|It's not democratic socialism; it's|
|People who don't think much of it|
|How the sausage is made|
“”Those damn socialist Scandinavians keep outperforming everyone in everything.
Social democracy is a political ideology that advocates for state intervention to fulfill social, financial, and political security, justice and equality of opportunity for people and actively reorder society in a way that is conducive to such developments. Such changes should be achieved by a legitimated and free democracy. It is common but not unique to Europe, where social democrats regularly feature as one of the major parties and have governed (or at least participated in governments) in many states, most notably in Northern Europe (up to being nicknamed the "Nordic model", which is effectively a blend of social liberalism and social democracy). Social democrats traditionally regard government intervention as a force for good, regulating markets and engaging in redistributive efforts to benefit disadvantaged groups and consumers to establish a more equitable society. The ideologies' economic model is that of John Maynard Keynes, the father of modern macroeconomics.
Somewhat confusingly, social democracy is not the same thing as democratic socialism, nearly identical names notwithstanding. Modern social democrats believe in maintaining a market economy with varying (but, as discussed below, often dwindling) degrees of regulation and with a welfare state — democratic socialists do not (liberal socialists are the only nominally "socialists" who do), as they seek to abolish those goodies.
In American discourse, the leftiness of contemporary social democrats in Europe is often greatly overestimated. European social democratic parties are primarily moderate establishment parties, only and mostly symbolically slightly to the left. They have been marked by over a century of reformism since they split from socialism, including a neoliberal turn in the 1980s.
Social democrats belong firmly in the progressive camp, and they reject the need to change society through revolution and class warfare. Instead, they affirm the necessity of obtaining a mandate within the confines of existing democratic structures and, once in power, focus on implementing policies designed to reform a country's society and economy towards a more equal distribution of wealth. Since the end of World War II, European social democrats have generally abandoned the goal of building an alternative economic system to capitalism and moved towards platforms that affirm market-based economic orders and private entrepreneurship yet seek to implement welfare and state intervention designed to improve the long-term outlook for underprivileged groups.
The original split between traditional socialists and social democrats occurred at the end of the 19th century when the latter emerged as a new branch of socialists who originally shared their vision of a radically different post-capitalist society but didn't want to participate in outright revolutions that Marxist orthodoxy considered necessary to bring such change about. Instead, they opted to form political parties that acknowledged the existing order for the time being and tried to attain power through elections. Nowadays, this definition would cover all of the mainstream democratic left parties, even though many of these still label themselves "socialist". Therefore, this definition is inapplicable.
In a European context, many modern social democrats may hold similar positions to less extreme conservative opponents due to both types of parties converging around the center of the political spectrum. Key elements of the welfare state remain popular with the major parties and the general populace.
Wealthy media magnates may be perceived to have used their control over large sections of news outlets to make policies that tax rich people less popular and also have used their lobbying power to lower the taxes their community pays. In recent years, overall spending on welfare policies has been slightly reduced by both center-right and center-left governments to decrease government deficits (without increasing taxes on rich people) and enhance economic competitiveness.
A brief history
Initially, social democrats were democratic socialists before the First World War. The split occurred in the late 1910s and the early 1920s; in Russia, the Mensheviks (moderate revolutionaries that dethroned Tsar Nicholas II in February of 1917) were overthrown by the bolsheviks (communist revolutionaries) in October 1917, leading to a civil war and elimination of any dissent, later culminating in Stalinism. In Germany, the newly founded Communist Party (German: Kommunistische Partei Deutschlands, KPD) staged a coup d'état against the recently established democracy (the Weimar Republic) governed by the Social Democratic Party of Germany (German: Sozialdemokratische Partei Deutschland, SPD), an infamous historical event known as the Spartacist uprising. The right-wing Freikorps forces of the first President of Germany, Friedrich Ebert, defeated the mob of Rosa Luxemburg and Karl Liebknecht, which led to the historical association among socialists of social democracy with fascism (a conspiracy theory known as ""social fascism", founded by Stalin).
Not all socialists believed in this; many (such as Leon Trotsky) denounced the Bolsheviks and their late mutation, Stalinism, claiming that social democrats are allies in the fight against fascism, even if they disagree ideologically to a certain extent. As a side-note, American historian Theodore Draper argues that the accusation of "social fascism" by the far-left facilitated the rise and consolidation of nazism in Germany in 1933.
Increasing reformism and the neoliberal turn
Since they split from socialism in the early 20th century, social democrats have been marked by ever-increasing reformism. By the mid 20th century, social democratic parties in Western Europe had become establishment parties that supported parliamentary democracy, monarchy (in the countries with kings and queens), a market economy with a reasonable level of regulation and government involvement, and a pro-Western and pro-U.S. foreign policy.
While traditionally and nominally part of the left-wing, social democratic parties today are so moderate that they could also be described as centrist. They are usually perceived as establishment, only slightly to the left of centrist parties in much of Europe. Since the 1980s, social democratic parties in Western Europe, including the Nordic countries, have been marked by an increasingly neoliberal turn, as exemplified by Tony Blair's New Labour of the 1990s and 2000s. In Norway, social democrat Jens Stoltenberg's first government (2000–2001) was known for an unprecedented privatization and deregulation drive. In practice, social democratic parties in Norway, Germany, and other Western European countries agree with their countries' conservative/center-right parties in most areas of substantial policy, especially since they all are fairly technocratic parties, as opposed to populists on the left and right. For instance, the Norwegian Labour Party and the Conservative Party have agreed on the maxim "the foreign policy is settled" (i.e., not up for debate). The two parties have the same broad consensus regarding substantial economic policy. In American discourse, the leftiness of contemporary social democrats in Europe is often comically overestimated.
There is still some debate over how well these policies worked. Social democratic thought and governance have had a lot of influence on post-war Western Europe; the respective parties dominated the political landscape in Scandinavia and introduced the modern European welfare state model in numerous other countries such as France, Germany, and the Netherlands. While economic growth was robust up to the 1970s, the much more market-liberal United States performed better in recent decades, though practically all of these gains in America went to the wealthy, even if the US also saw dramatic growth in its welfare state. Nowadays, only Norway, which has a great deal of oil, has a higher (PPP) GDP per capita than the USA.
However, in social matters (for example, social mobility), the Scandinavian countries tend to outstrip the USA by a good margin. As of 2020, the four Nordic countries are also the top 4 in the Global Social Mobility Index, while the US is not even in the top 25. In terms of the Gini coefficient, which measures the equality of income distribution, the United States does very poorly (even worse than Russia). It is handily beaten by the European states, though, in this particular index, the Nordic countries are also beaten by some countries of the former Eastern Bloc and the former USSR. Human development and World Happiness Report are also indexes on which the Nordic counties perform considerably better. The Nordic countries also score very high on the Where-to-be-born Index.
Overall, perhaps the main "rival" of the Nordic countries is not the US, which is beaten in most of the rankings (although in not all of them, like GDP per capita), but Switzerland, a very economically liberal country with far more geographical, cultural and historical similarities with the Scandinavia that can, in fact, beat them in many relevant rankings (but not all of them, like the Gini Index and the Social Mobility Index).
During the European sovereign debt crisis
In 2006, The Economist asserted that the Nordic Model would break down due to "grave defects", predicting that a new center-right government in Sweden would dismantle the welfare state. This would not occur. Two years later, the economies of the United Kingdom (where The Economist is based) and its even less-regulated counterpart, the United States, crumbled into the worst recession since the 1930s. Sweden's total tax rate remains near 50%, and every Scandinavian nation has emerged with comparatively lower debt levels and unemployment rates than both the US and UK. The Economist has since, if begrudgingly, called the Scandinavian countries "probably the best-governed in the world." The Economist made a widespread mistake that can be found in the whole political spectrum: the fiscal and monetary policy in countries like Sweden are far more restrictive than those found in countries like US and UK. Having higher taxes is not the same as being fiscally irresponsible. Oddly enough, the Swedish Social Democratic Party built most of the fiscal consolidation mechanisms in Sweden.
Look at the fine print
The stereotype that the Nordic model is a bureaucratic, Soviet-style mess borders on the willfully ignorant. In addition to exceptionally high union membership, there is a deep commitment to adapting to the times. To combat outsourcing and wage dumping, as associated with globalization, Scandinavia is committed to free trade, trading corporate taxes for VATs. This regulatory environment is known as flexicurity, wherein ease of hiring and firing workers is offset with skills upkeep towards ensuring that they won't go into poverty while unemployed.
The Nordic countries score very high on the Ease of Doing Business rankings, an index created by the World Bank, with Denmark in fourth place (The US is the sixth), Sweden and Norway in the top 10, and Finland in the twentieth. In other words, these countries have a strong welfare state and have overall simpler regulations for businesses and stronger protections of property rights than most of the world. These two points can (at least in these countries) live in relative harmony. The fact that the Nordic countries managed to establish a strong welfare state that didn't compromise the democratic foundations of these countries or their economic freedom has been used to critique the libertarian idea that a big government tends to degenerate into a despotic one.
In the United States
Social democracy in the United States has been associated with the left-wing of the Democratic Party and the right-wing of the Democratic Socialists of America. The latter organization had both social democratic and Marxist wings. The Democratic Party's left-wing, during the post-World War II era, was typified by organized labor and writers like Arthur Schlesinger Jr. He viewed social democracy as the "vital center" of politics in opposition to both communism and laissez-faire capitalism. Other groups, like the Social Democrats USA, and the related Democratic Socialist Organizing Committee, were formed by former Trotskyists who had swung hard-right on foreign policy and advocated a strong anti-Soviet Union stance but remained economically leftist; this group's primary ideological influence was Trotskyist theorist Max Shachtman, who is sometimes also cited as an intellectual father of neoconservatism. The 1912 election was particularly memorable as a (possible) high watermark of leftist ideology on the national stage, as it pitted an outright socialist (Eugene V. Debs) and a candidate of the Progressive Party (Teddy Roosevelt) as well as a self-described "progressive" for the Democrats (Woodrow Wilson) against an incumbent Republican (Howard Taft) who got clobbered and placed third.
A small Social Democratic Party exists in the US, but most Americans have no idea. They know the existence and resurgence of the Democratic Socialists of America (DSA), who recently helped candidates win local and state elections in Virginia towards the end of 2017.
For decades, the only self-described "Socialist" on the national political stage was Vermont Senator and 2016/2020 Democratic presidential primary candidate Bernie Sanders. Although some parts of the internet had a near-religious conviction that Bernie would eventually win the candidacy, this did not happen, and Hillary Clinton won the candidacy, briefly throwing parts of the internet into mass hysteria.
As of the 2018 midterm election, due to the work of grassroots organizations such as the Justice Democrats, Democratic Socialists of America, and Bernie's Our Revolution, a few new social democratic figures have cropped up in the American mainstream. The most well-known of the entire group is Rep. Alexandria Ocasio-Cortez (NY-14), who initially gained fame for successfully primarying House Democratic Caucus Chair Joe Crowley from the left. Also included in this group are newcomers and incumbent House Democrats such as Ro Khanna (CA-17), Raul Grijalva (AZ-3), Pramila Jayapal (WA-7), Ilhan Omar (MN-5), Ayanna Pressley (MA-7), and Rashida Tlaib (MI-13). The 2020 election added Cori Bush (MO-1), Jamaal Bowman (NY-16), and Marie Newman (IL-3), among others, to the lineup.
A lecture by American sociologist, feminist writer, LGBT rights activist, and author of "Viking Economics: How the Scandinavians got it right and how we can, too" (2016) George Lakey, about how the United States can achieve social democratic goals.
Faux criticism and misinformation
Considering that many European countries provide good cases to study and to use in support of social democracy, we have an idea of how this system could work in the US, as well what are its many advantages and shortcoming, but that hasn't stopped opponents of social democracy from decrying it with bad arguments.
Much of the "criticism" against social democracy hails from intellectually dishonest conservatives and right-libertarians who cannot be bothered to do much research into the subject and thus regurgitate shallow attacks (so-called "arguments") against a system that works very well in so many countries based on the evidence we have.
Some of these "criticisms" include:
- "Venezuela!!!", "Cuba!!!", "Soviet Union!!!" (none of which are or were social democratic)
- They don't have minimum wages!!! (see below for explanation)
- They're free-market economies!!!
- They're capitalist countries with big welfare states!!!
- They are homogenous countries; we have too many blacks and Mexicans here!!!
None of these fallacious attacks actually explain why social democracy is a flawed ideology that should not or cannot be implemented in the United States; instead, many of them just describe aspects of social democracy. If someone makes these arguments, agree and ask why we shouldn't pursue that ideology. Either they won't be able to respond, or they'll contradict themselves and call those countries or reforms socialist or use a reductio ad Venezuelam fallacy.
Is it true that Nordic countries do not have a minimum wage?
Although the Nordic countries don't have a minimum wage established by law, their trade unions are strong enough to negotiate salaries with their respective employers. Instead of a state entity demanding a fixed value that has to be changed regularly via legislation (that may or may not include political ambitions and electoral scheming), it is not altered by factors such as inflation rates and per capita purchasing power (PPP). Workers and employers thus have a better and more direct influence on their working and financial conditions than what a parliament has, engaging in constructive dialogue and exchanges.
While there is actual criticism against social democracy, much of it is skepticism of whether or not the Nordic countries which implement social democracy would actually be better off without it.
One of these points of skepticism is the fact that the Nordic Countries, in particular, have shown pretty good social outcomes and low levels of income inequality before adopting social democracy and the "Nordic Model". In 1960, tax revenues amounted to 25 percent of GDP in Denmark, 28 percent in Finland, 29 percent in Sweden, and 32 percent in Norway. This can be compared with rates of 27 percent of GDP in the UK and 34 percent in Germany at the same time. From 1960 to 2005, the Nordic countries have fallen in their life expectancy rankings.. In fact, Iceland, despite having a smaller government,[note 1] has better social outcomes in many areas than the other Nordic countries. In 2011, life expectancy in Iceland was 82.4 years, compared with 81.8 in Sweden, 81.3 in Norway, 80.5 in Finland, and 79.8 in Denmark. Iceland beat all of them in child mortality rates in 1960, 2005, and 2013.
These countries have also shown interesting trends in their egalitarian income distribution. In 1920, well before the existence of any welfare state, Sweden had the most equal income distribution out of the US, Canada, France, and the Netherlands. The income share of the Swedish top decile drops sharply over the first eighty years of the twentieth century. Most of the decrease took place before the expansion of the welfare state, and by 1950, Swedish top income shares were already lower than in other countries.
In Denmark, the Gini coefficient of taxable income moved considerably towards higher levels of equality during the last three decades of the 19th century and in the first half of the 20th century. Most of the shift towards higher equality happened before introducing a large public sector and high taxes. In Denmark, Norway, and Sweden, the income shares of the top 10% and largely for the top 1% dropped a lot between 1900 and 1970. It continued to fall during the 1980s but has since increased to 1970 levels.
Income and wealth inequality
The Nordic countries generally rank among the lowest countries in the Gini coefficient, which measures income inequality. However, Slovenia beats Norway, Denmark, Finland, and Sweden; Czechia beats Finland and Sweden; Slovakia, Belgium, and Austria beat Sweden. These countries, specifically Slovenia, Czechia, and Slovakia, don't have welfare states or taxes anywhere near similar to what the Nordic countries have, and Czechia even has a flat tax. However, the income per capita is also much lower in Slovenia, Czechia, and Slovakia than in Scandinavia, something which the IEA report omits, nor does it look at other flat tax countries that don't fit this pattern, such as Russia, suggesting at least a degree of cherry-picking.
In terms of wealth inequality, Italy and the United Kingdom have lower levels than Finland, and Sweden has worse inequality than Canada, Germany, and the United States. As of 2009, 30% of Swedish households had net zero or negative assets. Around 20% had asset levels corresponding to about one month’s salary for an average household.
Effects on economic growth, employment, and investment
The income per capita in the US is quite higher than in most of Western Europe.[note 2]Due to the catch-up effect, the European economy should be growing faster than the American one. However, as the Harvard professor and former National Bureau of Economic Research president, Martin S. Feldstein, states, the gap is growing wider. In other words, the Americans are getting even richer than the Europeans. Professor Feldstein suggests at least 10 reasons for this growth disparity, one of them being a smaller government. Indeed, many studies indicate that a bigger government slumps economic growth. Studying about 100 countries in the post-war world, another Harvard professor, Robert Barro, concludes that “the cross-country data indicate that government consumption is inversely related to growth, whereas public investment has little relation with growth". The Swedish economist Stefan Fölster argues “that an increase of the expenditure ratio by 10 percentage points is associated with a decrease in the growth rate on the order of 0.7–0.8 percentage points”. The UCLA professors Eric Engen and Jonathan Skinner concluded that the impact could be twice as big in an older, albeit broader study.
Similar evidence suggesting that a bigger government harms the employment rates has also been found by the IMF. A paper by the Harvard professor Alberto Alesina states that a reduction by one percent of government spending leads to an increase in investment by 0.16.
There are at least two reasonable objections to this argument. One is that the US is a lot more unequal than Europe. The other is that the income per capita is only one social indicator, and the US lags behind in many others. Albeit it’s hard to question these facts, two World Bank studies suggested that economic growth is the most critical factor in improving quality of life. Perhaps the most vital aspect where the US lags behind Europe is healthcare. However, the United States spends a lot more than any other country, with government and compulsory schemes representing 14% of the American GDP in 2019 (only 8% in 2010 when the US wasn't even in the top 5 countries with more healthcare spending). The second place, Germany, spends 10% of its GDP on public healthcare. Considering how the American income per capita is 25% larger than the German income per capita, the spending per citizen is even more dramatic. Indeed, according to the OECD, not even the average Luxembourgish spends so much per capita as the average American, and that's only considering the public spending! So, at least on this point, perhaps the US should focus more on efficiency rather than spending even more. It is worth mentioning that even the welfare state couldn't prevent the rise in social inequality in the Old Continent, and nearly all European countries failed to reach the United Nations Sustainable Development Goals inequality target over the 1980-2017 period.
MIT economist Daron Acemoglu, Harvard political scientist Jim Robinson, and economist Thierry Verdier argue that there are two capitalist systems, the "cuddly capitalism" (like the Scandinavian countries) and the "cutthroatle capitalism", like the US. According to them, it would be wrong if the world adopted the first one, as "cuddly" countries tend to have less innovative economies. Part of their economic growth comes from the technologically advanced "cutthroatle" countries. If a country like the US, with an essential role in innovation, adopts a social democracy, it could harm global economic growth. On the other hand, these claims are not founded on much empirical evidence, using patent filings primarily to show the differences, there are studies which look at larger spaces of time which come to the conclusion that there is no real difference in innovativeness.
But even if this was the case, this can be seen as apologia for horrible social conditions, as long as growth continues, we can justify depriving people of social healthcare that could save or extend their lifespans. This could be argued to be an expensive trade to make.
In the case of political positions, it may vary depending on the radicality of the actual ideology as well as the conservatism of each country's politics. For example, in conservative countries such as Japan, even European 'center-left' social democracy or progressivism can be recognized as 'left-wing'. On the contrary, it advocates anti-capitalism, such as the Social Democratic Party of Switzerland, but in some cases, it is classified as the 'center-left'.
|Australia||ALP||Australian Labor Party||Centre-left|
|Austria||SPÖ||Social Democratic Party of Austria
(German: Sozialdemokratische Partei Österreichs)
|Belgium (Wallonia)||PS||Socialist Party
(French: Parti Socialiste)
|Centre-left to Left-wing|
|Canada||NDP / NPD||New Democratic Party
(French: Nouveau Parti démocratique)
|Centre-left to Left-wing|
|Croatia||SDP||Social Democratic Party of Croatia
(Serbo-Croatian: Socijaldemokratska partija Hrvatske)
|Czechia||ČSSD||Czech Social Democratic Party
(Czech: Česká strana sociálně demokratická)
|Denmark||A||The Social Democratic Party
|Estonia||SDE||Social Democratic Party
(Estonian: Sotsiaaldemokraatlik Erakond)
|Finland||SDP||Social Democratic Party of Finland
(Finnish: Suomen sosialidemokraattinen puolue,
Swedish: Finlands socialdemokratiska parti)
(French: Parti Socialiste)
|Germany||SPD||Social Democratic Party of Germany
(German: Sozialdemokratische Partei Deutschlands)
|Iceland||Social Democratic Alliance
(Irish: Páirtí an Lucht Oibre)
|Israel||HaAvoda||Israeli Labor Party
(Hebrew: מִפְלֶגֶת הָעֲבוֹדָה הַיִּשְׂרְאֵלִית)
(Italian: Partito Democratico)
|Japan||Shamin-tō||Social Democratic Party
|Lithuania||LSDP||Social Democratic Party of Lithuania
(Lithuanian: Lietuvos socialdemokratų partija)
(Dutch: Partij van de Arbeid)
|New Zealand||Labour||New Zealand Labour Party
(Māori: Rōpū Reipa o Aotearoa)
|Norway||A / Ap||Norwegian Labour Party
(Portuguese: Partido Socialista)
(Slovene: Socialni demokrati)
|Spain||PSOE||Spanish Socialist Workers' Party
(Castilian-Spanish: Partido Socialista Obrero Español)
|Sweden||S / SAP||Swedish Social Democratic Party
(Swedish: Sveriges socialdemokratiska arbetareparti)
|Switzerland||SP / PS||Social Democratic Party of Switzerland
(German: Sozialdemokratische Partei der Schweiz,
French: Parti Socialiste, Italian: Partito Socialista Svizzero)
|Centre-left to Left-wing|
|Turkey||CHP||Republican People's Party
(Turkish: Cumhuriyet Halk Partisi)
|Turkey||HDP||Peoples' Democratic Party
(Turkish: Halkların Demokratik Partisi)
|Centre-left to Left-wing|
|United Kingdom||Labour||Labour Party||Centre-left|
- Liberal conservatism — This is a major ideological competitor for social democracy in some areas, including Western Europe and Northern Europe. (The term "liberal" in liberal conservatism has nothing to do with the "liberal" that Americans use in a similar sense to social liberalism or social democracy.)
- Social market economy
- Third Way
- The Friedrich-Ebert-Stiftung (FES) — a social-democratic foundation named after the first President of Weimer Germany, Friedrich Ebert.
- The surprising renaissance of the Nordic model — Nordic Investment Bank ("Be open, but share the fruits of openness.")
- The Nordics in the global crisis — Centre for Economic Policy Research
- Why Are Finland's Schools Successful? — Smithsonian
- Lessons from the Swedish/Nordic Model — OECD
- Our World In Data — Income inequality, for more information on the subject
- The average tax revenue as a percentage of GDP from 2003 to 2013 in Iceland was 36%. This is contrasted with 42% in Finland, 43% in Norway, 44% in Sweden, and 47% in Denmark.
- The four countries with a higher income are: Switzerland and Ireland, two of the three countries in Western Europe with a lower welfare spending than the US (the third country, Iceland, has the world's 6th highest income, right behind the US); the oil-rich Norway, that spends a lot less than its Nordic neighbors, and the richest of them all, extra tiny Luxembourg.
- Interesting, eh?
- https://www.crfb.org/blogs/mandatory-spending-makes-bulk-spending-growth Mandatory Spending Makes Up the Bulk of Spending Growth]
- Global Social Mobility Index
- Farewell, Nordic model, The Economist
- Nordic model on Wikipedia
- Nordic model: The tax mix, Worthwhile Canadian Initiative
- A Big Safety Net and Strong Job Market Can Coexist. Just Ask Scandinavia, The New York Times
- The Narrow Corridor: States, Societies, and the Fate of Liberty, by Daron Acemoglu and James A. Robinson. New York: Penguin Press, 2019. pp. 464-67
- Scandinavian Unexceptionalism. pp. 51; do note, however, that this report came out of the Institute of Economic Affairs, so it might merit a grain of salt or two...
- Ibid. pp. 52
- Ibid. pp. 54
- Ibid. pp. 55
- Ibid. pp. 56
- Ibid. pp. 56-57
- Ibid. pp. 57
- Ibid. pp. 59
- Ibid. pp. 60
- Why is Growth better in the United States than in other Industrial Countries
- Fiscal Policy and Growth
- Growth and the Public Sector: A Critique of the Critics
- Temporary and permanent government spending in an open economy
- Government Size and Economic Growth in Developing Countries
- Economic Growth in a Cross Section of Countries
- Growth Effects of Government xpenditure and Taxation in Rich Countries
- Fiscal Policy and Economic Growth
- Reforming Government in Industrial Countries
- Fiscal Policy, Profits, and Investment
- Growth is Good for the Poor
- Growth is Still Good for the Poor
- Health expenditure and financing
- How Unequal Is Europe? Evidence from Distributional National Accounts, 1980-2017
- Can We All Be More Like Scandinavians? Asymmetric Growth and Institutions in an Interdependent World