Even 30 years ago, it was clear that the fall of the Berlin Wall would change everything. But what this change will actually mean for world politics in the 1989st century, we have yet to see. By XNUMX, the Soviet Union (and communism as a whole) had condemned tens of millions of people to poverty and proved to be clearly unable to compete with the Western economic model. In four decades, the Cold War claimed millions of lives on various battlefields around the world (conflicts there were much "hotter" than the name of that war suggests) and became a pretext for repression and elite domination in dozens of countries in Latin America, Africa and Asia.
But, regardless of all the positive consequences, the era that came after the Cold War at the same time overthrew the Western social democratic (social) contract: the system of social protection, regulation, state services for all, the tax policy of income redistribution and, finally, the labor market institutions that protected workers and the poor for a long time. In the opinion of political scientist Ralf Dahrendorf (quoted by the late Tony Judd), the political consensus reached at that time became "the greatest progress ever seen in history." It not only reduced the level of inequality in most developed countries, but also contributed to decades of rapid economic growth.
Economic growth in the post-war period was ensured by fairly competitive markets, formed with the help of regulatory norms, which broke monopolies and almighty conglomerates. This was made possible by innovations generously funded by governments and state education systems. The rapid growth in the number of good, highly paid jobs in that period is the result of the work of labor market institutions that did not allow employers to abuse their power over workers. If there were no such restrictions, companies would create low-paid jobs with poor working conditions.
Social democracy played a very important role in politics as well. Its institutions of income redistribution and social programs could not survive if non-elites were not in power. Broad political participation was achieved with the help of reforms aimed at expanding voting rights and deepening democratic processes. It was supported by influential political parties, for example, the Swedish Workers' Party, and trade unions. And he was guided by universalist ideas that motivated people to support and defend democracy.
In many ways, the situation in the US was no different from that in Western European countries. During the New Deal period and the post-war period, America enthusiastically broke up trusts and limited the political influence of the wealthy. It introduced a state system of old-age and disability pensions (social insurance), unemployment benefits, redistributive taxation, as well as various measures to combat poverty. And although America used anti-socialist rhetoric, it still introduced social democracy with American characteristics. Among other things, this meant that the social protection system was weaker than in other countries.
All this cannot be understood if we do not take communism into account. The point is that social democratic movements emerged from communist parties, many of which, including Social Democracy in post-war Germany and the French Social Democratic Party, did not renounce socialist rhetoric until the 1960s or even the 1980s. The parties that turned out to be the most successful in forming new labor market institutions, providing high-quality state services and reaching a broad social consensus (e.g. the Swedish Workers' Party or the British Labor Party) have renounced their former Marxism, but still speak the same language as and their Marxist cousins.
But more importantly, the elites themselves supported the social democratic social contract as an instrument to prevent communist revolution. It was precisely this anti-communist orientation of social democracy that motivated intellectuals, e.g. economist J. M. Keynes, one of the architects of the post-war order, and also political leaders - from US President Franklin Roosevelt to John Kennedy and Lyndon Johnson. In the same way, the threat of communism (from North Korea) forced South Korea's leadership to pursue ambitious land reform and investment in education, as well as to be patient with labor unions, despite their desire to keep wages low. .
But the collapse of communism (both as an economic system and as an ideology) broke the chairs on which the social democrats were sitting. Leftists were suddenly faced with the necessity of creating a new, equally inclusive and equally universalist ideology, but they proved to be inadequate to the task. However, the leaders of the rising right-wing forces interpreted the collapse of communism as a signal (or chance) to remove social democracy in favor of the market.
For a number of reasons, the choice of such an agenda in most Western countries was a mistake. First, it ignored the contribution of the socialist state, labor market institutions, and state investment in research and development to the polycratic growth of the economy. Second, it turned out that this agenda could not predict that the demolition of social democratic institutions would weaken democracy itself and further entrench active politicians and the rich (who became much richer during the process). And, thirdly, it ignored the lessons of the interwar years when the absence of economic prospects and strong social protection created the conditions for the rise of extremism, ultra-left and ultra-right.
US President Ronald Reagan and British Prime Minister Margaret Thatcher probably saw a future world with more efficient markets and less bureaucratic control. But the political revolution they started culminated in the tenure of Donald Trump in the US and the Boris Johnson-led government in the UK. Today, the social democratic social contract must be reshaped for the XNUMXst century.
For this, we need to recognize the problems facing developed countries: from uncontrolled deregulation and an unbridled financial sector, to structural changes caused by globalization and automation. Also, we need to form a new political coalition that will be broad enough to include industrial workers who are still among the most politically active groups of the population (although their number is now smaller).
But the most important thing is to recognize that the power of large companies is limited; provision of comprehensive government services, including health and high-quality education; protecting workers and preventing the growth of instability in employment for those on low incomes; finally, investments in research and development. All these are not only political decisions that should be evaluated from the point of view of their economic consequences - they are the essence of the social democratic project and the foundation of an advanced and stable society.
Copyright: Project Syndicate, 2019.
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