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In the s, the SPD began to transition away from revisionist Marxism towards liberal socialism beginning in the s. Curt Geyer, who was a prominent proponent of liberal socialism within the Sopade, declared that Sopade represented the tradition of Weimar Republic social democracy, liberal democratic socialism and stated that the Sopade had held true to its mandate of traditional liberal principles combined with the political realism of socialism. The only social democratic governments in Europe that remained by the early s were in Scandinavia.

The Nordic model would permit private enterprise on the condition that it adheres to the principle that the resources it disposes are in reality public means and would create of a broad category of social welfare rights. Whereas the — SAP governments had run large deficits, after a strong increase in state expenditure in the new SAP government reduced Sweden's budget deficit. The government had planned to eliminate Sweden's budget deficit in seven years, but it took only three years to eliminate the deficit and Sweden had a budget surplus from to However, this policy was criticized because—although the budget deficit had been eliminated—major unemployment still remained a problem in Sweden.

In the Americas from the s to s, social democracy was rising as a major political force. In Mexico , several social democratic governments and presidents were elected from the s to the s. Political violence in Mexico had become serious in the s with the Cristero War in which right-wing reactionary clericals fought against the left-wing government that was attempting to institute secularization of Mexico.

Cardenas stepped down as Mexican President and supported a compromise presidential candidate who held support from business interests in order to avoid further antagonizing the right-wing. After World War II, a new international organization to represent social democracy and democratic socialism, the Socialist International in In the founding Frankfurt Declaration , the Socialist International denounced both capitalism and Bolshevik communism—criticizing the latter in articles 7, 8, 9 and 10—saying:.

The rise of Keynesianism in the Western world during the Cold War influenced the development of social democracy. Keynesianism was believed to be able to provide this. Attlee immediately began a program of major nationalizations of the economy. There were early major critics of the nationalization policy within the Labour Party in the s. In The Future of Socialism , British social democratic theorist Anthony Crosland argued that socialism should be about the reforming of capitalism from within.

SPD leader Kurt Schumacher declared that the SPD was in favour of nationalizations of key industrial sectors of the economy, such as banking and credit, insurance, mining, coal, iron, steel, metal-working and all other sectors that were identified as monopolistic or cartelized. Upon becoming a sovereign state in , India elected the social democratic Indian National Congress to government with its leader Jawaharlal Nehru becoming Indian Prime Minister. I am not referring to the communist countries but to those which may be called parliamentary, social democratic countries".

The new sovereign state of Israel elected the socialist Mapai party that sought the creation of a socialist economy based on cooperative ownership of the means of production via the kibbutz system while it rejected nationalization of the means of production. With these changes, the SPD enacted the two major pillars of what would become the modern social democratic program: The economic crisis in the Western world during the mid to late s resulted in the rise of neoliberalism and politicians elected on neoliberal platforms such as British Prime Minister Margaret Thatcher and U.

In , an agreement was made between several social democratic parties in the Western bloc countries of Belgium, Denmark and the Netherlands; and with the communist parties of the Eastern Bloc countries of Bulgaria, East Germany and Hungary; to have multilateral discussions on trade, nuclear disarmament and other issues. In , the Socialist International adopted its present Declaration of Principles. The Declaration of Principles addressed issues concerning the "internationalization of the economy". The Declaration of Principles defined its interpretation of the nature of socialism.

It stated that socialist values and vision include "a peaceful and democratic world society combining freedom, justice and solidarity". It defined the rights and freedoms it supported, stating: Socialists are committed to achieve freedom from hunger and want, genuine social security, and the right to work". However, it also clarified that it did not promote any fixed and permanent definition for socialism, stating: In a movement committed to democratic self-determination there will always be room for creativity since each people and every generation must set its own goals".

The Socialist International congress was politically significant in that members of Communist Party of the Soviet Union during the reformist leadership of Mikhail Gorbachev attended the congress. The Socialist International's new Declaration of Principles abandoned previous statements made in the Frankfurt Declaration of against Soviet-style communism. After the congress, the Soviet state newspaper Pravda noted that thanks to dialogue between the Soviet Communist Party and the SI since that "the positions of the CPSU and the Socialist International on nuclear disarmament issues today virtually coincide".

The collapse of the Marxist—Leninist regimes in Eastern Europe after the end of the Cold War and the creation of multiparty democracy in many many of those countries resulted in the creation of multiple social democratic parties. Though many of these parties did not achieve initial electoral success, they became a significant part of the political landscape of Eastern Europe. In the s, Third Way politics developed and many social democrats became adherents of it.

The social democratic variant of the Third Way has been advocated by its proponents as an alternative to both capitalism and what it regards as the traditional forms of socialism—including Marxist socialism and state socialism —which Third Way social democrats reject. It officially advocates ethical socialism , reformism and gradualism , which includes advocating a humanized version of capitalism, a mixed economy , political pluralism and liberal democracy. Prominent Third Way proponent Anthony Giddens, Baron Giddens views conventional socialism as essentially having become obsolete.

However, Giddens claims that a viable form of socialism was advocated by Anthony Crosland in his major work The Future of Socialism Giddens claims that this claim "can no longer be defended". He says that with the collapse of legitimacy of centrally planned socialization of production, "[w]ith its dissolution, the radical hopes for by socialism are as dead as the Old Conservatism that opposed them".

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Giddens says that although there have been proponents of market socialism who have rejected such central planned socialism as well as being resistant to capitalism, "[t]here are good reasons, in my view, to argue that market socialism isn't a realistic possibility". Giddens makes clear that the Third Way, as he envisions it, is not market socialist, arguing that "[t]here is no Third Way of this sort, and with this realization the history of socialism as the avant-garde of political theory comes to a close".

Giddens commends Crosland's A Future of Socialism for recognizing that socialism cannot be defined merely in terms of a rejection of capitalism because if capitalism did end and was replaced with socialism, then socialism would have no purpose with the absence of capitalism. The only common characteristic of socialist doctrines is their ethical content. Socialism is the pursuit of ideas of social cooperation, universal welfare, and equality—ideas brought together by a condemnation of the evils and injustices of capitalism.

It is based on the critique of individualism and depends on a 'belief in group action and "participation", and collective responsibility for social welfare'. Paul Cammack has condemned the Third Way as conceived by Lord Giddens as being a complete attack upon the foundations of social democracy and socialism, in which Giddens has sought to replace them with capitalism.

Cammack claims that Giddens devotes a lot of energy into criticizing conventional social democracy and conventional socialism—such as Giddens' claim that conventional socialism has "died" because Marx's vision of a new economy with wealth spread in an equitable way is not possible—while at the same time making no criticism of capitalism. As such, Cammack condemns Giddens and his Third Way for being anti-social-democratic, anti-socialist and pro-capitalist that Giddens disguises in rhetoric to make appealing within social democracy.

British political theorist Robert Corfe who was in the past a social democratic proponent of a new socialism free of class-based prejudices, criticized both Marxist classists and Third Way proponents within the Labour Party. The party has lost its soul, and what has replace it is harsh, American style politics". Corfe claims that the failure to develop a new socialism has resulted in what he considers the "death of socialism" that left social capitalism as only feasible alternative.

Lafontaine has noted that the founding of The Left in Germany has resulted in emulation in other countries, with several Left parties being founded in Greece, Portugal, Netherlands and Syria. The Future of Social Democracy in Europe Cramme and Diamond note that belief in economic planning amongst socialists was strong in the early to mid-twentieth century, but declined with the rise of the neoliberal right that both attacked economic planning and associated the left with economic planning. They claim that this formed the foundation of the "Right's moral trap" in which the neoliberal right attacks on economic planning policies by the left, that provokes a defense of such planning by the left as being morally necessary and ends with the right then rebuking such policies as being inherently economically incompetent while presenting itself as the champion of economic competence.

Cramme and Diamond identify market conforming as being equivalent to British Labour Party politician and former Chancellor of the Exchequer Philip Snowden 's desire for a very moderate socialist agenda based above all upon fiscal prudence, as Snowden insisted that socialism had to build upon fiscal prudence or else it would not be achieved. In the s, the social democratic parties that had dominated some of the post-World War II political landscape in Western Europe were under pressure in some countries to the extent that a commentator in Foreign Affairs called it an "implosion of the centre-left".

The decline subsequently proved to not be isolated to Greece as it spread to a number of countries in Western Europe , a phenomenon many observers thus described as " Pasokification ":. However, in other countries such as Denmark and Portugal support for social democratic parties was relatively strong in polls as of Moreover, in some countries the decline of the social democratic parties was accompanied by a surge in the support for other centre-left or left-wing parties, such as Syriza in Greece, Unidos Podemos in Spain and the Left-Green Movement in Iceland.

Several explanations for the European decline have been proposed. Some commentators highlight that the social democrat support of national fragmentation and labour market deregulation had become less popular among potential voters. For instance, French political scientist Pierre Manent emphasised the need for social democrats to rehabilitate and reinvigorate the idea of nationhood.


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Skarstein emphasised the contrast between social democrats' strong commitment for helping people on the international scene on one side, and their strong commitment in favour of welfare policies for the nation's own population on the other. The article claims that the SPD subsequently lost half of its former electoral coalition, namely blue-collar voters and socially disadvantaged groups, while efforts to gain access to centrist and middle-class voters failed to produce any compensating gains. Furthermore, the article concludes that the only possible remedy is for the SPD to make efforts to regain former voters by offering credible social welfare and redistributive policies.

Spain is one of the countries in which the main social democratic party, the Spanish Socialist Party , has been in government for a longer period of time than any other party since the transition to democracy in However, it has also declined like the European social democratic parties, losing half of its electorate between and and gaining its worse ever result since the restoration of democracy.

Some authors consider him and his Government the last hope for Europe to retain its social democratic heritage, [] and some believe they will act as an example to like-minded politicians in other countries. From a purely socialist point of view, social democratic reform is a failure since it serves to devise new means to strengthen the capitalist system, which conflicts with the socialist goal of replacing capitalism with a socialist system. Socialist critics often criticize social democracy on the grounds that it fails to address the systemic issues inherent to capitalism, arguing that ameliorative social programs and interventionism generate issues and contradictions of their own, thus limiting the efficiency of the capitalist system.

The American democratic socialist philosopher David Schweickart contrasts social democracy with democratic socialism by defining the former as an attempt to strengthen the welfare state and the latter as an alternative economic system to capitalism.

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According to Schweickart, the democratic socialist critique of social democracy is that capitalism can never be sufficiently "humanized" and that any attempt to suppress its economic contradictions will only cause them to emerge elsewhere. For example, attempts to reduce unemployment too much would result in inflation and too much job security would erode labour discipline. Marxian socialists argue that social democratic welfare policies cannot resolve the fundamental structural issues of capitalism, such as cyclical fluctuations , exploitation and alienation. Accordingly, social democratic programs intended to ameliorate living conditions in capitalism—such as unemployment benefits and taxation on profits—creates further contradictions by further limiting the efficiency of the capitalist system via reducing incentives for capitalists to invest in further production.

Critics of contemporary social democracy, such as Jonas Hinnfors, argue that when social democracy abandoned Marxism it also abandoned socialism and has become a liberal capitalist movement, [] effectively making social democrats similar to non-socialist parties like the U. Market socialism is also critical of social democratic welfare states. While one common goal of both concepts is to achieve greater social and economic equality, market socialism does so by changes in enterprise ownership and management, whereas social democracy attempts to do so by subsidies and taxes on privately owned enterprises to finance welfare programs.

Franklin Delano Roosevelt III and David Belkin criticize social democracy for maintaining a property-owning capitalist class which has an active interest in reversing social democratic welfare policies and a disproportionate amount of power as a class to influence government policy. They note that even in Scandinavian countries social democracy has been in decline as the labour movement weakened. Joseph Stalin was a vocal critic of reformist social democracy, later coining the term " social fascism " to describe social democracy in the s because in this period social democracy embraced a similar corporatist economic model to the model supported by fascism.

This view was adopted by the Communist International. There are critics [ attribution needed ] that claim that social democracy abandoned socialism in the s by endorsing Keynesian welfare capitalism.

This compromise created welfare states and thus Harrington contends that although this compromise did not allow for the immediate creation of socialism, it "recognized noncapitalist, and even anticapitalist, principles of human need over and above the imperatives of profit". From Wikipedia, the free encyclopedia. For a list of parties named as such, see Social Democratic Party. Not to be confused with democratic socialism. Social justice Democracy economic industrial representative Labor rights Mixed economy Welfare Trade unionism Fair trade Environmental protection Negative and positive rights Secularism Social corporatism Social market economy.

History of socialism Socialist calculation debate Socialist economics. Decentralized planning Participatory economics. Market socialism Lange model Mutualism. Socialist market economy Socialist-oriented market. First International International Workingmen's Association. World Federation of Democratic Youth. International Union of Socialist Youth. International Committee of the Fourth International. Meanwhile, as Socialism advances throughout the world, new forces have arisen to threaten the movement towards freedom and social justice.

Since the Bolshevik Revolution in Russia, Communism has split the International Labour Movement and has set back the realisation of Socialism in many countries for decades. Communism falsely claims a share in the Socialist tradition. In fact it has distorted that tradition beyond recognition. It has built up a rigid theology which is incompatible with the critical spirit of Marxism. Where Socialists aim to achieve freedom and justice by removing the exploitation which divides men under capitalism, Communists seek to sharpen those class divisions only in order to establish the dictatorship of a single party.

International Communism is the instrument of a new imperialism. Wherever it has achieved power it has destroyed freedom or the chance of gaining freedom. It is based on a militarist bureaucracy and a terrorist police. By producing glaring contrasts of wealth and privilege it has created a new class society. Forced labour plays an important part in its economic organisation.

Jawaharlal Nehru , Prime Minister of India — The examples and perspective in this section may not include all significant viewpoints. Please improve the article or discuss the issue. May Learn how and when to remove this template message. Social democratic parties or parties with social democratic factions [ edit ] Albania: Social Democratic Party Argentina: Radical Civic Union Austria: Social Democratic Party of Austria Australia: Australian Labor Party Belgium: New Democratic Party Chile: Party for Democracy Croatia: Social Democratic Party Czech Republic: Czech Social Democratic Party Denmark: Social Democratic Party Finland: Social Democratic Party of Germany Ghana: National Democratic Congress Greece: Panhellenic Socialist Movement Greenland: Hungarian Socialist Party Iceland: Social Democratic Alliance India: Indian National Congress Ireland: Israeli Labor Party , Meretz Italy: Lithuanian Social Democratic Party Luxembourg: Luxembourg Socialist Workers' Party Malaysia: Democratic Action Party Malta: Democratic Party of Moldova Mongolia: Mongolian People's Party Montenegro: Labour Party New Zealand: New Zealand Labour Party Norway: Pakistan Peoples Party Poland: Democratic Left Alliance Portugal: Social Democratic Party Russia: A Just Russia San Marino: Party of Socialists and Democrats Serbia: Direction — Social Democracy Slovenia: Social Democrats South Africa: African National Congress South Korea: Spanish Socialist Workers' Party Sweden: Social Democratic Party of Switzerland Turkey: Republican People's Party United Kingdom: Movement for Democratic Change.

Co-operative Commonwealth Federation France: French Section of the Workers' International Germany: Mapai , Alignment Italy: Social Democracy of the Republic of Poland Portugal: Social Democratic Party historical faction [ citation needed ] San Marino: Being based on a compromise between the market and the state, social democracy lacks a systematic underlying theory and is, arguably, inherently vague.

It is nevertheless associated with the following views: Retrieved 10 August People argued that if the Stalinist Soviet empire, where the state controlled everything, showed socialism in action, then socialism was not worth having. They could be seen as a compromise between socialism and capitalism. They favored a mixed economy in which most industries would be privately owned, with only a small number of utilities and other essential services in public ownership.

Social democracy therefore came to stand for a broad balance between the market economy, on the one hand, and state intervention, on the other. Thus Bernstein summoned up Kant to point the way towards a politics of ethical choices. Social democrats have not accepted the materialist and highly systematic ideas of Marx and Engels, but rather advanced an essentially moral critique of capitalism. England in and in Cited in Hollander , p. He expressed skepticism about state aid to the unemployed, for example, which he feared might merely sanction a new form of 'pauperism'.

Cited in Steger , p. The Handbook of Neoliberalism. Tata McGraw-Hill Education, Retrieved 20 October German social democracy and the electoral consequences of the Agenda ". They supported and tried to strengthen the labor movement. The latter, as socialists, argued that capitalism could never be sufficiently humanized and that trying to suppress the economic contradictions in one area would only see them emerge in a different guise elsewhere e.

Some hold out for a nonmarket, participatory economy. All democratic socialists agree on the need for a democratic alternative to capitalism. As a result, capitalists will have little incentive to invest and the workers will have little incentive to work. Capitalism works because, as Marx remarked, it is a system of economic force coercion.

It is idealistic to believe that tax concessions of this magnitude can be effected simply through electoral democracy without an organized labor movement, when capitalists organize and finance influential political parties. Even in the Scandinavian countries, strong apex labor organizations have been difficult to sustain and social democracy is somewhat on the decline now. Archived from the original on 16 August Interviews with Ingmar Bergman.

Swedish edition copyright ; English translation The Nobel Peace Prize ". Politics Today 2nd ed. Nehru on Social Issues. International Encyclopedia of Political Science. Bardhan, Pranab ; Roemer, John E. A Case for Rejuvenation". Journal of Economic Perspectives. Barrientos, Armando; Powell, Martin The Third Way and Beyond: Criticisms, Futures and Alternatives. The Battle for Asia: From Decolonization to Globalization.

The Social Democratic Moment: Ideas and Politics in the Making of Interwar Europe. The Primacy of Politics: What's Left of the Left: Liberalism and Social Democracy in a Globalized World. Retrieved 29 January Bernstein, Eduard []. The Preconditions of Socialism. Cambridge Texts in the History of Political Thought. Translated by Tudor, Henry. Blaazer, David []. The Popular Front and the Progressive Tradition: Socialists, Liberals, and the Quest for Unity, — Popular Movements in the Revolutionary Era.

Britain, Ian []. A Study in British Socialism and the Arts, c. Bronner, Stephen Eric Political Tradition in the Twentieth Century. Under the Shadow of War: Fascism, Anti-Fascism, and Marxists, — Imperial Germany and the Great War, — The Two Red Flags: European Social Democracy and Soviet Communism since Routledge Companions to History. Liberals and Social Democrats. The Future of Politics: Bury St Edmunds, England: Governing Purpose and Good Society". In Cramme, Olaf; Diamond, Patrick. After the Third Way: The Future of Social Democracy in Europe.

Edinger, Lewis Joachim University of California Press. Anthony Crosland and the Affluent Society". In Black, Lawrence; Pemberton, Hugh. Modern Economic and Social History. After the New Social Democracy: Social Welfare for the Twenty-First Century. The Quest for Economic Competence". Giddens, Anthony []. Beyond Left and Right: The Future of Radical Politics. A New Agenda for Social Democracy". The majority of the literature focuses on programmatic change.

However, social democracy has a fundamental element in its political and ideological basis, which differentiates it from both the conservative right and the radical left. This is its close relation with the state. Therefore, the theoretical and research interest of this study is concentrated on analyzing this relationship of social democracy with the state under the contemporary conditions of neo-liberal domination. This relationship is essential in the process of the transformation of social democracy and its constant adaptation to its historical roots.

Social democracy, in any case, use the state as a social and regulatory mechanism that may be transformed during specific historical contexts, but is never abandoned. In other words, the regulatory and social pillars of the state the welfare state are key elements of legitimizing social democracy. On the basis of diachronic social democratic narratives, the eviction of political power from economy renders economic power uncontrolled, which means that the freedom of workers is reversed to the freedom of sovereignty of economic power over the workers [4].

The liberalization of market forces aims at protecting the economy from problematic political interference. Of course, in the social democratic narratives there is always a distinction between permissible and inadmissible interventions of the state [4]. In any case economic activity is subjected by social democracy under political control through the legal protection of the labor status, the dissolution of feudal forms of work organization, the introduction of participatory processes in the workplace and the introduction of the welfare state.

Social policy is the institutional expression of the social idea under conditions of capitalism dominated by social democracy. Social policy is a set of rules and regulations for the protection of workers and in this sense degrades to some extent the power of capital over work. On the other hand, social policy protects capitalism from the danger of revolution and instability as long as it absorbs the ideas of the social movement, namely, those whose participation in the capitalist system is necessary for the proper functioning of the system.

Social concessions serve to maintain capitalism and, in that sense, include conservative motives. This means that social democracy seeks to implement social policies on the one hand, as fulfillment of social demands of workers and on the other hand, as an element of unhindered preservation of capitalism and productive process. In this sense, social democracy maintains a dual nature as a force that changes capitalism but at the same time sustains it through the state to which a social sign is attached.

In a sense, therefore, the promoted compromise by social democracy between market competition and state intervention is perhaps the most effective form of legitimation of developed capitalism [5]. The state undertakes the fulfillment of social justice, something that is not implemented by the market, thus increasing the legitimacy of the capitalist economy through the widening of individual opportunities with particular emphasis on the socially vulnerable, excluded and helpless. Through the integration of welfare measures, the capitalist system appears as an organizational form that firstly minimizes and compensates for individual existential risks, secondly defends the inherent interests of workers, and thirdly, considers the state as a mediating institution that supports workers [5].

The social democratic ideology offers to the vulnerable citizen the right to social protection and services, and at the same time, acknowledges the existence of the capitalist system. This functional sequence constitutes a fundamental element of social democracy that has been preserved over time at its core despite the high cost of the welfare state. The more detailed theoretical examination of the fundamental element of social democracy, especially under neo-liberal conditions, is the main aim of this study.

Taking into account the abovementioned considerations, this study aims to categorize social democratic parties based on the social policy framework they embrace and to highlight the political deficit that has led to the dismantling of social policy, to the crisis of the state and consequently to the European social democracy crisis. It is true that social policy comprises one of the basic elements for social democratic parties as long as it is the mechanism for the creation of conditions of social equality and justice.

However, the transformations that have been conducted during the previous decades have intensified the necessity of transformation of social democratic policies in terms of political implementation rather than of ideological subversion. This paper analyses the necessity of welfare state policies for social democracy but in the reformed and modern socio-economic conditions.

In order to achieve this objective the research will begin with the analysis of the limited persuasiveness of the neoliberal theory. The following analysis analyze these ideas and considers their limited persuasiveness in order to state that social democratic ideas comprise a viable alternative framework that could offer socially sustainable solutions. The research continues with the analysis of the crisis of social democracy and stateness in order to show the problems and challenges that have been created to social democracy as long as the passive and extensive state is not any long a sustainable choice.

Based on this analysis the next chapters study the importance of reform of capitalism by implementing a new set of social policies that will overcome the previous passive pattern by creating an active framework of welfare state polices. The recent economic crisis coincided with an imaginative public speech, full of unsubstantiated assumptions and fictions, such as the conjecture that it actually comprised the end of neoliberalism as a dominant ideology.

In particular, in the left ideological landscape, there was a notion that neoliberalism can be considered dead but still dominant, in the sense that its ideas have been exhausted, but it continues to generate destruction in the form of a living dead [7] , because there is a lack of alternatives [8]. This particular position would not have been deprived of a practical basis if there was not a lack of a differentiated logic, far from generalizations, aphorisms and exclusively ideological roots.

The differentiation lies in the fact that neoliberalism did not actually fail in political but in economic terms in the sense that it did not yield the expected economic results of both structural and statistical level. In other words, liberalization of the market had more than thirty years to respond to the promise of a scientific economic theory that would make economic growth stronger and more stable, would offer greater opportunities for economic mobility, reduce unemployment and, in general, construct the necessary conditions for achieving prosperity.

However, throughout the developed world, the extensive liberalism of the market has failed to achieve its initial objectives. All developing countries, such as China, with high economic development levels, did not follow the neoliberal orders of non-intervention by the state in the market [9] [10]. The over-optimistic projection of market ideology from the neo-liberal thinkers, was at the same time unrecognizable in the sense that it did not take into account that in the two hundred years of the social history of capitalism, the emergence of crises, in social clashes and wars, has been a frequent phenomenon.

Therefore, the cultivated expectation by the neoliberal thinkers that the liberalization of markets on an international scale would bring redemption, became dubious [11]. However, despite its economic failure as a theory, the central positions of neoliberalism remain dominant. From this perspective, neo-liberalism is the secularization of an irrational theological-stoic perception of harmony. The dominant mistake of this perception is, according to the author, the belief in a natural, automatically fulfilled class of the world and consequently, the refusal of limits of validity of the theory [12].

At the same theme, Rodrik [9] [13] notes that despite the objections expressed by neo-liberal economists about state functions, successful economic policies have always been backed by the state to promote growth and accelerate structural change. In particular, as it turns out, at the period of the economic crisis, it was national governments that rescued banks, stimulated the financial markets, rescued large businesses, and provided a social safety net [13]. As Legatum Institute suggests [14] [15] , Table 1 states such as New Zealand, Norway, Sweden, Denmark, Canada, Australia and Finland, which have a relatively high regulatory role of the state, provide a high level of social welfare, education and individual freedoms as well as they integrate more successfully immigrants and minorities into the real economy and they also display the best economic indicators for Consequently, it turns out that social cohesion has a positive impact on the real economy.

Most empirical studies show that prosperity and income security are linked to an entire institutional framework, including a variety of legal and regulatory approaches stemming from the degree of state influence on the economy [16] [17]. This is equally true for developed and emerging economies. In particular, earlier IMF surveys [18] , the World Bank [19] and several reputable scholars [20] [21] [22] , highlight the great importance of the institutional role of the state in economic development.

The development of a stable and credible institutional framework at national level facilitates the smooth functioning of society and avoids political and economic conditions [17] [23]. On the other hand, a series of arguments are usually used by the neo-liberal devotees who can be summarized in three categories. The first category focuses on the fact that the large public sector causes tax increases for public funding and this creates distortions and inefficiencies.

Hayek [24] argues that the necessary taxation to finance state activity should be subject only to unified principles and not to serve the redistribution of income, that is, the social democratic view of social justice. The second category refers to the fact that public expenditures are inevitably accompanied by the increase in the activities of the state, whose measurable increase in efficiency and productivity is much lower than that of the private sector [25]. In this view, if the state wishes to intervene in the economy, the best way would not be through public spending which would create inflationary pressures but by removing restrictions on trade and the free movement of capital [26].

According to this view the state must be kept away from the economy and intervenes only when certain goods could not be offered by the market. The Legatum prosperity index. The condition for this public activity is, firstly, that the state does not support any monopolistic claim and allows the production of the goods through the market [24]. The state must also provide only goods which are matters of the general interest and do not cover specific and fragmented collective needs.

His conception about the limited economic activity of the state is not only contrary to the idea of the socialist planned economy but also to the Keynesian economic policy that is considered as the first step towards a centrally planned economy of central administration [24]. Finally, the third category of arguments is linked to the belief that the public sector is less efficient than the private sector because it does not possess the same incentives on the market. Restricting state intervention to the economy and liberalizing private initiative from bureaucracy and stifling administrative arrangements that undermine the incentive for entrepreneurship [27] is based on the idea that the free and uninterrupted operation of the market through is able to ensure the optimal or socially desirable distribution of available means of production, full employment, monetary stability, and economic growth [28].

Consequently, for liberals the free market can substitute the state and become the main regulator of political and economic developments. In particular, Hayek advocated the liberalization and deregulation of financial transactions not only within the national borders of a country but internationally by the privatization of state-owned enterprises, the reduction of state spending, and the creation of a powerful state that would protect institutionally the legal operation of the market without interfering [29]. On the contrary, state supporters and social democrats usually insist that the state offers useful services that improve both the individual position as well as the position of the businesses.

A public sector with high levels of public spending can provide sufficient levels of infrastructure, a well-trained workforce and an effective health care service, factors that contribute to the increase of the productivity of an economy. Financing these costs requires high taxation. Therefore, the negative effects of high taxation are offset by the positive effects of higher public spending. In addition to spending and taxes, regulating state interventions institutions also play an important role in economic development. It also appears that countries with a large public sector have much better institutional quality, better education and social protection systems and greater opportunities for innovation.

It is true that there are four economic development models followed by the different countries in the developed world: As it is clear in Figure 1 , Sapir [30] classifies these basic models of analysis based on the criteria of social justice equity and economic efficiency. From this typology, it appears that the Nordic model, which has a high level of public intervention and institutional development while is considered to be a model for the implementation of non-irrevocable social-democratic policies, is characterized by high economic efficiency and social equality.

However, the Mediterranean model has low levels of efficiency and equality due to a lack of institutional development and public effectiveness. Despite the fact that countries in Northern Europe and Scandinavia. The global competitiveness index [31]. A typology of European economic development models. Economically and financially, market economies need strong state institutions for achieving macroeconomic and fiscal stability as well as for the stability of the economy, legal security of transactions, smooth functioning of the market and social cohesion.

The role of a credible public institutional framework for the development of general investment and development conditions through appropriate incentives that generate trust, transaction security and efficiency, is therefore crucial. In this context, the role of the state in properly regulating the labor market as well as the financial markets is clearly necessary. However, the pursuit of the neo-liberal perception after the s, along with the social-democratic compromise of the Third Way, prevented the development of an appropriate institutional building at both national and international level for the proper political regulation of the economy.

Instead, economic reforms have primarily focused on privatizing public goods as well as deregulating and liberalizing the markets. In essence, this was a ten-point agenda developed by Williamson [32] mainly constructed for Latin American countries, in order to overcome over-indebtedness and supposedly stimulate growth [17]. The proposed measures focused on reducing state intervention in the economy, fiscal discipline, opening markets for trade and foreign direct investment, restructuring public spending, liberalizing political interest rates, liberalizing trade, deregulating intensifying privatization, reforming taxation, increasing monetary competitiveness and safeguarding property rights [17].

Just a few years after its first implementation, the neo-liberal agenda was severely criticized by the fact that the countries in which it was applied Mexico, Argentina, Brazil, several Asian countries instead of reducing public debt, were even more indebted, while their economies were collapsing. This neo-liberal agenda can therefore be regarded as imperfect, with a dominant weakness; that it seeks to liberalize and deregulate the markets unilaterally, without framing this operation with the requisite institutional security that only the state can provide and thus exposes the countries in severe crisis risks.

At the same time, with its regulatory gap, the neo-liberal agenda also includes an institutional gap in social terms, since reforms aimed at liberalizing market forces are not combined with the required compensatory social measures, such as minimal social security, wider distribution of income and a minimum level of equal opportunities. In particular, the social vacuum of neo-liberal agenda has led to a process of de-legitimization. The reasons for the failure of the Washington consensus are confirmed, as mentioned above, in a number of recent studies that examine the importance of the state and its institutional framework for the long-term development of the economy.

Particularly, Hall and Jones [20] have found a positive correlation between per capita income and the quality of social infrastructure, which is determined by the degree of legal certainty, the quality of bureaucracy, the corruption susceptibility, the risk of investment loss and the level of liberation of the respective economy.

In any case, the economic affairs of neoliberalism [10] are not verified, such as the specific one which suggested that the period of incomparable macroeconomic stability would last forever. Also, the assumption that the prices determined by the financial markets are the most accurate assessment of investment values and the assumption of the reduction of individual economic behavior as a rational macroeconomic policy criterion, have not been verified either. Neo-liberal ideas also do not seem to have the necessary validity, namely those which insist that upgrading policies for the affluent will lead to upgrading the socially vulnerable, and that state functions and initiatives can be more effective if privatized.

Social democracy from a purely practical point of view expresses a kind of empirical stateness that is based on functional aspects of the state [33] [34] , such as security provision, utilization and redistribution of resources and provision of public goods and services prosperity. As it is empirically evidenced in an earlier publication by Huber and Stephens [36] Table 3 , social democratic states are characterized by their generosity and redistributive function see Table 1 , columns 1, 2, 7 while the Christian democratic states show high generosity but are less redistributive. The liberal welfare states are still less generous and show little redistribution.

Social democratic states seek universal coverage for a wide range of social risks through the combination of basic security and income protection with comparatively generous benefits for low-income people as well as the public provision of a large part of free or subsidized services columns 5 and 7. Characteristics of welfare state and production regime. In the area of social services, social democratic welfare states provide not only health care but also care for children and the elderly, rehabilitative services for the disabled, and retraining and relocation assistance for those losing their jobs or having been separated from the labour market for a while see column 5.

Neither Christian democratic nor liberal welfare states provide any of these kinds of services; at best, they finance a limited array of privately provided services for the needy. These services, along with generous child allowances, make the social democratic welfare states women-friendly and encourage female labour force participation see column 6. On the financing side of the welfare state, separate taxation makes female labour force participation financially attractive. Social services and basic transfer benefits are typically financed by general revenue, whereas earnings related benefits are financed by earnings-related social security contributions.

In this regard, social democracy has applied the aspect of public welfare and social policy as a flexible element of the state which is quantitatively and qualitatively adapted to historical circumstances. Therefore, the social democratic version of the state uses social normalization through social policy and through the provision of public goods and services not only as an element of social prosperity but also as an element of stability.

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Although the existence of the state does not presuppose the dimension of social prosperity, in the social democratic form of the state the provision of public goods and services and the construction of social prosperity are necessary choices of state activity. As a result, state has gained a very high degree of control, which often led to criticism. As the neo-liberal economic model prevailed, the role and the responsibilities of the state were redefined.

Since then, the most important task of the state has been to ensure competitiveness. The provision of goods and services has been subjected to market criteria or has been fully transferred to private companies in order to make them more effective and customer-oriented, a promise that has never been implemented. Basic goods and services have become more expensive and they are often no longer sufficiently available at national level.

Therefore, the state is not a neutral factor, representing general interests, but it reflects the social association of different forces-interests. Since exclusivity is socially negotiable, the agreement on what is publicly available is decided on a political level. Even Adam Smith [38] had insisted that the state must provide certain public goods because they are not marketable such as education. Under social democratic governance, many policy areas such as energy, water supply, public transportation, social housing, public media, health care and education were delivered to the welfare state through political decisions.

This was implemented under the prerequisite that these goods are available to all. However, through political decisions these goods are currently delivered, under the pressure of neo-liberalism, to the market. It is precisely therefore from this distinction that social democracy derives its viability. At this point, however, it is important to refer to the definition of democracy which refers to the existence of certain fundamental rights linked with the rule of law. As far as the fulfillment of these rights is concerned, there is also an aspect of the provision of public goods such as education [39].

In particular, education is important since it allows the implementation and fulfillment of civil rights [40]. As regards the dimension of security and stability, the fulfillment of this public duty is a prerequisite for any form of development. We can therefore conclude that democratic principles and processes can only be developed in a safe and stable environment that is pursued by the social dimension of the state.

Consequently, it is of fundamental importance that the preservation of democracy as a precondition of the monopoly of power is achieved only when the protection of rights and freedoms is guaranteed at national level [41] [42]. So, in essence, social democracy expresses a quintessence of the bourgeois state that can only be removed by neo-liberalism through its neutralization.

The scope of legislation is in line with this dimension. It may be argued that a developed system of rules is a prerequisite for the formulation of fundamental rights and, furthermore, is the basis for the emergence of a constitutional state. As regards the relationship between democracy and the raising of resources, this is particularly important for the delivery of public goods.

For instance, the right to education is not able to be guaranteed if funds are not available. Only when the administrative structures are effective can the rule of law be preserved. This brief overview of the relationship between the different dimensions of the state and democracy demonstrates the importance of an effective state for achieving socio-economic development but also for the imposition and preservation of democratic processes. The state that social democracy defends, however, should not be considered as a sufficient condition in itself, because the concept of state power often serves as the basis of an authoritarian regime.

Consequently, only the state is linked to both the social and the executive aspect of democracy, with specific demands on the state, such as the application of legislation, the separation of powers or even the transparency of democracy [43]. At this level the demarcation of research about social democracy lies. Research should focus on the extent to which social democracy in the future can defend itself without defending doctrinal and developmental automation to defend a state that will facilitate the viability of democratic processes, both material, economic and political.

From a practical point of view, ensuring a certain level of living is to a large extent linked to the delivery of public policies based on the public interest and the public good [44]. Ultimately, the definition of the public good and its regulation economic or legislative typologically and morphologically belongs to the governmental policy. Social democracy, therefore, with its strong perception of the regulatory role of the state and public policies, in fact defense the common good, which contributes to improvement of the general level of prosperity.

Of course, the state and public policies are articulated on the hierarchical bureaucratic model of administration, whose basic characteristics are the importance of the rule of law, the rigor of administrative procedures and the importance of public interest [44]. Only through public policies can social justice be provided. As noted in various empirical studies, citizens consider equal education opportunities as the most important public policy. Policies on social security are also very important. Moreover, it is noteworthy from a practical point of view that major legislative and policy initiatives at national and European level have made a significant contribution to the promotion of gender equality in employment.

It is true that neoliberalism has dominated and continues to monopolize the political narratives of the majority of political parties, including social democracy. Neo-liberalism was now transformed into a political venture that seeks a political basis for legitimacy in societies, especially in the middle socio-economic groups [46].

Moreover, with the consensus of these socio-economic groups, neo-liberal parties prevailed in the core of Western Europe without great resistance, which embraced the undertaking of fiscal stability, bank rescue and austerity [17]. The neo-liberal ideology affected Western societies in adopting fiscal stability as a one-way street. At the same time it affected also the progressive narratives and especially the social democratic one, on a common path of decline. An example of the above statement could be the variations of neoliberalism associated with the Third Way of social democracy.

These variants have attempted through a more active role of the national state and by accompanying social measures, in order to obtain broader consensus on the deregulation of the markets [47]. In contrast to post-war social democracy, which was limited to the obsession with the national state and its intervening functions, the new social democracy considered the state as the Achilles heel of its narrative that prevented the adaptation to the conditions of globalization and the expansion of privatization.

The new approach raised the question of economic inefficiency of the state and the threat of individual liberties and rights from both the economy and the state itself. As Gauchet [48] notes, since , it has challenged the social democratic compromise, which was implemented after the Second World War and was associated with a profound transformation. Today we can clearly assume that the main characteristics of this kind of compromise have been significantly transformed.

As a result, social democracy abandoned its socially-compensatory reform strategy in the context of capitalist dynamics and accepted the liberal model of globalization, based on the assumption that complete liberalization of the markets could be combined with the implementation of sociopolitical policies [49].

In the name of linear economic order promotion, social democracy has removed from the essence of its identity by moving from the model of Rhine capitalism to an Anglo-Saxon economic model with a reversed logic [49]. The new financial capitalism that prevailed is characterized by a relentless expansion of market into geographic and social fields that were not yet embedded in capitalism. This is automatically linked to the deregulation of specific rules that restrict the market [49]. In the midst of the global economic crisis, the inadequacy of unrestricted liberty of the markets, both as an economic and an ideological model [50] , emerged among others.

However, along with the inadequacy of the markets, the Third Way crisis followed, which was implemented by the New Social Democracy. Today, social democracy is in danger of losing its hegemonic position within the progressive political spectrum because it has lost the tradition of radical reformism, which historically was characterized by great political, social and economic advantages. As a result, social democratic parties are not able to reap the diffused social anger that is reproduced during the crisis. Shattered societies turn to the right and left-wing populist parties that have the largest inflows of new members and voters in the post-war period.

From the point of view of the extreme right, the adoption of the harsh anti-capitalist criticism, which was once prized by the left [51] , seems to be fruitful. On the contrary, the European Social Democracy and the greater reformist left remain deeply divided, and there has never been such a great deal of uncertainty about criticism of capitalism and its long-term goals.

It is a fact that the moral and intellectual weakness of progressive space explains the prevalence of neoliberalism as a modern political direction despite all the economic disasters it has brought. Whether in the government or in opposition, the severe economic crisis found the European center-left in great unease, with no plan and vision with viable alternatives. As a result, improvisations and rough maneuvers have prevailed to a certain extent in the face of the fast exploitation of financial market dangers, the increasing anger of voters and the growing fear of the future.

Therefore, it is not unreasonable to note that the exchange of strong traditional principles and values with unclear visions of the center undermines unity, and ultimately even the aspirations of social democracy leading to a profound ideological, political and organizational crisis. The constant mutation of social democracy was accompanied by a process of historical power dynamics, partly causing large and widespread shocks. The opening of the New Social Democracy to neo-liberalism was accompanied by the abandonment of the state as a central tool for public policy and its regulatory capabilities towards market functions [52] [53].

Consequently, during the crisis, the state was confined to certain distinct functions that were common to both social democratic and conservative governments. The most frequent governmental interventions include capital injections, bailouts, and some governmental control over companies, governmental involvement in corporate decision-making, and nationalization. This strategy has been translated into practice by socializing the losses produced by various businesses or banks after decades of privatization of their profits [56].

If the future role of social democracy for the state is to socialize the losses of companies and to privatize their profits, then the social character of public policies is questioned, on the one hand, and the possibility of universalization of the social dimension of the state as such. Consequently, the crisis does not particularly facilitate social democracy in its ideological and organizational renewal.


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Indeed, contrary to the interwar period, where particular emphasis was given on the creation of state-independent economic structures, social democracy of the post-war period was limited to the reform of the state and omitted direct concern with the population and its self-serving forces. This has led to an obsession with the national state, which, as a consequence of globalization and privatization, proved to be the Achilles heel of social democracy. Therefore, the question that arises today is the extent to which social democracy can restore or reconstruct important state functions in conjunction with a model of the market that is in line with the principles of solidarity, social justice and at the same time does not restrict economic dynamics and stability.

The new center-left must promote three difficult issues at the same time. Firstly, it should promote growth, secondly, ensure that this development integrates society, that is to say, the vulnerable social groups, and thirdly, reduce budget deficits [57]. It is obvious that social democracy needs to be reconnected with the Keynesian agenda, especially in terms of job creation and economic growth, support the welfare state and improve financial market regulation. However, it has also to overcome some serious issues.

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In , for instance, Sweden reduced its income and capital tax with a very positive impact on both innovation and growth [57]. At the same time, the indicators of social cohesion have remained relatively high and the benefits of the welfare state have remained universal. Therefore, the question is: How can relations between the state and market be restructured in order to maintain and strengthen the welfare state and social cohesion within an active state? In other words, how can a new socioeconomic example of a social democratic agenda for the 21st century be established, guaranteeing social progress without subduing the economic objective of continuous growth and without being weakened by fiscal derailment?

This question is directly related to the prevailing trend of secular stagnation, which places obvious limits on the social surpluses required for the pursuit of balancing social policies while stabilizing the distortions created by markets [58]. The redefinition of the relationship between state and market can be better enhanced through a new social democratic economic and social policy.

The terms and conditions of this policy are: As the social democratic proposal of power was more or less assimilated by political systems dominated by economic lobbies post-democracy and, moreover, the economy gained a dominant position than the policy, while has consistently defined developments throughout the crisis, the question that arises is to what extent there is a possibility of formulating a social democratic prospective governmental proposal that will bring the state back to its central role, even in diversified and more effective functions [60].

In this paper, there will be an attempt to outline a new reform framework for social democracy by mainly focusing on a new role for the state. It turns out that the new social democracy currently acts under a completely defensive attitude towards the power of neo-liberalism. This will benefit European societies from finding sustainable solutions without disrupting social cohesion and the rights that comprise a significant prerequisite. This will require a new historical compromise between capital and labor that would allow the creation and development of such a welfare state. In the current liberated, disorganized and deregulated capitalism the elites ignore all compromises.

The main fear of the lower socioeconomic groups is a possible further social reduction, after the elites carried on them the cost of the recent economic disruption that led to the fourth Great Depression in the history of capitalism. In this context, new radical views are needed for the construction of a modern social democracy.

Such a view was expressed by Judt [61] who does not believe in common recipes and synchronized international solutions to all problems on a global scale. Judt praises the welfare state within old Europe rather than the United States, as it can be the ideal model of the future welfare for societies.

There is no tradition of social democracy in the US so Judt calls on European Social Democracy to recall its strong roots. These lie in the transformation of capitalism, in which social democracy in Europe had played a leading role. A transformation associated with the consolidation of the welfare state, the intervening state, the extensive public goods and services sector as well as the domestication and regulation of capitalism, could counterbalance the negative social consequences and lead to a viable social future [62].

This new approach will be based on the tradition of the democratic left, which has criticized the Leninist way towards socialism. But this does not mean that without much hesitation European social democracy must abandon its rich subversive heritage, including the tradition of radical reformism. In other words, it must not abandon the critical reflection on capitalism. At the same time, however, social democracy must remain connected with the libertarian tradition of human rights that defend individual autonomy.

However, as regards the delimitation of the notion of liberty, social democracy should not be confined to a narrow perspective, which approaches the individual as being in a condition of struggling to survive and therefore is responsible only for himself. This view considers the individual free as long as it is not dependent on the state and to the extent that it pursues selfish individual goals. On the contrary, social democracy seeks a meaningful concept of freedom, which is not confined to the individual but is linked to social conditions [63]. In this respect, the individual is free when it enjoys social security and equal opportunities.

Despite the fact that the above principle was registered through the historical struggles of social democracy in the value code of modern Western democratic societies, the percentage of people who are really free is not too high. Poverty, absenteeism for example the increase of the social vulnerable group of NEETs , unequal education and training opportunities, unemployment, inadequate health care and, in general, the increasing problems of access to social goods, signal the prevalence of conditions of freedom [64].

Therefore, for social democracy, the state is an important tool that produces freedom, not just a tool that reduces it. However, during the crisis, social democracy manifested its great ideological gap without the proper political narrative, the necessary ideas and an innovative conceptual framework in order to resist the dominant neo-liberal discourse and, therefore, to create a viable social future beyond capitalism.

This void is expressed by the paradox that the social democracy lacks a new narrative for the state together with a real social democratic philosophy of justice. Social democracy that has been socially righteous for a century in a dividing line with bourgeois and demand more social equality but has no corresponding theory of justice which could inspire it to the necessary reformation of the welfare state, has no clear future [42]. The necessity of reforming the welfare state is de facto the result of the increased fiscal pressure created by various transformations such as demographic aging, globalization and the individualization of societies.

Limiting social democracy to a moralistic debate about the abhorrent modern tendency for social cuts does not negate the obligation to formulate a coherent policy proposal for the construction of a new welfare state, capable of creating measurable social justice objectives and fiscal balanced rules. Those past reflexes that set social benefits above the rules of rational financial management do not necessarily correspond unconditionally in a new theory of social justice.

Surely, the welfare state as we know it was not necessarily a perfect mechanism for the automatic elimination of social inequalities and the promotion of common good. Anyone who defends the welfare state and the public sector must effectively claim its horizontal and vertical reform. Everyone who seeks this reform needs broad alliances, support for the traditional working groups, employees of precarious social groups, farmers and the middle socioeconomic groups.

A serious and wider program of transformation of the state with sufficient depth and without easy populist slogans should be the main objective. Such an example is the privatization of the railways in Great Britain [66]. However, the answer to the catastrophic privatization policy should not be nationalization, but advanced, sustainable and democratic forms of the public economy that include the state but not their management form the state.

Without the adequate and flexible provision of public goods and services that can be used regardless of its purchasing power or position in the market, equality and freedom of citizens is not able to be achieved in capitalist economies. This is the purpose of the de-commodification of public goods, which is one of the basic pillars of the welfare state [37]. If the public space, the public sector, as the foundation of democracy and as a reasonable counterpart in the private sector, does not acquire a material basis, it will inevitably become degenerated into a rhetorical form.

Thus the main objective should focus on the creation of a democratic economy that produces, distributes and uses public goods and commodities, with a universal basis and distribution. Such a system will surely have a serious and necessary involvement and the private sector. The social democratic model can be revitalized through a new theory of social justice focused on the state and the freedom of the individual. Theoretical sources from which social democracy can draw valuable conclusions are diverse and not limited to dogmatic choices. According to Hayek, legal equality is required in conjunction with the maximum freedom of financial contracts, with minimal social security through state transfers [67].

Hayek [68] proposes the individual autonomy of the public policy field. Rawls follows this position, but considers, on the contrary, that social justice is not a matter of individual virtue but of institutional regulation. The market, according to the philosopher, has unlimited possibilities for distribution in the economic field, but it is not capable of creating social justice. In a sense, Rawls finds a moral blindness in the market, which leads to unequal and unfair conditions of access to it.

Therefore, according to Rawls, the economic, political and social structure of societies must include institutions that will fairly distribute those goods that are important for ensuring equal opportunities. These basic goods are rights, freedoms, opportunities, income and wealth and, in general, all the social conditions of a dignified living. Rawls reports two distribution principles. The first [69] calls for an absolutely equal distribution of basic freedoms and civil rights. On the basis of this principle, each individual has equal right to an extended and fully adequate system of equal freedoms compatible with an identical system of freedom for all.

This rule is not disputed in modern democracies and is usually applied to the rule of law. The second [69] principle focuses on socio-economic equality, according to which socio-economic inequalities are permissible only when they benefit everyone. Above all, however, the principle should foresee that a potential socio-economic inequality must benefit the most socially vulnerable.

In other words, socio-economic inequalities should be subject to a management which makes such arrangements that will benefit the most disadvantaged and secondly to positions-opportunities which are open to all in conditions of fair equality of opportunity. In essence, this rule can be translated into the ability of a society to allow inequalities in favor of the privileged if they also bring advantages to the socially vulnerable.