Trade Unionism v. Neoliberalism: Different Paths to Impact Investing in the U.S.

Abstract

Goal – privatization and outsourcing help public and private employers, respectively, to reduce their costs and even to increase productivity and output. The state has retained its role in developing and implementing policies in reducing unemployment, providing related social benefits and maintaining core public services. However, the increased use of novel financial instruments such as social impact bonds (SIBs) may result in the privatization of these core state functions as well. With SIBs, private investors are given a goal or target – for example, to reduce unemployment by a certain percentage in a specific community or region-and are rewarded with a return on their investment if these targets are met. This article analyzes and criticizes the use of SIBs in the U.S., and contends that labor unions would do a better job in implementing elements of state employment policy than private investors. Research methodology – the author used the qualitative empirical, doctrinal and analytical research methodologies. Originality – it is an original work evaluating different ways in which private actors (financial investors or labor unions) may assist governments in solving social problems such as unemployment.