Visions of the Sustainable Welfare

Society: Extending Social Quality into

an Asian/Developmental Context

Yoshinori Hiroi

Abstract

The concept of ‘sustainable welfare society’ is highlighted in the social quality analysis, an
approach that was extended from a European into an Asian developmental context. This
article will expose the basic meaning and conceptual framework used for an analysis of the
sustainable welfare society. On this basis, it will examine the postwar Japanese experience
of public policymaking and, furthermore, explore the implications of this approach by
the analysis of Asian cases and of developing economies. Accordingly, the idea of realizing
sustainable welfare societies is discussed in the background of Japanese social policies in
reference to the European context of development.

Keywords: sustainable welfare society; integration of welfare and environmental policy;

developmental context; Japan

1. Conceptual Frameworks of the Sustainable Welfare Society

Definition and Implications

The ideal of the ‘sustainable welfare society’ is described as a society where a high
level of social quality within social structures and distributional justice is achieved in a
sustainable manner, given finite natural resources and environments. This concept has
certain policy implications, which seem to be particularly important for researchers
discussing social policy issues in Asian countries, as distinct from the European ones.
Indeed, the notion of the sustainable welfare society suggests valuing the integration
of social policy and environmental policy into a uniform one by combining the terms
‘sustainability’ and ‘welfare.’ At present, many Asian countries have experienced
speedy economic development that has inevitably increased their consumption of
natural resources, as in the examples of China and India. This growth makes the issue
of environmental sustainability a critical one for our discussion of social policy issues.
Thus, we need to incorporate an element of environmental sustainability into the
discourse of social policy debate in the context of Asian countries.1

International Journal of Social Quality 1(1), Summer 2011: 19–31

© Berghahn Journals 2011
doi:10.3167/IJSQ.2011010103
Yoshinori Hiroi

Welfare, Environment and Economy

Depending on the contexts in which they are used, the concepts of ‘welfare’ and
‘environment’ contain a rich variety of meanings. To make a conceptual comparison,
‘welfare’ mainly concerns the distribution of wealth and the condition of its equity (or
equal distributional justice), whereas ‘environment’ mainly concerns the total volume
of wealth, and its sustainability2. Thus, in some ways, these two concepts can be
closely related to each other, and therefore the integration of these policies is essential
for sustainable welfare societies. Within this relationship, if we consider ‘economy’ as
dealing with the production of wealth and the efficiency of resource allocations, we
thus have a triangular structure of the three elements as presented below:3
Table 1: Issues and Objectives of Welfare, Environment and Economy

function or issues objective

Welfare distribution of wealth equity (or equal justice)

Environment total volume of wealth sustainability

Economy production of wealth efficiency

If we explore the relationship of these three elements, the following conceptualization

might possibly show a conceptual framework with which to understand human
society. As shown in figure 1, human society can be analyzed on three levels: first,
individuals; second, community; and three, nature. In other words, ‘individuals’
are seen in the context of market or economy, while ‘nature’ corresponds to the
environments within which human beings act. In modern times, the ‘individual’
expanded rapidly with the development of the market economy and became alienated
from communities and nature. As a result, in the relationship between the market
economy and communities, there is a decline of community power but an increase of
inequality. The distorted relationship between market economy and nature took the
shape of environmental destructions and the unsustainable consumption of natural
resources.

Figure 1: Relationships among Environment, Welfare and Economy

(A) Individuals Economy/Market

Issues of Welfare

(B) Community Community

Issues of Environment

(C) Nature Environment

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 Visions of the Sustainable Welfare Society

Accordingly, the issues of welfare concern the relationship of (A) and (B) and the
environmental issues concern the relationship of (A) and (C). Accordingly, the issues
of both welfare and environment are, to some extent, only part of the problems in
human society. In this context, the integration of welfare policy and environmental
policy is essential.
Thus, we should inquire further about the relationship between the roles of
government, market and community? This forms part of the discourse in the realm of
comparative welfare states.4 If we have the policy areas of environment in perspective,
the tentative configuration can be shown as in figure 2. Here both ‘welfare’ and
‘environment’ refer to ‘government’ as well as ‘community.’ Also we must note that
the concept of ‘sustainability’ is allied with ‘community’ because community includes
elements of sustainability or duration including intergenerational succession.
Even so, we still should be aware of the several meanings and/or contexts that
the term ‘sustainability’ implies. For instance, the term ‘sustainability’ sometimes
denotes financial sustainability of some institutions or systems, as in the example
of the ‘sustainability of pension system’. However, the term ‘sustainability’ became
highlighted in the area of environmental policies as well as in the area of ‘sustainable
development policies.’ Thus we should distinguish between the different dimensions
of ‘sustainability’ from short term to long term.

Market [Efficiency]

Government Community

[Equity] [Sustainability]
Welfare Environment

Figure 2: Market-Government-Community Nexus and Welfare and Environment

Figure 3 below is a revised and extended version of figure 2. In this figure, three
dimensions of ‘sustainability’ are distinguished. They include:

1. sustainability (in a short-term): concerning with market and government;

2. sustainability (in a long-term): concerning with community;
3. sustainability (in a far long-term): concerning nature.

Thus, when we discuss the notion of the sustainable welfare society, we should
not only consider the factors in the first dimension but also the factors in the second
and third dimensions since the sustainability of natural systems is fundamental for the
existence of human society.
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Yoshinori Hiroi

[Sustainability (short-term)]

Welfare
Market Government

Environment
[Efficiency]
Community

[Sustainability (long-term)]
Nature
[Sustainability (super long-term)]

Figure 3: The Nexus of Market–Government–Community in Relation to Welfare and

Environment

2. Failure in a Shift from Industrial Policy to Social Policy? The

Dynamic Relationship of Welfare, Environment and Economy in
the Process of Economic Development in Postwar Japan

Using the analytic framework sketched in the previous section, we can further
examine the Japanese experience with a focus on the dynamic relationship of welfare,
environment and economy. In the late nineteenth century, Japan became the first
industrialized Asian country and went through a rapid process of economic and social
transformations. The Japanese experience of social policy and the formation of social
protection systems thus provides many interesting points of observation, which seem
different from those of Western countries. For instance, when Japan tried to achieve
universal coverage of social insurance programs between 1940s and 1960s, around 40
to 60 percent of the total population was engaged in agriculture, unlike many Western
countries but similar to many developing countries. Another case concerns the
dynamic relationship of economic policy, social (or welfare) policy and environmental
policy in the process of development. As a ‘latecomer’ in industrialization, Japan
(and many other Asian countries) took social policy as a ‘dependent’ policy area,
often ‘embedded’ in economic policy or industrial policy, particularly at the earlier
stages of development. Here I will briefly review the postwar Japanese experience of
public policy regarding income redistribution, and examine the dynamic relationship
of economic, social and environmental policies.

Stage 1: Policy Initiatives for ‘Equality of Opportunities’ in the Postwar

Era

The postwar Japanese policy developments in income redistribution can tentatively

be divided into four stages. The first stage is the period right after the end of the
22 • International Journal of Social Quality • Volume 1 Number 1 • Summer 2011
 Visions of the Sustainable Welfare Society

Second World War under the occupation of the United States of America. This stage
is characterized by strong policy initiatives for ‘equality of opportunities’. Two policy
developments were significant in this context: first, radical redistribution of land by
the agricultural land reform; and second, a mandatory educational system of junior
high schools.
The land redistribution initiated by the occupation force was aimed at the
dissolution of feudal land ownership. Indeed, by 1946, the Special Law for the Creation
of Landed Farmers was enacted and a lot of agricultural land was mandatorily bought
by the government and sold to the peasants. As a result, the ratio of land owners
to the total number of farmers increased from 31 percent in 1945 to 62 percent in
1950. The introduction of a mandatory education system has also had a very strong
effect on land redistribution, because it provided people with equal opportunities at
an early stage of life. In a social sense, this system served as a basis for later economic
development as it cultivated a labor force capable of engaging in economic activities.
Figure 4 shows the relationship between the egalitarian effect of land distribution
and economic growth in the twentieth century. In this table, the egalitarian effect of
land distribution is measured by using the Gini coefficient. The positive correlation
between two sets of factors is evident. This experience can be observed also from Korea,
Thailand and Taiwan. The issues of land ownership and distribution, although not the
central issue in the discussion of welfare states, are important when we examine the
social policies of developing countries in Asia. Some of these policies concern assets
rather than income, so the study of social policy development should not only pay
attention to income redistribution but to assets as well.

Average GDP per capita growth, 1960–2000, %

8
Taiwan, China
Rep. of Korea
6
China
Vietnam Thailand
Japan
4 Malaysia
Indonesia
Dominican Rep. Sri Lanka Egypt
Brazil India
2 Paraguay Colombia
Costa Rica Mexico
Guatemala
Argentina Kenya
South Africa
Peru El Salvador Honduras
0
R.B. de Venezuela Nicaragua

–2
1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3
Initial land distribution (Gini coefficient, inverted scale)

Figure 4: The Egalitarian Effect of Land Distribution and Economic Growth

Source: World Development Report 2006 (Equity and Development) 2005.

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Yoshinori Hiroi

Stage 2: ‘Redistribution for Production’ in the Period of High Economic

Growth (1950s to 1960s)

The notion ‘Redistribution for production’ may sound odd to most European social
policy scholars but this is the most important aspect of Japanese redistribution policy
in the postwar period. In European welfare states, production is the process occurring
in the sphere of market operations, whereas income redistribution happens in the
field of social protection (and related mechanisms, e.g., progressive taxation, etcetera).
However, in postwar Japan, policies made in the production sphere played a major
role in enhancing the effect of income redistribution whereas the policies of social
protection have a relatively weak function of income redistribution.
To address these policies specifically, we can refer to the following policies, which
are often categorized as ‘industrial policies in the broad sense’: first, subsidies to farmers
(which means the income distribution between the urban and the rural population);
second, tax redistribution between the central and local governments; third, subsidies
to small and medium enterprises and to the factories of declining industries.
To make a general assessment, the subsidies to farmers was a very important policy
measure because in this period, the process of industrialization coincided with a huge
population transferred from rural areas to urban areas. This turned the income gap
between farmers and the urban residents into a major political issue. The redistributive
mechanism of tax revenues from the national government to local governments was
an important means of resolving the issue of social protection in the poor regions.
There were still other significant income redistribution mechanisms, which helped
the workers in various industrial sectors. As the element of income redistribution in
these policies was mingled with the industrial policies made by the government, their
Table 2: Government Expenditure in Japan by Policy Area (billion yen)

Social protection Tax transfer from Public projects

(by tax) central to local
governments
1958 122 224 190
1960 193 328 304
1965 546 716 726
1970 1152 1772 1441
1975 4136 3308 3487
1980 8170 6952 6896
1985 9902 9690 6891
1990 11480 15931 6956
1995 14543 12302 12795
2000 17636 14915 11910
2005 20824 15923 8015
Source: Ministry of Finance, Japan; One Hundred Years of Japan by Figures, Yano Tsuneta Kinen-
Lai, 2006, p. 432.

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 Visions of the Sustainable Welfare Society

implementation blurred the contrast between the issues of ‘resource allocation’ and
‘income redistribution’.
Thus, Japan achieved a wide coverage of social insurance in 1961 in the fields of
health care and pensions and this contributed to the work of the strong redistributive
mechanism formulated by the setting up of a number of ‘industrial policies’ beyond the
policies of social protection. This results in a change in the composition of government
expenditures, as figure 5 shows. In this table, the expenditures resulting from tax
transfer from central to local governments and from public projects were bigger than
those spent on social protection schemes until the 1970s. These mechanisms played
major roles in realizing an equal distribution of income.

Stage 3: Public Projects and the Beginning of Social Protection Policies

for the Elderly (1970s to 1990s)

From the 1970s onward, Japan entered a period with low-rated economic growth.
In terms of redistribution policy, this period is characterized by the following
developments: first, the growth of public projects as a mechanism of income
redistribution; and second, social policies for protecting the elderly. In this period,
the state spent money on public projects that impacted on income redistribution.
Figure 6 shows the relationship between the increased public projects per capita and
the raised per capita income level in various prefectures of Japan. This relation was
weakly identified during 1955 and 1960, but, in the 1990s, the data show that in the
regions where the level of per capita income was low, the volume invested into public
projects was high. This means that in this period, public projects, beside their primary
aim of providing necessary infrastructure, played a part in income redistribution in
the low income regions.

1955–1960 1991–2000
400 5000
per capita (Thousand Yen)

per capita (Thousand Yen)

Volume of public projects

Volume of public projects

300 4000

200 3000

100 2000

0 1000
50 100 150 200 2500 3500 4500
per capita income per capita income
(Thousand Yen) (Thousand Yen)

Figure 5: Public Projects and Per Capita Income at Different Prefectures of Japan

Source: Daiwa Research Institute, Economic Planning Agency of the Japanese Government, Prime
Minister’s Cabinet Office Japan: Nihon Keizai Shimbun, March 1, 2005, p. 21.

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Yoshinori Hiroi

In this period, the idea of ‘redistribution for production’ was still maintained,
but these ‘production-oriented’ sets of policies, which had been effective in the past,
gradually became an obstacle for the development of social policies, particularly in
regard to social provision for the working population. Besides, using public projects
as a redistributive mechanism would have the side-effect of discouraging a transfer of
labor from old industries to the newly emerging ones. Projects such as building local
infrastructure of roads and dams might lower the unemployment rate in the short
term but they might cause environmental destruction in the long run.
Meanwhile, this period is also characterized by the beginning of redistribution
through social protection for the elderly. As the size of the group of elderly persons
who were retired from the labor force increased, the mechanism of ‘redistribution
for production’ could no longer work effectively, as many of them were out of the
labor market. Given a quickly ageing society (the ratio of people over 65 rose from
7.1 percent in 1970 to 17.3 percent in 2000), some kind of social protection system
became inevitable. Therefore, a number of social policies were produced in the area
of pensions, health care and long-term care.

Stage 4: Pro-market Reforms and the Outcomes (2001 and Afterwards)

With regard to Japanese redistribution policy, the last stage of evolution coincided
with the so-called ‘Koizumi Reforms’ of 2001. This reform was characterized by a
strong pro-market or neo-liberal policy initiative. Through the reforms, the idea of
‘redistribution for production’ and other government interventions in the market,
which had characterized redistribution policy in postwar Japan, was abandoned or
minimized. These reforms had a positive effect in dissolving vested interests and
reducing the inefficiency of government interventions, but it had a negative effect
of increasing income inequality. Taking Gini Coefficient in household income
(after the redistribution by tax and social protection schemes) as an example, this
figure was increased from 0.3606 in 1996 to 0.3873 in 2005 (data from the Income
Redistribution Survey by the Ministry of Health, Labor and Welfare), which was
among the highest in developed countries.
After the Democratic Party of Japan won the general election in August 2009,
the process of Japanese social policy development was re-dynamised. This event was
regarded as a historic victory and a turning point of Japanese political history, which
ended the one-party rule (by the Liberal Democratic Party), which had lasted for
more than fifty years. Many promises made in the election by the members of the
Democratic Party have had to be abandoned. In the social policy area, new decisions
on increased and extended family allowances for children, reforms of the healthcare
system for the elderly, reorganization of the pension system, etcetera, are likely to
be taken, although how strong the actual policy initiatives of the new government
will be still is an unsolved question. A set of factors that will inevitably influence the
process of policymaking in Japan, includes an ageing society (the ratio of people over
sixty-five years was 22.1 percent of the total population in 2008) and changes to the
economy and society.

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 Visions of the Sustainable Welfare Society

From a Development-oriented Approach towards a Social Quality

Approach: The Policy Implications

Based on a review made on the changes in Japanese public policies from a redistribution
perspective, we can make the following evaluations. First, in the postwar era, the most
effective and perhaps most successful sets of policies in terms of redistribution were
very strong policy initiatives for an ‘equality of opportunities’ which later provided
a basis for economic development. Second, ‘redistribution for production’ worked
relatively successfully in the early stages of Japanese economic growth but it became
a burden after 1970 and curbed the development of social protection as such. The
recent pro-market reforms, intended to eliminate the negative aspects of government
interventions, have led to increasing income inequality.
These policy developments may be described as ‘a failure in a shift from industrial
policy to welfare policy’. In the period of high economic growth, the government
interventions into the production sphere were successful both in terms of efficiency
and redistribution but these later became a burden since the pro-market reforms
combined with the underdevelopment of social policies, worsening the situations
of income equality. This discourse of development may be observed also from many
more later industrialized countries.
In addition, in the late 1960s and early 1970s, the environment problems were
recognized as policy issues and some policy responses were initiated by enhanced
various laws and regulations and the creation of an Environment Agency (1971).
Environmental protections were enacted by government ministries in charge of
each industrial sector (such as the Ministry of International Trade and Industry,
the Ministry of Transport, the Ministry of Public Works, etcetera). Even so, in
comparison with the goal of economic growth, the issue of environmental protection
was treated as a policy area of secondary importance. In the context of growing public
concerns about environmental issues, the new development initiatives will be taken
by the central and local governments. However, still much remains to be done. Thus,
in the discussion of welfare, environment and the economy, we need to promote the
social quality approach (see Table 3).
In the above table, four policy areas of industrial policy, welfare or social policy, land
policy, and environmental policy, are placed in perspective. In Japan, public policies
in the early stage of industrialization are likely to be ‘development (or production)-

Table 3: Orientations of Social Analyses

The process of economic development

Development-oriented Social Quality-oriented

Dimensions regarding Industrial Policy Welfare (or Social) Policy
Human/Labor
Dimensions regarding Land Policy Environmental Policy
Place/Space (Agricultural Policy,
Urban Policy)

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Yoshinori Hiroi

oriented’, in which social policy and/or environmental policy are either embedded
in economic policies (such as industrial policy and land policy) or marginalized. As
the economy grew, there was a need for transition in policy orientations from the
‘development-oriented’ to ‘social quality-oriented’: this transition was not made easily
but often failed. Accordingly, attention should be paid to studies showing the dynamic
relationship between the factors of welfare, environment, economy and policymaking,
which are significant in the realization of sustainable welfare societies. Policy models
for assisting such transitions should be based on comparative research.

3. Agenda for Promoting Sustainable Welfare Societies

In Asia, many countries have been going through the process of rapid economic
development and industrialization. Although there are huge variations among these
countries in the degree of industrialization, urbanization and population structure,
as well as in cultural and ecological aspects, we may still assume that there is some
sort of common agenda for the ambitions of Asia and Europe to realize sustainable
welfare societies.
In regard to the environmental sustainability, the situation in Asia, at first glance,
seems very serious as some gigantic countries, including China and India, are now
accelerating resource consumptions as the result of their economic development.
However, if we look at the trend of population from a longer perspective, the
situation is less pessimistic because population in east Asia will reach its peak in the
2030s (about 2.1 billion people according to the UN population forecast). The aged
population, increased consumption of food, energy and other natural resources per
capita, will increase the necessity for policy makers to produce the policies for realizing
sustainable welfare societies in Asia, from local to national and regional level, making
it the most urgent agenda.
With regard to welfare and income distribution, the relationship between
economic development (GNI per capita) and income inequality (Gini coefficient) in
Asian countries can be summarized by figure 8. These data may illustrate a pattern
of Kuznets’ hypothesis of the inverted U-shaped curve (although the precise context
should be further explored).
As for income inequality, various coping measures should be taken in these
countries, not only for social policies but also for industrial policies. As discussed in
the previous section, this requires integration of industrial policies and social policies
and an appropriate transformation of policy orientations from developmental to social
quality. It is crucial to theorize such policy models through comparative research in
Asian and European countries. We should also note that in Asia, the major agents
in delivering welfare are not only the states or governments but also the community
organizations and civil society agents.
Unlike the European countries, where the state is a ‘welfare state’, Asian states, at
least up to the present day, play a relatively small role in providing welfare but the local
community acted as a basic welfare provider. Thus, we need to be very cautious about
conclusions drawn from any ‘(East) Asian model’ of welfare or from a ‘Confucian

28 • International Journal of Social Quality • Volume 1 Number 1 • Summer 2011

 Visions of the Sustainable Welfare Society

60 Vietnam
Cambodia Philippines
50 Malaysia
China
40 Thailand
gini coefficient

Sri Lanka
Korea
30
Indonesia
Laos Japan
Mongolia
20

10

0
0 5000 10000 15000 20000 25000 30000 35000
GNI per capita (PPP, dollar)

Figure 6: Economic Development and Income Inequality in Asian Countries

Source: data adapted from World Development Report. Equity and Development. Oxford University
Press, Oxford (2006), p. 292

The process of economic development

Pre-industrial society Industrialization Post-industrial society

Government

‘Traditional ‘New Community’

Community’ ex. NPO, civil society

Market

Figure 7: The Relationship of Community, Government and Market

model’ but there is a possibility that these Asian countries have some commonalities
in the process of industrialization and post-industrialization, in their governments,
markets and communities, and that these features may differ from the European ones.
Also, they may have a common interest in reaching the goal of ‘sustainable welfare
societies’, but the paths of development in Asia and Europe will differ.
Accordingly, we may view welfare development in Asia at the supra-national level
and implement various kinds of policies to progress the development process in this

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Yoshinori Hiroi

region. These policy measures can include: first, international cooperation in the area
of social protection in Asia; second, establishing an ‘Asian Welfare Network’; third,
a commitment to study and operate ‘welfare states’ at the supra-national level. Thus,
some projects can be set up: for instance, JICA’s (Japan International Cooperation
Agency’s) project started in 2006 5, which aimed to increase the effective operation of
old-age pensions in the rural areas of China. Other forms of international cooperation
in social protection should also be enacted. Third, communication and networking
should be facilitated for researchers, local civic groups and helpers in the areas of welfare
or social policies, including comparative research. Last, but not least, community
policies should be created for east Asia as well as other forms of cooperation, to be
enacted among member states, including a redistributive mechanism at the supra-
national level in Asia.

Notes

1. In a European context there are discussions of ‘green social policy’ (for instance, Fitzpatrick and Cahill
2002) and the concept of sustainable welfare society expressed here has many common policy concerns,
although the latter may pay more attention to the process of economic development.
2. For instance, the welfare state discussions are mainly concerned with the effect of distributional justice
and the economic outputs of human activities, while the focus of environmental discourses are used to
locate the issue of sustainability in human economic activities with the finite natural resources and the
maintenance of a functioning ecosystem. In welfare discussion, the term ‘sustainability’ can refer to the
sustainability of human society including inter-generational relationships and the financial sustainability
of state social protection systems.
3. There is a similar discussion in the area of ecological economics. See Daly (1996), Daly and Farley (2004).
4. For instance, see Esping-Andersen (1999).
5. See http://www.jica.go.jp.

References

Beck, W. et al. 2001. Social Quality: A Vision for Europe. Kluwer Law International, The Hague,
The Netherlands.
Daiwa Research Institute, Economic Planning Agency of the Japanese Government, Prime
Minister’s Cabinet Office Nihon Keizai Shinbun, March 1, 2005, p. 21.
Daly, H. E. 1996. Beyond Growth. Beacon Press, Boston, USA.
——— and Farley, Joshua. 2004. Ecological Economics. Island Press, Washington DC, USA.
Esping-Andersen, G. 1999. Social Foundations of Post-industrial Economies. Oxford University Press,
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Fitzpatrick, T. and M. Cahill. 2002. Environment and Welfare: Towards a Green Social Policy.
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Gasper, D. et al. 2008. “Human Security and Social Quality: Contrasts and Complementarities.”
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Goodman, R. et al. eds. 1998. The East Asian Welfare Model: Welfare Orientalism and the State.
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Gough, I. and J. A. McGregor, eds. 2007. Wellbeing in Developing Countries: From Theory to
Research. Cambridge University Press, Cambridge UK.

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 Visions of the Sustainable Welfare Society

Institute for International Cooperation., 2004. Development of Japan’s Social Security System. Japan
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——— and Chack-kie Wong. 2005. East Asian Welfare Regimes in Transition: From Confucianism
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Biography

Yoshinori Hiroi graduated from the University of Tokyo and after receiving a
master’s degree there he worked for the Ministry of Health and Welfare of Japan
between 1986 and 1996, where he was involved in policy makings in the areas of
health and social policy. He moved to Chiba University and has been Professor
at the Faculty of Law and Economics since 2003. During 2001–2002 he was a
visiting scholar at Massachusetts Institute of Technology. He has written many
books in Japanese including Social Protections of Japan (Japan Economist Award)
and Rethinking on Community (Osaragi Award). His English publications include
Development of Japan’s Social Security System, Japan International Cooperation
Agency (JICA).

International Journal of Social Quality • Volume 1 Number 1 • Summer 2011 • 31

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