Is neoliberalism ruining the welfare state?

It is universally acknowledged that Europe is in a state of precipitous decay. The demographics of the continent are changing drastically; people aren’t keen on having children, and
Is European welfare perhaps being abducted by neoliberalism in disguise,while its population stands by, suffering powerlessly? Europa abducted by Jupiter, disguised as a white bull, as her friend watches helplessly – as imagined by Rembrandt. Photo: Wikimedia Commons/Google Art Project

It is universally acknowledged that Europe is in a state of precipitous decay. The demographics of the continent are changing drastically; people aren’t keen on having children, and meanwhile the very old keep getting more numerous as medical science and work conditions improve. Baby boomer generations of the 40’s and 50’s are retiring en masse. These retirees deserve pensions, of course, and pensions are paid by the taxes of the currently employed. Furthermore, other welfare institutions – including medical care and care of the elderly – are similarly dependent on the bounty of the workers, whose services our aging population require to an ever-increasing extent. The problems are obvious – with fewer workers, how will we manage to uphold the current state of welfare for the increasing demands of the future?

Several solutions have been proposed. Increased immigration, for instance, would increase the number of working people in Europe and bring about the taxes the nations are clamouring for. But are there enough immigrants to fill the aching hole in national tax revenue everywhere? Why should they desire to, for instance, move to Sweden, a chilly and boring country if ever there was one, when France and Germany beckon, and arguably have a lot more to offer? Relying on immigration is obviously also a politically sensitive issue to the racist hive mind of the European population. It is simply not politically possible for European countries to open their borders, not when so many ruling parties have made their success through appealing to our inner xenophobe. Other ideas include delaying retirement age a few years, also an unpopular idea among the working masses, and limiting welfare, which is paramount to political suicide in a country like Sweden, where trust in the state is high. How then, do you keep the population happy while not infringing unnecessarily on the welfare system?

Enter social investment funds, originally a venture capitalist idea of quantifying welfare to make profit. There are countless variations of social investment, sometimes involving no private enterprises at all and sometimes run more purely for profit. The overarching idea however, is that a fund is set up to which individuals and organisations can apply for funding of a project over a limited time period. The project needs to have “both social and economic benefits” and an analysis of when the project is expected to generate profit and pay back to the fund is required. The profit is gained from savings in other parts of the welfare state package through early interventions. Essentially, early intervention is to identify risk behaviour and vulnerable groups and intervene before they become a “problem” and cost the state copious amounts of money in welfare. For example, an investment of early intervention for a particularly vulnerable group in school pays back in the savings in, for instance, the criminal justice system and social services, whose services won’t be needed. The superfluous budget is cut and delivered as profit.

The basis of this approach is a ruthlessly neoliberal view of human life as an economic investment of the state. The lack of morality, and of the notion that human life worth saving for its own sake, is striking within this movement. This has however not stopped it from becoming an enormously attractive option, even in countries with a historically strong welfare state and ideals of solidarity with the weak, such as Sweden. The Swedish state has spent 6 billion SEK 2006-2014 on social investment, despite not even having a state-run fund. Instead, the driving force behind this movement is SKL (Sveriges Kommuner och Landsting) and individual municipalities. Eager to limit the expenses of welfare, which weigh heavily on municipalities, they start their own social investment funds. SKL produces massive amounts of sunny pamphlets and guides for municipalities, coated with the thick glossy varnish of the unobjectionable gospel truth: the projectisation of welfare will inevitably bring success and improvement to, not only the budget, but the citizens as well. Because at its core, that is what this approach suggests. Render the welfare state to a complete set of self-sustaining three year projects targeting specific vulnerable groups. There is profit to be made!

There is no use blaming municipalities for their enthusiasm for social investment. They have immense costs to carry, enormous responsibility for their population, chronic inability to reach their ideals, and ever-slimmer budgets to keep. Social investment funds promise, with almost religious fervour, to solve social problems without further draining the coffers. But what are the consequences of turning the welfare state into projects? Despite all of SKL’s claims about long-term, preventative solutions, projects rarely run for longer than three years. Some of these projects might be turned into regular practice, but it is rare that their structure remains unchanged once they have to fit into a budget. Furthermore, which projects are accepted by the funds? Surely “safer” ones, promising reliable returns, have a higher chance of approval than projects that might have a bigger need for the extra funding but whose clients are more unpredictable. There is also, naturally, the moral issue of equating a human life to figures and costs. Trying to calculate the price of a troubled childhood resulting in social issues, versus the cost of an intervention certainly seems to be a profoundly inhumane look at life. Do all aspects of society need to be rendered in economic terms to be worth spending money on?

Despite the numerous problems that naturally arise from trying to clinically calculate methods to gain profit from something as complex and precious as human life, the social investment funds of Europe continue to thrive. The European Union, facing a future of an impoverished, aging continent, is a vocal proponent of the method. And certainly, some good might yet come out of it. But as the ultimate saviour of the continent’s welfare issues, it speaks more of our increasingly economic way of viewing the world, than of our desire to help.

Text: Anja Johansson
anja.johansson [at]

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