The Cedar Lounge Revolution

Social Democracy: The Meaning, Use and Abuse of a Term August 14, 2010

Paul Gillespie in the Irish Times tackles the question of where Social Democracy might go from here. He begins thus

”SOCIAL DEMOCRACY, in one form or another, is the prose of contemporary European politics.” These words of the historian Tony Judt, who died last week of a body crippling illness aged 62, are taken from a brilliant lecture he gave in New York last year before he was altogether incapacitated. They are a fitting way to examine one of the great puzzles of the contemporary world: why has the European left performed so pathetically when capitalism is in crisis, neoliberalism discredited, unrestrained financial markets blamed and working people are footing the bill for recovery?

Gillsepie argues that the question of the miserable performance of the left is a transatlantic question

politically and intellectually under the Obama administration, concerning not only whether to stimulate or cut out of the recession, but how best to promote and protect social welfare, link states and markets, and extend democracy – the three great social democratic concerns.

Before returning to Gillespie, some discussion of Judt. Some time back, EamonnCork provided a link to a piece by Tony Judt entitled Ill Fares the Land in the New York Review of Books. Published shortly after his book of the same name, Judt addressed the changes that had taken place in political culture since the 1970s, including the sense of powerlessness among the young that replaced the arrogant confidence of the 1960s, and the near-total collapse of the political debates that had shaped the world for decades.

Something is profoundly wrong with the way we live today. For thirty years we have made a virtue out of the pursuit of material self-interest: indeed, this very pursuit now constitutes whatever remains of our sense of collective purpose. We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: Is it good? Is it fair? Is it just? Is it right? Will it help bring about a better society or a better world? Those used to be the political questions, even if they invited no easy answers. We must learn once again to pose them.

Judt argued that the recent economic problems demonstrated that we can’t go on living in the world shaped during the Reagan/Thatcher years.

the obsession with wealth creation, the cult of privatization and the private sector, the growing disparities of rich and poor. And above all, the rhetoric that accompanies these: uncritical admiration for unfettered markets, disdain for the public sector, the delusion of endless growth.

He warned that if we simply bailed out unregulated capitalism, the same thing would happen, and worse, in future.

And yet we seem unable to conceive of alternatives. This too is something new. Until quite recently, public life in liberal societies was conducted in the shadow of a debate between defenders of “capitalism” and its critics: usually identified with one or another form of “socialism.” By the 1970s this debate had lost much of its meaning for both sides; all the same, the “left–right” distinction served a useful purpose. It provided a peg on which to hang critical commentary about contemporary affairs.

Noting the disillusionment among his students with a world they feel unable to change, he noted that he

wrote my book Ill Fares the Land for young people on both sides of the Atlantic. American readers may be struck by the frequent references to social democracy.

Judt rejected the American term liberal as a description for those who advocated “public expenditure on social objectives” in favour of social democrat.

Social democrats, on the other hand, are something of a hybrid. They share with liberals a commitment to cultural and religious tolerance. But in public policy social democrats believe in the possibility and virtue of collective action for the collective good. Like most liberals, social democrats favor progressive taxation in order to pay for public services and other social goods that individuals cannot provide themselves; but whereas many liberals might see such taxation or public provision as a necessary evil, a social democratic vision of the good society entails from the outset a greater role for the state and the public sector.
Understandably, social democracy is a hard sell in the United States. One of my goals is to suggest that government can play an enhanced role in our lives without threatening our liberties—and to argue that, since the state is going to be with us for the foreseeable future, we would do well to think about what sort of a state we want. In any case, much that was best in American legislation and social policy over the course of the twentieth century—and that we are now urged to dismantle in the name of efficiency and “less government”—corresponds in practice to what Europeans have called “social democracy.” Our problem is not what to do; it is how to talk about it.

Europe, he noted, was different.

Many European countries have long practiced something resembling social democracy: but they have forgotten how to preach it. Social democrats today are defensive and apologetic. Critics who claim that the European model is too expensive or economically inefficient have been allowed to pass unchallenged. And yet, the welfare state is as popular as ever with its beneficiaries: nowhere in Europe is there a constituency for abolishing public health services, ending free or subsidized education, or reducing public provision of transport and other essential services.

Judt set out to challenge conventional wisdom on both sides of the Atlantic, what he termed the “Washington consensus”, i.e. essentially the neo-liberal belief that anything the state could do, the private sector could do better.

The Washington doctrine was everywhere greeted by ideological cheerleaders: from the profiteers of the “Irish miracle” (the property-bubble boom of the “Celtic Tiger”) to the doctrinaire ultra-capitalists of former Communist Europe. Even “old Europeans” were swept up in the wake. The EU’s free- market project (the so-called “Lisbon agenda”); the enthusiastic privatization plans of the French and German governments: all bore witness to what its French critics described as the new ”pensée unique.”

Judt noted that the bailout did not represent an ideological shift among the political elites in Europe and the US.

as the response of the Obama administration suggests, the reversion to Keynesian economics is but a tactical retreat. Much the same may be said of New Labour, as committed as ever to the private sector in general and the London financial markets in particular. To be sure, one effect of the crisis has been to dampen the ardor of continental Europeans for the “Anglo-American model”; but the chief beneficiaries have been those same center-right parties once so keen to emulate Washington.
In short, the practical need for strong states and interventionist governments is beyond dispute. But no one is “re-thinking” the state. There remains a marked reluctance to defend the public sector on grounds of collective interest or principle. It is striking that in a series of European elections following the financial meltdown, social democratic parties consistently did badly; notwithstanding the collapse of the market, they proved conspicuously unable to rise to the occasion.

So what is his solution?

If it is to be taken seriously again, the left must find its voice … We have entered an age of insecurity — economic insecurity, physical insecurity, political insecurity … We have seen that the specter of terrorism is enough to cast stable democracies into turmoil. Climate change will have even more dramatic consequences. Men and women will be thrown back upon the resources of the state. They will look to their political leaders and representatives to protect them: open societies will once again be urged to close in upon themselves, sacrificing freedom for “security.” The choice will no longer be between the state and the market, but between two sorts of state. It is thus incumbent upon us to reconceive the role of government. If we do not, others will.

The last three decades, he noted, have seen the reversal of a century-old trend.

From the late nineteenth century until the 1970s, the advanced societies of the West were all becoming less unequal. Thanks to progressive taxation, government subsidies for the poor, the provision of social services, and guarantees against acute misfortune, modern democracies were shedding extremes of wealth and poverty.
To be sure, great differences remained. The essentially egalitarian countries of Scandinavia and the considerably more diverse societies of southern Europe remained distinctive; and the English-speaking lands of the Atlantic world and the British Empire continued to reflect long-standing class distinctions. But each in its own way was affected by the growing intolerance of immoderate inequality, initiating public provision to compensate for private inadequacy.

He then goes on to give examples of the nature of this inequality, which is at its highest in the west among the most deregulated countries – the US and UK. One suspects that the Republic is not far behind. He provided graphs on things like inequality and health, crime, mental illness, life expectancy, and social mobility to illustrate the facts he cites.

In 2005, 21.2 percent of US national income accrued to just 1 percent of earners. Contrast 1968, when the CEO of General Motors took home, in pay and benefits, about sixty-six times the amount paid to a typical GM worker. Today the CEO of Wal-Mart earns nine hundred times the wages of his average employee. Indeed, the wealth of the Wal-Mart founder’s family in 2005 was estimated at about the same ($90 billion) as that of the bottom 40 percent of the US population: 120 million people.

The consequences?

children today in the UK as in the US have very little expectation of improving upon the condition into which they were born. The poor stay poor. (See Figures 1 and 2.) Economic disadvantage for the overwhelming majority translates into ill health, missed educational opportunity, and—increasingly—the familiar symptoms of depression: alcoholism, obesity, gambling, and minor criminality. The unemployed or underemployed lose such skills as they have acquired and become chronically superfluous to the economy. Anxiety and stress, not to mention illness and early death, frequently follow.

Inequality is the key issue for Judt, explaining why US life expectancy lags behind that of Bosnia, and only just above that of Albania.

Inequality is corrosive. It rots societies from within. The impact of material differences takes a while to show up: but in due course competition for status and goods increases; people feel a growing sense of superiority (or inferiority) based on their possessions; prejudice toward those on the lower rungs of the social ladder hardens; crime spikes and the pathologies of social disadvantage become ever more marked. The legacy of unregulated wealth creation is bitter indeed.

Just as corrosive has been the change in social attitude that has seen the pursuit of wealth trump all else. The essay concludes

How should we begin to make amends for raising a generation obsessed with the pursuit of material wealth and indifferent to so much else? Perhaps we might start by reminding ourselves and our children that it wasn’t always thus. Thinking “economistically,” as we have done now for thirty years, is not intrinsic to humans. There was a time when we ordered our lives differently.

So, then, it seems that for Judt Social Democracy was about tackling inequality using the power of the state and social expenditure. Although he places great stress on the power of ideas for the future of social democracy, the idea that he seeks to promote are about altering material realities, and not simply abstract moral categories like justice and fairness.

So how then does this fit with Gillespie’s article, which cites Judt as its inspiration?

It suffers from decades of adapting to the very forces which brought on the crisis. Ideologically its leaders bought into the neoliberal, efficient market consensus, promoting the deregulation which exploded two years ago. “Third way” policies eroded the distinctions between left and right, as social democratic parties became more geared to consensual governing than representing alternative futures. Their links to the social classes, trade unions and other blocs supporting them were weakened without finding new social bases.
As a result they lost their ability to fight defensive battles against the new insecurity or offensive political and intellectual ones for an alternative future. Liberal, green or radical left parties gained advantage, but the resulting fragmentation on the left throughout Europe has given easy victories to conservative parties in the European Parliament elections and a string of contests in larger and smaller EU member states.

That seems fair enough, and in line with Judt’s argument. Gillespie goes on to develop these points, arguing that social democracy needs to adopt an international response. He puts faith in the EU as the potential saviour of social democracy.

They have been slower to translate that into coherent policies at a European level to deal with the eurozone crisis. The €750 billion financial stability fund agreed in May is a huge pragmatic step towards greater economic governance. But we do not hear any common social democratic case for it to be supplemented by a bigger EU budget, Eurobond issues, financial transaction taxes, tighter financial regulation or more macroeconomic balance between surplus and deficit states. As a result voters may well conclude that a deflationary spiral of cuts typifies EU policy-making rather than its current right-wing agenda.

Let’s remember what Gillespie sees as the three great concerns of social democracy: to protect social welfare, link states and markets, and extend democracy. I haven’t read Judt’s book, but I didn’t get the impression from Judt’s article that he would see it like that. It seems to me that this is a very different type of social democracy, exactly the defeatist sort Judt was arguing against. Social democracy in its heyday after the Second World War, and even for decades after, spoke in terms of the transformation of society, and especially in terms of equality. This involved a very clear notion of using the powers of the state, especially taxation, of the redistribution of wealth. Nowadays, we hear about fairness not equality, and we never hear about redistribution from social democrats. Again, it may be in Judt’s book, but there wasn’t much sign of it in the article. Social democracy has been hollowed out, but it’s precisely in that hollowing out of economics that it has lost its purpose, and lost its way. I’m not sure that Judt was addressing that question as directly as he might in that article, and Gillespie certainly isn’t.

Who does Gillespie pick to exemplify the new type of thinking he is calling for? The current chair of the Socialist International, none other than the Greek Prime Minister, George Papandreou, who has called for

“fair, efficient system of economic governance that balances the need for sovereignty with the complex demands of monetary union in a globalised economy”

that will ensure

that democracy is never subordinated to markets

.

That, frankly, beggars belief. The idea that the hope of social democracy lies in the thought of someone who is implementing the dictates of the IMF and domestic capital under the cloak of an austerity programme in Greece is beyond parody. And this is what has happened to social democracy once it has given up even on moderate wealth distribution. Give me the KKE and socialism any day of the week.