Europe, explained.
Might the End of History have been a curse and not a gift (Tom Brenner/Getty Images)
Observers at the collapse
The liberal international settlement is crumbling, but social democrats haven’t found an answer for what comes next.
Europe, explained.
Might the End of History have been a curse and not a gift (Tom Brenner/Getty Images)
The liberal international settlement is crumbling, but social democrats haven’t found an answer for what comes next.
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Observers at the collapseObservers at the collapse
In the first episode of The Sopranos, Tony, perched in his psychiatrist’s chair, summed up the late 1990s malaise sitting in the gut of middle America.
It's good to be in something from the ground floor. I came too late for that and I know. But lately, I'm getting the feeling that I came in at the end. The best is over.
He encapsulated that foreboding sense that the End of History might have been a curse and not a gift.
The world has been undergoing a great decoupling within the established political order over the past quarter-century, but the centre-left has not yet found the language or theories to navigate it anew.
In the wake of the Cold War, neo-liberal market capitalism, universal democracy, and an international rules-based order underwritten by the security of the United States became a tightly bound three-strand rope. Success could only be envisioned by the embrace of all three. Each got stronger and more inseparable.
For a while that held true. Western liberal economies grew, middle classes consolidated gains, and the peace endured.
Then came the Global Financial Crisis, the Covid pandemic and the worldwide inflation shocks. War on the European continent. Brexit. The Trump takeover, twice. Shock after shock after shock.
US President Donald Trump boards Air Force One on 16 November 2025, en route to Joint Base Andrews, Maryland (Molly RileyWhite House/Flickr)
Yet none has prompted a thorough rethinking within the centre-left of the basic tenets of our political and economic systems. The three-strand settlement has been untouchable even as circumstances, the public and other political movements adjusted.
Previous global shocks have resulted in an upending of the political and economic order. Each generation of leaders had a theory on the shelf to turn to in the aftershocks of crisis.
Consider the Great Depression and the emergence of US President Roosevelt’s “New Deal” policy agenda. FDR turned to the existing but not yet adopted Keynesian theories to inject state spending to stimulate demand in the economy.
On another continent, it was the post-war United Kingdom that looked to the policy thinking of William Beveridge to rebuild. Beveridge had written his report to tackle the “five giant evils” in 1942. Ignored during the war, it was implemented in the late 1940s with the birth of the National Health Service and social security, creating the modern British welfare state.
Finally, it was a period of economic stagflation in the 1970s that prompted conservative leaders to reach for the policy shelf, pulling on Milton Friedman’s work. That pre-existing theory inspired what would become Reaganomics, Thatcherism and even “third way” policies, reducing the state and opening markets to competition.
Each of those global crises resulted in big global changes drawn down from theories already considered and ready. This time, there appears to be no idea waiting on the shelf, or at least no willingness to consider one.
If social democrats wish to preserve the most vital strand – democracy – they will need to think seriously about how to repair it and readjust the other two strands to find a new settlement.
Each of the three strands of the liberal settlement is fraying. If social democrats wish to preserve the most vital strand – democracy – they will need to think seriously about how to repair it and readjust the other two strands to find a new settlement.
The international rules-based order was always a way of upholding a system that advantaged a certain type of nation-state. Underwritten by the world’s security guarantor, these rules benefited those who adhered to a unipolar view where capitalism and free trade reinforced global peace. “No two countries with a McDonalds have ever gone to war” was the refrain I was taught in undergraduate international relations courses in the immediate post-9/11 years.
We now live in an unquestionably multipolar world – partially driven by the United States’ decline and Trumpian retreat as much as the rise of other major powers and greater shifts towards smaller pacts and regional groupings.
As Russia jumped the fence and invaded Ukraine, that Big Mac security theory turned out to be as true as the idea that burgers are good for you. China’s rise, while retaining its adherence to socialism with “Chinese characteristics”, baffled analysts who held that great market economics would inevitably lead to liberal democracy. The strands were meant to be mutually reinforcing.
“No two countries with a McDonalds have ever gone to war” was the refrain taught in undergraduate international relations courses in the immediate post-9/11 years (Daniel Torok/White House/Flickr)
The liberal market-based economic system was meant to be the greater wealth creator. By freeing markets, the rising tide of wealth generation was meant to raise all boats.
If that was still believed by social democrats, then it was blown apart by Nobel Prize economist Joseph Stiglitz in his major report on inequality handed to the G20 meeting in South Africa last month. It was the countries of the Global South who had sought for the report to be a major feature of the G20 summit, further underlying the point of the fracturing of the unipolar world – a point first observed by French economist Thomas Piketty.
The Stiglitz-led report is excoriating of the existing economic order. The rising tide has left more boats behind than it raised. Billionaires' assets account for one-sixth of global GDP, while the bottom 50% of the world gained only 1% of the benefits of decades of global growth. Climate change costs are created in one part of the world and borne by another, the poorest bearing the heaviest load.
Inequality, it is written , is a policy choice. The report calls for a total overhaul of our global governance and taxation arrangements.
It has driven more than 500 inequality economists and experts to back the call for a global inequality body akin to the IPCC, the UN’s independent standing body on climate science. Last week, economist Daron Acemoglu wrote in The Financial Times that we are living through the crisis of liberal democracy largely because the social compact that there would be “shared prosperity” has broken down.
All of that together is pulling on the most vital strand – democracy itself. Piketty writes in his new collection of essays that “social democracy is not a finished product … if we freeze ambitions … without a real new perspective for the future, then we leave the field open to other political currents”.
The deep and legitimate desire of the centre-left to restore trust in our institutions is both noble and needed. Yet that project has become a singular focus, masking the need for structural changes in the economic and international orders.
Shock after shock, crisis after crisis, and social democrats have seemingly ossified in their thinking.
Bolstering institutions has become a comfort food for social democrats, giving false hope that the old world can be trusted with just one more independent commission, one more piece of managerial oversight of executive decision-making. All the while, the public wants meaningful economic, climate and social realignment.
Shock after shock, crisis after crisis, and social democrats have seemingly ossified in their thinking. They have become the defenders of existing institutions and legacies, no longer seeking to strike new ground. All the while, the right and far-right have begun a major project of global reorganisation and realignment, embracing new models of authoritarianism, populism and statism.
These are terrifying developments and by no means a path that social democrats should peer down. Yet they also can’t cling haplessly to a world that broke in 2008’s crash and has accelerated past them.
It is understandable why the Abundance agenda was so quickly latched onto by centrists. It described a world where a more progressive future could be found by tearing away at built-up regulatory systems that got in the way of principled progress. It was also a set of ideas with more interest in building state capacity than it has been given credit for in the shorthand retelling. For its faults, it was at least an articulation of some new ideas for the moment. Yet it didn’t dare tug away at any of the three strands; it was a new approach to handling the same settlement.
Economist Minouche Shafik suggested that a new social compact is needed to better share the benefits and spread the risks to create a more inclusive society. The former Vice President of the World Bank and Peer now serves as Chief Economic Adviser to UK Prime Minister Keir Starmer. She wrote in her 2021 book, “it is within our gift to shape a new social contract that gives us, and those who come after us, a better future”.
The opportunity for social democrats isn’t to lament coming in at the end. But instead to cast the world anew and create a fresh beginning.
About the author
Elliot Stein
Elliot Stein is Founder and Principal of McCauley Group.
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