The End and Beginning of History

The end of neoliberal democracy should spark the resurgence of social democracy.

The 20th Century comprised a number of catastrophic struggles between various ideologies of political and economic organisation. From the outbreak of the First World War in 1914 to the end of the Second World War in 1945, imperialism, fascism, communism, and nationalism - not necessarily distinctly delineated - convulsed the world. From that apocalyptic chapter in world history, imperialism and fascism lay buried; communism and nationalism emerged from the rubble.

One crucial lesson of that period, however, particularly learned during the interwar years, was that nationalism could be tempered by recognising the difference between ethno-nationalism of the sort that imperialism and fascism embraced, and the sovereignty of nations, defined as national self-determination. Imperialism deprived weaker or smaller peoples of the opportunity for self-determination, and the rights and protections which flow from independence and statehood. Properly understood, nationalism was a rejection of imperial hierarchical order based on the interests of the ruling power, and a desire for recognised legitimacy of the right to nationhood.

But the interwar years showed that national self-determination came at the risk of descending into tribal nationalism if economic conditions created fertile ground for fringe political movements to cultivate resentment and anger. In order to balance national sovereignty against the excesses of nationalism, there was a recognition of the necessity to maintain standards of living in the population and protect workers from exploitation, while adopting capitalist economic policies that could support growth and a democratic politics that supported an open society. This was the understanding that gave birth to the post-Second World War social democracy State.

In this evolutionary process, the disintegration of imperialism and rise of nations after 1918 was necessary, but not sufficient; it took the descent into the barbarism of the second convulsion to produce the sufficient model, which balanced political and social freedoms with economic growth. Nationalism could be controlled through the the creation of an international order based on a shared framework of legitimate sovereignty, mutual cooperation, and international rule of law. The European Union, for all its imperfections, remains the best example of the success of such a mutual framework.

The end of the Second World War thus combined the rise of sovereign nation states that had begun in the aftermath of the First World War with a democratic model,  broadly termed "welfare capitalism", that explicitly understood the importance of protecting the economic needs of the population against the conditions that allowed ideologies like fascism and communism to fester and grow. And at the end of the Second World War, with fascism defeated, the great ideological struggle became a face-off between democracy and communism. This struggle would run right up until the fall of the Soviet Union. 

At the time of the disintegration of the Soviet Union, the West had also evolved a competing model of society to the social or liberal democracy model of the immediate post-Second World War period, known as the "neoliberal" model. The fall of the Soviet Union and communism as an economic model (China at the time remained a poverty-ridden backwater yet to rise to its current version of Market-Leninism) was celebrated as the culmination of the great ideological struggles of the 20th Century, with the Western neoliberal model deemed triumphant as the last ideology standing. It was "the end of history". Or so it appeared...

It is important to note that economic ideology was baked into the fabric of these political systems. As Mark Blythe has succinctly summarised, fascism abolished society to control the market; communism abolished the market to control society. The emergence of "welfare capitalism" or "social democracy" constituted a model where society was acknowledged to be comprised of individuals with interests and rights (i.e., political and social rights and freedoms that are shared equally by individual citizens), but recognised a relational aspect between society and markets whereby if markets were left to their own devices - as they were during the Industrial Revolution through to the rise of fascism - they were inherently predatory and exploitative, with negative consequences for society. This reality warranted the role of the State as mediator between markets, society as a whole, and individuals, particularly those for whom their relations to employment in the market dictated having less resources to access the key requisites of a participatory democracy: education, healthcare, housing, and basic living standards.

This latter role of both society and the State is crucial to understand the radicalness of the neoliberal revolution, because at face value it is easy to take the two concepts - the political concept of democracy and economic concept of markets - and see the differing forms of social democracy and neoliberal democracy as essentially similar. Where neoliberal democracy departed so radically from the organisation of social democracy was with regard to relations between society and the market. The very prefix "neo" in neoliberalism reflected the role of the State vis-a-vis the market, where the State was to serve only as "handmaiden of the market".  More radically, society itself was viewed as an obstacle, because to conceive of a society as a whole was to create reciprocal responsibility between individuals in that society, and any such reciprocal responsibility was a barrier to the pursuit of individual self-interest. This core tenet of neoliberal theory extended to corporations, considered legal persons, as within this framework they could pursue self-interest in an unimpeded market, free of any moral or social obligations.

The radical departure of neoliberalism, in contrast not only to social democracy but also to fascism and communism, was that the market substituted for society. The role of the State was to do nothing but facilitate the replacement of society with a self-governing market, then step away. Social democracy envisaged the role of the State as a mediator between markets and society, providing the necessary freedoms - political, social, and economic - for individuals to live with equal rights in a democracy, while providing safeguards to society against the predatory inclinations of markets infringing on the operation of those rights. One simple distinction is in relation to monopoly power. Social democracy intervenes to maintain competition by preventing monopoly power; neoliberalism, although it mobilises the rhetoric of "competition" to ward off regulation, ultimately has facilitated the grossest accumulation of monopoly power since the Robber Baron era in America. Amazon is the new Standard Oil. There is a further, crucial distinction to be made here; the separation, or lack thereof, between political and social freedoms, and economic freedoms.

Social democracy maintained a distinction, understanding that democracy itself is an organising principle predicated upon a society of individuals with equal political and social rights, but that capitalism and markets may produce inequalities that act as barriers to the exercise of positive political and social freedoms (i.e., freedom to). For example, a nominal political and social freedom of freedom of expression is of little use if individuals in society lack literacy due to poor education, and therefore cannot exercise their right fully. Thus, negative political and social freedoms (i.e., freedom from), such as the freedom from undue restrictions of society on the right to freedom of expression, can only truly be realised if a society supports the ability of individuals to positively exercise that right, e.g., well funded education systems. Similarly, an unregulated market produces a feudal labour system in which wealth inequalities widen. When individuals and families in lower income occupations begin to lose ground, while on paper they maintain negative freedoms in society, in reality the resulting lack of access to education, healthcare, and secure housing, means the market is creating barriers to their exercise of positive freedoms. They are prevented from fully engaging with participatory democracy.

The neoliberal model retained no such distinction, as the minimisation of the State in favour of individual self-regulation within a supposedly self-correcting, omnipotent free market, positioned the market as the guiding social force: the market became the social order itself. In this way, political and social freedoms became subsumed by the concept of market economic freedoms; this is one of the greatest cons pulled by any organising political or economic ideology in history. It allowed the winners in an unregulated market economy to convince those losing in that market that any State intervention on their behalf, i.e., an economic intervention, was in fact an attack on their very political and social freedoms. Thus, in countries whose political Right have embraced the neoliberal ideology, the destitute and despairing victims of the system are often the ones who most strongly oppose any State intervention on their behalf. This allows the corporate monopolies who govern society, as society is subsumed by the market, to maintain a class of Serfs for an employment market that, for those without education, healthcare, or stability, is a form of indentured servitude.

In this model, there are no positive freedoms of individuals, as positive freedoms - the freedom to - are only bestowed on the corporate and the financial sectors, and market policies. As the only role for the State is to facilitate positive freedoms for markets - the freedom to engage in vulture capitalism - political institutions also become subservient to the market. True freedom from can only be exercised in society if individuals have freedom to, and the neoliberal model is one which fundamentally strips political and social rights from individuals under the guise of economic freedom. As the neoliberal model denied the relational aspect of society, the express implication is that there is no longer a duty to be responsible, because conceptualising freedom only as negative freedoms (the freedom from) removed any positive obligations on responsibility and reciprocity.

This is why "personal responsibility" in a neoliberal context, by its own definition, is at best an oxymoron and at worst a barefaced lie. The neoliberal model operates from a premise that the market is wholly separate from society, and from the State, when in reality any economic system always impinges on society. By denying any relational aspect between markets and society, the neoliberal model operates a form a preemptive gaslighting, where any and all adverse consequences can be swept away as independent of markets. Social factors become the target for blame, as if those very social conditions are independent of economic policy, rather than consequent on them.

Of the various iterations of combinations of democracy and capitalism, the neoliberal model has been a cataclysmic failure, second only to communism of all the 20th Century ideologies. Fascism, as a purely economic model, was highly successful in combining market freedoms with centralised State planning, but its social and political ideologies were so debased that it required total and complete military defeat in order to hit the reset button in Europe. Neoliberalism and communism were both predicated upon a theory of society in relation to the market; the former replacing society with markets, the latter abolishing markets to control society. In both instances, the guiding theories remained nothing more than theory, never producing evidence of their functionality. The sole difference is that the neoliberal model has indeed produced vast levels of wealth, unlike communism. But like communism, the available wealth is concentrated among a narrow elite while a majority of the population exist in relative serfdom.

Both neoliberalism and communism have particular relations between politics and markets; under communism, political institutions take full control of the market, while under neoliberalism, the market controls political institutions. The American Senate is perhaps the most stark example of this, in which the seated members are not politicians, but pay-for-play gatekeepers providing access for the market to influence policy. A system of vulture capitalism was inevitably going to produce vulture politics, because everyone is up for sale. A system of vulture capitalism was inevitably going to produce a political chamber of Joe Manchins. Like communism, neoliberalism essentially abolished social mobility, created a clear delineation between "haves" and "have nots", and stripped whole segments of society of basic dignity. And like communism, neoliberalism is fundamentally anti-democratic, stripping individuals of the ability to be a fully informed participant in the democratic process; the distinction being communism doesn't even pretend to have a democratic system.

The reality is that the festering anger that exists in sections of society in countries like the U.S. or Britain, the corrosion of political independence and integrity, the facilitation of monopoly power, the endemic corruption, the gross inequality and destitution, the erosion of social mobility, and creation of a feudal economic model, is not an accident of history. It is the consequences of adopting a particular economic ideology that subsumed political and social concepts into a market construct of society. The Western countries who embraced this model are now largely incapable of viewing the social/political model and economic model as distinct but inherently related; the neoliberal model only has an economic model, within which the social/political are subsumed. As such, the Western neoliberal model is now incapable of imaginging a different future, because their economic ideology is a religion, insofar as it is grounded on a series of theories, the premises of which are all faith-based. They have no basis in evidence or reality. The fantasy never came true.

The truth is that social democracy is the last system standing. For all the imperfections that any system for organising humans in a society have, social democracy is clearly the only form of democracy that is capable of utilising capitalism in a way that maintains genuine democracy. Of the various ideological struggles from the 20th Century that precipitated the "end of history" rhetoric, these struggles have extended into this early quarter of the 21st Century. Russia and China have revived imperialism from the grave. Economically, however, China offers the more convincing model overall because it combines its social model with free-market capitalism as its economic model. The Chinese Communist Party, ironically for its title, realised that if they wanted to maintain power they could liberalise society or liberalise markets, but not both: they chose markets to retain control of society. They have lifted millions out of poverty in the same 20-year span that the neoliberal model has been plunging citizens into debt, poverty, opioids, and death (literally: declining life expectancies in low income areas).

Primarily society should be concerned with individual political and social freedoms; the economic model should facilitate growth without compromising society. This is the middle ground social democracy strikes, that neoliberal democracy corrodes. This is also why the alternative that China presents to the world is so worrying, because there are plenty of peoples throughout the world without either political and social freedoms or economic prosperity, and they may just take economic stability and better standards of living at the expense of some political and social freedoms. Commentators of the Western neoliberal mould cannot fathom this, because they are incapable of seeing the world through anything other than the economic-freedom-as-political-freedom lens. They are utterly convinced no one would ever trade "freeeedom" Red, White and Blue style, for running clean water and a full stomach, as if a Jeff Bezos serf is free because their belly is full of cheeseburgers and they have the freedom to choose whatever whiskey and drugs will numb themselves to reality.

In this epoch of the ideological convulsions that began in the 20th Century, we have arrived at the end of the beginning. China presents an alternative to the world, but this alternative is, from a political and social perspective, regressive and totalitarian. For democracy to continue to present a more attractive option for people who desire political and social freedoms, but seek economic stability and prosperity, it can no longer continue to operate a system that replaces society with the market, and subsumes political institutions to the market. The model of neoliberal democracy has been an abject failure, because the effect of elevating markets to a primacy is corrosive to democracy. The U.S. and China in 2022 provide a stark contrast of the inevitable relational aspect between markets and society, where the market have destroyed society in the nominally "free" U.S., while it has been expanded in China to provide a basic standard of living while retaining control of society. No doubt to many people around the world, China may provide a more attractive option, if only because it is not America.

Social democracy provides the middle ground, balancing the liberalisation of markets with State intervention as appropriate to facilitate the exercise of positive freedoms of individuals in society.

And society as a whole will always be greater than the sum of its parts.