The Neoliberalization of Social Democracy

In April of this year, Canada’s New Democratic Party officially renounced its commitment to socialism. In July, the British Labour Party announced plans to end its life-long special relationship with unions. In terms of their expected impact, the two changes are very different. Whereas the NDP – which has never pursued socialism, notwithstanding the wording of its constitution – simply formalized its longstanding membership among political parties who embrace capitalism, the Labour Party’s intended break with unions will have meaningful political consequences. Yet despite their differences – in content, in scale, in geography – both changes are part of a larger trend: that is, the neo-liberalization of social democracy.

The nine chapters in the edited collection Social Democracy After the Cold War describe the development of that trend and analyze its relevance for anti-capitalists. It claims to provide “a comprehensive examination of a politics that has come to be identified as the ‘new’ social democracy.” Comprehensive is a bold word and isn’t the best descriptor of a book that offers case studies of social democracy without including chapters on experiences in Southern Europe (think Greece and Portugal) or anywhere on the Asian, African or South American continents. That said, the collection does provide a richly detailed and very readable account of recent shifts in social democracy in several of its core homelands: the United Kingdom, Sweden, Germany, Canada, Australia, and, with recognition of their unique political culture, Québec and the United States. 

The first social democratic parties appeared in Europe more than a century ago. The most radical, such as Germany’s (of which Rosa Luxemburg was an active member) sought the transformation from capitalism to socialism in part through winning government and implementing a legislative agenda designed to empower working class people and movements. By the end of the Second World War, social democracy was thoroughly reformist and supported Keynesian economic policy and the development of a broad welfare state. Social democratic parties in power, such as Attlee’s Labour government in Britain, used the tools of the state to manage a regime that combined corporate profitability with a modicum of support to larger layers of the population. In the UK, Sweden, Germany, and other places across the industrialized West, transportation infrastructure, communication systems, and other large-scale industries were nationalized. Publically-funded health-care and schooling was extended, unemployment insurance was developed, and greater protections for workers were put in place. Social democracy helped facilitate the temporary post-war political settlement between capital and labour. In the wake of the 1970s economic crises and the implementation of neo-liberal policies that eroded the welfare state, crushed unions, and favoured capitalist expansion, social democracy faced challenges both to its electoral viability and its identity as a critic of unbridled capitalism. 

The key feature of social democracy since the early 1990s has been its dedication to the market as a means of achieving social justice. As Evans puts it in the introduction: “What distinguishes the new social democracy is an embrace of its new ‘modern’ role as a manager of neoliberal restructuring.” In Schmidt’s framing chapter, he argues that champions of the new social democracy made two fundamental assumptions that would lead to dramatic shifts. First, they argued that in the contemporary era government could no longer be won by appealing to working class interests.  Capitalist development had so altered the class structure that electoral victory would depend on building “cross-class alliances” through electoral platforms with the broadest popular appeal . Second, globalization and the increased need to be competitive meant the previous welfare state  could not be maintained: “Under the perceived constraints of integrated world markets, a remake of the Keynesian welfare state after the neoliberal interlude was not on the social democratic menu, whether voters had an appetite for it or not.” 

The case studies in Social Democracy After the Cold War demonstrate that throughout the industrialized West, social democratic parties have not only weakened their defence of public goods and citizenship entitlements but have embraced the logic of neo-liberalism without exception. In his chapter on the post-Cold War NDP, Evans suggests that the party’s electoral strategy is based in its promise that it can “manage neoliberalism better.” Östberg concludes that “Swedish social democracy has actively contributed to the use of the EU for economic reforms that move in a neoliberal direction.” Echoing his framing chapter, Schmidt explains why the leaders of Germany’s Social Democratic Party “saw the abandonment of any commitment to the Keynesian welfare state as a necessary adjustment of their politics to new economic and social realities.” Woodward suggests that Australia’s Labour Party has maintained stronger links with unions than has been true in other places but “its need to placate business groups has also demonstrated the limits of social democracy in a globalized world.” Sheldrick tells of how the British Labour Party “pursued a relentlessly electoral strategy that accepted neoliberalism and market-based politics as a new consensus.” Rosenfeld, offers fresh thoughts on social democracy in the United States (a context in which “very few social democrats even call themselves social democrats”). He  concludes that social democracy as a movement – in Europe, Asia, and the US – “has become independent of a true working-class base… no longer argues and organizes for major reforms within capitalist society… accepts, for the most part, the limitations of neoliberal globalization… [and] has no relation to any transformative project against capitalism.” 

Individually, the case studies offer detailed local histories of the transformation of a major current within the broad Left. Taken together, they suggest that social democracy is no longer part of anti-capitalist struggle. The notion is implied throughout the book. At times it is plainly stated, as when Schmidt concludes that “alternatives to neoliberalism and the competition state… must be built beyond social democratic parties” and Sheldrick calls “irrefutable” the logic that “if the Left in Britain is to have a voice, it will need to split from the Labour Party and establish a new, independent left-wing party.”

It’s against the backdrop of social democracy’s collapse as a vehicle of working-class agency that Rashi closes out the collection with an analysis of the new political formation Québec Solidaire. After explaining the failure of both the separatist and federalist variant of social democracy in Québec, Rashi concludes that this history

has opened up a space, probably unique in North America, for a bona fide Left to assert itself. This new Left, in tune with the social movements that have allowed Québec to resist conservative and neoliberal policies to a degree not seen elsewhere in the continent, is attempting to forge a mass alternative capable of influencing the political scene. The future success of Québec Solidaire depends on its ability to deepen its program of a post-capitalist, green, and independent society while simultaneously building larger alliances with social and political forces seeking to oppose the right.

The case of Québec Solidaire is inspiring. Here is a broad “new Left formation,” which Rashi argues is moving “toward explicit anti-capitalism,” with two elected parliamentarians in Québec’s National Assembly. Activists across the broad Left have much to learn from the fact that the party represents not NDP-style “social democracy from above” but rather “a much more ‘grassroots left approach’… intimately linked to the rise of the anti-globalization movement.” 

In addition to learning from new experiments, however, it is also important to question whether even the degenerated version of social democracy might still play a role in anti-capitalist strategy. In part this is because new social movements never emerge fully formed; they grow unevenly and out of a context shaped in important ways by remnants of older Lefts. The case studies in this collection call for something beyond social democracy but do not inquire into how such movements might form and how existing social democracy might factor into rebuilding a mass left. In light of the more critical politics still present in social democracy – unevenly, to be sure, but also rooted in real working-class experiences and power – it is worth asking, in the Canadian context, at least: Should anti-poverty campaigns not publicly press the NDP to raise welfare rates in a way they wouldn’t the two traditional parties of the ruling class? Might Palestine solidarity activists not learn something important and potentially find crucial support by challenging the NDP’s tailing of Harper’s Israel policy? 

Social Democracy After the Cold War makes a valuable contribution by documenting the fall of Keynesian and the rise of neo-liberal social democracy. Of course, social democracy, like all political movements, is full of contradictions; and while it is important to be clear-eyed about the limitations of the movement today, this means not simply viewing it as a spent force. We need to analyze its contradictions, which involves attending to the fact that not all social democratic members and supporters are committed to a neo-liberal orientation. Many progressives express themselves through social democracy, even when they recognize the problems with this approach. Thinking through such contradictions could help clarify the sorts of pathways through which broader layers of activists might find their way to new, more radical movements.

James Cairns is a member of the Toronto New Socialists. He teaches at Wilfrid Laurier University in Brantford, ON, and is active in Faculty 4 Palestine. He and Alan Sears recently published The Democratic Imagination: Envisioning Popular Power in the 21st Century.