2. Socialism, Social Democracy, Neoliberalism

After the Soviet Union collapsed, socialism experienced a decline in popularity and the neoliberal ideology attained worldwide hegemony. Since then, many countries around the world have been privatizing their industries, liberalizing government restrictions and deregulating markets. These measures are supposed to make the economy as efficient as possible and, hence, provide the highest degree of prosperity to society. However, the economic crises of the last years reopened the debate about the most suitable socio-economic system and gave social democrats and even socialists new ideological upwind. Based on the first five policies on the politics table, their ideological positions will be illustrated on the following pages.

Socialism

Socialism is a term that was coined by French political theorist Henri de Saint-Simon in the 18th century and popularized by the works of Karl Marx and Friedrich Engels. In its essence, the broad range of societal frameworks being labeled as socialist has two goals in common: The socialized ownership of the means of production (for example through nationalization) and the abolishment of private property. Thus, it can be termed as the transitional phase before communism with the government acquiring the crucial task to centrally plan the economy. Socialists believe that cooperation is at the heart of human nature and that wealth should be distributed as equally as possible. Thus, they argue that cooperative action has not yet fully developed because the capitalist system forces individuals to compete with one another while others exploit their labor power by skimming off the generated surplus value and, thus, accumulating capital. Socialist thought was especially prominent around the 19th century and partly lost its influence after the collapse of the Soviet Union.

Social Democracy

A Social democracy can be described as a combination between a representative democracy and a capitalist economy. Social democrats are heavily influenced by the works of John Maynard Keynes and Karl Polanyi and, thus, favor the expanded role of the state in social and economic affairs, an extended welfare state as well as the regulation of labor markets to provide solid labor protection. Therefore, social democracies usually feature a mixed economy, meaning an economy consisting of elements from both a planned- and a market economy.

Yet, social democrats still emphasize the vital role of private businesses in the functioning of the economy. In their view, the capitalist system can benefit all of society as long as it is properly supervised and embedded in a framework of tight regulations. In the western world, the underlying Keynesian ideas were especially prominent from the 40s until the 70s with many scholars arguing for their gradual comeback.

Neoliberalism

Neoliberalism is considered as the evolution of classic liberalism and supports the role and functioning of free-markets and personal and entrepreneurial freedoms. Backed by authors such as Ludwig von Mises and Friedrich August von Hayek, its proponents are advocates of laissez-faire economies. For them, the price system is a practical expression of the market, something that would only be distorted by government interventions such as tight labor market regulations. Therefore, in their eyes, the main driver of a healthy economy is the competition between individuals as well as companies and should be enabled by extensive privatization efforts. Since the 1980s, many states have begun to reject Keynesian policies and, instead, embraced market-based economies. This made neoliberalism the hegemonic political and economic philosophy in many parts of the world, although many scholars argue that the recent crises are paving the way for its decline.