^aDepartment of Political Science, Johns Hopkins University, Baltimore, MD 21218, USA. E-mail: mark.blyth@jhu.edu

Abstract

This paper examines the institutional context of social democracy. Social democracy is defined here as being composed of two specific goals, the reduction of inequality and the decommodification of labor, combined with a particular institutional means to achieve these goals. The first part of this paper discusses why these goals are so central to social democratic politics and details the institutions that realize these goals. It is argued that if what makes social democratic economic policies possible are specific institutions, then the ability to pursue social democratic policies in the 21st century is severely circumscribed. Specifically, political control of the institutions of domestic credit is seen as critically important for producing social democracy. Through a discussion of two cases of social democratic institutional failure: the United States and Sweden, the paper demonstrates that the absence of such domestic financial institutions means that even with the most optimistic will in the world, the best that social democrats can do, at least at the moment, is to serve as a palliative to neoliberalism. Furthermore, it is argued that if 'globalization' is to seen to have any constraining effects upon the practices of such a politics, then such constraints are as much ideological as institutional, which makes policy change in the current era ever more unlikely.