Abstract
When the financial crisis struck in 2007–2008, there was a brief, 2-year flurry of active governmental attempts to provide stimulus to the economy to prevent a recession from turning into a full-blown depression, coupled with active efforts to support the financial system such that it did not ‘meltdown’ and exacerbate problems of unemployment and falling gross domestic product (GDP). By 2010, however, there was a decisive turn to austerity as public debt accumulated, largely because of the effort to ameliorate the crisis triggered by the private financial system. Notwithstanding the cause of increasing public debt, the solution, in many countries and international organizations, was seen to lie in getting it under control, and the means of doing this was austerity in public spending, a policy turn fraught with consequences for social policy and social programmes.
This broad-brush account of the crisis may, however, obscure rethinking about the role of social policy, the limits of the neoliberal policy paradigm that has dominated policy discourse for decades and the development of alternatives. It is certainly true that crises do not automatically lead to policy change. Yet, there is also a perception that crises do present the opportunity for such change, while others suggest that ideational path dependency is just as likely.
Pressures for ideational continuity and change can come from many sources. In this Forum, we asked our contributors to reflect on the degree to which selected international organizations had exhibited change or continuity in their approaches to social policy in the years since the crisis occurred. Specifically, we asked, did the crisis led to the significant change in the international organization’s thinking about its role with regard to social policy?
The picture that emerges is mixed, but to those who had hoped that one outcome of the crisis would be a major challenge to the neoliberal approach, not particularly encouraging. That said, there are some signs of change that might lead others to a more optimistic interpretation.
In Europe, the austerity approach has perhaps been most prevalent. Christoph Hermann notes that the welfare state based on European Social Model principles did mitigate the impact of the crisis. However, after the turn to austerity policies, he notes that poverty, social exclusion and inequality increased, especially perhaps in those countries subject to Troika (the European Commission, the European Central Bank and the International Monetary Fund [IMF]) conditionality in exchange for financial assistance to meet debt repayment obligations.
Turning attention to one of the Troika members, the IMF, Antje Vetterlein argues that during the 1990s the IMF had undergone an organizational crisis leading it, after the Asian Financial Crisis, to participate in Poverty Reduction Strategies, thus enhancing its social policy role. But after the 2007 crisis, the IMF, having already recovered its traditional power position, found its international role enhanced by the crisis and focused on economic issues to the exclusion of the social and de-emphasized its attention to poverty issues.
By contrast, in Anthony Hall’s account, the World Bank markedly increased its financial support for social protection, albeit by the established methods of cash and in-kind transfers to the chronically poor. He observes that the scale of World Bank social policy activity thus expanded rapidly, but that critics point to problems with the distribution of the assistance (middle-income countries faring better than low-income ones) and programmes remaining targeted rather than universal, features that were consistent with a Washington consensus approach to poverty mitigation.
In organizational terms, the crisis led to rejuvenation of the role of the International Labour Organization (ILO) as it did in a different way for the IMF’s role. In addition to developing the narrative of the crisis as one of jobs at the global level, the ILO was able, as James Canonge describes it, to open new policy space and to advance and win widespread endorsement for its concept of basic income security for all, through nationally-defined floors of social protection.
The balance of policy responses to the crisis emerging from the above discussion seems embedded in our final international organization, the Organization for Economic Development and Cooperation (OECD). Jessica Merolli finds that the OECD response predominantly shows continuity from its pre-crisis neoliberal posture. Amidst the familiar litany, however, there are examples that may indicate a potential for new thinking that will be worth monitoring in the future.
Did the crisis provoke new thinking about social policy? For the most part, it does not seem so. Yet, some indications of change were noted, and it can be said that the crisis may be far from over and that the same may be true of the development of alternative visions of social policy.