Does Social Democracy work?

I'd like to ask this because I'm too economically illiterate to pick my team in the never-ending war between Keynesians and neoclassicals. So far from what I've read is that Social Democracy leads to inevitable crisis by stifling growth, innovation and investment which is all necessary for capital accumulation under capitalism which eventually results in stagflation.

I think as socialists, we are free to argue with both the neoclassical criticisms of Social Democracy as well as defend it, because both, Neoliberalism and Social Democracy are, are just flavors of capitalism which we reject alltogether. What I like to know is, under a capitalist system, does Social Democracy work?

Also, will Social Democracy in the long term always be subjugated to a "neoliberal shocktherapy" or is this avoidable?

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It works at postponing capitalism's collapse, until the rich get tired of it.

Do they really tho? Under the New Deal porky had the most prosperous time ever. People actually have money to consume shit.

Yes and no. Anwar Shaikh Explains this, if you are 'economically illiterate', I suggest you educate yourself:

youtube.com/playlist?list=PLQzsQMPHKEXFsc6KwjFP1M546nnSpduF5

TLDR: Social democracy saves the system, but profitability takes a hit, so porky eventually undoes it in their drive for profit. Essentially,

The workers had money to consume shit, porky had a 90% top marginal tax rate. 98% during WW2. Granted, the rich still had a fuck ton of money, but its a natural tendency of capitalism that the rate of profit falls over time, you can't do succdem today because the profits aren't there to redistribute. The rich still overall have more money (the mass of profit), even though the 'rate' of profit is less.

New deal was an aberration by the fact that America was one of the few industrialized countries in the world that wasn't exploded to the ground by WW2, after a few decades those countries rebuilt and started to compete again, not to mention the third world getting more developed. Porky can't afford to give labor bonuses and also he doesn't particularly feel the need to now that the cold war is over and most workers feel there is no alternative to capitalism anyway. What are they going to do? nothing.

This, Liberals are spooked by FDRism, neoliberalism wasn't some evol conspiracy cooked up by Hayek to destroy the working class and leftismwell… actually it was but it was also necessary to resolve the crisis capitalism had come to in the 1970s as a result of unions having too much bargaining power, and indexing their wages to inflation leading to the 'stagflation' of the 70s, where prices would inflate, wages would inflate, causing prices to inflate, and so on. Neoliberalism was needed by not just porky but the system itself to get out of its malaise, it was the only thing porky could do to fix the system at the expense of fucking the working class, but also restoring profitability

Why tho? Is it because Marx was right about the falling rate of profit? Is it because of globalization (outsourcing) and general slowdown of technological advancement?

Also, wasn't most of the profitability in the 50s caused by state investments? Couldn't a lower rate of investment be compensated by a huge public investments?

Also thanks for the answer

WAKE ME UP

Globalization, outsourcing, and technological advance are here to stay, at least for a while. The falling rate of profit is actually related to automation.


Not exactly, State investments are good for long term things like the highway system, the internet, etc. However, the reason the US was so profitable in the 50s/60s was an export led economy because europe, etc. And their industrial capacity had been destroyed by WW2.


That was Keynes idea and Obama tried it after 2008, with the stimulus and all, but ended up abandoning it because they feared the massive amount of money they were spending was gonna cause hyperinflation, although it never did.

Well as we all know, the economy has been stagnating since 2008, we haven't been in a crisis, but neither has the system really truely recovered. According to the liberals/keynesians/some Marxist this is because the stimulus wasn't big enough, according to everyone else, its because it doesn't work. Jurys still out, imo

I mean, you could have the government spend money but there's a limit to how much you can deficit spend as well. Eventually if profitability doesn't come back you're stuck. Succdem just extends to life of capitalism and makes it slightly less crappy, but it can't really 'save' them system in the historical long run.

These are actually really complicated topics in economics, even Marxian economics. Here's a blog on Marxian economics I like to read:

critiqueofcrisistheory.wordpress.com/

Its interesting stuff, he occasionally talks about politics and history as well.

no

CAN'T WAKE UP

Ok someone explain to me what the fuck this graph is showing here, I'm an economic illiterate tbqh

The thick black line is the rate of profit (surplus value divided by the capital invested in a given cycle), the dotted line is basically labour content of a given commodity, and the grey bars are an approximation of the organic composition of capital (money invested in machines and tools divided by money paid to workers).
The 3 thin curved lines are trend lines corresponding to each.

The graph basically shows increased investment in fixed capital (machines and tools) relative to variable capital (labour power) correlating with a fall in the average rate of profit.

Yes, unlike communism.

SAVE ME

SAVE ME FROM THE NOTHING I'VE BECOME

It is much more utopian than communism, it cant work because of objective economic laws

It would work if SocDems would just fucking listen to us and implement a Land Value Tax. I swear every time I bring LVT up to a SocDem I get either, "Its too outdated" or "Muh Income Tax" completely ignoring LVT works like an unavoidable progressive tax and is extremely malleable.

georgist detected

Look at Venezuela and tell me.

this wasn't really due to excessive union pay demands, but due to a collection of banking factors as part of a more general business cycle, cost-pull inflation from oil prices, poor fiscal policy, shocks from free-floating currencies, and a failure to increase taxes to fund the vietnam war.

Really I've always wondered what would have happened if we went down the statutory prices-and-incomes policy route instead of the deregulation and smash the workers route. (There would still be a power swing back to capital, but it would be managed bloodletting rather than beheading.)


part of the problem with Obama was that he believed the money multiplier was anything but a meme. All the money poured into banks has basically just died or gone straight into the pockets of the rich (who don't consume it, so it doesn't really stimulate anything.)


One thought here: It's always memed that if you factor in total compensation then these two remain aligned - but doesn't that just mask any distribution-effects inside the thing? (i.e. total compensation matches productivity, but only a few upper-middle tier workers have seen their compensation rise in terms of the company carrying ballooning healthcare costs, while everyone else is underpaid.)


I like LVT but every time you post that supply and demand chart I'm inherently suspicious because muh flat supply curve and muh demand curve can be any shape at all except intersecting itself.


undeveloped countries exist for every ideology.

What do you mean by "work"? Social democratic countries have been successful at capitalism. Social democracy also inevitably requires a Wall to prevent exploited third-worlders from entering and breaking the welfare state (read: demanding what is rightfully theirs). This makes Social Democracy inherently fascist - an in-group must be defined for social democracy to exist. This is why Social Democracy should be opposed, along with all forms of social welfare spending.

...

People will still be encouraged to move from poor countries to rich countries for the promise of welfare and a better life. Enforcing a neutral balance of trade could still lead to more advanced blocs like the EU having a neutral balance with one another, while still not trading with the third world, and giving incentives towards migration, necessitating a border, and before we know it we're back to fascism.

Left-socdem works the best out of any system being tried out today. Everyone says they hate socdems until of course one runs for office, like Sanders, then everyone is sycophantic.

Most politics to the left of left-socdem is just LARPing

lol
pre-scarcity idiots go back to Holla Forums

That's why I noted structuring things. Presumably once the system was stabilised you could do something along the lines of artificially setting the trade-deficit of developing nations higher than it really is while not applying the penalties that usually entails, encouraging other countries to throw surplus into it just to get some stuff.

Also if the EU became a totally self-sufficient bloc (i.e. zero trade elsewhere) then it wouldn't be exploiting the third world. The main undesirable element of the relationship (except of course the arbitrary restriction on travel) is the wealthy countries extracting far more from the poor countries than they would do in their own (i.e. lower wages and safety regulations.), if you cut international trade entirely that goes away.

I'd also draw emphasis to the way you could (relatively) easily have open-borders fascism, provided the migrants express loyalty to their new homes, and the risk of brain-drain if flows of people are unilateral. one wonders if we could have an international migration union to ensure people are given incentives to move around as required most, in addition to a clearing union. More as a thought experiment than anything else. I mean by that stage I might as well just advocate one world socdem government.

I mean, there will always be a set supply of land so unless we can suddenly create more of it there will always be a flat supply line. The chart shows how the burden of the tax falls completely on the land owner as the rent or cost becomes what the buyer or renter is willing to pay rather then the expense the landlord is charging. The landlord/landowner now has to conform to the tenet and use his land efficiently in order to not fall into debt. An important thing to note as well is that natural resource extraction is also taxed as it also uses limited community owned supplies. If you get the time read Stiglitz, he puts it better then I can.

Just look at Europe today. Social Democracy is running Europe into the ground.