Small States in the Modern World
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Small States in the Modern World

Vulnerabilities and Opportunities

Edited by Harald Baldersheim and Michael Keating

Small States in the Modern World comprehensively assesses the different modes of adaptation by small states in response to the security and economic vulnerabilities posed by global change. It uses a diverse collection of case studies to explore the complexities of change and to place them in their temporal and geographical context.
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Chapter 7: Small-state Scandinavia: social investment or social democracy?

Nik Brandal and Øivind Bratberg


The concept of a social investment state is often presented as a way of reconciling economic productivity with social equality. From this perspective, social investment implies that welfare policies (and regulation of the economy more generally) may be designed so as to encourage high-skilled labour and social mobility and thereby a reasonable extent of redistribution. Thus, the state invests in its citizens, who respond with enhanced productivity, and equality is enhanced as a fortunate side effect. However, there may be good reason to discuss whether social investment as a development model is in fact capable of maximizing productivity and equality without any trade-offs being involved. Social investment evidently requires state intervention with the aim of encouraging a competitive economy. Investment is not, however, informed by a moral argument for redistribution or egalitarianism and is likely to yield different priorities in rough economic weather. The present chapter takes this line of argument as a point of departure and discusses social investment against the concept of social democracy. Social democracy, as we will contend, requires more than a state that invests in its citizens. Here, state intervention goes beyond maximizing the return on human resources to ensure that other aims are pursued, such as the protection of precarious groups in society or financial support to uphold a viable civil society. Furthermore, social democracy is also reliant upon collective organization and negotiated settlements, elements that do not feature in the social investment model.

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