Can Social Democracies Survive in the Global South?

To succeed, social-democratic movements in the global South must steer a course toward a society without poverty or social exclusion, avoiding two current utopian projects. The first utopia is a neoliberal fantasy, the self-regulating market. In the words of Karl Polanyi in The Great Transformation, this “would result in the demolition of society,” with humanity “robbed of the protective covering of social institutions.” The second utopia, subscribed to by some tendencies in the global justice movement, advocates “delinking” and “localization” as “post-growth” strategies for achieving environmental sustainability, grass-roots democracy, and genuine community. In contrast, social democracy constitutes what the disillusioned Yugoslav communist, Milovan Djilas, approvingly called an “unperfect society.” The pursuit of perfection leads to despotism, Djilas warned; far better, then, to opt for perpetually “unperfect” societies—like those in Scandinavia—that pragmatically strive to reconcile liberty, equity, and community with the demands of a market economy.

Proponents of the self-regulating market, though still highly influential, have recently seen their ideological hegemony eroded. The erosion was evident by the late 1990s in the increasingly heterodox and critical declarations of influential economists such as former World Bank chief economist Joseph Stiglitz and former “shock therapy” advocate Jeffrey Sachs; in the oft-noted neoliberal “reform fatigue” in developing countries; and in the growing criticism of neoliberal prescriptions by left-of-center governments and popular movements, especially in Latin America. Behind this loss of confidence lies one irrefutable fact: market-oriented reforms in the global periphery have produced disappointing, and frequently destructive, results.

The second utopian project proposes “delinking” from global capitalism. Its proponents reject efforts to reform global governance, claiming that people in the developing world cannot improve their welfare within global capitalism. “Post-growth” or “de-growth” advocates rightly point to the harmful environmental impacts of exaggerated consumerism and unregulated economic expansion. Like “localization” supporters, however, they call for an unrealistic future: self-contained communities and the reduction or even elimination of long-distance trade. Rarely do they acknowledge that economic growth in poor countries can improve well-being. Moreover, “localization” and “post-growth” enthusiasts say little or nothing about how the funds necessary to purchase goods undersupplied locally would be generated or how communities could enforce limits on firm size and long-distance commerce.

If progressive movements in the developing world resist seduction by unrealizable utopias, what path remains? What, in particular, is the likelihood of the emergence and survival of social-democratic regi...