Social Democracy is Dead. Long Live Social Democracy!

Everyone agrees that the left, especially social democracy, is a mess. But what should be done about it?

Surely, a strong progressive movement is essential to counter right-wing populism, devastating climate change and vast and corrosive inequality with a program guided by egalitarian justice. But we can’t continue with the present course because it’s dramatically failing.

The Tragedy of Social Democracy

A recent book by Sirvan Karimi – The Tragedy of Social Democracy – concisely analyzes the origins, rise and fall of social democracy in the West. His Marxist viewpoint leads to an unsympathetic treatment, but the gist of his critique is firmly based nonetheless. But what is lacking is telling: an appreciation of the formidable trends that undid social democracy, and an alternative approach that might realistically overcome the debacle.

The chastening reality is that we have no realistic alternative to democratic-reformism in the Western world. But before developing this idea, consider Karimi’s critique. We need to understand where we are before we can decide what to do.

Social democracy is tragic, according to Karimi, because a movement originally committed to displacing capitalism with a progressive alternative ultimately lost its way and adapted to the profitability imperatives of neoliberalism. That is generally true, and that is tragic.

 What Went Wrong

Under the intellectual leadership of Eduard Bernstein and Karl Kautsky, social democracy started life in the late 19th and early 20th centuries with a revolutionary Marxist agenda. Its proponents would attain socialism gradually through parties winning elections and using governmental office to extend political and social rights and democratize the economy.

In the three decades following World War II, social-democratic parties registered considerable success under the aegis of the state-activist Keynesian consensus. A burgeoning welfare state and growing income equality ushered in a level of societal well-being never experienced before – or perhaps since. Karimi is unwilling to assign credit to the social democrats for this situation. Instead, Keynesianism and the welfare state were “structurally imperative to the maintenance of capitalism,’ merely “effective pre-emptive measures” to deflect the working class into reformist channels (p.88). Although a questionable interpretation that deprives the labor movement of agency, we can at least agree that this post-war era represented the acme of social democracy.

But stagflation and the rise of neoliberalism in the 1970s and 1980s brought an end to the glory-days. What had worked in the Keynesian era became the left’s Achilles heel. Social democracy had succeeded by fostering a healthy capitalist economy that produced the economic growth needed to fund an expanding welfare state and support higher wages and better working conditions. Its role had shifted from socialist foe of capitalism to pragmatic facilitator and regulator of capitalism. When growth ended and power shifted to the capitalist class, the social democrats were rudderless. They had become dependent on the capitalism they had initially vowed to transform.

What followed since the 1990s was the unedifying spectacle of leftist parties adapting to the imperatives of corporate profitability within an increasingly globalized market economy. This accommodation of neoliberalism took the form, whether called that or not, of the Third Way. Purportedly a middle course between market fundamentalism and old-style (statist) social democracy, it signaled the defeat of the democratic-reformist tendency. Social-democratic parties began to impose austerity programs on their own constituencies.

Why Did this Happen?

Karimi seems to believe that the social-democratic project was doomed from the outset, that a democratic-reformist path is always vulnerable to the cunning and power of capital and its allies. This view may be correct. But, in that case, we will have to conclude that the Keynesian era was just a fluke, a structural necessity of capitalism. Is it that, or is the social-democratic welfare state a remarkable achievement of the labor movement and its allies?

Although I cannot engage that dispute here, I can emphasize that the social-democratic movement has faced and is still facing enormous challenges to which there are no obvious answers. It wasn’t incompetence or naiveté that sabotaged the democratic left; it was circumstances.

  • Hyper-globalization of markets, propelled by technological change and neoliberal policies to free trade, investment and financial flows, restricts national policy autonomy and deepens the divide between winners and losers. Enshrining free capital mobility, in particular, lays the ground for financialization of economies, the rise of plutocracy and the volatility of markets as cross-border speculation grows. All of these trends work against traditional social-democratic redistributive policies, and indeed undermine democracy itself.
  • The decline of the “traditional” (industrial) working class and unionization undermines the “natural” political base of leftist parties. Right-wing attacks on public-sector unions, a remaining bastion of progressive initiatives, compound the problem. The “new” working class is increasingly multi-ethnic, female, and employed in the service sector. The fragmentation of identities, occupations and work-places make organization difficult.
  • Immigration and the emergence of multicultural societies create a dilemma when rising economic insecurity breeds anger that is directed by the far right against immigrants, racial or religious minorities. Progressives, to be true to themselves, must defend the rights of minorities. To do so, however, puts them at odds with traditionally left constituencies among the present or former white working class.

In a nutshell, how do you build the democratic  left in the context of hyper-globalization that shrinks the policy autonomy of national governments and post-industrial societies with a multiethnic population, low union membership, a small and beleaguered industrial working class, a populist right dealing in conspiracy theories – not to mention an ingrained culture of consumerism and possessive individualism?

 What to Do?

Not only does Karimi underestimate the debilitating challenges facing the democratic left, but also he offers an ambiguous alternative to social democracy. Essentially, his alternative boils down to this: a new left should adopt a program featuring the “socialization of investment” and the “democratization of the economic sphere.” To achieve these goals, he continues (p. 88-9), requires building a broad-based coalition of progressive forces to engage in class struggle. In addition, nationally based socialist movements must develop alliances at the regional and global levels to confront the globalized dominant class at all levels of governance. At this general level, none of these proposals diverges from ideas widely circulating in progressive circles.

But the devil, as they say, is in the details – and Karimi provides very few. How will this class struggle be waged, within the rules of liberal democracy and electoral politics or outside, in the streets, in outright confrontation with the forces of order? If the former, how does the program differ from democratic reformism? Both “socialization of investment” and “democratization of the economic sphere” can be construed as parts of a reformist, incremental strategy. For example, specific policies might include the following:

  • Shareholding rights for employee representatives on corporate boards
  •  Government-backed funding for employee buyouts of faltering companies
  • The mobilization of pools of workers’ capital to support alternative ownership strategies such as producer cooperatives
  • Extension of public trusts into key domains such as land, housing and the electromagnetic spectrum
  • Commons management systems that expand the realm of decommodification.

Of course, none of these initiatives can proceed far without two systemic changes. The first is what Bernie Sanders refers to as a “political revolution.” At a minimum, a new democratic left must aim at eliminating the influential role of money in politics. This shift will require public funding of parties according to an agreed formula. That still leaves, however, the concentrated economic power of large transnational corporations. Reducing this power requires, as a start, breaking up banks that are “too large to fail” and anchoring capital in national jurisdictions – which brings us to the second systemic change.

That is the reversal of hyperglobalization. The national level is still the most inclusive level at which solidarity can be mobilized. Although, as Keynes argued, free trade is a good thing under certain conditions, free capital mobility is not. We need to return to capital controls and introduce a Tobin tax to discourage destabilizing cross-border speculative flows. The aim would be to deter speculation but not long-term foreign direct investment. Above all, we must produce a fairer globalization if we are to stave off vicious right-wing populism and the possibility of full-fledged fascism. Karimi is right: the left must organize at various levels to achieve its goals.

Under current conditions, the best hope we have is democratic reformism. Is there a realistic alternative, despite social democracy’s recent failings, to the strategy of a rejuvenated left capturing governmental power and using it to incrementally efface neoliberalism? Confrontational class struggle, if not a marginal activity by a small minority, would involve many years of turmoil, probably culminating in a fascist reaction. And can we really trust the revolutionary left to do the right thing when in office?

But to advocate democratic reformism is not to embrace the discredited policies of most current social-democratic parties. We must stand in opposition to neoliberalism, if not capitalism. Social democracy is dead. Long live social democracy!

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4 thoughts on “Social Democracy is Dead. Long Live Social Democracy!

  1. CORNELIA Baines

    Fascinating insights – useful for a physician-epidemiologist who is a politically and economically naive reader!

  2. J. Hamilton, AICP

    Richard, thank you. Useful insights on several of the historical keys to the devolution of social democracy that has led us to our current unfortunate political circumstances in the West.


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