Is social democracy the natural partner of the ‘free’ market?

The truth is finally out: social democracy loves the free market, always has.

Over the last few years, a reasonable section of the commentariat has noted the supposed shift of social democratic parties to liberal economic policies. The story goes: once upon a time they used to be true to their beliefs, fostering the welfare state, caring for those less fortunate, and so on. But under the gradual pressure of neo-liberalism, they began to shift away from their core beliefs. Old social democrats, if not socialists, hanker for the days when social democracy was almost socialist.

All that seems so much wishful thinking. To begin with, the welfare state always was a mechanism for ensuring as many people as possible remained consumers. Add to that the xenophobia of the welfare state and you can understand how easily social democratic governments can demonise ‘foreigners’. Further, it was social democratic governments that most smoothly introduced neo-liberal policies in the 1980s and 1990s. Thus, in Australia and New Zealand, in Norway and Sweden, they managed to do so without the massive disruptions and labor unrest of the crude efforts by Thatcher and Reagan. In those cases, Blair and Clinton did a much better job. And it is worth noting that the various forms of moderate redistribution and restrictions on monopolies undertaken by social democratic governments assist in encouraging competition. In contrast, liberals have tended – by means of their standard slogan that a country is now ‘open for business’ – to stifle competition  and foster monopolies by relaxing ownership laws.

Fast forward to the recent Australian elections, in which a truly conservative government – arguably the first – has won a narrow ‘victory’. Here, it’s worth noting what The Economist had to say before the election. It argued that Labor deserved another term, since that party is much better at encouraging a forward-looking free market. And that old free market advocate, Saul Eslake, pointed out that a conservative government led by Tony Abbott would be bad for business. In other words, Labor is the better party for business and the market. But this should be obvious, since Bob Hawke and Paul Keating showed as much during the long labor reign from 1983 to 1996.

Ultimately, social democratic parties accept the untranscendable horizon of capitalism. They differ slightly with their opponents in other ‘parties’ (really factions) about how it should be fostered. But I would go a step further and suggest that the social democrats really are the natural party for the market. The reason is simple: they can hoodwink workers and bleeding hearts into believing that their policies are of benefit to those who do it tough. It is not for nothing that liberal and conservative parties have borrowed those tactics from the social democrats.


7 thoughts on “Is social democracy the natural partner of the ‘free’ market?

  1. My point, Fred, is that Labor has not abandoned its true beliefs in favor of neo-liberalism doctrines, but that such an appropriation is very much part of its core identity as a pro-capitalist party. It is actually better at implementing such policies than any Liberal or Conservative party.

      1. Or pretty much any social democratic party. It’s worth noting that the German SDP would rather enter into a coalition with Merkel and her bunch than actually form government with the Greens and Die Linke.

    1. And I would agree with that point, has always been such, its just a wee bit more obvious recently eg Albo and Bill saying they regret having a go at single mums now, when its too late, and the obsession with budget surplus.
      Vladimir got it right yonks ago when he described the ALP as a capitalist party.

      1. Yes, it’s that wonderful piece on elections in Australia, when Labor won government. How come nothing has changed? He asks. Why haven’t they begun to dismantle the system? The reason is obvious, he points out.

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