After Growth: The Future of Social Democracy

By Mehdi Hasan and Jonathan Derbyshire
Social Europe Journal

The implosion of neoliberal ‘turbo-capitalism’ in the autumn of 2008 should have been the moment for social democratic parties to come in from the cold. More than two years on, however, social democracy is in retreat across the Continent, electorally weak and intellectually incoherent.

Growth and prosperity have vanished, leaving social democrats ideologically disorientated – and the fortunes of the last Labour government in Britain, in particular, contain lessons for centre-left parties in western Europe. What the British experience of the past decade suggests is that modern social democracy has amounted, in practice, to limited state intervention in markets, coupled with high levels of government expenditure and a rhetorical commitment to the establishment of ‘world-class public services’. What has been missing is any substantive philosophy of the public good.

In times of plenty and abundance, the failure to make a broader, moral case for an egalitarian politics of social justice and the progressive notion of a ‘good society’ did not much matter – the Labour governments of Tony Blair and Gordon Brown simply watched the tax receipts from apparently endless growth pour in and then redistributed them to the poor by ‘stealth’. This was the essence of the much-vaunted ‘third way’. But when the economic climate changed in 2007 and 2008, Labour found itself without a coherent ideological story to tell about the action it took to mitigate the worst depredations of the calamity that befell the global financial markets.

As Ernst Hillebrand, of the Friedrich Ebert Foundation, has pointed out, modern European governments of the centre-left made a fetish of ever-increasing ‘growth’ – improved productivity, technological innovation and so on were regarded simply as means to that end (which has, of course, turned out to be a chimera), and not as ‘instruments’ for enhancing people’s ‘liberty’. ‘To consumerism’s promise of happiness’, Hillebrand wrote, must be opposed a vision of an alternative society’.

Since the pursuit of economic growth at all costs – without, it should be said, proper discussion of the distribution of its proceeds – is what seems to have distorted and diminished social democratic politics in recent years, a good place to start in developing such a vision might be the concept of growth itself. In a 2009 report commissioned by a politician of the centre-right, French president Nicolas Sarkozy, the Nobel Prize-winning economists Amartya Sen and Joseph Stiglitz drew attention to the limits of GDP as an indicator, not just of economic performance, but of ‘social progress’ too. GDP, Sen and Stiglitz argued, is inadequate as a measure of people’s ‘well-being’. Measuring economic and production is one thing; measuring citizens’ quality of life quite another.

This dilemma is not new, of course. In the 1930s, for example, John Maynard Keynes that what he called the ‘economic problem’ (that of stimulating demand and preventing the flight into liquidity) was merely a corollary of the much more fundamental question of what it means to live well; the ‘permanent problem’ of what it is that makes human lives go better rather than worse.

So should the recent rehabilitation of Keynes’s macro-economic theories by the centre-left be accompanied by a similar re-acquaintance with his focus on wellbeing and the need ‘to live wisely and agreeably and well’? Happiness economics and a much richer conception of the ‘aspirations’ of ordinary citizens offer social democrats a way out of the intellectual impasse in which they find themselves. In the words of the LSE’s Christian Kroll, ‘the science of happiness can be a new tool for public policy’ and could potentially ‘facilitate a true renewal and revitalisation of social democracy’. Kroll points to the German Social Democratic Party’s engagement with this new paradigm. The SPD’s 2009 election manifesto declared:

‘Economic growth is not an end in itself. This conviction is gaining more supporters. We agree with many, with unions, churches, and many entrepreneurs. Economic success has to benefit the people. Robert Kennedy once said: GDP measures everything except that which makes life worthwhile.’

To adopt the distinction pioneered by the historian Peter Clarke, social democratic politicians must be ‘moral’ rather than ‘mechanical’ reformers, focused on ends and not means. They need to see that their task consists as much in moral persuasion and argument in favour of the fundamental values of equality, social solidarity and genuine liberty as it does in pulling on the levers of power.

The lesson of the financial crisis, and the defeat of centre-left parties across Europe, is clear: social democrats can no longer afford to masquerade as centrist technocrats. If they are to win back power, they must first radically rethink and expand their understanding of progress and prosperity.