Date: Sat, 17 Jul 1999 11:40:59 -0500 (CDT)
From: MichaelP <>
Subject: Privatising social democracy
Article: 70096
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Privatising social democracy

By Josi Vidal-Beneyto, Le Monde diplomatique, July 1999

The manifesto setting out a third way for the new centre in Europe, launched by Tony Blair and Gerhard Schroder in London on 8 June (1), is a highly significant political move with a clear electoral agenda. The retreat of liberal fundamentalism has left the forces of the right in disarray and a section of the electorate dissatisfied with the social insensitivity of the neo-liberal proposals and disenchanted with the old Christian Democrat programmes. This represents a rich source of votes, a political no-man's-land that the two Social Democrat leaders think they can seize with a minimal risk of losses on their left flank.

They see capitalism and the market economy, on the one hand, and business enterprise and wealth creation, on the other, as the only credible prospect for the 21st century. There is, to their minds, nothing to fear from a communist or socialist alternative, which has no place in modern society.

In their view, it is time to abandon radical positions, left or right, both equally untenable in today's complex world. It is time to find a third way that will provide a new focus for social democracy, offering a political agenda based on new values: modernity and pragmatism, the end of equality as a permanent aim, the end of the state as the principal pillar of social justice, the promotion of consensus as the preferred basis for political life, the encouragement of innovation and individual initiative as essential instruments for personal and collective advancement.

The new formula, say Blair and Schroder, has already proved popular with electorates in the United Kingdom, Germany and, more recently, Israel. It will eventually be adopted everywhere because it has successfully dropped the rigid and archaic baggage that encumbered social democracy in the past.

These ideas are of course inconsistent. They are completely at odds with the 21 points of the European socialist parties' manifesto signed in Milan three months ago—which may, incidentally, account for the disastrous showing Blair and Schroder's parties made in the European elections on 13 June. But quite apart from this, they clearly spell the end of any idea that social democracy might offer a strong, left-wing answer to the problem of reconciling capitalism with democracy.

There is nothing natural about the cohabitation of the two systems, as liberal doctrine would have us believe. For it to succeed, we must first resolve the contradiction between the accumulation of capital, on the one hand, a fundamental requirement of capitalism which leads inexorably to the concentration of wealth and economic power in the hands of the few, and, on the other, the need to legitimise the system by means of a redistribution that will render the domination of the rich acceptable to the majority of the population.

This contradiction is less evident in phases of economic growth, when high returns on capital are compatible with full employment, rising wages and a steady growth in consumption. But it is very much to the fore in periods of stagnation and recession, especially if the state cannot make good any shortfall. During these times of crisis, the social compact between labour (represented by the unions), business and the state is liable to break down.

During the 1970s the economic crisis and rising unemployment placed a great strain on labour relations and on the prevailing political balance in the West, notably the uneasy but stable cohabitation between capital, labour and the state. At the end of the 1980s, the fall of the Berlin wall, the collapse of the Soviet Union and the ossification of Marxism had a seismic effect on the parties of the left.


Those socialist parties that had not yet followed the lead given at Bad Godesberg (2) and abjured Marxism, hastened to do so and the social democratisation of socialism became universal. The parties of the left that still had strong links with the unions broke them, particularly in southern Europe, Portugal, Spain, Italy, etc. So goodbye, labour. But this severing of links undermines the true basis of democratic socialism, increases the floating vote, destroys the credibility of any plan to transform society and reduces socialist parties to mere electoral sparring partners, concerned only, like all the rest, to win political power.

The state, long regarded by some—liberals and anarchists—as an inefficient, extravagant and oppressive structure, has been under attack in the past few years, both from within (owing to the increasing autonomy of regions and towns) and without (as a result of the formation of macropolitical areas such as the European Union). Many are now inclined to scrap it—on the pretext that globalisation has in any case signed its death warrant by rendering it incapable of performing its functions.

The most significant feature of Blair and Schroder's neo-liberal manifesto is the cool effrontery with which they assert that all the prophets who have been predicting the demise of social democracy (3) for 20 years were right. Their—astonishingly feeble—reasons for taking this view are not set out in the manifesto but in two books designed to lend some theoretical gravitas to their apostasy (4), The Third Way. The renewal of Social Democracy (5) by Tony Blair's adviser, Anthony Giddens, and Aufbruch, die Politik des Neuen Mitte (Fresh start, a policy for the new centre) (6) by Bodo Hombach, Federal Minister for Special Tasks in the German government and close associate of Schroder, who contributed an epilogue to the book.

To explain its present parlous state, these two authors mount a devastating attack on the foundations of social democracy, namely the workforce, the labour movement, the unions, the state and particularly the welfare state, which they hold responsible for the current stagnation.

Hombach falls back on the well-worn argument that society needs to be opened up, while Giddens calls for yet another—the umpteenth - modernisation. Director of the London School of Economics and one of the most widely known sociologists writing in English in the world, Giddens barely touches on the subject of labour. The term is not listed in the index, except in conjunction with the term market. For him, as for Hombach, all the problems of labour can be reduced to problems of the labour market, where supply and demand meet and adjust, in accordance with the needs of the economy. In their view, there is no longer any point in talking about a confrontation between management and labour. The working class has largely disappeared, the social democrat parties can no longer rely on a block working-class vote, and the old electoral left-right divide no longer obtains or has at least become much more complex.

Using old social-liberal arguments, Giddens claims that the labour movement has given way, once and for all, to new social movements that are the real players in the contemporary social scene. Thus the drama of the class struggle has been superseded by the dynamics of inclusion and exclusion. In this connection, Giddens has no compunction in asserting that exclusion at the top, exclusion of the upper strata of society, is as damaging as exclusion at the lower end of the social scale. Integration must therefore not be aimed exclusively, or even primarily, at the least privileged sections of society. This might lead to fragmentation and encourage the tendency of the ruling classes to pull out, although their role is, he says, essential to the progress of society as a whole.

Our conduct, according to Giddens, should be inspired by business enterprise and its most characteristic values—competitiveness and wealth creation—and to hell with the timid old notions—security and redistribution—of social democracy. The bosses' characteristic enthusiasm for progress and willingness to take up a challenge should be shared by the workforce. Employees should have a positive attitude towards risk, which is an essential ingredient in any really flexible employment policy. We must abandon the passive model of the welfare state which creates a culture of dependence. The people must become social players, helping to build a social investment state in which the welfare state is replaced by the welfare society and everyone once again plays an active part.

Bodo Hombach's message is no different. He considers that the only possible socio-economic pattern is the social market economy and the only figure he admires, apart from Schroder, is the Christian Democrat, Ludwig Erhard (7).

When all is said and done, the model that Blair and Schroder are suggesting we should adopt, on the strength of their advisers' theories, is not new nor has it anything to do with social democracy. Unless of course, we are willing to accept social democracy with a liberal face, social democracy that has been privatised.


(1) See Le Monde, 20-21 June 1999.

(2) The town in Germany where the Social Democrat Party Congress formally renounced Marxism as a basis for the party's political doctrine.

(3) See, for example, Alain Touraine, L'Apres-Socialisme, Grasset, Paris, 1980; Ralf Dahrendorf, L'apres-social-democratie, in Le Debat, no 7, Gallimard, Paris, December 1980; Francois Furet, Jacques Julliard and Pierre Rosanvallon, La Republique du centre. La fin de l'exception francaise, Calman-Levy, Paris, 1988.

(4) See Ignacio Ramonet, Social Democracy betrayed, Le Monde diplomatique English edition, April 1999.

(5) London, 1998.

(6) Econ Verlag, Munich, 1998.

(7) Ludwig Erhard (1897-1977), former economy minister. A keen advocate of economic liberalism, he was regarded as the architect of the German economic miracle. Succeeded Konrad Adenauer as chancellor (1963–1966).