Social spending as a driver of economic growth

Abstract

This chapter aims to reconstitute the factors that led to formulating such a hypothesis and considers how they have been put to the test by economic crisis. As of the 1980s, the general trend towards increased social spending developed in successive stages. The persistence of ratchet effects following the depression phases of the business cycle contradicts the theoretical hypothesis of social spending as a growth engine. The theoretical justification for the argument is based on the concept of not limiting the analysis to the types of economic policies sustained by social spending, but rather reversing the perspective by associating these expenditures with the population quality they produce. Key studies carried out in the mid-20th century have shown that the historical increase in public spending followed a particular model alternating periodic increases and ratchet effects. Regulationist studies periodise structural changes in long-term growth by analysing its instability in terms of accumulation regimes and their crises.