We have witnessed in recent years a renewed interest in social democracy. Its appeal is quite understandable.¹ Today this idea is mainly associated with the welfare states that emerged in the postwar era, their memory standing in sharp contrast with neoliberalism and its dire social and political consequences. For many scholars, the state of political instability in modern democracies is a consequence of the downfall of the mid-twentieth-century social democratic consensus. 

The predominant understanding of this term, however, is heavily informed by a liberal appropriation of the history and meaning of social democracy. In praise of the most recent Labour cabinet formed in the United Kingdom, Daron Acemoğlu claimed that social democrats “first moved away from hard left ideas and rhetoric. Then, once in power, they delivered on the concrete improvements they had promised.” This strategy, the author added, led to a “democracy functioning properly and delivering in terms of economic growth, stability, public services, and low levels of inequality and corruption” — a formula that “has worked well for workers’ parties and social democrats elsewhere.”² Behind his assertion that “the social-democratic compact now needs to be refashioned for the twenty-first century” is an account in which any relevant differences between social democracy and liberal progressivism are erased.³ The embrace of liberal principles is viewed as an inevitable consequence of the decision to engage in institutional politics that led, furthermore, to an era of democratic stability. 

The distinct feature of this view is the underlying idea that social democracy and the liberal capitalist order are complementary, both theoretically and historically. In the words of a distinguished scholar on the subject, Sheri Berman, in the social democratic order “the market system was tempered and limited by political power, and the state was explicitly committed to protecting society from the market’s worst consequences.” “Social democracy,” Berman argues, “is a variant of socialism distinguished by a conviction that democracy makes it both possible and desirable to take advantage of capitalism’s upsides while addressing its downsides by regulating markets and implementing social policies that insulate citizens from those markets’ most destabilizing and destructive consequences.”⁴ According to this interpretation, social democracy does not aim to supplant capitalism but to constrain and regulate it. It would help people to “adjust to capitalism, rather than engaging in a hopeless and ultimately counterproductive effort to hold it back.”⁵