Introduction

This chapter discusses the prospects for social investment approaches in the wake of the worst financial crisis for more than 80 years. It explores whether the pressures resulting from the crisis will prompt a reversal of social investment ideas and concepts aimed at changing the basic character of the welfare state from remedial to pre-emptive strategies.

The idea of social investment heavily influenced the European Union's (EU) Lisbon Strategy. The Lisbon Strategy saw itself as representing a new synthesis of competitive markets, knowledge-based investment and strategies for social inclusion, advocating a break with the neoliberal mindset of the previous two decades, while different in prescription to the Keynesian welfare state of the post-war era. This social investment ‘turn’ in policy thinking, as Hemerijck describes it, gathered momentum in the mid-1990s and owed a good deal to the intellectual influence of social scientists such as Gøsta Esping-Andersen. This new approach to the European social dimension was further developed in the landmark Belgian Presidency in 2001.

The Lisbon Strategy fell far short of its ambitious targets. Other chapters in this volume assess the diversity of social investment policies in Europe, analysing successes and failures and the tensions and synergies that have emerged over the last decade. The global financial crisis and recession, however, have added a new urgency to the debate about the future of social investment. Before the crisis, a great deal of discussion focused on the question of the Europeanisation of social and employment policy and whether EU processes were effective in promoting reform at member state level. Now the issue is whether a social investment strategy remains both coherent and politically feasible for the post-crisis era ahead. That is the focus of this chapter.

Crises are not only moments of catastrophe, but create unprecedented opportunities for social and economic reform. The current crisis has inevitably thrown up many challenges, but it also presents a window in which to transform the existing social and economic order. One outcome might be that Europe's political class will focus again on the importance of embedding a strong social dimension in Europe, echoing and building on Delors’ conception of Social Europe in the late 1980s, but for a very different era.