This month, Daron Acemoglu laments the ills befalling the US economy over the last four decades: slow productivity growth, stagnant median wages, a corporate oligarchy that ‘dominates much of the economy’, and a patrimonial income distribution – an increasing share of national income accruing to ‘capital owners and the highly educated’. In response to these ills, he advocates the panoply of social-democratic policies: centralized wage-bargaining, wage compression, subsidies for productive investment, social welfare policies and public education.
Acemoglu contrasts this form of social democracy, which he finds in 1940s and 50s Sweden, with democratic socialism, ‘whereby companies would be controlled either by their workers or by an administrative structure operated by the state’. This arrangement, he argues, is undesirable, because it ‘cuts the system’s most important lifeline: private ownership of the means of production.’ Not only is democratic socialism unworkable in theory – the experience of 1970s Sweden also proves it to be unworkable in practice.
Acemoglu’s gloss on the history of Swedish social democracy is untenable. There are, moreover, good theoretical reasons to think that the form of social democracy he favours will either degenerate into neoliberalism, or result in democratic socialism.
