Making Capitalism Fit For Society, by Colin Crouch

Chris Pierson considers a pitch for ‘assertive social democracy’ in an age dominated by neoliberalism

August 22, 2013

Colin Crouch has written a tract for our times. This is a tricky undertaking, especially if you are a social democrat. It is an enterprise with a lengthy track record of disappointment. There has hardly been a year since the early 1980s in which social democracy has not been renewed, recalibrated or rebranded. And here we all are: in a society in which social mobility has stalled, working life is increasingly precarious (especially for the young) and with income inequality at levels last seen in the 1930s.

Crouch’s pitch is for a newly “assertive social democracy”, which he contrasts with the prevalent “defensive social democracy”. In the opening chapter, he presents us with an unblinking account of just how bad things have become. From here, he moves to his key suggestion, that “we are all (partly) neoliberals now”. With his tongue only just inside his cheek, he offers us a typology of three kinds of neoliberalism.

First is the one dreamed of by the “true believers” who would like to take us off to a libertarian wonderland. “Actually existing” neoliberalism is what we have in Britain (and elsewhere) today. It shrouds itself in a Sunday celebration of the freedoms of the market but is, in fact, a kind of “crony neoliberalism” in which political elites act in concert with business elites in a cosy coalition to fleece the rest of the nation. His third (and preferred) form of neoliberalism he identifies with the reformist social democracy of Germany’s Social Democratic Party (post-1959) whose golden rule was “as much market as possible, as much state as necessary”.

There has hardly been a year since the early 1980s in which social democracy has not been renewed, recalibrated or rebranded

We have to accept capitalism; indeed, we have to accept some form of neoliberal capitalism, because it is the only system that can produce the goods and is consistent with the freedoms that liberal peoples value. The rest of the book points us in the direction of those reforms that can deliver this switch in neo-liberal governance: global disciplining of footloose capital, a “social investment welfare state”, and a revival of the “European project” along more socially progressive lines.

Early in the piece, Crouch recognises that what social democrats really lack is not ideas but power. But this is just where Making Capitalism Fit for Society fails to go. There are plenty of good policy ideas in this book. But this is absolutely the “defensive social democracy” that Crouch wants to supersede. In fact, his thumbnail history of social democracy (and liberalism) is just too short. The early social democrats (and the new liberals) recognised that progressive political forces had to address the systemic power of private capital.

They chose the route that they did after 1945 because they believed that a changed political economy – Keynesianism plus the welfare state – gave labour and its allies a power base with which to resist the impositions of capital. In its most optimistic form (in Anthony Crosland’s The Future of Socialism), this wasn’t really capitalism any longer. This optimistic prognosis turned out to be profoundly wrong. What we face now is not 1959 but 1890 – and without the ascendant power of the unions.

This is not an argument against all the sensible and imaginative policy suggestions made here. It is just a plea to stop pretending that some sort of neoliberalism is what we want. It isn’t. And we had better think about how we can change it, not least because of the global environmental issues that Crouch flags but does not really engage with. In the great division of intellectual labour, someone needs to be thinking very hard about what these alternatives should be. It just probably shouldn’t be someone in Ed Miliband’s office.

Making Capitalism Fit For Society

By Colin Crouch
Polity, 216pp, £50.00 and £15.99
ISBN 9780745672229 and 2236
Published 23 August 2013

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Reader's comments (1)

Thank you Chris for this very clear exposition. I heard both David Harvey and Colin Crouch on R4's 'Thinking Allowed'. Both analysed the current situation extremely well, but Harvey I think was more realistic on what happens that he argued that no one has yet come up up with a solution to the current crises. Civil society has to address the cronies but cant do so without a party is one argument, A party has to address the cronies but can't do so without civil society. If our parties are currently captured by the elites. Can we do without a party to capture the state? You point out the need to confront the power of private capital which has reached extraordinary levels of wealth and influence. You finish on the environmental issue....I think that this will drive a new form of politics as time is fast running out to continue to deal with business as usual. According to the IPCC we have a 5-17% chance of the thermohaline circulation halting by 2100 causing catastrophic climate change in the northern hemisphere. it is currently a low probability but high impact event. If 'assertive social democrats' can't get political power to address this risk before then, the climate will do for crony liberalism what social democracy fails to do. i.e. crush it and millions of us with it. The stakes are high.