Many anarchists appear to argue for social democracy. At the very least, they argue it's not as bad as neoliberalism. They argue that, yes, we are still exploited and oppressed under social democracy, but at least we have benefits, a safety net, and regulation protecting them. All hail the protection of the state against capital. (I'm not being that sarcastic. To quote Chomsky, "State power is a good example of a necessary cage. There are sabre-toothed tigers outside; they are called transnational corporations which are among the most tyrannical totalitarian institutions that human society has devised. And there is a cage, namely the state, which to some extent is under popular control." I'm not going to pretend this is a support for states in general. It's not. It's a simple lesser of two evils argument.) Oftentimes, they set it up in opposition to neoliberalism which doesn't have those things and is creating global neocolonialism. It's true, neoliberalism doesn't have these protections against capitalism. It's also true that neoliberalism is creating global neocolonialism. The problem is that neoliberalism is not in opposition to social democracy. In contrast, social democracy needs it and wouldn't be able to survive without it.
This may seem like a somewhat strange argument. After all, aren't neoliberalism two opposed visions of capitalism? Surely they are incompatible. Well, they are, to an extent. There cannot be a state that is 100% neoliberal and 100% social democratic at the same time. However, this analysis only analyzes neoliberalism and social democracy in isolation. In a global context, they aren't incompatible. A state or group can easily promote social democracy at home and neoliberalism abroad. You can see that with America. Institutions like social security, medicare, and medicaid have become so ingrained in America that those who oppose them have to disguise their intentions to reduce it. However, abroad, through institutions like the IMF, the World Bank, and the WTO, they promote neoliberalism.
But my argument was more extreme than simply saying that they are compatible. I was arguing that social democracy depends upon neoliberalism. Now, they obviously exist side-by-side, with most first world countries being social democracy and mainly producing highly specialized goods requiring highly skilled and paid workers while third world countries, either by choice or because of some force limiting their choices, primarily pursue neoliberal policies making cheaper stuff that depends upon cheap labor. I hope the dependency of social democracy on neoliberalism is obvious by now.
However, I'll assume it isn't. Now, let us assume that the entire world has developed to the point where it can sustainably transition into social democracies and they do just that. (Note, a sufficiently poor and underdeveloped country can't do this. Social democracies require money to work.) But what of the cheap goods requiring cheap labor? Now, they are produced in social democracies. They have things like minimum wages and protections for labor. This increases costs. Now, either the capitalists take the hit to their profits (hah! as if) or they raise prices. This means a pretty across the board raising of prices, which is otherwise known as inflation. Except, this time, it's global inflation. This means the money the workers are being paid is less. So much for minimum wage. But, also, the profits the capitalists are raking in are worth less. So they raise prices again and the workers try to raise their wages leading to even more price increases. This causes more and more inflation. The capitalists fire workers to cut costs, but that's not going to stop this inflation. This has actually happened before here in the US. We called it stagflation. But, in this case, it would be global. Well, what happened last time we experienced stagflation? Well, we trimmed at the social democratic institutions, though not eliminating them. Likely the same would happen, but, since this would be even worse, it would be done to a greater extent.
As such, social democracy couldn't survive global social democracy. But surely that's not enough to demonise social democracy. Perhaps it wouldn't survive being a global phenomenon, but at least it doesn't perpetuate the neoliberalism in the third world by its very existence... right? Well, lets take the opposite example. What happens if all the social democracies abandon social democracy and pursue neoliberal policies. Well, there are still the same sort of high paying jobs that need to be done. The wages in these wouldn't drop too much. However, all of a sudden, capitalists would be able to move the low cost jobs home. And it would be cheaper for them to do the whole of their production at home. They'd have less transport costs as they aren't transporting as far. They'd have better infrastructure to work with. So transnational companies pull out of third-world countries and move the production they would do in those countries home. This would significantly worsen things in first world countries and make them much more stratified. But what of the third world countries? Well, they would no longer have transnational companies taking advantage of them. They would no longer be forced to do menial labor for first-world countries. They'd be able to construct their own industry, or no industry at all, if they want none. They'd be able to expand and grow. They'd have choice. They wouldn't be the glorified colonies of first world countries.
So, yes, social democracy seems superficially better than neoliberalism, but it isn't. Rather, it is taking the highly stratified internal capitalist structure of neoliberal countries and projects it upon the world stage, with those in third world countries almost universally worse off than those in first world countries. Ultimately, neither is any good and we should oppose both. And it shouldn't be opposing both, but supporting one over the other. They are not fundamentally separate. We must oppose both equally.