The Assessment: Economic Policy and Social Democracy

The economic objectives of recent governments of the Left were full employment, reducing inequality, and enhancing economic performance and democratic control by measures of planning and socialization. The economic inheritance was difficult--stagnant investment, high unemployment in a number of cases, and inflation higher than that of competitors. The generalized productivity slow-down, slow growth, and the drive to reduce inflation represented an unfavourable context. The supply-side interventions atrophied, were abandoned or reversed. Employment performance was poor overall and sometimes disastrous. Some extensions of the welfare state were achieved and major increases in inequality were avoided, but this record was hardly exceptional. Globalization is often blamed for such disappointments. Here, the emphasis is on the inherent difficulties of the social democratic project--containing distributional conflict other than by unemployment, sustaining support for redistribution when living standards are stagnating, and constraining business while relying on it to maintain high investment. Copyright 1998 by Oxford University Press.