The End Of Social Democracy

Authored by Jeffrey Tucker via The Epoch Times,

A friend reminded me of a piece I wrote in 2017 that predicted the end of social democracy. This was three years before lockdowns, and it strikes me even now as a correct prediction. It is now under stress as never before. In fact, it seems doomed. But what comes after is still in question.

The settled system of social democracy emerged all over the Western world in the 20th century. We got rid of monarchical power (late 19th century), imposed direct rule via voting in large parts of the industrialized world (post-Great War), built up welfare states (1930s), and then assigned a managerial technocratic class to manage the bureaucracies, public finance, and global economics (post-WW2).

The eventual result was not liberalism from ages past or despotism traditionally understood but a combination of systems that the elites hoped would be stable, pleasing to the electorate, consistent with continued economic growth, and yield positive outcomes for health and population welfare overall.

The classic statement summing up this view in book form came in 1960: “The End of Ideology” by Daniel Bell.

A self-described “socialist in economics, liberal in politics, and conservative in culture,” he said that all wild-eyed visions of politics had come to an end. They would all be replaced by a system of rule by experts that everyone will love forever.

To be sure, the ultimate end-of-ideology system is freedom itself. Genuine liberalism (which probably shouldn’t be classified as an ideology at all) doesn’t require universal agreement on some system of public administration. It tolerates vast differences of opinion on religion, culture, behavioral norms, traditions, and personal ethics. It permits every form of speech, writing, association, and movement. Commerce, producing and trading toward living better lives, becomes the lifeblood. It only asks that people—including the state—not violate basic human rights.

But that is not the end of ideology that Bell and his generation tried to manufacture. What they wanted was what is today called the managerial state. Objective and scientific experts would be given power and authority to build and oversee large-scale state projects. These projects would touch on every area of life. They would build a cradle-to-grave welfare state, a regulatory apparatus to make all products and services perfect, labor law to create the perfect balance of capital and labor, huge infrastructure programs to inspire the public (highways! space! dams!), fine-tune macroeconomic life with Keynesian witchdoctors in charge, a foreign-policy regime that knew no limits of its power, and a central bank as the lender of last resort.

What Bell and that generation proposed wasn’t really the end of ideology. It was an invasive state, administered by elite bureaucrats, blessed by intellectuals, and given the cover of agreement by the universal right of the vote. Surely nothing can truly be oppressive if it takes place within the framework of democracy.

The whole thing turned out to be a pipe dream. Only a few years after the book appeared, ideology came roaring back with a vengeance, mostly in reaction to the ossification of public life, the draft for the Vietnam War, and the gradual diminution of economic prospects of the middle class.

The student movement rose up, and gained momentum in response to the violent attempts to suppress it. Technology gave rise to new forms of freedom that were inconsistent with the static and officious structure of public administration. Political consensus fell apart, and the presidency itself—supposed to be sacrosanct in the postwar period—was dealt a mighty blow with the resignation of President Richard Nixon. Government no longer held the high ground.

All that seemed to hold the old post-war social-democratic consensus together was the Cold War itself. Surely we should put aside our differences so long as our country faces an existential threat of Soviet communism. And that perception put off the unleashing of mass discontent until later. In a shocking and completely unexpected turn, the Cold War ended in 1989, and thus began a new attempt to impose a post-ideological age, if only to preserve what the elites had worked so hard to build.

This attempt also had its book-form definitive statement: “The End of History” by Francis Fukuyama. Fukuyama wrote, “What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.”

It was Bell 2.0 and it didn’t last long either. Over the last 40 years, every institution of social democracy has been discredited, on both the Right and the Left, even as the middle class began to face a grim economic reality: progress in one generation was no longer a reliable part of the American dream. The last time a government program really seemed to work well was the moon landing. After that, government gradually just became a symbol of the worst unbearable and unworkable burden, especially following lockdowns and the discrediting of science itself.

I ended my 2017 piece with this sentence: “Heavily ideological protest movements began to spring up in all corners of American public life: the Tea Party, Occupy Wall Street, Black Lives Matter, Bernie, Trump, and whatever comes next.”

Well, that was only 6 years ago, and look how history has moved into a fast-forward trajectory. Now we know what was next. We had grim and alarming COVID lockdowns that did nothing to control a virus but did serve as a mass reminder of who is in charge: the state and its allies.

In fact, that might have been the point all along, a grand effort to impose shock and awe and settle the question once and for all. Democracy, we have learned, does not mean that the people get to elect their leaders. It means that we are assigned public figures for which we can vote, provided these individuals have no plans to disrupt the established ways of the ruling class.

At the same time, we are are still living with the deep contradictions of the social-democratic system, which I named in 2017:

1. Financial unsustainability. Many forms of redistribution only worked because they leveraged the present against the future. The problem with that model is that the future eventually arrives. Think of Social Security. It worked so long as the few in older groups could pillage the numerous in younger groups. Eventually the demographics flipped so that the many were on the receiving end and the few were on the paying end. Now young people know that they will be paying their whole lives for what will amount to a terrible return on investment. It was the same with Medicare, Medicaid, and other forms of fake “insurance” instituted by government. The welfare state generally took a bad turn, becoming a way of life rather than a temporary help. Subsidy programs like housing and student loans create unsustainable bubbles that burst and cause fear and panic.

2. Terminal inefficiency. All forms of government intervention presume a frozen world without change, and work to glue down institutions in a certain mode of operation. Public schools today operate largely as they did in the 1950s, and then suddenly they were shut down completely, as if to say: we don’t need them anyway. Antitrust regulations deal with industrial organization from years ago even as the market is moving forward; by the time the government announces its opinion, it hardly matters anymore. And you can make the same criticism of a huge number of programs: labor law, communications regulations, drug approvals and medical regulations, and so on. The costs grow and grow, while the service and results are ever worse. And that inefficiency was on display in spades during lockdowns: perhaps $10 trillion taken from taxpayers and given to elites with no discernible advantages for society.

3. Moral unconscionability. The bailouts after the 2008 financial crisis, followed by the much-worse lockdown payments, were indefensible to average people of all parties. How can you justify using all the powers of the federal government to feed trillions overall to well-connected elites who were the very perpetrators of the crisis? Capitalism is supposed to be about profits and losses, not private profits and socialized losses. The sheer injustice of it boggles the mind, but this only scratches the surface. How can you pillage average Americans of 40 percent of their income while blowing the money on programs that are either terminally inefficient, financially unsustainable, or just plain wrong? How can a government expect to administer a comprehensive spying program that violates any expectation of privacy on the part of citizens? Then there is the problem of wars lasting decades and leaving only destruction and guerilla armies in their wake.

What actually creates the tipping point in which social democracy morphs into something else? What displaces one failed paradigm with another? The answer lies with an even deeper problem with social democracy. You can discern it from this comment by F.A. Hayek in 1939. “Government by agreement is only possible provided that we do not require the government to act in fields other than those in which we can obtain true agreement.”

All public institutions that are politically stable—even if they are inefficient, offer low quality, or skirt the demands of basic morality—must at the minimum presume certain levels of homogeneity of opinion (at least) in the subject population; that is to say, they presume a certain minimum level of public agreement to elicit consent. You might be able to cobble this together in small countries with homogeneous populations, but it becomes far less viable in large countries with diverse populations.

Opinion diversity and big government create politically unstable institutions because majority populations begin to conflict with minority populations over the proper functions of government. Under this system, some group is always feeling used. Some group is always feeling put upon and exploited by the other. And this creates huge and growing tensions in the top two ideals of social democracy: government control and broadly available public services. Mass immigration intensifies this problem to the breaking point.

Hayek warned us in 1944: when agreement breaks down in the face of unviable public services and a discredited ruling class, strongmen come to the rescue. That truly seems where we are headed, whether the further centralization of power is from the left or the right.

It’s an exhausting cycle, one that we can avoid by a simple return to constitutional government.

The solution to avoid complete political chaos, economic collapse, and social anomie seems apparent but do we have the strength and ability to embrace it?