The state-centric model of development has moved to the centre stage in India and many other developing countries.
At the same time, the alleged shortcomings and uneven distribution of benefits resulting from state or government
intervention have increased the pressure to consider alternative routes to development via privatisation and market-
oriented mechanisms.
This essay introduces both sides of the debate on the state-centric model versus market approaches. The future direction
of social policies will be influenced by the way in which the questions raised in the debates are addressed and resolved.
Dr. N. Viswanathan is Professor of the TISS Golden Jubilee Mahalaxmi Temple Trust Chair in Social Work at the Tata
Institute of Social Sciences from August to December, 1990. He is also Professor and Associate Dean at Adelphi
University School of Social Work, Garden City, New York.
The modern concept of the nation-state has now begun to dominate the public realm.
In a preponderant number of more than one hundred and sixty nation-states that
comprises international society today, the state now has greater presence and
prominence than ever before in policy formulation and development. Virtually every
sphere of life is under the jurisdiction or domination of the state in newly independent
nations, today generally denominated as "developing countries". Viewing the Indian
scene, for instance, Ashis Nandy observed that "The most prominent feature of the
Indian political culture in recent years has been the emergence of the nation-state as
the hegemonic actor in the public realm".1
The state is often perceived as a force that can alter economic distribution within the
society. The growing political activism of India's various social groups, as well as the
increased grass-roots mobilization of various segments of civil society, have been a
"natural" result of the prevailing belief that the Indian state has an important economic
and redistributive role. From the very privileged to the downtrodden, everyone wants
more and everyone hopes and expects that the state will provide it. The question,
however, is: can the state continue to meet the escalating demands? The answer to the
question remains open. Developing countries that have relied on the state-centric model
of development have a record of accomplishment that some find inspiring, others
disheartening. India has been a remarkable example of an open society in which, since
the early years of independence, the political elites have deliberately chosen to see
national development as the prime responsibility of the state. The state, guided by
Nehru's socialist vision, took on itself the responsibility for transforming the economy.
Even more ambitious, it sought to deliver new services - education, public health, social
services, community development - to half a million villages. Throughout India's
post-independence history its sensitive minds have demonstrated their ability to come
to grips with the most complex and awesome issues facing the country. India has also
gained recognition as the world's largest and vibrant democracy. This is one side of
India's face, whereas the other side is not so pretty. Despite free India's resilience and
impressive achievements on many fronts, its chronic problems persist and show no
signs of abating. Mass poverty, malnutrition, urban congestion, ecological devastation,

382 N. Viswanathan
environmental degradation, and large scale illiteracy are some of the intractable
problems that undermine the nation's confidence in its own progress. To this woeful list
must now be added other problems - insurgency in border states, subnationalist
passions, and internecine warfare between and among religious groups. There is no
escape from the fact that these manifestations of India's deep-seated problems serve
to spread despair and cynicism about the institutions that sustain Indian democracy and
about the democratic process itself. Rajni Kothari provides a critical analysis and
interpretation of the mutation of the Indian state from an instrument of social transfor-
mation to an instrument of coercion, terror, misinformation, and distortion of the
democratic process.2
What, then, are the prospects for the continuation of the state-centric model in the
decade of the '90s and beyond?
Debate has been heating up in India and other parts of the world on the appropriate-
ness or effectiveness of state intervention as a strategy for promoting economic
growth and advancing social justice. This debate is a subscript of the larger issue
of state-society relationships3 and the related issue of the appropriateness or
effectiveness of command economies, centrally planned economies, mixed
economies, or market economies as strategies for the social and economic develop-
ment of modern nation-states.
To begin an in-depth exploration of the phenomenon of development, and the social
policy implications thereof, state or government intervention has been chosen as the
overarching theme and seminal concern of this Focus Issue on Social Policy.
The Debate
Advocates of state intervention love to pose as pragmatisms and realists. Markets are
not perfect, they argue. If they were, they could perhaps be relied upon to allocate
resources efficiently and equitably. But everybody knows they are not, so governments
have to step in to remedy the imperfections or externalities caused by the market.
Although democratic capitalism in Western nations uses the market system to satisfy
the desires of those possessing adequate resources, it often does so with little regard
for those with inadequate resources or for preserving the environment for future
generations. Developing countries in Asia and Africa have apparently found it more
problematic to use the market system with respect to providing basic health and
education services, alleviating poverty and homelessness, and meeting a variety of
other basic human needs.
State domination is reputedly a common characteristic of most Third World countries.
Such domination is justified on the belief that national economic policy and state control
are crucial instruments for shaping the destiny of their countries, according to national
norms. In India, for example, ever since it attained independence, the basis of social
policy development and instruments for its implementation, were influenced by a strong
perception that there was pervasive market failure in the Indian system and, that, the
solution lay in frequent and decisive government intervention. The effectiveness of this
interventionist approach was adjudged favourably by protagonists of state intervention.

At the Cross Roads : Whither Social Policy ? 383
Critics, on the other side of the debate, argue that the result of government intervention
is usually a disaster. Though policy makers and programme administrators frequently
rationalise their advocacy of state intervention in the name of the poor, the backward
and the downtrodden, the real reason lies in the enormous power that they wield and
the patronage they can dispense, if the state remains strongly interventionist. The
experience of developed and developing countries alike is that intervention breeds
intervention. Typically, additional interventions are called for to deal with the difficulties
caused by earlier interventions. Then, further interventions would be needed to sort out
the mess surprisingly caused by those interventions, and so on. As a result of the
unwillingness or inability to break this vicious cycle, the government in some countries
became such a suffocating monster that the private and voluntary sectors went almost
completely underground, or else virtually expired. As one Latin American joke has it,
"The economy grows at night while the government is sleeping". 4
Developing countries continued to claim that they could escape poverty by central
planning and government intervention. Yet, distracting circumstances mounted and, in
many developing countries, the resources, available for development thinned and
expectations diminished. Many, though not all, of the poor countries became poorer still.
Thus, the attempt to eliminate market failure by government intervention led to another
type of failure—government failure. And, unsurprisingly, the combined effect of these
twin failures had a corrosive and damaging effect on both economic growth and
redistributive justice.
For the world's poor countries, this past decade has been a cruel disappointment.
Hobbled by indebtedness or by other economic, political, or social crises, most of them
have seen their growth rates slow, and many have seen living standards, that were
already pitifully low, fall even further. The pain, almost surely, has been concentrated
particularly on the poorer, disadvantaged groups. In consequence, there appears to be
a growing consensus, cross-nationally and across political parties and forums of public
opinion, that the centralized and bureaucratic environment cannot deliver the goods and
less, at any rate, cannot bring the fruits of development to the poor and deprived
sections, or even prevent their own resources being drained away by corporate interests
or elite groups. It has been suggested, therefore, that many Third World democracies,
including India, could benefit from a "rational" policy shift towards lesser state controls
and a more open and competitive economy. Some commentators have gone a step
further to suggest most forcefully that, faced with a rapidly changing world, India and
other developing countries will have to drastically reorient their social and economic
policies; and that the challenges that lie ahead can best be met by disbanding the public
sector and relying more on the private sector.
This unresolved debate between the proponents and opponents of government inter-
vention has left many developing countries at the crossroads. The question that they
seem to confront is whether they should rely on imperfect markets or imperfect
governments. Both markets and governments seem unsteady and the future direction
of social policy seems more unsettled than before.
This introductory essay is designed to open up, more fully, the larger theoretical and
empirical debate on the future direction of social policies, by focusing analysis on the
key institutions of modern nation-states. The questions that confront us are readily
identified: Is state intervention necessary in the management, governance or develop-

384 N. Viswanathan
merit of a nation-state? To what extent is state intervention warranted in the social and
economic environment of the 1990s and beyond? Does such intervention inhibit or
interfere with the propensity of the market for self-regulation and economic growth?
These questions are not new, but they have resurfaced in the changed context of a
globalized world economy. In one way or another, all the articles featured in this issue
centre around the focal concern of the role and responsibility of the nation-state in
organizing, controlling, and directing social and economic development.
Paradigmatic Viewpoints
Important differences of viewpoint have emerged among prominent policy makers and
policy analysts about the national strategies best suited for advancing economic growth
and equitable distribution in the difficult global adjustment climate of the 1990s. Among
the most prominent of the current approaches, two stand out: the liberal and conser-
vative paradigms. The Keynesian or neo-Keynesian paradigms that gained ascedancy
over nearly fifty years, have slowly yielded to revisionist views now referred to in popular
parlance as Thatcherism or Reaganomics. 5
Proponents of the "new orthodoxy" - the so called conservatives and neo conservatives
- have extolled the virtues of the marketplace and built their political support by opposing
governmental structures. Putting old wine in new bottles, the new orthodoxy is un-
abashedly pro-market and anti-statist. Its main thesis is a strategy of economic revitalisa-
tion which would strengthen the private sector and which, in turn, would assume
increasing responsibility for bolstering the supply of goods and services. It thus carries
forward, with redoubled vigour the liberalizing, pro-market strains that have been gaining
momentum throughout the world in recent times.
In tune with this view, is the idea currently in vogue, that governments can do almost
nothing right. But as fads go, this one has been stretched to the limit with assertions in
some quarters that government itself is the main obstacle to development, and that it
is, in fact, a part of the problem rather than a part of the solution. Mindful of the limits of
government in promoting economic development and social well-being, the new or-
thodoxy is emphatic in advocating the privatisation of all services (including social
services) and curbing the growth of public goods.
Even state-dominated regimes in the Soviet Union and Eastern Europe have come
under pressure to embrace privatization as an antidote to declining productivity and
resultant shortages in consumer goods. Developing countries have also recently been
under strong pressure to privatise state-owned or state-controlled enterprises as a
means of curbing inefficiency, improving productivity, and creating a climate for innova-
tion. Several Third World countries have moved in this direction.
The private sector has become involved in spheres as varied as commercial aviation,
telecommunications, postal services, power, etc. - formerly the preserve of govern-
ments and state-owned enterprises. Extrapolating from this trend, the International
Finance Corporation (IFC), an affiliate of the World Bank, has forecast an increased role
for private sector in all developing countries in the years ahead.

At the Cross Roads : Whither Social Policy ? 385
The movement towards privatisation has gained ground as allegations are made that
direct or indirect subsidisation of public goods have performed little or no distributive
role towards improving equity. In fact, it is even alleged that they have often had either
unintended adverse consequences or proved to be counter productive. Currently, there
is a pervasive feeling among many development theorists and strategists that somehow
development has "failed" and, that, the results have gone awry — a feeling reinforced
at the extremes, by food and environmental problems and by the debt crises of many,
if not all, of the developing countries.
Some of the prominent leaders in developing countries, including India, have become
disillusioned by the lack of visible results in poverty alleviation and redistributive justice,
even after substantial investments of capital and human resources by their govern-
ments. In consequence, some of these leaders who, at an earlier time, were ardent or
fervent advocates of state intervention, have now become increasingly sceptical of
expending government revenues on social programmes, without tangible results. This
cynicism is reflected in terms like "bottomless bucket" that have appeared with increas-
ing frequency in political forums.
In contrast to the foregoing viewpoint, other mainstream analysts, falling into the
so-called liberal camp, are persuaded by the substantial progress that many developing
countries have achieved since they became independent. They recognize that progress
as measured by modernisation, social upgradation, and economic self-sufficiency would
never have happened without governmental initiative or forward looking public develop-
ment policies. They insist, therefore, that there is no substitute for the continuing lead
that governments must supply to development promotion efforts.
Proponents of this view are less than awed by the magic of the market. They argue that,
privatisation of public sector undertakings in developing countries, does not offer "across
the board" solutions. Indeed, in some instances, public enterprises are needed to
perform a crucial function in strategic industries, or, to provide urgently needed services.
There is also a continued need in poor countries for massive, restructuring interventions
by government within a framework of comprehensive economic and social planning.
In western capitalist or free market economies, as contrasted with command economies
and other state-dominated or centralised regimes, prolonged periods of steady
economic growth laid the basis for the expansion of welfare states. Bipartisan support
for the welfare state reflected the emergence of a broad-based consensus in Parliamen-
tary and Congressional bodies. The welfare state, in turn, helped defuse class conflict
by establishing a minimum floor of economic security for the working class. The resultant
social stability, and the strengthened social fabric, were used as indices for the success
of the social policies embodied in the welfare state.
As architects of the welfare state, liberal advocates build their arguments upon the active or
affirmative role of government in promoting equity and social welfare. They draw upon
empirical data to point to the imperfections of the marketplace, its inability to trickle down the
benefits of an affluent society, and the polarities of income distribution resulting in the
perpetuation of the underclass. Their raison d'etre for state intervention is equitabledistribution
and social justice, rather than simply economic growth or economic self-sufficiency.

386 N. Viswanathan
The old and the new paradigms co-exist, each with its own adherents. The ideas of
some others are more heterodox, but they are essentially variants or offshoots of these
two dominant paradigms of social and economic policy. The two paradigms are
antithetical in their fundamental assumptions and belief systems, yet, they have often
proved to be synergistic. Both these paradigmatic viewpoints, when carried to their
logical extreme, can be discredited, as indeed they have been by the so-called
This leads us to ask several pointed questions: What is a useful social policy stance for
the future ? Should we be leaning more towards one paradigm than over the other ?
Shall we be adopting a middle ground position that avoids the extremes of the"
arch-typical conservative and liberal viewpoints ? Is there an alternative paradigm, if so,
what are its building blocks? Are there some special valuable lessons for India gleaned
from the experiences of other countries— be they capitalist, communist, socialist or
social democratic ?
These are not questions that are easily answered, yet they need to be addressed in the
context of values that we uphold and cherish in the social work profession. The role of
social work in shaping and implementing social policies must be carried out with greater
deliberation and foresight than hitherto.
Social Policy
Social Policy is an interstitial domain of inquiry in the disciplines of economics, history,
philosophy, political science, and sociology. As an interdiscipline, it draws upon a body
of knowledge that is vast and variegated. In recent years, there has been a rekindling
of interest in social policy analyses and there has been an upsurge of writings in this
vein. Increasingly, policy makers have sought the advice of policy analysts in designing
and shaping the real world policy agenda.
The definition of social policy adopted here is somewhat broad and inclusive, to
encompass the kinds of choices that a society makes in allocating the resources that it
has at its command to meet agreed-upon human needs. These choices are usually
troublesome and difficult, as it is assumed that resources are limited or scarce, relative
to needs that are often insatiable or elastic, plus the difficulty of establishing national or
subnational consensus on the importance of one need as against another. Who is to
make these choices ? What is the calculus for making these choices? Although answers
to these questions are murky, the fact remains that choices have to be made and
allocative mechanisms established, which sometimes result in new or novel social
inventions. The design and development of these linkage mechanisms between resour-
ces and needs is what we commonly refer to as social policy.
As societies evolve and develop over time, they begin to uncover or discover significant
gaps or shortcomings in their conventional modes of need resolution. This is because
needs change or multiply, new needs emerge, or needs become converted to rights or
entitlements. Resources may not increase or expand in proportion to the volume or
magnitude of needs. The resultant policy struggle is to create the best balance between
resources and needs.
Simple as it may seem, the creation of an optimal or even desired mix between resources
and needs is seldom easy or straight-forward. It does not lend itself readily to

At the Cross Roads : Whither Social Policy ? 387
econometric analysis; and subjective judgements are involved in disentangling value-
laden considerations. As pointed out earlier, there are significant ideological cleavages
and differences in world view among policy makers, policy analysts, and relevant actors
in interest groups or constituencies. While these differences in the world view and value
orientations are inevitable, and perhaps, even healthy in societies that aspire to be
democratic, secular and multi-cultural, it also makes it difficult to work towards a
modicum of consensus or shared agreement on desired goats, as well as the means
for accomplishing them. In consequence, what we have witnessed is a great deal of
acrimonious debate in professional and political circles about "who gets what?" and "who
benefits?" The orchestration of different value positions and theoretical viewpoints on
the role and responsibilities of nation-states in improving the quality of life for all citizens,
is becoming increasingly difficult.
This leads us to ask, once again, several pointed questions: How do we reconcile the
discordant views of a pluralistic and multi-cultural society? What framework or scheme
do we use for weighing the trade-offs of one set of social policies against another? How
best are resources to be allocated? Answers to these questions are influenced,
presumably, by the theoretical and value lenses that policy actors use in resolving
large-scale national concerns.
Resource Allocation
Policy makers have three clearly differentiated channels available to them for the
purpose of resources allocation and service delivery: public sector, private sector, and
voluntary sector. The public sector includes the provision of goods and services directly
by central, state or local government agencies. The private sector includes all proprietary
for-profit organisations whose production of goods and services are financed largely
from their own profits or surpluses, supplemented at times with government subvention,
subsidies, or tax incentives. The voluntary sector refers to goods and services provided
by not-for-profit organisations (also called non-government organisations), which are
financed either entirely by philanthropic or charitable contributions and endowments, or
supplemented by government grants or purchase of service contracts.
In command economies, such as in the Soviet Union and Eastern Europe, the public
sector assumes primacy and the level of government intervention is reputedly high. In
centrally planned economies, such as in socialist democracies, the level of government
intervention is high, but there is some scope for private and voluntary sectors to play a
supportive role. In mixed economies, such as in Western Europe, the level of govern-
ment intervention is moderated by the co-mingling of public, private, and voluntary
sectors in varying proportions. In market economies, such as in capitalist democracies,
the level of government intervention is predictably low with a policy framework that leads
through market mechanisms to efficient resources allocation and utilisation. Whether
private and voluntary sectors are permitted to flourish or smother are integrally related
to the prevailing political outlook and development philosophy. Thus, the level of
government intervention and the level of utilization of relevant sectors, are inter-related
with the political economy of each of the nation-states.
The availability of resources to be channeled through one or more sectors is influenced
by fiscal, social and monetary policies. If taxes are increased, for example, revenues
are high and more resources are available for allocation or distribution, if, on the other

388 N. Viswanathan
hand, taxes are cut, then resources are reduced and proportionately less resources are
available for utilisation by the public sector. Whether the system of taxation will be
progressive or regressive also has a vital bearing on the availability of resources. These
are "bread and butter" issues affecting the pocket books and life styles of the citizenry,
hence such choices are sensitive to the predispositions and vagaries of the electorate.
The a priori assumption that resources are scarce or limited is valid only upto an extent.
In spite of the apparent need for budget austerity, the fact is that policy makers today
have a degree of latitude and freedom in shifting priorities, rearranging resources, and
stimulating revenue enhancement or augmentation. Provisions and programmes that
emanate from social policy are usually seen as a drain on resources, as users of the
benefits categorized as "clients" are seen as consuming resources rather than producing
them (the free ride problem, as it is sometimes called in welfare economies). If it can be
documented or demonstrated that social policies are investments that ultimately result
in resources production, then we have a more congenial climate for social policy
The allocation of resources is very much related to the issue of the nature and extent
of needs, as well as their political appeal. There are basic needs that are common to all
or larger segments of the population; there are needs targeted to a particular group or
population entity; and there are needs that are more unique or idiosyncratic to specific
individuals or families. Thus, there are different kinds of needs clamouring for recognition
and attention. Establishing priorities among competing needs for the purpose of
resources allocation is, itself, a time consuming political process.
A quintessential policy agenda is, therefore, the articulation between resource allocation
and need determination. The following matrix suggests the decision points that confront
policy makers:
Needs Versus Resources
Public sector Private sector Voluntary sector
Basic Needs
Target Needs
Unique Needs
The Zero Sum Game
Policy makers have tended to gravitate towards zero-sum games in arriving at social
policy choices. This means simply that competing priorities are resolved by eliminating
one group in favour of another that wields, perhaps, more substantial political influence.
The choice of this strategy results in winners and losers, a process that leads to the
empowerment of one group and the disenfranchisement of another.

At the Cross Roads : Whither Social Policy ? 389
Although an element of the zero-sum game theoretical model is inevitable in policy
decisions, it is conceivable that strategies can be devised to create beneficiaries among
different categories or segments of the population with divergent needs and circumstan-
ces. As policy choices usually involve trade-offs and compromises an incremental
strategy can be devised to benefit a broad cross-section of the population, thus
culminating in more winners than losers.
Whither Social Policy ?
The preceding analytical overview is intended to sharpen the debate on competing
viewpoints in social policy formulation and development, to activate further research,
and to serve as a source of reflection on the questions that initiated this inquiry. What
are the goals of state intervention? What are the strategies for attainment of these goals?
What are the "trade-offs" between goals and means? Both technology and methodology
are involved in finding answers to these questions.
This synoptic overview on social and economic policy making initiates analysis and
exploration by juxtaposing two paradigmatic viewpoints, seemingly in opposition with each
other. The clash of orthodoxies among the old and the new groups is evident. In the final
analysis, however, it may not be an "either-or" choice involving either total affirmation or total
rejection of state intervention. Caution should be exercised in any attempt to pigeonhole
specific individuals into one of the categories. It is quite often the case that an individual
would flow with one doctrinal current on a given policy issue, and ride with another on other
issues. However, public policies of one sort or another will always remain an important
subset of social policies in most nation-states. Hence, the role of state intervention, in an
absolute sense, is to an extent self-evident. However, other elusive questions remain with
us: How much state intervention? Towards what ends?
The 'Focus Issue' invites our readers to reflect on the views and experiences that are
expressed in this special edition. Cross-national analyses are especially valuable in this
regard, provided we recognize that caution should be exercised in treating both
developed and developing countries as a broadly homogeneous group. The experience
of India in national development during its post-independent years offers a rich
laboratory. An indepth examination of the Indian experience through successive cycles
of five years plans has to be carried out in theoretically fruitful ways to yield new
hypotheses, generate additional empirical research, and suggest alternative paradigms
more suited to the ethos and culture of Indian society.
1. Ashis Nandy, 'The Political Culture of the Indian State,' in Daedalus, Journal of the
American Academy of Arts and Sciences, Fall 1989, Vol. 118, Number 4, p.1.
2. Rajni Kothari, State Against Democracy: In Search of Humane Governance, Ajanta
Publications. See also, Rajni Kothari, Rethinking Development: In Search of
Humane Alternatives, Ajanta Publications.
3. For an analysis of various aspects of mutual interaction between society and the
Indian State, see: Atul Kohli (ed.), India's Democracy: An Analysis of Changing
State-Society Relations, Princeton, New Jersey: Princeton University Press, 1988.

390 N. Viswanathan
4. For an excellent and more extended discussion along these lines, see:" Third World
Survey: Poor Man's Burden", The Economist, September 23, 1989, pp.1-58.
5. An excellent dialogue somewhat along these lines is brought together in John P.
Lewis and Valeriana Kallab (Editors), Development Strategies Reconsidered, New
Jersey: Transaction Books, 986.