Guest commentary by Carolina Jansen, former colleague in the MERGE project.
Wellbeing is usually measured through its outcomes, such as life expectancy, schooling, or income. Less often we ask what allows a society to produce those outcomes in the first place. This post argues that wellbeing has institutional roots. It rests on the state’s capacity to design and deliver public policies, on the democratic deliberation that decides what wellbeing means and for whom, and on the arrangements that connect central financing to local implementation. Building an economy oriented toward sustainable and inclusive wellbeing requires more than a new indicator: it depends on a shared understanding of what constitutes a good life, since the current system is held in place by the mutual reinforcement of metrics, models, policies, and institutions (Kubiszewski et al., 2025).
Through two cases as different as Finland and Brazil, it shows how the same institutional mechanisms underpin both, and traces how wellbeing is built, defended, and at times eroded, and why measuring it is inseparable from the institutions that make it real.
Wellbeing rests on state capacity
State capacity refers to the state’s ability to formulate and implement collective goals across its territory. One of the most established authors in the field, Skocpol (1985, p. 9), conceives of the state as an actor and ties its capacities to the implementation of official goals, especially over the actual or potential opposition of powerful social groups or in the face of recalcitrant socioeconomic circumstances.
Notably, she employs the term in the plural, acknowledging the multiple dimensions and heterogeneities embedded in national state structures. Mann (1984) called this “infrastructural power”: the capacity to penetrate society and execute decisions through institutions rather than coercion.
Beyond these foundational definitions, a substantial body of literature has sought to map the concept’s many dimensions. In her review of the field, Cingolani (2013) shows how state capacity gradually “branched out” from a narrow focus on fiscal and coercive functions toward broader, multidimensional definitions as the concept travelled across disciplines. Synthesizing these strands, Souza and Fontanelli (2020) argue that, influenced by different disciplinary traditions, state capacity is expressed in three broad objects: extractive capacity, that is, the ability to institute and collect taxes; coercive capacity, the ability to impose law and order; and administrative capacity, the ability to formulate and implement public policies through a professionalized bureaucracy.
Lotta (2014) adds a dimension often missing in macro accounts: state capacity materializes in bureaucracies, in the professionals who carry policies into everyday life, and in the political-relational capacity to coordinate among actors and levels of government (Lotta & Vaz, 2015).
Capacity becomes real in public policy
If state capacity is the abstract stock of resources and competences, public policies are where it becomes concrete, what the more recent literature calls state policy capacity. Painter and Pierre (2005) define the concept as the ability to marshal resources to make intelligent collective choices and set strategic directions. Kattel and Mazzucato (2018) push this further: states need dynamic capabilities, the ability to learn, adapt and shape markets, which are built and revealed through the policies they design and implement. Yet policies are never merely technical instruments and can be understood as arenas of contestation in which competing societal projects confront one another, and whose distributive outcomes reflect the prevailing balance of social forces and historically situated political choices (Jannuzzi, 2021; Fleury et al., 2024).
The trajectories along which social vulnerabilities are reduced or widened are intrinsically tied to public policy choices in domains such as labour, housing, health, and urban mobility.
Finland: capacity built and defended
Finland offers a clear illustration. The comprehensive school reform of the 1970s required a deliberate expansion of state capacity: research-based teacher education at universities, sustained public funding, and implementation through municipal administrations under a national framework guided by the principles of universality, free provision, and equity. Sahlberg (2007) shows how this institutional investment translated into one of the most equitable education systems in the world, with high learning outcomes achieved at average OECD cost and without high-stakes testing. Education became both a product of Finnish state capacity and an engine of its broader social and economic transformation.
A central pillar of this reform was the professionalization of teaching itself. Since the late 1970s, all teachers in Finland have been required to hold a research-based master’s degree, with university programmes designed to produce autonomous professionals capable of grounding pedagogical decisions in research rather than in external prescription (Toom & Husu, 2016; Tirri, 2014). This was a deliberate act of state-building: rather than steering schools through standardized testing and accountability pressure, the state invested in the capacity of the bureaucracy on the ground, the teachers themselves, and granted them the trust and discretion. Capacity, in this sense, is embodied in the professionals who translate policy into everyday practice.
This pattern is not exclusive to education. It reflects a defining feature of the Nordic welfare model, namely the construction of state capacity through empowered local government. Finnish scholarship characterizes these systems less as a uniform welfare state than as a multitude of “welfare municipalities”, since most service provision and decision-making is concentrated at the local level (Kröger, 1997). As Sellers and Lidström (2007) and subsequent scholarship show, Scandinavian welfare states expanded by granting municipalities significant autonomy over taxation and service provision, and the capacity of local administrations grew in tandem with the universal services they were tasked with delivering. What appears as generous social outcomes is therefore the visible result of decades of deliberate institution-building: a tax base, a professionalized public administration, and a multi-level governance arrangement capable of turning universal rights into concrete services across the territory.
Even robust state capacities are not permanent: the Finnish model has itself been tested by the austerity that followed the deep recession of the early 1990s, by recurrent pressures on the financing of care, and by the major reorganization of health and social services launched in recent years, reminding us that capacity, once built, must be continuously defended rather than taken for granted.
Brazil: wellbeing as a constitutional pact
A very similar movement is also found in countries of the Global South, as is the case of Brazil. Despite the vast differences in wealth, history, and context, the same institutional mechanism underpins both cases: central financing combined with local implementation and multi-level coordination. What Finnish scholarship describes as central grants inducing municipalities to deliver fairly uniform services (Kröger, 1997) closely mirrors the logic of the Brazilian Universal Health System, in which federal regulation and fund-to-fund transfers are paired with municipal provision and negotiated coordination across federative levels (Lotta & Vaz, 2015). In both, wellbeing is produced not by the central state alone, nor by local governments alone, but by the institutional arrangement that binds them together.
The 1988 Federal Constitution was a milestone in the definition of Brazilian state capacities and established itself as one of the most comprehensive constitutions in the world. The fundamental objectives set out in the 1988 Constitution are: 1) to build a society that is free, just, and based on solidarity; 2) to guarantee national development; 3) to eradicate poverty and marginalization and to reduce social and regional inequalities; 4) to promote the wellbeing of all, without prejudice as to origin, race, sex, colour, age, or any other form of discrimination.
It is a social contract that explicitly defines education, health, food, work, housing, transport, leisure, security, social security, protection of motherhood and childhood, and assistance to the unprotected as rights of every citizen and duties of the state. It established a decentralized governance model distributing responsibilities and resources between federal, state, and municipal governments which allowed policies like the Unified Health System (SUS) to reach even the most remote municipalities. The Brazilian Constitution addresses not only the effects of the social question — a concept referring to the structural inequalities produced by the capital-labour relation and the state’s duty to address them — but also seeks to guarantee mechanisms to act on its causes, as in Article 5, which guarantees the right to property; in Article 6, which establishes labour and housing as social rights; and in Article 8, which guarantees free professional or trade union association, among others. In it, the social question is taken up as a “matter of state”, so that both social protection and social promotion become public duties (Proni, 2024). In this sense, the social question in the 1988 Constitution is not reduced to monetary poverty or to the social protection system alone, but extends to the “(…) collective capacities to universalize the guarantee of human rights” (Proni, 2024, p. 9). It was through this constitutional framework, and through a period of consecutive progressive governments between 2003 and 2016, that Brazil was able to design public policies in a structured and integrated way connecting health, income transfer, labour and education into a broader vision of wellbeing and social development.
In 2026, the UNDP reported that Brazil had, for the first time in its history, reached the ‘very high human development’ category, with a Municipal Human Development Index (IDHM) of 0.805 for 2024. According to the UNDP, education was the component that most drove this progress, and social inclusion and school-permanence policies such as the Bolsa Família programme, which ties income transfers to children’s school attendance and health check-ups, were decisive in enabling it. Despite these gains, racial, gender, and regional inequalities still significantly reduce the index to 0.641 when adjusted for inequality.
In Brazil, the decades from the 1990s to 2014 were marked by what Jannuzzi describes: “The bold yet feasible commitments to expanding access to social rights went hand in hand with the broadening and strengthening of the country’s political-relational and technical-bureaucratic capacity” (Jannuzzi, 2024, p. 70).
The public values embedded in the Brazilian Constitution, much like the institutional arrangements that underpin the Finnish welfare state, reveal a broader conception of public policy: one oriented toward equity and social justice, in which social rights take the form of a civilizational pact committed to the universality of fundamental human rights and to intersectoral, territorially sensitive responses (Benevides, 2001; Proni, 2024; Jannuzzi, 2024).
The nexus: state capacity, democracy, and wellbeing
This broader conception of wellbeing is what the MERGE project seeks to make measurable. The flaws of GDP as a measure of progress are by now widely acknowledged; the harder question is what should stand in its place. Hundreds of wellbeing indicators have been proposed over the past decades, and their sheer variety, in terminology, method, and scale, long made agreement seem out of reach. Yet analysing over two hundred of them, MERGE research finds strong conceptual agreement beneath that surface diversity: most point to the same underlying values, and around twenty components, spanning human, social, natural, and financial dimensions, capture most of the common ground (Kubiszewski et al., 2025). A shared measure, in other words, is within reach. What keeps GDP in place is not the absence of an alternative, but the mutual reinforcement of metrics, models, policies, and institutions around the goal of growth, and the entrenched interests that benefit from it (Costanza et al., 2024).
Public policies should therefore be understood as part of a broader whole, inscribed in the social contract and in the established civilizational pact. This understanding runs counter to the view of public policies as isolated interventions or as limited solutions for social, economic, and environmental challenges in domains where the market does not operate, or operates according to a different logic. Such readings ignore the operational and systemic complexity involved and underestimate the innovative potential of public policies to promote social improvements. In dialogue with this critique, scholars such as Mariana Mazzucato emphasize the collective character of innovation and the active role of the state as an agent that steers, coordinates, and creates markets, particularly through missions oriented toward social and environmental challenges, breaking with the view of the state as a mere corrector of market failures (Mazzucato, 2018; 2021).
These cases bring us to the explicit link between state capacity, democracy, and wellbeing — not separate agendas but mutually constitutive. Democracy defines the ends: it is through democratic deliberation that a society decides what wellbeing means, and for whom. State capacity provides the means: without competent bureaucracies, fiscal resources, and coordination across levels of government, social rights remain promises on paper. Wellbeing outcomes, in turn, feed back into democratic legitimacy.
Seen this way, wellbeing is never simply an outcome to be measured; it is the product of institutions that must be deliberately built and continually defended. Finland and Brazil, for all their differences, tell a similarly story: durable wellbeing emerges where state capacity supplies the means, democratic deliberation defines the ends, and multi-level arrangements bind central financing to local delivery. A better indicator matters but only as one instrument within this larger architecture. To measure wellbeing well is therefore also to commit to the state capacity and democratic governance that make it real.
Its roots, in the end, are institutional.
References
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