Social democracy and globalisation: the limits of social democracy in historical perspective

This article argues that social democratic governments throughout the 20^th century faced internal and international constraints arising from the operation of capitalist economies and that the evidence for a qualitative deepening of such constraints since the collapse of the Bretton Woods system is far from unequivocal. Financial markets were already big enough and fast enough to deter such governments from the pursuit of egalitarian policies in the interwar years or to destabilise them if they ignored the warning signs. This article also shows that the efficacy of Keynesian macroeconomic policy in the Golden Age has been exaggerated and that the problem of short–term movements of speculative capital persisted throughout this era in a country such as Britain. Keynesianism never worked in the face of mass unemployment and it is misleading to suggest that its breakdown in the 1970s somehow robbed social democracy of the policy tools that had maintained full employment in the 1950s and 1960s. A host of additional problems have indeed beset social democratic governments since 1973, but the analysis of such problems is hindered rather than helped by much of the literature which invokes economic globalisation. Globalisation theory is in need of further specification before it can be useful and arguments about the economic consequences of globalisation since 1973 need to distinguish its effects from those of the many conjunctural problems of the period as well as the policies that important agencies have pursued in search of solutions to them.