A decade after the last financial crisis which roiled the world, it has become obvious to most observers that more than facile cosmetic “tweakings” are needed for us to return on the path of sustainable development. This conclusion has forced many leaders of countries in crisis to re-examine the structural bases of their economies in an attempt to craft comprehensive and coherent responses that go beyond merely ameliorating symptoms. Such fundamental reappraisals have raised the demand for us to go beyond merely aspiring for “democracy”. Our expected oil revenues from 2020 demand that we discuss this issue.
The triumph of the neo-capitalist model over the socialist alternative at the end of the 1980s was supposed to have delivered us to the “end of history” and beyond ideology. The victorious neo-liberals never felt it necessary to really articulate an “ideology”, they merely elaborated its tenets as “common sense”. Its most popular exposition, dubbed the “Washington Consensus”, was merely the title an economist tagged on to his compilation of demands made by the IMF/World Bank on faltering Latin American economies.
However, after the collapse of the neo-liberal project in 2008, it is clear that the extreme ideologies – pure socialism and unfettered capitalism – have both failed: the former because of insufficient incentives, and the latter because of booms and busts, unproductive speculations, uncontrolled negative externalities, and unfettered greed. As most of the countries attempt to pick up the pieces from the neo-liberal tsunami, they are all – to a lesser or greater extent – adopting policies from the “middle-way” social democratic (S.D.) tradition pioneered in Europe over a century ago.
These include a “mixed economy” of both privately and publicly owned enterprises; a wide range of subsidised or publicly provided social services, especially health and education; rigorous regulation of enterprises for the benefit of wider societal interests; progressive taxation; rule of law; and social justice and entrenched human rights, etc. Those counties that held on to their S.D. policies to a greater degree, such as Germany and India, have fared better than those that plunged deepest into the neo-liberal vertigo of market fundamentalism – such as Britain and the US. The latter duo’s praxis, dubbed “Anglo-American” capitalism by the Germans, have however still denied the assumption of any ideology.
At onset of the crisis, the greatest focus was placed on rescuing the financial system, which had crumbled because of the false assumption (market fundamentalism) that the self-regulated market could best spread the risks it was supposed to intermediate. In S.D. fashion, governments have had to move in massively at both the national and international (IMF) levels to stop the haemorrhaging, which is still ongoing. As the crisis inevitably spilled over into the real economy, the major S.D. tools of governmental fiscal and monetary policies were ratcheted up; they had become standard after WWII. This is also ongoing.
There is now an acceptance of the fundamental S.D. position that Government must play a greater role in ensuring the goals of society are fulfilled, and the primary goal is that programmes must deliver the greatest good to the greatest number (in all social groups), and not just to the top one per cent. With this in mind, it is quite appropriate that other S.D. programmes for social justice are being proposed at this juncture.
The collapse of the neo-liberal paradigm does not mean an atavistic return to the ideas, policies and practices of the postwar social democratic era. Social democrats must also learn from the mistakes of that era, and retain what was valuable in the failed experiment, including a commitment to sound fiscal policy and a rejection of protectionist restrictions on trade in goods and services. This constant adjustment to the test of experience rather than arguing only from first principles is the distinguishing feature of the ideology of social democracy.
It is hoped that as Guyana gears up for the next General Elections, the political parties entering the fray would situate their programmes within a coherent paradigm of development.