Social investment—A (mis)leading paradigm? Why we need to distinguish different types of social investments

Social investment has become a buzzword among social policy-makers and welfare state scholars alike. Social investments seem to be the natural social policy response to the emergence of the skill-focused knowledge economy. Proponents advocate social investment as simultaneously addressing social and economic goals. At the same time, the social investment approach has also been criticized for multiple reasons: Some claim that social investments often create Matthew Effects that increase rather than decrease inequality; others fear that social investment undermines social compensatory policies and is used to retrench the welfare state. This short comment argues that while these discussions are interesting and important, most of these can be easily resolved. We see as the key problem of the ongoing debate that scholars and politicians refer to social investment as if it was one single type of policy, whereas there are quite different variants of this paradigm when looking at the concrete policies and social investment “in action.” At the heart of these debates thus seems to be a conceptual unclarity and ambiguity of the meaning of social investment. In order to advance the debate, we propose to distinguish different types of social investment: we distinguish social investments with the three different distributive profiles (inclusive, stratified, and targeted) and three different functions (skill creation, skill preservation, and skill mobilization). By distinguishing these nine types of social investment, we can analytically unpack the different social, economic, and political causes and consequences of social investments. This typology helps to normalize the analysis of social investments and helps to understand how social investments work “in action.”