From Warsaw to Melbourne, from Berlin to Texas, the streets of many OECD countries are witnessing anti-immigration rallies and the surge of far-right populism.

In Europe, the hard right has entered coalition governments; in the US, Trumpism shows no sign of fading; in Australia, resentment over housing, cost of living, and migration is being weaponised by opportunists.

This rise of extremism is not an accident of culture. It is in part the consequence of the long retreat of social democracy. Neoliberalism did not simply shrink the public sphere; it captured the centre-left itself, turning parties once dedicated to building equity into managers of market primacy. The result has been a failure of responsibility and opportunity and a triple failure: in social provision, in economic structure, and in sustainability.

Failure one: social provision hollowed out

In country after country, universal systems of health, housing, education and care have been fragmented into markets. In Britain, outsourcing has corroded the NHS. In Scandinavia, privatised elder care has frayed universalism. In Australia, the retreat has been even starker: housing, health, aged care, disability services, childcare and universities are now profit-centres, heavily underwritten by taxpayers.

The consequences are predictable: unaffordable homes, two-tiered services, mounting debt and abuse in privatised care. What was once shared as a public right, is now stratified by income.

But imagine the alternative. If social democracy had expanded public housing, strengthened universal healthcare and invested in equitable education, communities today would feel less alienated and more connected. Instead of frustration and anger, there could be confidence that the collective would provide better lives for all.

Failure two: structural transformation abandoned

The second failure is economic. Neoliberal leaders promised that freeing markets would deliver productivity, innovation and prosperity. Instead, capital flowed into speculation and property bubbles. Across the OECD, deindustrialisation hollowed out regional economies; in Australia, the economy remained semi-peripheral and reliant on exporting raw commodities while neglecting R&D, manufacturing, and value-adding industries.

The alternative was within reach. Social democracy could have built on the legacy of post-war industrial planning, using public capacity to drive investment in advanced manufacturing, green industry and knowledge sectors. Had governments intervened to shape the economy — as Germany, South Korea or Denmark did in key sectors — Australia and its peers might today enjoy more resilient economies, stronger productivity and more secure jobs.

Alienation would have been replaced with pride and inclusion in a shared national project of economic upgrading.

Failure three: sustainability betrayed

The third failure is existential. In the era of planetary crisis, social democracy should have been the political force to put sustainability at the core of its project. Instead, it reacted unproductively to the rise of green parties, clung to fossil fuel subsidies, outsourced the energy transition to developers, and treated climate as an add-on rather than the organising principle of economic life.

The alternative was transformative. A social democracy committed to sustainability could have planned a just energy transition, invested directly in renewables, and built climate resilience into housing, transport and industry. Instead of today’s climate anxiety and political backlash, citizens might feel the confidence of living in societies capable of safeguarding their future.

Retreat or renewal?

The triple failure of social democracy has left anger, frustration and alienation festering. And it is this void that the far right now exploits with scapegoating, nationalism, and authoritarian rhetoric.

But it did not have to be this way. A social democracy that advanced rather than retreated could have delivered secure housing, universal care, resilient industries and climate action. It could have fostered equity, connection, and cohesion instead of resentment and division.

The choice now is whether social democracy will rediscover that ambition. If it does not, it will not only remain complicit in neoliberal failures – it will leave the future to be shaped by the very forces of division and extremism it was once created to defeat.

The views expressed in this article may or may not reflect those of Pearls and Irritations.