THE MARKET PROVISION OF MANDATORY SOCIAL SECURITY: Protecting the Public Interest in Perpetuity

Pressures to introduce market reforms to public social security system emerged as a reaction to state welfare paternalism, drawing strength from the spirit of liberalism and emphasizing the virtues of the marketplace. Market reform advocates seek to shift the prevailing social security paradigm away from community solidarity to individual responsibility, with a view to divesting government of some of its statutory social security responsibilities. Market reform of public social security provision redefines the public-private boundary, making socio-political governance more a process of co-ordination, steering, influencing, and balancing pluralist interactions, with the civil service increasingly expected to act as trustee of the public interest. What, however, the public interest is and how it differs from private interest is problematic and it should reflect the shared values that create social bonds and identity within a society. The daunting twin challenges facing governments are to design a set of regulatory arrangements that can protect the public interest in perpetuity, and to resist calls for government subsidies to support the economic rent expectations of privatized providers. To meet these challenges the "hollowed-out" state must become a "smart" state. Copyright 2002 by The Policy Studies Organization.