112
institutional argument in favour of savings through social security upon condition that the government sees many sound opportunities for capital formation and is short of investible resources. The question here is not whether social security stimulates society's propensity to save but whether the government is more efficient in channelling savings into capital formation than other agents who hold society's savings. Household savings other than contributions to social security may be scattered over many financial enterprises in many forms (deposits, private insurance policies, financial assets, jewels, etc.). The process that channels such diverse savings into capital formation may involve waste of time and substantial transactions costs. By concentrating a good part of society's savings in one place through social security, the government may be capable of directly channelling them into planned capital formation with a minimum of delay. There is some value in this argument. But if the government really wants to commandeer society's resources for purposes of economic development, there surely are many other effective ways of doing so besides the use of social security programmes. Furthermore, the ability of social security to attract society's savings hardly seems to be an overriding justification for social security. It is somewhat ironical to suggest that social security, which is an instrument of "social justice", be used as an
excuse for commandeering society's resourCES f or economic development which itself is invariably responsible for producing social dislocations and social injustices necessitating in turn protection of individuals against socio-economic hazards through means like social security.
6. Social security labour quality and economic growth
Walter Galenson leads off the discussion of the role
of social security in relation to labour quality with these words: "Another view has recently come to the fore; that at least some elements of social security may in fact contribute positively to the productive process and to ultimate welfare. Those who take this position maintain that expenditures for such purposes, by augmenting the physical well-being and morale of workers, may lead to higher productivity and thus more rapid economic growth."1 However, one may well ask what elements of social security "augment the physical well-being" of workers in ways relevant to the increase in worker productivity. In the ordinary situation, benefits are paid to those who are struck by adverse contingencies or socio-economic hazards. The victims are temporarily or permanently withdrawn from productive activities. During the periods cf inactivity, productivity is zero, not growing. Furthermore, during these periods, the victims (the injured, disabled, sick, unemployed, aged, etc.) are cared for at a certain standard of living lower than their usual standards and cannot be said to have an "augmented" physical well-being. Thus, the major "elements of social security" do not increase the productivity of benefit recipients. But Galenson tries to correlate social security benefits with the growth of productivity. The result is, naturally, that there is no strong correlation between the two.
One therefore stakes the notion of productivity effect of social security on the "morale" of protected workers. One might sa y that workers work Dore confidently, more proudly, and more regularly during the normal periods or that they are willing to take more risks for improving their earnings by learning new skills, changing jobs, or moving to new places, because they feel "secure" in the knowledge that when they are struck by socio-economic hazards in the course of their bold experiments, they can fall back upon social security. But to what extent these favourable changes in worker outlook and behaviour can be attributed to social security is a very complex question. I am rather inclined to suppose that these attitudinal and behavioural changes on the part of workers are among the autonomous forces of development that precede the institution of social security. These changes are also responsible for the rise of socio-economic hazards that require concerted public attention, because at the base of these changes is the tendency toward greater individualism and a decline of concern about others. This view is also consistent with the evolutionary course of events emphasised by development economics.
However, there are two elements of social security whose productivity effects are rather obvious: public health and family allowances. "Public" health measurES (if instituted with emphasis on preventive rather than curative services) should
Walter Galenson, "A quantitative approach to social security and economic development", in The Role of Social Security ..., Chapter 4, p. 51.
E-1195-2F:5