cooperation; and growing dependence on the state to coordinate, plan and be the health provider, employer and safety net of last resort. Social democrats, in government and out, were key to the post-war consensus that was instrumental in tackling these problems, which have now resurfaced in a new way.
However, there are competing political models and ideas. Nationalism and populism are powerful forces in some countries (the US, Russia, China, Brazil, Mexico and India). Overlapping with those is the cult of ‘the authoritarian strongman’. Then there are what can be called the ‘welfare technocracies’ of East Asia. There are pockets, which may grow, of aggressive and radical individualism. And, in contrast, there are strongly communitarian movements at local level: sometimes inclusive; sometimes exclusive. The issue for social democrats is whether they can offer a mixture of competence and compassion that can transcend the competition in a democratic context.
Who are the social democrats?
The social democratic tribe is a lot bigger than represented by the parties that are descended from the socialist tradition like the UK Labour Party and its Antipodean cousins, the Social Democratic Party (SPD) in Germany, and the assorted social democrat parties around Europe. There are some social democratic parties that call themselves ‘socialist’, as in Spain, or ‘labour’, as in Norway, or ‘democrat’, as in Italy, and we should not include some that call themselves ‘social democrat’ but are rebadged ‘communists’. We should include the US Democrats, who never went through a socialist phase. There are also ‘social liberals’ who emerged from classical liberal parties but are now largely indistinguishable from social democrats, like the Canadian Liberals (though they have competition from the New Democrats), and others like the Dutch 66, the Swedish Liberals and Macron’s En Marche where there are big areas of overlap. The Liberal Democrats in the UK are such a hybrid, and the identification often has more to do with a country’s voting system and its history of political schism than meaningful working definitions of social democracy.
What is striking and disappointing is that social democracy has not travelled well outside the heartland of Western Europe, North America and Australasia. In Asia, Lee’s People’s Action Party (PAP) in Singapore was modelled on the British Labour Party but came to despise the welfare state. On the bigger canvass of India, the Congress Party seemed to have similar values to European social democrats but succumbed to rampant corruption. The same can be said for the Brazilian Workers Party. There are recognisably social democratic parties in many places (Ghana, Jamaica, South Africa, Costa Rica, Japan, Taiwan and Korea) but national idiosyncrasies tend to outweigh what they have in common.
Those national variations stem from different histories. Some social democratic parties, as in Sweden, broke with their revolutionary socialist ancestry over a century ago and have maintained a consistently reformist and democratic personality ever since. In some cases, as in Germany, there was a moment when the party redefined itself as unambiguously social democratic – the Bad Godesberg conference in 1959 – and it has remained aloof from parties of the far Left like Die Linke.
Despite the efforts of Anthony Crosland and others to achieve a similar clarification in the UK, ambiguity remained, leading initially to the SDP breakaway. Moreover, despite the efforts of Neil Kinnock, John Smith and Tony Blair to cement the social democratic character of the Labour Party, they succeeded only temporarily, leading to the bizarre spectacle of their party being captured by revolutionary socialists. Brexit has also created new geographical and ideological wounds. In the meantime, the Liberal Democrats became the voice of many social democrats, as well as liberals, but it is marginalised by the electoral system.
This very varied, eclectic, mix of parties and political traditions makes it difficult to locate the common denominator. There is a common thread in the Rawlsian tradition of thought, which emphasises individual freedoms alongside a shared sense of fairness and that has at its heart a ‘social contract’. The current crisis is also forcing social democrats to come up with new or reworked policy ideas to tackle new problems or old problems in a new guise.
What is to be done?
I see the main political challenge as to fashion what have been called ‘visions to touch’ as opposed to small-scale technocracy, on the one hand, and abstract slogans, on the other. I would identify four major areas where these ‘visions’ are required: large-scale unemployment; poverty and the interaction of tax and benefits; the workings of modern capitalism, especially in relation to data and the big data companies; and the threats to multilateralism.
Mass unemployment
The pandemic and lockdown have recreated a problem thought to have been solved except in specific areas like structural unemployment among young people in Southern Europe and underemployment in emerging economies in Africa and South Asia. The full scale of the problem is not yet clear, but when the temporary furlough schemes are phased out in the autumn, millions will be out of work in the UK.
In one respect, there has been an advance in policy thinking since the last depression in the 1930s to the extent that all major governments have accepted that they have a responsibility for maintaining adequate levels of aggregate demand through fiscal policy and/or the monetary policy of central banks. Aggressive monetary policy was used after the financial crisis and is being tried again. In addition, since the pandemic commenced, the main governments – the US, Germany, Japan, China, the UK and France – have all provided a large fiscal stimulus. To do so, they have accepted that they will incur substantially more public debt. There is an implicit acceptance that higher deficits and debt are not now an issue in the short run. That is not a worry for countries like the US and Japan, which can borrow in their own currencies, or like Germany and China, which have low initial debt levels. Many poorer and more indebted countries are more constrained. Others, like the UK, will need to set out a long-term debt financing plan to reassure their creditors. Social democrats will be needed to maintain commitment to a Keynesian approach – in a very fluid and uncertain world.
Not all unemployment can be dealt with through cheap money and fiscal stimulus. Much will be structurally caused by the disappearance of many firms and the obsolescence of specific skills. Various initiatives will be needed: cuts in employment costs by reducing employers’ national insurance contributions (NICs); large-scale and sustained public works projects; and investment allowances, incentivising early investment. Some groups will find it very difficult to join or rejoin the labour force, especially young people without work experience and older workers close to retirement age. For the former, there are tested schemes offering a guarantee of post-school education, training or employment. For the latter, there is a need to ensure access to adult and continuing education, as well as retraining opportunities. The more successful schemes of the 1980s and the ideas successfully trialled in Sweden and Germany should inform policy.
The dogmas of the past have no role in an emergency of this kind and social democrats have an important role in escaping the public good–private bad or private good–public bad dialectics of the past. The approach will need to be eclectic and practical, and involve maximising the contributions of the private and public sectors. One of the legacies of the Coalition years is the Industrial Strategy, which provides a forum for public–private coordination and cooperation at a sector level to address long-term issues. That structure needs to be revived and strengthened to give focus to what would otherwise be random interventions at firm level.
Poverty, tax and benefits
The pandemic has exposed the limitations of the British welfare system after years of reform and cuts. Large numbers have fallen through the cracks; others have been forced to rely on the stringent benefits of Universal Credit and a patchwork of specific supports for disability and other needs. On the other hand, pensioners, protected by the ‘triple lock’ on the state pension, have been insulated from the economic effects of the crisis, as they were after the 2008/09 financial crisis.
The reforms of Beveridge (like Keynes, a liberal) provide a template for a comprehensive social safety net that social democrats have regarded as the right starting point. Recent adaptation of the post-war welfare state involved an attempt to create a form of negative income tax under Gordon Brown’s tax credit system. The principle was good but it suffered from complexity and the practical problems of offsetting continuous