It is a major question why, in so many countries, the demise of 1980s neoliberalism has led to a relentless focus on the size and efficiency of the state rather than the inherent instability of markets. The post-war social contract has been undermined, and yet, in many countries, the debate has barely begun as to why the system of capitalism is failing to secure prosperity and progress for so many citizens. 

Recent geo-strategic shocks, notably the Covid-19 pandemic, the wars in Ukraine and the Middle East, the ongoing threat of catastrophic climate change, transatlantic tensions, the race for resources prompting trade wars, and the consequent unravelling of the global economic order have each struck like an earthquake at the heart of the institutions and assumptions of western market liberalism that once had the confidence to proclaim ‘the end of history’. Instead, today, it is the ‘end of the West’ that is announced by many.

Over the last decade, many Social Democratic parties have argued for the return of the state. They have never abandoned the concept entirely, although in the 1990s many parties were inclined to believe that the state was becoming weaker in the face of globalisation. In the 2010s, several centre-left governments accepted policies of austerity in the belief that the active state was no longer affordable. As such, the turn today is an attempt to learn lessons while insisting that only an active state can protect citizens from the new threats and insecurities – at home, in the loss of secure jobs and livelihoods wrought by the rise of new technology, climate change and globalisation; elsewhere, in the new threats from rogue authoritarian regimes and dictators on the periphery of Europe. 

We know that, regardless of recent scepticism about the role of government, Social Democracy historically in Europe has been heavily reliant on state power. In truth, too many centre-left parties refused to recognise the extent of popular dissatisfaction among voters with the efficacy of the state. In recent decades, there was a visceral backlash against the state in many societies, which quickly lost legitimacy as a result. This was partly driven by the new right critique of ‘big’ government: the argument in many countries was that government bureaucracy was inefficient and overloaded, absorbing too large a share of scarce resources. Other pressures on the social democratic conception of the state, such as the ageing society and changing demography, threatened to render the traditional welfare state unaffordable. And that while its protective powers are neither adequate nor sufficient, the welfare state has also lost its important historic role as a vehicle for social mobility that could fulfil working people’s aspirations. However, voters’ concerns about the state could not be blamed merely on the ideologues of the New Right. Many citizens became rapidly disillusioned with the collective provision afforded by the welfare state, both in its coverage and quality.

There were other reasons for growing dissatisfaction with the state. The increasing size and complexity of modern government, as well as the perpetual narrative about ‘polycrisis’ and the circumstances that remain beyond government’s control, made it more difficult for citizens to understand who makes decisions and who should be held accountable. The professionalisation of politics had already ‘outsourced’ policy-making decisions into the hands of experts, but now the development of technologies and scientific innovation increasingly placed decision-making power in the hands of consultative bodies appointed by the state, undermining liberal forms of representative and participative democracy. Large-scale bureaucracies thus risked fuelling citizen disengagement and declining trust in the political system. Many citizens feel the state no longer trusts them, and they grow disillusioned and angry towards the state in turn. In these circumstances, a new debate about the role of the state is more necessary than ever. 

First, there is an urgent need for new capacities and instruments to exercise collective power locally, nationally and globally. Of course, it is an illusion that the nation-state acting alone can shield citizens from rising threats and insecurities. It is important to recognise the nature of interdependence and the meaning of shared sovereignty in the light of a changing internationalist agenda – whether European integration, climate change or the response to humanitarian crises. Governments need to work with citizens, where necessary sharing responsibility and moving away from a transactional model of delivery where the state does things ‘to’ and ‘for’ people to an approach whereby the state and citizens act in partnership.

Second, we need to better determine how the state can steer markets and reshape capitalism in the public interest. What combination of tools, laws, regulations, capacities and instruments is required to ensure that market economies achieve the optimal combination of economic efficiency, social justice and societal progress? Given the imperative to re-arm Europe and meet the economic challenge posed by the Trump presidency, there is much greater scope for active government intervention and well-designed industrial policy.

Third, we need to work through how best to reform welfare states, given that this is the function of the modern state many citizens regularly encounter in their daily lives. The Beveridge welfare state is not meant to be put on a pedestal and defended at any price. The welfare state will need to adapt to new challenges, including becoming more responsive to citizen’s needs, aspirations and preferences. The public sector has to match the convenience and flexibility that is so often afforded by the private sector. And it has to build on the impressive achievements the world of science, research and technologies has harnessed. This is yet another means to re-empower the state by making its institutions thrive in the modern era.

Fourth, it is necessary to clarify how the state can reconnect with citizens through the decentralisation and devolution of political power, ensuring that people are involved in the making of decisions that affect them. While decentralisation of state responsibilities is not a panacea for all social and economic ills, research by the Organisation for Economic Co-operation and Development (OECD) indicates that decentralisation increases confidence in democracy while promoting more regionally balanced economic growth and development. This also means a serious focus on the role of civil society organisations, trade unions and citizen’s movements, focusing in particular on the political participation of young people.

This revived focus on the role and purpose of the state means bringing ideas back into mainstream debates about the future of European Social Democracy. Success is hardly guaranteed, for events can conspire against the best ideas. Yet without ideas, there is no hope. 

Photo credits: Shutterstock.com/Vitalii Vodolazskyi