THE FUNCTION OF SOCIAL POLICY AND SOCIAL INCLUSION IN EXPLANING THE GENERAL ECONOMIC EQUILIBRIUM

Abstract

The article substantiates the function of social policy as such, which reflects the actual social value – social inclusion. Thus, it draws attention to the differences between this approach and other approaches to the social function that have already been implemented in economic science. The content of social inclusion is considered from the perspective of its background (set of economic, technological, humanitarian, managerial reasons) and several main forms of manifestation. Participation of citizens of the country in the distribution and redistribution of national incomes, in labor / business activity, in public management of communities is considered as such forms of manifestation. The article presents the social function equation (DI) as a nonlinear relationship between output and income differentiation. The latter (income differentiation) has been interpreted as partially able to detect the level of inclusion. It has verified the assumptions about the possibility of presenting a social function through social inclusion, according to panel data of statistics of EU countries for the period 2014 – 2018. Herewith, the data on GDP per capita and Gini coefficient, Income share ratio have become the object of analysis. The social function has been implemented into the theoretical construction – model IS-LM-DI. The latter forms the theoretical basis for explaining the interaction of the three policies – financial, monetary and social – for the sake of moving toward a general equilibrium. A graphical interpretation of the model IS-LM-DI has been provided. The considered model generalizes two possible variants of combining stimulating actions of the financial and monetary authorities of the country with the actions of social regulators, which are aimed at overcoming exclusion, alienating, and respectively, at achieving social inclusion.