Preface

"Social Welfare" offers, for the first time, a wide-ranging, internationally-focused selection of cutting-edge work from leading academics. Its interdisciplinary approach and comparative perspective promote examination of the most pressing social welfare issues of the day. The book is divided in three sections. The first part aims to clarify some of the ambiguity around the term and discusses the pros and cons of privatization; the second part presents a range of social welfare paradoxes and innovations; and the third section establishes a clear set of economic frameworks with which to understand the conditions under which the change in social welfare can be obtained.

#### **Section One: Idealization and Privatization**

Drawing on the work of Hegel, Alexander and others, Laratta's opening chapter takes us into the extreme difficulties posed by the concept of civil society which exists in an uneasy relationship with the concept of Social Welfare. Indeed, the history of civil society in many countries is not one of self-organization and/or anti-statism as it is often described by contemporary civil society scholars, but it is largely a history of how social welfare provision was organized in a traditionally class-based society. Laratta argues that many contemporary civil society scholars, in idealizing the sphere of civil society over the spheres of market and state, tend to see their theories as inheriting and understanding the "classical political theory" on civil society. However, when we look more closely we find that the use of the concept of civil society in Enlightenment thought is sometimes significantly different from its use in contemporary civil society theorizing- even though the latter speaks in the name of the former. For Hegel civil society was first characterized as a "System of Needs" in which labour represents the moving principle through which people create those things that others need while satisfying their own needs through exchange. However, with the production of commodities and knowledge –with the latter being a consequence of the former - persons in civil society (market) become related to each other exclusively because they are dependent on them (PR 183). This articulates a virtuous circle which leads to inequalities in civil society in terms of rich and poor. This was the vision of civil society at the beginning of the 19th century, prior to the rise of modern capitalism. As has been pointed out by Whelan (2000), "both revolutionary and evolutionary forms of socialism were a response to this emerging political economy in the mid-19th century. Fear of revolution ultimately led to the rise of the welfare state from the late 19th century in order to ameliorate the harsh conditions brought on by modern capitalism" (13). The state was thought to provide a variety of solutions to the problem of inequalities which could not be resolved through the market (ibid.). Thus, the central idea in Classical Political Theory was that the state has the important function "to protect the individual from the markets and other powerful group interests in civil society" (ibid, 12). In contemporary civil society theorizing, the central idea becomes that of civil society protecting individuals against the unmitigated power of the state (Gellner, 1994). This contributed a lot to the introduction by many governments of a 'neo-liberal' policy which reduced the role of the state as main provider of social services and promoted the application of the *new public management* mechanisms evidently inspired by the models adopted in the private sector (Minogue, 1998). In this new environment, private organisations, which had previously been seen as fulfilling the demand for social services which the state did not provide, now clearly abandoned this role in favour of a more dominant one in which they were left to cope with the whole burden of social services provision (Young, 2000; Pavolini, 2003).

Preface XI

secure the individual's freedom because they do not abolish the differences and

The third chapter by Villadsen explores paradoxes in modern welfare provision, both by drawing upon theoretical concepts of paradoxes in modern forms of governing and by presenting some specific case studies of paradoxical welfare. In his detailed chapter, Villadsen examines three types of paradoxes: a) the paradox of universality; b) the paradox of truth; and c) the paradox of power. The latter one encapsulates the concomitant value placed on deregulation and regulation in modern welfare states. The problem is that welfare state wishes to facilitate the diversity of civil society, yet the state often resorts to planning in order to secure this diversity. In many cases, social policies conceive of civil society as an unfathomable residual, as well as a concrete collaborator. Paradoxically, for instance, is that when governmental authorities seek support and revitalize agents in civil society, they at the same time fear that this very support may infect and undermine the particular rationality of voluntary and grass roots organization. More formally, the problem is thus that any premeditated attempt to delimit authenticity undermines this very authenticity. The fundamentally asymmetrical relations of power between state authorities and civil society agents are therefore sought equilibrated by means of strategies of 'partnerships', 'project-organizations', or quality standards defined by civil society

Chapter four by O'Keeffe looks exactly at this growing importance of 'partnerships' and 'area-based partnership organizations' to aspect of social welfare. Those organizations tend to provide social welfare services as part of a suite of local development actions that include training and up-skilling local populations, supporting new enterprise development and animating the community and voluntary sector. Drawing on experiences in social welfare service delivery across four European countries, this chapter examines the outputs and impacts of area-based partnerships' approaches to social welfare, including the degree of innovation, the extent to which initiatives have become mainstreamed, and the ways in which regional and national policies and practices may have been amended as a result of local pilots and lessons. The chapter also assess the limitations of area-based partnerships' approaches, and it questions the significance of factors such as the lack of long-term funding streams,

In the fifth chapter, Leonardsen Dag argues that even in countries with high standard of living such as Norway there is a mismatch between the type of welfare problems that exists and the measures applied to combat them. Today a dangerous mix of interests has occurred between governments in search of solutions and legitimation, and social science industry that too easily promises 'technocratic' solutions to what essentially is a political problem. In Norway, as in many other countries, politicians are searching for what they call 'evidence-based' documentation that can tell them in a

shortcomings in enforcement and limited information dissemination.

inequalities in civil society but reproduce them in a different shape.

**Section Two: Paradoxes and Innovations**

agents themselves.

In the second chapter, Kallianiotis shows how in the last 30 years privatization has become the only trend, even though that has become economically and politically disruptive. He argues forcibly that privatization has contributed further to the weakening of the public sector, since public assets have been sold at very low prices that did not even compensate for the loss of future revenue from these companies. This failure of privatisation had already been anticipated by some scholars, for example Walzer (1988). In a discussion about the relationship between the 'nationalized distribution of welfare services and socialized distribution of welfare services', he noted that the crucial matter was to hold them both in balance, but he also pointed out that this requires neither the removal nor replacement of the state (Walzer, 1988: 17). He claimed that the replacement of the state would be a utopian project only and one unlikely in fact to strengthen the private organizations because these need the state 'to defend them against their own divisiveness, to protect them when they are alone and helpless, to enforce universal standards of care and safety' (Walzer, 1988: 18). On the following page of the same paper, Walzer (1988: 18) reached an important conclusion when he said that: …when welfare is delivered socially rather than nationally, citizens receive a different and unequal kind of welfare… The claims of particularity are represented by social authority, that is, by men and women closely connected to a particular place or regularly attentive to the interests and aspirations of a particular group. For this reason, socialised distribution is bound to be different in different places, reflecting the decisions of many different committees. And 'different' here necessarily means unequal. Some committees function better than others because they tax their members more heavily, spend their money more wisely, choose to provide these services rather than those. Years later, Fine (1997) made a similar point when he claimed, using Hegelian language, that the end of *civil society's mediating institutions* (private organisations) remains restricted and finite, and they will never secure the individual's freedom because they do not abolish the differences and inequalities in civil society but reproduce them in a different shape.

#### **Section Two: Paradoxes and Innovations**

X Preface

century. Fear of revolution ultimately led to the rise of the welfare state from the late 19th century in order to ameliorate the harsh conditions brought on by modern capitalism" (13). The state was thought to provide a variety of solutions to the problem of inequalities which could not be resolved through the market (ibid.). Thus, the central idea in Classical Political Theory was that the state has the important function "to protect the individual from the markets and other powerful group interests in civil society" (ibid, 12). In contemporary civil society theorizing, the central idea becomes that of civil society protecting individuals against the unmitigated power of the state (Gellner, 1994). This contributed a lot to the introduction by many governments of a 'neo-liberal' policy which reduced the role of the state as main provider of social services and promoted the application of the *new public management* mechanisms evidently inspired by the models adopted in the private sector (Minogue, 1998). In this new environment, private organisations, which had previously been seen as fulfilling the demand for social services which the state did not provide, now clearly abandoned this role in favour of a more dominant one in which they were left to cope with the

whole burden of social services provision (Young, 2000; Pavolini, 2003).

In the second chapter, Kallianiotis shows how in the last 30 years privatization has become the only trend, even though that has become economically and politically disruptive. He argues forcibly that privatization has contributed further to the weakening of the public sector, since public assets have been sold at very low prices that did not even compensate for the loss of future revenue from these companies. This failure of privatisation had already been anticipated by some scholars, for example Walzer (1988). In a discussion about the relationship between the 'nationalized distribution of welfare services and socialized distribution of welfare services', he noted that the crucial matter was to hold them both in balance, but he also pointed out that this requires neither the removal nor replacement of the state (Walzer, 1988: 17). He claimed that the replacement of the state would be a utopian project only and one unlikely in fact to strengthen the private organizations because these need the state 'to defend them against their own divisiveness, to protect them when they are alone and helpless, to enforce universal standards of care and safety' (Walzer, 1988: 18). On the following page of the same paper, Walzer (1988: 18) reached an important conclusion when he said that: …when welfare is delivered socially rather than nationally, citizens receive a different and unequal kind of welfare… The claims of particularity are represented by social authority, that is, by men and women closely connected to a particular place or regularly attentive to the interests and aspirations of a particular group. For this reason, socialised distribution is bound to be different in different places, reflecting the decisions of many different committees. And 'different' here necessarily means unequal. Some committees function better than others because they tax their members more heavily, spend their money more wisely, choose to provide these services rather than those. Years later, Fine (1997) made a similar point when he claimed, using Hegelian language, that the end of *civil society's mediating institutions* (private organisations) remains restricted and finite, and they will never

The third chapter by Villadsen explores paradoxes in modern welfare provision, both by drawing upon theoretical concepts of paradoxes in modern forms of governing and by presenting some specific case studies of paradoxical welfare. In his detailed chapter, Villadsen examines three types of paradoxes: a) the paradox of universality; b) the paradox of truth; and c) the paradox of power. The latter one encapsulates the concomitant value placed on deregulation and regulation in modern welfare states. The problem is that welfare state wishes to facilitate the diversity of civil society, yet the state often resorts to planning in order to secure this diversity. In many cases, social policies conceive of civil society as an unfathomable residual, as well as a concrete collaborator. Paradoxically, for instance, is that when governmental authorities seek support and revitalize agents in civil society, they at the same time fear that this very support may infect and undermine the particular rationality of voluntary and grass roots organization. More formally, the problem is thus that any premeditated attempt to delimit authenticity undermines this very authenticity. The fundamentally asymmetrical relations of power between state authorities and civil society agents are therefore sought equilibrated by means of strategies of 'partnerships', 'project-organizations', or quality standards defined by civil society agents themselves.

Chapter four by O'Keeffe looks exactly at this growing importance of 'partnerships' and 'area-based partnership organizations' to aspect of social welfare. Those organizations tend to provide social welfare services as part of a suite of local development actions that include training and up-skilling local populations, supporting new enterprise development and animating the community and voluntary sector. Drawing on experiences in social welfare service delivery across four European countries, this chapter examines the outputs and impacts of area-based partnerships' approaches to social welfare, including the degree of innovation, the extent to which initiatives have become mainstreamed, and the ways in which regional and national policies and practices may have been amended as a result of local pilots and lessons. The chapter also assess the limitations of area-based partnerships' approaches, and it questions the significance of factors such as the lack of long-term funding streams, shortcomings in enforcement and limited information dissemination.

In the fifth chapter, Leonardsen Dag argues that even in countries with high standard of living such as Norway there is a mismatch between the type of welfare problems that exists and the measures applied to combat them. Today a dangerous mix of interests has occurred between governments in search of solutions and legitimation, and social science industry that too easily promises 'technocratic' solutions to what essentially is a political problem. In Norway, as in many other countries, politicians are searching for what they call 'evidence-based' documentation that can tell them in a scientific way and with scientific certainty, what works in preventing crime, bullying, suicide, drug addiction etc. As problems escalate, so do calls for scientific solutions. The danger the author see in this is to use Herbert Marcuse's expression 'the materialization of values'. Marcuse in 1970 wrote that 'The historical achievement of science and technology has rendered possible the translation of values into technical tasks….Consequently what is at stake is the redefinition of values in technical terms, as elements in technological process". von Wright(1994) made a corresponding remark when warning against the illusion that more scientific techniques can protect us against different threats in modern society.

Preface XIII

**Rosario Laratta** 

Meiji University

Japan

Graduate School of Governance Studies

The next chapter by Aguirre focuses on the effects of price discrimination under imperfect competition. In particular the chapter shows that under third-degree price discrimination the seller can charge different prices to consumers who are separated geographically or that are differentiated by age, occupation, time of purchases or by endues. Moving from non-discrimination to discrimination raises the firm's profit, harm consumers in markets where the prices increase and benefit the consumers who face lower prices. Consequently the overall effect on welfare is undermined. In this chapter the author present a model which allows the welfare effects of third-degree

Negotiation in the social welfare system is often proposed to be a solution to some of the negative effects of competition. However, in most research in multiparty automated negotiation has focused on building efficient mechanisms and protocols to reach agreements among multiple participants, being an objective to optimize some type of social welfare measurement without placing social welfare itself as an integral part of the negotiation process (Hindrinks et al., 2009). In chapter 9 of this book, Marsa-Maestre et al. discuss the application of heuristic nonlinear optimization techniques to mediated negotiations involving highly uncorrelated utility spaces, and the effect of the different notions of social welfare in this kind of negotiations. The authors define different metrics for social welfare which allow to address one of the main challenges in negotiation in non-monotonic spaces: the low probability of finding and agreement. Some of the proposed metrics increase the agreement probability at the cost of individual utility, while the other focus in enforcing specific consensus

The final chapter by Candel-Sanchez proposes a game-theoretic approach to understand the relationship between social welfare and the emergence of a negotiation process. The author demonstrates that if the parties are uncertain about the threshold under which a negotiation does take place (i.e. the cost of the public good), then the free rider problem is partially overcome and negotiations might emerge with positive probability. This view of the problem allows for a mechanism designed solution to the

price discrimination to be well understood and explained.

policies different from 'classic' social welfare.

very hot issue of international conflicts over territory.

In the following chapter, Underlid Kjell drawing again on the case of Norway, presents us with evidences that poverty is not just uneven distribution of economicmaterial resources as it is often understood, but also of immaterial values, like freedom which is described as lack of, or inhibited, autonomy. Indeed, as argued in the opening chapter of this book, for Hegel "poverty is not only indigence in externals; it is also joined to moral degradation. The poor are subject to yet another cleavage, namely a cleavage of heart and mind between them and civil society. The poor man feels himself excluded and shunned, scorned, by everyone. This exclusion necessarily gives rise to an inner indignation. He is *conscious of himself as infinite and free*, and so there arises the demand that his determinate external existence should correspond to this consciousness. In civil society it is not a merely natural need and distress against which the poor man must struggle. The poor man is opposed not only by nature, by mere being, but also by my will. The poor man feels as if he were related to an arbitrary will, to human contingency, and in the last analysis, what makes him indignant is that he is put into this state of division through sheer arbitrariness" (PR: 244, editorial notes1 rephrased).

#### **Section Three: Competition and Negotiation**

Economic theory predicts that concentration of market power leads to higher prices. However, higher hospital prices may signal higher quality. In Chapter 7, Schneider sheds light on the relationship between hospital competition and health outcomes as measured by risk-adjusted mortality rate that are based on the California Coronary Artery Bypass Graft Mortality Reporting Program. The findings of this study could have a real impact on the current situation. Indeed, as argued by the author, during the past decade the hospital industry introduced profound organizational changes, including the extensive consolidation of hospitals through mergers and the formation of hospital systems. In addition, faced with falling profit margins, hospitals industry saw an unprecedented wave of hospital closures and loss in operative capacity (Hsia et al. 2011). Both trends tend to decrease the existing competitive pressures for hospitals in the market. However, if hospitals located in less competitive markets exhibit worth health outcomes, then the case for promoting competition through antitrust enforcement and support of failing hospitals is strengthened. Here lays the importance of this study.

The next chapter by Aguirre focuses on the effects of price discrimination under imperfect competition. In particular the chapter shows that under third-degree price discrimination the seller can charge different prices to consumers who are separated geographically or that are differentiated by age, occupation, time of purchases or by endues. Moving from non-discrimination to discrimination raises the firm's profit, harm consumers in markets where the prices increase and benefit the consumers who face lower prices. Consequently the overall effect on welfare is undermined. In this chapter the author present a model which allows the welfare effects of third-degree price discrimination to be well understood and explained.

XII Preface

scientific way and with scientific certainty, what works in preventing crime, bullying, suicide, drug addiction etc. As problems escalate, so do calls for scientific solutions. The danger the author see in this is to use Herbert Marcuse's expression 'the materialization of values'. Marcuse in 1970 wrote that 'The historical achievement of science and technology has rendered possible the translation of values into technical tasks….Consequently what is at stake is the redefinition of values in technical terms, as elements in technological process". von Wright(1994) made a corresponding remark when warning against the illusion that more scientific techniques can protect us

In the following chapter, Underlid Kjell drawing again on the case of Norway, presents us with evidences that poverty is not just uneven distribution of economicmaterial resources as it is often understood, but also of immaterial values, like freedom which is described as lack of, or inhibited, autonomy. Indeed, as argued in the opening chapter of this book, for Hegel "poverty is not only indigence in externals; it is also joined to moral degradation. The poor are subject to yet another cleavage, namely a cleavage of heart and mind between them and civil society. The poor man feels himself excluded and shunned, scorned, by everyone. This exclusion necessarily gives rise to an inner indignation. He is *conscious of himself as infinite and free*, and so there arises the demand that his determinate external existence should correspond to this consciousness. In civil society it is not a merely natural need and distress against which the poor man must struggle. The poor man is opposed not only by nature, by mere being, but also by my will. The poor man feels as if he were related to an arbitrary will, to human contingency, and in the last analysis, what makes him indignant is that he is put into this state of division through sheer arbitrariness" (PR:

Economic theory predicts that concentration of market power leads to higher prices. However, higher hospital prices may signal higher quality. In Chapter 7, Schneider sheds light on the relationship between hospital competition and health outcomes as measured by risk-adjusted mortality rate that are based on the California Coronary Artery Bypass Graft Mortality Reporting Program. The findings of this study could have a real impact on the current situation. Indeed, as argued by the author, during the past decade the hospital industry introduced profound organizational changes, including the extensive consolidation of hospitals through mergers and the formation of hospital systems. In addition, faced with falling profit margins, hospitals industry saw an unprecedented wave of hospital closures and loss in operative capacity (Hsia et al. 2011). Both trends tend to decrease the existing competitive pressures for hospitals in the market. However, if hospitals located in less competitive markets exhibit worth health outcomes, then the case for promoting competition through antitrust enforcement and support of failing hospitals is strengthened. Here lays the

against different threats in modern society.

244, editorial notes1 rephrased).

importance of this study.

**Section Three: Competition and Negotiation**

Negotiation in the social welfare system is often proposed to be a solution to some of the negative effects of competition. However, in most research in multiparty automated negotiation has focused on building efficient mechanisms and protocols to reach agreements among multiple participants, being an objective to optimize some type of social welfare measurement without placing social welfare itself as an integral part of the negotiation process (Hindrinks et al., 2009). In chapter 9 of this book, Marsa-Maestre et al. discuss the application of heuristic nonlinear optimization techniques to mediated negotiations involving highly uncorrelated utility spaces, and the effect of the different notions of social welfare in this kind of negotiations. The authors define different metrics for social welfare which allow to address one of the main challenges in negotiation in non-monotonic spaces: the low probability of finding and agreement. Some of the proposed metrics increase the agreement probability at the cost of individual utility, while the other focus in enforcing specific consensus policies different from 'classic' social welfare.

The final chapter by Candel-Sanchez proposes a game-theoretic approach to understand the relationship between social welfare and the emergence of a negotiation process. The author demonstrates that if the parties are uncertain about the threshold under which a negotiation does take place (i.e. the cost of the public good), then the free rider problem is partially overcome and negotiations might emerge with positive probability. This view of the problem allows for a mechanism designed solution to the very hot issue of international conflicts over territory.

> **Rosario Laratta**  Graduate School of Governance Studies Meiji University Japan

**Part 1** 

**Social Welfare:**

**Idealization and Privatization** 
