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WP7 - Building blocks for social investment (III): macro‐level conditions for a social investment

Examination of macro‐level boundary conditions (financing, governance, market regulation) for a more effective social investment strategy.


The full implementation of the SIP and of its basic objectives will obviously depend on a number of boundary conditions: sufficient financial resources, Europe engaging in a sustainable economic recovery, a legal framework based on non‐discrimination and ‘capability‐friendly’ market regulations, and a new governance culture which is more supportive towards civil society and democratic participation. The current neoliberal governance model (based on new public management (NPM) and free market principles) has obvious limitations in terms of social inclusiveness, guaranteeing basic rights and social investment. It gives priority to efficient markets over the development of social and economic capabilities. New types of growth are emerging in the global economy. They are based on a variety of autonomous processes of development, located in several world regions and ‐ depending on their scope ‐ mobilising local, regional or national capabilities. Their common features are continuous innovation, constant reorganisation, the transgression of borders ‐ between states and between the vertical domains of public policies ‐ and huge internal social inequalities. To be sustained, they require policies and governments that are flexible, proactive, open to diversity and to collective citizens’ initiatives, and policies struggling for social and economic investments. In other words, to realise its potential for economic growth, the Social Investment Package should be coupled with the re‐launch of economic investment in Europe.

A private copy of the synthesis report of this workpackage is available on request.

To do

WP7 tasks will investigate how implementing the SIP should proceed : respectively, financing; democratising; looking for the best combination of governance levels through the principle of subsidiarity. Coupling social and economic investment at all levels requires to efficiently connect the macro‐ with the micro‐level and to deal with the diversity of possible regulations of economic activities without sticking to standard macro‐macro approaches . This search for connecting the macro‐ to the micro‐level is the common thread across WP7 tasks. In addition, as a building block for a rights and capability‐based approach, WP7 is concerned with the search for relevant, precise and realistic proposals for progressively turning European institutions and policies towards that coupling.

1. Financing social investment and its coupling with economic investment

  • is it possible, step by step, to transform the public debt into financing both social and economic investments? How can European banks be involved in such “a positive restructuring” of the public debt through coupled social and economic investments? What adjustments of the European monetary policy and financial regulations would be needed? Which division of roles between the national and European Central banks can serve that purpose, within the European Central Banks System?
  • reorienting public subsidies to firms in the name of employment (exonerations of social contributions, tax subsidies, etc.) into financing investments of these firms in capabilities of their workforce and of their surrounding reservoir of precarious workers. A review will be made of the different schemes by which firms could make credible and public commitments to these matters in exchange for public subsidies. To what extent would such reorienting imply the revision of European regulation of State aid to the economy?
  • As the first step towards an equal national fiscal basis (or, at least, effective fiscal coordination), which proposals could be made to restore effective average tax rates at a level closer to that currently paid by the SME’s, allowing to finance incentives for social and economic investments?
  • Re‐establishing fiscal solidarity, primarily at the national level, from the upper classes to the lower ones along the entire income scale. Rather than additional taxes, a realistic alternative for the shrinking public resources that does not harm the expected economic recovery, would be to enforce social fiscal solidarity at stable public financial needs. Which tax reforms should be promoted in that direction?

2. Finding the best types, contents and procedures for the SIP implementation: democratic governance

Which systems of democratic deliberation are to be created in order to allow the voices of all the stakeholders to be heard in social and economic investments? How could such systems be extended to financing procedures and to the monitoring of outcomes?

How should the present subsidiarity rules and division of competences between different levels of government (EU, member states, regions, firms) be revised for a better grip on the pervasive economic and social diversity? How can we let economic and social partners as well as civil society at different levels ‐ rather than the Centre ‐ take the lead in building relevant indicators and evaluating outcomes?

Through which deliberative procedures ‐ keeping in mind they will depend of the problem at hand ‐ can theseactors find the relevant levels at which to define and implement European policies?

How to transform the political European method in order to use basic human rights ‐ social, political and economic‐ as benchmarks to evaluate public policies in Europe at the different levels? How to make use of new policyinstruments such as collective deliberative inquiries aimed at training representatives, building relevant knowledge and elaborating solutions? How to adapt firm structures (including the European enterprises) in order to promote alternative ways of development?