Social democracy is more capitalist, more free market, than we are
Sharon Graham, of Unite, insists that “it will be full-fat social democracy - or nothing”. Three of the analyses of what Labour must do next are, we are told, all concentrating on how the supply side of the economy must be reformed. To be more responsive, more efficient, produce better and cheaper. Excellent, we agree, wholly. We’ve even started to make jokes about Manchesterism:
Manchester Liberalism (also called the Manchester School, Manchester Capitalism and Manchesterism) comprises the political, economic and social movements of the 19th century that originated in Manchester. Led by Richard Cobden and John Bright, it won a wide hearing for its argument that free trade would lead to a more equitable society, making essential products available to all. Its most famous activity was the Anti-Corn Law League that called for repeal of the Corn Laws that kept food prices high. It expounded the social and economic implications of free trade and laissez-faire capitalism. The Manchester School took the theories of economic liberalism advocated by classical economists such as Adam Smith and made them the basis for government policy.
We, obviously, agree with this turn of affairs. We’re not, we admit, wholly in favour of social democracy preferring instead a lighter tread of the state upon the people. But we can still point out how to get to a social democracy that works.
Which is, obviously enough, to observe how those social democracies that work - the Nordics - do so. They’re markedly more free market, more capitalist even, than Britain or even the United States. We could even say more Manchester. There are no economy wide minimum wages, capital taxation is lower than our own, there’s less state and government intervention into the economy. Failing businesses fail and clear the ground for the new and innovative not get propped up for more decades of wealth destruction.
It’s true, the state as a whole then taxes and redistributes more. It does so not from the wealthy but from all - all pay for those glories of that welfare state. It is also hugely less centralised than the UK system. Active taxation, spending and policy takes place at the county, even commune, level not some dismal tower block in the capital city.
This is, exactly, that concentration upon the supply side the groupuscules within Labour are now proposing. It is also that full-fat Manchesterism. Run the economy - who produces what, how, at what price - on as free market and capitalist lines as anyone can bear to stand. How the wealth so produced is distributed is the social democratic question. We think not very much by the state, others will think rather a lot. But the reason this is the only form of social democracy that works is that this is the only form that actually produces that wealth to be distributed. That concentration upon the supply side, markets red in tooth and claw.
Now, if anyone’s interested in exactly how to gain that supply side boost we’re wholly willing to have a chat and advise. This is, after all, what we’ve been doing these past decades, telling people how to boost the supply side of the economy. As Polly T has been saying for decades: “We must be more like Sweden”. On the supply side of the economy at least….
Tim Worstall