Right now, social democracy is being talked about seriously again for the first time since the Great Depression. The social democratic new Deal was put into effect by the Roosevelt administration in order to mitigate the worst effects of the Great Depression and to ward off the threats of both socialism and fascism. Social Democracy is a system based on a mixed economy and a strong welfare state. It allows government intervention in order to protect citizens from the excesses of capitalism. FDR saved capitalism from collapse but I do not think Social Democracy is a good long term solution. Here are my reasons.
- Context is key and the world has changed a lot. The New Deal was put into place during a time when socialism and fascism were both credible threats to the established elites. The Soviet Union was powerful and so was Germany and this combined with a poor economy meant that it was impossible to maintain order without strong men. The Robber Barons were unwilling to give up power and the people were suffering. The total war economy was also helpful in jump starting the American economy. When the entire government and private sector were involved in the economy, and were specializing in war materials, it spurred very fast growth. It also helped that following the end of World War 2, the United States was the only remaining giant Western power intact. No battles were fought on the North American continent and Europe was devastated. Stalin’s Soviet Union had also been forced to ward off the German war machine by itself.
- In social democracy, capitalists still have power. As long as they do, they can turn back the clock on the welfare state. They will always seek greater profits as that is what capitalism needs. If you are a first world country, you depend on the exploited laborers of the third world. But ultimately profits can only go up for so long. Eventually the first world must be made third world or the profits will stop. Imperialism and interventions need to open markets because without that, the first world will not have its relative comforts. With global climate change and more refugee crises, it will be harder to protect the first world from the implications of capitalist greed. It is far more likely that reforms will be undone then for capitalists to go against their own interests for the good of all. The worst the world gets, the harder it will be to get meaningful incremental change. As long as capitalists have power, the left will always have an uphill battle. The conservatives have the infrastructure because of money.
- Classical liberal ideas from Great Britain are intertwined with capitalism. Capitalism’s idea of private property requires that property be improved and used efficiently to make profit. The moral imperatives of capitalism intertwine with the Lockean and Smith ideas of individual liberty and the puritan work ethic. The oldest American ideas were the most puritanical and extreme of all. This country was founded by businessman for businessman. Property owners were the ones who felt they deserved to rule. The founding fathers were no different. Understanding this is very important because intent does guide people when discussing solutions to public policy. It would behoove all of us to ask, does liberalism make sense today? Could we use a bit more utopian out of the box thinking?
Please share with me your thoughts if you read this.