The twentieth century may be called the century of the welfare state. It saw the emergence, expansion and maturation of the welfare state as we know it. Some have claimed that these developments represent a ‘growth to limits’ (Flora, 1986) and in a way this communicates a vision that we, at the turn of the century, were about to see the end of history, or at least the end of the welfare state evolution. However, we have learnt from the first decade of the twenty-first century that, not only does the welfare state appear to be here to stay, it is also subject to continued reform. This started already in the late 1990s, when various attempts were made to redefine the principles, goals and instruments of the welfare state to adapt it to the new socioeconomic context of the post-industrial era. Central to this new thinking is the emphasis that is placed on developing policies that aim at ‘preparing’ rather than ‘repairing’. These ideas have been developed most notably in OECD (1996), Giddens (1998), Esping-Andersen et al. (2002) and Rodrigues (2003). While different terms and labels have been used (such as ‘social development’, ‘the developmental welfare state’, ‘the social investment state’, ‘the enabling state’ and ‘inclusive liberalism’), all these analyses point towards a similar policy logic based on what can be labelled ‘social investment’.

The social investment perspective is intended to sustain a different economy than that after 1945 – the knowledge-based economy. In this new economy, knowledge is considered as the driver of productivity and economic growth. The knowledge-based economy thus rests on a skilled and flexible labour force, which can easily adapt to the constantly changing needs of the economy but also be the motor of these changes. The social investment perspective also aims at modernising the post-war welfare state so as to better address the new social risks and needs structure of contemporary societies, such as single parenthood, the need to reconcile work and family life, lack of continuous careers, more precarious forms of contracts and possessing low or obsolete skills (Bonoli, 2005).

We set out this book by asking a number of questions about the concept of social investment: What is it? Which policies can be associated with it? How does it perform? Is it relevant for the current and future challenges of modern welfare states? Behind these questions, there is of course a larger enterprise of searching for a strategy that would be able to regenerate the welfare state, promote social inclusion, create more and better jobs, and help address the challenges posed by the economic crisis, globalisation, population ageing and climate change. There is an underlying notion that the social investment strategy carries such potential. However, the aim of the book is also to critically assess the social investment approach in terms of the content and coherence of the ideas and policies put forward, its actual implementation and achievements, as well as its shortcomings. The book can hence be seen as an attempt to contribute to the discussion on the relevance of the social investment perspective for the new challenges that Europe and other continents are facing and, moreover, to base this discussion on a realistic view of how the world is working.

In this concluding chapter we organise the examination of what we have learnt from the contributions to the book around a number of subthemes. We start out by discussing how far the social investment approach has come in terms of an emerging paradigm by mapping out its contours both at the ideational level and in terms of the policies implemented, and ask questions around its achievements. This, in turn, raises a number of critical issues around the design and implementation of social investment policies that are elaborated on in the second section of this chapter. In the third section, we put forward some ideas for a new form of economic thinking to underpin the social investment approach, and examine the politics of the approach in order to identify what could be the driving forces behind it. Finally, we look at some of the challenges ahead and discuss possible constraints for future reforms.

The social investment perspective as an ‘emerging paradigm’

The ideas

From an ideational point of view, the clear message is that a new and coherent set of ideas is emerging, even if there is some degree of ambiguity around some of the ideas (see Chapters One and Three).