The Social Democratic Illusion, by Wallerstein
Source Louis Proyect
Date 11/11/15/12:33
The Social-Democratic Illusion
Commentary No. 313, September 15

SOCIAL-DEMOCRACY HAD its apogee in the period 1945 to the late
1960s. At that time, it represented an ideology and a movement
that stood for the use of state resources to ensure some
redistribution to the majority of the population in various
concrete ways: expansion of educational and health facilities;
guarantees of lifelong income levels by programs to support the
needs of the non-”wage-employed” groups, particularly children and
seniors; and programs to minimize unemployment. Social-democracy
promised an ever-better future for future generations, a sort of
permanent rising level of national and family incomes. This was
called the welfare state. It was an ideology that reflected the
view that capitalism could be “reformed” and acquire a more human

The Social-Democrats were most powerful in western Europe, Great
Britain, Australia and New Zealand, Canada, and the United States
(where they were called New Deal Democrats) – in short, in the
wealthy countries of the world-system, those that constituted what
might be called the pan-European world. They were so successful
that their right-of-center opponents also endorsed the concept of
the welfare state, trying merely to reduce its costs and extent.
In the rest of the world, the states tried to jump onto this
bandwagon by projects of national “development.”

Social-democracy was a highly successful program during this
period. It was sustained by two realities of the times: the
incredible expansion of the world-economy, which created the
resources that made the redistribution possible; and United States
hegemony in the world-system, which ensured the relative stability
of the world-system, and especially the absence of serious
violence within this wealthy zone.

This rosy picture did not last. The two realities came to an end.
The world-economy stopped expanding and entered into a long
stagnation, in which we are still living; and the United States
began its long, if slow, decline as a hegemonic power. Both new
realities have accelerated considerably in the twenty-first century.

The new era beginning in the 1970s saw the end of the world
centrist consensus on the virtues of the welfare state and
state-managed “development.” It was replaced by a new, more
rightwing ideology, called variously neo-liberalism or the
Washington Consensus, which preached the merits of reliance on
markets rather than on governments. This program was said to be
based on a supposedly new reality of “globalization” to which
“there was no alternative.”

Implementing neo-liberal programs seemed to maintain rising levels
of “growth” on stock markets but at the same time led to rising
worldwide levels of indebtedness, unemployment, and lower real
income levels for the vast majority of the world’s populations.
Nonetheless, the parties that had been the mainstays of the
left-of-center social-democratic programs moved steadily to the
right, eschewing or playing down support for the welfare state and
accepting that the role of reformist governments had to be reduced

While the negative effects on the majority of the populations were
felt even within the wealthy pan-European world, they were felt
even more acutely in the rest of the world. What were their
governments to do? They began to take advantage of the relative
economic and geopolitical decline of the United States (and more
widely of the pan-European world) by focusing on their own
national “development.” They used the power of their state
apparatuses and their overall lower costs of production to become
“emerging” nations. The more “left” their verbiage and even their
political commitment, the more they were determined to “develop.”

Will this work for them as it had once worked for the pan-European
world in the post-1945 period? It is far from obvious that it can,
despite the remarkable “growth” rates of some of these countries –
particularly, the so-called BRICs (Brazil, Russia, India, China) –
in the last five to ten years. For there are some serious
differences between the current state of the world-system and that
of the immediate post-1945 period.

One, the real cost levels of production, despite neoliberal
efforts to reduce them, are in fact now considerably higher than
they were in the post-1945 period, and threaten the real
possibilities of capital accumulation. This makes capitalism as a
system less attractive to capitalists, the most perceptive of whom
are searching for alternative ways to secure their privileges.

Two, the ability of the emerging nations to increase in the short
run their acquisition of wealth has put a great strain on the
availability of resources to provide their needs. It therefore has
created an ever-growing race for land acquisition, water, food,
and energy resources, which is not only leading to fierce
struggles but is in turn also reducing the worldwide ability of
capitalists to accumulate capital.

Three, the enormous expansion of capitalist production has created
at last a serious strain on the world’s ecology, such that the
world has entered into a climate crisis, whose consequences
threaten the quality of life throughout the world. It has also
fostered a movement for reconsidering fundamentally the virtues of
“growth” and “development” as economic objectives. This growing
demand for a different “civilizational” perspective is what is
being called in Latin America the movement for “buen vivir” (a
liveable world).

Four, the demands of subordinate groups for a real degree of
participation in the decision-making processes of the world has
come to be directed not only at “capitalists” but also at the
“left” governments that are promoting national “development.”

Fifth, the combination of all these factors, plus the visible
decline of the erstwhile hegemonic power, has created a climate of
constant and radical fluctuations in both the world-economy and
the geopolitical situation, which has had the result of paralyzing
both the world’s entrepreneurs and the world’s governments. The
degree of uncertainty – not only long-term but also the very
short-term – has escalated markedly, and with it the real level of

The social-democratic solution has become an illusion. The
question is what will replace it for the vast majority of the
world’s populations.

[View the list]

InternetBoard v1.0
Copyright (c) 1998, Joongpil Cho