What Is Social Policy All About?

In this article, the term social policy is explained. This is an important topic for the UPSC exam. It is covered in governance, societal issues, etc. It is also important for the essay paper in the IAS exam.

In developing economies this refers to the social contract between capital and labour specifically for the management of the development project. The latter in turn has been defined for much of the past half-century, as the project of increasing material welfare for most of the citizenry through economic development, using the agency of the nation-state. For many developing countries, including India, this project remains partially or largely unfulfilled – although this state of incompletion still has not prevented it from being very nearly abandoned in several instances.

It is increasingly evident that social policy has a significance that goes beyond even the valid concerns about basic equity and minimal living standards, which form part of the social and economic rights of citizens. In fact, it can play a major role in the capitalist development project, at several levels. At the most basic level, social policies of different types are crucial to the state’s capacity to “manage” modernisation, and along with it the huge economic and social shocks that are necessarily generated. Thus, for example, social policies of affirmative action in parts of Southeast Asia have been essential to maintaining ethnic harmony over periods when existing income inequalities and social imbalances across groups within the aggregate population would be otherwise accentuated by economic growth patterns. Similarly, when overenthusiastic and possibly insensitive developmental projects overturn existing local communities or destroy material cultures without satisfactory replacement, social policy can become the basic instrument for rehabilitation and renewed social integration. The massive human shifts (geographic, economic, social) that most development projects entail are potentially sources of much conflict, and often social policy is the most effective means of containing such conflict or at least keeping it within levels that do not destabilise society or derail the development project itself. The second important, and related, role of social policy is, of course, that of legitimisation – not only of the state, but of the development project itself. This need for legitimisation arises both for the long run process and in terms of short run crisis management. Thus, over the long run, or planning horizon, it is especially important in growth trajectories that rely on high investment and savings rates, thereby suppressing current consumption in favour of high growth for larger future consumption, and which therefore imply sacrifices typically made by workers and peasants. In such a scenario, social policy that is directed towards providing basic needs and social services to those who are otherwise deprived of the gains from economic growth in terms of increased current consumption, would be not just important but even necessary to ensuring social stability and continuity of the process itself. In so far as the growth process also generates or entails cyclical volatility in growth or incomes, or has a tendency towards periodic crises of whatever sort, social policy can also serve as a cushion for dampening the worst social effects of crisis, which in turn can contribute to the feasibility and sustainability of the entire process. For example, sudden and severe economic contractions causing sharp peaks of unemployment may be socially easier to tolerate if some forms of unemployment compensation or benefit are provided. Even when the shocks stem from natural rather than economic causes (such as earthquakes or cyclones) social policies in the form of say, public insurance schemes or micro credit schemes can cushion the worst effect of such shocks, in addition to direct relief. Such strategies have macroeconomic consequences as well: thus, it is now accepted that economies with a large public sector presence (in terms of share of GDP or employment) have more muted business cycles or tend to suffer less extreme recessions. The fourth crucial role of social policy is in terms of affecting the conditions of labour such that there is an increase in the aggregate social productivity of labour, rather than simply increases in labour productivity in particular sectors which reflect different technological choices. It is now widely recognised that the universal provision of good education and basic health services is an important condition for raising aggregate labour productivity levels. But even other aspects of social policy, such as working conditions, access to other public services, etc., play important roles in this regard. It is even being accepted that the latter can in turn influence technological choices themselves, and nudge growth trajectories towards “high road” paths rather than “low road” strategies which are chiefly dependent upon cheap labour.

In capitalist economies which are quite closely integrated with international markets or rely on export markets as an engine of growth, social policy has played a very important but largely unsung role in terms of underwriting a significant part of labour costs for private capital and therefore providing employers greater flexibility and contributing to their external competitive strength. For example (but not exclusively) in some countries of East Asia, the publicly assisted provision of cheap food to the urban population, along with basic housing, cheap and adequate public transport, basic public health and education services, and so on, effectively meant that substantial portions of the wage basket were at least partly provided by the state. This in turn meant that wages paid by private employers could be correspondingly lower, since basic needs were already to a significant extent taken care of, and this gave such employers a major competitive edge in export markets. In addition to being an integral part of the economic growth process, social policy also evolves with this process, and changes depending upon how the development process impacts upon different classes and groups. In other words, both the economic policy and the social policy patterns, even when they appear to be unchanging in a statutory sense, are actually quite dynamic and intertwined with the political economy configurations, which also constantly evolve. In case this sounds excessively complicated, consider this example: Certain types of industrialisation strategy generate particular types of employment, for example, a small scale engineering industry may grow based on supply and demand linkages emanating from a large publicly funded railway expansion programme. Such increases in employment in turn generate demands for certain types of social policy such as provision of housing, health and education facilities for workers. families, and so on. This in turn can create not just greater political voice for such groups but also more productive workforces which in turn encourage the demand for certain types of technological change in products and processes, which in turn leads to pressure for certain types of public investment which could incorporate such technological innovation. In contrast to such a positive dynamic process, consider a different pattern of industrialisation in which relatively few new jobs are generated, but the profits from such economic activity are quite high. The shift in income distribution will not only shift demand in favour of certain types of non-mass consumption goods, but also increase the political and lobbying power of capital in various ways. This, in turn, can influence state policy to encourage fiscal patterns (whether in the form of taxation, direct spending, or subsidies), which further accentuate the income and employment inequalities, and so on. Or they can involve the expansion of certain types of employment, effectively creating or enlarging certain classes such as the urban middle classes, which then can become important in terms of political voice and the ability to influence economic policy decisions as well as to demand certain social policy measures which largely benefit these groups only. It thus emerges that while social policy is both a desirable and a necessary concomitant of the development process, its existence and form in each social context cannot be taken for granted, but rather depends upon political economy configurations which influence both its extent and its evolution. This is clearly evident from the Indian experience, which shows both the clear need for effective social policy and the relative inadequacy of what has been provided by the state in terms of meeting the basic objectives of the nationalist developmental project. It is argued in this paper that the relative inadequacy of social policy in India over the post-independence period is one important reason why the development project itself has remained incomplete and unsatisfactory in terms of fulfilling the basic requirements of the majority of citizens. These issues are discussed in more detail below.

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