Social democracy and neoliberalism are typically treated as opposing philosophies, with each entailing radically different visions for how society should be structured. But as Steve Fuller writes, social democratic and neoliberal approaches may have more in common than we think. Tracing the history of the two ideologies, he argues that their differences have often turned more on rhetoric than substance.
I recently debated Philip Mirowski on whether neoliberalism can provide a positive basis for university policy. This may seem strange, since neoliberalism is usually blamed for all the problems that universities face these days. Nevertheless, I argued that it is also the source of all that is good, starting with Lionel Robbins’ landmark 1963 report which opened the door to state-driven marketisation in UK higher education, effectively breaking down the Oxbridge monopoly. After Robbins, new academic providers sporting US-style campuses and new interdisciplinary programmes attracted young people who might otherwise have been deterred from attending university altogether. The strategy worked and was extended in a less capital-intensive way in 1992, resulting in today’s diverse higher education sector and unprecedented enrolment levels that are only now declining.
The long arc of this policy has been neoliberalism writ large, which becomes less surprising once we recall that Robbins himself was one of the staunchest opponents of Keynes’ collectivist idea of ‘welfare’ as the prime objective of economic science, and as LSE economics chair he had hired the neoliberal luminary Friedrich Hayek. Nevertheless, my audience thought that I was attributing to ‘neoliberalism’ what properly was due to ‘social democracy’. What’s at stake in the alternative labelling? Much less than meets the eye, I believe. In fact, their overlapping ideological space defines what I have previously called the ‘Alt-Left’.
As it turns out, Robbins began life – like both Hayek and Keynes – as a Fabian socialist, but with Hayek he parted company with all forms of socialism in the 1920s in the wake of the First World War and the Bolshevik Revolution. This was in fact typical of how social democracy and neoliberalism parted ways in the twentieth century, a division that became ensconced over time in the Mont Pelerin Society. But very often the policy differences have turned more on rhetoric than substance, which in recent times has made it easy for, say, Bill Clinton, Tony Blair, Gerhard Schröder and François Mitterand to advertise themselves as ‘social democrats’ but end up appearing ‘neoliberal’.
Here it is worth recalling that after Robert Michels’ classic Political Parties, social democracy has been the paradigm case of an ideology that will do anything to secure power, not least by adapting its principles to circumstances. Michels recounts how the German Social Democratic Party (SPD) quickly sold out much of its Marxist heritage by championing Bismarck’s social insurance proposals, a set of Tory reforms designed to avert a working class revolt that soon afterward became the template for what we now call the ‘welfare state’. As for the part of the Marxist heritage that the SPD retained – the championing of the labour movement – concern was mainly focused on getting people to join unions so as to render their votes ‘reliable’ in elections.
To be sure, Michels, a follower of Vilfredo Pareto, spun a cynical tale, given that by the eve of the First World War, the SPD was the largest party in the Reichstag and fully behind the Kaiser’s belligerent foreign policy. However, the SPD’s ascendancy was taken quite seriously overseas, especially by the UK Fabians and the US Progressives. Bertrand Russell’s first book was based on his lectures on the SPD as a lecturer in the newly formed LSE. And both Theodore Roosevelt and Woodrow Wilson frequently expressed their admiration for Bismarck’s transformation of Germany’s political landscape, of which the SPD was – perhaps ironically – the biggest beneficiary.
However, the people we now call ‘social democrats’ and ‘neoliberals’ went down divergent paths over the question of whether the state has its own aims that are distinct from those of the people who authorise its existence. The First World War had largely been a tragedy of diplomatic errors that needlessly cost the lives of millions. Moreover, Wilson raised a national income tax to draft Americans into this war even though the US was not material to the conflict. The deep unpopularity of Wilson’s move resulted in a domestic backlash, two decades of US isolationism that ended only with the Japanese attack on Pearl Harbor in 1941. Meanwhile the newly formed Soviet Union took enormous steps to reorganise land and wealth with little meaningful consent of anyone concerned. However the absolute nature of the Soviet state contained all backlash, which enabled the Leninist project to proceed full steam ahead for seventy years.
Neoliberals characteristically group Wilson and Lenin together as the ‘original sinners’ against liberalism. However, it would be a mistake to say neoliberals are anti-state. On the contrary, neoliberals believe that a strong state is needed to create and maintain markets, which – following the Marquis de Condorcet – they treat as social mechanisms for ‘making people free’. Neoliberal hostility to collectivism in the twentieth century should be seen as extending liberal hostility to the herd mentality in the nineteenth century, as enshrined in Mill’s On Liberty. Mill too believed that the apparatus of government had to be organised in a certain way to enable people to be free, since they might otherwise just follow the crowd. Whereas for Mill truth itself was at stake (a la Hayek and Popper), neoliberals have been more concerned with the full realisation of human potential, which after the US Progressive economist Irving Fisher is still called ‘human capital’.
Both social democracy and neoliberalism can be credited with an enormous amount of social experimentation and innovation, some of which succeeded and some of which failed – but all of which is worthy of study. My guess is that a crucial difference between the two lies in their respective attitudes toward policy failure. A rough first approximation is that social democrats are inclined to blame the rich and absolve the poor, while neoliberals absolve the rich and blame the poor – which in turn reflects a divergence in how they think about how power in society is organised. That is only a start at an analysis of two ideologies that deserve to be understood as closer together than they currently are.
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Note: This article gives the views of the author, not the position of EUROPP – European Politics and Policy or the London School of Economics. Featured image credit: Musa Zero (CC BY-SA 3.0)
Steve Fuller – University of Warwick
Steve Fuller is Auguste Comte Chair in Social Epistemology at the University of Warwick. His latest book is Post-Truth: Knowledge as a Power Game (Anthem). He would like to thank Johan Söderberg for having been the audience member who most explicitly raised the matter that inspired this piece.
This is a fascinating essay that provides abundant food for thought. One idea that gives me pause is the claim that “It would be a mistake to say neoliberals are anti-state.” I think Fuller here conflates two things that, when discussing neoliberalism in particular, are important to distinguish – namely the state and government. I think it would be a mistake to say neoliberals are anti-government, but it would be correct to say neoliberals are anti-state. So, I would say that neoliberals believe that a strong government is needed to create and maintain markets – but these markets are ultimately aimed at becoming part of the Global Market and deemphasizing the importance of the individual states. A strong government is also needed to shift everything in the country toward participation in this Global Market by installing market mechanisms throughout society (Foucault’s notion of ‘neoliberal governmentality’). The European Union is a good example, as are NAFTA and the TPP in the US – more government, less state. In contrast, both social democrats (like Bernie Sanders in the US and the Nordic countries in Europe) and neopopulist nationalists (like Trump in the US and Brexiteers in the UK) want to focus first on their own countries. What binds social democrats and neopopulist nationalists – in contrast to neoliberals – is that both are statist and anti-globalist. What differentiates social democrats and neopopulists from one another is the particular vision of the state they endorse. Whereas social democrats (what Fuller is calling the Alt-left) envision something like a traditional welfare state, neopopulist nationalists envision making their countries great again via policies such as protectionism in trade, so-called ‘strong borders’, and decreasing the role of government in regulating the markets. I discuss these issues in greater detail here: https://www.nature.com/articles/s41599-017-0041-0.
First, I recommend Holbrook’s article for its own sake — in fact, it reads like the precis of a book that needs to be written!
But in terms of the issues he raises in the comment, I would pick up on two points:
1. Whatever is going on in the democratic political landscape today, there is really no meaningful place for the word ‘conservative’. At best, it serves as protective colouration for various liberal/interventionist strategies. And this has been true at least since the Thatcher/Reagan revolutions of the 1980s. Although a lot of energy has been spent of the role of the ‘religious right’ and ‘family values’ in shifting the direction of democratic politics over the past 30-40 years, these interest groups have functioned largely as foot soldiers in a larger battle, which is over the nature of the state. Otherwise, there’s no doubt that the world is becoming more ‘socially liberal’ — which helps explain why the public voice of ‘morality’ is increasingly negative and reactive. Someday — but not now — Trump will be given credit for having hastened this process. In any case, who among the leading UK Tories is truly ‘conservative’? Arguably, only the PM is.
2. Both the social democrats and neo-liberals need a ‘state’ in the original early modern sense that’s associated with ‘status quo’ — i.e. a power base that entitles the holder to set common standards over a region, rendering it a ‘common playing field’ (aka ‘Justice 1.0’). The state then is in the business of making laws, which are written in a language that everyone can be made to understand, and then enforcing those laws. Markets need all those things, and it’s no accident that neo-liberalism was largely born of lawyers who migrated to economics, like Hayek. The question then becomes how much more does the state need to do — other than protecting the existential conditions for those standards to be maintained (i.e. ‘security’). ‘Government’ is the historic answer to that question, and neo-liberals buy the line ‘States govern best that govern least’, which means that minimum interference in how individuals and group manage to meet the ‘common standards’ in whatever they do. Social democracy argued that this was ‘too little’ government, and that the state needed to do more, specifically ‘in the name of the people’, to enable the common standards to be met by everyone (aka ‘Justice 2.0’). That’s pretty much how the negative/positive liberty idea comes into existence.
I’m working on the book now!
In response to 1., I am in almost complete agreement with Fuller. Whether we want to talk about the US (Reagan, Bush, Clinton, Bush, Obama) or the UK, I think all the administrations’governments since the late 70s were simply different flavors of neoliberalism. So, the ‘conservative vs. liberal’ rhetoric masked the general agreement on neoliberal policies, which we could group under the term ‘globalist’. I do think that there is one sense in which ‘conservativism’ is being used today by some of the neopopulists, who otherwise are radical rather than conservative. The way in which the neopopulists appeal to conservatism is a rhetorical tool: invoke nostalgia for The Good Old Days to mobilize those who see themselves as conservatives in a radical (anti-conservative) attack on existing government institutions. It’s a bait and switch, though, insofar as what’s promised — getting back to the Good Old Days — is not what’s being delivered — a statist plutocracy.
In response to 2., I would allow that the neoliberals need a power base that allows them to set common standards over a region, but that region tends to de-emphasize national borders and so always aims to stretch the power base beyond the individual state. This, in fact, is one of the selling points for neopopulism — that the state (whether the US or the UK) has given up too much of its sovereignty. I think that neoliberals need to deemphasize the government of states, but they do this by installing interstate governments (such as the EU). Again, I think this is why the neopopulists are nationalist (and statist) — it’s a contrast to the globalist nature of neoliberalism.
I look forward to Britt’s developed version of the argument, especially as expressed in point 2.
(DISCLAIMER: Steve Fuller is my PhD supervisor)
Under a charitable reading of their political goals, both social democracy and neoliberalism aim at curtailing “corporate power”: i.e. avoiding capital concentration capable of affecting other social formations (for instance, politics or culture). They diverge regarding the mechanism used for dealing with this issue: whereas social democracy uses citizenship-based access criteria for distributing goods, neoliberalism uses market-based access criteria for the same goal. Both mechanisms could be called “centrifugal mechanisms” insofar as they aim at “dispersing” capital.
Both Frank Knight and Hayek believed, in a Marxist fashion, that markets are the best mechanism for doing away with authoritarian social formations. During the first years of the MPS, they debated on whether the market could sustain the wider social and cultural structures that were necessary for society to exist. Knight thought, with Marx, that “all that is solid melts in the air” while Hayek believed that the market’s self-correcting mechanisms would provide some kind of equilibrium between market and society (curiously enough, and probably due to his experience living in NY, von Mises agreed with Knight).
This debate was bracketed (by Hayek) to provide some stability to the MPS project. Thus, its nuances were lost in the synthesis that resulted in the late 70s, which kept the idea of using the State to foster markets but lost the concern for capital concentration.