Scholvinck, Director of the UN Division for Social Policy and
Development in New York, made the following presentation to an
NGO Orientation prior to the 40th Commission on Social Development.
The theme of his speech, and of the 40th Commission, was on the
need for integration of social and economic policy. The following
text has been edited from the original.
In 1992 when Bill Clinton was running for President of the United
States, his campaign manager came up with the extremely effective
slogan Its the economy, stupid! Now why did
he choose that slogan? Was it because people were concerned about
fiscal deficits and external imbalances? About inflation? Perhaps.
But they were also very concerned about unemployment, social security,
affordable housing, and a whole host of social issues that come
with fear of a recession. In other words, in most peoples
minds, there isnt a distinction between the economic and
the social. They are inextricably linked.
Why then is there so much concern about integrating social and
economic policy? Why is there a World Economic Forum in New York
with an attendance fee of $25,000 per person and a World Social
Forum in Porto Alegre with an entrance cost of $50 per person?
Similarly, why is there a Commission for Social Development but
not a Commission for Economic Development? The contrast between
the World Economic Forum and the World Social Forum is particularly
telling. It reinforces the image that the economic is associated
with the rich and powerful and the social with the poor and powerless,
a dichotomy in dire need of being closed.
We know that without macro-economic stability, it will be difficult
to attack the causes of poverty as macro-economic stability makes
it possible for policy-makers to look beyond the short-term and
turn their attention to long-term structural issues. In turn,
for economic development and economic stability to thrive we need
social development, especially investment in human capital and
better equity. Stable societies and stable economies are thus
The social sector is mostly concerned with the long term and the
economic realm with the short term. Take for example the Millennium
Development Goals. They are profoundly of a social nature: eradicating
poverty and hunger; reducing infant and maternal mortality; and
improving the lives of 100 million slum dwellers. None of these
goals will be achieved overnight. In fact, the goal of eradicating
poverty is translated into a target of halving the proportion
of poor people living on less than $1 per day by 2015. For most
politicians and economists, a target date of thirteen years from
today is beyond the horizon. Or as Keynes once quipped: In
the long run we are all dead. Without a doubt, macro-economic
policy is mostly concerned with the short run: it involves managing
policy instruments in a consistent manner so as to achieve a stable
and sustainable pace for a number of economic variables such as
wages, inflation and exchange rates.
Social policy often involves equity considerations while economic
policy is mostly concerned with efficiency. Marrying equity and
efficiency is not a simple matter, especially since it is often
efficiency that predominates. An important task is to temper this
focus on efficiency and to redress the balance towards the inclusion
of equity. Lest we forget, macroeconomic policies are essentially
only a means to an end, and not an end in themselves. As the Secretary-General
points out in his report on Integration of Social and Economic
the ultimate ends of economic policy are
in the broadest sense social.1
Therefore, it is essential that explicit social objectives are
included in macro-economic policy making.
Curing the Problem
As we all seem to more or less agree on the diagnosis then why
is it so difficult to implement the cure? There are two plausible
reasons to put forth here. One concerns the lack of strong institutions
and the other I would call making the case for integrating
social and economic policy making.
One of the major problems of developing countries is that institutional
development is greatly facilitated by a certain level of economic
development which is in turn hardly possible without proper institutions.
Here, the UN system and donors can play a major role by providing
technical assistance in national capacity building to improve
public institutions. Without strong institutions it is extremely
difficult to implement effective social and economic policies.
What is particularly important is that integrating social and
economic policies cannot be achieved without a level playing field
between Ministries of Finance and Ministries of Social Development.
The latter need strengthening if they are to interact on an equal
basis with the former.
of public sector budgets determines to no small extent the economic
and social objectives of a country. However, in setting this budget,
coordination and cooperation among the different Ministries is
often absent, or weak at best, thereby causing inconsistent policy-making.
Furthermore, when priorities are fleshed out in the budget process,
social development goals are often viewed as soft
objectives especially when compared with macroeconomic targets.
A number of years ago Alan Blinder published a book entitled Hard
Minds and Soft Hearts. As long as those who deal with the
economic side are perceived as having only hard minds and those
on the social side as only having soft hearts, there can be no
dialogue or at best a dialogue of the deaf. This dialogue of the
deaf was well captured by the Expert Group Meeting on the Social
Aspects of Macroeconomic Policies, a group convened by the UN
Division for Social Policy and Development in preparation for
the 40th Commission on Social Development.
Thus, a major criticism expressed by social development
experts and advocates toward macroeconomic policy makers is that
they are not sufficiently concerned with the social dimension.
The social costs associated with choosing or implementing particular
macroeconomic policies are sometimes either ignored, not well
understood or not taken explicitly into account. Critics view
such macroeconomic policy-makers as lacking heart
and being technocratic, caring more about narrow macroeconomic
targets than about the suffering that these policies and targets
cause to others.
On the other side, macroeconomic policy-makers may view their
critics as not understanding macroeconomics well and therefore
not appreciating the importance of growth and low inflation, or
not understanding the priority of restoring sound macroeconomic
management and its implications for financial markets and a countrys
ability to attract future credit or investment. At the extreme,
macroeconomic policy-makers may view their critics as promoting
their own particular cause or being too soft and not
able to appreciate the tough decisions that must be
made when conducting macroeconomic policy-making.2
These two views sum up what I call making the case
for integrating social and economic policy. First, social policy
represents the basic understanding of what a society stands for
while recognising the economic realities in which it operates.
Second, making the case should be based not only on advocacy but
also on convincing evidence founded on research that shows the
social impacts of macroeconomic policy. More research is also
required on how social development affects economic growth and
ultimately contributes to the success of macroeconomic policies.
The last point, the contribution that social policies make to
reaping economic benefits, is particularly worth pursuing. By
taking a more positive tack, advocating social policy will stand
a much better chance in influencing the allocation of resources
to social development objectives. In short, the field of social
development should move from discussion to productive ideas by
specifying key theoretical linkages, by building evidence, and
then making strategic choices regarding policy.
If we can combine the hard minds with the soft hearts, perhaps
we can then look forward to a World Development Forum where the
social and economic dimensions of development are discussed on
an equal footing.
Division for Social Policy and Development, Department of Economic
and Social Affairs,
United Nations, New York: www.un.org/esa/socdev/ageing/
Commission on Social Development: www.un.org/esa/socdev/csd/
of the Secretary-General on the Integration of social and economic
of the Secretary General for the 40th Commission on Social Development,
Integration of Social and Economic Policy, (E/CN.5/2002/3), paragraph
2 Ibid., Annex 1, paragraphs 33 and 34.