Tuesday, June 10, 2008

Review: The Dilemmas of Social Democracies: Overcoming Obstacles to a More Just World

The Dilemmas of Social Democracies: Overcoming Obstacles to a More Just World by Howard Richards and Joanna Swanger

Put in general terms, the point of the book boils down to this:
1. "Expecting people to be motivated to act to meet other people's needs by a desire for economic gain or profit is only a partial answer to the problem of motivation, not the whole answer."
2. "Expecting the price-signals generated by supply and demand in markets to tell people how to act to meet other people's needs is only a partial answer to the problem of guidance, not the whole answer."

So far, it sounds like the authors are in the mainstream Unitedstatesian liberal/European social democrat stream of thought. Let's stick with liberal economics, capitalism, but put some soft stockings on the market's invisible foot so it's stomping doesn't hurt so much. But then...

3. "To the extent that a society depends for meeting people's needs on profit motives and price-signals, measures designed to alleviate poverty, which weaken profit motives and/or distort price-signals, are likely to backfire."

This sounds like the same thing that conservatives will say, that the good intentions of the liberals/social democrats are actually counterproductive, and do the opposite of what is intended, thanks to the counterintuitive but immutable laws of economics.

The authors wouldn't disagree, except they would note that "economics" should not be reified and turned into universal laws like the laws of physics. On those (vanishingly rare) occasions when neoliberal economics is correct about the real world, it is only so because the governing customs are those of neoliberal economics.

What the authors' argument boils down to is similar to that of the early communists who viewed European social democrats as deluded traitors whose concessions to capitalism would never work, because the intrinsic nature of capitalism - namely, that high profits are essential to ensure investment hence employment and high wages down the road - would not allow the ideals of social democrats to be implemented for long. Without wealthy foreign markets that demand a social democratic country's products, the country will be without the high level of profits necessary to ensure both high wages and high levels of investment at the same time. When once-backward countries caught up and began to produce high quality products using highly exploited laborers - hence at a lower cost of production - social democratic countries simply couldn't compete as well, and their incredibly successful economies finally experienced problems in funding their redistributive policies, much to the relief of neoliberal economists, who previously had been reduced to arguing that these wealthy, egalitarian societies would be even better if only they ditched the policies that made them what they were.

The bottom line is: the underlying constitutive rules of the modern worldwide economy must be changed to allow for motives other than self-enrichment (for a few) and self-preservation (for the many) to operate. Kind of like... socialism.

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