tinction in Germany between Sozialpolitik and Gesellschaftpolitik> reflects
the two types of social policy which Ropke set off against each other in 1943 in
discussing proletarianisation and its remedies .
His "Proudhonian" concern to see the autonomy of small units developed
in opposition to bureaucratic centralism may quite legitimately be linked with
the French self-management movement; and at all events he announced a
reaction against "the cult of the colossal" in industry, presaging the ecologi-
cal movement of today ("small is beautiful") .
His insistence on the importance of the peasantry and craftsman trades has
not had much of an echo in the highly industrialised countries, but a realisa-
tion of the decisive role of these sectors both economically and sociologically
has marked a milestone in the development strategy of the Third World coun-
tries. More generally, Ropke is, if not the inventor of the term,> at least one
of the major modern theoreticians of the third way as a possible course
between the liberalism advocated by Hayek allowing for no middle path and
the socialism which Schumpeter announced as inevitable.
Livingin Switzerland, in the heart of Western Europe, Ropke thought that
this cultural region of continental influence was fertile ground for the propa-
gation of a humanist anthropology that could serve as a basis for an economic
and social life freed of both the classical liberalism and the collectivism which
he regarded as aberrations. The question remains open but, 40 years later, it
must be acknowledged that it was clearly stated.
Three Forecasts for Our T ime 25
Conclusion
What authors will be chosen in 30 years' time for testing the relevance of
their forecasts? Let us venture a guess and say that they will be John Gal-
braith, Raymond Aron and Leszek Kolakowski. The first, a professor at Har-
vard like Schumpeter, advocates economic and social planning in the United
States . The second is conducting, within the framework of a market economy,
a fight against the totalitarian ideologies. And the third, who is now exiled, is
undertaking the same combat in the light of his experience in a socialist
country, Poland, which today is going through a situat ion unprecedented in
such a regime since the establishment of socialism in Eastern Europe.
It is perhaps between the two Harvard professors, Schumpeter and Gal-
braith, that the parallel is most evident. Aron is less purely liberal than Hayek .
Kolakowski, for his part, is above all a philosopher who, unlike Ropke, does
not propose a definite course of institutional and economic renewal. Both,
however, insist on the cultural stake and the need for a profound change in
ways of thinking, which brings them singularly close together.
If the choice of these new writers is as representative as we think of the
major options open to the industrialised countries today, it shows both the
steadfastness of the major orientations and the appreciable differences in the
formulation of views at 40 years' interval.
The unknown factor is the future, but there is nevertheless a certain thread
of continuity that encourages us to reflect on what lies ahead.
Notes
I See in particular the major posthumous work: History of economic analysis (London,
George Allen and Unwin, 1954).
2 l.A. Schumpeter : Capitalism, socialism and democracy (New York, Harper and Bros.,
third edition, 1950), p. 65. Th is edition contains a supplement to the 1942 edition, on postwar
developments.
3 ibid., p, 415.
4 OECD Observer, Nov. 1980, p. 28.
5 According to the Econom ic report of the President (1979). SeeMonique Fouet : ., Les Etats-
Unis, economie dominante dans une periode de transition", in Notes et etudes documentaires
(Paris, Documentation franca ise, 1980).
6 Schumpeter, OP t cit., p . 170.
7 F.A. Hayek : The road to serfdom (London , George Routledge and Sons, 1944), p. 12.
8 Hayek, OP t cit., p. 26.
9 See in part icular the trilogy: Law, legislation and liberty, three volumes (1973-79).
10 "There exists no third principle for the organisation of the economic process which can be
rationally chosen to achieve any desirable ends, in addition to either a Functioning market in
which nobody can conclusively determine how well orr particular groups or individuals will be, or
a central direction where a group organised for power determines it. " F.A. Hayek: Law, legisla-
tion and liberty, Vol. 3: " The political order of a free people" (London, George Routledge and
Sons, 1979), p, 151.
II " The mirage of social justice", Vol. 2 of the triology cited above .
12 OECD Observer, Nov. 1980.
13 Except for an allusion to free corporatism suggested by Quadragesimo anna (Pius XI,
1931) in his last statement to the American Economic Association (30 December 1949) in: Capita-
lism, socialism and democracy, op . cit., p . 416.
14 Wilhelm Ropke : The social crisis of our time (London, William Hodge, 1950). The
German original was published in 1943.
1S Like Hayek, ROpke overlooked the mediaeval world , whose community spirit is, however,
to be found in the solutions he advocated, unlike Hayek's .
16 Ropke, op , cit., p. 91.
17 ibid., p, 105.
18 ibid., p. 120.
19 Sismondi: Etudes sur l'economie politique (1837-38) (Geneva, Slatkine Reprints, 1980);
F. Le Play : La reforme sociale (1864).
20 Ropke, op . cit ., p . 173.
21 Ropke, op. cit., p, 225.
22 See A. Langner (ed.) : Katholizismus, Wirtschaftordnung und Sozialpolitik, 1945-1963
(Schoningh, 1980), pp. 27-109. Though Ropke, like Erhard, was a Protestant, his affinities with
social Catholicism are none the less evident.
23 G. W. Bruck : Allgemeine Soziatpolitik (Bund-Verlag, 1976), pp. 18 et seq.
24 In 1932E. Heckscher used this term to describe a middle course between mercantilism and
liberalism .
3 Social Policy - Crisis or
Mutation?
JACQUES DELCOURT
Two complementary explanations of what some cal1 the crisis of the Wel-
fare State, and others call its change of character, are increasingly accepted.
One lies in the now chronic imbalance between social expenditure and avail-
able receipts. The other may be deduced from the mount ing criticism of the
effectiveness of social policy as regards both delivery and redistribution and
of what economists and sociologists cal1 its "perverse " effects.
What, then, are the prospects for social policy? Is the end of the Welfare
State at hand? Some possible scenarios are outlined in the latter part of the
present article.
Imbalance of social budgets

Between 1950 and 1974 economic growth permitted welfare expenditure to
increase also. Col1ective aspirations and social spending continued to rise
rapidly in spite of the economic recession which began in 1974. During reces-
sionary periods welfare expenditure has continued to increase more sharply
than social and fiscal receipts .
Increase of welfare spending

Extended scope and content of benefits
There are several reasons for the increasing cost. One is the massive
increase in unemployment in the Western economies. Another is the ageing,
both relative and absolute, of the population: the number of normal pen-
sioners rises, as does the number of "very old" persons (age 75 and over)
and-with the deepening economic recession-the number of early pensioners
increases also. A third reason is the growing incidence of chronic illness (a
result of medical success in the struggle against acute diseases): without going
so far as to endorse Illich 's assertions about the expansion of sickness result-
ing from the extension of medical care, we cannot deny that the battle against
sickness is a battle to prolong life; nor should we exclude the phenomena of
over-medication and iatrogenesis of disease in our modern societies. There
is also monetary inflation, which raises the nominal cost of all goods and
services, including those required in the social sectors.
To the above must be added the weight of the social aspirations and needs
of those who receive allowances or have their welfare costs refunded. The
claims made by social movements-that the position of protected persons
ought to be improved and all their risks covered-should clearly not be under-
estimated as a factor in the growth of welfare expenditure, particularly in rela-
tion to social security. Indeed, despite their generally respectable age, social
security systems continue to reveal sundry gaps in their coverage of contingen-
cies or groups of persons (for instance, part-time work) . Some of these imper-
fections are due simply to the emergence of new forms of employment, new
kinds of work, or new family situations in contemporary society.
During the long period of prosperity through which we have passed, wel-
fare allowances and services have been extended to several classes of persons
whose earnings are either nil (students) or small and difficult to verify (self-
employed handicraftsmen, shopkeepers etc.) or whose working lives were
short or discontinuous so that they have contributed for short total periods
only.
Our Welfare States have also introduced new protective schemes for those
who still slip through the social security "net". In Belgium the comprehensive
"livelihood security" system includes a guaranteed income for old persons
(Act of I April 1969), a guaranteed allowance for the disabled (Act of 27 June
1969)and thirdly a minimum living allowance> for persons without resources
and under the age of 60 for women or 65 for men (Act of 7 August 1974). This
"minimex " is intended for potentially active persons who are more or less
indigent but for some reason cannot receive any unemployment or other spe-
cific allowance. It is payable only to Belgians and other European Community
nationals. The decentralisation of arrangements for the grant of "minimex"
has contributed to the indebtedness of another level of public administration,
the local authorities.
In Belgium welfare expenditure has been further increased: by the exten-
sion of public social assistance and the introduction of a right thereto in con-
nection with the reopening of public assistance centres (Act of 8 July 1976);
and by the partial State financing of private welfare services. Fraud and the
simultaneous drawing of several benefits also help to explain the increase in
social expenditure.
Two other causes, though real, have been less often mentioned and ana-
lysed. A substantial part of the growth of social spending is due to increases in
the remuneration of the many professional groups whose members are
employed in the various sectors and services. Another part may be attributed
to the escalating cost of supplies and equipment for purposes of education,
health, welfare and so on. Each of the above two causes deserves a brief expla-
nation involving: (a) a redefinition of what social or welfare expenditure
should be taken to mean, and (b) an identification of the parties interested in
the growth of that expenditure and in the distribution of income within society
which it and its growth engender.
• In French, minimum de moyen d'existence, commonly called " minimex".

Social Policy-Crisis or Mutation? 29
Extension of social sectors

In order to understand and explain correctly the abnormal increase in wel-
fare expenditure, it must be remembered first of all that social policy and the
social sectors of public administration include everything relating to health,
education, continuous training, culture, housing, passenger transport, welfare
services and collective facilities for assistance to individuals, families and
small communities.
To understand and explain the increase in expenditure , it is important also
to identify the persons, groups of persons, communities, institutions, under-
takings and branches of the economy which are directly or indirectly inter-
ested in the increase. For this purpose we must disregard the pattern of analy-
sis proposed by the theory of distribution of incomes and allowances, and
must analyse the following instead : the markets sustained by welfare expendi-
ture and the spending of allowances; the jobs created in the social sectors
themselves; and the trades and jobs consequentially created in the branches
which produce the consumer goods, services and equipment required for the
operation and development of the social sectors.
Three levels of income distribution: interests at stake
Economists-and sociologists after them-have taken to distinguishing
three levels of income distribution among members of the population.
The first shows people's gross remuneration and other income. The second
level of income distribution is obtained, on the one hand, through the subtrac-
tion of fiscal and social charges paid, and on the other hand, through the
addition of allowances of various kinds (the "social transfers") received, by
individuals and their dependants. These transfers are made up chiefly of bene-
fits and income replacements under social security schemes; but some welfare
payments-e.g. low-rent housing construction bonuses, study grants and spe-
cial cheap fares in public transport-come out of the yield of general taxation .
For Belgium this second level also takes into account the financing, from tax-
ation, of the minimum livelihood guarantee system which, for several years,
has existed side by side with social insurance and served as a complement to it.
Some of these transfers, namely the grant of allowances to replace or supple-
ment people's incomes, are nothing but the financing of a potential demand
which could not otherwise be made effective; such allowances, obtained
directly by the recipients, revert to the undertakings, etc., that provide the
goods and services which the recipients need. Social transfers maintain or
increase the global demand of various classes of the population.
The third distributional level adds to the second the advantages obtained
from the social services and collective facilities and equipment-nurseries,
schools, hospitals, public transport, welfare institutions for the old or the dis-
abled, etc. The operating expenses of these services and the capital costs which
they involve, being paid directly or indirectly by the public authorities, are
nothing but the financing of the provision of goods and services by the various
social and cultural groups of the nation as a whole.
So, as shown at the second level, the State sustains the demand for spe-
cialised services (teaching, health) and for subsistence goods and facilities by
its grant of allowances to replace or supplement lost or depleted income . At
the third level the State creates or finances the supply of goods and services. In
the aggregate, by intervening to affect both supply and demand, the State
helps to develop the market for welfare goods, services and equipment. That
is why, when explaining the growth of social expenditure, it is a good thing to
identify, besides the recipients of allowances and other benefits, also the other
agents and groups which have an interest in its maintenance and extension.
The financing of the recipients of benefit, and of the socio-cultural institu-
tions at their service, keeps certain economic circuits active and augments the
employment of highly skilled personnel. The grant of benefits and the opera-
tion of social services are not only to the recipients' and users' advantage;
indirect effects occur in areas which stand-in terms of the economic
process-both above and below the institutions themselves .
Level of remuneration in the social sectors
The social sectors, most of which (e.g. education and health) are highly
professionalised, while others (welfare in the narrow sense) are fast becoming
so, have high salary levelsand a high proportion of staff costs in total expend-
iture. Pay scales are related to university degrees and certificates and to sen-
iority in the profession . The social, medical and cultural sectors, as well as
education, employ members of highly organised professions: the medical
practitioners, pharmacists, nurses, physiotherapists, dieticians, teachers,
psychologists, speech therapists and welfare workers, for instance, as well as
the highly skilled "outside" personnel such as the computer specialists now
engaged in the daily management of hospitals and insurance funds, the chem-
ists in analytical laboratories, the engineers and technicians responsible for the
installation and logistic services of such institutions.
Thus, besides the recipients of benefit, large number of workers with high
qualifications have an interest in the maintenance and growth of the social
sectors as a whole. Moreover, these sectors and the public services in general
provide an outlet for almost 60 per cent of university graduates and probably
some 40 per cent of those of other post -secondary training institutions.
Cost oj supplies and equipment in the social sectors
Many branches of industry are concerned in the supply of the goods, ser-
vices and increasingly sophisticated equipment now required for the operation
and development of the social sectors, their logistic services (residence facili-
ties and laundries of schools and hospitals, for instance) and their accounting
and other central services. Nowadays we may add the supplies and equipment
required from outside for controls of various kinds-discovery of frauds and
co-ordination of social records. The money invested in the development and
equipment of the school and university systems, hospitals and their adminis-
tration, institutions for housing the disabled and the old, cultural and sports
infrastructures, public transport and low-rent housing, as well as in the intro-
duction of elaborate and sophisticated technolog ies in the various sectors, is

not unrelated to the growth of welfare expenditure.
Operational costs and the cost of capital equipment in the social sectors do
not redound only to the advantage of persons receiving benefit and the
patients and users of the services . Thus, it will not be possible, in the future, to
trace all social expenses in the same way.
The increasing investment in the tertiary sectors which are engaged in the
maintenance, adaptation and development of human resources, or simply
devoted to the subsistence of human beings as such, have a dynamic effect on
the growth of a range of "social" manufacturing and construction industries,
the scale of which should not be underestimated. A great many branches of
industry have a direct interest in the operation and development of the social
sectors because they supply or install the laundries and kitchens, the labora-
tory equipment, the accounting and data-processing services, the residences,
lecture halls and offices, medical equipment and instruments and those for
film projection, telecommunication and so on.
These supplying branches and their representatives are in contact, not with
the patients and beneficiaries, but with the skilled personnel of the social sec-
tors . Thus, welfare expenditure has a double motive power : on the one hand,
it promotes the employment of highly qualified personnel; on the other, it
promotes the use of buildings and apparatus which engineering services are
often called in to construct and also creates demand for various sophisticated
supplies-in the therapeutic and pharmaceutical fields, among others.
In sum, the following enter into the explanation of this growth of welfare
expenditures and deficits : the high remuneration of the professional groups
concerned; and the rise in costs (both of supplies and of capital), in the social
sectors, whether these are in the hands of public or private institut ions. In
recent years there has been a development of sophisticated apparatuses to
assist management, for apprenticeship and teaching, and also to step up the
struggle against disease.
Similarly, in explaining economic growth, the importance of greater social
expenditure and the development of a demand for educational and health
services should not be underestimated. As Bertrand de Jouvenel points out,
we must not forget that capitalism's golden age has been the age of welfare
capitalism.
Movement of taxation and analogous receipts
Various factors explain the relat ive decline in receipts which is developing
while social expenditure continues to grow.
Decrease in the number of active as compared with
inactive persons by 1985
It has been possible in recent years, and this will continue for a time, to
count on an increasing rate of female participation in the workforce . Also, the
sizeable generations born between the end of the Second World War and 1965
will still be entering the employment market until 1985. Thirdly, the genera-
tions, whose members will have retired in the same period, are the relatively
small ones born during and immed iately after the First World War in 1914-
1920.
Owing to the coincidence of the above three factors, the active population
has been increasing and will continue to increase for a few years yet, even if
unemployment rises at similar rates . Those movements have made it possible,
and will make it possible for a further short period , to disregard the true
magnitude of the resulting problem. But by 1985 the turning point will have
been reached: the generations born since 1965 will come in at the base of the
pyramid of potentially active persons ; at the apex, there will be larger genera-
tions than those now leaving the workforce; and the ratio of inactive persons
to the total population will rapidly increase .
Decline of receipts during a recessionary period
Even if during the recession, despite the growth of unemployment, the
number of workers paying social contributions has remained relatively high,
the number on short-term or fixed-term engagements or only casually
employed has been rising fast. In other words, there has been an increase in
low-paid, insecure employment and hence a decline in the yield of taxes and
similar receipts. Wage restraint, whether statutory or negotiated , has the same
unfavourable result.
Thus, the level of income subject to tax is rising today at a slower rate than
expenditure. Furthermore, the increase in fiscal and social charges tends to be
reflected in the export of capital, fiscal fraud, clandestine employment and
other social aberrations . Economists are talking more and more about a
"parallel economy"-informal, invisible, underground-coexisting with the
more formal economy. If they are to be believed, such a dual system has every
chance of expanding in conditions of underemployment.
Urgent measures to balance the social budget

Having regard to the growth of welfare expenditure and the imbalances to
which it leads in social accounting, the first corrective moves to be considered
aim at reestablishing an equilibrium of receipts and expenditures.
Increase the contributions or change their impact
In order to increase the financial base of social security schemes, most of
the ceilingson the part of wages and salaries subject to deduction were first of
all raised and then removed altogether. In depressed times, this "derestric-
tion" can be justified as a measure of over-all solidarity, Belgium has recently
also decided that replacement income shall be subject to tax, whatever its
origin .
Furthermore, in order to lighten the very heavy social charges on under-
takings , various measures have been discussed in recent years with the object
of transferring certain liabilities in this area from the employers or workers to
the consumers or taxpayers, namely :
Social Policy-Crisis or Mutation ? 33
to levy social security contributions on the undertaking's total value-added

amount rather than on the wage bill (thus shifting some of the burden
from the smaller, more labour-intensive businesses to the larger, more
capital-intensive businesses);
to transfer the financing of certain sectors of social security (particularly
family allowances, health and pensions) to general public resources;
to increase the value-added charge on certain products , to the advantage
of the social security funds, so as to be able to reduce the quasi-fiscal bur-
den on certain classes of persons with high rates of unemployment, such as
industrial workers.
In the language of specialists, such changes in the basis of a levy would be
"bloodless" operations in the sense that they would not seek to increase
receipts but to lighten the burden on undertakings or to redistribute it better
between them: the reduction would be greatest for the most labour-intensive
plants.
Only the last of the above three measures has been taken in Belgium. It is
less radical than the others and will probably not be very effective.
Reduce expenditure-or its rate of increase
Various means of achieving the above, such as putt ing a ceiling on benefits
or barring allowances above a certain level of income, are in course of study .
Immediate proposals in this field relate to restrictions on the highest retire-
ment pensions. Some even suggest having nothing but a statutory minimum
pension which would be the same for everyone; those who wanted an addi-
tional pension would have to take out additional insurance coverage. A simi-
lar solution might be considered in the health care sector : here too, individuals
could contract for supplementary insurance if they so wished.
Also in the health sector, belief in the importance of what we call the
"ticket" is increasing (the patient makes a small flat-rate contribution to the
cost of each benefit); the primary object of such an arrangement is to counter-
act overconsumption of hospital and other medical services, but it might also
help to ease the budgetary situation. The necessity of covering all risks, great
and small , at the same time is also questioned.
Another. means of effecting economies consists in having the amount of
certain benefits depend on the composition of the family and particularly the
number of dependants, as is done in the case of family allowances. The over-
all number of dependent persons is declining and the number of persons who
are unmarried or live alone tends to increase as does the number of young or
middle-aged couples without children or other dependants.
It would also be possible to extend or reintroduce, as the case might be, the
notion of "head of the family". The rate of unemployment benefit could be
made to vary between the "head" and other members. A similar distinction
could be introduced as regards a good many other cash benefits.
Other means of reducing expenditure are being considered: imposing
stricter controls to prevent abuses or actual fraud; barring certain benefits in
consideration of the aggregate income of a married couple, for instance; and

-on the basis of a time limit-transferring individuals from social insurance
to the minimum living allowance system or, within social insurance, from one
sector to another (e.g, from employment benefit to pensions).
All the above possible adjustments relate to social security benefits.
Regarding welfare expenditure as a whole, many other corrective measures are
being considered and discussed. In the financing of young people's studies,
the student would be asked to pay a contribution. In public transport, the
price of periodic commutation tickets would be increased and special fares for
particular types of needy persons would be replaced by commercial rates
based on the frequency or extent of utilisation. Advocates of these latter
changes point to the rapid rise in levels of remuneration in the last 20-30 years:
an increasing number of passengers, it is argued, could pay more than they
do.
Labour movements and some occupational groups oppose the above
adjustments as acts of social regression which would constitute a "retreat
from equality of opportunity" and claim that they would meet with strong
popular resistance. In the view of others, including the "new" economists,
these corrective measures, as regards both receipts and expenses, are merely
palliatives; they would not "correct" enough and would start a chain of "per-
verse" indirect effects.
Today, economic and sociological criticisms of the Welfare State can be
heard on all sides, together with proposals to transform the basis of both
charges and benefits. The economic criticisms stem , on the one hand, from
the growing imbalance of budgets and social accounts and, on the other hand,
from observation of what are considered to be the negative effects of the
increased number of welfare allowances paid, both on the readiness of the
payees to go to work and, indirectly, on the motivation of the " payers"
also-the persons, undertakings and institutions having to bear increasingly
heavy fiscal and social charges.
In terms of productive efficiency, the economic criticisms lead, beyond the
search for budgetary equilibrium, to a fundamental challenge of the advisa-
bility of welfare expenditure. Social criticism, in terms of distributive and
redistributive effectiveness, tends rather towards selectivity as regards the
right to benefit and modulation of its amount.
The perverse effects of a social economy:

neo-liberal criticism of the Welfare State
According to the neo-liberals, welfare expenditure puts the workers poten-
tially "on relief"; social assistance, once given, be it in the form of allowances
or services, soon calls for further assistance. The more help is accorded, the
more help is expected, and thus , the advance of welfare expend iture is self-
propelled. From another point of view, the more assistance is given, the
greater the financial demands which the State has to make on individuals and
undertakings .
Particular aspects of the neo-liberal position are summarised in the follow-

ing sections.
Disincentive effects as regards work
By requiring more and greater efforts from the population-particularly,
in fiscal and analogous policy, by removing the upper limit on taxable income
and imposing a limit on the advantages which income can bring-the Welfare
State gradually flattens out the differences between people's economic posi-
tion whatever their degree of activity and creativity. By compressing income
scales, it becomes bit by bit an egalitarian State. Social assistance, whatever
form it takes, acts on the assisted persons as a disincentive to work, while fis-
cal and social charges have the same kind of effects on taxpayers as a whole.
The characteristic egalitarianism of the Welfare State, by restricting dif-
ferences in consumption levels and encouraging mass as against elitist con-
sumption, attacks one of the bases of economic and social dynamism. At all
times there must be production and consumption, not only of the goods
required by all, but also-in due proportion-of a range of other goods and
services, sufficiently differentiated to reflect the respective social position of
individuals and families-at least, if it is desired to set up or preserve a
dynamic development process . That is the idea expressed by Henri Lepage
(I 978b) when he writes, quoting Kolm, " we must allow the rich to be richer so
that the poor may be less poo r . . . not because extreme inequality is justified in
itself but because the most elementar y realism obliges us to consider that ,
beyond a certain point , every policy which consists in taking from the rich to
give to the poor amounts in effect to making the latter poorer still. They will
lose more because of the decrease in the gross national product (due to the
negative effects which increasing redistributive taxation has on savings and
investment attitudes) than they will gain from their greater share in the gross
product .. , That may be shocking for those who idealise the notion of justice,
but it is a constraint which we cannot disregard : in order that hundreds of
thousands of ill-housed people, for instance, may be provided with homes at
low cost to themselves, we have to accept a position in which a few hundreds
can afford to buy a yacht " . From that point of view, any luxury expenditu re
can be socially justified.
In short, the Welfare State acts as a disincentive to work, both for the
persons assisted (whether they are unemployed, for instance, or registered as
indigent) and for workers in employment.
Threat to State finances
The growth of welfare expenditure obliges the State to scrape the bottom
of the barrel in its search for money; it raises the level of taxation and social
charges . This increases unemployment and clandestine work, inflation, fiscal
evasion and fraud, the export of capital, and can cause a taxpayers' strike (as
actually happened in California). By "strangling" the entrepreneur as well as
the taxpayer and stifling private initiative, the State also causes disinvestment,
a decline in the new investment rate and an increase in the "parallel
economy". To reverse the unfavourable trend as regards investment and to

prevent a collapse of its own finances, the State maximises its intervention in
the economy . Having turned the workers into a potential relief-line, it begins
to do the same with the employers. Whether undertakings are highly efficient
or "sick", the State invents an arsenal of weapons for use against them so as
to broaden its fiscal base. But this interventionism also has perverse effects.
From social to economic intervention

In its search for social cohesion and security, the State is obliged to inter-
vene more and more in order to bring about economic stability, security and
growth. In the eyes of the neo-liberals, economic intervention has many kinds
of perverse effects, both for the undertakings placed in the "sick" class and
for those forging ahead in the best of health. If the assistance-as regards, for
example, the waiving of taxes on investment-is not general, it contorts in two
ways the competition between those which are assisted and the rest : by the
charges levied on the profits of the healthy undertakings; and by transfer of
the yield to the "sick" ones .
Moreover , as surveys and research have shown, assistance given to under-
takings in difficulty does not usually put their situation right. A business
which has once been helped has an above-average chance of needing to apply
to the State again .
Economic intervention, coupled with social intervention, not only leads to
an imbalance between State receipts and expenditure. In order to correct that
situation, the government will have to borrow more on the capital market. It
will thus cause rates of interest to rise, often to extremely high levels. This
in turn will restrict access to loans for undertakings which need money for
capital expenditure and so will reduce the latters' chance of recovering their
previous pattern of economic growth.
Furthermore, despite the rise in rates of interest, the Welfare State,
because it undermines the rational family duty of providing for the future,
causes the volume of savings to diminish: there is no longer any need to put
money aside for old age, sickness or accident, or for the children's education.
To sum up, the more the State helps , the more it will have to help. So, in
the view of the nco-liberals, it is better not to start out on the path of eco-
nomic intervention. Instead of correcting the errors of the market, a govern-
ment merely adds to these the further errors of planning and control. Eco-
nomic intervention not only costs more and more, it is also less and less
effective .
Thus the State, protector at the social level, becomes protectionist at the
economic level: or rather, nee-protectionist, since protection by way of cus-
toms barriers is out of fashion. Nee-protectionism of the technical, pre-
regulated type deprives economic liberalism of any remaining vitality. It
sounds the death knell of the market economy, of competition-in a word , of
private enterprise.
A major perverse effect of interventionism

Among the perverse effects of intervention at the economic and social
levels is the threat to political and democratic freedom. This is the considered
opinion of Friedman (1980). If our nations permit public action gradually to
supplant private enterprise, there will result, in due course, not only a restric-
tion of entrepreneurial freedom, freedom to invest and disinvest, but of all
other freedom too.
Following the complete socialisation of the productive apparatus, inter-
ventionist States, whether collectivist or not, do and will muzzle trade union
activity and-bit by bit-all the traditional freedoms patiently won within the
framework of the liberal State. In the view of Geiger (1980), such an outcome
is all the more probable because the balance of trade between the economies
which remain capitalist and those which become socialist will shift to the
advantage of the former. A State which inter venes systematically at the eco-
nomic and social levels tends, because of its failure , to become authoritarian.
According to Geiger, in European countries with their tradition of freedom
and democracy such a prospect would quickly raise a storm of protest among
the people , who would not tolerate the gradual constriction of their freedom ;
and that reaction would soon lead to a "reliberalisation" of the economy.
Sociological criticisms
There are several sociological criticisms of the Welfare State and social
policies : one relates to their effects in terms of income and cultural distribu-
tion, another is of the elitist type, a third attacks the bureaucratic approach.
There are more radical attitudes as well. Paradoxically, all these criticisms,
though stemming from widely different theoretical assumptions, coincide in
their condemnation of the inefficiency and perversity of Welfare State poli-
cies, particularly the maldistribution of social benefits and services and the
high cost to the taxpayer. Generally, the sociological criticisms are more spe-
cific and more sector-oriented than those of the economists and lead up, not
so much to proposals about money, budgets and finance as to suggestions for
more selective benefits, re-evaluation of present practices (involving more
efficient services and greater participation by protected persons in their organ-
isation and operation) or even the development of new practices and some
degree of deinstitutionalisation.
Criticism of redistribution
The basic criterion for this kind of criticism is efficiency in the redistribu-
tion of wealth . The main question to be answered is: who profits by social
policies? or, what classes of persons receive the various allowances, benefits
and so on? Redistribution may be analysed either in its horizontal or in its
vertical aspect.
Sociological observers can agree fairly easily that welfare policies cause
horizontal redistribution : transfers from the healthy to the sick or inju red;
transfers from childless people to those who have dependent children; trans-
fers from employed workers to the unemployed ; transfers from active persons
to the inactive, part icularly pensioners.
But these horizontal transfers, it is argued, do not imply redistribution
from richer people to the less rich . Welfare schemes, with their cash allow-
ances, health care, study grants, home construction loans, etc., seldom oper-
ate to the advantage of the poorest among the poor ; the benefits usually
remain in the hands of some intermediate class .
Indeed, the critics continue, the vertical distribution tends to be counter-
logical. Such is the view of those who have analysed either social and cultural
or economic redistribution, according to their particular points of view-
sociologists like Bourdieu (1970) and Boudon (1977) in France, or economists
like Deleeck (1978), whose doctrine has been taken over in France (and fre-
quently quoted) by the "new economist" Lepage (1978b).
Two kinds of examples are generally given : on the one hand, cases in
which the redistribution is inverted and benefit goes more frequently, or in
greater proportion, or in better quality, to persons in the higher and interme-
diate income groups; on the other hand, cases in which more benefit goes to
the less poor among the poor, or to the richer members of a particular target
class.
Following are some instances of this type of sociological criticism . They
relate to the distribution of benefits, first in non-selective social insurance
systems and then in selective systems intended for specific low-income groups .
In health care, the degree of utilisation of personnel and medical equip-
ment is said to be correlated to the user's socio-economic level, so that a pro -
portionately higher share of medical costs and sickness allowances is spent on
or paid to the rich; refunds of pharmaceutical expenses, on average, greater in
the higher and medium income groups, which are more likely to use sophisti-
cated kinds of medicines; the greater longevity in those income groups is said
to compound this effect.
As regards family allowances, big families are found both at the upper and
at the lower income levels of the social pyramid : but boys and girls at the
higher levels are described as more interested in education and as going to
school for longer periods . Thus , larger total sums are paid as child allowances
in their respect.
Similarly, it is argued, within the education system, the choice of subjects,
the duration of studies and success or failure in examinations remain cor-
related to the student's socio-economic origin , regardless of the amounts allo-
cated to education as part of a democratisation policy and whatever changes
are made in the range of subjects and the programmes offered (as when
"reformed education" was generalised in Belgium).
Even where the redistribution is not inverted, as in the cases mentioned
above, it is said to be often "blocked" in the sense that the poorest individuals
in the target group are not reached or have no real access to the allowances
and other benefits. Study grants provide a striking example of this: the larger
share seems to be obtained by young people of the higher and intermediate
income groups among the population covered-i.e. people from families

whose incomes, though below the absolute ceiling for such grants , are in the
brackets nearer to the top. The same applies to the use of public facilities and
services and in the area of social housing and construction grants and facili-
ties: the rise in construction prices and the high rates of interest charged on
loans make the benefits, it is argued, increasingly selective.
In some other cases, as regards unemployment allowances for instance,
there are naturally exceptions to the bias in redistribution pointed out above :
no doubt the classes with relatively low incomes and levels of education do
provide proportionately the greatest numbers of unemployed. However, it is
argued, further analysis shows that many young people who are worst off in
those two respects, and whose chance of finding well-paid, stable, satisfying
jobs is lowest, are unable to obtain unemployment allowances when they enter
the labour market, even after a waiting period , because they have not the
necessary certified training . In Belgium there are several vocational training
certificates, holders of which cannot receive unemployment benefit on leaving
school but are entitled only after having worked and earned. So, even in the
case of unemployment, selectivity is said to operate against the weaker mem-
bers of the economic and social system, so that their chances of receiving
benefit are smaller than those of other groups.
Complementary explanations are given for the two phenomena of inverted
and blocked redistribution. As regards the former, critics say, the "new in-
equality" resides not so much in differences of income and property, occupa-
tional advantages or personal relations and power (which constitute inequality
in the distribution of economic, cultural and social capital between families):
it consists rather in the greater welfare benefits received by middle and even
upper-class persons, in whose favour social insurance and allowance systems
operate to the full, both at the family and at the occupational level-and even
as regards pensions . Although taxes and charges are higher on the higher
incomes, people who already have such incomes are said to receive more from
social security if all their various advantages are taken into account. This anti-
social redistribution towards groups in the middle and upper levels of the
economic and social pyramid is attributed to the strength of those groups
and their ability to exert efficient pressure on the persons, institutions and
machinery responsible for distribution of benefits . Such is the more recent
explanations by specialists, such as Greffe, who attempt a sociological analy-
sis of inflation.
Inversely, the explanation of the blocking of distribution to the weaker
members of the target classes of welfare schemes is as follows: the poorest
people, and those who are socially and economically least integrated, have
neither the resources, nor the individual strength , nor the collective power to
win access to the benefits they might otherwise receive, although they are per-
haps the most numerous and certainly the kind of people for whom social
security systems are intended . In Belgium, it is claimed that even the minimum
living allowance , the "minimex", always goes to the lucky people who move
in circles close to the competent department and the case workers concerned.
The " perverse" effects denounced by sociologists arise mainly at the stage
of distribution . However, two counter-arguments should be borne in mind :
first, that social insurance and analogous schemes , unlike many other welfare
systems, aim primarily at covering contingencies and compensating for their
occurrence, not at the equalisation of income or wealth . Equality in the face
of risk and equality of income are two clearly different objectives. If the
objective is equity, then distribution should not be egalitarian but equitable,
having regard to the hardships suffered.
The other counter-argument relates to the analysis of inverted redistribu-
tion . Most research into this, it is pointed out, concentrates on the effects of
particular , individual benefits. But redistribution should be studied in the
light of the size of the family and be calculated per capita of the family or
household. The analyst should compare the total contributions made to
income transfer systems, erc., during the subject's whole lifetime and the
aggregate benefits and services received in exchange. If the successive stages of
each life, career and family history are taken into account, an imbalance
between the two totals may not always have the same significance.
The elitist criticism
The criticism called elitist, formulated by Albert O . Hirschman (1980),
may be summarised as follows. The critical condition of the Welfare State
arises out of its own excessive growth. Every mass service loses quality; quan-
tity and quality of output are two such distinct objectives that one or the other
may be attained but never both at the same time; and quantity spoils quality
by its ill effect on the internal operation and development of the institution
concerned . All this leads to frustration on the users' part and other mecha-
nisms , outside the institution, help to reduce still further the users' satisfac-
tion with the services provided . The whole process is an expression of the law
of diminishing returns as it applies within an increasing number of sectors of
the Welfare State.
Among the internal conditions Hirschman mentions three. The growing
dissatisfaction of users, he says, proceeds first of all from the inconvenience
of having to rely on an overcrowded mass service. At the hospital, the social
insurance office, or the employment exchange you have to wait in line.
Secondly, mass production is inevitably standardised : it causes further dis-
satisfaction for users, who are treated like mere numbers, just as it does for
workers who are tied to an assembly line and required to make a few rapid
movements in a minutely subdivided operation. Thirdly, any increasing out-
put requires increasing input: beyond certain limits the additional personnel
will be of lower quality, particularly if there is insufficient time for the neces-
sary training .
As a rule the quality of service deteriorates slowly and the users' dissatis-
faction makes itself felt only after a time; but it will increase rapidly as soon as
other processes come into play outside the welfare scheme concerned and
these demonstrate or intensify the fall in quality. Education as an example. In
order to make it more democratic, staff have to be found in increasing num-
bers. They must be able to teach , and particularly to handle lessgifted and less
interested pupils . Thus , compulsory schooling for all, and its extended dura-
tion (under the " elitist" rationale), oblige the authorities to recruit "second-
quality" personnel-teachers who have been insufficiently or too rapidly
trained. Moreover, secondary and higher education , the rapid rise in the num-
bers of students, without a parallel policy of developing the supply of jobs
requiring high qualifications, will increase dissatisfaction among those who
have completed their studies and made an effort to obtain degrees or certifi-
cates . Democratisation also sets off another dissatisfaction mechanism: uni-
versity degrees are status symbols, goods required not only for their intrinsic
value but also for the social rank and distinction which they are deemed to
confer. Thus, if they become commonplace, if nearly everybody has one, the
holders' satisfaction will be considerably reduced, even where the quality of
instruction has remained intact. If, therefore, the State wishes to maintain or
raise the quality of education and ensure that the experienceacquired thereby
is not wasted, if it wishes to sustain the level of satisfaction among graduates
and fulfil the social ambitions of educated people, then it must necessarily
spend larger sums on teacher training and the creation of employment for
young persons on completion of their studies.
Such mechanisms and their effects recur in many other social and cultural
fields.
Criticism of bureaucracy
This kind of criticism underlies several current attacks on the expense and
inefficiency of public as opposed to private management-defects which are
attributed to the lack of two stimuli, profit and competition (in other words,
to lack of a market).
Criticism of bureaucracy means, first of all, criticism of bureaucrats con-
cerned to tighten their hold, to justify and extend their services. It also means
criticism of politicians concerned to gather support and win elections: votes
have to be bought-in the present case those of certain social classes-and this
may lead to some deviation from the pursuit of the general good, since politi-
cians often serve various kinds of specific interests. Social security systems
and welfa re policies, it is considered, can easily be used as fronts behind which
to rationalise what are really bureaucratic or political aims.
Moreover, this criticism goes on, the persons receiving benefit are always
far fewer than the number of payers, since the mass of workers pay for the
unemployed and the mass of healthy people for the sick. Thus, various lobbies
come into existence, gather strength and fight for the greatest profit they can
draw from the system . These lobbies get action from the bureaucrats and poli-
ticians, but they represent a very small part of the population, whereas the
silent majority never recovers what is taken from it by way of various contri -
butions and charges.
Another target of this kind of criticism is the " corporate" administration
of the Welfare State. Tripartism-management by employers, workers and
government-which is a feature of many systems is blamed for not giving
responsibility to widely representative organs but rather substituting the inter-

play of sectional interests and compromise.
But criticism of bureaucracy also means the criticism of procedures
imposed by increasingly complex administrative and decision-making
machinery. Critics point to the centralised and hierarchical character of many
public departments, the structure and the rules of which, they say, are con-
ceived to ensure the prescribed, egalitarian treatment of "cases" rather than
to cultivate a warm relationship with people or to encourage participation by
the protected groups. Private enterprise, it is argued, would necessarily act
more smoothly than government offices and officials, caught up in their own
machinery and obliged to act "through channels". Applicants, handled as if
they were files or numbers rather than persons placed in real, particular cir-
cumstances, do not feel that they are treated with empathy, are being helped
or guided, and start to see their own purpose as escaping control; this, in its
turn, has an effect on costs.
Thus, in a few years, critics have shifted their ground from decrying the
social burden of private enterprise to denouncing the costs of State interven-
tion, the "perverse" effects of which are distinguished at the social and at the
economic level. There has been a move from analysing the deficiencies, dis-
orders and contradictions of a market economy to stigmatising the disorder
and complexity of welfare institutions and their manifold uncoordinated
actions.
Typically, it is argued, the Welfare State consists of a complex network of
institutions and administrations whose respective responsibilities are imper-
fectly distinguished; so it is not rare for families in real difficulty to remain
without assistance for a long time because they do not fit as neatly as others
into subjectively defined criteria or are not so familiar with paper-shuffling
procedures and annoying controls. "In a bureaucratic system the cunning
have more chance of being helped than the deserving."
These criticisms do not deny the need to pay for social welfare spending.
Their purpose is less to reduce the growth rate of welfare schemes than
to increase the latters' external effectiveness (by pointing out inequalities,
improper choice of objectives, etc.) or internal efficiency (by attacking waste-
ful or inefficient organisation). In other words, it is not so much the expendi-
ture itself that is denounced; the analysis leads rather to reflection on the
necessity of reorienting the flow of benefits and services towards the poor in
general and well-defined target groups in particular. "What is the use of
redistributing to the rich? Let us first seek to combat poverty effectively. Why
hand the State functions that a market economy can do better?" That is the
philosophy of the new approach, which aims at restricting State intervention
because of its perverse effects and inefficiency.
To be truly social one must be effective. But does that mean dismantling
the Welfare State? The conclusion is a hasty one and avoided by those who
believe it is important to invest in the development of human resources-a
doctrine of which Gary Becker is the most eminent advocate. But various radi-
cal criticisms point towards that conclusion nevertheless .
Radical or essential criticisms

These criticisms stem from the model produced by Ivan IlIich (1975) when
he analysed the institution of medicine. According to him, any increase in
medical services and health care increases the numbe r of "patients" and
present-day medicine has a markedly iatrogenic element, even if popular
belief that it can do anything continues to grow .
Following Illich, radical critics of welfare policies and social expenditure
not only denounce their perverse effects but also seek to demonstrate how
such policies and expenditures promote the evil which they ought to counter-
act. For some time now, criticisms of this kind have been abundant in socio-
logical literature. The more a particular deviation is denounced , we are told,
the greater will be the number of deviationists, whether first offenders or "old
lags"; as if the attacks only served to create that particular deviation and
cause it to mult iply.
The more money spent on psychiatric treatment, it is argued, the greater
the number of mentally sick; the higher the rate of unemployment benefit , the
more people receive it-or try to; if more help is given to deserted wives, the
number of husbands who leave their wives-or whom their wives turn out of
the house-will also increase. In education too, it is observed, the more the
school -leaving age is raised and the more young people go to school, the
greater the proportion of drop-outs and of pupils who have not mastered the
most elementary educational disciplines .
Indeed, these critics conclude, it looks as though society were increasing
the evils which it seeks to eradicate, aggravating the problems which it would
like to solve-sickness, unemployment, insanity, ignorance, breakdown of the
family . It is as if people were trying to meet the criteria on which the grant of
assistance depends, as if the definition of deviations from standard made
those deviations easier to follow .
Paradoxically, the sociologists who criticise welfare policies and expendi-
tures for illogical redistribution, bureaucratisation, deterioration of mass
services, etc ., and the radical critics who see in those policies and expenditures
the cause-or one of the causes-of various social evils, agree with the new
liberal economists in denouncing the perverse effects of " welfare" on
people's readiness to work, to save, to invest, to innovate.
Taken together, these critic isms give credibility to the idea that it would be
possible, without hurting anyone and even with advantages for all, to spend
less on social matters and to render welfare services more efficient by placing
their finances on a private footing and decentralising their administration.
"The more you help people, the more you have to help them. Let us stop these
absurd systems and find people work. Let us develop an employment
economy instead of a welfare economy"-the neo-liberals say.
But what would be the effect of reducing taxes and contributions restrict-
ing welfare expenditure and even partly dismantling the social services? Are
there not, beside the dysfunctions now denounced, other healthy conditions
resulting from the growth and operation of social security for workers and
non-workers also? It is in answer to such questions that different scenarios for

the future are presented in the following paragraphs.
Scenarios for the future

The criticisms outlined above, seen as a whole, lend colour to the view that
welfare policies and expenditures operate in an atmosphere of waste and inef-
ficiency, that they have harmful effects, and that social development has
become a major obstacle to both economic and individual development.
Within a few recent years some of the accepted tenets of economic
science-Pigou's theory of social costs, Keynes' doctrine of the need to sus-
tain demand in the struggle for full employment, Beveridge's ideas about the
development of social insurance in connection with the basic Keynesian prin-
ciple-seem to have lost adherents and standing. Today they are denounced as
the root cause of our inflationary societies. Given these attitudes, two extreme
scenarios are possible for the future. One is typical of the monetarist school
and the neo-liberals, who give priority to the fight against inflation, the restor-
ation of freedom to invest (and therefore to disinvest) and withdrawal of the
State from intervention in both economic and social affairs . The other advo-
cates the right to work, the right to a job, and income guarantees. The latter
implies control of the rhythm of disinvestment as well as the promotion and
guidance of investment. Of course, in addition to neo-liberalism and State-
controlIed or welfare capitalism, a third scenario is conceivable-that of a
socialist society. However-until proof of the contrary-its centralised pat-
tern cannot be regarded as a real alternative in the most developed Western
countries.
The neo-Iiberal scenario

Towards a "supply economy"?
This is the scenario of a school fiercely opposed to State intervention and
professing a monetarist policy to be strictly applied by governments in their
financial and budgetary affairs. The State fights inflation and, for the rest,
seeks to restore the stimulus of market conditions and competition while
restricting its own intervention in income distribution . Promotion of invest-
ment requires the reduction of taxes on high incomes and on companies. Such
a policy is regarded by its advocates as the only one which will lead, in due
course , to the expansion of productive employment. They believe in
re-liberalising the economy, in replacing the promotion of demand by that of
supply and therefore of investment; for it is increasing supply which creates
demand, not vice-versa. By financing demand, they say, you simply finance
inflation, rising prices and, in the long run, unemployment and stagnation.
An undertaking which innovates, invests, produces, is at the same time creat-
ing more demand, a wider market, more income and employment. Supply is
the true motive force of the economy.
Such is the outlook of the "enterprise economists", the new viston

proceeding from micro-economic analysis as opposed to the macro-economic
approach of the bureaucratic and technocratic schools. If that outlook is cor-
rect, it is argued, we must revert as soon as possible to a market economy and,
if not to laissez-loire, at least to such a level of State intervention as may be
compatible with a market economy. Furthermore, rather than remain within
the vicious circle of social intervention, involving customs barriers, State
direction of the economy and anti-democratic practices, governments should
fully accept the internationalisation of industry and the new international
division of labour, accelerating on the one hand the reform of traditional
businesses and sectors, and on the other hand developing advanced capital-
intensive and research-intensive activities and undertakings, whether engaged
in the production of goods or of services.
A dual economy-danger or choice

But many observers consider that the strategy of "escaping forward" and
deserting the "sick" industries, which is summarised above, would lead to a
society deliberately split into two compartments-two sets of activities, indi-
viduals and regions . This duality would comprise one compartment adjusted
to modern methods, integrated on a world scale, composed of up-to-date men
and women able to handle electronics and other advanced technologies, to
speak foreign languages, spending part of their time abroad ; and another
compartment embodying the heritage of our cultural traditions, made up of
units isolated from world competition, using and developing mild forms of
energy and "companionable tools ", based on personal affinities, relying on
the redistribution of wealth and on self-management, and composed of less
mobile human beings in search of a more sociable, classical way of life.
Amado and Stofaes (1980) believe that the dual economy would consist of
an exposed exporting secto r and a parallel sheltered sector with stable employ-
ment. That is not really so, because the latter would include also provisional ,
short-term, fixed-term and part-time employment with low skill levels, a good
deal of work at piece rates , somet imes for several employers at once, with lit-
tle chance of promotion or a career-in other words, jobs which the econo-
mists would classify in the secondary employment market.
Part of the dualism could arise out of the development, parallel to the offi-
cial economy, of an underground economy in which producers and workers
would try to escape taxes and other charges, to evade regulations on hours and
conditions of work, etc., and even to engage in unlawful activities (the drug
trade, prostitution). Many such people would also be engaged, partly at least,
in some recognised kind of work. If so, as Jean Vincens points out (1981),
they would be less exposed to discovery or denunciation for an offence ; if not,
they would lose the right to social protection.
Another part of the underground economy might result from unemploy-
ment or underemployment in people's recognised occupations . Some unem-
ployed individuals would likely pick up small, occasional or recurrent jobs .
A parallel economy might also include the exchange of services between
groups of friends or similar people and work in new kinds of organisations

such as the labour co-operatives which were established after the culture crisis
of 1968or the economic recession of 1974. These are considered by adherents
of self-management socialism to be half-way between capitalist and collec-
tivist forms and a framework for free ("autonomous") coexistence. They
might constitute a system parallel to that of the large-scale undertakings which
often work primarily for export and are run according to the principle of
direction and discipline ("heteronomous" units, as these have been called,
particularly by Gorz, 1980).
The informal part of the dual economy might even be legalised, with the
two kinds of undertakings competing in the recruitment of personnel or the
marketing of products . But that is a subjective, optimistic view of dual-
economy problems, the major source of which would be the continuing rise in
unemployment and the unstable character of an increasing number of jobs.
Social effects of the dual economy
Economic dualism-resulting from an "escape forwards", the relief of the
economy by desertion or reorganisation of " sick" industries and restriction of
social expenditure-would consolidate the division of society.
"Liberty" in this connection would mean stopping the struggle for equal-
ity and consenting to bigger and bigger differences between social classes, eco:
nomic sectors, geographical areas-between the people at the front of the
queue and those at the back .
Preferring this kind of "liberty" means choosing an economically and
socially polarised society. The same dualism would recur in employment, con-
sumption, social security and-as Greffe points out-between public and pri-
vate aid systems also. Some of the consequences of this dualism are explored
in the following paragraphs.
Employment
Harassed by their jobs in a giant establishment, serving giant machines ,
men and women in the exposed, heteronomous sector would have mainly
functional relations with other workers, their superiors and subordinates, the
customers of the firm . In this sector the worker would be highly productive
but estranged because constantly subject to command and tele-guidance in his
job. Work and management would be organised with a view to maximum effi-
cieney. However, undertakings in this sector might develop towards some
form of employee participation (Lepage , 1978b).
In the sector composed of autonomous units, human beings would be less
overworked and less overshadowed; employment would be, so to speak,
according to taste; people would work with those whom they knew and liked,
in accordance with their aspirations if not with their abilities-probably, no
doubt, because such undertakings would pay lower wages and wage-bill taxes,
social charges, etc., than those in the heteronomous sector .
The great danger of this economic duality would arise out of the interde-
pendence of the two sectors and their reactions one to the other. The autono-
mous sector with congenial labour relations might in the long run, willy-nilly,
destabilise the high-wage sector and cause a relative deterioration of its
production conditions and the competitive position of its products. Part-time
employment and a whitewashed "black" employment market might destroy
good work and good jobs, at least as regards stability and rates of pay. The
problem lies in whether it is possible to limit the effect of the forces tending to
destabilise employment.
But the indirect results of coexistence of the two sectors do not end there.
Even if the parallel sector were legalised, as proposed by Lionel Stoleru in
France (1974), you do not merely confirm the existence of a two-speed
economy, you accept a consequential differentiation of labour laws and social
security systems. Economic dualisation inevitably involves dualism at the
social level also.
Consumption
If it were agreed to separate the world of highly productive people from
the world of the easy-going, that might seem at the outset to be the conse-
quence of choosing not merely a kind of work but a way of life.
In fact, consumption procedures would be polarised . There would be
privileged circuits and supplies, reserved for one set of people; and socialised,
public circuits and supplies for the rest-people whose tastes and preferences
are supposed to be alike. Goods and services for the former class would be
diversified; for the latter-standardised (Greffe, 1975).
Social security
The scenario which requires the economy to be reliberalised and social
control to be restored to the private sector would strengthen dualism in our
developed economies and societies; it would accentuate the polarisation of the
workers into two classes according to sectors and regions and also according
to their kind of employment (autonomous or heteronomous); it would also, in
effect, increase discrimination between workers and non-workers. Indeed, the
dualisation into social insurance and minimum security arrangements, which
is already going forward, applies to both these groups.
A dual economy would sound the death-knell of any single, complete, uni-
form social security system covering all workers, whatever their skills and
occupations, whatever the degree of continuity of their employment.
Not long ago this trend towards greater uniformity and harmony in wel-
fare arrangement seemed to belong to the logic of social progress (Perrin,
1980). The idea was to extend to every worker and indeed to every person both
the obligation to contribute and the right to receive the various allowances,
even if some variations and differences were accepted or proposed so as to
have regard to the kind of employment, its duration and its full-time or part-
time character.
The slow-down of economic growth in the advanced and organised sector
of employment and the expansion of the secondary sector are widening the
gap between-on the one hand-a social insurance system, based on general
labour solidarity (but in danger of becoming applicable only to workers in a

highly technified economy, integrated on a world scale); and-on the other
hand-a national social assistance system, paid for out of taxes and merely
guaranteeing minimum living allowances for workers and other citizens in the
underground or unorganised sector.
Thus, on one side of the gulf, we should have the world of the high-output
people, the men and women of an efficiently productive economy , people who
resist outside competition, conquer export markets, create and renew the tech-
nologies at the international level. They would have a complete social insur-
ance system with allowances to make up or replace any lost income. On the
other side of the gulf, there would be the world of the workers and citizens of
the info rmal economy, the men and women on casual labour or part-time or
working for entirely variable periods, those engaged in small-scale handicrafts
and similar occupations; but also the increasing numbers of people who were
shut out of the world of labour and excluded from all gainful occupation. Any
of those making up the latter economy might be there by choice or because
they had been driven away from the more productive world. They would be
entitled to minimum living allowances in amounts unrelated to their work or
to the status of employed persons .
The system of protection mentioned first in the preceding paragraph being
based on the provident or insurance method could, according to neo-liberal
ideas, be partly or entirely turned over to the private sector. The second
system would be typical of public assistance and general solidarity; the bene-
fits it paid would of course be at much lower rates .
It would be possible, according to this scenario, to move between the
social insurance and minimum living allowance systems. After a sufficient
period of employment a worker could be admitted to an occupational or other
provident scheme. Inversely, a person who had been unemployed for a
considerable time might be moved on to the less expensive level of a minimum
living allowance.
The above could be one kind of dual social security set-up, but other forms
would be possible also. For instance, social security could be divided into sec-
tors , some of which would be for workers only, while others-such as family
allowance and sickness benefits-would be for all the citizens concerned and
unrelated to employment.
A dual social security set-up, according to neo-liberal ideas, could develop
towards the return of part or the whole of a particular sector into private
hands. For instance, the State would guarantee a minimum retirement pension
and people able to afford it could obtain an additional pension by paying pre-
miums into a private insurance fund. This method is applied already and
could be extended to other branches of protection. The system could thus
appear to be discriminating not so much between rich and poor as between the
provident and the improvident. At the outset, indeed, the option might even be
real; but in time it would become illusory as, with the economic recession tak-
ing on a permanent character, increasing numbers of people were threatened
with exclusion from the productive sector of society.
Provisional conclusion
The nco-liberal scenario certainly accentuates tendencies, which are inher-
ent in capitalist societies, towards a dual economy, a segmented labour mar-
ket, the polarisation of social life, of consumption, of security; towards the
rejection and exclusion of those who cannot acquire the knowledge, follow
the rhythms, meet the requirements and standards of a society geared to maxi-
mum production.
That places in its proper perspective the neo-liberal and radical sociologi-
cal criticism about exclusion and marginalisation by social welfare schemes.
On the other hand, the importance of rejection and exclusion mechanisms in
the economic system is perfectly clear . Even if there does seem to be a remark-
able parallel between the growth of social expenditure and that of social risks
and evils, that does not indicate a causal relationship but no doubt stems from
a series of other factors, among which we must recognise the social effects of
competition and accelerated growth.
Moreover, social security and assistance schemes have sprung up in
response to the requirements of development and rapid change in our socie-
ties. Despite the recession, and despite the slowing of over-all growth, there
has been an increase in the rate of job provision and elimination, big shifts in
employment between countries, regions and branches of the economy, and
also alterations in employment resulting from the deindustrialisation of our
economies and the expansion of the tert iary sector .
The rise in unemployment levels and the rapid changes in the structure of
employment following accentuated competition require an effective struggle
against the marginalisation of certa in classes and parts of the nat ion . Let it
not be forgotten: the most unequal societies have not necessarily been those
that progressed most rapidly.
In future, therefore, one cannot naively continue to regard social expendi-
ture as a hindrance to economic growth. On second thoughts, the whole dis-
tinction between production ("economic") and distribution ("social"), or
indeed between economic activity ("productive") and social welfare ("non-
productive" or even "counter-productive"), will seem to be archaic . But what
are the productive attributes of welfare, the healthy or positive functions of
social expenditure?
The social scenario: functions of welfare

We must start off by accepting that not every piece of social expenditure is
good or productive. No expense item should be maintained merely because it
is "social". Welfare policies must be kept up to date, just as methods of
imposing fiscal or quasi-fiscal charges must be adjusted to changing condi-
tions. Welfare schemes, and arrangements for taxation etc., should have
regard to the growth of women 's employment, the diversification of work
systems (full time, part time, flexible hours), changes in the family or house-
hold, emergence of new communities, simultaneous receipt of allowances and
other income, changes in the proportion of active and inactive persons, in the
capital intensity and labour intensity of undertakings and also in the ratio of
deferred or "socialised" income to the gross earnings of the workers (not
being immediately available, deferred income diminishes or even eliminates
the individual's freedom of choice). In social expenditure, taxation schemes,
methods of administration , there must be more equity, selectivity, economy.
Social changes should not cause fiscal evasion, nor should benefits cause lazi-
ness and fraud . The structures and administrative costs of welfare should not
be permitted to grow indefinitely and the sense of distance between the
"office" and the individual should be minimised.
But at present, economic growth and social expenditure are regarded as
rivals. A low rate of growth is explained by the "excessive" cost of welfare, its
"harmful" effects, its "perversity": and the necessity of cutting it down is
accordingly deduced. New economic growth, it is said, can be attained only at
the price of sacrifices in the matter of welfare; to put the brake on income dis-
tribution is regarded as a condition sine qua non for more rapid economic
advance. According to the neo-Iiberals, only the reduction or restriction of
social spending can stop the export of capital, the decline of investment, and
the process of disinvestment evidenced by counter-industrialisation; only such
a restriction will force the increasing number of "welfare idle" back on to the
employment market.
The above apparent logic proceeds from the naive assumption that the
economic and the social are incompatibles; that society has to choose between
welfare and employment, between capital investment and social advance. If
the problems of the production and the distribution of wealth are separated in
this way, the two appear to be alternatives, as if their interdependence were
not fundamental, as if all economic circuits were not totally related to social
expenditure and the operation of the social sectors, as if social expenditure
had no motive effect, as if the redistribution of income were not a condition
on which higher levels of production and employment depend, and as if status
and luxury spending by the rich could-alone-cause mass demand and
consumption and thereby increase investment at the national level.
Traditionally, in the minds of economists, the term "economic" means
production and the term "social" means distribution.
Economics define the mechanisms and factors which contribute to the
making and the growth of the "cake" of aggregate wealth. Any operation
which increasesone's own product without diminishing that of others is called
"productive" , the same term may be applied to an operation which, after the
losers have been (hypothetically or actually) compensated, retains an advan-
tage for those who undertook it.
Social affairs, the argument continues, deal with the distribution of
wealth, of the fruits of production-the division of the "cake"; so welfare is
just a by-product of economic action . This image deprives the distributive
operation of any positive economic motive power. The only effect which
social distribution appears able to have is therefore negative-if too much has
been divided, or too equally.
But are things as simple as all that?
Social Policy-i-Crisis or Mutation? 51
Welfare -and human resources development

If we are to comprehend social action objectively and specifically, we must
regard it not only as a series of operations for the transfer-the redistribu-
tion-of wealth, but also as an important part of the effort made by society
for the ' maintenance, training, transformation and expansion of its human
resources; what Marxist economists call the "quantitive and qualitative repro-
duction" of the workforce. So social costs include current and capital expend-
iture on health and education, on initial and continuous vocational training,
on manpower settlement and mobility, and on housing, transport, relocation
of families and environmental development.
Seen and analysed from that point of view, social costs are not without a
positive effect on economic performance. They are no longer necessarily a
brake on growth and they may well be a motor for it.
As Francois de Lavergne points out (1979), "transport services, hospitals
and schools have helped to encourage initiative by releasing individuals from
day-to-day constraints . .. " . By taking charge of people-the old, the dis-
abled, the helpless poor in institutions, the children in schools, the sick in hos-
pitals, the infants in nurseries-public services replace the old-fashioned
enlarged family and make the adults more available for employment, particu-
larly the women , who were traditionally responsible for household work and
bring up the children. So a considerable part of current and capital expendi-
ture on welfare in fact serves to facilitate the mobilisation of manpower
reserves, to raise skill levels and promote the adjustment of human resources.
Some social expenses undoubtedly reduce the obstacles and open up new
areas, to a more productive organisation of society.
Welfare and competition
A good many social costs are nothing but the grouping, the socialisation,
of charges which undertakings would otherwise have to bear, in part at least,
for themselves : the existence of unemployment benefits enables an employer
to layoff an ageing worker; education costs borne by the community or the
family reduce the effort which undertakings had to make for the training of
their work people-and still frequently have to in the Third World .
Another latent function of social charges is to equalise the competitive
position of undertakings by having them pay the same contributions whatever
the personal hazards, the family risks or other contingencies which their
employees have to face. So the burden is spread, whether or not the workers
have large families, are often or seldom absent sick, and so on.
Although the same level of productivity may conceivably have to be
reached, even where widely different social charges exist, this is not a reason
to suppress them in whole or in part.
Welfare and the social cost of growth
Some welfare expenditure may be regarded as meeting the social costs of
economic development (Fournier and Questiaux, 1979). The availability on
the market of many services and good s previously performed or produced in

the household has enabled more women to take employment and has also con-
tributed to the break-up of the traditional permanent family (the immediate
family as well as the enlarged unit) and the emergence of new kinds of (often)
less permanent communities . But this in its turn requires the provision of col-
lective facilities which will enable women to do some of their work outside the
home, and arrangements which will compensate for the loss of the security
and affection previously enjoyed in the family .
Another part of welfare expenditure is due to the necessity of providing
supervision and guidance for individuals, groups and local communities.
Because they promote disorder, our rapidly changing societies require
machinery of social prevention and control, as well as personal reform ser-
vices and institutions.
However, it is conceivable that recent medical discoveries (tranquilisers,
for instance) and new means of control (communications, electronic data
processing) may enable social supervis ion to be carried out at lower cost. In the
United States there is a movement to deinstitutionalise the care of the mentally
ill and to substitute medical treatment for some elements of social care and
control: " word therapy" is being replaced by medication therapy because
talking and related welfare assistance are the more expensive.
Welfare and demand
Lastly, welfare expenditures include some intended to maintain the
demand of workers and other consumers who are momentarily or perma-
nently without incomes from employment (study grants, unemployment bene-
fit, sickness or accident or invalidity allowances, pensions). By replacing or
making up lost income, such benefits also sustain the effective demand of the
inhabitants of regions where economic activity is obsolescent or declining.
This checks the spontaneous tendency of populations to concentrate, to cause
overcrowding or higher production costs and to disturb the balance between
regions.
Moreover, welfare plays an important part in the development of post-
industrial societies, particularly by creating a big demand for services-
schools, hospitals, public transport etc. (Shonfield, 1979). Some experts point
out that, in addition to external demand from world (replacing colonial) mar-
kets, a vast internal market has arisen and much new activity sprung up as a
result of expanding social expenditure.
Welfare, industrial peace and social development
In the view of the advocates of social democracy, the market and competi-
tion are economic mechanisms, blind to social, ethical, cultural and human
values, though fundamentally dynamic and creative . Hence the idea of
developing a "social market-economy" which retains the stimulus of the mar-
ket while seeking to preclude social conflict by systematic collective bargain-
ing, to counteract the trends towards inequality and inequity, and to promote
the satisfaction of social needs and protection against social risks by income
transfer and expenditure on welfare (Zweig, 1980). Until the recession of 1974
there was an apparent consensus about these ideas, which seemed to be at the
basis of unprecedented economic prosperity and a long period of social peace.
Today, however, the terms of that consensus are becoming once more a
matter of dispute. With the recession there began a period of reorganisation,
rationalisation and reorientation of social institutions which will no doubt
increase the areas of potential conflict and give rise to new forms of actual
conflict-between institutions and individuals as well as between workers and
employers (Block and Hirschhorn, 1979).
Thus, on the one hand, there are people who believe that increased social
expenditure will be a death sentence for the liberal economy and will lead to
State capitalism and hence to the emergence of totalitarian regimes. Others see
in the reduction of taxes and social spend ing a liberal adventure with a roman-
tic air, perhaps, but bound to cause a resurgence of social militancy and class
war. Moreover, they add, if taxes on the rich are lowered and welfare aid
diminished, one cannot be sure that the savings of the nation will not find
their way abroad or that inverted redistribution will create new and expand
existing markets inside the country.
Conclusion
Whatever be the problems raised nowadays by the unruly growth of wel-
fare expenditure, they cannot obscure its motive effect on economic develop-
ment. Both current and investment expenditure for the various social services
(education and training, health and housing, transport, public assistance and
the rest) have important functions to perform. They adjust human resources,
facilitate the accumulation and appreciation of capital, make society accept-
able and ensure its reproduction . But whatever the positive functions of wel-
fare expenditure may be or may have been, the problem of what to do about
it-whether we can escape the recession by increasing or decreasing that
expenditure-remains unsolved .
In the view of some-Thurow (1980) for instance -the machine is blocked
for lack of substantial new transfers of resources. This applies both nationally
and internationally.
Another question which remains unanswered is whether the economic
position can be improved by socialising or by desocialising "welfare" in the
broad sense of that term . It is clear, for instance , that the development of
social insurance deprives the private insurance business of enormous sums:
one has only to imagine the amounts handled by pension funds or spent on
social health care and sickness allowances . The money handed over to the
government and the welfare institutions is no longer available to the private
sector. So the stake involved in welfare must be very great indeed.
Perhaps one part of the stake should be the object of competition between
social insurance schemes and the private insurance sector, since the former
remove a broad area of operation and finance from control by the private sec-
tor . From the point of view of enterprises, private insurance and capitalisation
would no doubt be preferable in many cases.
54 Social Policy in Western Europe and US.
Have private undertakings perhaps other costs and contingencies to mee

than those now covered by collective insurance? They are not opposed to wei
fare expenditure as such, indeed many provide their employees with extensivi
"fringe" benefits and services. This informal kind of social security shoulc
not be underestimated, but the benefits are always individualised and res
tricted to long-service employees of the undertaking, particularly its "white
collar" staff.
Resistance to any increase in traditional welfare expenditure may be partly
due to the necessity of new social services, e.g, continuous training.
The far-reaching reconversion now in process in our Western economies
and the new international division of labour call for the employment of new
kinds of workers under conditions which are also new. Perhaps the urge tc
reorganise and reorient social expenditure may be explained in that way
(Block and Hirschhorn, 1979).
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4 Swiss Social Policy Since 1950
HANS-PETER TSCHUDI
Introduction
The so-called labour question, a consequence of industrialisation, lies at
the origin of social policy. In the nineteenth century large numbers of work-
ers, living in extreme hardship, earned much too little to set anything aside for
adversity or old -age. While in rural areas the family could see after the needs
of its poorer members, in towns workers were left to their own devices. These
facts have been described often enough not to need repeating here. The econ-
omic and social conditions in Switzerland at the time were of course very
similar to those in other industrial countries, even if they were not as bad as
the conditions in England and the Ruhr, for example. The needs for workers'
protection and social security, consequently, were very similar too.
The approach to social policy in Switzerland has differed considerably
from that of other countries. While the Swiss blazed the way in some sectors,
in others they were slow in finding satisfactory solutions-and indeed some
problems have not yet been properly solved today, any more than in the EEC
countries. The Canton of Glarus, for example, was the first State in the world
to limit-as early as 1846-the working hours of adult workers. As compared
with legislation elsewhere, the Federal Factory Act of 1877 afforded workers
much better protection. Switzerland was the first country in Europe to have
laid down, in its Code of Obligations of 1911, a broad legal base for collective
labour agreements. If it has long lagged behind in the field of social insurance,
on the other hand, it is probably because of its system of direct democracy.
The referendums on the liberal Forrer Sickness and Accident Insurance Act in
1900 and on the Schulthess Old-Age and Survivors' Insurance Act in 1931,
both of which were rejected, are cases in point. Once advances have been
achieved under the Swiss system, however, they are irreversible. No attempt to
go back on a law, once adopted, no attempt at what today may be called
"social dismantlement", has ever been successful in Switzerland.
A social policy intended to meet existing needs could only be carried out if
it was regarded as fair and necessary by the majority of the population. The
Swiss social system has been built largely on three intellectual and political
movements, each with objectives of its own: the liberal principles of equality
and fraternity, the social ethics of Christianity, and the workers', trade union
and political movements. The welfare of the population was one of the objec-
tives of the Federal Constitutions of 1848 and 1874, whose orientations were
largely the work of the democratic radical party. The Factory Act and the
Sickness and Accident Insurance Act were adopted when that party had an
absolute majority. Considerable influence was also exerted by Christian social
ethics, founded in the belief that all men, as children of God, have equal rights
and that everyone has the right to human dignity. The Catholic principles of
social ethics have been summarised in particular in the well known encyclicals
of Pope Leo X11I, Rerum Novarum , Pope Pius XI, Quadragesimo Anno,
Pope John XX11I, Materet Magistro, and Pope Paul VI, Populorum Progres-
sio, The Protestant principles of social ethics coincide by and large with those
of the Catholic Church. It is from the labour movement, however, that the
greatest stimulus for social policy has come. The labour movement fought
tooth and nail for the eight-hour day and, after its introduction, pressed for
further reductions in working hours . Many popular initiatives and specific
social policy statements in Parliament are also due to the labour movement.
In the field of social policy, however, Switzerland has not remained iso-
lated but has been strongly influenced by trends abroad. The so-called Bis-
marck social insurance system of the 1880s had a definite impact on Swiss
sickness and accident insurance legislation. The Beveridge social security plan
in the United Kingdom (1942) was a decisive stimulus for the extensive post-
war development of Swiss social insurance. And international labour legisla-
tion has been especially important : Switzerland has ratified the ILO Social
Security (Minimum Standards) Convention of 1952 and the European Social
Security Convention of 1964. Swiss legislation is in conformity with the provi-
sions of these international agreements, and nearly the same can be said of the
European Social Charter, which has been signed by the Government but not
yet ratified by Parliament.
Owing to the diversity of the ideological and political sources of Swiss
social policy, various forces have been at work in giving social provisions
tangible form. All of the major political parties have contributed to the
development of the social system. Trade unions and employees' organisations
have played a particularly active part. Generally speaking, social policy in the
nineteenth century was identified with the problems of wage earners. Swiss
lawmakers were quicker than their counterparts in many other countries to
realise that the self-employed also lived in extremely precarious conditions
and were in need of protection every bit as much as wage earners. Economic
and social measures were therefore adopted to ensure the survival of the self-
employed and enable them to continue in their chosen livelihood. The legisla-
tion on agriculture, containing many special provisions for peasants living in
the mountains, is now highly developed . Another fact of great social signifi-
cance is that the main branches of social insurance in Switzerland are not
designed as insurance for wage earners, or class-based insurance, but as gen-
eral public insurance, with the result that the self-employed enjoy nearly the
Swiss Social Policy Since 1950 59
same measure of social security as wage earners. The objective is general

solidarity of the population as a whole.
Developments since the Second World War

According to present-day standards, 40 years ago the Swiss population
was still inadequately protected against contingencies. The only existing provi-
sions at the time were the military insurance scheme, the Sickness and Acci-
dent Insurance Act (accident insurance was partly compulsory and there were
federal subsidies for sickness insurance) and some provisions for unemploy-
ment benefits. It is difficult to imagine that only a few decades ago many
people, after a lifetime of hard work, had virtually nothing put aside for their
old age and were plagued by worries about their future . The disabled were left
largely to their fate. Children born crippled were left to vegetate, often in
abject poverty, because there were virtually no specialised schools or rehabili-
tation schemes available for them.
Nearly all of existing legislation was enacted after the end of the Second
World War. Why this sudden development? The military and political threat
hanging over Switzerland definitely played a part. Faced with that danger, the
sense of solidarity between the various segments of the population was
considerably strengthened. Nor had the experience of the First World War
been forgotten, which had brought home the need to avoid social tension aris-
ing from the distress of large sectors of the population. Lastly, Switzerland
had not been involved in the Second World War and, having experienced an
unprecedented economic boom until the mid-1970s, had become a rich
country. As a result, the funding of social benefits was greatly facilitated, and
in such an economic situation it would have been incomprehensible that the
social measures adopted in poorer countries should not have been adopted
here.
The first real breakthrough came just after the outbreak of the War: on
20 December 1939, the Federal Council, invested with extraordinary plenipo-
tentiary powers, issued the Federal Order to establish temporary regulations
on compensation for loss of earnings due to military service. Under the Code
of Obligations in force at the time, as under the Code in force today,
employers were bound to pay wages to active servicemen only for a relatively
short period of time. They could not of course be required, in the event of
mobilisation, to subsidise the needs of the families of workers called up for
military service. During the First World War, the Confederation had granted
assistance only to poverty-stricken soldiers; the aid granted to about 35 per
cent of the servicemen at the time was in fact insufficient to protect them
against poverty. This was one of the chief causes of the social tension pro-
duced at the end of the War. A recurrence could be avoided only by setting up
a better provident scheme without delay. Here, the Federal Council struck
upon a particularly happy solution. A clearly defined right to reasonable
benefits was granted to servicemen, thus freeing them from basic financial
worries. The scheme was funded by employers' and workers' contributions
(2 per cent of the wage each). And since not only wage earners but the self-
employed sustained a loss of earnings during their military service, several
months later the Federal Council supplemented the regulations on wage com-
pensation by regulations on compensation for the loss of earnings of the self-
employed. At the end of the War, further compensation for loss of studies
was granted to university-level students. These regulations constituted a mile-
stone for they enabled Switzerland to hold out during the Second World War
and proved as well to lay the groundwork for the subsequent development of
social policy.
Without a doubt the most urgent problem during the period of mobilisa-
tion was to provide for the subsistence of servicemen's families. At the same
time, however, the notion of family allowances was introduced because wages
could not keep pace with the steep rise in the cost of living brought about by
wartime conditions. Though this problem, admittedly, came within the prov-
ince of the cantons, the Confederation held itself responsible for agriculture,
first because the agricultural policy was conducted by it and secondly because
in wartime a strong domestic agriculture was able to feed the entire popula-
tion. Exercising its full wartime powers, the Federal Council, by an Order of
9 June 1944, laid the bases for family allowances for farm workers and high-
land farmers. During the same period, finally, the Federal Council also tack-
led the problem of unemployment insurance since the end of the War was
expected to produce large-scale unemployment as the end of the First World
War had done. New regulations were therefore needed to cope with the situa-
tion. The title of the Order issued by the Federal Council is already indicative:
"Regulations respecting unemployment benefits during the wartime crisis".
The situation had changed: the regulations on subsidies previously in force
gave way to genuine insurance legislation. Severe demands would be made on
the unemployment funds, which had to be organised accordingly; subsidies
were geared more closely to expenditure; and a system of pooling risks was
introduced.
Sound constitutional bases for a modern social security system were
swiftly laid after the Second World War. As early as 1945, the people and the
cantons approved the counterproposal of a constitutional initiative to intro-
duce an article providing for family protection (Federal Constitution, article
34, paragraph 5). Provision for social insurance is now made under paragraph
2 relating to the family allowance equalisation fund and paragraph 4 relating
to maternity insurance . Thus the Confederation has for 35 years had the con-
stitutional obligation to introduce maternity insurance, which, however, has
not yet been done. Admittedly, the Bill which a committee of experts had pro-
posed for a Federal Act on sickness and maternity insurance was published in
1954. That Bill provided for compulsory maternity insurance covering medi-
cal care and a daily allowance for two weeks before and six weeks after
confinement. This insurance was to be financed by contributions payable by
both men and women. However, opinions about sickness and maternity insur-
ance differed so widely that it was decided not to submit the Bill to Parlia-
ment. A partial solution to the problem nevertheless exists under the sickness
insurance system in that the sickness insurance funds as a rule pay the same
benefits in the event of pregnancy and confinement as they do in the event of
illness. Provided the mother belongs to a sickness insurance fund, the costs of
medical care are therefore covered . On the other hand, the situation is less
favourable as regards compensation for loss of earnings of working mothers.
Though they are legally entitled to claim ten weeks of benefits, with at least six
after confinement, the insurance coverage taken out by many women workers
does not include compensation for loss of earnings in the event of illness or
provides for a daily allowance that is quite inadequate.
In 1947, new articles dealing with economic and social matters were intro-
duced into the Federal Constitution. Under these articles the Confederation,
besides its full competence in the field of labour legislation, is empowered to
regulate compensation for loss of wages or earnings in the case of military ser-
vice and-subject to appreciable limits-unemployment insurance. Since that
constitutional reform, it has also been empowered to regulate the branches of
social insurance provided for in the Conventions of the International Labour
Organisation and the Council of Europe. The development of the social sys-
tem from the standpoint of constitutional law did not end there , however.
Since then there have been no more fundamental changes, it is true , but rather
an extension of the Federal Government's sphere of competence. For exam-
ple, Article 34 (4), which dates back to 1925 and originally contained only a
general principle of federal competence, was supplemented in 1972 by a social
policy programme covering old-age, survivors' and invalidity insurance . The
hitherto limited federal competence in the field of sickness insurance was
considerably enlarged in 1976, and above all unemployment insurance became
compulsory for all wage earners.
On 20 December 1948, following a brief period of deliberations, Parlia-
ment adopted, on the basis of extens ive preliminary studies, the Federal Old-
Age and Survivors' Insurance Act. Although very conservative elements
launched a referendum against that law, it was approved by an overwhelming
majority of the people on the same day as the new economic and social articles
of the Constitution. The Act proved to be a masterly stroke. The old-age and
survivors' insurance scheme (AVS) has remained in force until now without
major change . A public opinion poll has shown that its establishment is
regarded as the most important political event in Switzerland this century. In
the Swiss system the social component is more marked than in most other old-
age insurance systems . Contributions are payable on the total income, with no
ceiling. People earning more than 39,600 francs annually pay so-called soli-
darity contributions which do not affect the total amount of the pension,
whereas the pensions of persons with low incomes are so calculated as to be
proportionally much higher than their contributions. The maximum amount
of an AVS pension is twice that of the minimum pension, while the contribu-
tions payable may vary in the ratio of I to 10 or more. Since it was first intro-
duced, the AVS scheme has been constantly revised at regular intervals, not so
much to remedy possible shortcomings as to improve the benefits paid. To be
precise, there have been nine such revisions, not counting other minor
changes. Although a detailed description of the matters covered by these revi-

sions would be outside the scope of this article, the main pension and contri-
bution rates may at least be mentioned. At the outset, the minimum pension
payable to a pensioner living alone was 40 Swiss francs monthly. The justifica-
tion advanced for this small amount was that it was a basic pension, and the
fact that no one could possibly meet his basic needs with such a pension was
overlooked. Today the Constitution prov ides for the payment of AVS pen-
sions adequate to cover such needs . The minimum pension is now 550 francs
monthly while the maximum pension, which was 125 francs at the outset, is
now 1,100 francs monthly. The minimum pension is therefore nearly 14 times
higher than it was originally, while the maximum pension is only about 9 times
higher; during the same period of time, prices have slightly more than
doubled . This is one of the main reasons why the general standard of living
of most AVS pensioners is satisfactory, according to the findings of a well
known survey conducted by Berne University's Institute of Sociology. The
introduction of the AVS was greatly facilitated by the fact that it could be
funded from the 4 per cent wage deduction previously used to compensate for
the loss of earnings of servicemen, which was no longer needed for that pur-
pose after the War, so that new sources of financing did not have to be found.
The 4 per cent contribution from wages was sufficient until 1969. Today the
employer's and worker's AVS contributions together amount to 8.4 per cent
of the wages.
In its message of 16 September 1963 on the sixth revision of the AVS, the
Federal Council proposed for the first time a thoroughly Swiss solut ion to the
problem of social insurance: "Apart from moral and family obligat ions, our
population is insured against the economic consequences of old age, death
and invalidity in three main ways: by personal providence (savings, individual
insurance), by collective occupational insurance (retirement insurance and
group or company insurance) and by social insurance and supplementary
welfare benefits. "
This conception, however, did not gain acceptance at once. So-called basic
pensions continued to be paid by the federal old-age insurance scheme, while
supplementary welfare benefits were extended only to some wage earners and
not at all to self-employed persons. With a view to providing relief for the
truly needy, the Federal Act on supplementary old-age, survivors' and invali-
dity benefits was adopted; this Act provides for the payment of subsidies to
the cantons, the amount of which varies according to their financial capacity,
so that they can grant supplementary benefits to pensioners whose income and
capital do not exceed certain limits. Since it came into force on 1 January
1966, needy pensioners have been entitled to supplementary benefits . Under
this Act it was recognised for the first time that the pensions paid by social
insurance schemes should not be so-called basic pensions but pensions that
actually cover the pensioners' basic needs. Since supplementary benefits are
now paid by every canton, every elderly or disabled person today receives an
annual pension of at least 8,800 francs and every couple an annual pension of
at least 13,200 francs.
The "three-pillar" conception described in 1963 was eventually accepted

by Parliament and the nation as a whole. Following a constitutional revision,
the provisions of article 34 (4) on the Federal Government's competence were
superseded in 1972 by provisions establishing an exemplary social policy pro-
gramme. While the subsistence of needy elderly and disabled persons has been
insured since the mid-1960s, paragraph 2 of that article now provides that the
AVS pension must adequately cover the pensioner's basic needs. In order to
ensure that these needs will continue to be covered and that the living stand-
ards of pensioners do not fall appreciably behind those of the economically
active population, the law provides that the pension must at least be adjusted
to the cost-of-living index. It was realised that needs would not automatically
be covered merely by establishing this principle in the Constitution; conse-
quently, a provision was introduced into article 11 of the transitional provi-
sions of the Constitution to the effect that the Confederation would grant to
the cantons contributions to the financing of supplementary benefits so long
as federal insurance benefits did not suffice to cover pensioners' basic needs.
This constitutional amendment is a particularly significant step forward in
that it gives tangible form to the broad goal stated in paragraph 3 that occupa-
tional insurance coverage is compulsory for wage earners and is intended,
together with the AVS, to enable them to maintain their previous standard of
living to a reasonable extent.
While social policy hitherto confined itself by and large to helping the des-
titute to stay afloat, thus helping to free them from poverty, the new constitu-
tional article on old-age, survivors' and invalidity pensions expressly states
that the social position of the elderly, disabled persons and survivors should
not be reduced by old-age, invalidity and death and that they should, on the
contrary, be able to maintain their previous standard of living at an appro-
priate level. The implications of this constitutional objective go beyond the
fields covered by article 34 (4) to affect other branches of social insurance
whose scope and structure are not defined by the Constitution. On the basis of
in-depth preparatory studies made by a committee of experts and the AVS/ AI
Commission, in 1975 the Federal Council submitted to Parliament a Bill on
occupational old-age, survivors' and invalidity insurance. The Bill was
approved by the National Council in 1977 without substantial changes. Far-
reaching amendments were introduced, however, by the Council of States,
though it did maintain compulsory occupational insurance for all wage earn-
ers. On the other hand, it did not consider it possible, because of the current
economic situation, to give immediate effect to the benefits provided for by
the Constitution. Accordingly, it reduced the pensions appreciably, while
acknowledging that the regulations would have to be reviewed and improved
over the next ten years. The procedure for settling the differences between the
two Councils is now under way and it is not yet known what sort of compro-
mise will be reached .
Military insurance-sickness, accident, invalidity and survivors' insurance
for servicemen-was the first social measure to be adopted in Switzerland
because of a specific need to protect a particular category of the population.
Of a fairly liberal conception, it has remained in force over the years without
any notable change. At the same time, however, a thorough revision of legis-
lation governing military insurance was undertaken in the light of the experi-
ence gained during the two periods of mobilisation. Since sickness and acci-
dent insurance was not yet compulsory for all wage earners and not only
servicemenbut persons called up for civil defence needed to be covered, it was
found necessary to extend both the body of insured persons and liability for
military insurance. New attitudes towards social problems, moreover,
required an increase in benefits. As a result, the Federal Military Insurance
Act was adopted on 21 September 1949. This law has been partially revised
five times since then, and benefits improved and adjusted on each occasion to
keep pace with cost-of-living increases and wage rises. Of all the social insur-
ance schemes, the military insurance scheme provides the most extensive bene-
fits, partly no doubt because it is financed wholly out of the Confederation's
budget and is not dependent on any other source of income.
Unemployment insurance was previously governed by a Federal Council
Order issued in 1942under the full powers exercised by the Council at the time
and was therefore incorporated into ordinary law. With the introduction of
the economic and social articles mentioned earlier, the first constitutional
bases for unemployment insurance were laid, though with considerable
restrictions. In particular, it was left to the cantons and not the Confederation
to make unemployment insurance compulsory. The Federal Unemployment
Insurance Act of22 June 1951 was based largely on the Federal Council's war-
time Order. It did not stand the test of time. In the period of prosperity which
followed, when there was very little unemployment, the interest in optional
insurance quickly dwindled and by the mid-1970s, when the recession set in,
only about 20 per cent of the working population was insured against unem-
ployment. It was obvious then that voluntary unemployment insurance was
inadequate ; a revision of the Constitution was quickly prepared, and on
13 June 1976 article 34 (9) was approved by the people and the cantons. On
8 October 1978 the Federal Assembly approved the transitional regulations
which, pending revision of the law, amended numerous provisions of the
regulations in force up to that time. A decisive factor here was that hence-
forth unemployment insurance became compulsory for all wage earners.
Whereas previously the cost of unemployment insurance had to be borne by
the workers alone and their financial burden was merely lightened by subsidies
from the Confederation and the cantons, henceforth it was financed jointly by
the employers and workers, each paying an equal share. The contribution at
present is 0.5 per cent of the wages. Contrary to the AYS, this contribution is
not deducted from all income but only up to a ceiling of 3,900 francs monthly.
Unemployment insurance is self-financing in principle, and subsidies from the
Confederation and the cantons are provided for only in special cases. The
benefits which, according to the constitutional text, must ensure adequate
compensation for loss of earnings amount to 65 per cent of the wages for sin-
gle workers and to 70 per cent for heads of family; allowances are also pay-
able in respect of persons dependent on the worker for financial assistance or
support. The benefits are payable for 150 working days a year at most, or
180 days in the case of partially disabled workers or workers over 55 years of
age. A new Unemployment Insurance Billsubmitted by the Federal Council is
now under consideration by Parliament. While confirming the existing struc-
ture of the scheme, it contains a number of innovations as far as benefits are
concerned.
The article of the Constitution on family protection laid the constitutional
foundations for legislation on family allowances. Consequently, the wartime
regulations governing family allowances for farmers could be incorporated
into ordinary law, specifically the Federal Act of 20 June 1952 respecting
family allowances for farm workers and highland farmers. Its scope was con-
siderably enlarged by the Federal Act of 16 March 1962, which extended
entitlement to allowances to farmers with small holdings in the plain. Other
revisions resulted in raising the income ceilingset for family allowance entitle-
ments for farmers with small holdings and in increases in benefits. The princi-
ples of the regulations, however, remained unchanged : household and family
allowances for farm workers; family allowances alone for farmers with small
holdings; a higher rate of allowances in the highlands than in the plain; contri-
butions as a percentage of the wage for agricultural employers, to help to a
small extent to finance the allowances granted to farm workers, with the
remaining costs being borne by the Confederation and the cantons.
Nor have the family allowances for workers provided for by the Constitu-
tion been neglected by the federal authorities . In 1959, a detailed report by a
committee of experts was published setting forth the principles for the com-
pulsory payment of family allowances to workers. It was intended to serve as
a basis for a Bill on the matter, but the proposal met with resistance from
employers and most of the cantons. As a result, no Bill has yet been submitted
to Parliament. The gap , however, has been filled by the laws enacted by the
26 cantons on family allowances . This state of affairs has the advantage that a
major field of social security has remained within the province of the cantons.
Less satisfactory are the appreciable differences existing between the family
allowances paid (ranging from 60 to 130 francs monthly), which give rise to
complaints on the part of employers operating in cantons where the contribu-
tion rate is high.
Under article 34 (3) of the Constitution, adopted in 1947, the Confedera-
tion was empowered to establish regulations for adequate compensation of
loss of wages and earnings during military service. Regulations were made
under that paragraph by the Federal Act of 25 September, which modified the
scope of that provision as well. Following the introduction of civil defence,
entitlement to allowances for loss of earnings was also extended to persons
called up for civil defence . Consequently, the Act was now called the Federal
Act respecting allowances for loss of earnings for persons called up for mili-
tary service and civil defence. Since the 4 per cent wage deduction levied dur-
ing the War was subsequently transferred to the AVS, the financing of loss-of-
earnings allowances had to be readjusted to the new situation. It was decided
to increase the AVS contribution; the increase at present is 0.6 per cent. The
fact that the maintenance of servicemen's families is not financed out of the
military budget but directly by the economy as a whole, i.e, by joint employer
and worker contribtions, is a feature peculiar to the Swiss system.
During that period a highly important new branch of social insurance
-invalidity insurance-was created. It may seem surprising that this was not
done much earlier since disabled persons are more dependent on social insur-
ance benefits than any other segment of the population. The State and society
do not fulfil their social obligations when they allow part of the population to
suffer from physical or mental impairment, a series of social handicaps and
financial worries all at once. Despite this obvious need, invalidity insurance
was the last link to be forged in the social security system, probably because it
was difficult to assess the expenditure that this branch would involve and the
extent of the demands that would be made on the authorities with its imple-
mentation.
In its message of 21 June 1919, just after the end of the First World War,
the Federal Council had proposed that an article be introduced into the Con-
stitution empowering the Confederation to establish not only the AVS but
invalidity insurance as well. The proposal was amended by Parliament to the
effect that invalidity insurance should be introduced later than the AVS. Since
the AVS came into force only in 1948, a further delay was required for the
introduction of invalidity insurance. The relevant Federal Act was adopted at
last on 19 June 1959. Its provisions may be said to be enlightened and gener-
ous. They stress the elimination of the disability and not, as in the older regu-
lations of other countries, the payment of financial benefits to compensate for
the incapacity to work. Disabled persons should to the fullest possible extent
be made self-sufficient and afforded the opportunity of earning their own liv-
ing. The provisions are based on the principle that rehabilitation takes pre-
cedence over benefits. Like the AVS, invalidity insurance is designed as gen-
eral public insurance since every member of the population is faced with the
risk of invalidityand, when it arises, is dependent on social insurance benefits .
It is also sensible that the financial burden, which is often heavy for the indi-
vidual, should be shared by society as a whole. That the mentally handicapped
and the physically disabled are placed on an equal footing may be said to be
an exemplary measure. The Invalidity Insurance Act, especially its provisions
for medical, vocational and educational rehabilitation, is considered to be an
excellent law by the experts and has met with general public approval. The
results nevertheless needed to be reviewed and interpreted after a few years.
The Federal Act of 5 October 1967 rectified some of the law's shortcom-
ings, broadened some of its narrower provisions, improved various benefits
and streamlined the scheme's organisation. In addition to this specific revision
of the Invalidity Insurance Act, the numerous revisions of the Old-Age and
Survivors' Insurance Act have also helped to increase invalidity benefits con-
siderably since they are aligned exactly to AVS benefits. The constitutional
basis of invalidity insurance was also modified appreciably by the revision of
article 34 (4), submitted to popular vote on 3 December 1972. Henceforth
government invalidity insurance benefits must adequately cover basic needs
and, in addition, must be so supplemented by collective occupational insur-

ance (the second pillar) as to allow the disabled to maintain their previous
standard of living to a reasonable extent. Initially, on the basis of piecemeal
information, the cost of invalidity insurance was estimated at 135 million
francs annually. Although expenditure remained within that limit the first
year, subsequently the cost of benefits, and especially rehabilitation, steadily
increased until it came to exceed 200,000 million francs. This rise in costs was
absorbed by an increase in contributions. While the joint employer and
worker contribution at the outset was 0.5 per cent of the wages, today it
amounts to I per cent. Under the Constitution, besides, half of insurance
costs is payable directly by the Confederation and the cantons.
Current trends
In the years after the Second World War, all the branches of social insur-
ance which international Conventions regard as elements of social security
-with the exception, as mentioned earlier, of maternity insurance-were
established. Although great improvements have been introduced by the
numerous revisions made over the years, the social policy it was hoped to
achieve has not yet been fully implemented. People who are insufficiently
covered by social insurance consider that they are at a great disadvantage as
compared with others now receiving satisfactory benefits, and efforts accord-
ingly are being made at present to carry the system several steps further .
(a) A new Act providing for compulsory accident insurance for all wage earn-
ers, including stronger measures for accident prevention , has already been
adopted by the two Houses of Parliament and is due to come into force on
I January 1983.
(b) Collective occupational insurance (the second pillar) for old age and inva-
lidity, as provided for by the Constitution, is now at a critical stage. Both
Houses, it is true, have approved Bills making insurance compulsory for
all workers, but the differences in substance and form between the Bills
approved by the two Houses are considerable . It is to be hoped that these
differences will be ironed out soon so that occupational insurance will at
last be made effective for all wage earners.
(c) The need to revise sickness insurance legislation is not challenged, though
opinions still differ about the new regulations that should be applied. A
draft Bill proposed by the Federal Department of the Interior, making
sickness insurance coverage (for loss of wages) compulsory for all wage
earners and providing as well for various improvements in the sickness
insurance system, has been under study for quite some time. Its submis-
sion to Parliament has been delayed by discussions about a redistribution
of duties and responsibilities between the Confederation and the cantons.
(d) Under the sickness insurance system, maternity benefits will be appreci-
ably increased so as to fill to some extent the gap caused by the absence of
maternity insurance.
(e) At the time of each revision, efforts are made in particular to eliminate
overlapping and harmonise to the fullest possible extent the scattered
socialinsurance schemes. In the medium term, general provisions of social
insurance legislation may help to streamline and clarify the system in the
interest of all the parties concerned.
Even when the regulations outlined above are introduced, social policy
should not remain at a standstill . Its dynamism derives from its struggle for
social justice. This ideal will never be fully realised, and there will always be
problems to solve and wishes to be met. The development of society, besides,
constantly creates new tasks and new forms of social distress. After having
satisfactorily solved the problem of old age under article 34 (4) of the Federal
Constitution, social policy can be expected to concentrate on ensuring family
welfare and a secure future for the younger generation. In addition to ade-
quate maternity insurance and family allowances, equal opportunities for
young people must be ensured through co-ordinated training programmes and
social policy measures.
Born as it was in the nineteenth century, social policy up to now has
mainly had to combat abuses, make good shortcomings, and repair damage.
In future, it should be able not only to establish a system for protecting people
against risks but to prevent social distress wherever possible. More thought
than before will be given to preventing accidents and disease, ensuring people
employment, etc.
The main efforts deployed for developing the social system in the short
and long term have been described above . It must not be -assumed, however,.
that these trends are going unchallenged . While there was a broad consensus
in favour of social security in the 1950s and the 196Os, the development of
social security today meets with considerable resistance of various kinds. The
most important are mentioned below.
Perhaps the most widespread objection arises in part from a certain
amount of lassitude following the swift development of social policy and in
part from the financial difficulties due to a slower growth of the national pro-
duct. As a result, some have advocated a slowdown in the advance of social
policy. Temporary pauses are of course possible and may be tolerable, but
they must not go on for too long or social tension will be produced as serious
needs are left unsatisfied and cases of injustice continue to exist. Severe and
far-reaching criticism has been levelled against the principle of social insur-
ance on the ground , for example, that its benefits are indiscriminately dis-
tributed without bothering to. ascertain when and where they are needed or
not. The system has also been criticised for not being as immediately clear as it
should be since the contributions are paid in part by the employers and the
beneficiaries themselves thus do not realise just how much social insurance
costs. A few economists would like to turn the clock back a hundred years to
the period before the German Chancellor, Otto von Bismarck, founded the
social insurance system in Germany, and limit social measures to welfare for
the poor. In so advocating, they overlook an important principle of social
insurance. namely that the beneficiaries payout of their own pocket to be

insured against the various risks of life. while welfare has to be financed
entirely by the taxpayer. Employers' contributions, in turn, seem a sensible
measure since public social insurance also serves the direct interests of enter-
prises.
This is especially obvious in the case of unemployment insurance. How-
ever. old-age and invalidity insurance are equaIly important for them since, if
government pensions did not exist. employers would have to devote larger
sums to retirement schemes. The solidarity achieved through social insurance
is doubtless better than paternalism. The legally recognised rights to these
benefits. as clearly established within the framework of social insurance . give
the individual a more secure position in society and help to strengthen his
personality. Admittedly. social insurance does not provide him with moral
security as well. but this is beside the point since social insurance has its own
purposes and is not intended to take the place of the family or the Church .
An unintentional weakening of the social system might arise from the pro-
posed "cantonalisation" of certain federal regulations involved in a new dis-
tribution of duties and responsibilities between the Confederation and the
cantons. The efforts made by the Federal Council to draw a clearer and more
sensible distinction between the responsibilities of the Confederation and
those of the cantons and at the same time to strengthen the federal system
deserve support. However, the social system should not suffer as a result.
There is a risk that foIlowing the transfer of certain social responsibilities to
the cantons. there may be large differences in the benefits paid by the various
cantons. The unfortunate consequence would be that cantons granting advan-
tageous benefits might try to protect themselves against the influx of pension-
ers by establishing waiting periods for eligibility for residence.
The demand. which is heard especiaIly abroad. for a "new social policy"
seems unclear and somewhat irrelevant. If it is a caIl for less red tape. of
course it deserves endorsement. If rationaIly organised, social insurance can
be given a human face. At all events. the existence of legal claims to benefits
necessaril y presupposes some form of organisation, though definitely more
human than an arbitrary system. It should also be pointed out that the social
insurance schemes in Switzerland are far from being as unwieldy as those in
larger countries. A contradiction that is occasionaIly encountered is that peo-
ple do not wish to do without the advantages of social security but are not wil-
ling to accept the constraints which are necessarily involved. People complain
that some benefits are inadequate but overlook the fact that their inadequacy
is due to insufficient wages and that the social insurance system is not able to
compensate for all the inequalities of our economic system. One argument
advanced in favour of the new social policy is that the system should be
extended to cover categories other than those covered a few decades ago. It is
quite rightly explained that the working class has by its own efforts emerged
from proletarian poverty and that the workers' standard of living has
improved. This, however. is an argument in favour . not against. the tradi-
tional social policy. The existence of better conditions may be ascribed to that
policy. If the present system of social security were abandoned, large segments
of the population would sink back into poverty and new social problems
would be certain to arise.
In conclusion, it 'should be noted that the modern critics of existing social
policy are unable to point to new directions . The objections that it is too
extensive, that it restricts freedom and encourages laziness, are as old as social
policy itself. On the other hand, it is quite right to stress the economic limits of
the social system. Social policy should not be pitted against the economy , but
neither should economic policy neglect the social aspects. The objections
raised should not lead to immobility . Swiss social policy should aim at a fun-
damental enlargement of its objectives : it is not enough to free people from
poverty, they must also, when they become incapacitated for work or lack the
opportunity to work, be guaranteed their previous standard of living to an
adequate extent. The Swiss social insurance schemes are already largely
designed as general public insurance . But as long as their scope remains lim-
ited and segments of the population not yet covered are faced with risks,
continuing efforts must be made to broaden insurance coverage. To ensure
greater social justice will continue to be in future one of the country 's major
moral and political duties.
5 Trends in the Social Policy Aims
of the United States (1960-1980)
PHILIPPE BENETON
There was a time when it might have been thought that the theme of equal-
ity would be submerged in the affluent society. In 1958, J . K. Galbraith noted
in his book The affluent society that "few things are more evident in modern
social history than the decline of interest in equality as an economic issue".
Yet in actual fact, in the 1960s and 1970s, it became a central concern of
American intellectual and social life. The question of equality was fiercely
argued out between experts and ideologists, mainly because it had become a
problem of practical policy as a result of the determination of the political
authorities to tackle certain inequalities as such, together with the social prob-
lem of poverty. "For the first time in American history, equality became a
major object of government policy; and also for the first time, with perhaps
the exception of the Freedmen's Bureau of the Reconstruction period,
governments not only made laws but constituted themselves instruments of
egalitarian policy." )
The United States committed itself to an ambitious social policy centred
around the idea of equality. But the aims of this policy have evolved with time
owing to a shifting of the egalitarian idea. This evolution has often been pre-
sented as the replacement, as the aim of public action, of equality of opportu-
nity by equality of results. However, the term "equality of results" can lead
to misunderstandings since it has two different meanings: this off-shoot of the
egalitarian idea can be seen as a questioning of the principle of equality
of opportunity - which principle is bound up with that of the "American
national character" - in the two following ways:
(a) a displacement (betrayal?) of this principle, no longer defined by the
absence of institutional and legal barriers (the starting point) but measured
by equality of results between certain social groups (Blacks/Whites,
men/women in particular) (the culminating point). In this sense, equality
of results means statistical parity between categories, i.e, equality between
the average results obtained by certain groups;
(b) a limitation of the scope of the meritocratic principle (or a rejection of this
principle) by excepting from this principle the distribution of certain goods
(or of all goods) and reducing the degree of economic inequality through
redistribution. Equality of results in this sense refers to inequalities
between individuals .
This evolution will be studied from the point of view of the social policy
that was implemented , prior to considering changes in ideas and , lastly, the
significance of the new principles which carne to the fore in the 1970s.
The egalitarian strategies (1960-80)

Tackling the sources of inequality
The social strategy of the I960s, that of Presidents Kennedy and Johnson,
consisted essentially in tackling the sources of inequality. The aim was to ena-
ble those who were excluded from society to become integrated by getting rid
of the social causes of this exclusion and guaranteeing equality of opportunity
for all. The equality aimed at was therefore equality of individual opportunity
to succeed. Economic inequality as such was not tackled directly, except in its
effects on certain groups (Blacks in relation to Whites) and indirectly
rebounding as it were from the main strategy , which complied with the
"American dream" of an open and united society.
President Johnson's ambitious "social crusade"-to build a Great
Society-e-sought both to put an end to racial discrimination and to give ethnic
minorities, Blacks in particular, the same social opportunities as other Ameri-
cans and to win the war on poverty , that social scourge with which the United
States had just found itself to be afflicted. In practice, the policy comprised
three main elements : the equalisation of rights ; the Economic Opportunity
Act; and the policy on schooling (on top of which carne in-kind relief).
The equal rights policy was not only fully in harmony with the principles
of United States society but aimed at making these a reality and at putting an
end to discrimination against the black minority. In 1964 and 1965, the major
civil and political rights legislation was passed, the Civil Rights Act and the
Voting Rights Act which, energetically applied , did away with the discrimina-
tory system in the South . The way had been paved by the 1954 judgement in
the Brown case though little action had been taken on the decision until the
commitment of the American public authorities as a whole succeeded in abo -
lishing all inequalities before the law not only at school but in public places
and in employment. In 1968 Gary Orfield , referring to the changes in the
South since 1964, wrote: "It has been a social transmutation more profound
and rapid than any other in peacetime American history. " 3
The war on poverty was based on the same principles , but its promoters
gave the concept of equality of opportunity a wider interpretation. Beyond
legal equality, it was the social factors underlying inequality of opportunity
that had to be tackled . The cornerstone of this policy-the significantly
Trends in the Social Policy Aims ofthe United States (1960-1980) 73
named Economic Opportunity Act-provided for a range of measures all

designed to enable the poor "to learn their way out of poverty" , to overcome
their handicaps in order to playa full part in society, mainly through voca-
tional traning, appropriate social services and participation. The most innova-
tive programme-the Community Action Programme-aimed at encouraging
participation by closely associating the poor in the war on poverty, by putting
them in a position of having more control over their future and thus attenuat-
ing their feeling of helplessness. To the same end, several legislative texts were
adopted establishing a scholastic policy to help deprived children. Pro-
grammes of all kinds were set up providing for the grant of in-kind relief,
financial help and the institution of compensatory teaching for children from
poor backgrounds and/or ethnic minorities. The most famous of these pro-
grammes is the Headstart Programme which sought to make up for initial
handicaps through educational activities at the pre-school level.
There was and still is considerable controversy over the outcome of this
policy of the 1960s which can be evaluated in very different ways according to
the criteria applied . At the end of the decade the number of poor had dropped
substantially-36 million in 1963,24 million in 19644 - a n d a large fraction of
the black population had climbed up the social ladder , the percentage of
"white-collar" black workers having risen from 18.8 per cent in 1964 to
27.9 per cent in 1970. S On the other hand, however, a number of programmes
had apparently failed, the confidence placed in the equalising mission of the
school was sapped by sociological studies (the Coleman Report, and Inequal-
ity by C. Jencks), the assisted population was growing beyond expectations
and the climate was impaired by the black riots and the war in Viet Nam. On
top of all this was the fact that aspirations had risen with the progress
achieved and the spread of egalitarianism. Whatever the case, and whether or
not in line with reality-though it was also an important element of this
reality-the general feeling at the end of the 1960swas one of failure.
Then the social strategy changed and a new strategy of war on poverty was
devised- as that of the 1960s got out of hand: the policy which had aimed to
ensure that all individuals had the same rights and equal opportunities at the
outset and which did not allow collective characteristics (essentially those of
race) to be taken into account, was largely replaced by a policy seeking to
ensure equality of actual results between certain groups (defined by racial,
ethnic or sexual criteria) and, with this objective, taking account of member-
ship of these groups . Thus the criterion or race, which was initially rejected in
the name of the universalist principles of United States.society, later became
respectable and was used to bring about equal representation of the races at
various levels of social life. This policy took the form of the desire, on the one
hand, to achieve a balanced racial composition in schools and, on the other
hand, to redress inequalities in representation affecting minorities and women
on the campus and in the working world."
The policy of integration in the schools was mainly a matter for the judi-
ciary. In various rulings, the Supreme Court laid down the authoritarian prin-
ciple of allocating children to schools according to race wherever there were
any signs of discriminatory tendencies (which was interpreted very widely).

These decisions opened the way for judicial activism in the federal courts.
Some federal judges became famous throughout the country by imposing
ambitious and controversial desegregation plans entailing wide-scale busing.
With many ups and downs, these plans increased and in 1978 were applied to
1,505 school districts and over 12 million school-children, i.e. 10 per cent of
school districts and 28 per cent of the school population. 8 This policy aroused
violent antagonism, its educational efficiency proved to be more than dubious
and, typical of its adverse side effects, it accelerated the " white flight" to the
suburbs . 9
In the field of employment, the issue of state intervention evolved in the
same direction. The Civil Rights Act banned all discriminatory or preferential
treatment based on the race, colour or religion of an individual. Affirmative
Action turned out to be a policy of differential treatment favouring minorities
and women. The evolution was gradual and the policy followed was often
ambiguous, but, on the whole, developed logically according to the following
principles:
(a) statistical equality became the norm, i.e. a situation in which the represen-
tation of minorities and of women in different jobs reflected their numbers
within the reference group (the total population, the population of an
area, the population likely to apply for the jobs in question-the reference
bases vary);
(b) any unequal representation to the detriment of minorities or of women
was considered (failing proof to the contrary) to result from discrimina-
tion (past or present, personal or "institutionalised");
(c) corrective action had to take the form of direct intervention at the recruit-
ment and promotion stages to bring about statistically correct representa-
tion. The logic of this policy thus necessarily implied leads, if not to rigid
quotas, at least to the consideration of race or sex of the competing appli-
cants.
Applied in universities, administrations and a number of enterprises
(particularly those under federal contract), the Affirmative Action policy
improved the position of a number of women and Blacks, but it does not seem
to have been the most deprived who benefited. The policy appears to have
been particularly ill adapted to resolving the black problem as it presents itself
today, with a black fringe society in the ghettos, excluded by their lack of
skills or qualifications from the places reserved in the universities or in middle
and higher level employment. 10 The Affirmative Action policy, moreover, has
proved costly in both time and money and has often engendered a sense of
injustice among those (men, Whites) who consider themselves to be victims of
reverse discrimination , contrary to the equal protection of the law. This, how-
ever, was not the view of the Supreme Court, whose jurisprudence is lacking
in clarity and firmness but which, nevertheless, found nothing irregular about
the racial criterion being used in the admission of students or in job selection
(provided, at least in the case of the universities, that the practice did not take
the form of rigid quotas). II
Action on the forms and degrees of inequality
As the strategy of the 1960sgot out of hand, a new strategy was devised in
the form of direct intervention regarding the degree of economic inequality .
This change of strategy followed on (and was partly dictated by) the unwel-
come developments in respect of welfare benefits but was also linked with the
evolution of the egalitarian idea .
The war on poverty, as has been seen, favoured tackling the sources of
inequality. But it also comprised programmes of in-kind relief to help the
poor to meet certain basic needs and to have access to a style of life that was
nearer to that of the "average American": there was Medicare, providing
medical assistance for the elderly, Medicaid for the poor, housing assistance
for poor families provided through the new Housing and Urban Department,
and an extension on the federal scale of the food stamps scheme. These pro-
grammes joined those already in existence, which originated in the main with
the New Deal, organising a system of retirement pensions, unemployment
benefits and assistance for the elderly indigent, for widows and their depend-
ent children and for handicapped persons . The Aid to Families with Depend-
ent Children (AFDC) scheme calls for special attention : this benefit, which
was intended to help fatherless children (it was instituted mainly with orphans
in mind) was originally seen as a minor measure and the 1935 reformers, just
like those of the 196Os, thought that following the development of a general-
ised insurance system there would cease to be any need for it. In actual fact, in
the 1970s, it was to become "the cornerstone of the current welfare system". 12
The promoters of the war on poverty thus inherited cash benefits and
created benefits in kind but in no way sought to set up an extensiveand lasting
system of assistance. On the contrary, by acting on the factors of poverty, the
policy was expected to result in the gradual reduction in the number of per-
sons assisted and a drop in the cost of assistance. The approach was described
by G. Y. Steiner 13as an "impossible dream" from which, however, the coun-
try was slow to wake up, although it was obvious that the policy had got out
of hand .
In 1965 the amount of total public expenditure in the social field (both at
state and at federal level) was 77.2 billion dollars and by 1970 it had reached
146 billion. Even if it represented less in real terms, the growth was extremely
rapid and was due mainly to galloping expenditure at the federal level: the real
cost of welfare activity at this level had more than tripled during the period.
Several benefits were "responsible" for this development but one in particu-
lar : the AFDC .14
In 1960 the AFDC had 3 million beneficiaries (compared with 2.2 million
in 1950) and the number rose to 5.3 million in 1967. The "customers" had
increased and were no longer those for whom the benefit had been created.
The AFDC was paid less and less for fatherless children and more and more
(68 per cent in 1967) for children whose fathers, still alive, had left home.
There were, thus, two developments that had not been anticipated : the AFDC
came to be generally connected with broken homes and the number of families
assisted continued to grow in a period of prosperity. In 1967 Congress tried to

stem the increase by making the assistance cond itional upon attempts to find a
job or to take a vocational training course (the Work Incentive Programme-
WIN) and by devising a system of gradual taxation that was to constitute an
incentive to work . This reform was an almost complete failure . The adminis-
tration of the new system degenerated into a bureaucratic nightmare and the
new regulations had the notable result of enabling certain "working poor" to
register for AFDC . In 1971 the number of beneficiaries increased from 5.5 to
10.6 million. Towards the end of the 1960s, New York became the symbol of
the aid crisis. The amount paid there was particularly high (the decision in the
matter was left to the states and there were considerable differences from one
state to another) and the number of beneficiaries went up particularly quickly:
1 person in 30 at the beginning of the 1960s, then 1 in 10, 1 in 7 and 1 in 6 in
1970.
How is this explosion to be explained? No doubt, there were various rea-
sons: underestimation of the potential "clientele"; the change in attitudes
brought about by the civil rights movement; the efforts of the militant organi -
sations to encourage the destitute to claim their " rights" ; as well as the effects
of the system itself. The amount of the aid seemed to encourage family break-
ups and to discourage those concerned from looking for work (in some states,
the income derived from aid rivalled that earned working). Thus, contrary to
expectations, the financial cover of the poor was extended but in an atmo-
sphere of disillusionment and criticism of a system considered by public opi-
nion to be unduly costly and impaired by fraud and abuse. One of the ironies
of history is that it was the forms of aid that existed before the implementa-
tion of the Great Society, and which did not depend on its dominant strategy,
which grew out of all proportion, taking advantage in particular of the new
political and social situation created by the reforming ardour of the Demo -
crats.
The inflation of cash benefits was not only unexpected but led to an awk-
ward situation. To reform the system by reducing the amount of benefit s or
the number of beneficiaries could not fail to arouse strong resistance. The
escalation of cash benefits not only meant a failure of President Johnson's
strategy but made it difficult to repeat the experiment. Consequently, while as
a candidate Richard Nixon had been able to criticise the Democrats' social
programmes frequently and vigorously, as President he had less room for
manoeuvre. As soon as he took office (January 1969) the new President took
on the labyrinth of social assistance and after a few months' reflection and
discussions opted for a new strategy against poverty, the income strategy, and
proposed a form of negative income tax. The policy had the advantage both
of taking account of existing restrictions-it extended the coverage of cash
benefits , acknowledging as it were the evolution of the system-and of
appearing as a bold and generous innovation. IS
On 8 August 1969, in a televised address, President Nixon solemnly pro-
posed to put an end to the existing system of social assistance and to replace it
by a new system which would benefit all the poor, whether working or not,
Trends in the Social Policy Aims of the United States (1960-1980) 77
and all families with dependent children, whether the breadwinner was the
father or the mother . The project, known as the Family Assistance Plan
(FAP), was to provide all families with a minimum income varying according
to their size (1,500 dollars per year for a family of four). To meet the main
objection that the system could not fail to arouse, Nixon insisted on the obli-
gation and incentive to work. He explained that it was not a guaranteed
income that was involved, since the beneficiaries, with the exception of the
handicapped and of single women with children under school age, would be
required to have a job or to have registered at a vocational training centre.
Moreover, extra work would not be penalised since the assistance scale was
established in such a way that it was always advantageous to work. And Nixon
finished his speech by the words that were to become famous: "What Amer-
ica needs now is not more welfare but more workfare."
This Family Assistance Plan thus marked a significant change. It was no
longer a matter of providing certain poor people with financial assistance
because of their age, their incapacity or their difficult family situation, but of
ensuring that all families facing economic hardship had a minimum income.
For the first time the financial cover was officially extended to the working
poor. The project caused some surprise and in particular was disturbing for
the liberals. The project was liberal in that it extended social aid, but it was
presented by a conservative. The ambivalence blurred the traditional political
divisions and was one of the reasons for its failure. 16
In April 1970 the FAP was adopted in the House of Representat ives by a
strong majority (243 votes to 155), but failed to get through the Senate
Finance Committee, which rejected it in November by ten votes to six. The
91st Congress was coming to the end of its term of office and at the beginning
of the following year President Nixon launched a new appeal for the adop-
tion of the FAP (which had been amended) . The newly elected House of
Representatives once again adopted the project in June 1971, but it was
blocked in the Senate without being voted on. For some it went too far, while
for others it did not go far enough. The liberal Democrat establishment was
very reticent at first, with the exception of a few well known figures, and then,
as the issue became confused , some outbidding went on and acceptance of the
FAP was made conditional upon the raising of the minimum guaranteed
income. On top of this mainly ideological blockage came another, of bureau-
cratic origin: the project ran into the opposition of the social work profession,
the administration set up not so long ago to provide services within the frame-
work of the Great Society and whose interests appeared to be threatened .
With pressure from the black activists, this opposition took a radical turn.
Finally, on the other side, the upholders of financial orthodoxy joined forces
with the southern representatives to criticise a project which they saw as too
costly and unlikely to free itself of the basic shortcomings of the existing
system (fraud and abuses) .
Apart from the hesitations and various forms of opposition-the liberals,
for their part, blamed the President who was said to have withdrawn his sup-
port for the project at the last lap 17- there are other important reasons for the
failure . The reformers had to take account of yet other interests, those of the
persons who were receiving assistance in the period 1970-71 . The administra-
tion, on the one hand, was unable to explain clearly the connection between
the FAP and the system it was to replace and, on the other hand and above all,
it decided to avoid damaging anyone's interests. This respect for acquired
rights was certainly very understandable politically, but it prevented the set-
ting up of effective work-incentive machinery. The system stood in the way of
its own reform.
Thus, the system remained essentially unchanged and went on escalating
under the Republican presidency as under the Democratic presidency. The
growth of welfare expenditure was even faster in these years than during the
preceding period and developments were still largely beyond the control of
those in charge, while once again the list of recipients got longer. What was
new, however, was that this increase in the social welfare "clients" affected
cash benefits less-the number of beneficiaries of the AFDC stopped at
around II million in the 1970s-than benefits in kind and one form of them in
particular, the food stamps. There was also a sharp increase in the cost of
medical assistance.
At the end of the Johnson administration a virulent campaign had been
waged against "incredible malnutrition" in the United States. CBS television
showed a documentary depicting "hunger in the United States" in very strong
terms. As soon as it took over, the new administration tackled the problem
and the committee set up for the purpose proposed to standardise the food
stamps scheme at the federal level and to extend it by lowering the qualifying
conditions. The reform was passed in 1971 and had unexpected success. The
scheme was to be extended to 11.5 million people (against 4.3 in 1970). In 1972
there were 12.1 million beneficiaries and the figure rose to 19.2 in 1975. Subse-
quently , the number dropped gradually, assisted by economic growth, until
1978 (in December 1978 it stood at 15.9 million); but following economic dif-
ficulties and problems with the application of the Food Stamp Act of 1977
which abolished the obligation to purchase coupons, 18 the number once again
exceeded 19 million in 1979, reaching 21 million in I980-despite a campaign
by the Carter admin istration to eliminate fraud and error. 19
In 1969 this policy of in-kind relief had been devised as a stop-gap for
which there would no longer be any need once the over-all reforms had been
instituted. In actual fact it became a partial substitute for reform, described
by R. Nathan w as a "mini-negative-income tax" (in kind). In this sense, the
expansion of the food stamps scheme could be considered as a beneficial sti-
mulus since it meant that the needs of the poor were more fully met, but it can
also be seen as harmful, partly because assistance in kind is in many ways
open to criticism (as regards cost and the practical conditions of its adminis-
tration, and as regards the reduced freedom of choice of the beneficiaries) and
partly because this form of assistance had acquired such proportions that it
was difficult to abolish and replace it and consequently harder to make a
sweeping reform of the welfare system whose defects (inequalities between
states, bureaucratic expense, wastage and abuses, adverse effect on family sta-
bility) had not been eliminated.
Trends in the Social Policy Aims ofthe UnitedStates (1960-1980) 79
In 1976 the platform of the Democratic Party included the replacement of

welfare by a simplified income maintenance system, substantially financed by
the federal Government. The Carter administration got down to work quickly
and on 6 August 1977, in a speech at Plains in Georgia, the President make
known his proposals for reform (which were officially submitted to Congress
the same day) . 21
The Carter project-Program for Better Jobs and Incomes (PBJI)-was
similar to the Nixon proposal in that it also suggested the application of a
guaranteed income scheme combined with strong incentives to work. The level
of minimum income hardly differed, in relative terms, from that proposed
seven years earlier, but the guarantee was to cover all the poor, whether or not
they had dependants and whether they were married or single. Assistance for
those capable of working entailed the obligation to do so (provision was made
for fines in the event of job rejection) and in all cases extra earnings resulted in
only a slight reduction of the allowance . This system was combined with a
massive employment creation programme in the public sector which was also
intended to encourage unemployed beneficiaries to return to work .
The PBn was more attractive politically than the FAP. The White House
was occupied by a Democrat and Congress, which still had a Democrat major-
ity, appeared more liberal than the previous Congresses. But the Senate was
not called upon to reach a decision since on 22 June 1978 the Speaker of the
House of Representatives announced that discussion of the project had been
postponed. Less than one year after it had been presented to the public, it was
dropped. The PBn had not survived its first examination by the relevant com-
mittee of the House of Representatives. It had transpired that the extra cost
was not around 6 billion dollars, as stated by the promoters of the project, but
nearer 20 billion. At the time when the anti-tax lobby had just won a resound-
ing victory in California (with "proposition 13") an increasein public expend-
iture on this scale was out of the question. In 1979, before the subsequent
Congress, the President proposed anew, less ambitious version of his reform
proposal which aimed mainly at equalising benefits between states. The text
was approved by the House of Representat ives but not by the Senate. With
President Carter's defeat in the 1980 elections, it was dropped completely.
Egalitarianism (1960-80)
The evolution of American social policy thus reflects a transformation and
devaluation of the principle of equality of opportunity. This evolution sprung
from an ideological movement which resulted in the complete re-thinking of
the traditional idea of equality in the United States.
Traditionally, the egalitarian pr inciple implies equal rights and the same
opportunities for all but in no way condemns inequalit ies brought about by
market forces or passed on by the family. The American idea of equality
denounces differences in initial status and requires that everyone should be
able to take advantage of the immense opportunities offered by nature and
society. In particular, schools must be open to all and ensure equal treatment
for all. "The school's obligation is to ' provide an opportunity' by being avail-
able within easy geographic access of the child, free of cost [...J and with a
curriculum that would not exclude him from higher education." 22. 23 In this
favourable context the individual is then held respons ible for his success or
failure and each American , as Tocqueville noted, tends to cons ider himself
master of his own fate. Hence, the social discredit attached to being poor and
receiving welfare assistance. Such values and feelings are obviously not likely
to justify state intervention to remedy the situation through redistribution .
Wealth that has been produced belongs to those who have produced it and
whose only obligation is to do their share in work for the common good . The
idea of a welfare state long remained foreign to the mentality of the United
States, which explains why it was slow to develop, why in seeking the reasons
account must be taken not only of the intentions of the prime movers in the
game (the welfare explosion of the 196Os), why the US Welfare State, in com-
parison with Western societies, has important gaps (such as the absence of
state sickness insurance scheme for all, and the absence of family allowances)
and also why, until the 1970s, its aims did not include any narrowing of the
span of individual incomes. Like progressive income tax, social insurance and
the welfare system had redistributive effects and were justified only "in terms
of the ethics of redistribution" . 24
The liberal idea of equality that prevailed in the 1970s is vastly different
from this traditional concept. It stemmed from a school of thought which
became increasingly influential between 1960 and 1980 and was marked by a
number of major studies by experts and/or ideologists. An attempt will be
made hereafter to outline the main ideas and essential phases, distinguishing
between the various propositions which, implicitly or explicitly, in turn
defined the principle of equality. 2S
First proposition: the application of the principle of equality of opportunity
implies combating the social factors which make competition unequal and
should lead to less inequality of results between groups (i.e, between Whites
and Blacks)
Equality of opportunity is no longer confused with mere equality of rights
and facilities offered and is seen less as a fundamental self-justifying right
than as a means of transforming society.
This shift in the concept began with the historic ruling in the Brown v . the
Board of Education of Topeka case, unanimously handed down by the
Supreme Court on 17 May 1954. In respect of a case of discrimination in
schooling, the Court rejected the "separate but equal" principle as being con -
trary to the clause concerning equal protection before the law in the four-
teenth amendment to the Constitution. This legal volte-face marked the end
of an era and, moreover, was based on a new type of reasoning. The main
argument underlying the decision was not that the assignment of pupils
according to a racial criterion infringed a basic freedom but that the very fact
of segregation was a source of inequality in schooling: "Does segregation of
children in public schools solely on the basis of race, even though the physical
Trends in the Social Policy A ims of the United States (1960-1980) 81
facilities and other 'tangible' factors may be equal, deprive the children of the
minority group of equal education? We believe that it does." The Court
backed up this conclusion by sociological reasoning based on various studies
that were cited in the references (see footnote II), emphasising in particular
the fact that the sense of inferiority created in black children as a result of
segregation had adverse consequences on their schooling. This innovative and
imprudent attitude (for it is dangerous for a lawyer to base his decision on
sociological studies that may subsequently be challenged)" extended the idea
of equal protection before the law by taking into account the social factors of
inequality of opportunity and aiming no longer merely at equality of access
and of treatment but also at equality in school results. However, the innova-
tion was barely recognised as such and the decision in the Brown case affected
the idea of equality of opportunity mainly by helping to make desegregation
in schools one of the main criteria of this equality . 27
Right from this initial stage, it is apparent that the idea of equality of
opportunity was not considered in abstract and general terms but seen from a
particular angle: that of the fight against certain inequalities, namely racial
inequalities. Equality of opportunity was then sought less for itself than for its
expected social outcome. This outlook was to become clear in the 1960s with
the implementation of the Great Society programmes. The determination to
ensure equal-or, at least, less unequal-opportunities was due not so much
to a concern to apply meritoc ratic principles as to that of resolving certain
social problems such as racial inequality and poverty.
Second proposition: equality of opportunity implies equality of results
between groups
The second stage was reached when the idea, namely that equality of
opportunity should be pursued to reduce inequality of results between groups,
was replaced by the idea that equality of results was the real measure of equal-
ity of opportunity.
The Coleman report contributed to this change . The report, entitled
Equality of educational opportunity, commissioned by Congress under the
Civil Rights Act to study the lack of equality of educational opportunity
between racial groups and other groups, was entrusted to a team under J. S.
Coleman.e The authors considered several possible meanings of the concept
of equality of educational opportunity without explicitly committing them-
selves, though the logic of their work led to a shift in the meaning. The origi-
nal idea was to study mainly differences between the respective resources
available to schools (particularly differences between white and black
schools). It was expected that the study would yield the necessary facts and
justification for a policy of equalisation of these resources. However, to the
general surprise, few differences were discovered between the schools as
regards material means, curricula and other measurable criteria. The inequal-
ities regarding success were in fact far more marked within each school than
between schools and could be explained largely by differences in family back-
ground. Coleman and his team, therefore, considered all the social factors
underlying inequality in success at school and, as a consequence, they came to

see equality of school results between groups (rather than equality between
schools attended by the different groups) as the real measure of equality of
opportunity. "Equal schools or equal students", which was the title chosen by
Coleman to summarise the conclusions of his study in The public interest»
makes a clear distinction between the two ("equal students" refers to equality
between groups of pupils, mainly between White and Black) The discovery
that schools were equal when they had been thought to be unequal could not
but shift attention from equality of inputs to equality of results, which
replaced the former as a criterion of equality of oportunity in schools .
The report, which had considerable influence, led the experts and public
figures to put the question of equality of opportunity in new terms, terms
which unexpectedly coincided with the arguments that were increasingly being
used by the black militants. Equality before the law was a fact and the idea
then gained ground that this equality should be reflected by equality of actual
results between racial groups . As far back as 1965, in his report on Negro
families, D.P. Moynihan wrote :
The demand for equality of opportunity has been generally perceived by white Ameri-
cans as a demand for liberty, a demand not to be excluded from the competitions of
life-at the polling place, in the scholarship examinations, at the personnel office, on
the housing market [... J. Equality of opportunity now has a different meaning for
Negroes than it has for Whites. It is not (or at least no longer) a demand for liberty
alone, butalso for equality-in terms of group results. In Bayard Rustin's terms, "It is
now concerned not merely with removing the barriers to full opportunity but with
achieving the fact of equality". By equality, Rustin means a distribution of achieve-
mentsamong Negroes roughly comparableto that among Whites. 30
Third proposition: equality of educational opportunity does not lead to

equality of results
Following the Coleman report, another sociological study helped to dis-
credit the traditional concept of equality of opportunity. At the end of the
1960s the results of the education policy of the Great Society looked disap-
pointing. Inequality by Christopher Jencks.!' published in 1972, provided a
theoretical explanation for these results or lack of results. Jencks and his col-
leagues had undertaken a vast investigation which yielded largely discouraging
conclusions. Inequality, first of all, confirmed the heretical conclusion of the
Coleman report, that educational attainment had little to do with the school
attended, but took the heresy even further by demonstrating that social suc-
cess appeared to be only remotely linked with educational attainment. The
level of education was probably the factor most closely related to socio-occu-
pational status but given the same level of education, there were nevertheless
considerable differences in status while the correlation between education and
income seemed to be even more tenuous. "Variation in men's incomes proved
even harder to explain than variation in their occupational statuses. Educa-
tional credentials influence the occupations men enter, but credentials do not
have much effect on earnings within any given occupation, so their over-all
effect on income is moderate." 32 The practical conclusion of these observa-
tions was that since the school was not responsible for these inequalities, it
was powerless to lessen them . Jencks noted that during the preceding 25 years,
there had been a decrease in inequality of educational opportunity but that it
had not resulted in a corresponding reduction in economic inequality. The
rebound had not worked.
These conclusions which were reported in the popular press made a con-
siderable impact, partly with biased or erroneous interpretations. Jencks' own
interpretation was biased since he concluded that "equalizing opportunity
would not do much to equalize the eventual distribution of income" 33 but the
question was one of equal results between individuals not between groups .
The latter was of secondary importance for Jencks since "eliminating income
differences between Blacks and Whites or between children born into wealth
and poverty would not do much to eliminate inequality in general. This fol-
lows from the fact that there is almost as much income inequality among peo-
ple born in the same circumstances or with the same color skin as in the larger
population."> Jencks was thus applying his own standard of reference and
judging the policy in force by this yardstick. Yet, evaluated in the light of
equal results between groups, the policy called for a quite different judge-
ment, for the facts presented in Inequality showed in fact that by reducing
educational inequality between Blacks and Whites and between poor and rich
children, inequality in economic results between these groups would be consi-
derably reduced. This biased interpretation on the part of Jencks was gener-
ally overlooked 3S so that his book appeared to be demonstrating the total inef-
fectiveness of the school in its egalitarian mission.
Various interpretations could be put on this supposed ineffectiveness but
the spirit of the times would not contemplate any factors other than social
ones . This can be seen clearly from the reactions to Arthur Jensen's publica-
tions .
In seeking to explain the persistently poor results of black pupils, the
sociologists had only negative conclusions to put forward . According to the
Coleman report, for instance, there was no variable-not even family back-
ground-that accounted for this difference . There remained, of course, one
possible interpretation: the genetic factor. In 1969 A. Jensen, a professor of
psychology at Berkeley, published a long study in the Harvard Educational
Review concerning intelligence tests and scholastic achievement. 36 He began
by pointing out that compensatory education had apparently failed and then,
after a very technical analysis, put forward two propositions: (a) differences
in IQ between individuals seem to relate more to biological heredity than to
social environment; and (b) the average IQ differences between groups (par-
ticularly between Whites and Blacks) also seem to be due more to the role of
the innate than to that of the acquired. The article was couched in academic
terms and the explanation involving the role of genetic differences between
races was put forward only as a plausible hypothesis, compatible with the data
used . But Jensen "had jabbed his finger at the rawest and most sensitive spot
in the entire system of liberal thinking about education and equality in Amer-
ica" . 37 His interpretation at least partly exonerated Whites from their
responsibility for the social inferiority of the Blacks and ruled out the school
as an instrument of social reform. Passions were then unleashed, with left-
wing students of the SDS (Students for a Democratic Society) demonstrating
at Berkeley against racism and Jensen. The latter was obliged to give his lec-
tures in clandestinity to avoid violent disturbances. Some of his colleagues at
Berkeley tried, but in vain, to have him censured. The Harvard Educational
Review refused to let anyone (even Jensen) have new editions of his article
until they were accompanied by a good number of criticisms of the author's
arguments. 38Scientifically, the essential question was not settled-and still is
not settled tOday39-but ideologically it had been decided.
Equal results therefore remained the aim, with its implications of action
on the social factors of inequality which no longer seemed to involve the
school. Other forms of state intervention were then called for, either to reduce
the inequalities in results between individuals or to decrease the same inequal-
ities between groups.
Fourth proposition: equalisation of results implies direct action on economic
inequality
Jencks' learned study Inequality was a scientific work but with an avowed
political aim, to show the pointlessness of the policy of the 1960s and to plead
for another strategy: "If we want to equalize incomes, we must do so directly,
rather than equalizing something else and hoping this will redistribute
income."40 His sociological conclusions could be used to justify the redistri-
butive policy. Jencks analysed the correlation between different forms of
inequality (cognitive skills, IQ, occupational status, income), but his findings
were largely inconclusive. What remained then to explain social success?
Jencks admitted his ignorance while proposing, as possible factors, luck
(which he emphasised) and non-cognitive skills. These are residual factors
hardly likely, particularly the first one, to justify the wide span of incomes. In
reply to criticism, Jencks referred, however, to other justifying principles:
"Our commitment to income redistribution had nothing to do with our esti-
mate of the role of luck in determining incomes [... J. We advocated redistribu-
tion because we felt that the poor needed additional money more than the
rich." 41In fact, his arguments were mainly negative since he rejected the meri-
tocratic principle, saying "I cannot see any ethical justification for a distribu-
tion in which income depends solely on productivity" ,42 without determining
any specific criteria for redistributive justice.
The study by John Rawls, A theory ofjustice, 43 set out to do precisely this.
The study is an ambitious work which was immediately held to be very
important and was widely discussed; it is also in line with the upsurge of egali-
tarian thinking. Rawls' theory of justice may be described very briefly, as fol-
10ws: 44 let us imagine a group of people living in a natural state, unaware of
the position that will be theirs in the society they are to enter and let us sup-
pose that these people have to choose between different concepts of justice.
Allowing for a number of assumptions as to their character and degree of
ignorance, Rawls considers that these people would choose justice as fairness,
that they would first of all demand that basic liberty should be equally distri-
buted among all (first principle) and then that social and economic inequal-
ities should be regulated in such a manner as best to serve the interests of the
most disadvantaged and that these inequalities should relate to positions that
would be open to all in conditions of equality of opportunity (second princi-
ple).
Thus, the fair society is not an egalitarian one but its inequalities are in no
way justified by the principle of meritocracy. For , according to Rawls, greater
talent or ability gives no moral right to greater reward. The natural distribu-
tion of talent is neither fair nor unfair; it is a simple fact. Nature is arb itrary
and inequality in natural gifts is undeserved . Justice, therefore, requires not
the rewarding of those born with greater abilities but the compensating of
those of lesser ability who are born without such advantages . "In short" ,
comments M. F. Plattner. "the redistributionist view is based on supplanting
an ethics of reward in favor of an ethics of redress."41 However, Rawls'
second principle implies that greater rewards are given to those whose contri-
bution to economic activity is higher but only in so far as such rewards
encourage their recipients to increase their activity in such a way that ultima -
tely it is the most disadvantaged who benefit. In other words, it is fair, for rea-
sons of social efficacy , for the most productive to receive rewards they do not
deserve. 46 According to this view, individuals no longer own the wealth they
produce, and its distribution is decided by the collectivity. For Rawls, justice
implies total social control over the distribution of wealth.
Several less complicated studies and articles which were published during
th is period reveal the declin ing importance of the principle of meritocracy in
liberal thinking and argue in favour of redistribution . 47All these writings con-
test the legitimacy of the wide span in incomes that result from the free play of
market forces and call for corrective intervention by the State.
Fifth proposition : fighting poverty involves fighting inequality
This proposition is connected with the preceding one. Poverty had been
reduced but not economic inequality. The liberals linked the former to the lat-
ter, defining poverty in relative terms . During the war on poverty , a poverty
line had been established, which was revised each year and which corre-
sponded to the level of income considered as the subsistence level (since fami-
lies with low incomes spend approximately one-third of their money on food ,
the level had been fixed by multiplying by three the amount of money needed
for a minimum adequate diet). In the disillusioned atmosphere that marked
the end of the 1960s, several social scientists had questioned this approach to
poverty, submitting another interpretation which can be summed up in the
following two ideas: "First, that American poverty is a phenomenon of rela-
tive deprivation and not living below some absolute minimum subsistence
level and second, that the behaviour of poor people which often seems to
interfere with their taking advantage of services and opportunities represents
an inevitable adaptation to their situation of relative deprivation , an adapta-
tion that will not easily be given up unless there is some very basic change in
the situation to which they must adapt. "48 Expressed more bluntly: "the poor
simply need money, but beyond that is another fact : relative deprivation and
economic inequality" . 49 Consequently : "we must raise the income of the poor
not only absolutely but relative to the income of the average American". 49
This new approach implied a new strategy which took the form of proposals
in respect of a minimum guaranteed income for all. The idea gained ground
rapidly in liberal academic circles and was also favoured, for other reasons, by
M. Friedman and the Chicago school; in 1968, for example, 1,300 economists
belonging to nearly 150 institutions sent a petition to Congress requesting the
adoption of a "national system of income guarantees and supplements" . 50
This type of project marked a complete break with the traditional concept
of welfare. It established a new right, the right to a minimum income granted
to all regardless of differences in situations. "Whether someone was poor for
reasons beyond his control or as a result of his own actions made no differ-
ence. Whether poverty was apt to be a temporary situation or a chronic condi-
tion was inconsequential. Whether opportunities were plentiful or scarce was
irrelevant. To each according to his needs : that was the new ethic of liberal
social policy." 51
This was not the view of President Nixon but his Family Assistance Plan
(FAP) was in line with this school of thought, as was President Carter's Pro-
gram for Better Jobs and Incomes, which went further by extending the bene-
fit of the guaranteed family income to individuals. As for MacGovern, who
was a candidate in the 1972 presidential elections, his programme (which was
committed to radical redistribution) seems to have been largely responsible for
his crushing electoral defeat, which is a striking illustration of the gulf
between the liberal idea of equality and the opinion of the majority of the
United States electorate.
Sixth proposition: equal results (between groups) involves introducing a quota
system for access to social positions
This proposition, which defines the affirmative action policy has no major
theoretical studies to back it up . The policy practised stems from the evolution
of ideas but has also been forged in a more or less improvised way over the
years and its aims are often marred by ambiguity. Justification through the
fight against the present effects of discrimination is replaced by, or sometimes
combined (more or less clearly) with the idea of compensation for the discri-
mination suffered throughout the history of the United States. In the second
case, the justifying principle is different since it implies that the grandchildren
have to make up, partly at least, for the actions of their grandfathers. The
jurisprudence of the Supreme Court does not allow for these principles of jus-
tification to be determined absolutely .
Conclusions
This liberal idea of equality has been stoutly contested, particularly by the
neo-conservative school. Nevertheless , it has had considerable influence on
the social policy applied. At the end (for the time being at least) of its evolu-
tion, it appears to be cha racterised by two basic ideas: (a) inequality of results
between groups, considered on the same footing as inequality of opportunity,
is untenable; and (b) economic inequality, resulting from the play of market
forces and the need for widescale redistribution, is likewise untenable . It
might be thought that these propositions break with the principles of a "libe-
ral" 52 society and. in conclusion, they call for a number of critical comments:
(a) Equality of opportunity, considered in absolute terms, is an aim that is
incompatible with the values of a "liberal"society. According to sociological
studies, inequality of opportunity can be explained by two main factors: the
effects of social stratification and the role of the family. The matter should,
therefore, be looked at from a completely different angle: instead of acting on
the conditions of the race in the hope that at the end of it the gaps between
competitors will be narrowed, begin by reducing existing gaps to make the
race fairer . Yet this fair competition will give rise to a new stratification which
itself will be a source of inequality of opportunity. We come, therefore, to a
vicious circle. The family plays a key role in passing on inequality. Is the
answer then, as proposed by Plato or Campanella, to abolish the family or at
least reduce its educational function as much as possible? Such a policy could
only be restrictive. Equality and liberty do not make good partners in this
respect so "trade-offs" are called for . The objective cannot be equality of
opportunity but the least possible degree of inequality of opportunity compat-
ible with respect for rival values (individual liberty, respect of the family... ).
(b) Equality of results between groups is distinct from equality of opportu-
nity . To put them on the same footing would be relevant only if the factors
which influence social success and which are compatible with equality of
opportunity were all shared identically within the groups under consideration.
First of all, it is by no means proved-and appears highly unlikely-that indi-
vidual talent, merit and tastes are equally distributed . For example, who can
maintain that if there were no inequality of opportunity the social or racial
composition of a group of doctors in a given place would follow the pattern of
the local population? Then, groups are differentiated by their average age: in
the United States, differences between ethnic groups are considerable , the
average age ranging from 46 (Jews) to 18(Puerto Ricans) and for other groups
being as varied as 36 (Italians and Germans), 28 (Chinese), 22 (Blacks), etc. 53
Finally, it can be observed that paradoxically, those responsible for American
social policy have considered discrimination as the key factor in the differen-
tial success between races at the very time when The declining significance of
race» was being noted together with the dominant role of economic and social
factors. Misinterpretations have been piling up.
(c) A policy of preferential treatment for certain groups infringes individ-
ual rights and constitutes a dangerous precedent since it violates a "liberal"
principle, that of free competition between individuals and the awarding of
social position according to personal ability. Admittedly discriminatory prac-
tices and social factors impede the application of this principle but so does the
affirmative action policy, in the opposite sense, since it is based on group

membership. Such a system may well reduce inequalities between groups but it
can only undermine equality of opportunity between individuals by making
individual merit take second place to collective attributes . Moreover, if the
quota principle is recognised, it is difficult to see why its application should
remain confined to certain sectors of social activity and to certain social
groups. Why should quotas (in respect of Blacks, Chinese, Mexicans, etc.) not
be extended to employers, to trade unions and even to Congress or the
Supreme Court? And why should quotas be contemplated only for linguistic
and racial minorities rather than using as criteria of "fair representation" not
only sex (already recognised as a criterion) but also age, geographic origin or
social class, since inequalities of representation also exist between generations,
states and social categories? This would lead to a system of generalised pro-
portional representation which would deprive individual merit of its value at
the same time as it would inextricably complicate-and probably poison-
social life.
(d) A redistributive policy modifies the relationship between individuals
and society and also redistributes power. The greater the scale of redistribu-
tion, the more extensive the social control of the national income . Implicitly,
the individual tends no longer to be considered as the owner of the product of
his work, and the wealth he has produced becomes a minute fraction of the
collective wealth over which the public authority holds sway. This politicisa-
tion of the distribution of income aspired to by Jencks, seen as justice by
Rawls, means taking from individuals for the benefit, in principle, of the citi-
zens. But apart from the fact that there is no certainty that this substitution of
the will of the majority for individual wishes is legitimate, our societies are
only imperfectly democratic and transfers of power generally take place to the
benefit of the political and administrative leaders. There is an ineluctable law
in respect of inequality: except when it is a matter of ensuring equality of
liberty, the fight against inequality creates further inequality in terms of
power. The law is well known but insufficiently acknowledged. Does not the
claiming of equality often engender the thirst for power?
Notes
I J. R. Pole : The pursuit ofequality in American history (Berkeley, University of California
Press, 1978), p. 326.
2 On the subject of this policy see, in particular: The Public Interest (New York), special
issue entitled The great society : lessonsfor the future, No. 34, Winter 1974; and S. A. Levitan and
R. Taggart : The promise of greatness (Cambridge, Harvard University Press, 1976).
3 Quoted by Nathan Glazer in Affirmative discrimination (New York, Basic Books, 1978),
p.79.
4 Census Bureau assessment, quoted by F. Levy: "Poverty by the numbers", in The Ameri-
can Spectator, May 1978, p. 18.
S Cf. J. W. Wilson: The declining significance of race (Chicago University Press, 1978),
p. 131.
Trends in the Social Policy Aims of the United States (1960-1980) 89
6 See p. 405.
7 In respect of this policy, see in particular, Glazer, op. cit.
S US News and World Report, 4 May 1979, p. 52.
9 Philippe Beneton : "Les juges, les experts et les eleves. A propos de I'Integration scolaire
aux Etats-Unis"', in Analyses de la SEDEIS, No. II, Sep. 1979, pp. 10-17.
10 See Wilson , op. cit .
II Bakke (1978) and Weber (1979) judgements. In respect of these rulings see: "Why Bakke
won't end reverse discrimination" I (W.J. Bennet and T . Eastland) and II (N. Glazer), in
Commentary, No. 66 (3), Sep. 1978, pp , 29-41; and "Justice debased: the Weber decision"
(c. Cohen), in Commentary, No. 68 (3), Sep, 1979, pp. 43-53.
12 F. Doolittle, F. Levy and M. Wiseman : " The mirage of welfare reform", in The Public
Interest, No. 47, Spring 1977, p. 63.
13 G. Y. Steiner : "Reform follows reality : the growth of welfare", in The Public Interest,
No. 34, op. cit., p. 54.
14 On the subject of this "Welfare explosion" see, in particular, Doolittle et al., op. cit.
15 On the Nixon project, see D.P. Moynihan : The politics of a guaranteed income: the
Nixon administration and the Family Assistance Plan (New York, Random House, 1973); and
M. Anderson: Welfare: the political economy of welfare reform in the United States (Stanford,
Hoover Institution, 1979), introduction and pp , 81-85.
16 L. Lenkowsky : "Welfare reform and the liberals", in Commentary, March 1979, p. 57.
17 For a liberal point of view (and a review of Moynihan's study), see Gus Tyler : "The poli-
tics of Pat Moynihan" , in L.A . Coser and I. Howe (eds.): The New Conservatives (New York,
Quadrangle, 1974), pp . 181 et seq.
18 Previously a poor family was obliged , for example, to buy a 150dollar food stamp for
50 dollars . Following the reform, a 100 dollar stamp could be obtained free of charge .
19 Cf. US News and World Report, 21 May 1979, p. 67; and 26 May 1980, p. 7.
20 Quoted by Doolittle et al., op . cit ., p. 67.
21 On the Carter project, see Anderson , op . cit., Chapter Vlll; and Lenkowski, op, cit.
22 J .A. Coleman: "The concept of equality of educational opportunity", in D.M . Levine
and M.J. Bane (eds.): The "inequality" controversy: schooling and distributive justice (New
York , Basic Books, 1975), p. 203.
23 Obviously these principles have been flagrantly violated-by the practice of slavery and
then, after its abolition, by that of legal discrimination which was found lawful by the Supreme
Court in 1896 under the "separate but equal" doctrine. This contradiction remained until the
judgement in the Brown case in 1954.
24 M. Feldstein: "Social insurance", in C.D . Campbell (ed.): Income Redistribution
(Washington, American Enterprise Institute, 1976), p. 76; see also comments by R. J. Lampman
and R. Nisbest, ibid ., pp . 106 and 223.
25 This description is obviously schematic and does not reflect the full complexity of the
chang ing patterns of ideas.
26 Thomas Sowell: Knowledge and decisions (New York, Basic Books, 1980), p. 387 (note
18).
27 Coleman, op. clt., p. 207.
28 J. S. Coleman et aI. : Equality ofeducational opportunity (Washington, US Department of
Health, Education and Welfare , 1966). On the subject of this report, see, in particular, D. Bell:
"On meritocracy and equality", in The Public Interest, No. 29, Fall 1972, pp . 43 et seq., and
M. Cherkaoui : "Sur l'egalite des chances : a propos du rapport Coleman". in Revue francaise de
sociologie, No. XIX, 1978, pp. 237-260.
29 The Public Interest, No.4, Summer 1966.
30 D.P. Moynihan: The negro family: the case for national action (Washington DC, US
Department of Labor, 1965), pp. 2-3.
31 C. Jencks et aI. : Inequality: a reassessment ofthe effect offamily and schooling in Amer-
ica (New York, Basic Books , 1972).
32 Ibid., p. 254.
33 "Inequality in retrospect", in Harvard Educational Review, No. 43 (I), Feb. 1973, p. ISO.
34 Ibid., pp, 150-151.
35 See, however, the comments of L. Thurow : "Proving the absence of positive

associations", in Harvard Educational Review, No. 43 (I), Feb . 1973, pp. 107-108.
36 A. Jensen: "How can we boost IQ and scholastic achievement?" , in Harvard Educational
Review, No. 39 (I), Winter 1969, pp. 1-123.
37 G. Hodgson : "Do schools make a difference?" in Levine and Bane: The inequality con-
troversy , op. cit., p. 29.
38 Cf. The Atlantic Monthly, Sep. 1971, reproduced in "Intelligence et societe" , in Preble-
mespolitiques et sociaux (Paris, La Documentation Francaise) , No. 163,9 Feb. 1973, pp . 25-26.
39 Although the recent studies of Thomas Sowell provide some sound arguments for those
who dispute the genetic interpretation . Sowell demonstrates how in the past various ethnic groups
of European origin with a similar social background obtained results in intelligence tests that were
identical to or poorer than those of blacks today, " Race and IQ reconsidered ", in T . Sowell (ed.) :
American ethnic groups (The Urban Institute , 1978), pp . 203-238.
40 Jencks, op, cit., p. 209.
41 "Inequality in retrospect", op. cit., p, 153.
42 Ibid., p, 154.
43 John Rawls: A theory ofjustice (Cambr idge, Harvard University Press , 1971).
44 Basedon the summary given by R. Boudon at the beginning of his remarkable review of A
theory of justice ("Justice sociale et interet general : A propos de la theorie de la justice de
Rawls", in Revue francaise de science politique, No. XXV (2), Apr. 1975, pp . 193-194).
45 M.F . Plattner: "The Welfare State vs. the redistribution state ", in The Public Interest,
No. 55, Spring 1979, p. 35.
46 Ibid., p. 44.
47 Herbert J. Gans : More equality (New York , Vintage Books, 1974); Arthur M. Okur :
Equality and efficiency, the big trade-off (Washington , The Brookings Institutions, 1975); Lewis
A. Coser and I. Howe (eds.) : The new conservatives (New York, Quadrangle, 1974); L.A. Thu -
row: The zero-sum society (New York, Basic Books, 1980).
48 Lee Rainwater : " Poverty in the United States", in Social problems and social policy :
inequality and justice (Chicago, Aldine Publishing Company, 1974), p, 74.
49 L. Shull and S. Santiestevan: "What do we want right now?", in I. Howe and M. Har-
rington (eds.): The Seventies (New York, Harper Books, 1972), p. 473.
50 Anderson, op. cit., p. 71.
51 Lenkowsky, op, cit., p. 59.
52 In his concluding comments, the author uses the term " liberal" in the Continental Euro-
pean sense, implying non-intervention by government in social and economic affairs.
53 Cf. T. Sowell: "Myths about minorit ies", in Commentary, No.2, August 1979, p. 36.
54 Title of the book by the (black) sociologist, Wilson, op . cit.
6 Social Policy in Sweden
(1950-1980)
nJRGEN HARTMANN
Sweden has been known throughout the last 30 years as the "model of a
welfare society" . Much commentary both in favour and against the general
spreading of welfare benefits and the intervention of the public in the every-
day lives of citizens has been published during this period. The defeat of the
Social Democrats in the 1976 elections and the obvious economic problems
within Sweden in the late 1970s caused a number of writers to question the
" Swedish model" .
Most of the industrialised countries have developed a more or less compre-
hensive network of social welfare services to maintain at least a minimum
standard of living for citizens and to prevent social disintegration . Looking at
the expenditures for social services in a number of countries one finds that
Sweden never has been in the lead (although near the top in 1970).
Still, there is the notion of the "Swedish welfare state" as a very special
model of society which has achieved a higher degree of social security, but
perhaps at the same time a greater dominance of governmental control and
influence over the lives of its citizens. Are the problems that Sweden is facing
today a direct effect of the welfare system or can the same problems be found
in other countries not regarded as typical "welfare societies"? In this article I
should like to point out the bases of the Swedish welfare system today and
indicate some possible ways of overcoming the present problems.
The historical and societal background

of the Swedish welfare policy
As in many other cases of the introduction of a "new deal" , reflected in
parliamentary action and administrative regulation, the roots of the newer
welfare measures can be traced back into history and the moral beliefs of a
society. This is the case in respect of the measures introduced in Sweden
during the 19405 and I950s which later became known as the Swedish Welfare
System. Until the 1930s no visitor to Sweden would have thought of being in a
Table 1. Social service expenditure as percentage of GNP . selected years and countries
1913 1932 1938 1949 1954 1960 1965 1970
Australia 7 8 8 8.5 9
Austria 14 17 15.5 17.5 19
Canada 8 7 7 9 9 9.5 13.5
Denmark 9 II II 12 16.5
Finland 9 10 9 10.5 13
France 13.5 18.5 13 15.5 14.5
Germany I 5 23.5 17 19 15.5 16.5 17
Netherlands 10.5 8.5 8.5 9.5 II 15.5 20
Norway 8.5 9 9.5 II 15
New Zealand 15 12.5 13 11.5 11.5
Sweden 3.5 9.5 9.5 11.5 11.5 II 13.8 19
UK 4 12.5 II 11 10.5 II 12 14
USA 2 6 6 .5 5 5.5 7 7 9.5
I After 1945 FederalRepublic of germany.
Sources: before 1949 calculated from Forsman (1977: 30 ff.) and Musgrave (1969); 1949 and after from The
Cosl of SocialSecurity , ILO, 1952. 1958, 1976.
welfare society. On the contrary, Sweden suffered as much as any other

country from the economic crisis of the period. At that time being a poorly
industrialised country (some 30070 of the population worked in industry) the
depression rapidly stopped the development towards a more industrialised
structure and caused extensive unemployment in the expanding urban areas .
Bad housing conditions, low incomes and almost no social security meas-
ures had a strong negative impact on the willingness of the urban population
to have children. The drop in the birth rate caused a lively discussion both in
Conservative and in Socialist circles and in 1934 a relatively unknown couple
at that time, Alva and Gunar Myrdal, published a book on " Crisis in the
population issue" . The book contained an analysis of the demographic situa-
tion and suggestions how to overcome the crisis. The suggestions made in that
book are extremely relevant for the understanding of the development that
occurred 10 to 20 years later because both the theoretical approach used by the
Myrdals and the measures that were outlined were almost identical with the
political position taken by the Social Democratic Party until the 1960s.
The resultant welfare systems, since it arose out of the birth-rate crisis,
encountered no real political opposition. Both, Socialists and Conservatives,
could unite with the common purpose of maintaining the existence of the
Swedish people as such. At the same time these measures also touched a his-
torical chord that can be traced back to the times of the ancient Viking tribes .
The main theme of the moral code of these tribes was that everybody should
serve the well-being of the whole tribe and not only look to satisfy individual
interests. This theme was strengthened during history by the religious beliefs
that all people in Sweden shared and that gave the governing power a great
Social Policy in Sweden (1950-1980) 93
responsibility in the distribution of wealth in society. Thus both the actual

crisis situation and the moral traditions in Sweden underpinned measures
to ensure the welfare of every citizen in Sweden.
The social policy measures to be taken had to follow the majority's values
regarding assistance. Generally one can see three basic concepts for such
assistance.
Poor relief and humanity
The concept is derived from Christian traditions holding that one should
care for the poor as an act of charity and from the liberal viewthat emergency
provisions should be based on voluntary aid. The help should be given only if
it was badly needed otherwise there would be an abuse of the system.
Socialisation and rehabilitation
When people 's difficulties and poverty could not be attributed only to
their misconduct or fault, but had to be seen as a result of the economic and
social system, relief tended to be seen as "assistance for self-help". Insurance
schemes and educational efforts were the results of this idea of social assist-
ance . Instead of unsure and voluntary benefits, the person in need was now
entitled to benefits granted by law which allowed him to maintain a certain
standard of living. But these general measures would leave outside the social
net those people most in need. The rehabilitation of those outside the social
net was a major problem because there were risks that action by the adminis-
tration could be seen as a labelling process which could be called " help for
self-destruction", and permanently create groups that were in need of social
help and control.
The integration concept
The new Keynesian theories of the 1930s and the common concern of
maintaining a high birth rate led to the prevailing concept of social integration
in Sweden. The defects of society were reflected in the cases of poor and
deviant people. For those better off, there was a moral obligation to show
solidarity with the weak and the poor. According to these ideas the ideal situa-
tion would be a society with only small differences in income distribution and
social classes.
The integration concept with its strong implications of solidar ity and
equality appealed particularly to the political beliefs of the Socialist Party in
Sweden, but was also shared to a large extent by other political groups. But
there were also strong opposition groups which could accept the common idea
of social welfare, but not the equality component of it. As a compromise,
Swedish social policy in the years from 1940 onwards was mainly guided by
the social security principle regarding financial support in cases of sickness
and unemployment. Benefits were given in relation to the last income of a per-
son . The equality concept was used in the fields of education, health care and
information in order to give all citizens the same access to these services inde-
pendent of their financial situation or their social background .
Private consumption per capita 1931·1975, 1964 prices , logarithmic scale.
Kronor
'000
1000
- . ~
. -t:
'-
V ...·
500 -~ ~' ....
'IIr- ..•.r~·
s: .... ....-. .--:
I
---/
....: V
V \,./1/
100
l/
500 +-+-+--+--+7"+-:f-±7"+-l
1931 50 60 70 7S
C10Ihin~
Recr.atlon
MflfiClll and _ I cere
100
Kronor
lli31 40 50 60 70 75
!
.J ...'.-
I
i
TOll' con ..mption 1000
: ,-:: '
.-
F_ ~~
T..... ; I~:'"
Houoehol<l ~1l!ianc'l -L~ _y~_
~-:;;:: I I
200 I
! • • I
1131 1075
1lIol.: TIl.IIll dnhIcllini conllPO"dl 10
.. Inc_ i~ CO....flll)lion .... Clpila - .......... and .......
br 3 '5 a YIIl' 19U -11175 IIld lhll_t - HoutinV
.2l\.y.... - Or""!I'oOds and .....icwI
From Royal Ministry of Foreign Affa irs: The Biography of a People. Stockholm. 1974.
Outside the field of social welfare the equality concept achieved a wider
political breakthrough in the fiscal policy of the 1960s and 1970s. This period
featured high marginal tax rates (up to 85070 for an income over Skr. 200,000
per year) and a wage policy of the unions to obtain higher annual increases for
lower income groups than for those on an average or better than average
income level.
Welfare policy in Sweden 1945-1980

During the 1930sthe Myrdals proposed the following in order to overcome
the population crisis: maternity benefits and measures, children's benefits,
housing allowances, free education and free school meals, a general health
service, and finally, and perhaps most important of all, information and mass
education on questions of housing, nutrition and health. The Swedish type of
welfare society actually developed along these lines after 1945, marking one of
the few examples where the conclusions of a scientific report were imple-
mented in practical politics.
The emphasis on general measures can be seen as a special tradition of the
Swedish welfare society . Free education and school meals were introduced in
the 1950s for all school children, not only for those in economic need. The
same holds true for the general children's allowance that is not related to the
income situation or the employment of the parents .
The general insurance system covers all people permanently living in
Sweden. Medical aid and treatment relate only to the kind of illness, and not
to the financial or social situation of the covered person. General cover is also
the case with respect to the "folk pension" that is paid to everyperson perma-
nently living in Sweden above the age of 65. In addition to the basic benefit
there are supplementary pensions that depend on the previous income of a
person, but apply to all kinds of employment, profession or self-employment .
These examples of the predominance of general measures in the field of social
welfare show the trend in the development of Swedish social policy : to give
social benefits to nearly everybody in society (and not merely those in need) in
order to achieve a positive attitude towards welfare redistribution in a large
part of society.
Social policy cannot, on the other hand, be seen as isolated from develop-
ments in economic and social structures . Economic growth during the 1950s
and 1960s created a good basis for general measures providing social income
for all Swedish citizens. Progressive taxation that in the beginning only caused
problems for perhaps 10% of the taxpayers could be accepted as long as the
net income was still growing for all groups .
Public consumption rose along with private consumption during this
period, giving to the public as well as to political leaders the impression that
there was only a loose connection between consumption and economic pro-
duction within the country. For the majority of people, public services seemed
to be available without any costs, and the automatic rise of taxable income
through inflation allowed the government to finance new public employment
and services.
Table 2. Occupational structure in Sweden

(in percentages) 1950-1975
1950 1960 1975
Farming and forestry 23 14 6

Manufacturing 41 45 38
Commerce and transportation 22 21 27
Public services 14 20 29
Total 100 100 100
The depopulation of the countryside and the growth of the urban areas
underlay the trend of the individualisation of the nucleus family with both
parents working (the woman mostly in services or commerce) . Child care and
facilities for the elderly were no longer organised by the extended family but
by public institutions financed by taxation . Thus the responsibility of society
for the upbringing of the children, for their educational and occupational
careers, and provisions for the elderly created the Swedish type of welfare
society that guarantees life-long security to every citizen.
The effect of the general security concept combined with an equality
approach is that the annual income available for a family with two children is
about Skr. 60,000, regardless of whether the annual salary is Skr. 40,000 or
90,000. Taxation and redistribution level out the differences between different
economic positions . This fact has normally positive social results (e.g. for the
standard of housing and upbringing of children) but gives rise to problems in
the economic sphere which cannot be neglected .
Problems of the Swedish welfare policy

The general distribution of welfare benefits is based on the assumption
that a majority is willing to finance these benefits via the taxation system. The
solidarity of the people who are better off will provide those on a lower
income level with resources. In times of economic growth this model of redis-
tribution will not meet extensive opposition because all groups will still gain.
In times of zero growth or recession a decision must be made as to whether
public or private consumption should be reduced and which groups should
bear the loss. At that point the real problem for a welfare system with a gen-
eral approach, as in Sweden, becomes apparent.
Economic decline will increase the number of unemployed in society,
enlarge the tendency to apply for early pensions and retain a large number of
youth in educational institutions due to the lack of available jobs on the
labour market.
All these tendencies will produce higher spending within the welfare
system at a time when the financial resources of government and public agen-
cies will decline as a result of the economic situation . Following Keynesian
theories, deficit spending by the government should be used to overcome the

crisis. Indeed, most of the governments in the industrialised world used this
method during the 1970s because it solved several problems in the short run .
Public loans allowed governments to pay the benefits that were regarded by a
majority of people as "acquired rights" (e.g. children allowances, housing
benefits, full sick pay and unemployment benefits). Reductions would have
caused tremendous political opposition, particularly in countries like Sweden
where all political parties not only accepted a high level of welfare benefits,
but during election campaigns tried to win over the electorate by promising
them even higher benefits .
The other economic way out of the crisis-by raising the level of
taxation-was quite impossible in the Swedish context because of high mar-
ginal taxes which already caused a severe problem of tax avoidance and eva-
sion, and the establishment of a "grey" economy or market.
As a result of the worsening economic situation, Sweden, like most of the
other western countries, financed the rising costs of the welfare benefits by
foreign loans. This was done by both the Socialists who governed until 1976,
and the bourgeois parties ruling from 1976 onwards. The bourgeois parties
extended the net of public responsibility by nationalisation of large parts of
the steel and shipbuilding industries in order to guarantee employment to
several thousand employees . In this way the demand for publicly financed
intervention became increasingly stronger and the solution of the economic
crisis became more and more difficult. Yet the electorate still accepted in good
faith the governing parties' commitment to overcome the crisis.
But the Keynesian-inspired deficit spending policy is only possible during a
short period of time, due to the fact that loans have to be repaid and this will
create even greater problems than before if the economic situation has not
improved in the meantime. Thus the miscalculation about future economic
developments and the constraints of the political structure prevented an early
adjustment to the economic capacity of the country (and in other countries, as
for example Belgium, the United Kingdom, Poland, Denmark and Sweden).
In my view, the conclusion to be drawn is that it is not the social welfare
system per se which proves to be wrong, but the public's and the political
leaders' non-acceptance of the fact that spending must be adjusted to the
economic resources available .
As early as 1976 Wilensky, in an empirical study based on data from
19 countries, pointed out that the tax-welfare system backlash seen in several
countries cannot directly be linked to the level of welfare benefits in a society,
but can be traced to the prevailing socio-political traditions in a country. In
countries where the social welfare system by tradition had been limited to
those in need, cuts in social benefits were more likely to be approved by the
majority of the public because only small groups with limited political power
were affected. This has been the case, for example, in the United States . That
does not mean, however, that the economic situation will be strengthened.
Rather the situation of the marginal groups will be worse and that can create
more tensions in society and risks of violent reaction on the part of the groups
affected .
The economic CriSIS seen today and the long period of low economic
growth expected in the futu re will not permit an extension of the financial
benefits in the welfare societies on any appreciable scale. But, on the other
hand , problems of a shrinking labour market, structural changes and a grow-
ing proportion of aged people with the need for institutional care, will require
resources that either have to come from public taxation or from a reduction of
other private expenditures. What then are the solutions for the welfare society
in crisis?
Future trends in welfare societies

As Wilensky puts it in the cited report : "The revolution of expectations
must be channelled and contained because mass demands for benefits and ser-
vices are outrunning the capacity of government to meet them" (Wilensky,
1976, page 9).
The first step of a government should be to show in as detailed figures as
possible how public benefits and subsidies are spread in a country. Not
only social welfare benefits should be discussed, but all benefits and sub-
sidies paid by the public to private persons, companies or institutions.
These figures might show that it is not social welfare that is taking the
main part of available resources, and that the main beneficiaries are not
the poor relying on social security, but people in economically healthy
situations who benefit from tax-reductions, cultural subsidies or housing
benefits, as well as entrepreneurs and shareholders who gain economically
from structural aid programmes and the general taxation system .
It should become common knowledge to every citizen how income from
taxation is used and how public expenditures are divided between different
groups of society. Without such transparency concerning resource trans-
fers due to governmental action, any discussion about the limits of redis-
tribution policy would be rather superficial. It would merely reinforce the
tendencies in mass-media to blow up welfare abuses compared to econ-
omic crimes and abuse of public resources in administration.
The second step should be to show the real costs of the benefits that are
provided in order to establish a positive attitude towards welfare distribu-
tion among the people. Today, in most countries, the exact amount of
taxes paid is known to people whereas the total amount of benefits, e.g.
free education , health systems, housing subsidies, etc., is not generally
known and therefore underestimated. It should be possible for an ordinary
citizen to calculate his personal financial gains and losses in the welfare
system.
The third step should be to discuss rather openly, and without narrow-
minded perspectives caused by prevailing ideologies, whether certain bene-
fits should be financed by public or by private resources. In this discussion
the social aspects of the different models should be questioned and those
alternatives which imply undes ired social effects should be rejected (e.g. a
health system that allows adequate access only to those with a high
income) .
It should be clearly spelled out that a reduction of costs for social welfare
in the fields of education, health services and the labour market would
create a demand for high public expenditures in the long run in other
fields. For example police forces to cope with juvenile delinquency and
direct social benefits to prevent extreme poverty and starvation would be
required . Only long-term arrangements that guarantee a stable social order
in society will allow also those who prefer individual solutions to utilise
their income without the fear of being attacked by other groups in society.
Some critics of a comprehensive welfare system express their fear of
extended misuse of the system. This fear is often taken up by the press and
other news media and is also reflected in political discussion. Although
empirical studies show that such misuse of governmental benefits is rather
limited, it is none the less an important question for public opinion . It
should therefore be a strict rule in a country that a person who receives
social benefits, especially unemployment benefits, early pensions, etc.,
should still be obliged to make some contribution to society, depending on
his abilit ies. In a study in Sweden it was shown that the rehabilitation of
alcoholics who received early pensions without any obligations, was hin-
dered or even thwarted, whereas when they were obliged to fulfil certain
tasks in order to become entitled to each successive payment, alcohol
abuse among this group diminished.
Unemployed people should receive a benefit high enough to guarantee
their standard of living, but they should at the same time be obliged to do
some work for the public in areas that cannot be financed through the nor-
mal budget. This approach may not be appreciated by certain groups, par-
ticularly the trade unions, but it seems that it is a possible way to avoid the
unintended marginalisation of the unemployed or early pensioners. It may
be noted in passing that this approach could well coincide with a restruc-
turing of the labour market to adjust to technological and organisational
innovation. To conserve the present structure of the labour market by sub-
sidies or legislation will in the long run lead to further economic crises.
In conclusion one could say that the social welfare system should be pre-
served and/or extended to those areas where it is, socially and financially, the
most acceptable way of organising services in society. But one should bear in
mind that it is also impossible in the most comprehensive system to neglect the
limitations of a given country. On the other hand, it would in the long run be
disasterous for a society to build its structure on the principle that the fittest
will survive and that the free market will solve all problems. Only a society
with a minimum of internal tensions and economic differences will be able to
preserve its social and political structure and prevent the advent of political
extremism.
Bibliography
A more comprehensive discussion of the development of the Swedish welfare system
can be found in the following books (in English):
Acta sociologica: Vol. 21. Special congress issue: " The Nordic Welfare States", Oslo,
1978.
The Biography of a People : Royal Ministry of Foreign Affa irs, Stockholm , 1974.
Wilensky, H. : The Welfare State and Equality, London , 1975.
Wilensky, H.: The 'New' Corporatism, Centralization and the Welfare State, London,
1976.
7 Social Welfare and Social
Services in Italy Since 1950
PIERPAOLO DONATI
The different stages of development

This article presents a brief analysis of social policy in Italy since 1950, and
deals in particular with policy concerning the social services. I First of all, it is
necessary to describe the different stages in the historical development of this
social policy, of which four may be distinguished in post-war Italy . They
begin with the establishment of the Italian Republic, under whose Constitu-
tion the model of the welfare state already existing in other Western countries
was adopted. "
From 1950 to the early 1960s (the residual model of the welfare state). Ital -
ian society during this period was built on the liberal model of the "open
society" turned towards post-war reconstruction . State social security was
organised on the basis of the social insurance system formerly elaborated by
the fascist regime (1925-43). This inherited system was part of the machinery
of a residual welfare state that was slowly moving towards an institutional
model? based on the new ideological principles outlined in the Constitution.
Many of the issues discussed during this period were embodied in the law dur-
ing the following stages .
From the early 1960s to 1970 (the ideological roots of the institutional
model) . This was a period of fertile transition . Laws were enacted to ensure
some of the social rights" prescribed by the Constitution (for instance, the Act
on elementary education with the extension of compulsory schooling to the
age of 14). On the other hand, a crucial debate among the political parties
developed about the reorganisation of social security, social services, and
social action in the field of labour. The main concern was the planning of
social policy, at all levels of public administration, with the decentralisation of
public assistance to local authorities (regions and communesj.>
From 1970 to 1975 (the bases of the institut ional welfare state : the first
regional legislature). This is the period of the actual decentralisation of wel-
fare. Functions previously carried out by the central Government were trans-
ferred to the new regional governments (or " ordinary statute" regions), which
were made autonomous in these matters through budgetary appropriations
(Act No. 281/1970). This Act gave effect to the provisions of art icle 117 of the
Constitution.
The reorganisation of social services was based essentially on the principle
that the commune should be held responsible for the provision and adminis-
tration of the great majority of social services. Responsibility for the planning
and co-ordination of social measures in welfare sectors was conferred on the
region, as the highest local authority.
From 1975 to 1980 (the realisation of the institutional model, with a trend
towards a "total welfare state": the second regional legislature). Th is is the
most effective stage of social reform. It begins with Act No. 385/1975 (enti-
tled: "Principles for the organisation of the regions and of public administra-
tion") . A subsequent decree of the President of the Republic (No . 616/1977)
laid down the procedure for giving effect to this Act. 6
The most significant reform of the period was, without a doubt, that of
the health-care system (Act No. 833/1978). This reform embraced the funda-
mental aims of universality and equality, preventive measures and wide par-
ticipation in the provision of public health services.
In considering these four stages, I would outline a few basic trends that
can be detected to some extent in other welfare systems , though there are also
several differences.
- The growth of public action in comparison with that of private institutions
(whether profit-making or non-profit-making). The Italian State, particu-
larly since the turning-point of 1970, has been gradually breaking out of
the former limited system of public assistance which operated purely on a
social insurance basis and relied heavily on means tests and the principle of
selectivity. The effort required to build up an institutional welfare model
of social policy has been great but, in my opinion , the actual model it has
led to can be considered a quasi-total welfare model, since it embodies the
principle that all needs, whether manifest, potential, or of any other
nature, must be met by statutory agencies. That is to say public institutions
-the necessity to apply to private agencies no longer existing in principle
at any rate. The trend in social policy is to make private agencies unneces-
sary or, at best, marginal to the system, 7 though they can still be applied to
in practice , and reality is thus very far from corresponding to the principle.
The essential fact is that this principle was the focus of social legislation in
the 1970s.
Growth of expenditure on public services. It is obvious that the commit-
ment to satisfy the basic needs of everybody, irrespective of the contribu-
tion that he or she makes to the production of goods and services, will
cause social expenses to get out of hand. 8 At the same time, the effort to
create the welfare state requires an enormous expansion of the fiscal
machinery which, in turn, means the increasing economic and social
dependence of individuals, families, and social groups on the public
administration. 9
Social Welfare and Social Services in Italy Since 1950 103
The increasing fragmentation of welfare measures. One of the aims of

social reform in the 1970s was to overcome the extreme fragmentation of
social action (until then managed by many different ministries and other
public or quasi -public agencies) by unifying them at the local level, in what
is known as the "local social-health unit" . 10 Unfortunately, this aim has
not been realised. In fact, the establishment of the first regional legisla-
tures and the subsequent differentiation between them during the second
regional legislatures have caused further fragmentation in the administra-
tion of social services, even within the same "local unit" .
The administrative crisis. The proliferation of difficulties due to the
increasing complexity of the welfare system has greatly affected the ability
of central and local authorities to ensure social changes. II At the beginning
of the 1980s the political administrative subsystem seems unable: (a) to
undertake effective and efficient social action ; (b) to co-ordinate welfare
measures, at either the national or the local level; and, above all, (c) to
control the adverse effects of disorganisation in the public bureaucracy, an
excessive dependence on public assistance, the rise of new types of
poverty, 12 and so on.
Obviously, these are only some of the negative consequences at the present
time. None the less, they are at the core of the present crisisand the difficulties
that Italian social policy will have to face during the 1980s. The crisis today is
so vast, in economic terms, and even more in the political and cultural out-
look, 13 that it endangers the whole pattern laid down during the past decade.
My task, then, is to give a general outline of the reasons why the Italian wel-
fare state finds itself in this situation. 14
Main principles and aims of social reforms

in the 1970s: manifest and
potential functions, and consequences
Here I should like to delineate the basic principles upon which Italian
social policy is pursued today. These principles are summarised in table I,
together with some of their positive and negative consequences. I shall discuss
only the most significant issues, since the limited length of this article does not
allow a full explanation of each point.
I . The political administrative decentralisation of social services to local
authorities IS is considered to be the first principle. It aims at unifying all social
services (and in general all welfare measures at the level of the " local health
unit" (USL), in accordance with the planning and co-ordination established
by the region.
The potential function can be seen in the need to counteract inefficiency,
disorganisation, and the lack of political co-ordination on the part of the
central Government.
Table 1. Main principles and alms of Italian legislation in the field of social polley in the 19705
~
Principles and aims Manifestfunctions Potential and Consequences
latent functions
I. Political administrative To administer services at the To relieve the central Subordination of social services and
decentralisation of social local level (communes) government because of its measures to the local political structure
services and measures lack of effectiveness and (on party lines)
co-ordination
2. Systemic planning To offer services capable of To control the ways needs Appearance of new needs that cannot be
meeting any need are satisfied satisfied
3. Universality To offer uniform (standard) To make access to social Pressures towards the redifferentiation of
services to all beneficiaries services equal and to control services (a return to more individual
the cost treatment)
4. Integration of different The full co-ordination of To rectify potentially Increasing medicalisation of life (needs are
forms of social assistance social action abnormal situations met according to a "medical paradigm")
S. Social participation To influence public decisions To seek general political Frustration and a feeling of alienation
agreement among beneficiaries and the imposition of
a rigid corporate structure on the public ~
bureaucracies
6. Social prevention Removal of pathological Collective mobilisation for Reinforcement of the general need for
""~
causes of social problems the control of the whole security (with the increase of stress and the ~
environment stimulation of needs)
7. Desegregation of deprived To develop the personality Blending what is "different" Denial or repression of the social reality of
~
S·
groups of marginal people through into what is "normal" or the "different" and of cases calling for a
full social integration "equal" non -systemic approach ~
<0
8. Free services To make civil and social Systemic management of Favouring some (middle) social strata and 1\
rights effective (towards full social stratification depriving others 3
or substantial equality)
Increasing social awareness Modernisation of life styles Increasing dependency on social services
~
9. Widespread information on C1
available social services and of new social rights and consumption (in terms
measures of social services) ~
~
S
~
Social Welfare and Social Serv ices in Italy Since 1950 105
The consequence is the subordination of the great majority of social ser-

vices, through personal relations , to the negotiations of the political parties in
the local areas .
2. Systemic planning 16 is the second principle, for, although there can be
other kinds of social planning, in particular kinds in which the agencies of
"civil society" 17 (solidarity groups, volunteers, private organisations, and so
on) are taken into consideration, Italian legislation does not treat them as
essential but rather as marginal forces for particular areas and groups under
its social policy . It is true that these non-statutory agencies are recognised and
allowed to operate as welfare agencies, so far as they conform to the public
model of services provided, but they are not looked on as a solution for every-
body , and certainly not for the deprived. In other words, I would suggest that
the Italian legislation to which I refer lays down a planning based on a kind
of "pluralism within the same, uniform institut ions", rather than a type of
"pluralism between different institutions" , public and private.
Against this background, the manifest function of planning social action is
to offer services that are adequate to the entirety of needs (health, economic,
social) through an approach I call the "social-epidemiology paradigm", 18
whose main feature is to maximise the control of society over needs instead of
enabling people to cope with their needs themselves.
The potential function is to control in principle-through "system integra-
tion " rather than "social integration" 19_all the various ways in which needs
are met, in order to achieve other important aims and, in particular, social
equality.
The consequence is a new differentiation of needs and of the social
demand for services. This situation arises because systemic planning is basi-
cally unable to assess and to foresee all needs, and yet it compels people to
satisfy their needs without any real freedom of choice or individual contact
with institutions.
3. Universality of services. Another basic principle is the abolition of the
requirement to prove that services are needed. Explicitly, the new legislation
offers standard (equal) services for everybody, irrespective of social status or
area of residence.
Such a trend towards uniformity is consistent with the aim of achieving
equality and controlling the cost of services. Yet it, too, like the previous prin-
ciple, has the effect of making people seek a return to more individual treat-
ment in all welfare services and measures. 20
4. The integration of all kinds of services. This principle corresponds to
the aim of overcoming the fragmentation of welfare measures, which up to
now have been almost completely uncoordinated.
The latent function is that of controlling deviation and all situations pre-
senting conflicting problems .
The negative effect consists in a new struggle between services after they
have been integrated. It can be clearly seen nowadays when we observe that
social services are becoming more and more separated from health services.
This consequence may also be called a "process of the medicalisation of life":

that is the dissemination of the medical paradigm as the way of solving social
problems (for instance, in the sphere of family services). 21
5. Social participation. This principle is a basic component of all Italian
legislation on welfare in the sense that, ideally, any service must have the par-
ticipation of the professionals who administer it and of the beneficiaries.
As a matter of fact, there has been little effort to specify in detail how the
process of decision-making should incorporate social participation and make
it effective. 22 The general administrative framework, none the less, must allow
for social and civic participation at every level.
The potential function can be seen in the need of the system to achieve a
new general political agreement.
The consequences, on the other hand, are not consistent with the principle.
In fact, social participation has no influence in practice on the decision-mak-
ing processes. This situation: (a) creates frustration and a sense of alienation
among the beneficiaries; and (b) imposes a rigid corporate structure on the
personnel of public bureaucracies. These effects are not peculiar to Italian
society. In Italy, however, they are particularly strong for two reasons:
(i) beneficiaries experience a lack of alternatives in the choice of the social aids
and services available, and (ii) there is an acute scarcity of opportunities for
occupational mobility among the personnel providing social aids.
6. Prevention. The Italian welfare system is very much concerned with the
prevention of conditions of need arising from unemployment, any kind of dis-
ease, and in general, any situation of social deprivation (relative or absolute).
Primary, secondary and tertiary forms of prevention receive special
emphasis in the new National Health Service. They are aimed at the elimina-
tion of any pathological situation that can produce illness or social problems.
The potential function is to mobilise people in order to control the whole
environment.
Negative effects are linked to the strong emphasis on the generalised need
for "security" . First, there is an increase of social anxiety and tension, both in
the minds of people and in the relations between beneficiaries and institutions.
Secondly, a disproportionate use is made of technical tools to meet social
needs, and this situation produces medical and social iatrogenesis .
7. The desegregation of deprived groups of the population. Since 1968the
deinstitutionalisation of the deprived (the handicapped, poor children, the
elderly, delinquent youth, etc.) has gone very far in Italy. Many shelter institu-
tions, such as alms houses, have been closed.
This trend has been a result of the campaign against "total institutions"
proposed by E. Goffman. But, in fact, it has also been due to the ideological
difficulty during the I970s of separating and distinguishing" normal" persons
from "abnormal" (or "different" persons: those who are-in a sense-par-
ticularly wanting or weak in certain physical, psychological, or socio-
economic respects.
Positive results have been achieved in the defence of civil and social rights.
There have also, however, been negative results. People turned out of shelter
institutions have sometimes been sent to disorganised or non-existent families
or to developing personal social services (or-as we say-"open" services. In
other words, they have been placed in ordinary-life situations without ade-
quate aid or support.
Some difficulties and dilemmas of the Italian welfare

state: an interpretation of the crisis
Today there is an obvious and wide gap between theoretical statements
(principles) and the actual achievements of Italian social policy. On the one
hand, it is claimed that the system should deal with all social needs, meeting
them through public institutions. On the other hand , social needs are increas-
ing so fast that they cannot be met by public policy.
The needs are increasing in number while social expenses have to be cut.
There is an evident vicious circle in which social needs and social services,
interacting with each other, expand while economic resources become scarcer
and scarcer.
The social legislation of the 1970s was enacted in the midst of a socio-
political crisis that prevented the realisat ion of its main principles. What are
the reasons for this failure?
The economic causes are very clear (stagflation and so on), but-in my
opinion-they are not the most significant. After all, few financial restrictions
were imposed during the 1970s and a great deal of money wasspent in order to
implement social policy . According to H. Wilensky, Italy is one of the coun-
tries where most is spent on welfare. 23 A more convincing explanation lies in
the difficulties of the political administrative subsystem . As a matter of fact,
the problems are linked to the inability of the Italian public administration to
reform itself in accordance with the new principles of decentralisation, plan-
ning, prevention, participation, and so on. 24
Taking into account these political and organisational factors, I believe
that the failure must be understood in yet another way. I would argue that,
even if the public administration were able to change quickly and efficiently,
the system elaborated in the 1970s would not work, for the main problems
cannot be understood and overcome simply by adopting a systemic neo-func-
tional approach. The weakness of Italian social policy is related to the limita-
tion of its functionalist framework . Here are some cases in point :
- Dilemma of the spiral of needs and services. Social measures try to catch
up with social needs, but the latter always keep ahead and are subject to
factors that cannot be controlled by functional means.
- Dilemma of reductions in welfare expenditure. It is impossible for public
expenditure in the social sectors to expand any further for at least three
reasons : (a) the strong fiscal pressure existing in Italy (compared with
other countries) ; (b) the large financial deficit of the public administra-
tion; and (c) the fact that the increase in social expenditure in the 1970s did
not achieve significant improvements in the quality and quantity of the
services provided for the beneficiaries .
- Dilemma of decreasing marginal utility in public services. There is, more-
over, the fact of the decreasing marginal utility of a purely quantitative
increase in services beyond a certain threshold because of the high cost.
- Dilemma of negative effects. Last, but not least, a merely pragmatic
management of the crisis cannot avoid further adverse consequences, espe-
cially the multiplying effect of needs, the medicalisation of life and the
imposition of a corporate structure on bureaucracies.
In short, if we interpret the Italian social policy of the I970s as an attempt
to provide happiness through the building up of a total welfare state, its main
feature lies in a planning philosophy under which no social problems should
ever arise. Execution is entrusted entirely to systemic controls" that are sup-
posed to be effective and efficient. Such a "philosophy" of social policy leads
to a negation of what I would call the "potentials of the life-world" . In other
words, the groups and agencies of " civil society" which are kept marginal and
are integrated or allowed only supplementary roles.
Two corollaries to this way of thinking are likely to become increasingly
obvious:
On the one hand, a growing dependence of " civil society" on public assist-
ance, which can be seen as a general process of proletarianisation. In this
connection, I would say that the welfare state , despite its declared purpose
of bringing happiness, actually creates uneasiness and, indeed, the oppo-
site of welfare.
On the other hand, a growing inflexibility in the organisation of social ser-
vices and measures, even on the labour market. 26 This inflexibility is both
the cause and the effect of the decline in the social participation that used
to stem from such spontaneous initiatives as self-management, volunteer
work, and in general, all "social private" activities 27 motivated by
altru ism and the urge to collaborate.
In Italy the result of these two corollaries is the widespread return to pri-
vate intiative of welfare agencies that offer benefits on a commercial basis.
This happens in all fields: education (schools), health (hosp itals, clinics, etc.),
the labour market (development of the "submerged economy " with the
spread of "black market" work and of a second and even a third job not offi-
cially declared), assistance to the elderly, support for handicapped people,
and all other personal social services. 28
All this leads to the obvious conclusion that the present situation cannot be
effectively met by acting within the boundaries and the methodology of the
social policy followed up to now. In my opinion, it is necessary to act in both
the public and the private spheres by trying to establish communication
between them and so establish more rational and sensitive interrelations and
interdependence . 29
Social Welfareand Social Servicesin Italy Since 1950 109
In the public sphere the welfare planning and co-ordinating capacity of the
administration must be improved . In the private sphere citizens must be
allowed to participate in the social services, both at the planning stage and at
the final stage where the services are provided . This requires, in particular, a
new legitimisation of what I call "social private" spheres, non-profit-making
agencies that run services on a self-management basis. They accept controls
on both their inputs and their outputs, but are really autonomous in the way
they operate, though they guarantee certain standards in the benefits that they
provide. Only the existence of such agencies and social groups can make social
rights and freedom effective.
This means that we need a new inst itutional framework for welfare meas-
ures, something along the lines foreseen by G. Myrdal , for instance, when he
said that the new phase of the welfare state must put social welfare institutions
under the more direct control of the people. 30
To conclude, the Italian social legislation of the 1970swas aimed at sepa-
rating, if not polarising, public and private spheres at the very moment when
they were beginning to overlap. We need to redirect social policies towards a
sharing by public and private institutions on lines of reciprocal autonomy,
instead of thinking only in terms of systemic (public) measures. In this way,
members of the public can be made responsible for their welfare rights and for
the services they use, and we can expect to avoid the present negative effects
and dilemmas of an " empty" and ineffective welfare state .
Notes
I My conception of " social policy" is very near to that presented by R. Titmuss : Social
policy: an introduction (London , Allen and Unwin, 1974). Given the distinctions between fiscal,
occupational and social welfare , however, 1shall concentrate mainly on the third, which can also
be called "p ublic assistance" (A. Sinfield : "Analyses in the social division of welfare" , in Jour-
nal of Social Policy, Vol. 7, Part 2, 1978).
2 See A. Ardigo , 1977; P . Donat i, 1981b.
3 The concepts of the residual , institutional and total (or normative) welfare state are taken
from R. Mishra : Society and social policy (London , Macmillan, 1977). For a critical examination
of these models see P. Donati, 1981b.
4 "Social rights" are taken to mean rights relating to an adequate level of living (minimum
package of goods and services) for everybody.
5 The purpose of socio-economic planning was established, in particular, by the Ministero
del Bilancio e della Programmazione : Progetto 80 (Florence, Sansoni, 1970). For a history of
socio-economic planning in Italy during these years see G. Ruffolo, 1973.
6 On these topics see : M.C. Bassanini et al. , 1977; A. Barbera and F. Bassanini (eds.), 1979.
7 For a general outl ine see A. Zucconi (ed.) , 1974.
8 See F. Reviglio, 1977, Censis, 1980.
9 See F. Forteet al., 1978; and , on the family, P. Donati, 1981a. This is why we speak of the
Italian welfare state as an " assistance" state in a negative sense, meaning that it merely enables
people to survive: A. Becchi Collida, 1978, 1979.
10 "Unit" here means a territorial area where welfare servicesare administered and furnished
to a certain population (rang ing from 50,000 to 200,000 people). Usually it is divided into sub-
units (districts and elementary areas). In Italian it is called "unitit socio-sanitaria locale" (USL).
II For a general account see Censis, 1980.

12 On traditional poverty in Italy see G. Sarpellon , 1980; on new kinds of poverty, Censis,
1979.
13On the present administrative crisis of the Italian welfare state see A. Ard igo, 1980.
14More details and statistical data are included in P . Donati , 1981c.
15 On the adm inistrative reorganisation see A. Barbera and F. Bassanini (eds.), 1979. On the
" local unit" of the social services see C. Trevisan , 1978.
16 " Systemic planning" is taken to mean planning placed entirely in the hands of public or
political bodies, whether in respect of the assessment of needs or of the provision of social
services.
17 " Civil society" is taken to mean people, groups and agencies acting in various sectors of
welfare without the influence or control of political parties .
18 A theoretical analysis of this paradigm is given in P. Donati , 1981a, Chapter 5.
19 According to the distinction made by D. Lockwood : " Some remarks on the 'social
system' ", in British Journal of Sociology, VII, 2, 1956.
20 A description and interpretation of the search for a return to more ind ividual treatment
can be found in the reports of the social situation of the country (Censis, 1980 and previous years :
1977,1978,1979).
21 An example of this general trend can be found in a survey of family services: P . Donati,
1979.
22 A general outline of participation in the National Health Service is given in A. Ardigo ,
1979.
23 See H. Wilensky; The welfare state and equality (Berkeley, University of California Press ,
1975).
24 In this connect ion there are many interesting contributions both theore tical (R. M. Russo,
1974; F. Cazzola, 1976; F. Terranova, 1975)and empirical (an example of a survey is given by
R. Scortegagna. 1981).
25 As interpreted by C. Offe , 1978.
26 On the relations between the welfare state and the labour market in Italy see S. Bruno,
1978; A. Zevi, 1978; A. Becchi Collida (ed .) , 1978, 1979.
27 The theory of "social private spheres" is outlined in the introduction to my book,
P. Donati , 1978.
28 See E. Sainsbur y: The personal social services (London, Pitman , 1977).
29 In order to deepen this perspective as it is today proposed in Italy see A. Ardigo, 1980;
P . Donati, 1981a, 1981b.
30 G. Myrdal: Beyond the welfare state (London, Duckworth, 1960).
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Index
abuses 98,99 (seealso fraud) cuts in 98

accident insurance 57, 58, 67 demand for 98
accident prevention 67, 68 distribution of x, 37,38
administration, public 29,101-2,104,106 employment 34,51,52,59
AffirmativeAction (USA) 74 expenditure on xi
ageing population 27, 28 failure of 38
agriculture 58, 60 housing 97, 98
Aid to Familieswith Dependent Children maternity 61, 67, 95
(AFDC)(USA) 75,76,78 selective 37
alcoholism 99 sickness 48
alienation 106 social insurance 66
allowances 28-9,37 ,38,47 (seealso supplementary 62
benefits) unemployment 43,60,97,99
accident 52 voluntary 93
child 38,95,97 wartime 60
disabled 28 welfare 91, 93
family 7,33 ,38,48 ,60 ,65,68 Berne University Institute of Sociology 62
housing 95 Beveridge , W. 44,58
income limitsto 33 binh rate 23,92
increasednumber of 34 Bismark, Otto von 68
invalidity 52 black riots 73
loss of earnings 65 Brown Case (USA) 72,80,81,89023
maternity 1, 12n13,95 bureaucracy 41,42,103,104,106
negativeeffects of 34 bureaucratic centralism 24
sickness 38, 52, 53 busing 74
unemployment 39
Amado,J. 54 'cantonalisation' 69
anti-tax lobby 79 cantons 63,64,67
anxiety, social 106 capital, export of 35,50
Aron, Raymond 25 capitalism 14, 18,20
'assistance for self help' 93 Caner, President 78,79,86
assistance in kind 75 Catholic Church 58
assistance, public 101,102,108 charity institutions 5
AVS (Federal Old Age, & Survivors' Chicago School 86
InsuranceScheme, Switzerland) 61-6 child care 96
AVSIAI commission 63 child allowances 38,95 ,97
children's benefits 95
Becker, Gary 42 children, protection of
Belgium 2,28-9,32,39,97 Christianity 58
benefits, social (seealso allowances) 67,76, Christian tradition 93
95,98,99,109 civildefence 64,65
cost of 37,98 civil rights 104, 107
ceilingof 33 Civil Rights legislation (USA) 72
children's 95 Civil Rights Act (l964)(USA) 72,74 ,81
112
Index 113
clothing 94 equality of 8
Code of Obligations 1911 (Switzerland) 57 free 95,98
Coleman Report 73,81,82 goals of 4
collective bargaining 52 higher 2,3,41
commerce 15,96 pre-primary 1-2, 73
Community Action Programme (USA) 73 reformed 38
Conservatives (Sweden) 92 university 2
Congress, US 79,86 educational supplies 28
Constitution, Italian 101,102 educational systems x
Constitution, Swiss 61 EEC 24
consumption 47,94,95,96 egalitarianism 71,79 -86
Council of Europe 61 eight-hour day 58
criminality 11 Eighth Development Plan (France) 1, 23
cultural distribution 36 elderly, care of 96, 106(seealso old
cultural indeterminateness 16 people)
culture 29, 30 employee participation 46
customs barriers 45 employment 1,7,44,45 ,46-7,49
autonomous 46- 7
decentralisation 101,103,107 benefit 34,51 ,52,59
decreasing marginal utility 108 casual 32
decision-making process 106 clandestine 32,35
deficit spending 97 full 44
deinstitutionalisation 37,52, 104, 106 heteronomous 46- 7, 50
delinquency, juvenile 99,106 insecure 32
democracy 20 low-paid 32
Democratic Party (USA) 76-9 part-time 42
Democratic Radical Party (Switzerland) 58 public 95
Denmark 2, 97 encyclicals, papal 58
deprivation 106 England 57
deprived groups 104, 106 'enterprise economists' 45
'derestriction' 32 environment
desegregation 104, 106 control of 104, 106
disabled people 28,66, 106, 108 protection of 1, 3
allowances 28 environmental development 5
institutions for 29, 30 equality 40,58 ,71-2,79-83,86-8,93,
pensions 62-3,75 95,96,102,105
disease, iatrogenesis of 27,43 European Social Charter 58
disinvestment 35,44,50 European Social Services Convention (1964)
division of labour 45 58
dual economy 45,46,49 expectations 98
dualism , economic 46, 47
dual system 32 Factory Act (1877)(Switzerland) 57,58
families, financial aid to 1,3, 7,12n13 , 29
economic crisis 15,92,97,98 (seealso family allowances)
economic dualism 46, 47 family 36,43,49,51-2,75-6,96,102
economicgroW1h 31,50,51,95,96,98 family allowances 7,33 ,38,48,60,65,68
social costs of 51 Family Assistance Plan (FAP)(USA)
Economic Opportunity Act (USA) 73 77-8,86
economic prosperity 3, 53 family policy 1, 68
economy , state direction of 36, 44 family protection 65
economy, underground 45 fares, special 29, 34
education 1,2,7,10,29,40-1 ,43,51 ,57, farmers 65
93-4,96,101,108 farming 96
cuts 2,99 Federal Act of Supplementary Benefits
compulsory 101 (l966)(Switzerland) 61
demand for 31 Federal Military Insurance Act (Switzerland)
democratisation of 38 64
effects of busing on 74 financial constraints ix
elementary 101 fiscal machinery 102
fiscal policy 95 income

fiscal pressure 107 annual 16
food 2,84 ,94 distribution 29, 95
Food Stamps Act (1977)(USA) 78 guaranteed 28
food stamps scheme (USA) 75,78 guarantees 44
forecasts, economic 13 replacement 32
forecasts, social 13 social 95
forestry 96 taxable 35
Forrer Sickness& Accident Insurance Act income tax (see tax, income)
(1900)(Switzerland) 57,58 industry 31,92,97
fragmentation 103, 105 industrial workers 33
France xi, 1- 3,23,38,47 inequality 72-4,84-5 (seealso equality)
fraternity 58 inflation 27,35,44,95
fraud 33,50,77 information 93, 104
freedom of choice 105 institutional welfare model 102
free education 95, 98 institutions
free market 99 private 105
free services 104 public 105,107
Friedman, M. 37,86 sheltered 106-7
insurance
additional 33
Galbraith, J. K. 25,71 collective 66, 67
Geiger , T. 37 compulsory 67
Germany, Federal Republic of 2, 24 invalidity 66- 7, 69
goal, concept of 4 maternity 60-1,67-8
Goffrnan, E. 106 old age 61
grants, study 29,38,52 private 33
Great Society 72,76- 7,81 schemes 93
Greffe, X. 39,46-7 sickness 60- 1
system, general (Sweden) 95
integration 93,104,105
handicapped (seeunder disabled people) international agencies 2
Hayek ,F.A.13,17 -21 intervensionism xi, 36, 42
'head of the family' 33 intervention,State 36-7,44-5,97
Head Start Programme(USA) 1- 2, 10,73 Invalidity Insurance Act 66- 7,69
health 29,51,53,95, 105, 108 Italy 2, 101-111
health care 2,7, 10, 12n3, 28, 93
health care insurance 33,38 ,43
health services 31,99,105 Jencks , C. 73,82-4,87
health systems 98, 99, 102 Jensen, A . 83,84
'help for selfdestruction' 93 Johnson , President 72,76
Hirschman, Albert 40 John XXIII 58
historical interference, theory of 20 Jouvenel, Bertrand de 31
holidays, paid 10
hospitals 29,30,33,51-2
housing 7, 12n13,29, 38, 53, 75, 92, 94-6
Kennedy, President 72
allowance 95
Keynes, J. M. 44
benefits 97- 8 Keynesian theories 93,96-7
construction loans 29, 38
Kolakowski, Leszek 25
subsidies 98
Hummel, Charles 4
labour market 98,99,108
iatrogenesis 27,43, 106 labour movement 58
I1ich, Ivan, 27, 43 labour question 57
illness 27 laissez faire 18-19,45
ILO SocialSecurity Minimum Standards Lavergne ,F.de 51
Convention (1952) 58,61 Lazarsfeld 8
immigration policies 2- 4 LeoXIII 58
imprisonment 11 Lepage, H. 35
Index 115
liberalism Nixon, Richard 76,77 ,86

classical 13, 17 non-statutory agencies 105
decline of 20 'normal' 104, 106
nineteenth-century 18,21 nurseries 29,51
liberal principles 58 nutrition 95
livelihood security scheme (Belgium) 28-9
loans 97 objectivesas to means 4
local authorit ies 101- 3 objectives as to results 4
'local health unit' (USL)(Italy) 103 objectivesocialresearch 9
'local social-health unit' 103 occupationalstructure, Sweden 96
old age insurance 61
macro-research 7 old people 28,29,30
malnutrition 78 'open services' 107
manufacturing 96 open society 101
Marx,K. 21 Orfield, G. 72
mass services 43
Materet Magisrra 58 'parallel economy' 32,35-6,45
maternity participation 37,41
allowances 1, 12n13, 35 civil 106
benefit 61,67,95 social 104,106-9
insurance 60, 67- 8 Paul VI 58
leave 2,3,7 peasants 58
means tests 102 pensions, 10, 33-4, 39, 52-3, 62-3, 75, 96,
medical assistance 78 99
medical care 27,61,94 (see also health additional 33, 48
care) funds 53
'medical paradigm ' 104,106 retirement 10,33 ,48 ,62-3,75,95
medical services 33,43 supplementary 95
Medicard (USA) 75 widows' 75
Medicare (USA) 75 pensioners 27, 38,63
mentally ill 52 pharmaceuticalexpenses 38
migration policies 2, 34 Piaget, Jean 9, 12n11
military insurance scheme (Switzerland) Pigou 44
59,61-2,64 PiusXI 58
military service planning 7,104-6
compensation for 60- 2,65 Plattner, M. F. 85
loss of studies due to 60 pluralism 105
'minimex' (Belgium) 28,39 Poland 97
minimum family income 77 politicalagreement 104,106
minimum income 85-6 poitical parties 58,103-5
minimum livingallowance 28,34,39,48 poor relief 93
minimum security arrangements 47 population
mobility active 31-2
manpower 51 ageing 27
occupational 106 crisis(Sweden) 92,95
Moyniham, D. P. 82 inactive 32
Myrdal, Alva 92, 95 poverty 14-15,71,73,75,85,93,99
Myrdal, Gunar 92,95, 109 poverty line 85
pressure groups 5
Nathan , R . 78 prevention 104, 106- 7
National Health Service (Italy) 106 preventive measures 102-4
nationalisation 97 prices 44
needs and services spiral 107 private agencies 102
negative effects 104, 108 private enterprise 36-7,42
neo-functional approach 107 private initiative 35
nco-liberalism 44- 9, 50 private institutions 102
nco-protectionism 36 'process of the medicalisationof life' 106
' New Deal' 75 Program for Better Jobs and Incomes (PBJI)
'new inequality' 39 (USA) 79
Protestant social ethics 58 sheltered institutions 106- 7

psychiatrictreatment 43 sickness 93
public agencies 103 sickness and accident insurance (seeunder
public assistance 28, 53 insurance)
centres 28 sick pay 97
departments 41 social assistance 34,35,48
public expenditure 102 social budgets 27, 32- 4
public institutions 102 social costs 51
public management 41 Social Democratic Party (Sweden) 91- 2
public services 96 social dismantlement 57
social economy 37
'social epidemiology paradigm' 105
Quadragesimo Anno 58
social insurance 39,40,44,47-8,53,58,
quasi-total welfare model 102
101-2
quota systems 86
socialism 3,13,14-7,44
Socialist Party (Sweden) 92-3,97
Rawls, I . 84-5,88 social justice 24
recession x, 27,32,46,48,53,96 social market economy 13,24,52
recreation 94 social net 93
redistribution social policy 5, 7
blocked 38-9 action ix
ethics of 80 aims x
horizontal 37 criticism of ix, 27
income 84 evaluation of 10
inverted 38-40,53 expansion of x
modelof 96 expenditure 20,28,31-3,43,53,75,91
policy 98 goals ix, 14
vertical 37 in state of crisis ix, 27
welfare 95- 6 instruments of ix
referenda 57, 61 institutional welfare model of 102
refunds 38 measures 1, 93
regional government 101- 2 negative effects of ix - x
regional legislation 101,103 objectives x,2-4
replacement income 32 prospects 27
Representatives , House of (USA) 78-9 social sciences and 5
Republican Party (USA) xi, 78 trends x-xi
Rerum Novarum 58 social problems 5
research x,5,8 ,9 social professions x
retirement pensions 10,33,48,62-3,75 social protection 12n13
rights, social 107 social receipts 31- 2
right to work 44 social research 5- 9, 40
Ropke, W. T. 13,21-4 social researchers 6
Rule of Law 21-4 social rights 101
Rustin,B. 82 social scenario 49- 53
social sciences 5- 7
social sector
schools 29-30,51-2,74,79,108 costs 30-2
equality in 81- 4 employment 29-30
meals, free 95 extension of 29
racial integration in 73- 4, 84 operational costs 30- 1
school-leavingage 43 salaries 28,30-1
Schulthess Old Age and Survivors' Insurance social security x, 28, 34, 47,98, 101 (see
Act (1931)(Switzerland) 57-8 also allowances ; benefits)
Schumpeter, J. A . 13, 14- 7,24,25 aims 41
selectivity 102 Beveridge Plan (1942) 58
self-employed 58,95,108-9 contributions 33
self-management 108-9 growthof 28
self-management socialism 46 need for 57
Senate (USA) n , 79 'net' 28
servicemen 59-60 schemes 29, 68
Index 117
socialservices ix, 37, 43,101-5,107-8 Unemployment Insurance Act 64

solidarity contributions 61 UNESCO 24
solidarity groups 105 uniformity of services 104- 5
sport 30 universality of services 104-5
standard of living x, 3, 91, 99 urban growth 96
statutory agencies 102 USA xi, 1,71-90,97
steel industry 97
Steiner, G. 75
Stofaes, C. 54 Viet Nam war 73
Stolery , L. 47 Vikings 92
structural aid programmes 98 Vincens,Jean 45
students 28,38,41 vocational training 2, 12n13, 39, 51, 53, 73,
Students for a Democratic Society (SDS) 77
(USA) 84 voluntary aid 93
study grants 29, 38, 52 volunteers 105, 108
submerged economy 108 Voting Rights Act (USA) 72
subsidies 98
'supply economy' 44
Sweden 91-100 wage policy 95
wage restraint 32
Switzerland 57- 70
wealth, redistribution of (see redistribution)
welfare
target groups 5,38,42 allowances see allowances
tax benefits see benefits
avoidance 97 budgets ix, 50, 51, 52
ceilings 32 capitalism 31,44
evasion 35,50,97 distribution theory of 29
income 32 economic effects of 29,35
negative income 76 expenditure 24,27 ,31 ,34-5 ,52-3
taxation 29,39,50,95-8 fragmentation of 103
tax-welfare system backlash 97 'welfare idle' 50
teachers 41 welfare policy see Italy, social policy,
Third Way 13- 21 Sweden, Switzerland, USA
'three pillars ' 63 Welfare State ix, 10, 15, 27, 34, 35-8,
Thurow, L. 53 40-1,43,80
' tickets' 33 crisisof 27
'total institutions' 106 character 27
total welfare state 108 concept 10
trade unions 5,37,58,99 criticisms of 34- 8,43
training programmes 68 effects 35- 7
transport 29,34,52-3,96 expectations 35- 7
tripartism 41 policies 37, 40- 2
women
UK 58,97 employment and 31,49,51-2,96
underemployment 45 equal representation of 74
unemployment 12n13, 15,27,32,35,43, insurance and 61
45-6,49,60,92-3,96,106 worker 's movements 58
allowances 39 Work Incentive Program (WIN) (USA) 76
benefits 43,59,75,97 ,99 working hours 57- 8
insurance 62,64,65 working mothers 61
Unemployment Insurance Bill 65 work systems 49

Roger Girod, Patrick de Laubier, Alan Gladstone (Eds.) - Social Policy in Western Europe and The USA, 1950-80 - An Assessment-Palgrave Macmillan UK (1985)

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Roger Girod, Patrick de Laubier, Alan Gladstone (Eds.) - Social Policy in Western Europe and The USA, 1950-80 - An Assessment-Palgrave Macmillan UK (1985)

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SOCIAL POLICY IN WESTERN EUROPE AND THE USA, 1950-80

This volume seeks to trace certain tendencies and developments in social

Roger Girod is Professor of Sociology at the University of Geneva . In the

Patrick de Laubier is Professor of Sociology and Director of the

Alan Gladstone is Acting Director of the ILO's International Institute for

in association with the

All rights reserved. No reproduction, copy or transmission of

This book is printed on paper suitable for recycl ing and

List of Contributors vii

1 Social Research and the Development of Social Policy Objectives 1

2 Three Forecasts for Our Time 13

3 Social Policy-Crisis or Mutation? 27

4 Swiss Social Policy Since 1950 57

5 Trends in the Social Policy Aims of the United States (1960-80) 71

6 Social Policy in Sweden (1950-80) 91

7 Social Welfare and Social Services in Italy Since 1950 101

Philippe Beneton is Professor at Rennes University , France.

Jacques Delcourt is Professor at the Catholic University of Louvain,

Pierpaolo Donati is Professor of Sociology, University of Bologna, Italy.

Roger Girod is Professor at the University of Geneva, Switzerland.

Alan Gladstone is Acting Director, International Institute for Labour

Jiirgen Hartmann is at the European Centre for Social Welfare Training

Patrick de Laubier is Professor of Sociology at the University of Geneva,

Hans-Peter Tschudi is Professor at the University of Basle and former

Social policy in the industrialised market economy countries is in a state of

different type of interventionist policy by the state in the social sphere , a

Let us begin with a few examples of social policy measures. Afterwards ,

areas). The methodology reflected by these reports has , however, been

Objectives and goals

Even in this case, however, the objective is not altogether an objective in

Research and social policy

Actors Stages in the formulation and implementation of social

Macro-research and micro-decision

Scientific delimitation and global diagnosis

In order to arrive at the maximum exactitude and objectivity, the ques-

Mere differences in the method of calculation, to give only one example,

FRG France Italy UK

(a) Annual average rate of increase of social

the somewhat fabulous panorama of the postwar generation, at least in the

can socialism be assimilated to mere appropriation by the State of resources

socialism because of the cultural indeterminateness of the latter and also

laissez-loire attitude but of encouraging competition for both economic and

Hayek, unlike Schumpeter, is perfectly able to describe the cultural ideal

In attempting to account for the contradictions between the ideals of a

medium-sized enterprises. A regulatory policy should also be applied to safe-

Imbalance of social budgets

Increase of welfare spending

• In French, minimum de moyen d'existence, commonly called " minimex".

Extension of social sectors

duction of elaborate and sophisticated technolog ies in the various sectors, is

Urgent measures to balance the social budget

to levy social security contributions on the undertaking's total value-added

consideration of the aggregate income of a married couple, for instance; and

The perverse effects of a social economy:

Particular aspects of the neo-liberal position are summarised in the follow-

economy". To reverse the unfavourable trend as regards investment and to

From social to economic intervention

A major perverse effect of interventionism

income groups among the population covered-i.e. people from families

responsibility to widely representative organs but rather substituting the inter-

Radical or essential criticisms

non-workers also? It is in answer to such questions that different scenarios for

Scenarios for the future