UNRISD Visible Hands: taking responsibility for social development Visible Hands, an UNRISD report for Geneva 2000, explores recent efforts to reassert the value of equity and social cohesion in an increasingly individualistic world. Markets in themselves have no capacity to imagine or create a decent society for all. Only the ‘visible hands’ of governments and public-spirited people can do that.      The Social Summit took place in Copenhagen in 1995 at a time when free-market enthusiasts were promising to deliver progress for all. But there was widespread discontent with the damage caused by neo-liberal policies. Poverty and unemployment were growing rapidly in indebted developing countries. The collapse of the Soviet Union exposed large numbers of people to the rigours of the market without making adequate provision for social protection. The welfare State was also under threat in OECD countries, where workers were subjected to levels of uncertainty unknown for decades.      Many Summit participants demanded change: a significant increase in economic opportunity, the creation of new and better jobs, a more equitable distribution of income, increased gender equality and inclusiveness. A chorus of well-informed protest also demanded economic policy reform, to reduce crippling instability in global markets and permit robust economic expansion.      Events since Copenhagen have confirmed the incapacity of the dominant macroeconomic model to meet these challenges. There has been relatively weak growth of global GDP, with unusually high or low growth in some countries or regions. This has been accompanied by falling real wages and the degradation of working conditions for large numbers of people.      The instability of the global financial system has deepened. The collapse of the Mexican economy, brought about by the uncontrolled flight of capital in late 1994, was followed during 1997 by a still larger economic crisis in some East and South East Asian countries. Macroeconomic statistics suggest that though these nations have staged a rapid recovery, millions of their people have not.      Visible Hands: taking responsibility for social development is an UNRISD report specially written for the five-year review of the World Summit for Social Development. The report says that faith in the ability of unregulated markets to provide the best possible environment has gone too far, and that too great a reliance on the ‘invisible hand’ of the market is pushing the world towards unsustainable levels of inequality and deprivation. It states that a new balance between public and private interests must be found. Efficient markets, functioning in a way that promotes widespread well-being, require contributions from a well-run public sector. They require a healthy, well-educated and well-informed population, and they require the social stability that grows out of democratic governance and an acceptable level of social security.      The report illustrates how between 1945 and 1980, the public sector enjoyed unprecedented expansion. Most people wanted their governments to play a central part in national development. During the 1980s and 1990s, however, some states disintegrated and many were affected by free-market reforms.      The most pervasive and far-reaching reforms have been those that aim for fiscal stability – concentrating on cutting public expenditure. It is significant that in the advanced industrialised democracies, states did not succeed in cutting expenditures by much. They faced stiff resistance from citizens who defended existing social services and entitlements. Developing countries faced less well-organised civic opposition and cut expenditures much more sharply. Their resolve was stiffened by pressure from international financial institutions. In fact, budgetary reforms have been the single most important condition imposed in conjunction with structural adjustment loans over the past two decades.      The report is broken up into eight main chapters headed: Globalisation with a human mask Who pays? Financing social development Fragile democracies A new mission for the public sector Calling corporations to account Civil societies Getting development right for women Sustaining development      The conclusion is that five years after Copenhagen, there is little indication that the fundamental goals and values orienting world development are moving towards greater social responsibility. Incentive structures in everything from education to investment decisions have been reoriented towards improving the options of the profit-maximising individual. The investor has become much more important than the worker. The consumer has gained higher status than the citizen. Questioning extreme individualism and the unbridled power of money – reasserting the value of equity and social solidarity, and reinstating the citizen at the centre of public life – is a major challenge of our time. The ‘invisible hand’ of the market has no capacity to imagine a decent society for all, or to work in a consistent fashion to attain it. Only human beings with a strong sense of public good can do that. UNRISD 1211 Geneva 10, Switzerland Tel: + 41 22 917 3020 Fax: + 41 22 917 0650 Email: info@unrisd.org web: www.unrisd.org