by Pranab Bardhan
Many decades back when I was teaching at MIT, a senior colleague of mine, Paul Rosenstein-Rodan, a famous development economist, asked me at the beginning of our many long conversations what my politics was like. I said “Left of center, though many Americans may consider it too far left while several of my Marxist friends in India do not consider it left enough”. As someone from ‘old Europe’ he understood, and immediately put his hand on his heart and said “My heart too is located slightly left of center”. A 2015 study by psychologist Jose Duarte and his co-authors found that 58 to 66 per cent of social scientists in the US are ‘liberal’ (an American word, which unlike in Europe or India, may often mean ‘left of center’), and only 5 to 8 per cent are conservative. If anything, social scientists in the rest of the world are on average probably somewhat to the left of their American counterparts. If that is the case, for the world in general social democracy is likely to be an important, though not always decisive, ingredient of their ideology. In European politics and intellectual circles there was a time when social democrats were considered the main enemy of the communists, at least in their rivalry to get the attention of working classes, but now with the fading away of old-style communists, social democrats have a larger tent, which includes some socialists of yesteryear as well as liberals, besieged as they both now are by right-wing populists.
In an earlier column on “Prospects of Social Democracy in a Post-Pandemic World” I have discussed how in general the actual or potential strength of social democratic parties may change with the constraints and opportunities of such a world. In this article I go beyond the modalities of actually functioning political parties to a somewhat deeper analysis of the social democratic idea as a balance between some conflicting but also potentially complementary social values, and how this balance may be shifting in our complex world and difficult time, and how that influences the ideological positions of social scientists.
Let us go beyond the over-simple and amorphous left-right distinction (historically originating in particular ways of seating in the French National Assembly) which over the years has become quite misleading, particularly in failing to capture the multi-dimensionality of ideological positions. Let us instead start with the old-style foundational values of Liberty, Equality and Fraternity. The old simple categorization used to be that those who particularly emphasize the primacy of liberty as a social value were called liberals; socialists used to be associated with belief in the primacy of equality or ‘social justice’; and belief in the primacy of fraternity or community solidarity lent to the description of one’s being a communitarian. But things get complicated as there are multiple layers in that trinity of social values, and people, particularly social scientists, in their belief system usually mix the different ingredients of all the three in markedly varying proportions to concoct a smorgasbord that passes for their ideology.
On liberty there is a tradition among philosophers to distinguish between negative and positive forms of liberty—the former to denote “freedom from” undue intervention or restrictions, and the latter denoting “freedom to” do things that enhance one’s self-realization and well-being. Libertarians are preoccupied with the former, democratic socialists often with the latter. Social democrats want a bit of both. To confound matters there are those who describe themselves as “left libertarians”— they combine individual freedom with an egalitarian approach to natural resources. Some of them are opposed to private ownership of means of production, others are skeptical of private ownership of natural resources, arguing in contrast to right-libertarians that neither claiming nor mixing one’s labor with natural resources is enough to generate the claim to full private property rights.
People also distinguish between economic freedom and political freedom, the former primarily relating to private property rights, relatively unhindered operation of private initiative and enterprise, etc., and the latter to rights to free expression and democratic participation.
Milton Friedman openly gave primacy to economic freedom over political freedom. In his 1994 introduction to the 50th anniversary edition of Hayek’s Road to Serfdom, he categorically stated: “The free market is the only mechanism that has ever been discovered for achieving participatory democracy.” In this, he seems to have gone beyond his line of thought expressed in the classic 1962 book, Capitalism and Freedom, where he stated: “History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition.” His 1994 statement implies that economic freedom is a necessary and sufficient condition for political freedom. I think Friedman was generally wrong in this. There are some countries (or long periods in the history of a country) which were politically democratic without a great deal of free markets (the first four decades of independent India can be cited as an example), and there are many undemocratic countries with a lot of free market enterprise — in the Heritage Foundation ranking of countries by Economic Freedom Index, the top position is occupied by Singapore, and Qatar and Rwanda are among those described as “mostly free” countries, and Saudi Arabia, Belarus, Russia and Hungary as “moderately free”. None of these seven countries has distinguished itself in terms of political freedom. This suggests that economic freedom is neither a necessary nor a sufficient condition for political freedom.
(I should narrate here an interaction I had with Friedman himself on a related issue many years back. In a conference where both of us were invited speakers, when Friedman attributed the then widely-acclaimed postwar advance of the Japanese economy, in contrast to the relative stagnation of the Indian economy, to the regulations and controls in the latter, I pointed out to him that the Japanese state was not particularly a paragon of non-interference. His answer, unfalsifiable as it happened to be, was that the Japanese economy would have done even better without the state interference!)
Economic freedom is often described as a key characteristic of the capitalist system. But, somewhat paradoxically for liberal believers in capitalism, the most successful recent case of what many would describe as capitalism is from China under the leadership of a so-called Communist Party, where there is considerable economic freedom in terms of private ownership and markets, both domestic and global, though political freedom is largely absent. While most of the Chinese economy, particularly its dynamic parts, is in the private sector, both in terms of production and employment, there is, of course, the overarching importance of state guidance and control over Chinese capitalism. The success of capitalism is now much too closely associated with nationalist glory. The Chinese leadership can undo individual capitalists at short notice (in recent years some of the richest men of China have been put in jail), but the important systemic issue is that it will find it much more difficult to undo a whole network of capitalist relations, by now thickly overlaid with vested interests at various levels. As China (or Vietnam) is no longer a plausible example, for the anti-capitalists it is now hard to find a significant case of a durably viable and technologically dynamic economy that is run on traditional socialist lines of control. Yet, of course, many dream on.
Economic freedom is associated with market competition, and competition is meaningless if it is not on a level playing field. So liberals who support economic freedom should be in favor of vigorous measures to curb monopoly and business collusion, though not all liberals do this with alacrity. Raghuram Rajan and Luigi Zingales in their 2003 book Saving Capitalism from the Capitalists show how in the US entrenched incumbents, particularly in financial markets, use their power to protect their own economic position and to repress the same free market through which they originally achieved success. It is part of a dialectical relationship between capitalists and markets that capitalists after entering a market try their best to raise barriers to entry for others. Milton Friedman often used to dismiss the importance of empirical cases of monopoly except those brought about or protected by government action. This overlooks many important cases where technology, economies of scale, and network effects generate durable monopoly businesses without much involvement of the government (in today’s world Google and Facebook are obvious examples).
Liberals in emphasizing the importance of individual rights and autonomy recognize the equal dignity of every human being. But there are at least two ways these individual rights come into conflict with rights of a collectivity of individuals in some democracies. First, in many divided societies identity groups are politically salient, and their group rights can sometimes suppress individual freedoms in quite unwarranted ways. For example, in such societies sometimes a book, or a film, or an artwork may be banned if there is even a whiff of a suspicion that it may offend the sensibilities of some group, trampling in the process on an individual’s democratic freedom of expression. A liberal sensitive to identity issues is often torn in this matter. Second, in many countries where there is an overwhelmingly large majority group along with relatively small identity or culture-based minorities, there is a danger of democracy degenerating into a kind of crude majoritarianism, a phenomenon that is now quite common under the leadership of populist demagogues, as in India, Turkey, Hungary, Poland, Russia, Brazil, the Philippines, and elsewhere. A liberal in this context is often pitted against elected authoritarianism.
Finally, for many people liberalism in privileging individual autonomy and freedom often leaves a social vacuum that conservatives are more adept at filling. There is something deeper involved here than the simple fact that many people feel more comfortable with the moral certitudes that conservatives usually offer in contrast with the prickly skepticism of the liberals. In his book On Human Nature the conservative philosopher Roger Scruton was on to something when he distinguished between the liberal individual, self-possessed in her autonomous decisions, consent, contract, and trade, and the conservative individual who endows meaning to her life mainly through her identity in relation to a community with established traditions. If this distinction is important, as it can be in many contexts, liberalism of social scientists can be seriously deficient. We’ll come back to this issue of community later in this article.
The conflict between liberty and equality is often central to ideological differences among social scientists. This conflict was pointed out most eloquently by B.R. Ambedkar, a major architect of the Indian Constitution and a leader of a historically disadvantaged community in India, in his last speech in the Constituent Assembly before the Indian Constitution was set to start operating from January 26, 1950:
“On the 26th of January 1950, we are going to enter into a life of contradictions…..In politics we will be recognizing the principle of one man one vote and one vote one value. In our social and economic life, we shall, by reason of our social and economic structure, continue to deny the principle of one man one value. How long shall we continue to live this life of contradictions? How long shall we continue to deny equality in our social and economic life? If we continue to deny it for long, we will do so only by putting our political democracy in peril.”
This contradiction is now acute in many democracies as economic inequality has reached grotesquely high levels.
What may have been uppermost in Ambedkar’s mind was the social inequalities of India, where low castes had been subject to centuries of oppression, humiliation, and discrimination, and such inequalities are clearly contradictory with equal dignity of human beings that the concept of liberty and democracy connotes. The last seventy years of the Indian case have shown that political equality of democracy can bring about substantial, even dramatic, changes in the access to political power for some hitherto subordinate groups, but vast numbers of the underprivileged continue to remain victims of social and economic inequality.
Economic inequality, like in income or wealth, can also have a direct adverse impact on the quality and quantity of democracy. For example, there has been a popular argument in comparative history, emphasized by the political sociologist Barrington Moore in his 1966 landmark study, that traditional forms of land inequality, with concentration of power in a landed elite, makes emergence of democracy difficult. Similarly, looking at the contrasting development paths in South and North America since early colonial times the economic historians Engerman and Sokoloff have shown how societies with high land inequality at the outset of colonialization (particularly with factor endowments suited to plantation agriculture with slave labor or minerals that could be extracted with forced labor) develop institutions that restrict access to political power to a narrow elite, and block the transition to democracy.
Even for more mobile non-land forms of wealth, economic inequality enables the rich and the corporate sector to pour resources in the political influence machine to get the system to work in their favor, particularly through lobbying, media-shaping, and campaign-financing. All this often results in laws and regulations, along with tax cuts, in favor of wealth concentration and perpetuation of plutocratic power, undermining democracy, or allowing a kind of sham democracy where economic inequality cripples genuine political freedom and competition.
Some egalitarians even go to the extreme of suggesting that in countries with high inequality and poverty liberty is essentially vacuous, mainly allowing for the ‘freedom to starve’ for the dispossessed multitude; they contrast between ‘bourgeois democracy’ of capitalist countries and the ‘people’s democracy’ of more egalitarian countries. With the generally sad experience of many decades of people’s democracies in the recent past, it is probably correct to take the conceptual position that liberty retains some intrinsic value even independent of the value of equality. Similarly advocates of social justice find in egalitarian policies the attempt to fulfill some ethical norms which may be independent of other values like liberty.
Liberals, of course, point out that government policies to redress inequality hurt liberty, as for example when the disincentive effects of progressive taxation to pay for redistributive policies limit the economic freedom for private enterprise, investment and risk-taking. There is clearly an important trade-off here, even if one ignores some cases of socially unproductive risk-taking by the rich (with ‘collateral damage’ for the poor), say, in financial or real-estate speculation. The general social consensus in different countries takes different forms on this trade-off. Many conservatives advocate the environment of low taxes, light regulations, and low government spending as conducive to private initiative and innovations. Social democrats, however, point out that the relatively high tax-GDP ratio in social democratic countries funding a generous welfare state and a more sturdy physical and social infrastructure has actually helped the cause of business innovations, and that a well-provided-for, healthy, educated, and more stable and satisfied labor force has improved productivity and profitability. It has also been pointed out that even in the US much of the basic or foundational research and great innovations of recent times (like the Internet, GPS, Digital Search Engine, Supercomputers, Human Genome Project, Magnetic Resonance Imaging, Smart Phone Technology, and a whole host of others), which private business has made profitable use of, have been facilitated by or been the outcome of public investment funded to a large extent by taxpayer money.
It has been widely observed that people’s attitude to inequality differ according to their belief in the relative importance of ‘luck’ vs. ‘effort’ in an individual’s doing financially well, a belief that varies from one social context to another. Conservatives emphasize the importance of ‘effort’. In a related context, liberals also raise the issue of personal responsibility in discussing the kinds of inequality which are morally permissible. The latter, for example, may pertain to cases where between two individuals facing similar life chances one may end up richer than the other simply because the former is more ambitious or hard-working than the latter. This brings to the fore a distinction between inequality of opportunity and that of outcome. As philosophers, social commentators and the general public increasingly find the issue of personal responsibility in one’s choice or life decision quite socially salient, one can make a clear distinction between opportunity-egalitarianism—seeking to offset only those inequalities that are due to circumstances beyond an individual’s control (like the characteristics of a family or neighborhood a child is born in or its biological characteristics)– and outcome-egalitarianism that seeks to offset even those differences in outcome that are due to an individual’s own choice (say, in blowing away one’s opportunity by indulging in drugs or alcohol) or initiative (or lack of it). Of course, one has to be careful in the transmission of inter-generational inequality when you have to ensure equality of opportunity between children of ambitious or enterprising parents and children of ‘slacker’ parents.
Opportunity-egalitarianism should also be applied to undercut some liberals’ support of meritocracy. What these liberals ascribe to their merit turns out to be often the result of a combination of a set of unequal opportunities in the form of better home environment and neighborhood and social network, landing them with better (at least from the credentialing point of view) educational institutions and job contacts. Such structural advantages masquerading as earned merit are, of course, much more acute in countries with a long history of race or caste oppression.
Some social thinkers ascribe a great deal of value to fraternity or bonds with the community in which one is embedded. This community may include the family, kin groups, neighborhood, all the way to the political community of the nation– all collectivities with which some issues of the individual’s identity may be involved. We have already mentioned that conservatives drawing upon community traditions have tried to deflate the universalistic pretentions of liberalism. Communitarian philosophers like Charles Taylor have criticized what they call the ‘atomism’ of the libertarian concept of self, and suggested that our moral commitments that define our identity and meaning may arise from the social world in which we are located. Gandhi was a major political thinker who combined the liberal emphasis on autonomy and self-realization with the communitarian emphasis on moral duty arising from membership of one’s own community.
In real life fraternity/community can be in serious conflict with both liberty and equality. Traditional patriarchal families or kinship groups can be quite authoritarian in their treatment particularly of younger and female members. The latter, for example, have to accept many restrictions on their choice of work associates and marriage partners, sanctions on departures from due deference to the aged leaders, and injunctions on sharing the benefits from individual efforts and innovations. Furthermore, compared to larger social entities where many rival groups contend, small local community institutions may be more susceptible to capture by local overlords, oligarchs and majoritarian tyrants—think of white supremacists in the localities of US South, the tyranny of dominant castes in Indian villages, or Mafia capture of local institutions in Sicily. In all these cases outside intervention has been necessary to relieve institutionalized systems of local oppression. In India, in the debates during the freedom struggle, Gandhi had emphasized the centrality of the village community, but Ambedkar used to call the Indian village community a ‘cesspool, …a den of ignorance, narrow-mindedness and communalism’.
Today all over the world community-grown identity fanatics following populist demagogues are trying to thwart liberals who display more openness to ethnic minorities and immigrants. Even some (though not all) social democrats in rich countries feel that they have to be responsive to the cultural anxiety on the issues of immigration and multiculturalism expressed by the working classes. Not all ‘social justice warriors’ worry about global justice, as there can be conflicts in the interests of working classes of rich and poor countries.
Social Coordination Mechanisms
Ideological positions vary not just with respect to differential weights given to different aspects of the social values of liberty, equality, and fraternity, but also in important ways relating to the three major social coordination mechanisms society uses in functioning and striving toward those values: the state, the market and the local community. The state versus market is, course, the staple of old left-right debates. Even among the so-called left, social democrats sharply differ from socialists on the role of market and private capital. Among social democrats who allow the mode of production to be mainly capitalist, there are significant differences between those who want the state to be the main funder, but not necessarily the actual provider, of essential public services (education, health, water supply, public transportation, etc.), and those who think that some essential quality in those public services is lost if they are left to profit-making private agencies to provide. On the other hand, state officials may be inept or truant or corrupt, and the political accountability mechanisms are often much too weak to discipline them.
In their advocacy of a strong state the state socialists are sometimes in the uncomfortable company of jingoistic right-wing nationalists. In limiting the job-displacing effects of globalization, pursuing autarchic trade restrictions and promotion of state-directed industrial policy the right and the left sometimes merge. The increasing precariousness of work and all kinds of insecurity now exacerbated by the pandemic have made state effectiveness in social protection against them seem more imperative to people on all sides, though there are some differences among liberals and social democrats on the issue of protecting particular jobs versus protecting incomes.
On the operation of the market mechanism there are differences among liberals: there are those who follow the traditional economics textbook idea of small agents relentlessly competing, and guided by an invisible hand moving toward an efficient allocation of resources, barring some spillover effects from individual actions; other liberals and social democrats think that the market, though valuable in itself, is operated by large clunky bureaucratic entities called corporate firms with necessarily incomplete contracts (where performance or quality cannot be pre-specified in enforceable contracts) and subject to highly imperfect financial discipline, resulting in neither efficiency nor equity. Of all markets social democrats emphasize in particular that the labor market is qualitatively different from other markets, say the market for vegetables—it acts more like a social institution where values of fairness, reciprocity, responsibility, and dignity matter. In such a world markets and socio-political processes are intertwined, and demands for democratizing firm governance become salient.
In poor countries liberals are also divided on the issue of how best to alleviate poverty, some liberals mainly depending on market-fueled economic growth to raise incomes and jobs for the poor (“trickle down”), whereas social democrats find this inadequate and stress the role of the state in pushing through substantial anti-poverty programs. Even right-wing people now by and large accept (more, say, in Europe and India, than in US) the need for adequate welfare policies for the poor—they mainly worry about the inefficiency and perverse work incentives in some of the programs. On trade policy, liberals and most social democrats are generally in favor of trade liberalization, particularly on grounds of keeping imported inputs cheaper and for external competition acting as a disciplining force on domestic product costs and quality, whereas socialists and radical right may insist on more autarchic policies enabling ‘learning by doing’ and self-reliance.
Among the right, there are sharp differences between greed-is-good market fundamentalists on the one hand, and conservatives on the other who dread the encroachments of the market on traditional family values and community dislocations, as much as those following from distant bureaucratic interventions. Contrary to popular impression, neither Margaret Thatcher nor her guru Friederich Hayek were conservative in this sense—Hayek had even a well-known essay titled “Why I am Not a Conservative”.
Among communitarians, at one end there are those who are anti-state anarchists, libertarians (in the US, sometimes fighting for gun rights), and those who are against all hierarchy; at the other end there are those who are comfortable with stable, placid communities held up by hierarchy and deference. Those who are not against the state, but only against centralized state power, sometimes want more devolution of authority to local governments that can be more responsive to local needs and aspirations. At the same time decentralized local governments are sometimes captured (they may be easier to capture than central governments), and when the weak are thereby oppressed by the local powerful, appeals to central authorities for protection and relief are not uncommon. In his book Two Cheers for Anarchism, the political scientist James Scott endorses many of the thoughtful ideas of great anarchist thinkers of the past (like Pierre-Joseph Proudhon or Mikhail Bakunin) on the independent self-organizing power of individuals and small communities for informal coordination without hierarchy, but he recognizes that the state is not always the enemy of freedom and that the relative equality that is necessary for small-group coordination and mutuality can often only be guaranteed through the state.
All this illustrates how the complexities around the three coordination mechanisms of the state, the market and the community can give rise to a whole panoply of ideological positions. Those mechanisms can all do superb coordination jobs in specific contexts and fail utterly in others– we are all familiar with cases of government failures, market failures and community failures; they all have their strengths and weaknesses, and different ideological positions of social scientists often reflect different priors or empirical judgments about their relative importance in different historical contexts.
An Ideological Conundrum
To many social scientists, and political leaders, who are in search of some pragmatic balance between the social values of liberty, equality and fraternity, and between the three social coordination mechanisms of state, market and community, social democracy often seems like the embodiment of an imperfect but acceptable compromise. So there is a chance it will survive despite its current decline in different parts of the world. But there is one major global problem where its efficacy is yet to be seriously tested, that is with respect to the looming problem of the environment, even though the performance of social democracies in Europe and in some other countries (like Costa Rica and New Zealand) has been somewhat better than that of others. In grappling with the environmental problem the systemic issue that social democracy faces lies mainly in its fraught relationship with two durable features of the world order, one is nationalism and the other is capitalism.
Even if social democracy succeeds in defeating the incendiary populist projects of ethnic nationalism and in diverting the mass cultural energies toward some form of civic nationalism (on which I have written in an earlier column, “Coping with Resurgent Nationalism”), it is not clear that social-democratic nation-states will do enough to invest substantially in a global public good like climate change mitigation and adaptation. It may do better than some other alternative political systems, but if current trends are any indication, what’ll be done is likely to be “too little, too late”. On capitalism, which as we have seen, even in a modified form, is an essential ingredient of social democracy, one should point out that it may not deserve the full blame that environmentalists usually tar it with. After all, the Soviet Union, when it existed, was one of the largest polluters in the world. It was industrialization, whether under capitalist or socialist auspices, that caused much of the toxic pollution (the lack of democracy allowed the Soviet Government to do it with relative impunity). One is reminded here of what Gandhi said in an interview in September 1940, pointing to his differences with Jawaharlal Nehru: “…Nehru wants industrialization because he thinks that, if it is socialized, it would be free from the evils of capitalism. My own view is that the evils are inherent in industrialism, and no amount of socialization can eradicate them”.
Even if rich countries (and some middle-income countries like China) could come to an agreement to halt rampant industrialization and with the help of digital technology and renewable energy sources succeed in arresting further environmental degradation in the medium term, what about the poor countries? Vast numbers of young people in the latter countries are unemployed and getting restive, as they feel trapped in the low-productivity informal sector where they scrounge around. Decent jobs in the manufacturing sector are what they hope for, as they often do not have the education or skills requisite for many of the low-pollution digital service jobs. Small-is-beautiful romantics among the communitarians and the greens and the left do not fully appreciate that the scope for creating enough productive manufacturing jobs without the economies of large scale is rather limited (as the unfortunate experience of the small-scale business reservation policy followed for decades in India under original Gandhian inspiration has shown). Also, increasingly the more productive jobs in the manufacturing sector are skill- and capital-intensive. There is probably more scope for job creation in the renewable energy and care-giving services sectors for low-skill workers, but their linkage effects with the rest of the economy are not strong, and it is not clear that they will be enough to meet the massive demand for employment. This general issue will be an ideological conundrum for environmentally-minded social-democratic thinkers in poor countries for quite some time.