Global Development Institute Blog

Armando Barrientos, Emeritus Professor, Global Development Institute

Policy responses to Covid-19 have encouraged discussion of the future scope of social assistance, and social protection. Social assistance infrastructure – registries, payment systems, poverty maps – facilitated the rapid deployment of large-scale emergency support during the pandemic. This raised expectations that their consolidation would result in an expansion of social protection.

A more cautious assessment of the future of social protection might be in order. Emergency support has been largely time-limited and is gradually being withdrawn. Fiscal deficits and public debt resulting from the pandemic have eliminated any fiscal space.

What about potential lessons from the pandemic? Covid-19 has raised hard questions about our societies’ capacity to address risk and future crises. It is hard not to acknowledge the salience of the issue, we are reeling from the pandemic. This is the context in which the scope of social protection is being re-considered, especially among international organizations. At issue is whether social assistance is best understood as a risk instrument. This blog argues the ‘risk turn’ in our approach to social protection is a wrong turning.

The emergence of large-scale transfers to disadvantaged households in low and middle-income countries has been effective in reducing poverty. In large part, this is because transfers help address the main factors behind poverty: consumption, asset, and inclusion deficits.

These deficits flow from the organisation of the economy under capitalism. This is not a particularly radical assessment. Hegel, my favourite philosopher, wrote in 1821: “The poor … have the needs common to civil society [market society. AB] and yet since society has withdrawn from them the natural means of acquisition…their poverty leaves them more or less deprived of the advantages of society, of the opportunity of acquiring skill or education of any kind, as well as of the administration of justice, the public health services, and often even of the consolations of religion, and so forth” (Philosophy of Right p.149).

The risk approach to poverty avoids capitalism altogether by taking the view that people find themselves in poverty because of their inability to insure against risk.

There are complex and technical arguments underpinning this view and there are circumstances in which some people do fall into poverty because of an uninsured hazard. But as an explanation for global poverty, it falls a long way short. The implication that 1 billion residents of this planet, living in extreme poverty, are just unlucky is troubling.

Yet, the risk approach to poverty and social protection has its supporters.

Old social protection hacks like me recall the World Bank’s Social Risk Management Strategy from the turn of the century. It developed a comprehensive approach to social protection as a framework for identifying and managing the risks that keep people in poverty, from macroeconomic stability to micro-finance. It privileged (market) insurance solutions. Among other initiatives, the Strategy offered intellectual support for pension and health insurance reform in Latin America and Eastern Europe, and for micro-finance and micro-insurance programmes.

International development agencies are naturally attracted to the risk approach because their operations cover emergency assistance and, more recently, social assistance. They include social protection under safety nets. Multilaterals and humanitarian agencies have regularly repositioned social assistance as emergency assistance. Covid-19 has amplified this trend.

Interestingly, European welfare state theorists were also captivated by the risk approach to social protection. Esping-Andersen’s 1990 Three Worlds of Welfare Capitalism sought to explain the varieties of European welfare states by reference to their economic organization and political coalitions. But in his 1999 The Social Foundations of Post-industrial Economies the focus had shifted to ‘social risks’: “Social policy means public management of social risks” . Of course, ‘social risks’ – old age, unemployment, children and climate change for example – are not random hazards. They understood that the impact of ‘social risks’ is stratified according to the socio-economic class people belong to. Consequently, they favour comprehensive public policies to protect citizens.

To be sure, risk can and does generate poverty. Risk management instruments can be effective in preventing and mitigating poverty. Emergency assistance is hugely important, and it is only right that donors make it a priority in their work.

But as an approach to global poverty, the ‘risk turn’ is reductive because it avoids addressing the core factors behind it.

Social assistance, as distinct from emergency assistance, addresses poverty that flows from the organisation of the economy under capitalism. This is the source of its effectiveness. In combination with other public policies, it engages with the conditions in which large sections of the population lack the income, assets – human, physical, or financial – and political and economic inclusion, necessary to take full part in the life of the society.

Photo by Mauro Lima on Unsplash

Note:  This article gives the views of the author/academic featured and does not represent the views of the Global Development Institute as a whole.