Avner Offer (University of Oxford)
Victoria Bateman (University of Cambridge)
Economics assumes that every person is a free-standing unit with something to sell. But over the life-cycle, dependency on others is inescapable through infancy, education, unemployment, ill-health and old age. Social democracy and market liberalism offer different solutions to the same problem: how to provide for life-cycle dependency. Social democracy makes lateral transfers from producers to dependents by means of progressive taxation. Market liberalism uses financial markets to transfer financial entitlement over time. Social democracy is undertheorized but works. Economic theory is elaborate but fallible. It is underpinned by the prestige of the Nobel Prize in economics. In the process of responding to the success of social democracy economics shifted its norms from good faith to bad faith, providing a license of anti-social conduct. The Nobel Prize is the pinnacle of meritocracy. The adoption of meritocracy by social-democratic parties has undermined their effectiveness, and the challenge to meritocracy is the driver of the current political and economic crisis.
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