A Challenge to Labour’s Moderates

Labour’s moderates, led by Tom Watson, recently founded a social democratic caucus within the party. But what do they mean by social democracy?

What does it mean to be a ‘social democrat’? It has always been tricky to say. In the late nineteenth and early twentieth centuries, it described the movement that aimed to extend mass democratic demands into the economic sphere. The Social Democratic Federation, one of the Labour Party’s precursor organisations, was Britain’s first Marxist political party. Marx and Engels themselves used the term in their writing.

The story goes that this radicalism endured until the Second International split over the Great War and the Russian Revolution, after which social democracy is defined by contrast to revolutionary socialism. In this telling, the mainstream movements of Europe’s left committed themselves to a moderate, reforming road to social change and abandoned their anti-capitalist horizons. 

But this has always been suspect. After all, the mass parties that represented the social democratic tradition continued to aspire towards a fundamentally different kind of society. Much like Labour’s Clause IV, Germany’s Social Democratic Party (SPD) advocated the ‘transformation of the capitalist system of private ownership of the means of production to social ownership.’ The Norwegian Labour Party briefly joined the Comintern in the 1920s. And, when the Austrian social democrats won control of Vienna and began a radical programme of social housing construction, they named its centrepiece Karl-Marx-Hof. 

Membership card of the Social Democratic Federation, 1910.

France’s first Socialist Party prime minister Léon Blum certainly didn’t believe in this clean division of the Left. He famously said that ‘reform is revolutionary, and revolution is reformist’, arguing that ‘a revolutionary act occurs each time the working class achieves significant progress sooner than would have been the case in the normal course of events.’ As Blum would make clear writing for Tribune just months before he died, he remained committed to these politics until the end. 

Other attempts to describe the emergence of a clean-cut moderate social democracy cite the Second World War as its origin. Whatever about the messy Popular Front policies which preceded it, they say, social democracy afterwards was characterised by an attempt to manage rather than overcome capitalism, and by an adherence to Western foreign policy.

Yet, in the world’s most celebrated social democracy, this could hardly have been farther from the truth. Under Olof Palme, Sweden’s social democrats routinely defied the United States, backing the Vietnamese resistance during the war, supporting the struggle against apartheid in South Africa, and calling for an end to ‘Western domination’ of the globe. Furthermore, when the crisis of the 1970s hit, the party considered transitioning to a form of market socialism through the Meidner Plan.

The 1970s was a bad decade in general for proponents of the clean division theory, with social democratic parties emerging from dictatorships in Spain, Portugal, and Greece which were all, at least constitutionally, committed to overcoming capitalism. In fact, in Portugal, a country so thoroughly social democratic that even its centre-right party is called the Social Democratic Party, the path to social democracy was revolution — the Carnation Revolution of 1974–75 which brought the Estado Novo regime to an end amid an explosion of workers’ councils and co-operatives. 

Election rally at the headquarters of the Norwegian Labour Party, 1936.

While it may be difficult to pin down exactly what it means to be a ‘social democrat’, there is far more consensus about what social democracy represents. Social democracies are those places which built a welfare state in the twentieth century through fiscal expansion, wealth redistribution, nationalisation of essentials such as healthcare and utilities, progressive regulation, equality legislation, and social security policies. They achieved improvements in the standard of living — from public health and life expectancy to education, housing, and employment — unprecedented in human history.

They did this by distributing society’s wealth in a different way from the previously-dominant market system, disciplining capital, and ensuring that labour received a higher share of both the national income and the social surplus. This reached its apex in the thirty-year period after the Second World War known in France as the Trente Glorieuses. It was pretty glorious in Britain too, where the top 1 per cent saw its share of the national income fall from 15 to 5 per cent.

Although there were many attempts to sketch the bounds of these reforms, such as Britain’s 1942 Beveridge Report, social democracy was not the result of a grand plan. What took shape in Europe in the middle of the century wasn’t the vision of the early socialist and social democratic parties, and was certainly far more than the patrician welfarists like Bismarck had imagined when they first advocated public health insurance.

Social democracy was a class compromise, won by labour movements which realised that the distribution of wealth in society was a question of economic and social power. The foundation of this power was laid in the battles for trade union rights in the late nineteenth and early twentieth centuries, which in Britain ebbed and flowed from the legalisation of unions in 1871 to the mass industrial unrest of the period before and after the First World War. 

Swedish Social Democratic Prime Minister Olof Palme marches against the Vietnam War with the North Vietnamese ambassador, 1968.

Britain is a particularly good example because it shows that even though there were setbacks along the way — such as the failure of the 1926 general strike and the anti-union legislation which followed — the upward trajectory of labour continued, and was consolidated by the emergence of its political expression in the Labour Party. After the Second World War, when Labour came to power, the 1927 Trade Union Act was repealed and this forward march reached its highpoint when half of all workers in Britain were members of unions by the 1970s and ’80s.

With this level of organisation, and a willingness to fight, came real power not just in politics but in the economy — power over how things are produced, and power to determine who benefits from that production. This, combined with the tumult caused by the Second World War and the threat from the Communist east, was enough to force capital into a historic compromise of conceding some of its share to the welfare state lest it lose more at a later point.

Many believed that this compromise was permanent. In his Future of Socialism, Anthony Crosland argued that society’s major economic questions had been resolved. Contrary to Marx’s predictions of a crisis-ridden system prone to inequality, ‘traditional capitalism’ for Crosland had been ‘reformed and modified almost out of existence.’ Around the corner lay ‘mass abundance’, a 24-hour working week, and a future of ever-increasing living standards.

When you had lived to see Britain’s health system transformed from the poor house infirmary to the NHS, it would have been hard to resist such optimism. Sadly, however, Crosland’s predictions were not our future. The growth of the welfare state had placed real constraints on capitalists, resulting in a profit squeeze and the crisis of the 1970s. The drive to restore profitability to the system resulted in the emergence of Thatcher and Reagan, a renewed offensive by capital and the end of the historic compromise.

Ever since, inequality has been growing in the social democracies: labour’s share of the national income has declined, the welfare state has been under sustained attack, trade union density has been decimated (in Britain, it is now about half of what it was in its 1970s and ’80s heyday). Increasingly footloose and freed from state constraints, capital embedded its victories over labour first in globalisation and then, after the 2008 crash, in a decade of austerity policies.

Anthony Crosland wrote his landmark book ‘The Future of Socialism’ in 1956.

So, if social democracy was a product of the upward march of the labour movement, and is existentially threatened by its decline, shouldn’t the response of social democrats at this moment be to rebuild that movement and renew the struggle against capital that brought about the welfare state in the first place? 

Certainly, that would seem to be the logical conclusion, but for the past decade it has been largely ignored by Europe’s social democratic parties. Election after election passed without the centre-left proposing the kinds of policies that might rein capital in, meaningfully redistribute wealth, or empower the trade union movement. 

The weakness of their platforms paled in comparison to the historic scale of social democracy’s challenges as party after party withered away. In Germany, the SPD’s vote halved in twenty years; in France, the Socialist Party managed twice that level of decline in just five years.

In the end, it has been forces to the left of mainstream social democracy which have fought hardest to defend and even renew the welfare state. This is exemplified by the rise of Jeremy Corbyn to the Labour leadership and the party’s consequent adoption of policies like renationalisation of utilities, repealing the Trade Union Act, increasing taxes on the wealthy, and introducing a National Education Service.

And yet, it is against this direction that Labour’s ‘social democratic’ caucus has decided to define itself. Which begs the question: what do they mean by social democracy? To date, policy proposals which might answer this question have been thin on the ground. 

If it means challenging capital and undoing its conquests over labour in recent decades, social democracy might have a future. But if it means shying away from that battle, its best days are already behind it.