This chapter examines the development of social welfare programs in Western democracies and notes that they are influenced by cultural, economic, and political contexts. The chapter argues that in order to understand how social policies and social programs are developed, the cultural, economic, and politician contexts must be considered. The chapter, therefore, seeks to examine the cultural context that influenced the development of social policy, the economic context that influenced the development of social policy, and the political context that influenced the development of social policy.
TopEconomic Context
During the Great depression of 1930s, Keynesian economics brought success to many developed countries on social welfare policy. John Maynard Keynes’s book: The General theory of Employment interest and money, published in 1936 guided many social welfare policies during the period. Prior to Keynes, “the prevailing theory was that markets were governed by internal mechanisms with no need for states to be involved” (Mc-Daniel $ Um, 2015, p. 34). Keynes rejected this treatise that “free market competition would automatically facilitate full-employment, making government intervention both unnecessary and undesirable. Specifically, Keynes argued that “the government should stabilize the economy through the use of fiscal policy, that is, by increasing or decreasing spending and taxes in response to economic conditions” (Chapin, 2007, p. 95). When the individuals or private businesses do not consume or invest enough, the government must intervene. This is often referred to as demand-side or consumer – side economics (Chapin, 2007). Demand –side economics also emphasizes the importance of public investment in human capital – that is, programs, such as: education, healthcare and job training that make people “more productive – in order to increase national wealth” (Chapin, 2007, p. 95).
For many decades, the prevailing stance on social policy focused on Keynes. For example, the post-war welfare state in Britain, USA and Canada were premised on Keynes’ theory to a very large degree. It also guided social policy depression as his ideas were clearly reflected in various new deal programs of Roosevelt.
Another important issue that gained momentum at this period is “monetarism or monetary policy, often referred to as supply – side economics “developed by Milton Friedman” (Chapin, 2007, p. 95). Friedman argued that Keynesian strategies of using fiscal policy to smooth out business cycles harm the economy and fuel economic instability. According to Friedman, “government policy should be restricted to promoting steady growth in the nation’s money supply, that is, the total amount of money that is circulating in the economy” (Chapin, 2007, p. 95). This supply – side economic theory gained prominence in the 1980s and guided social policies of most developing countries.