Sunday, June 5, 2011

The Drumbeat against Social Democracy

"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.


brent said...

Thank you, Art, for laying out the terms of this debate in such clear terms. I would add the following points, partly in reaction to Mélenchon's statement in your subsequent post: 1) Perhaps the emphasis on fairer distribution comes from a persistent fear, not just in France but in the US and all the developed economies, that significant growth may be likely for the Brazilians, the Chinese, the Turks, but not for us, and distribution of what remains is therefore at the center of the political action; 2) whatever growth may be possible, the 'productivist' impulse runs counter to the ecological intuition that growth conflicts with the necessity to scale back carbon consumption and in other ways reduce the impact of economic production on the environment; and 3) while the personal net worth of politicians is a trivial question, the apparent intention of the governing classes to redistribute vast wealth upward while producing minimal growth has made the 'neo-liberal' model increasingly unattractive, quite apart from the morality of it.

As soon as significant numbers of French voters realize all this, a Mélenchon presidency will be inevitable.

Alex Price said...

I’m not sure how useful the argument you cite from Rawls is for thinking about these issues. Growth and technological progress in rich countries have ensured that, arguably, the poor have a higher standard living today than they did, say, fifty years ago. Everyone is richer, including the poor, a condition that satisfies Rawls’ criterion. But all is not well. The problem is that the gap between the rich and the poor is also greater. I believe there is quite a bit of research indicating that, beyond subsistence levels, what counts isn’t one’s absolute level of prosperity but the level relative to others. Social and economic mobility, important as they are, are only one aspect of the broader issue of inequality. Social democrats have a problem because they are implicated in the changes that have led to greater inequality but are not always credible in their suggestions for ways to mitigate it. The budgetary choices governments face may seem to oppose growth and redistribution, but this is already a false way of thinking about these issues, since it suggests that the two are incompatible, and redistribution figures in this dichotomy only as a form of charity. The real issue is social justice, which has nothing to do with charity and indeed is inimical to it.

FrédéricLN said...

I agree strongly on Art's analysis: the debate about "social-democracy" in France is basically set in moral terms. If you look like ready to drop socialism for social-democracy, that's evidence you are a social-traitor (whatever socialism really means…) - that's constant mechanics since Fabius' rebuffal of Rocard in 1979 (? PS Metz congress ?).

-> "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."

But what gives added strength to this moral argument, is the statement (if it's really one…) that wealth-oriented policies failed.

There are three arguments for that within the French policy debate:

1- one is relevant at world scale: the disqualification of "ultra-libéralisme" advocates. Those who promoted these policies, lied a great lot during the 2002-2008 years, and since. They presented finance as the new innovation force driving the economy, and so on, while it was just raw predation hidded behind sophisticated maths.

2- the second one is relevant at European scale: the disqualification the Lisbon/euro strategy advocates. The European insititutions as they are running, the "knowledge society" agenda as it was enforced, did nothing to really focus our development, to make it more sustainable, and so on. Not that Europe failed as a whole: but it looks like real improvement (such as in car energy consumptions) were obtained by other mechanisms, and even by people who had to fight hard against the main political leaders (or to work a discreet way, avoiding the sunlights of the political stage).

3- the last one is relevant to France, and even more to smaller countries like Greece, Ireland and so on: we are small countries, ie open markets. Money "given" to already rich people will perhaps rain down to poorer ones, but not much to French poorer ones. It will be invested in emerging countries, push real estate prices (that include no income for poor people), and so on. It's a difficult issue, as France counts some global companies (L'Oréal, Total, Renault, PSA, and so on): how to handle them politically? We definitely have no interest in pushing them to fly in other countries!

gregory brown said...

A brief thought -- that to really move from moral statements to political economy, we ought to try to be more precise than "rich" and "poor." In effect, just as political sociology is generally discussed these days (even in informal settings such as this one) much more precise than just "left" and "right", then the socio-economic categories ought to be considered more carefully.

To take but one very brief example, in so many ways the significant fracture in French, as in American, society is between those holding post-secondary degrees (or on a course to obtain one) and those not. If social democracy could be defined -- and presented -- as a program of broadening opportunity for educational and thus economic attainment, I believe it would cease to appear a matter of "favoring the rich" even if it not a program of active redistribution.

There are important elements of that issue in the various versions of the Socialist program but I still think that one of the great keys to Sarkozy's success in 07 and why I think he's likely to win again in 2012, is that he's (like the American right) got a more compelling (ie believable for many) account to present these days of why educational opportunities are so limited for so many (teachers, unions, state control, elitism, etc) and of how to enhance educational opportunities (in effect privatization, school choice and cost-cutting in public sector, counter-intertuitive to many educators but widely accepted as viable) than do social democrats or anyone else.

gregory brown said...

ps. my use of "American right" above was intended to be ironic. On re-reading I see it does not sound that way.