The Relationship between Social Policy and Economic Policy: Constructing the Public Burden of Welfare in China and the West*

Article excerpt

The purpose of this paper is to explore the °∞public burden °± characterization of welfare in two very different economic and cultural settings. Long familiar in the West, its causes, nonetheless, have not been examined. Moreover, as we demonstrate, an identical orientation to welfare is also found in China. To understand this apparently universal construction of a negative relationship between social policy and economic policy, we employ a novel tripartite framework. This analysis starts with economic ideology but concludes that two additional explanatory factors are necessary: institutional or regime differences and, in the case of China, the level of economic development

Keywords: Public Burden of Welfare, Functions of Social Policy, Welfare Ideology, Social Development, Welfare Regimes, Chinese Welfare System.


This paper considers the issue of whether the welfare system in China differs from those in the West in the treatment of the relationship between economic policy and social policy. Our starting point is the proposition that social policy contributes, directly or indirectly, to economic production and wealth creation - what in the European Union has been called the "productive factor" or investment dimension of social policy (European Commission, 2000; Bonoli, George, and Taylor-Gooby, 2000: 122). In practice, however, there is a persistent tendency to both subordinate social policy to economic policy and to portray the former as a burden on the latter in welfare systems, East and West, regardless of their specific regime. Our aim is to explain this universal tendency.

Literature on the relationship between social policy and economic policy overwhelmingly focuses on the functions of social policy to economy, be it negative, positive, or of a contingency nature (Atkinson, 1997; Atkinson and Stiglitz, 1980; Barr, 1987, 1989, 1992; Bonoli and Taylor-Gooby, 2000; Esping- Andersen, 1994; Gough, 1996; George and Wilding, 1984; Kuznets, 1955; Pfaller, Gough, and Therborn, 1991; Okun, 1975; Korpi, 1989; Rubinson and Browne, 1994). For example, Gough (1996: 228) advances a contingency position: "different welfare regimes exhibit different configurations of effects on performance and structural competitiveness." This suggests that there might be a trade-off between social equality and economic growth (Okun, 1975; Esping- Andersen, 1999) on some occasions, while on others, such as the contribution of education spending to the development of human capital, there is a beneficial relationship between social policy and economic production (Rubinson and Browne, 1994; Bonoli, George, and Taylor-Gooby, 2000). Despite the fact that regime type moderates capitalist logic, however, this functionalist approach towards relationship between social policy and economic policy does not explain the common tendency to subordinate the former to the latter. Indeed, it was taken for granted in the original welfare regime thesis (Esping-Andersen, 1990).

To explain this conundrum, we need to examine the relationship between social policy and economic policy. Neo-Marxist theory (O'Connor, 1973; Gough, 1979) is a good starting point, despite its well-known deficiencies, because it has examined this relationship extensively. With very few exceptions (Ferge, 1979), moreover, the social policy literature has been concerned mainly with Western capitalist societies until very recently (Walker and Wong, 1996, 2004). Indeed, the neo-Marxists were the guiltiest of neglecting non-capitalist societies (Klein, 1993: 8-9). China, as a state socialist society, offers a contrasting example for comparative analysis and is of increasing interest to Western scholars. It has a strong tradition of work ethic, which is especially relevant in studying the relationship between social policy and economic policy. Also, unlike the former Soviet bloc countries, China is a developing country. This provides added impetus to revisit some of the fundamental issues concerning the welfare state as an institutional arrangement in the context of social and economic development. …