In recent decades, the language of “social investment” has entered the vocabularies of policy makers and academics alike. Social investment policies stand in sharp distinction to two alternatives: social consumption policies and neoliberal economic policies. Whereas social consumption policies, such as unemployment benefits and pensions, aim to mitigate the economic risks of income loss by providing redistributive transfers and insurance, social investment policies emphasize the supply side of the economy. By providing education, employment, and training services to citizens, from the very young through to the working age population, they promise to halt the proliferation of low-end jobs, to reduce inequality and poverty, and to underpin long-run economic growth. In the language of many prominent advocates of social investment, these policies deliver a “win-win”: addressing the poverty and dislocation of neoliberal labor markets, while harnessing these markets' potential for growth in a postindustrial global economy (Esping-Andersen 2000).
However, as is often the case, the reality of social investment policies has been more varied than the enthusiasm around them might suggest. This chapter focuses on the political determinants of social investment policies. Over the past three decades, while the overall percentage of GDP that OECD countries devote to education, family policy, and active labor market policy has grown, it has remained relatively constant as a percentage of total spending. Moreover, the countries at the top of the social investment league, the Nordic countries, have a history of such spending that long predates the current emphasis on investment. Indeed, recent assessments of social investment policies, while lauding their potential, have advanced more pessimistic conclusions (Jenson 2009; Morel, Palier, and Palme 2012).
This pattern raises several questions: Why have social investment policies emerged more forcefully in some contexts than others? What explains the particular patterns of investment? What are the implications of these trends for economic and political life across advanced capitalist economies?
To answer these questions, we make several claims. First, we conceptualize social investment policies as a set of distributive policies that have both individual and collective consequences.