The Role of Social Policy in Economic Development: Some Theoretical Reflections and Lessons from East Asia

During the heady days of neo-liberal counter-revolution in the 1980s, the World Bank and the IMF prided themselves on not wasting their time on ‘soft’ things like social policy in designing their ‘structural adjustment programmes’. In the older, hardcore version of neo-liberal orthodoxy that had prevailed until the early 1990s, diverting resources to social policy, which softens the blow of the adjustment on the weaker sections of the society, was regarded as buying short-run palliatives at the cost of long-term productive development, since it would only slow down the necessary ‘adjustments’. Many people remember how strongly this line of thinking was pursued during the 1980s. This was pursued to the point of producing a call for ‘adjustment with a human face’ by those who did not completely reject the need for structural adjustment programmes but were deeply concerned by what they saw as unnecessary human suffering caused by such programmes in their unadulterated forms (Cornia et al. 1987).