Can the capability approach help us frame welfare reform in Europe?


Scholars have recognized the importance of the welfare state in constructing national identity, supporting social solidarity and providing legitimacy to the national state (for a recent discussion see Ferrera, 2005). From this perspective, it may be interesting to analyse European social policy while discussing on European identity. Indeed, the European Union lacks a “European welfare state”, which may be linked to a lack of European identity and of Europe-wide social solidarity – become even more evident with the current crisis.

Indeed, the European integration process has involved the construction of a common market, leaving the social issues to be regulated at country level by national welfare states. In other words, it seems that the economic sphere has been “Europeanised” while the social one has remained national.

However, at least since the adoption of the European Employment Strategy in 1997 and the Lisbon Strategy in 2000, a discourse on how to reform national welfare states has emerged at European level, generating an epistemic community of actors who share normative beliefs about the role of social policy and the direction of reform. The main idea in this hegemonic discourse is that social policy should be seen as a productive investment, which positively contributes to economic growth. More recently, the same discourse has been reinforced with the launch of the Europe 2020 Strategy (2010) and of the Social Investment Package (2013).

This European discourse is very influential, framing welfare states “problems” and respective “solutions” in a certain way, thus affecting national reform agendas. From this point of view, it may be possible to speak about a “European social policy” even without a European welfare state. But how does this European social policy look like?

My central claim is that the discourse on welfare states reform at European level suffers from economicism. With this term I mean the extension of market (economic) logic to non-market (non-economic) spheres of social life. Terms such as “employability”, “human capital”, “flexibility”, “social investment” and “activation” are some examples of economicistic notions developed in the European discourse and now at the core of almost all national discussions on welfare reform. Hence, two questions arise: first, why do we now use economic terms to discuss about non-economic issues such as social policy? And, second, why is that problematic?

The economization of the debate on social policy reform

Concerning the first question on the reason why we discuss welfare reform in economic terms, the answer seems to be twofold. On one hand, welfare states are said to be “in crisis”, that is, no longer economically sustainable. This is because of demographic changes (population ageing) and structural economic changes such as the rise of the service sector characterized by low productivity, globalization and increased international competition. Thus, the difficulty to finance welfare states makes legitimate to treat social policy reform as an economic problem.

On the other hand, the ideological shift towards neoliberalism has made possible the emergence of a discourse criticizing national welfare states for being inefficient and unfair. From this perspective, social policy would create perverse incentives and irresponsible behaviours at the individual level and excessive taxation, unemployment and slow economic growth at the macro level. Furthermore, the social solidarity at the basis of the welfare states would have become out of date with the rise of individualism and the ideology of the self-responsible, self-sufficient citizen. Also, welfare states are at the origins of inequality between insiders and outsiders, increasing the disparities between men and women, natives and immigrants, old and young, protected workers and precarious ones. Social policy is thus a social waste, a useless and even damaging bureaucracy, an obstacle to individual freedom and emancipation.

In this respect, the European discourse on social policy is not purely neoliberal in the strict sense because social policy is not seen as a waste but rather as a productive investment. However, what I want to stress here is that the neoliberal hegemony compels to find welfare state justification in the economic rather than in the social domain. In other words, in neoliberal times it has become impossible to justify social policy in terms of social objectives (e.g. social justice, human welfare, satisfaction of basic needs, protection of the vulnerable, redistribution, etc.). Rather, only if social policy is able to generate an economic advantage its existence is justifiable.

The ideological shift towards neoliberalism is also linked to an increase of the power of economics as academic discipline. Indeed, in the past decades the influence of economic theories on other social sciences has increased, especially in their connection with public policy so that, economics – presented as a scientific and value-neutral discipline – ends up defining social problems and their solutions (Brodie, 2007).

Why is this problematic?

Let’s now turn to the second question: Why is the hegemony of the economic discourse on welfare reform problematic? I would argue that national welfare states involve ideas of social justice and visions of the good society (even if very different and conflicting). Hence, welfare states have a social and a political function so that it would be wrong to confine welfare reform within an economic approach, without wondering about a conception of common good (Zimmermann, 2006).

Furthermore, not only historically developed conceptions of social justice are embodied in welfare state but also the reverse is true: institutions shape moral attitudes and individual preferences so that welfare state can enhance citizens’ sense of justice. Hence, a welfare state based on a purely economic logic risks destroying its support based on intrinsic motivations and normative beliefs. In contrast, good welfare institutions are characterized by a moral persuasiveness and their support is based on people’s sense of justice, which in turn can be enhanced by good institutions (Mau, 2003).

Thus, the main problem of reducing the debate on welfare reform to an economic matter is that economics as a discipline does not investigate alternative goals – which are considered value-related and thus non-scientific – but rather it always focuses on issues of efficiency, that is, on the best means to achieve given objectives. However, in social policy it is impossible to avoid a discussion about goals. In this sense, a normative reference, capable of giving guidance regarding the actual aims of a policy, is needed. Furthermore, in social policy it is often difficult to distinguish between means and goals, and means are rarely morally (and politically) neutral so that an ethical analysis is needed even in the narrow discussion about the means to achieve social policy objectives. Finally, the risk is that with the hegemony of economics in social sciences and the economization of politics and society, the discussion on goals disappears completely. This would reduce the political debate – that should take place at democratic level and concerning a discussion around values and social goals – to efficient administration discussed at technical level by experts of independent agencies.

However, efficiency is not the only social value – as economists tend to believe. Rather, social dilemmas exist and compel us to choose among conflicting goods. This is what makes them so difficult to solve (indeed it would be easy to choose between a good and a bad). Thus, a democratic debate should establish what should be sacrificed in the name of efficiency and which social spheres should be instead protected from the efficiency rationale because they respond to other values (Anderson, 1993; Sandel, 2012). In other words, a political and moral discussion is needed to balance the social value of efficiency with other social values, such as equality, human dignity, solidarity, etc.

The Capability Approach: An Alternative Way of Treating Welfare Reform

What is important here is that it should be recognized that economics itself is based on implicit and rarely discussed normative assumptions that can be challenged, initiating a democratic debate on the limits of efficiency. In short, what is needed is the engagement in an ethical reflection about welfare reform as well as about the place that the economic logic (and the market mechanism) should have in society.

In order to do so, Amartya Sen’s capability approach may be very useful (Sen, 1999a). Indeed, the capability approach is an attempt to re-establish the dialogue between ethics and economics (Sen, 1999b). Thus, against the tendency to treat values and ethics as beyond the scope of scientific research and the unwillingness to discuss concepts such as the good life and human wellbeing in social science, the capability approach explicitly uses a normative ‘informational basis’ (Sayer, 2009). In particular, the capability approach defines development in a way that goes beyond the narrow vision of mainstream economics, which treats it as synonym of economic growth. For the capability approach, development is a good social change (Crocker, 1992), assessed in terms of its human consequences.

Thus, the main advantage of the capability approach is that it allows overcoming the ideologies that reduce human beings to human capital, making the case for an economy serving human beings rather than the opposite. But in which way does such an approach help to think about welfare reform? An example may clarify this point.

The employment rate is one of the indicators used to assess the success of welfare reform at European level. So the development of work/life balance policies (e.g. the provision of childcare services) is justified in terms of increasing the participation of women in the labour market, which in turn can enhance economic growth. Instead, from a capability approach perspective work/life balance policies should increase the real freedom of women – their capabilities – to choose to work if they want to (which includes the freedom to care for their children if they want to), see Lewis and Giullari (2005). In other words, putting the wellbeing of the person (her real freedom) at the centre of policy evaluations, the capability approach overcomes the “welfare to work” model, which sees the increase of the employment rate as the main objective of social policy. Similarly, the stress on investing in education in the social investment approach is justified in terms of human capital, that is, the aim is to increase individual productive capacity in the economy. In contrast, from a capability approach perspective, “investing” in education is justified in a broader manner, including providing the instruments for critical and independent thinking. In other words, education is seen as the way for forming good citizens (free persons) for society rather than simply good workers for the economy (see Lister, 2003).

Another important advantage of the capability approach is its stress on the need for public deliberation and democratic discussion on the choice of the relevant information for taking collective decisions (Sen, 1999a; Sen, 1999b). From this perspective, instead of being an exclusive topic for experts who develop policy solutions in a top-down manner, welfare reform should be object of public deliberation. Even more radically, a democratic debate should be initiated on the meaning of richness, social progress and wellbeing in order to define what should be the final aim of social policy (which cannot be identified with economic or employment growth that are not goods in themselves but rather means to achieve something valuable).

I would argue that in Europe there is room to start such debate. In fact, economic growth slows down and there is a growing political interest in other measures of progress reflecting people’s quality of life (e.g. the Enquete-Kommission Wachstum, Wohlstand, Lebensqualität in Germany and the Stiglitz-Sen-Fitoussi Commission in France). In particular, the search for non-material means to achieve human wellbeing becomes more important – also for ecological reasons – and the rise of post-material values makes it legitimate to investigate ways to achieve a ‘good life’ that do not necessarily involve economic growth. Finally, the actual socioeconomic crisis and the emerging protest movements represent an opportunity to rethink the normative assumptions of our understanding of development.

In other words, it is necessary to start a discussion on the “final ends” (what constitutes human wellbeing, what is a good society, etc.), rather than narrowly focusing on the search for the most efficient means, following an economic logic. To use a metaphor, if we do not know where we want to go, it is useless to know which is the shortest way. Knowing what is the most efficient solution – the shortest way – does not tell us anything about the quality of life involved in this solution – the place were the shortest way leads.


In this short essay I have tried to show how the discourse on welfare state reform at European level suffers from economicism, that is, the extension of the economic logic to non-economic social spheres. I have proposed that in contrast to this hegemonic discourse based on “the best means” (efficiency), what is needed is a discussion on the aims of social policy.

Amartya Sen’s capability approach allows thinking in terms of final ends – the ethical aspect – and provides the basis for a democratic discussion on what really matters – the political aspect. In contrast, the economicistic discussion on welfare reform dominant at European level lacks both the ethical and the political aspect.

The current crisis has made even more evident the insufficiency of this narrow focus on economic aspects. The incapacity to solve the debt-crisis reveals the failure of the ideal of a European common market without social solidarity and with no political community at its basis. It is maybe time to start thinking seriously about the possibility of building a European welfare state to give social and political substance to the common market (some proposals on a European unemployment insurance have already been made). This in turn may also reinforce the European identity.

However, I argue that developing a European welfare state means addressing again fundamental normative questions, put aside for long time, on the kind of Europe we want to live in. This requires the reconsideration of societal goals through democratic deliberation, stopping the “economization of the social” involved in the application of economic logics to non-economic social spheres.


Brodie, J. (2007). Reforming Social Justice in Neoliberal Times. Studies in Social Justice, 1(2), pp. 93-107.

Crocker, D.A. (1992). Functioning and Capability: The Foundations of Sen’s and Nussbaum’s Development Ethic. Political Theory, 20(4): 584-612.

Ferrera, M. (2005). The Boundaries of Welfare: European Integration and the New Spatial Politics of Social Protection, Oxford University Press, Oxford.

Lewis, J. and Giullari, S. (2005). The adult worker model family, gender equality and care: the search for new policy principles and the possibilities and problems of a capabilities approach. Economy and Society, 34:1, pp. 76-104.

Lister, R. (2003). Investing in the Citizens-Workers of the Future. Transformations in Citizenship and the State under New Labor. Social Policy & Administration, 37(5): 427-443.

Mau, S. (2003). The Moral Economy of Welfare States: Britain and Germany Compared, Routledge, London/New York.

Sayer, A. (2009). Who’s Afraid of Critical Social Science? Current Sociology, vol. 57, n. 6, pp. 767-786.

Sandel, M. (2012). What Money Can’t Buy: The Moral Limits of Markets, Farrar, Straus and Giroux, New York.

Sen, A. (1999a). Development as Freedom, Oxford University Press, Oxford.

Sen, A. (1999b). L’Economie est une Science Morale, La Découverte, Paris.

Zimmermann, B. (2006). Changes in work and social protection: France, Germany and Europe. International Social Security Review, 59 (4), p. 29-45.

European Strategies in the Social Policy Field:

European Employment Strategy:

Lisbon Strategy:

Europe 2020 Strategy:

Social Investment Package:

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Francesco Laruffa (2015, 18 juin). Can the capability approach help us frame welfare reform in Europe? Sozialstaat | État Social. Consulté le 15 juin 2024, à l’adresse

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