“Risk” may be a central idea of the early 21st century, just as “globalisation” was the dominant idea of the 1990s. The fact that individuals and families are vulnerable to a wide range of social, economic and other risks — and that collective action is needed to help reduce and manage these risks — has long been an important theme in social-democratic thinking.

In the final part of a serialised paper first published by the Centre for Policy Development, University of Queensland economist John Quiggin writes that an improved understanding of risk can contribute to the development of a modernised social democratic model.

A new case for social democracy

The resilience of social-democratic institutions and values in the face of a concerted neoliberal attack has been striking. It is not sufficient however to defend the existing institutions of the social-democratic welfare state. Rather the case for social democracy must be formulated in a way that provides a response to current circumstances and challenges.

The idea that we have the capacity to share and manage risks more effectively as a society than as individuals may provide the basis for such a reformulation. The set of policies traditionally associated with social democracy may be regarded as responses to a range of risks facing individuals, from health risks to uncertain life chances.

Equally importantly, an emphasis on facing and managing risk collectively, through social institutions supported by government, is relevant to many of the challenges we will face in the future. Moss’s emphasis on the role of the state in providing protection against disasters looks particularly prescient in the light of the failure of the Bush Administration to provide a coherent response to the destruction of much of New Orleans by Hurricane Katrina. The damaging effect of that failure on the credibility of the Bush Administration and on support for the Republican Party in general, has been large and durable.

An even bigger source of risk today is climate change. In this case, the failure of neoliberals to respond has been complete. Until very recently, the vast majority of commentators on the political right either ignored the problem or sought to discredit the scientific evidence that established its existence and severity. Even now that attempts to delude the public on the scientific facts have generally been abandoned, neither the Bush Administration in the US, nor the Howard Government in Australia has any coherent response to the problem.

Finally, there is the question of national security. National security is traditionally seen as the trump card of political conservatives, yet neither historical nor recent experience suggests that this perception is strongly based in reality. Rather than treating security against foreign enemies or terrorist attacks as one of the risks faced by our community, to be minimised as far as possible and managed like other risks, the conservative approach has been to treat such risks as existential threats to the nation and to respond with military force, even though this is usually not the best response and commonly a counterproductive choice. From a social-democratic perspective, the nation-state is not an end in itself, but a set of institutions designed to serve the collective interests of its members. This view of the state suggests a more realistic approach to national security, based on careful assessments of costs and benefits, in contrast to outdated militarism.

Treating national security as a problem of risk management has two big benefits. First, it means that the security implications of global risks such as climate change and financial instability can be taken into account as an inherent part of the process of policy formation – rather than as an afterthought. Second, it ensures that the use of military power is considered as one of a number of policy options, rather than being the default response to particular risks.

The time is ripe, then, for a shift from the defensive position of the last quarter-century, in which social democrats struggled mainly to protect the achievements of the past. The risks and uncertainties we all face, from economic insecurity to climate change, require a shared response. At present, individuals are carrying the burden of risks that can only be faced by society as a whole, while society is bearing the costs of our failure to equip individuals to manage the increased risks they have been exposed to.

We can reduce anxiety and suffering for individuals, and put our economy and society back on a sustainable footing, by putting a coherent, consistent approach to risk management at the centre of public policy. Acting together, we can reduce and manage risk for everyone, and protect those who suffer the adverse outcomes of the risks that are an inevitable part of modern life.