A Fragile Society: the Genesis, Meaning and Costs of Social Policy

Podolskiy Vadim PhD in Politics Associate Professor, Department of Political Science, State Academic University for the Humanities 119049, Russia, Moscow, lane. Maronovsky, 26 deomniscibili@yandex.ru Other publications by this author

Acknowledgements: The article was prepared with financial support as part of the implementation of the State Task of the State Educational Institution on the topic "Modern Information Society and Digital Science: cognitive, economic, political and legal aspects" (FZNF-2020-0014).

Acknowledgements: The article is prepared with financial support as part of fulfillment of the SA (State Assignment) for the State Academic University for the Humanities on the subject “Contemporary information society and digital science: cognitive, economic, political and legal aspects” (FZNF-2020-0014).

The topic of social policy is one of the most actively discussed in political and academic environments. For a holistic perception and more effective analysis of the problems of social support, it is necessary to study not only the functioning of individual mechanisms, but also the general goals of social policy. Social policy is designed to protect certain categories of the population and society from vulnerability. In the context of social policy, the vulnerability of society is in its instability due to internal conflicts or low solidarity, and the vulnerability of an individual or groups is associated with limitations in the ability to provide themselves with necessary benefits. The most important object of social policy is the elderly. Over the past 3 decades, the share of the population of developed economies over the age of 65 has almost doubled, from about 10% to 17% of the total population of these states ^{[31, p. 250]}. The aging of the population leads to an increase in the burden on the health care system, since if only 30% of 55-60–year–olds have more than one chronic disease, then among 65-70-year-olds - 50%, and 70-75-year-olds - 60% ^[36]. The increase in life expectancy increases the burden on pension funds. If in the 1880s in Germany, when Bismarck introduced social insurance laws, life expectancy was 40 years with a retirement age of 70 years ^{[21, p. 315]}, then in modern Germany life expectancy exceeds 80 years with a retirement age of 67 years ^[6]. The birth rate in the most developed countries has decreased by a third in recent years ^{[35, p. 22]}. Due to economic and social changes, the family model of social protection that prevailed throughout the history of mankind ^{[25, p. 228]} ceases to function, and an increasing number of people are forced to rely on social assistance from public funds. The problem of aging and declining fertility concerns not only Japan, Korea, European countries and former British colonies. China, the world's largest economy in terms of production, also faces noticeable demographic problems ^{[27, p. 1]}. Social policy in this country was built under Mao, but had a rudimentary character due to the extremely small resources available to post-revolutionary China, and the main support of those in need was family and local assistance ^{[27, p. 76]}. In the 1990s, the system was recreated anew, but despite the multiple growth of redistribution with the help of state instruments with increased welfare, social protection in China outside of large prosperous cities is noticeably lagging behind Europe and Russia ^{[27, p. 85]}. At the same time, protection methods can create new risks. In the XX century, in countries with developed social policies, the level of public spending on social assistance increased from about 1-2% of GDP to 30% ^{[37, p. 47-50]}, the public debt increased.

If we evaluate social policy as a risk management system to protect against fragility, then decisions can be sorted for a number of reasons. Firstly, it is the motivation for social policy and, consequently, its objects. Secondly, these are the subjects of social policy, that is, regulators and administrators. Thirdly, these are the mechanisms of social policy, that is, the ways to mobilize resources and the order of their distribution. From the combination of these categories arises the variety of solutions in the field of social assistance that exists in the world. Although discussions about redistribution and the problematization of social support became the subject of social philosophy in ancient times, the most intensive development of the theory of social policy in political science took place in the second half of the XX century, during the era of the formation of the welfare state in Europe, mainly in Britain. Thomas Marshall formulated the rationale for the social obligations of the state ^[28]. Richard Titmus fixed social policy among the subjects of political science ^[41]. The classification of social states by the Danish sociologist Gesta Esping-Andersen has become generally accepted ^[13]. The controversy over the welfare state and the political problems associated with social policy were systematized and interpreted by Peter Taylor-Gooby ^[40] and Paul Pearson ^[33].

Motivation for social policy changes as social philosophy, economic and political conditions change, and often several different prerequisites can retain their influence in decision-making, creating unique configurations. In ancient despotists, the meaning of redistribution was in building a vertical of power ^{[12, p. 55]}. In Greek polis and Ancient Rome – in ensuring the loyalty and solidarity of the population in the case of city or state programs and in glorifying benefactors in the case of private initiatives. In Christian countries, the Islamic world and the Jewish community, charity was the fulfillment of religious obligations ^{[9, p. 1-4]}. The development of social policy in the industrial era pursued two goals. Firstly, the preservation of social stability, that is, the strengthening of hierarchy, the prevention of revolutions and the spread of socialism ^{[15, p. 64]}. Secondly, ensuring effective demand to stimulate the economy ^{[13, p. 144]}. The most acute dispute in the field of social policy can be considered the assessment of its impact on the motivation of workers. In England, there was an idea that the "Poor Laws" hurt the working habits of workers, since payments gave them the opportunity to receive money without working. The British "New Poor Laws" of 1834 proceeded from this premise, seriously tightening the conditions for granting assistance to the needy, and introduced the principle of "least acceptability": even the lowest-paid work had to bring more money than benefits ^{[14, p. 57-58]}. A similar opinion was formed in America in the twentieth century, when the growth of spending on social assistance was increasing, taxes were also growing, and the share of the poor and the number of riots did not decrease. The reaction was the emergence of neoconservatism and attempts to reduce the welfare state in the 1980s ^{[37, p. 27]}.

The object of social policy depended on the political and economic situation. For purely political reasons of maintaining loyalty, social support was provided to officials, soldiers and the masses. For religious reasons, social assistance began to be provided to the least protected categories of the population: orphans, widows, wanderers, the disabled, the elderly and the poor. After the economic transformations associated with the development of industrial production and market fluctuations, the unemployed also gradually became the object of assistance. In the XX century, in Europe and the USA, and then in other countries, there is an increasingly complex gradation of deserving and undeserving categories of the population depending on age, income level, health status and the nature of economic activity.

The subject of social policy was the state in the ancient despotisms and the Roman Republic and Empire, as well as, in terms of administration and regulation, in Byzantium. In Europe in the Middle Ages, the subjects of social policy were the church, religious orders, feudal lords, cities, guilds. Since the XV century, the role of the church as the main regulator and provider of social services has been declining, in the XVI century in Protestant countries and, less often, in Catholic ones, municipalities receive social functions. Since the XVII century, through pension provision, the direct participation of the state in social policy in the modern sense begins with the military and administrative estates. In the XIX century, the state began to regulate and then provide insurance services. Also in the XVIII-XIX centuries, charitable organizations spread massively, some of them continue to work to the present. Their sphere of activity included education and healthcare – for example, Protestant enthusiasts in England actually created a system of mass primary education ^{[11, p. 192-193]}.

The mechanisms of social policy reflected the scale of state intervention in the economy and social activity and depended on a combination of economic and political prerequisites. Redistributive economy has been known since the time of ancient centralized states, for example, the palace state in Crete or the ancient Egyptian state of the Pharaohs ^{[12, p. 55]}. References to the support of those in need are also found in the earliest historical sources. Prototypes of insurance systems can be found in professional associations of Ancient Greece and Ancient India ^{[30, p. 120]}. In ancient Rome ^{[9, p. 158]} and ancient China, there were systems of state subsidizing the cost of grain and pensions for retired soldiers or officials. In China, there were shelters for the disabled ^{[3, p. 335]}, and in Greece, doctors could provide services to those in need for free ^{[10, p. 8]}. But systemic and all-encompassing social assistance becomes thanks to the three Abrahamic religions. Religion was the basis for changing the ethos of social assistance, which began to be provided not depending on citizenship, but depending on the needs of the recipient ^{[9, p. 158]}. In the Roman Empire, after the adoption of Christianity, pandocheions, or hospice houses, known since Hellenistic times, spread and received specialization ^{[9, p. 233]}. Their profiles were fixed in the legislation of Byzantium and included orphanages for orphans, the poor, the elderly and the sick. Institutions for wanderers began to be called xenodochia ^{[43, p. 5]}, this name passed to Europe, where it was eventually replaced by the term "hospital" ^{[43, p. 240]}. The first hospital in the modern sense of the word, that is, a specialized institution with professional staff, was created by St. Basil the Great in the second half of the IV century ^{[10, p. 154]}. In the Islamic world, the first hospital was established in the VIII century, based on the Byzantine experience and Indian and Greek medical science ^{[42, p. 37-41]}. In the era of the Crusades, Europeans got acquainted with the Byzantine and Islamic experience, the mass creation of charitable institutions in Northwestern Europe began, and the term "hospital" gained medical significance, in particular, thanks to the activities of the Order of Hospitallers ^{[43, p. 34]}. There were separate charity schools in Byzantium, but free education was truly widespread in Jewish communities and in the Islamic world ^{[26, p. 85-87]}. There were several charitable mechanisms in the Jewish community: a "common tray" for daily food collections for those in need, a "basket" for weekly ^{[9, p. 204-208]}, a "doggie" for one-time targeted assistance ^{[9, p. 221-224]} and "hekdesh" funds for regular support ^{[9, p. 200-204]}, although the latter mainly financed religious institutions. Fraternities engaged in charity were also widespread among European Jews ^{[9, p. 197-198]}. In the Islamic states in the Middle Ages, social support was the most extensive and formalized in the world. Zakat, one of the pillars of Islam, performed the function of a single social tax, and was intended to help the categories of recipients listed in the Koran, including the working poor ^{[7, p. 472-472]}. Although the phenomenon itself was known in ancient Greece ^{[9, p. 4]}, in Europe only in the XX century the working poor began to be perceived as deserving recipients of assistance ^{[14, p. 163-164]}. As in the Jewish community and Christian states, in Islamic countries there was an informal targeted alms, sadaka, but institutions could also receive sadaka. The main means for financing charitable and other public institutions in the Islamic world was the Waqf funds, from the word "stop". The owner "stopped" the possession of his property and transferred it to charitable purposes, in particular, to finance schools ^{[26, p. 2-3]}. The practice of targeted donations of property to charity was known both in Europe and in Byzantium, and in Byzantium the emperors were often the most active donors ^{[10, p. 26]}. Aid in Europe and Byzantium was based on charitable donations and tithes, part of which was sent to the needy ^{[10, p. 13]}.  Food and clothing were distributed at monasteries and churches ^{[9, p. 4]}, as well as at special "tables" organized by churches and municipal authorities in medieval Europe ^{[15, p. 27]}. In German cities, the source for financing charitable giveaways was sometimes the alms-collecting "chests for the poor" ^{[15, p. 21]}. The Byzantine system of social support up to the XIII century was formalized more strictly than the European one and was more integrated with the state apparatus. In Europe, the founders of charitable institutions could be bishops, cathedrals, orders, feudal lords, cities and even individual families ^{[43, p. 5-10]}. The rules for the operation of shelters were based on the laws of Justinian, and only from the XII century in Europe attempts began to regulate the work of social support institutions, and from the XV century – their transition to the competence of municipal authorities ^{[43, p. 307]}.

The main policy of the state towards the poor in Europe was restrictions on begging, sometimes in the mild form of mandatory permission to collect alms ^{[15, p. 23]}, most often in the form of restrictions on movement between cities, and sometimes in a harsh form, for example, imprisonment. The positive policy of the state towards the poor in Europe arises after the Reformation, when the state transferred to municipalities the functions of charity that the church performed. In England, even the basic administrative unit, the parish, has been preserved. The English "Poor Laws", introduced during the XVI century and consolidated in 1601, became the first systematic legislation in the field of social policy, although administration and financing were carried out at the local level. The parish authorities had to assess the property of the residents of their parishes, and collect contributions from them for the poor in proportion to this property ^{[14, p. 38-40]}. Part of the funds went to dormitories for the needy, workhouses, which partly performed a penitentiary function, especially after the tightening of the poor law in 1834 ^{[14, p. 52-53]}.

Pensions have been distributed since the XVI century – one of the oldest examples was the "Chetham Chest", an insurance fund for sailors in case of disability, located in the English city of Chetham. The sailors placed part of the salary in a chest, which was locked with a complex lock that could only be opened with three keys at a time. The keys were kept by the officers, and they had to make sure that the applicant deserved help and only then give out the funds ^{[22, p. 229]}. In 1673, pensions were introduced for sailors of the French navy ^{[38, p. 126]}, in 1721 – Russian, first in the form of lump-sum benefits. Pensions for officials are gradually moving from the category of targeted salaries to the format of stable guarantees. Sometimes there could be several ways to finance pensions: from the treasury, from special funds, such as the aid committee created by Alexander I, or from special cash registers, where employees deducted part of the salary, such as the emerital cash registers created in Russia in the second half of the XIX century, following the example of Swedish cash registers for the military of the XVIII century. ^{[1, pp. 16-17]}. Non-state insurance systems existed in medieval guilds, and in the XIX century, as industrial production developed, they became widespread. They assumed contributions from salaries with subsequent payments in case of disability of the worker, his medical expenses or assistance to his family in case of his death ^{[15, p. 74]}. Insurance gradually became mandatory, the German states were the leader. After the unification of Germany, Bismarck introduced laws on compulsory pension insurance, insurance against diseases and accidents ^{[15, p. 103-104]}, which become an example to follow in countries such as France, Britain, Russia and Japan. At the beginning of the XX century, centralized redistribution of resources for social tasks became common ^{[14, p. 183]}. The first system of universal free healthcare in the world was the Soviet one ^{[18, p. 177]}. After the Second World War, Britain significantly transformed its social policy according to the program created by the economist William Beveridge. Instead of the insurance principle, as in Germany, and the local principle, as in the "Poor Laws", centralized redistribution of resources with the help of state funds and the budget began to be used ^{[14, p. 273-274]}. Following the British example, the Soviet social policy was rebuilt, which had previously imitated the German insurance corporate organization ^{[16, p. 41]}. The Soviet housing program of the 1960s was the most widespread in the world ^{[16, p. 142]}, but similar solutions were applied earlier in England ^{[17, p. 161-162]} and Germany ^{[39, p. 109-110]}. In the XX century, such types of social policy as benefits and allowances are also spreading.

The modern system of social policy is characterized by a combination of tax and insurance financing of social expenditures. In Germany and the USA, insurance principles are mostly preserved, and in Britain and Russia, most of the expenses are paid from budgets. Often, players of various industries also take part in the management of the social policy system. For example, in Germany, the health system is actually managed by a "Joint Committee" consisting of representatives of insurance funds, doctors and hospitals, and if the Ministry of Health does not challenge the decisions of the Joint Committee, they receive the force of law ^{[8, p. 64]}. In systems organized according to the example of the German one, the polysubjectivity of social policy remains, manifested, in particular, in a wide variety of insurance programs and a large number of players in the medical and pension insurance market, as in France ^[24]. The division of powers between regional, municipal and national authorities stems from the historical features of certain systems. Usually, the financing of healthcare and education is delegated to the regional and local levels, followed by the transfer of funds from the national budget to equalize the financial security of various territories. Sometimes territories are united to perform certain tasks in the field of social policy. In many cases, the private sector acts as an active participant in social support. Firstly, some functions may be delegated to private companies, for example, long-term care, or a private company may act as a contractor or supplier in the implementation of social functions by public authorities. Secondly, a private company can carry out charitable activities and collect or distribute donations. The share of private companies varies greatly depending on the current system. An example of a system with a large role of the private sector can be the USA, where 2/3 of health care costs ^[20] and ? of pension costs ^[4] are carried out from non-state sources ^[34]. An example of a state system can be Russia, where the role of the private sector is almost invisible.

Risks in the field of social policy arise at many points. Failure to fulfill social obligations within the framework of a stable redistributing vertical of the state or feudal economy is fraught with the loss of loyalty of subjects. Regional inequality in social issues creates migration and separatist threats. Economic and financial risks are associated with the stability of the budget, which is facing a constant increase in workload. Social and political risks are associated with increasing demands. With the democratization of the 19th and especially the 20th centuries, social policy became part of the election promises of candidates. According to the American conservative thinker Irving Kristol, the loss of religiosity in the USA of the XX century led to an increase in voter requests: having lost infinity, people began to demand infinitely much ^{[23, p. 168]}. The main subject of political bargaining is the conditions for financing and providing social support measures, that is, the level of taxes, fees and requirements for recipients of assistance. Topics such as retirement age, formulas for calculating pensions, rules for the operation of pension funds, levels of insurance contributions, the amount of benefits paid, the scale of benefits offered and categories of the population eligible for benefits, unemployment benefits often become the most acute during election debates. Due to the aging of the population and migration, spending on social programs is growing faster than tax or insurance revenues, but, as Pearson notes, social programs have become an integral element of the modern state, and there is a collision of an irresistible force in the form of the need to reduce costs with real estate in the form of an established social support system. The growth of expenditures becomes impossible due to budget constraints and demographic factors, and the reduction is perceived as politically unacceptable ^[33]. Attempts to reduce the welfare state in the 1980s did not lead to significant changes: the total amount of spending stopped growing for some time in the United States and Britain, but then this growth continued, even despite attempts to introduce an "activating" welfare state, as based on benefits and tax incentives for working citizens, and not direct payments for the unemployed. The ways to resolve such a contradiction are the widespread increase in the retirement age, insurance premiums and tougher conditions for receiving benefits and payments, the need check system and the principle of "least acceptability". A reduction in social benefits usually leads to an increase in them either for other expenditure items or after some time due to political considerations, and the level of expenditure remains either the same or increases. American neoconservatism pointed to the interest of administrators of social programs as one of the reasons for the increase in spending, but the main reason is the "rut effect" and institutional inertia, when society is more inclined to agree with tax increases than with program cuts, and debt mechanisms are used to postpone the issue of instability of social funds, and no political force I am not ready to take responsibility for radical reforms ^[32]. Since demographic changes occur in a similar way, countries face approximately the same problems: there are more consumers of social support and fewer taxpayers, and the transfer of social obligations through the increase in public debt ceases to serve as a protection against risk, but it becomes a risk itself due to the increase in debt. The solutions may differ. Germany ^{[2, pp. 97-98]} and the USA use an increase in insurance premiums ^[29]. Russia subsidizes the deficit of funds at the expense of the budget ^{[5, p. 542]}. France introduces special additional contributions to finance the deficit of existing funds ^{[24, p.23-29]}. The British experience can be considered the best, since the British pension fund in the late 1980s managed to overcome the deficit for some time due to a change in the payment model, but the peculiarity of the British pension system is that state payments are relatively small ^{[19, p. 48]}, and a high level of pensions is achieved through pension programs of companies with the support of state benefits. Britain, however, faces other risks, namely a shortage of available services: the British healthcare system, unlike European and American ones, is free, but the waiting times for some procedures can be very long ^{[14, p. 310]}. Polysubjectivity can act as a system-strengthening factor, as in Germany, thanks to an effective communication system between service providers and insurance companies, or increase risks, as in the USA, where the abundance of players does not lead to a reduction in the cost, which is extremely high compared to Europe. A mixture of government and market solutions does not always guarantee a general increase in efficiency, an example of which is the growth of the deficit after the introduction of market elements in the British healthcare system in Britain, despite improvements in the management architecture associated with the expansion of freedom of choice for medical institutions ^{[14, p. 312-323]}.

Social policy pursued different goals in different epochs, reflecting perceptions of fragility in one or another economic, political and ethical context. In the ancient centralized states, the main goal of social policy was to consolidate the hierarchy by providing assistance through the institutions of the vertical of power. The Abrahamic religions emphasized the fragility of the individual – an orphan, a widow, a wanderer, the infirm – calling for community solidarity to protect those in need. The feudal social system of medieval Europe combined these approaches. On the one hand, poverty was perceived as a given due to the fixed position of the needy on the lowest floor of the hierarchical system. On the other hand, religious prescriptions demanded to help the weak, placing, in a sense, the weak as a representative of God over the strong as the executor of the divine requirement. The state, however, saw the risks in vagrancy and persecuted beggars. After the Reformation, social assistance moved from the competence of the church to the responsibility of local authorities, and the European support system began to acquire solidaristic features that were originally present in the Jewish and Islamic systems. The demoralizing effect of aid on workers began to be perceived as a risk: it was believed that the recipient of benefits from the community would not work. The fluctuations in the economy associated with industrialization and urbanization increased the relevance of insurance schemes, which began to spread throughout Europe, and by the end of the XIX century, states began to make them mandatory. Democratization and the emergence of mass voters, coupled with a general increase in welfare and the need to stimulate economic growth, made political bargaining with the help of benefits and benefits possible, and the spread of socialist ideology in the XIX century and communist in the XX-th – in demand. Institutionalized altruism of social support has become an integral element of modern societies, but its preservation is associated with increasing difficulties. The problematization of social policy depends on the environment, but all countries face an aging population and are often forced to reduce the growth rate of spending on social needs, avoiding their direct reduction due to negative political consequences. From the point of view of financing, various combinations of taxes, targeted payments, insurance contributions, voluntary or charitable donations do not always consistently provide the lowest cost of providing support due to the increasingly complex balancing of interests and mechanisms and need constant configuration adjustments. From the point of view of the provision of services, polysubjectivity and market mechanisms can contribute to the improvement of some aspects of the functioning of social support systems, but they do not guarantee efficiency, as does the "activating" system of benefits. Protecting a fragile society through social policy therefore requires fine-tuning, taking into account international experience and local specifics.