"Social democracy," like "neoliberalism," is a vexed term, because one of its more frequent uses is to serve as a bludgeon in the hands of its enemies. Its flaws are assumed to be so manifest that the non-existence of any compensatory virtues may be taken for granted. Two articles in Mediapart exemplify the genre: in one, Bruno Julliard, the former student leader who first came to prominence in the anti-CPE demonstrations, points to Spain as a place where Spanish students are rejecting a Socialist government that made the fatal error of succumbing to the sirens of social democracy: "Les indignés espagnols pointent du doigt l'échec de la social-démocratie," is the headline. In the other, Laurent Mauduit uses the "secret" (de polichinelle? or non-existent?) Marrakech pact to place Martine Aubry on the horns of a dilemma: Will she honor her (supposed) compromise with the social democracy once personified by DSK and therefore condemn her party to defeat, or will she reject what Mauduit considers to be the disastrous record of PS surrender to social democracy (a term in which one cannot help but hear echoes of "social traitor")?
Mauduit deserves credit for describing specific "social-democratic" policies that he considers to have been failures: special tax treatment of stock options, certain features of the wealth tax favored by DSK, the floating of a balanced budget as a policy goal by DSK, and reduction of the interest rate on savings under the Livret A.
Now, these policies are indeed contestable. Some I wouldn't have supported at the time, and others have disadvantages that are perhaps more apparent in retrospect than they were when they were proposed. But I don't want to discuss policy details today. I want instead to look at what is common to these anti-social-democratic critiques. For Mauduit, what makes the policies that DSK once advocated obviously wrong, and what makes it eminently clear, in his view, that Martine Aubry should today cut whatever ties to the social-democratic wing of her party she may have assented to in the Marrakech pact, is that the distributive consequences are "un-socialist." In short, concessions were, or would have been, granted to the rich, instead of increasing transfers to the poor.
Now, in each case, the concessions to the rich were undoubtedly justified as incentives, whose ultimate purpose would have been to increase the growth rate of the French economy, whether by enticing some of the business of the financial sector away from the City of London, encouraging high-tech entrepreneurship, or spurring consumption at a time when the savings rate was arguably too high. These arguments have strengths and weaknesses as economics, but what really gives them their force is the moral premise that anything done to enhance the well-being of the comfortable and rich while many others remain struggling and poor is ipso facto unjustifiable.
The philosopher John Rawls tried to counter this view from his liberal perspective with the argument that favoring the relatively well-to-do may be justifiable if it results in improving the lot of the least well off. Growth, if it is large enough and its fruits are adequately distributed, can accomplish that trick. To my mind, however, the Rawlsian argument doesn't quite let social democrats off the hook if its consequence is to fracture society into two groups between which movement becomes rare or impossible. So even if the lot of the worse-off improves steadily, as Rawls would hope, they will not be content if the better-off use their advantages to close off the avenues of social mobility.
To some extent, I believe that this fracturing of society is what accounts for the scorn that some pour on social democracy today. The problem is not simply that many advocates of social democracy live well. This is of course true, and some French critics have made much of DSK's wealth as an argument against his ideas. But that is not the heart of the problem. If upward mobility is greatly diminished, then the worse-off, though grateful for improvements in their standard of living made possible by incentives to growth, will nevertheless come to feel that they constitute a permanently disadvantaged class, or even caste, and will therefore refuse to grant any legitimacy to measures that, while they may improve the well-being of society as a whole, nevertheless also reinforce the advantages that enable the better-off to transmit their standing to their children (the wealth to pay for private education, acquire cultural advantages, travel with ease and mingle readily with cosmpolitan elites, etc.). This is what gives the critique of social democracy its moral edge, even if the argument usually goes unstated. And a sharp cutting edge it is.
Of course the rejection of morally objectionable incentives may have unstated consequences as well. Indeed, exclusive concentration on distribution at the expense of growth may leave everyone worse off. But such arguments can become frustratingly abstract and theoretical and often rely on dubious assumptions. And they are not easily encapsulated in the brief exchanges that constitute much of today's public debate. This is a dilemma for the left in the first instance and ultimately for everyone.