Since the mid-1970s, social security policies in industrial countries have been forced to adjust to changing economic and social circumstances that have frequently placed a strain on their resources. Not only has there been the problem of rising unemployment, but also severe inflation in the late 1970s and early 1980s inhibited many governments from pursuing expansionary fiscal policies. Of special concern, for its social as well as its economic implications, has been the severity of the youth unemployment problem. Another serious problem has been the growth of family instability, resulting from rising illegitimacy rates, increasing divorce and separation rates, and cohabitation.

How national policies reacted to these problems has been the subject of much of the discussion in this volume. The problems are not likely to “go away,” and there will be a continuing need for adjustments to meet them. And yet, there is growing evidence that the countries that have pursued vigorous policies to combat unemployment on both the demand and the supply sides of the labor market have succeeded in holding down the level of joblessness.

Although we have not found a very consistent inverse relationship between social security expenditures and military expenditures as a percentage of GNP, it is pertinent to observe that the three Western European countries identified by Soskice (1987) as pursuing policies that held the unemployment rate to low levels – Austria, Norway, and Sweden – all had relatively low military expenditures as a percentage of GNP in 1982 (Statistical Abstract…, 1985, 866). Austria's military expenditures were especially low (only 1.2 percent of GNP). These three countries also spent a comparatively large percentage of GNP on social security.