Capitalism needs a strong social safety net to survive.

Conservatives need to learn the difference between socialism and social democracy. Because if they continue to denounce as socialism any attempts to make life less nasty, brutish and short, more people will start to think that socialism is okay.

“The power of the State should not be used for its own sake, but as a way to give people the security they need to pursue the lives they choose.” The Economist

And as I’ve written before, this is how to make globalisation, free trade and free markets work – through redistribution. Not through a wholesale retreat from globalisation. And certainly not through the government taking ownership of the private sector. But by taxing it appropriately so that everyone gets to enjoy the benefits.

Otherwise, capitalism’s disenfranchised and dispossessed masses – the ‘losers’ from unfettered free markets – will become too great in number, and will fight back against the system, without necessarily realising that the problem is not globalisation, but the distribution of its benefits. As The Economist stated “… by insuring people against some risks of creative destruction, welfare states would bolster democratic support for free markets” (at first glance, counter-intuitive for an institution that has traditionally been very much in favour of free markets and State inaction, but upon closer inspection, actually consistent).

It seems there is specific terminology to help with this distinction – ‘socialism’ vs. ‘social democracy’. Socialism if you want the government to seize the means of production; social democracy if you just want them to redistribute the benefits more fairly.

And that’s an important distinction if we want people to realise the difference between countries such as Denmark and Venezuela, both of which conservatives dismiss as ‘socialist’. This is only true of Venezuela, which ranks 179th globally in terms of economic freedom and is currently suffering through widespread starvation and hyperinflation. Denmark is ‘social democratic’ – a strong free market economy that ranks 12th in economic freedom, but with a government that imposes an average tax rate of over 50%, and therefore redistributes significantly without actually owning the means of production.

The result – compared to the US, Denmark has higher life expectancy, more vacations, higher happiness and life satisfaction rankings, lower income inequality, only marginally lower GDP per person (largely due to the aforementioned vacations), and – contrary to conservative ideology that social welfare disincentivises work – higher working-age employment rates (11 places higher than the US in OECD rankings!). There’s probably also something to be said for the fact that two-thirds of working Danes are unionised.

Of course welfare states can be reformed – especially in light of increasing demands on them from ageing populations and immigration. This could include gradually raising retirement ages and some restrictions of recent immigrant access to social welfare, or to immigration itself. But their effectiveness in terms of reducing poverty and inequality while maintaining incentives to work, is far more important than their size.

If conservatives really cared about avoiding the evils of ‘socialism’, they wouldn’t use the label on countries like Denmark. And they wouldn’t use it to describe any efforts to make life in the US less nasty, brutish and short. As Paul Krugman eloquently puts it, if you spend all your time dismissing health care, social safety nets, child care and disability support as ‘socialism’, people will eventually (and incorrectly) decide that socialism is okay.