The myth of a democratic socialist society funded by capitalism is finished

This is the defining political problem of the early 21st century

By Janet Daley

Whatever the outcome of the American presidential election, one thing is certain: the fighting of it will be the most significant political event of the decade. Last week’s Republican national convention sharpened what had been until then only a vague, inchoate theme: this campaign is going to consist of the debate that all Western democratic countries should be engaging in, but which only the United States has the nerve to undertake. The question that will demand an answer lies at the heart of the economic crisis from which the West seems unable to recover. It is so profoundly threatening to the governing consensus of Britain and Europe as to be virtually unutterable here, so we shall have to rely on the robustness of the US political class to make the running.

What is being challenged is nothing less than the most basic premise of the politics of the centre ground: that you can have free market economics and a democratic socialist welfare system at the same time. The magic formula in which the wealth produced by the market economy is redistributed by the state – from those who produce it to those whom the government believes deserve it – has gone bust. The crash of 2008 exposed a devastating truth that went much deeper than the discovery of a generation of delinquent bankers, or a transitory property bubble. 

It has become apparent to anyone with a grip on economic reality that free markets simply cannot produce enough wealth to support the sort of universal entitlement programmes which the populations of democratic countries have been led to expect. The fantasy may be sustained for a while by the relentless production of phoney money to fund benefits and job-creation projects, until the economy is turned into a meaningless internal recycling mechanism in the style of the old Soviet Union.

Or else democratically elected governments can be replaced by puppet austerity regimes which are free to ignore the protests of the populace when they are deprived of their promised entitlements. You can, in other words, decide to debauch the currency which underwrites the market economy, or you can dispense with democracy. Both of these possible solutions are currently being tried in the European Union, whose leaders are reduced to talking sinister gibberish in order to evade the obvious conclusion: the myth of a democratic socialist society funded by capitalism is finished. This is the defining political problem of the early 21st century.

Mitt Romney had been hinting, in an oblique, undeveloped way, at this line of argument as he moved tentatively toward finding a real message. Then he took the startling step of appointing Congressman Paul Ryan as his running mate, and the earth moved. If Romney was the embodiment of the spirit of a free market, Ryan was its prophet. His speech at the convention was so dangerous to the Obama Democrats, with their aspirations toward European-style democratic socialism, that they unleashed their “fact checkers” to find mistakes (“lies”) in it. (Remember the old Yes Minister joke: “You can always accuse them of errors of detail, sir. There are always some errors of detail”.) When Romney and Ryan offer their arguments to the American people, they are, of course, at an advantage over almost any British or European politician. Contrary to what many know-nothing British observers seem to think, the message coming out of Tampa was not Tea Party extremism. It was just a reassertion of the basic values of American political culture: self-determination, individual aspiration and genuine community, as opposed to belief in the state as the fount of all social virtue. Romney caught this rather nicely in his acceptance speech, with the comment that the US was built on the idea of “a system that is dedicated to creating tomorrow’s prosperity rather than trying to redistribute today’s.” Or as Marco Rubio put it in his speech, Obama is “trying ideas that people came to America to get away from”.

So it would be deeply misleading to imply that this campaign will be a contest between what Britain likes to call “progressive” politics and some atavistic longing for a return to frontier America where everybody made a success of his own life with no help from anybody but his kith and kin. In the midst of the impassioned and often nasty debate about the future of health care, in which Ryan was depicted as a granny-killer, there has been some serious Republican thinking about the universal provision of medical care for pensioners (or “seniors” as they are called in the US). Because, you see, the debate over there has gone way beyond welfare reform: the need to restrict benefit dependency among the underclass is an argument that has been won. What is at issue now is much more politically contentious: universal entitlements such as comprehensive Medicare and social security are known to be unaffordable in their present form. Ryan, the radical economic thinker, suggests a solution for Medicare in the form of a voucher system. Patients could choose from competing health providers, with a ceiling on the cost of procedures and treatments, instead of simply being given blanket no-choice care. Thus, the government would get better value for money, and individuals would have more say in their own treatment. Now why doesn’t anybody here think of applying that mechanism to the NHS? Oh, yes, some people have – but nobody in power will listen to them.

So how effective will all this turn out to be? Can Romney and Ryan reawaken the self-belief in American independence and real community solidarity? Quite possibly, but the odds are always in favour of the incumbent in US presidential elections. There is, however, a wild card in this game. I suspect that in 2008 a great many voters of good conscience would have felt the moral force of voting for the first black president, in order to exorcise the nation’s hideous racial history. But having proved that America is no longer a land of bigots, they will not feel it necessary to make that point again. Now they will be able to judge Mr Obama as they would any other political leader, and the US will truly have arrived at post-racial politics.

But in the course of this campaign, however it concludes, we are all going to get an education in what it might be possible to say if economic reality was actually confronted. Mr Ryan wound up his acceptance speech for the vice-presidential nomination with the chorus, “Our nation needs this debate. We want this debate. We will win this debate.” Some of us would like to have that debate here. We even think we might have a chance of winning it.