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'''Embedded liberalism''' or the '''Keynesian era''' was a period of [[class compromise]] in [[West]]ern countries in which an [[economic]] and [[ideology|ideological]] emphasis on an expanded social safety net and broad support for [[labor rights]] replaced [[laissez-faire]] [[liberalism]] as the [[hegemonic]] ideology. The shift was a result of several factors, including the massive social and industrial impact of the [[Second World War]], the rise in the bargaining position of the [[working class]] since the 1920s, and the high prestige of [[communism]] aided by the role of communist partisans and [[Soviet]] forces in defeating [[fascism]] in Europe. The term ''embedded liberalism'' was coined by academics Karl Polanyi and John Ruggie<ref>{{cite web | last=Widmaier | first=Wesley | title=Embedded Liberalism | website=Oxford Bibliographies | date=3 Jun 2019 | url=https://www.oxfordbibliographies.com/display/document/obo-9780199743292/obo-9780199743292-0138.xml | access-date=13 Jul 2023}}</ref> to refer narrowly to a set of [[macroeconomic]] and [[political]] positions; however, the phenomenon had clear origins in the shifting [[class conflict|class relations]] of the early 20th century. The era lasted roughly from the end of [[World War II]] until the mid-1970s, although it had origins in American and European policies ranging from [[Bismarck]]'s "[[State Socialism]]" to [[FDR]]'s [[New Deal]]. It largely ended with the [[neoliberal]] turn beginning in the 1980s.
'''Embedded liberalism''' or the '''Keynesian era''' was a period of [[class compromise]] in [[West]]ern countries in which support for interventionist social welfare policies, such as an expanded social safety net and broad support for [[labor rights]], replaced [[laissez-faire]] [[liberalism]] as the [[hegemonic]] ideology of liberal [[capitalism]]. The shift was a result of several factors, including the massive social and industrial impact of the [[Second World War]], the increasing bargaining power of the [[working class]], and a boost in the general prestige of [[communism]] due to the central role partisans and [[Soviet]] forces had played in defeating [[fascism]]. The term ''embedded liberalism'' was coined by academics Karl Polanyi and John Ruggie<ref>{{cite web | last=Widmaier | first=Wesley | title=Embedded Liberalism | website=Oxford Bibliographies | date=3 Jun 2019 | url=https://www.oxfordbibliographies.com/display/document/obo-9780199743292/obo-9780199743292-0138.xml | access-date=13 Jul 2023}}</ref> to refer narrowly to a set of [[macroeconomic]] and [[political]] positions; however, the phenomenon would not have been possible without the shift in [[class conflict|class relations]] since the early 20th century. The age of embedded liberalism lasted roughly from the end of [[World War II]] until the mid-1970s, although it had ideological and political origins in earlier class compromises from [[Bismarck]]'s "[[State Socialism (Germany)|State Socialism]]" to [[FDR]]'s [[New Deal]]. The compromise of embedded liberalism entered a period of crisis in the 1970s, after which it was largely replaced by [[neoliberalism]].


[[Keynesian]] economic policies resulted in an increase in real wages, employment rates, pension funds, and the nationalization of industries from transporation to health care. Some countries approached [[full employment]], massively strengthening the bargaining position of workers and sharpening the [[contradiction]]s of the capitalist economic system. The implementation of transnational economic policies such as the [[Bretton Woods system]] were crucial to the success of embedded liberalism on an international scale.
[[Keynesian]] economic policies resulted in an increase in real wages, employment rates, and pension funds, as well as wide-ranging nationalization of industries like transportation and health care. Some countries approached [[full employment]], massively strengthening the bargaining position of workers and sharpening the [[contradiction]]s of the capitalist economic system. The implementation of transnational economic policies such as the [[Bretton Woods system]] was crucial to the success of embedded liberalism on an international scale.


The success of embedded liberalism in many Western states was partly thanks to a broad coalition of [[intellectual]]s and the [[middle class]] with a highly organized and motivated [[working class]] into left-wing parties which supported [[progressive]] reform. In addition, many [[left]]ists have argued that the threat of [[communist]] influence from the [[Eastern Bloc]] in their internal affairs forced the hand of Western capitalists in acquiescing to the new consensus, citing countries like [[Sweden]], whose embedded liberalism bordered on implementing worker ownership of industry in the 1970s, and [[Finland]], which implemented a collaborationist foreign policy — both states sharing close borders with the [[Soviet Union]].<!--I'm not convinced of this; someone who does support this argument put more info and sources here--> Indeed, all but the most right-wing business groups, public commentators, and liberal intellectuals in countries like the US emphasized the benefits of the social consensus when attacking [[socialist]] and communist ideas, attributing the improved position of workers to the efficacy of [[bourgeois democracy]] and political [[pluralism]] which rendered radical action unnecessary, and the anti-communist efficacy of the New Deal consensus caused the United States to impose similar policies in other capitalist states from [[Germany]] to [[Japan]].
The political basis of embedded liberalism was often a broad coalition of [[intellectual]]s and the [[middle class]] with a highly organized and motivated [[working class]] in support of [[progressive]] reform. In addition, many [[left]]ists have argued that the threat of [[communist]] influence from the [[Eastern Bloc]] in the internal affairs of capitalist states forced Western capitalists to acquiesce to the new consensus, citing countries like [[Sweden]], whose embedded liberalism bordered on implementing worker ownership of industry in the 1970s, and [[Finland]], which implemented a collaborationist foreign policy — both states sharing close borders with the [[Soviet Union]].<!--I'm not convinced of this; someone who does support this argument put more info and sources here--> Indeed, in countries such as the United States, all but the most right-wing business groups, public commentators, and liberal intellectuals employed the new social consensus as a [[propaganda]] weapon, urging the workers to be thankful for reaping the benefits of non-communistic [[liberal democracy]]. The seeming efficacy of the New Deal consensus in resisting communism at home also led the US to impose similar policies in countries like [[Germany]] and [[Japan]].


Embedded liberalism proved untenable for a variety of factors. The most basic contradiction of developed capitalism, the continuous fight between capital and labor over limited [[surplus value]], requires that an economic crisis must result in the victory of one or the other class. Once business interests in countries like the [[United States]] and the [[United Kingdom]] had strengthened their political solidarity and began to explicitly fund think tanks which would lay the foundation of neoliberalism, the left-liberal compromise of Western labor parties faltered and broke. In addition, the radicalism of the working class was diminished when [[social democrat]]ic and socialist parties reduced or removed their anti-capitalist policy objectives in favor of class collaborationism. Due to this combination of factors, a political overthrow of the consensus took place in the US and UK and spread throughout the world. Real wages for Western workers have stagnated or even fallen since the late 1970s,{{cn}} and social spending has been aggressively reduced even in states such as Sweden, Finland, and [[France]].{{cn}} Internationally, the shift in domestic labor policy was accompanied by a shift away from [[import substitution]] and [[developmentalism]] toward an emphasis on [[privatization]], liberalization, and "[[structural adjustment]]".
Embedded liberalism proved untenable for a variety of factors. The most basic contradiction of developed capitalism, the continuous fight between capital and labor over limited [[surplus value]], requires that an economic crisis must result in the victory of one or the other class. When this crisis struck, business interests in countries like the [[United States]] and the [[United Kingdom]] had already begun to strengthen their political solidarity during the late 1960s and to fund the development of what would become neoliberal ideology. Once these new weapons were put to use in the late 1970s, the already unstable left-liberal compromise of Western labor parties faltered and broke. In addition, the radicalism of the working class had diminished as [[social democrat]]ic and socialist parties weakened their commitment to anti-capitalist policy objectives in favor of class collaborationism. Due to this combination of factors, a political overthrow of the consensus took place in the US and UK and spread throughout the world with immediate consequences. Real wages for Western workers have stagnated or even fallen since the late 1970s,{{cn}} and social spending has been aggressively reduced even in states such as Sweden, Finland, and [[France]].{{cn}} Internationally, the shift in domestic labor policy was accompanied by a shift away from [[import substitution]] and [[developmentalism]] toward an emphasis on [[privatization]], liberalization, and "[[structural adjustment]]". Neoliberal policies remain globally dominant to the present day.
 
The postwar compromise in the [[base|economic base]] influenced all elements of the [[superstructure]] of Western societies and was analyzed variously as an ideological, political, or social phenomenon, or more narrowly as a shift in the progression of economic science. Hence the era is known by liberal academics by various names, including the '''golden age of capitalism''' and the '''postwar consensus'''. Right-wing liberals, such as [[Austrian economics|Austrian economist]] [[Friedrich Hayek]], criticized the consensus as an endorsement of [[totalitarian]] and [[statism|statist]] thought, a critique which neoliberal ideologues would rephrase into an opposition to "big government" or "bureaucracy" with great success.


The postwar compromise in the [[base|economic base]] influenced all elements of the [[superstructure]] of Western societies and was analyzed variously as an ideological, political, or social phenomenon, or more narrowly as a shift in the progression of economic science. Hence the era is known by liberal academics by various names, including the '''Golden Age of Capitalism''' or the '''postwar consensus'''. Right-wing liberals, such as [[Austrian economics|Austrian economist]] [[Friedrich Hayek]], criticized the consensus as an endorsement of [[totalitarian]] and [[statism|statist]] thought, a critique which would be rephrased under the language of "big government" or "bureaucracy" by neoliberal ideologues decades later.
==Effects==
==Effects==
One of the most enduring effects of the late consensus era was an erosion of socialist and communist radicalism, especially in the wake of [[McCarthyism]] and its equivalents throughout the capitalist world. McCarthyism and anti-communism in the US contributed to a broader atmosphere that denatured the class character of the American labor movement into "a fight without ideologies, without red flags, without May Day parades."<ref>{{cite book | last=Lipset | first=Seymour Martin | title=Political Man: The social bases of politics | publisher=Doubleday and Company | publication-place=New York | year=1960 | oclc=1024685999|p=408}}</ref> Similar shifts occurred in other states, and it was in this context that a leading Australian Labor Party member stated:
One of the most enduring effects of the late consensus era was the erosion of socialist and communist radicalism, especially after a decades-long barrage of anti-communist [[propaganda]] and subversion throughout the capitalist world. [[McCarthyism]] and anti-communism contributed to a broader atmosphere that denatured the class character of the American labor movement into "a fight without ideologies, without red flags, without May Day parades."<ref>{{cite book | last=Lipset | first=Seymour Martin | title=Political Man: The social bases of politics | publisher=Doubleday and Company | publication-place=New York | year=1960 | oclc=1024685999|p=408}}</ref> For many Western workers, socialism became a distant, almost mystical future:
<blockquote>I think we should not duck around corners and pretend we do not want socialization of industry. It is a long term objective in the Labor movement, exactly in the same way that there is a long term objective in the Christian movement. The people who espouse Christianity have been struggling for over 2,000 years and have not arrived at it.<ref>{{cite book | last=Truman | first=Thomas Charles | title=The pressure groups, parties and politics of the Australian labor movement | year=1953 | oclc=37405974}} Apud Lipset 1960, p. 405.</ref></blockquote>
<blockquote>I think we should not duck around corners and pretend we do not want socialization of industry. It is a long term objective in the Labor movement, exactly in the same way that there is a long term objective in the Christian movement. The people who espouse Christianity have been struggling for over 2,000 years and have not arrived at it.<ref>{{cite book | last=Truman | first=Thomas Charles | title=The pressure groups, parties and politics of the Australian labor movement | year=1953 | oclc=37405974}} Apud Lipset 1960, p. 405.</ref></blockquote>


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*{{cite book | last=Harvey | first=David | title=A Brief History of Neoliberalism | publisher=Oxford University Press, USA | date=2005 | isbn=0-19-928327-3}}
*{{cite book | last=Harvey | first=David | title=A Brief History of Neoliberalism | publisher=Oxford University Press, USA | date=2005 | isbn=0-19-928327-3}}
*{{cite book | last=Lichtenstein | first=Nelson |edition=1| title=State of the Union | publisher=Princeton University Press | date=2002 | chapter=Chapter 4: Erosion of the Union Idea}}
*{{cite book | last=Lichtenstein | first=Nelson |edition=1| title=State of the Union | publisher=Princeton University Press | date=2002 | chapter=Chapter 4: Erosion of the Union Idea}}
[[category:economics]][[category:20th century history]][[category:liberalism]][[category:historical materialism]][[category:capitalism]]
[[Category:Economics]][[Category:20th century]][[Category:Liberalism]][[Category:Historical materialism]][[Category:Capitalism]]

Latest revision as of 18:31, 17 August 2023

Embedded liberalism or the Keynesian era was a period of class compromise in Western countries in which support for interventionist social welfare policies, such as an expanded social safety net and broad support for labor rights, replaced laissez-faire liberalism as the hegemonic ideology of liberal capitalism. The shift was a result of several factors, including the massive social and industrial impact of the Second World War, the increasing bargaining power of the working class, and a boost in the general prestige of communism due to the central role partisans and Soviet forces had played in defeating fascism. The term embedded liberalism was coined by academics Karl Polanyi and John Ruggie[1] to refer narrowly to a set of macroeconomic and political positions; however, the phenomenon would not have been possible without the shift in class relations since the early 20th century. The age of embedded liberalism lasted roughly from the end of World War II until the mid-1970s, although it had ideological and political origins in earlier class compromises from Bismarck's "State Socialism" to FDR's New Deal. The compromise of embedded liberalism entered a period of crisis in the 1970s, after which it was largely replaced by neoliberalism.

Keynesian economic policies resulted in an increase in real wages, employment rates, and pension funds, as well as wide-ranging nationalization of industries like transportation and health care. Some countries approached full employment, massively strengthening the bargaining position of workers and sharpening the contradictions of the capitalist economic system. The implementation of transnational economic policies such as the Bretton Woods system was crucial to the success of embedded liberalism on an international scale.

The political basis of embedded liberalism was often a broad coalition of intellectuals and the middle class with a highly organized and motivated working class in support of progressive reform. In addition, many leftists have argued that the threat of communist influence from the Eastern Bloc in the internal affairs of capitalist states forced Western capitalists to acquiesce to the new consensus, citing countries like Sweden, whose embedded liberalism bordered on implementing worker ownership of industry in the 1970s, and Finland, which implemented a collaborationist foreign policy — both states sharing close borders with the Soviet Union. Indeed, in countries such as the United States, all but the most right-wing business groups, public commentators, and liberal intellectuals employed the new social consensus as a propaganda weapon, urging the workers to be thankful for reaping the benefits of non-communistic liberal democracy. The seeming efficacy of the New Deal consensus in resisting communism at home also led the US to impose similar policies in countries like Germany and Japan.

Embedded liberalism proved untenable for a variety of factors. The most basic contradiction of developed capitalism, the continuous fight between capital and labor over limited surplus value, requires that an economic crisis must result in the victory of one or the other class. When this crisis struck, business interests in countries like the United States and the United Kingdom had already begun to strengthen their political solidarity during the late 1960s and to fund the development of what would become neoliberal ideology. Once these new weapons were put to use in the late 1970s, the already unstable left-liberal compromise of Western labor parties faltered and broke. In addition, the radicalism of the working class had diminished as social democratic and socialist parties weakened their commitment to anti-capitalist policy objectives in favor of class collaborationism. Due to this combination of factors, a political overthrow of the consensus took place in the US and UK and spread throughout the world with immediate consequences. Real wages for Western workers have stagnated or even fallen since the late 1970s,[citation needed] and social spending has been aggressively reduced even in states such as Sweden, Finland, and France.[citation needed] Internationally, the shift in domestic labor policy was accompanied by a shift away from import substitution and developmentalism toward an emphasis on privatization, liberalization, and "structural adjustment". Neoliberal policies remain globally dominant to the present day.

The postwar compromise in the economic base influenced all elements of the superstructure of Western societies and was analyzed variously as an ideological, political, or social phenomenon, or more narrowly as a shift in the progression of economic science. Hence the era is known by liberal academics by various names, including the golden age of capitalism and the postwar consensus. Right-wing liberals, such as Austrian economist Friedrich Hayek, criticized the consensus as an endorsement of totalitarian and statist thought, a critique which neoliberal ideologues would rephrase into an opposition to "big government" or "bureaucracy" with great success.

Effects

One of the most enduring effects of the late consensus era was the erosion of socialist and communist radicalism, especially after a decades-long barrage of anti-communist propaganda and subversion throughout the capitalist world. McCarthyism and anti-communism contributed to a broader atmosphere that denatured the class character of the American labor movement into "a fight without ideologies, without red flags, without May Day parades."[2] For many Western workers, socialism became a distant, almost mystical future:

I think we should not duck around corners and pretend we do not want socialization of industry. It is a long term objective in the Labor movement, exactly in the same way that there is a long term objective in the Christian movement. The people who espouse Christianity have been struggling for over 2,000 years and have not arrived at it.[3]

References

  1. Widmaier, Wesley (3 Jun 2019). "Embedded Liberalism". Oxford Bibliographies. Retrieved 13 Jul 2023.
  2. Lipset, Seymour Martin (1960). Political Man: The social bases of politics. New York: Doubleday and Company. p. 408. OCLC 1024685999.
  3. Truman, Thomas Charles (1953). The pressure groups, parties and politics of the Australian labor movement. OCLC 37405974. Apud Lipset 1960, p. 405.

Further reading

  • Harvey, David (2005). A Brief History of Neoliberalism. Oxford University Press, USA. ISBN 0-19-928327-3.
  • Lichtenstein, Nelson (2002). "Chapter 4: Erosion of the Union Idea". State of the Union (1 ed.). Princeton University Press.