Social investments

In times of failing economic demand, Keynesian economic theory famously suggests that governments should act in a counter-cyclical manner and boost demand through investments. Developed in direct reaction to the paralyzing austerity and non-activism of the 1930’s, Keynes’ work showed how government belt-tightening, far from restoring economic confidence, had put the economy into a dangerous tailspin.

Today, many people on the Left (but also those with a very different ideological outlook) argue for financial expansionism in response to the prolonged economic crisis. Yet, the situation today is fundamentally different from the situation in the 1930’s. With an ageing demographic and mountains of public debt already accumulated in many countries, it is doubtful that simply spending more borrowed money will be helpful, in particular in a world of international finance and open borders. If anything, it could hasten insolvency and state bankruptcies. This is why I repeatedly have argued that instead of simply spending more, we have to take this opportunity to reconsider what we spend our money on. In essence, my argument has been that if the Left had any imagination, it could have used this crisis to challenge entrenched interests ranging from the military-industrial complex to agricultural subsidies.

Yet, considering that this may be extremely difficult in political terms, a first preliminary step would be to think hard about the role of social investments. Despite the overwhelming success of welfare capitalism in Sweden and elsewhere, many people on the Left have remained ideological hostage to Marxists thinking. Instead of embracing the possibilities of functional socialism, they have insisted that exploitation is an inseparable feature of capitalism and continued to advocate confrontation as their main political strategy. In some countries, such as Sweden, the talk about “resisting capitalism” may have been mostly rhetorical, yet it has definitely reinforced social polarization and made it more difficult for people on the Right to see how they would benefit economically from greater equality and a higher rate of social investments.

While it may be theoretically simple to refute the idea that there is a trade-off between economic efficiency and equality (in an advanced knowledge economy, the rich benefit much more from having more people contributing with creativity and imagination than from the short-term gains that can be had through exploitation), the spectre of this kind of ideas still pops up everywhere, in particular when analysing economic globalization. What is needed is a counter-story, one that persuasively shows how investing in other people, both at home and abroad, make us all better off than we would ever be through exploitation. Considering the work of Peter Lindert (but also people like Gøsta Esping-Andersen), this should be fairly simple. What is often missing however is the radical imagination, the capacity to imagine what all this could mean if we dare to follow our own thoughts into the future.

However, it is precisely when we follow that thought that we begin to realize why the Left has been so hesitant about radical social investments. Draped in working-class nostalgia and uncertain about the long-term goals of emancipation (as seen not the least in its ambivalent stance towards feminism), the Left has become fundamentally uncertain about what purposes its politics should serve. Tied down by postmodern quibbles, people on the Left in academia have not been of much help either. Always quick to criticize “global capitalism”, these academics have had almost nothing to say about what could replace it and how the material needs of the rising poor should be satisfied without causing ecological mayhem.