Probable Justice: Risk, Insurance, and the Welfare State

By Rachel Z. Friedman

Decades into its existence as a foundational aspect of modern political and economic life, the welfare state has become a political cudgel, used to assign blame for ballooning national debt and tout the need for personal responsibility. At the same time, it affects nearly every citizen and permeates daily life—in the form of pension, disability, and unemployment benefits, healthcare and parental leave policies, and more. At the core of that disjunction is the question of how we as a society decide who should get what benefits—and how much we are willing to pay to do so.

Probable Justice​ traces a history of social insurance from the eighteenth century to today, from the earliest ideas of social accountability through the advanced welfare state of collective responsibility and risk. At the heart of Rachel Z. Friedman’s investigation is a study of how probability theory allows social insurance systems to flexibly measure risk and distribute coverage. The political genius of social insurance, Friedman shows, is that it allows for various accommodations of needs, risks, financing, and political aims—and thereby promotes security and fairness for citizens of liberal democracies.

• Language: English
• Publisher: University of Chicago Press
• Release date: Oct 10, 2020
• ISBN: 9780226731094

Book preview

Probable Justice

Probable Justice

Risk, Insurance, and the Welfare State

Rachel Z. Friedman

The University of Chicago Press

CHICAGO & LONDON

The University of Chicago Press, Chicago 60637

The University of Chicago Press, Ltd., London

© 2020 by The University of Chicago

All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission, except in the case of brief quotations in critical articles and reviews. For more information, contact the University of Chicago Press, 1427 E. 60th St., Chicago, IL 60637.

Published 2020

Printed in the United States of America

29 28 27 26 25 24 23 22 21 20    1 2 3 4 5

ISBN-13: 978-0-226-73076-9 (cloth)

ISBN-13: 978-0-226-73093-6 (paper)

ISBN-13: 978-0-226-73109-4 (e-book)

DOI: https://doi.org/10.7208/chicago/9780226731094.001.0001

Library of Congress Cataloging-in-Publication Data

Names: Friedman, Rachel Z., author.

Title: Probable justice : risk, insurance, and the welfare state / Rachel Z. Friedman.

Description: Chicago : University of Chicago Press, 2020. | Includes bibliographical references and index.

Identifiers: LCCN 2020005335 | ISBN 9780226730769 (cloth) | ISBN 9780226730936 (paperback) | ISBN 9780226731094 (ebook)

Subjects: LCSH: Social security—United States. | Welfare state—United States. | Risk—United States. | Probabilities.

Classification: LCC HD7125 .F754 2020 | DDC 361.973—dc23

LC record available at https://lccn.loc.gov/2020005335

This paper meets the requirements of ANSI/NISO Z39.48-1992 (Permanence of Paper).

Contents

Preface

INTRODUCTION

Out of Many, One

Justice and Chance

The Character of Probability

The Context of This Work

The Approach of the Project

Overview of the Argument

A Qualified Defense

ONE / The Origins of Risk and the Growth of Insurance

Insurance: A Brief Primer

The Early History of Modern Insurance

Pre-insurance Practices

The Emergence of Premium Insurance

The Theory and Practice of Early Marine Insurance

Probability Theory and the Doctrine of Aleatory Contracts

The Legal Background of Early Probability Theory

Probabilistic Justice

Equipossibility and the Distributive Turn

Life Insurance and Probabilistic Justice

Equity in Empirical Probability Theory

The Birth of Statistical Life Insurance

Mutualism with and without Risk

TWO / Probabilistic Justice and the Beginnings of Social Insurance

Precursors to Social Insurance

Social Insurance and the Liberal Idea

Richard Price: Property and Political Arithmetic

Friendly Society Reform: Social Insurance Writ Small

The First Social Insurance Plans: Mutual Insurance Writ Large

Early Proposals

Condorcet: Probability and Perfectibility

Thomas Paine: Welfare without Insurance

THREE / The Promise of Probability

The Practical Aims of Late-Classical Probability

Inverse Probability

Epistemic Equiprobability

Between Individual Choice and Social Responsibility

A New Rationale and Its Challenges

Mathematical and Moral Expectation

A Social Duty to Insure?

Social Insurance in Theory and in Practice

Mutualism with and without Risk, Revisited

Causal Laws and Rational Planners

A Social Insurance Moment

FOUR / The Collectivization of Risk and the Early Welfare States

The Rise of the Collective View of Chance

A New Interpretation of Probability

A Modified Case for Insurance

The Ethical Character of Frequentist Probability

Frequentist Social Welfare

Risk in the Early Welfare States

The Question of Responsibility

The Subjects and Targets of Social Policy

The Flexible Actuarialism of Early Social Insurance

FIVE / The Egalitarian Welfare State and the Ambiguities of Insurance

The Egalitarian Welfare State Emerges

The Centrality of Insurance to Postwar Egalitarian Welfare

The Amorphous Appeal of Insurance

The Limits of Universal Social Insurance

Subjective Probability and the Personalization of Chance

Keynes’s Transitional Account

The Rise of the Subjectivist View

The Moral Character of Subjective Probability

The Egalitarian Welfare State without Probability

Probability versus Justice

Rawls and Social Insurance without Risk

The Persistence of Probability

Insurance and Distributive Theory after Rawls

The Fate of Social Insurance in the Twentieth Century and Beyond

The Problem of Polarization

The Impact of Information

CONCLUSION

The Long-Standing Appeal of Insurance

Explaining the Welfare State

The Limits of Social Insurance

A Contemporary Example

Acknowledgments

Notes

Index

Preface

As this book went to press, the global crisis caused by the COVID-19 virus was unfolding around the world. Many economies had come to a near halt, as businesses, schools, and universities closed their doors to reduce the spread of the disease. Public health systems faced unprecedented demands, as many hospitals found themselves overwhelmed with patients and undersupplied with equipment and staff. The crisis is likely to have a serious impact on welfare states and on their social insurance programs in particular. While it is still far too early to meaningfully predict these long-term effects, two observations stand out as relevant to the historical and theoretical study that follows.

First, the speed with which many states turned to their social insurance systems to alleviate some of the economic burdens of the pandemic confirms how central these institutions are and how, at least in a state of emergency, they are able to generate consensus even in politically polarized environments. Within weeks of the outbreak, numerous governments had resolved to use their unemployment insurance schemes to help the rapidly rising number of those out of work. Some also adjusted sickness- and parental-leave benefits to enable workers to stay home without losing their livelihoods. Whether all these policies were wisely formulated, and will be judiciously financed, remains to be seen. Yet the fact that so many governments immediately turned to social insurance speaks to its salience and relative adaptability to the economic consequences of new hazards.

Second, this crisis has illustrated some of the persistent challenges of probabilistic reasoning in public life. The pandemic took most governments, healthcare providers, and individuals by surprise, unprepared for the far-reaching toll it would take. Even as the crisis reached global proportions, it took time for leaders and citizens to react, due to the inevitable difficulties of anticipating its progression and to individuals’ reluctance to change their behavior. It appears that two developments have in turn helped governments begin to manage the spread of the disease. The first is their ability to collect and analyze information about how and to whom it is likely to spread. The second is the perception of uncertainty among individuals, and especially the recognition that we still know relatively little about how the virus affects different groups or categories of people. Having set in, this recognition thrust people around the world into a rare experience of shared vulnerability, as the illness took its toll with little apparent regard for the distinctions that usually set us apart. In such moments, we are more inclined to look to governments to guide our choices and facilitate collective action for the safety and well-being of all. We are also more inclined to perceive what makes us alike, above all the fragility and neediness of our bodies, and to countenance a sharing of burdens that transcends individual distinctions.

In the wake of the crisis, these perceptions may lead to greater public demand for social safety nets and even generate far-reaching changes to welfare programs. Yet it is also inevitable that after some time has passed, in a state of greater calm and armed with greater knowledge, we will each turn back to our own habits of judgment, attendant to our own particular needs, circumstances, fears, and goals. We may be less aware of what makes us alike and more driven by the desire for personal independence and distinction. The concept of probability, with which we quantify and manage uncertainty, points in both directions—that is, to drawing conclusions from large-scale observations and to the guidance of individual prudential judgments. Not only may these diverge from one another, but both are also subject to continual change in light of new information. The challenge for public policy, and social insurance specifically, is to somehow bridge or combine the two.

These observations lend support to one of the central claims of this book: namely, that a distinctive set of concepts and tools lies at the heart of the liberal democratic political order, promising us both personal protection against misfortune and a mechanism to fairly apportion its burdens. The concept of risk and the practice of insurance are not simply technical or morally neutral in nature but rather mirrors of our principled commitments and tools for their realization. Understanding their character and evolution can shed light on long-standing tensions in our politics. It can also help us appreciate the ways in which our institutions address or manage those tensions, as well as their inability to fully resolve them. As a result, while the analysis that follows does not offer solutions to our current crisis, it may help to clarify enduring questions and prompt a rethinking of their answers.

Introduction

This book offers an account of how and why social insurance became one of the central distributive mechanisms in the arsenal of liberal democracies. As used here, social insurance refers to a publicly orchestrated system of contributions and distributions that provides event-conditioned benefits to its members. First proposed around the time of the French Revolution, such policies began to spread throughout Western Europe toward the end of the nineteenth century. Within the next hundred years, they had become a hallmark of industrialized states, and today they constitute one of the largest budgetary items in most wealthy democracies.¹ From pensions and unemployment support to healthcare and parental-leave policies, social insurance permeates the daily lives of modern citizens, promising protection against many fortuities that could affect their livelihoods and well-being.

Despite its prominence, however, social insurance evokes confusion and disagreement among the public and experts alike. Consider, briefly, the American Social Security system. Created in 1935, this program provides benefits to retired and disabled workers, as well as family members of the retired, disabled, and deceased. Nearly all of the system’s revenue comes from payroll taxes, levied up to a given level of earnings, which are split evenly between employers and employees and used to fund the claims of current beneficiaries.² Since the inception of the program, the total number of beneficiaries has steadily climbed, reaching nearly 63 million Americans in 2018.³ Among the elderly, who constitute more than two-thirds of those receiving benefits, Social Security is often a life-sustaining resource, providing the majority or even the entirety of income for a significant portion of beneficiaries.⁴

While Social Security has enjoyed remarkable popularity since its founding, in recent decades concerns about the program’s financial sustainability have tempered public enthusiasm. Although some point out that Social Security technically does not contribute to the federal government deficit because it pays benefits only from designated trust funds, these funds are currently slated to decrease over time as fertility rates decline and fewer workers are left to fund the benefits of longer-living retirees. In 2019, the Social Security Board of Trustees stated that combined trust fund reserves will run out by 2035.⁵

Politicians and policy analysts have responded to these concerns by proposing a variety of plans to strengthen the program. Voices from the political left have advocated increasing the rate of contributions, raising or removing the earnings ceiling for payroll taxes, and directing additional tax revenues on high earners and investments into Social Security. Meanwhile, voices on the right have proposed lowering benefits, raising the retirement age, and replacing or supplementing the program with a system of individually owned accounts, into which each worker’s payroll taxes would go.⁶ Among the questions raised by both sets of proposals is whether the program is, as one commentator puts it, just another government benefit, with higher earners subsidizing lower earners, or a more traditional insurance program, in which you earn your benefits and receive your fair share.⁷

The purpose of this book is not to defend any particular policy stance in the ongoing debates over Social Security or any other social insurance program. Rather, it aims to shed light on such debates by uncovering their philosophical origins and history. As we will see, social insurance has always appealed both to a kind of individual liberty or self-sufficiency and to a sense of mutuality or shared fate, and it has proposed to reconcile these commitments in different ways over time. Without minimizing the differences between partisan aims, considering these aims in the context of the political tradition that I trace here underscores the common framework in which both sides operate, along with the promise and limitations of insurance as a policy device.

Out of Many, One

Debates over Social Security attest to widespread confusion about the workings and purpose of social insurance. Most people know that they or their employers pay taxes or contributions into designated funds, some of which may be returned to them in the event that they retire, become unemployed or disabled, or have a child. Public health insurance, while organized separately and often more complex, entails a similar logic. Yet most citizens have little understanding of the relationship between what they pay into the system and what they get out of it. Is social insurance like an annuity or accrued property right, for which the individual’s contributions guarantee a certain return, or is it more like a tax, an amount paid into a general fund with no promise of a corresponding benefit?⁸ Is it a form of self-protection, in the way that commercial insurance is thought to be, or is it a contribution to the common good, even at personal expense?

Examining actual social insurance programs does not provide definitive answers. States have adopted a myriad of financing and benefit arrangements, many of which appear intractably—even deliberately—vague about the terms of the agreement they purport to offer. During the early years of Social Security, for example, it was a common mistake to regard the program as an annuity scheme in which contributors were entitled to receive benefits at a certain age based on their prior contributions. As a result, many participants were surprised to find that they had to retire to receive payments, even after reaching the age of eligibility.⁹ It was only in 1960, in the case of Flemming v. Nestor, that the United States Supreme Court held that a Social Security beneficiary is not quite like an annuity holder because her eligibility and the amount she receives are not simply a function of contractually determined payments. The ‘right’ to Social Security benefits is in one sense ‘earned,’ the Court noted, since it rests on the judgment that those who have contributed deserve to receive support later in life. Yet the practical effectuation of that judgment depends on a host of prudential considerations, making the idea of an accrued property right inapt.¹⁰ On this view, then, social insurance is at once an entitlement and a tax—and, as such, perhaps it is something else altogether.

Turning from the realm of policy to that of scholarship, one finds an equally bewildering variety of explanations for social insurance. Some have theorized it as a tool of economic self-interest, satisfying individual preferences for security where private provision fails to do so.¹¹ Others have seen it as an instantiation—successful or merely attempted—of noneconomic values such as social equality and solidarity or mutual aid.¹² Some have understood it as a means by which oppressed or vulnerable groups extract resources from the state on their own behalf.¹³ Still others have seen it as a grudging compromise with socialism or a reactionary attempt to save capitalism by blunting its harder edges.¹⁴

Clearly, insurance-type welfare programs have served very different ends in different times and places. Yet the fact remains that in its broad outlines, something called social insurance has long been a fixture of political life, both as a mechanism for financing distributive policies and as a justification for those programs. Our language and our political reality thus encourage us to regard it as a single phenomenon, and to that end we must continue searching for a more unified account. I propose that we will achieve greater clarity by narrowing our focus and considering social insurance as an evolving distributive arrangement or regime, in which material resources are divided based on a certain view of citizens’ equality or desert.¹⁵ On this view, social insurance represents an account of fair or equitable distribution, granting to those who have contributed their fair share the protection to which they are entitled.¹⁶

Of course, even this seemingly simple formulation remains ambiguous: What is each person’s fair share, and to how much is each entitled? Is fair recompense defined by how much one has contributed, and thus by a kind of merit, or by the extent of one’s misfortune, and therefore by a kind of need? Yet, I will argue, it is precisely by looking at social insurance in this light that we can perceive its distinctive and unifying characteristic. A central claim of this book is that social insurance is a distributive arrangement that by its very nature combines distinct principles, blurring the line between them in a way that has allowed for its plasticity and political resilience.

The defining source of its character, I maintain, is the concept of risk. Risk plays a central role in insurance as the quantified expression of an uncertainty or a possible harm. In the popular imagination, risk is often regarded as a purely technical concept: exact, impartial, and disconnected from moral questions. My argument challenges this view. It focuses on probability theory, the discipline most directly responsible for interpreting and calculating risk.¹⁷ As will soon be explained in greater detail, the concept of probability has always had a dual character: It is both an aid to individual reason under conditions of uncertainty and a measurement of chance events in the world. In both of these aspects, probability theory rests on and furthers normative claims—claims about individual rationality, about the nature of equality, and about the relationship between the two. A central contention of this book is therefore that the quantification of uncertainty via mathematical probability is often a moral and political effort embedded in what appears to be a technical one.

Justice and Chance

Social insurance responds to a fundamental political problem: the vulnerability of justice to chance. Consideration of this problem dates to the birth of political philosophy: In Plato’s Republic, for example, the just regime depends on an unlikely coincidence of philosophy and political power; in Aristotle’s Politics, even the best-possible regime requires near-impossible gifts of fortune.¹⁸ Modern political thought has attempted to formulate more attainable visions of political justice, ones less subject to the vicissitudes of chance.¹⁹ Nevertheless, the challenges posed by uncertain and uncontrollable forces persist on these accounts as well.

Looking from the vantage of contemporary political thought, we find that this problem has two salient interpretations. The first, now prominent in moral and political philosophy, considers how resources ought to be distributed given the many circumstances over which individuals have no control. If it is true that a just distribution tracks personal effort or responsibility, then material benefits or disadvantages resulting from strokes of fortune are very likely to be unjust. On this view, justice requires correcting for the effects of chance in initial endowments and in outcomes that the individual could not have foreseen or prevented.²⁰

The second interpretation focuses on the challenge of making decisions in the face of uncertainty about empirical events. Policymakers are likely to be uncertain about the causes of social problems, the consequences of policy choices, and even the possibility of adequately implementing their own decisions. Citizens also disagree about such questions, basing their judgments on different information, habits of reasoning, and understandings of what will promote their own good. Such uncertainty poses a problem for justice because it threatens the possibility of collective agreement and because misguided or ineffective policies may have unfair consequences.

Some philosophers have sought refuge from this problem in the logic of rights, with its guarantee, at least in matters of critical importance, that individual decision making will remain free from hapless incursions by the state.²¹ The social contract tradition, as originally articulated in the seventeenth century, offered a version of this solution that remains central to our politics today. By positing a fundamental equality among human beings, and with it a natural right to pursue self-preservation, early liberal thinkers attempted to fashion a system of government that would serve the interests of each and secure the agreement of all. Yet even this solution does not eliminate the need for instrumental reasoning on the part of governments, with all its attendant uncertainty, or resolve the difficulties of collective action given citizens’ conflicting estimates of chancy phenomena.

As it turns out, these two facets of the problem—the distributive and the decision-theoretic, respectively—both received seminal treatment in the theory of probability.²² This discipline, which emerged around the same time as the first social contract theories, set out to estimate uncertainty in rigorous, universal, and authoritative ways appropriate for all rational people. In so doing, it spoke simultaneously to the demand for a compelling account of practical reason under uncertainty and to the call for a fair distribution of resources. In the best case, these two facets of the calculus would align, just like the individual rationale and the collective advantages of the social contract itself.

That the concept of probability is dualistic has been well noted both within the discipline and among recent commentators.²³ Less remarked upon, however, is the continued relevance of this dichotomy for insurance, which was the first practice to invoke risk and then successfully utilize mathematical probabilities. Throughout this book, I argue that probability bequeathed to insurance its central ambiguity, along with the ongoing (but not entirely successful) effort to resolve it.

The Character of Probability

The concept of probability has a rich and contested past. The term itself refers to a measured likelihood or to an individual’s belief that an uncertain eventuality will come to pass.²⁴ In modern times, it has become associated with quantification and calculation. Probability theory, often in conjunction with statistics, is responsible for generating those numbers. It also interprets what these numbers mean and thereby lends them practical import.

What does, or could, a probability value mean? As Ian Hacking has influentially argued, the concept of probability is Janus-faced in that it has two enduring aspects.²⁵ One, which Hacking calls the epistemic, concerns the degree of belief warranted by a given body of evidence. An example of this sort of probability might be my belief, based on the weather report or simply opening my window, that there is a 25 percent chance of rain today. The other aspect, which Hacking calls the aleatory, concerns the laws of chance processes, or the tendency of some events to produce stable relative frequencies when a number of trials are conducted. An example of this sort is the observed mortality of members of a statistical class. The first aspect thus governs rational credence in the face of uncertainty, or the logical process of making sound inferences on the basis of given information; the second makes statements about facts or observations in the physical world. As Hacking shows, these two aspects of probability both date to the seventeenth-century emergence of the concept. Despite efforts to distinguish them or to purge one or the other, philosophers have been unable to decisively establish the priority of either, while practitioners have continued to employ both.

For the purposes of my analysis, the significance of this duality is that probability correspondingly offers two kinds of practical counsel. One aims to show individuals how to assign probabilities to uncertain propositions, often to help them choose the actions most likely to promote their goals. The other provides a measurement of equality among parties who wish to apportion the consequences of an uncertain event. Probability thus guides both individual choice and the fair distribution of resources in the face of chance.

I contend that both forms of counsel find expression in insurance. Social insurance differs from the commercial variety most obviously in that the state has the power to compel participation. This allows the state to evade to some degree the demand for an individualized accounting of expected losses and for premiums that reflect those values. Social insurance is also distinct in the risks that it covers, which historically have been confined to a certain kind of economic hazard. The question of why social insurance has been concerned primarily with such risks is one I will take up shortly, and I will also have more to say about why the distinction between social and commercial insurance is not as significant as is often supposed.²⁶ For now, I wish to emphasize that insurance, broadly understood, reflects the same fundamental duality of probability: On one hand, it represents a form of sound personal judgment; on the other, it secures a just or fair distribution of resources.²⁷ Questions about whether, and if so how, these two faces or interpretations align lie at the heart of many contemporary debates about the welfare state.

The Context of This Work

The past few decades have witnessed growing interest in the history and social significance of risk. Historians and sociologists of science have unearthed the assumptions and traced the evolution of mathematical probability and statistics.²⁸ Sociologists and historians have explored the social contexts and moral significance of insurance.²⁹ Finally, political scientists, legal scholars, and political economists have explained the insurance rationale for social policies, making a powerful case that individual perceptions of risk, and the concomitant desire for insurance-type protection, have long been key determinants of national welfare schemes.³⁰

These ideas, however, have not received comparable attention within political theory.³¹ This is especially striking given that major strands in contemporary distributive philosophy rely heavily on this family of concepts. Social insurance is therefore due for a sustained historical and theoretical analysis of the type that I perform here, one that accounts for its varied interpretations and its remarkable persistence as a political phenomenon.³²

A number of important works have lately demonstrated the value of a genealogical approach to the concepts of probability and risk.³³ My study is similar in that it unearths the latent assumptions of and mutations in the idea of social insurance, thereby showing that an element of the political landscape that we often take for granted is far from inevitable, particularly in its current form. Yet my aim is not solely or primarily critical. As will be explained further, I offer a qualified defense of social insurance, one that emphasizes its tendency to channel political debate within a single practice or set of institutions. It would be a mistake to rule out the liberating potential of such an analysis, and as we will see, the rubric of insurance does indeed constrain distributive politics in significant ways.³⁴ I hope first, however, to help readers appreciate that social insurance also solves an important problem—that of conflicting distributive claims, resulting from a plurality of judgments and ends—by accommodating the very unresolved duality from which a more directly liberationist approach would have us freed.

This work further departs from its predecessors in connecting the evolution of risk to the history of political thought. For example, drawing on what I understand as the foundational aims of the social contract tradition, I contend that social insurance is closely tied to the logic of modern liberalism. Once the purpose of politics is understood as the protection of individuals’ lives and property, and once prudence is defined as the deferral of short-term gratification for the sake of long-term security, it is not a stretch to regard civil society as one great mutual insurer.³⁵ That the political thought of early modern liberalism also hinges on the mechanism of contract only heightens this resemblance.³⁶ While the first social insurance proposals differed from early social contract theories in their explicitly distributive focus, they were animated by the same fundamental question: how to generate an agreement among diverse individuals that is at once choice-worthy for each and fair to all.

In addition, I refer here to social insurance as a regime, specifically one with a mixed distributive character. The notion of a regime in this sense comes originally from Aristotle, as does the understanding that different regimes reflect the distributive claims of their most authoritative constituents.³⁷ Social insurance is not a politeia in the sense of an all-encompassing political order. It is, however, a major part of the liberal democratic order and of the way citizens understand that order. Even more, like Aristotle’s conception of a regime, social insurance is explicitly distributive, reflecting some of our strongest, if not always harmonious, convictions about desert, equality, and fairness.

In a sense, this book is situated at the intersection of two recent bodies of scholarship, one focusing on the epistemology or mathematics of risk and the other on its sociology and politics. Works in the latter group have highlighted various ways in which determinations of risk reflect moral and political commitments.³⁸ These works and mine share an understanding that accounts of risk are intertwined with politics and with competing interests or claims about the ends of the political community.

Where my analysis differs most perceptibly from these predecessors is in focusing on the hazards associated with social insurance, which have a number of distinguishing characteristics. First, unlike ecological and technological risks, the risks associated with the welfare state relate directly to the distribution of wealth—in particular to the loss of earnings or earning potential.³⁹ This is a major reason why these risks have proven amenable in principle to insurance—which, after all, is a financial device that emerged to limit the downsides of commercial activity for those who would be devastated by such loss. Second, although the risks covered by social insurance tend to be regarded as social or systemic, caused by forces beyond the individual’s control, they are also perceived as manageable in the aggregate, thanks to large-scale statistical regularities and, where necessary, the coercive powers of the state. On one hand, then, social insurance can be seen as consistent with successful participation in a market economy, a judicious means of self-protection that any reasonable person would undertake. On the other hand, it reflects a powerful intuition that market participation is not simply a choice and that many of its outcomes do not reflect individual prudence or merit of any kind.

The type of risk associated with social insurance is hardly the only risk relevant to political life: The dangers of war, revolution, natural disaster, and other environmental harms are just as much political problems as are economic insecurity and inequality. Yet the question of how to cope with economic risk does lie at the heart of the liberal project, with its commitments to individual liberty—especially in the form of enterprise and acquisitiveness, which invite risk—and to equality, which is often threatened by risk. Social insurance, as the mirror of probability’s two faces, is central to the ongoing effort to reconcile the two.

The Approach of the Project

The argument of this book frequently refers to and relies on scholarship from disciplines beyond my own. I therefore gratefully acknowledge my debt to those whose insights have paved the way and benefited my thinking.

First, the following analysis draws on much of the excellent work done over the past few decades on the history of probability and statistics. The claim of this book to originality, however, lies not in explicating the intricate development of probabilistic and statistical thinking but in noting connections between some of these developments and contemporaneous social and political thought. I have also benefited from important work on the history and sociology of risk and insurance. My contribution as a political theorist, however, lies primarily in telling an overarching story of evolution and thereby drawing lessons for the self-understanding of liberal democracies. The latter task has not been endeavored before, at least not with the focus or on the scale that is attempted here. I therefore hope that the relative breadth of my analysis, and the corresponding lack of in-depth treatment of particular historical topics, will be understood as it is intended: as an effort not to cover all ground but to chart a path that future researchers may fill in and modify as appropriate.⁴⁰

Finally, while frequently referring to empirical work on the history and political economy of welfare, this book does not definitively explain the development of social policy over the past 250 years. Rather, in unearthing affinities between certain philosophical developments and public policy, its aim is considerably more modest: to point out that the concept of risk and how we define it has implications for the justification and design of public policy, and to show that history furnishes several examples of this often-overlooked relationship.

In tracing this relationship, it is not always possible to claim a direct historical connection between probability theory and welfare policy. In some instances, a particular thinker provides the link: The Marquis de Condorcet, Francis Ysidro Edgeworth, and John Maynard Keynes are examples of philosophers whose interests spanned both fields. But elsewhere the argument focuses more on the resonance of ideas across the two domains. Given that probability plays a central role in theories of both rationality and fairness, and given the ongoing prominence of insurance practices in modern states, it is not surprising that the former found expression in public life, even if at times indirectly or implicitly rather than through the conscious embrace of political actors.

Although this book does not set out to rigorously explain the adoption of particular policies, I contend that the notion of a policy paradigm, as influentially expounded by political scientist Peter Hall, helps to illuminate how ideas about probability and insurance have influenced the development of welfare states.⁴¹ As Hall explains, policymakers work within a framework of ideas and standards that specifies not only the goals of policy and the kind of instruments that can be used to attain them, but also the very nature of the problems they are meant to be addressing.⁴² These ideas, which have a status somewhat independent of institutions, are part of the arsenal used by interest groups, parties, and experts to influence political discourse and acquire power.

The accounts of social insurance considered in this book constitute an evolving policy paradigm in this sense. They possess a number of attributes that scholars have found central to the definition of such paradigms, including an understanding