Economy and Society in Europe
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Economy and Society in Europe

A Relationship in Crisis

Edited by Luigi Burroni, Maarten Keune and Guglielmo Meardi

While an economy is always ‘embedded’ in society, the relationship between the two is undergoing profound changes in Europe, resulting in widespread instability which is emphasised by the current crisis. This book analyses these changes, and in particular pressures of intensifying international competition, globalization and financialization within Europe.
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Chapter 3: The Political Economy of Social Investment

Anton Hemerijck


Anton Hemerijck 1. INTRODUCTION Most comparative welfare state researchers divide the postwar era into two periods: a phase of construction and expansion, from 1945 to the mid1970s, and one of consolidation and retrenchment, from the mid-1970s to the first decade of the twenty-first century (Pierson 2002). I wish to put forward an alternative periodization by subdividing the postwar period until the early twenty-first century into three distinct phases of welfare state reconfiguration. These are: (1) the era of welfare state expansion and class compromise, starting at the end of World War II; (2) the period of welfare retrenchment and neo-liberalism, which took shape in the wake of the oil shocks of mid- to late 1970s; and (3) the more recent epoch since the mid-1990s in which social investment policy prescriptions took root. Each phase of welfare state development can be conceptualized by distinct policy expert advocacy, designed to effectively respond to impending socioeconomic challenges and to achieve shared policy objectives, supported by fairly robust political compromises (Hemerijck 2012). It should immediately be emphasized that no single country specific change experience maps neatly onto the suggested three-pronged developmental sequence. Moreover, the social investment perspective has not yet been fully accepted as a hegemonic policy paradigm. Rather, it is an emerging welfare edifice and its institutional fate very much lies in the aftermath of the current financial crisis. Moments of fundamental policy change are often associated with successive waves of economic adjustment. Especially deep economic crises provide important political windows for policy...

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