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The Invisible Hand of Development Policy (and why a Development Bank Should Invest in Social Inclusion)

Arjan de Haan's picture

The word “social” tends to be associated with the softer side in the world of economics and development policy. The “social” is generally less well measured, and in the current world of effectiveness thus less actionable. However the “social” does frequently pop up on the dashboard of policy makers and development practitioners, often when things go wrong, when social unrest erupts, and when economic policies do not have the intended consequences. No wonder, hence, that after the Arab Spring and after the global financial crisis with the loss of legitimacy of previous arrangements, social inclusion or cohesion has come to the forefront of the debate.

The reason the “social” is less well defined and measured internationally (although the Indices of Social Development is starting to change this) is similar to the reason it’s difficult to measure what glue or cement does or is in isolation from the pieces it connects. Sociologist are primarily interested in how people relate to each other and to larger societal structures such as public institutions, clubs, elections, etc., and how norms, trust and values alongside interests are of critical importance in guiding individuals’ behaviour. For non-economists, it is heartening to see how Akerlof and Kranton’s Identity Economics is trying to insert identity, norms, and social categories into (economists’) ways of understanding people’s decisions – one hopes that this will lead to a blossoming of inter-disciplinary research that is critical to understand most of not all development challenges.

If the “social” is like the glue that keeps societies together, why would we care about “inclusion”? Clearly, like the application of glue or cement (as any failed DIY-er like me knows), inclusion is not inherently good. Inclusion can be deeply contested and un-just: Apartheid, caste systems, feudalism, slavery, gender norms, all entail certain norms and expectations of behaviour which guide(d) daily behaviour, often leading to at least temporarily stable social systems. A just or equal society is not something which is only inclusive, but where the criteria for inclusion are generated in a democratic and participatory manner, and where there is room for contestation and change.

The current call for “inclusion” is a call by political leaders, in their different contexts, to reshape and improve the opportunities for their populations, and particularly those that have benefited least from the respective development paths (a theme that is core to our work at IDRC on Inclusive Growth). In India, this has taken the form of call for “inclusive growth”, with access to rights as a core advocacy route within that. In China, inclusion means primarily addressing the growing inequalities and related challenges in public policies and administration that have been inherent in its development model and reforms. The Commission on Growth and Development called for inclusion to address the toxic global inequalities that had exposed the global economy, and the World Bank is launching "Inclusion Matters: The Foundation for Shared Prosperity" on October 9.  The report gives a framework to think about these issues and says that greater inclusion is possible and achievable.

In different ways, in each context, addressing these challenges builds on existing norms of equality and justice, as well as political expediency. As such, as political leaders know, this requires investing in social relations – and indeed norms – to strengthen or re-build the foundations of stable and just societies.

Photo: Salahaldeen Nadir / World Bank
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