Making capitalism livable: Social democracy addresses three major failures of capitalism

Introduction. Capitalism in its under- or unregulated state is harmful to people and to external entities such as the environment. However, a social democratic state can use tools of reform, viz. wealth redistribution, welfare, and regulation, to remedy the issues of capitalism without abolishing it.

Definitions:

• Capitalism is here defined as an economic system in which the means of production are privately owned and profit goes to those who own said means of production.
• Socialism is an economic system in which the means of production are democratically owned.
• Social democracy is a form of capitalism, which is to say it maintains private ownership of the means of production, but it is characterized by moderation of capitalism through reforms such as welfare and regulation.

Wealth redistribution. Capitalism at present is characterized by dramatic inequality—for example, according to a report released in 2017, the 8 richest people in the world owned as much wealth as the poorest 50% of the world's population. Through redistributive taxation, a social democratic state can reduce economic inequality; this would entail such mechanisms as high marginal tax rates on high income earners and possibly a wealth tax of the sort Elizabeth Warren (a 2020 US presidential candidate) proposed. The Brookings Institution estimates that one percent of the wealth of the American one percent could fix America's infrastructure entirely—with some left over.

Welfare. Under capitalism, by default (as we saw in earlier centuries and still see now in many places), those who cannot or do not work will often experience drastically reduced living conditions or die. Even those who are employed sometimes depend on food stamps. A strong welfare state provides for those who cannot provide for themselves—e.g., disabled people, the elderly, people who are temporarily unemployed—while, in capitalism on its default setting, those who cannot provide for themselves must fend for themselves.

A UBI (universal basic income) is preferable to other permutations of the welfare state because it streamlines the process of distributing benefits, reduces means testing, promotes optimal contributions to society, and has other benefits which I will elaborate upon elsewhere.

Regulation. Capitalism by default keeps regulation at a minimum. This is clearly harmful; some examples include the following:

• The 1911 Triangle Shirtwaist fire led to the deaths of workers when a cigarette dropped in a wastebasket ignited; the workers were locked inside the building to keep them from taking too many breaks; the fire escapes shortly became nonfunctional; and many workers ended up jumping out of the windows in the hope that they would survive.
• A more recent example is the 2013 Rana Plaza collapse, when over a thousand people died and thousands more were injured; the building had previously been declared unsafe, but the workers were told to proceed as usual even though other businesses in the building were preemptively evacuated.

Underregulated capitalism has seen many such human rights abuses—for example, before sufficient labor regulations were enacted, such as during the Industrial Revolution, workers, including young children, were often forced to work extremely long days for starvation wages and often lost limbs or died due to unsafe conditions. This is still the case in countries where regulation is weak or poorly enforced.

Besides labor regulations, lack of regulation has contributed to egregious errors in other areas as well:

• The Great Depression and the 2008 GFC (Global Financial Crisis) are two examples of a lack of regulation in the financial industry leading to economic disaster.
• Considering that 71% of greenhouse gas emissions since 1988 are attributable to just 100 companies, lack of emissions regulation can be noted as a major factor contributing to our present climate crisis.

Conclusion. Many of the main issues of capitalism are in fact issues with its default state. By taxing corporations and the wealthy, redistributing that wealth via welfare and/or a UBI to ensure a basic standard of living, and regulating industries to prevent tragic workplace events and economic and environmental crises, a social democratic state can make capitalism livable.