Put yourself in the place of an independent financial adviser telling his clients where to put their money in 1900. The object is to choose the stock market offering the best return over the 20th century. As you regard the world's bourses, which do you go for - Wall Street, the City, or the flamboyant coursiers of the Paris bourse who have been recently satirised in Zola's novel, L'Argent?
Not for a second does it cross your mind to look at those countries where socialist ideas are beginning to get a foothold. Sweden, for example, where a strong trade union movement and an intelligent social democratic party is beginning to make serious inroads into Nordic capitalism. Or faraway Australia where a rough and ready egalitarianism and hatred of the colonial class system is giving birth to the English-speaking world's first welfare state.
Yet according to a study just produced by the London Business School with ABN Amro, the Dutch banking group, the Swedish stock market has been the most profitable of all the world's stock market in the 20th century, followed closely by Australia.
The annualised percentage return on equities over the past 100 years shows Sweden topping the league, followed by Australia, the US, Canada and the Netherlands, with Britain coming a poor sixth.
With a population of nine million, Sweden has a remarkable set of world-beating companies, including household names like Volvo, Ericsson, ABB, Electrolux, and Saab. Yet according to classic neo-liberal theory, Sweden, the world's most high-taxed welfare state, where 95 per cent of all employees are trade union members, should be a basket-case, not the exemplar nation for stock market investment.
Australia, with its vigorous tradition of social democratic rights, strong trade unions, comprehensive welfare state and legal constraints on capital's freedom, offers similar proof that modern capitalism flourishes where social democrats are in charge.
The reason for this paradox can be found in the philosophical underpinning of social democracy - the removal of fear from daily economic provision so that investment decisions can be based on rationality, not emotion.
Step by step over the past 100 years, Swedish social democracy has removed the great fears that previously filled the lives of people: the fear that they will not have a home, adequate health care, education for children, a decent retirement and care in old age, or help in bad times of unemployment. The fear of sudden changes of government are tempered by a proportional electoral system that allows everyone a stake in the political process.
Swedish trade unions are organised on the basis of one industry, one union. Their very power and presence in each workplace has enforced a sense of responsibility about supporting the Swedish economy unknown in most of 20th century British trade unionism. The Swedish unions have been strong enough to enforce a permanent pay policy based on equal rises irrespective of the individual performance of a company. Poorly performing firms which couldn't pay went to the wall rather than take the easy option of cutting wages, extending hours or refusing to spend on R&D or training - the preferred choice of too many British firms in the past 20 years. As a result, Swedish productivity has been remarkable, as has performance of its exporting industries.
The Swedish social democratic party will soon announce that it will lead Sweden into the euro, thus removing the fear of currency fluctuations that do such damage to any exporting economy. People no longer need to hoard their money on a prudential basis against future calamity or provision of health care or education. Nor do they have to put so much into insurance funds where savings are scalped before they are reinvested. Instead, disposable cash is available through different financial instruments to help keep a stock market healthy and growing.
America would benefit from a close perusal of these economies. There are still more than 40 million people without health insurance in the US; if America could find a way of removing fear from this section (one fifth) of its population, its economy would grow even more strongly. In contrast to the 1950s and 1960s, it is now Europe and other regions of the world that send capital to America to help the US economy grow. One day, the conditions will be created in Europe that keep capital invested on this side of the pond and then America will need to find its own brand of social democracy to give all its citizens a role in the economy.
As the champagne corks pop in the 20th century's champion stock markets of Stockholm and Sydney, the glasses should be raised to the patient, Fabian, incremental, social-democratic policies that have removed fear and irrationality from society and allowed capital to be used to build a secure long-term future.
Today, there are few independent financial advisers who are conversant with the Webbs or read the works of Anthony Giddens and other gurus of the new social democracy. But if you want your money to grow over the next century, look for advanced social-democratic-governed countries. Your investment can only go up.
Denis MacShane is Labour MP for Rotherham
© New Statesman Ltd. 1999