Spending and Taxing: Towards a Fiscal Centred Perspective in Social Policy Research

Thus far, the welfare state literature has particularly focused on the spending side of social programmes, rather than on its fiscal side . While welfare-state theories differ in various respects, explanations tend to be benefit driven in the sense that actors interests and motivations, may it be decommodification, risk aversion or enhancing the capacity of state bureaucracies, are essentially framed in relation to the benefit/spending side of the welfare equation. From this perspective, social insurance contributions are primarily a function of the social benefits and services they finance. By bringing together autonomous bodies of literature as fiscal sociology and public finance and combining their insights with research on the fiscal-policy nexus we lay the foundations for a Fiscal Centred Perspective on Welfare State Development. This framework draws attention to an unacknowledged blind spot in the study of social policy, which concerns the politics of Social Insurance as a revenue raising institution and its causal implications for welfare state development. The Fiscal Centered Perspective is grounded in two interlocking claims. The first is that social insurance systems financed by contributions can be employed by state and non-state actors to advance their fiscal goals, beyond the financing of social benefits and services. The second is that, through different mechanisms such as legitimacy, institutional design, and coalition building, the design and management of SI contribution policies for such purposes can have substantial ramifications for the development and restructuring of social programs. As a theoretical article it discusses the potential added value of such a frame work. We argue that paying attention to the fiscal side of social policy can not only supplement traditional theories of welfare state development but can also enrich our understanding of current processes of welfare state retrenchment and restructuring.