Are the "new" social democratic parties in Europe
simply disguised libertarians, still calling themselves "socialist"
but basically supporting neoliberal ideas? This has often been
claimed in recent public policy debates. For example, in Great
Britain it has been claimed that Tony Blair and his "new" Labour
Party have continued the economic policies of Margaret Thatcher and
her Conservative Party. Equally, the economic reforms in New
Zealand, which turned the economy from a sclerotic, collectivist
welfare state into a modern, flourishing market economy, were
partly initiated by a party from the left. And didn't President
Bill Clinton promise to "end welfare as we know it?" And isn't
Germany's Social Democratic Party (SPD), together with its
left-wing Green coalition partner, in the process of abandoning its
deep-rooted pacifism of the left by entering the Kosovo war?
Despite the fact that these observations
appear to be correct, I do not share the view that the social
democratic parties in Europe are born-again liberals in the widest
sense of that word, as used in recent debates. (In Europe "liberal"
is very often a synonym for "modernity," or a description of the
lifestyle and views held by enlightened man. And, contrary to the
usage in English-speaking countries, "liberal" is not a term used
to describe social democratic values.)
In
my opinion, not much has changed during the decade since socialism
collapsed in the former Soviet Union and its satellite countries.
One cannot deny that reformers and/or modernizers are at work in
left-wing parties. But this is neither astonishing nor new. Viewing
the history of Germany's SPD after World War II, the Bad Godesberg
program--which was accepted by the party delegates in 1958 and
which distanced the party from the old Marxist ideas--did not
prevent the revival of neo-Marxism among their ranks only a decade
later.
It
is normal that bigger parties possess at least two wings battling
for control of the party's political path when they assume power.
In Germany, if Oskar Lafontaine, chairman of the SPD and then
Minister of Finance, had won his battle with Chancellor Gerhard
Schroeder, the SPD would now be leaning further to the left, and it
is doubtful that German military aircraft would be with the North
Atlantic Treaty Organization fighting against
President Slobodan Milosevic and his militia over Yugoslavia.
Schroeder, former chairman of the radical Social Democratic Student
Association, defeated Helmut Kohl and his Christian Democratic
Union (CDU) in the September 1998 elections while claiming to be a
modernizer not only of his party but also of his country. His
position in his party, however, is endangered. He might soon suffer
the same unkind fate of his predecessor, Helmut Schmidt, when he
lost the backing of the SPD in the early 1980s over the battle to
install Pershing missiles on West German territory.
In
the following remarks, I will attempt first to describe what
traditional socialism strives for and then proceed to what is
called the "new" social democratic point of view.
TRADITIONAL SOCIALISM
It
is said that socialism grew out of the industrial revolution and
the breakdown of the "old society"--to use Alexis de Tocqueville's
terminology.
The
introduction of liberal principles during the first phase of the
French Revolution (1789-1793), the scrapping of the feudal and
mercantilist economic order, and the emergence of dynamic markets
and new production techniques completely changed the old static
societies. Large numbers of small-scale businesses, organized in
traditional craft guilds, disappeared, and industrial undertakings
took their place. Similar to today's pressures of globalization,
new explanations of the world came to the fore. Early socialists
like Claude Henri de Rouvroy Saint-Simon and Charles Fourier
developed utopian ideas for the betterment of the world and founded
socialism as a philosophical and ethical system of thought.
But
the most impressive thinker, at least in continental Europe during
the 19th century, was Karl Marx, who in his theory of capitalism
argued that he had discovered the iron laws of the development of
human societies. In his theory on the eras of history, he claimed
that capitalism inevitably would be replaced by socialism and,
later, by full-fledged communism and the classless society.
Socialism became "scientific"--a construct of ideas according to
which the end is already known, and in which any endeavors to
change the course of events would be frustrated.
All
socialist European parties came under the influence of Marx's
thinking. Even today, radical Marxism plays an important role for
many in the left wing. In other words, Marx is not dead.
Marx
and his followers were so preoccupied with their theory of human
history that they did not realize the incompatibility of their
position with the pretension of socialism to being an ethical
system. If history inevitably moved along the road toward a
classless society, then all efforts either to change or to
accelerate the course of events would be senseless. In spite of
some ambiguities in Marx's theory, the only matter of dispute among
socialist thinkers was whether a revolution or a peaceful
development sped up by the introduction of universal suffrage would
be either necessary or sufficient to reach the end stage of
history. The controversy surrounding this point was one of the
reasons the leftist political movement in continental Europe split
into a communist and pro-revolutionary wing on the one hand, and a
social democratic grouping, favoring the democratic approach to the
putative end-state of society, on the other.
Left-wing parties didn't come into power
before the end of World War I (1914-1918). When this happened, they
realized that the whole Marxian body of thought would not be very
helpful in coping with the problems they were facing in the
war-torn societies. Since then, two schools of thought can be
distinguished: totalitarian socialism, on the one hand, and
democratic socialism on the other. The totalitarian movement seized
power in Russia (1917), and what was later called the Soviet model
and democratic socialism was successful mainly in West European
countries, among them Germany and Austria.
The
totalitarian socialists or communists resorted to the meager
10-point program of the Communist Manifesto, written by Marx and
Friedrich Engels in 1848. In this document, the two authors
recommend:
-
the abolition of private ownership of
land and application of all rents toward public purposes;
-
a progressive income tax;
-
the abolition of the right of
inheritance;
-
the confiscation of all property
belonging to emigrants and rebels;
-
the centralization of credit in the
hands of the state, by means of a national bank with state capital
and an exclusive monopoly;
-
the centralization of the means of
communication and transportation in the hands of the state;
-
an increase in the number and size of
factories and instruments of production owned by the state;
-
equal liability of all vis-à-vis
labor;
-
the combination of agriculture with
industrial production; and, finally,
-
free education for all children in
public (i.e., state) schools, along with the abolition of
children's factory labor in its present form and the practice of
combining education with industrial production, and so forth.
(Incidentally, this short list contains
some interesting criteria to find out whether a country should be
considered socialist or capitalist.)
From
the short list just mentioned, you can deduce easily that
collective property, central planning, and the elimination of
markets are compatible with the original ideas of Marx.
In
Western Europe, the 1920s and 1930s were the decades in which
totalitarian and authoritarian movements came to power, the most
destructive of which was Adolf Hitler's National Socialism. After
World War II and during the reconstruction period, democratic
socialists in Europe had to write their political programs anew. In
Sweden, where the Socialist Party has ruled, with minor exceptions,
since the 1940s, a democratic version of socialism was developed
that led to the well-known welfare state program that plays an
important role in other Scandinavian countries, too. In Great
Britain, the Labour Party came into power immediately after the war
and introduced the equivalent of the Swedish model based on Fabian
thinking--and not on Marxist views. In continental Europe,
classical liberal ideas under the heading of social market
economics experienced success in Belgium, Switzerland, Italy, West
Germany, and Austria, whereas France was inclined to follow the
ideas of the so-called economié concerteé--a
somewhat shaky mixture of central planning without compulsory
commands by state authorities--plus other all-encompassing
interventions into the economy.
In
light of the great success of market-oriented political and
economic policies in the 1950s and 1960s and the depressing "Iron
Curtain" that had descended from the Baltic Sea to the Black Sea,
the social democratic political and economic programs that relied
too heavily on Marxian thinking had to be revised. As I mentioned
previously, the Bad Godesberg program of Germany's SPD dropped the
Marxian elements of the party's platform, especially the central
planning proposals, to which large parts of the party adhered after
the war. The rules of the free market gained support and, instead
of central planning, some sort of macroeconomic steering of the
economy along Keynesian guidelines was proposed. But during the
high tide of neo-Marxism in the late 1960s and early 1970s, a
nostalgic return to the old ideas of the 19th century was en
vogue. Even today, the SPD is not fully immune from the
Marxian temptation: witness its inclination to establish coalition
governments with the former communist Socialist Unity Party (SED),
the party that ruled--and ruined--East Germany for 40 years. The
SED changed in name only, from the SED to the PDS (i.e., the Party
of Democratic Socialism), without really converting its political
and programmatic position. And it is now the coalition partner with
the SPD in an East German state; and, after elections to be held
later this year, it might become the political partner of the SPD
in other East German states as well.
IS THERE A "THIRD WAY" PROGRAM INSIDE
SOCIAL DEMOCRATIC PARTIES?
The
affinity with radical Marxism is only part of the picture. The
social democratic modernizers are also an important group to
consider. But what is the model they are striving for?
For
several decades, Sweden, one of the few European states that stayed
neutral during World War II, was a role model for social democratic
modernizers. For a long time, Sweden was one of the wealthiest
countries in the world. Its system of social services covered all
sorts of risks. Its society was egalitarian, and the overwhelming
majority of its citizens was in favor of the folkhemmet.
(This term is literally a combination of folk--that is,
people"--and hem, which means home.
If
the all-embracing welfare state, which substituted the security of
the government for the traditional ties of family, had not run into
grave financial problems, Sweden would still be "Mecca" for social
democrats. But Sweden's extremely high level of government
expenditures on its social welfare programs could not be sustained.
In fact, government spending rose from approximately half of gross
domestic product (GDP) in 1975 to two-thirds in 1995. The record
was set in 1993--ironically, under the non-socialist administration
headed by Carl Bildt--when public spending equalled 74 percent of
GDP.
In
Economic Freedom of the World: 1997 Annual Report
(Vancouver, B.C., Canada: The Fraser Institute, 1997), James
Gwartney and Robert Lawson rank Sweden 42nd out of 115 in its
measure of economic freedom. According to the 1999 edition of the
Index of Economic
Freedom, edited by Bryan T. Johnson, Kim R. Holmes, Ph.D.,
and Melanie R. Kirkpatrick (Washington, D.C.: The Heritage
Foundation and the Wall Street Journal, 1998), Sweden
comes in 33rd among 160 states. These findings indicate Sweden lags
behind such countries of approximately the same size as, for
example, Austria, Belgium, and many developing countries. This
performance is not very impressive. Further, in recent years
Sweden's social democratic government has pursued a policy of
trimming down its welfare state; public spending is now down to
approximately 50 percent of GDP, but this is still very high. At
the same time, the government's highly interventionist economic
policies were reduced, and more market-oriented policies were
adopted.
This
leaves the social democratic parties in Western Europe in an
unpleasant situation: Which path should they follow? and what does
social democracy stand for now? Prime Minister Blair created the
concept of "New Labour" and Chancellor Schroeder won an electoral
victory in September 1998 by coining the slogan of a "new middle."
From the point of view of political economy, the latter sounds like
a simple application of the median-voter theorem of public choice
theory. Nevertheless, Schroeder's wording was successful, and the
CDU--the party of Germany's seemingly life-long Chancellor,
Kohl--was defeated, receiving only 35 percent of the total
vote.
The
Schroeder strategy led to an extensive public discussion of whether
left-wing parties now follow the route known as the "third way" in
public policy deliberations. The term "third way" has been used
many times. Wilhelm Roepke, one of Germany's staunch neo-liberals
who was expelled by the Hitler government in 1933 and, together
with F. A. Hayek, founder of the classical liberal Mont Pelerin
Society, described his concept of a free society as the third way
between socialism, on the one hand, and "historical"--as he used to
say--liberalism on the other. Ota Sic, Minister of Economic Affairs
of Czechoslovakia who left his home country after the demise of the
"Prague Spring" in 1968 at the hand of occupying Soviet troops,
called his market socialist design a "third way," too. In Great
Britain, the "third way" has come to be associated with the
politics of Tony Blair, and his break with the old Labour and his
creation of New Labour. And Anthony Giddens, one of the most
influential advisers to New Labour, used the term as the title for
his latest book, The Third Way: The Renewal of Social
Democracy (Cambridge, United Kingdom: Polity Press, 1998).
People tend to see authors who favor the
idea of a third way as starting from the idea that the only other
possible choice is between either a capitalist or a socialist
economic order. From this perspective, the third way seems to be a
mixture of both economic systems, the market and central planning.
But a closer look reveals this to be false. Roepke, for example,
defended the market order against all approaches that used
convergence theory, which was popular during his lifetime and which
taught that the two economic systems of the bipolar world over the
long run would approach one another--that is, that they would
converge.
When
choosing the notion "third way," Roepke's point was that Western
societies suffered from moral decay, from worshipping the
large-scale, and--worst--from proletarianization. He declared that
19th century capitalism might have created the modern proletariat,
but that socialism was enlarging that class to include the whole of
humanity. Salvation would lay in a third choice:
Socialism, collectivism...are after all,
only the last consequence of our yesterday; they are the last
conclusions of the nineteenth century, and only in them do we reach
the lowest point of a century-old development along the wrong road;
these are the hopeless final stages toward which we drift unless we
act...the new path is precisely the one that will lead us out of
the dilemma of "capitalism" and collectivism. It consists of the
economic humanism of the "Third Way."
Roepke was a classical liberal fighting
for a "humane society"--a society in which the proletariat
dwindles, private property is a central institution, individual
rights are secure, and not only an economic equilibrium but also a
social equilibrium prevails.
But
what about the "third way" that is on the agenda of the social
democrats? Not much has changed--at least, not much has changed in
continental Europe.
Social democratic parties have learned
that their old idea to create a New Society run by New Men--that
is, people who act only in an altruistic manner--is utopian.
Therefore, the parties have moved, largely for opportunistic
reasons, toward the political center. They call their new position
as "center-left." This should not mean, as they say, a compromise
in the middle of the more clear-cut alternatives. On the contrary,
the new middle is described as the "active middle" or the "radical
center," which implies it is not the same as the "moderate left."
The man on the street might have difficulties with this
hair-splitting distinction; perhaps this is one of the more hidden
aims of this terminology.
But
what is the substance of this so-called renewed center-left social
democracy? Social justice and emancipatory politics are at the core
of its program. For example, it is said that a reformed welfare
state has to meet criteria of social justice. That simply means
that social democrats want to keep welfare spending high and that
they reject the libertarian position to privatize large parts of
the welfare state, leaving only a minimal safety net for those who
cannot care for themselves.
But
how should social justice--whatever that means--be implemented? Of
course, to adherents to the "center-left," government should be the
agent. Contrary to the classical liberal view and the sustained
libertarian critique of the role of government in social and
economic life today, the socialist agenda for the state is very
long. Just to name a few topics taken from a longer list by Anthony
Giddens in The Third Way (p. 70) as to the reasons a
government should exist:
-
the provision of public goods;
-
the regulation of markets in the public
interest;
-
the fostering of social peace;
-
the active development of human capital
through a central role by the state in the education system,
thereby shaping norms and values;
-
the provision of infrastructure;
-
the fostering of regional and
transnational alliances and the pursuit of global goals; and,
finally,
-
the role as a prime employer in macro-
and microeconomic institutions and, especially, in ecological
matters.
Despite the fact that the first, third and
fifth topic could be on the list of a classical liberal author
writing on the agenda of the state, this is simply the old picture
of giving de facto unlimited power to the politicians. In the
social democratic world, there are only acting high-minded men and
women who work in the public interest and who, of course, know what
is in the interest of their fellow citizens. The universal welfare
state, in a very wide sense, is at the core of the social
democratic philosophy. This is what in German is called der Vater
Staat--"the state as your father"--taking care and acting always in
the interest of his children.
It
is difficult to understand this paternalistic view against the
background of the emancipatory rhetoric of social democratic
parties. In a world that defines the individual as autonomous and
free to act so long as his acts do not interfere with the freedom
of others, governments should play only a subsidiary role and
should not be looked on as instruments that shape and control
society. From this view also follows the belief that interventions
should be limitless, according to the discretion of those in power.
On the contrary, political power should be limited, following
strict rules and respecting narrow boundaries.
Most
European Union (EU) member-states are under social democratic
governments today. Therefore, a short glimpse of how they act in
parochial affairs might be interesting. The dominant problem in the
EU--with the exception of Great Britain, Austria, and the
Netherlands--is high rates of unemployment. A total of 20 million
people are without jobs; major EU countries have double-digit
unemployment rates. How do their social democratic governments
react? For example, in Germany, the answer is corporatism, not
structural reform. The catch phrase is "alliance for work"
(Bündnis für Arbeit). Germany may restructure
its highly centralized wage-setting system according to the views
held by Chancellor Schroeder--as a permanent conference among the
unions, the representatives of entrepreneurial associations, and
the federal government. In this conference, the delegates will
decide how to reduce unemployment. On the agenda of "alliance for
work" are initiatives to reduce and standardize the work week not
only in France and Germany but also in the entire internal European
market to 35 hours; lowering and standardizing the retirement age,
thereby reducing the size of the labor force; increasing
public-sector investment; harmonizing government tax and spending
levels; and expanding government-run labor-market programs.
Not
many German economists back that program. The majority of
economists warns the government that the outcome of such policies
may be the opposite of what is intended--namely, a dramatic
increase in, instead of the lowering of, the rate of unemployment.
But European politicians are convinced that the new euro will allow
them to return to old Keynesian methods of steering their economies
according to the aim of full employment without taking recourse to
market-oriented reforms in their sclerotic labor markets.
The
social democratic "third way" model is not a disguised libertarian
program. It does not describe a new chapter in social democratic
thinking and ideology. In contrast to the views taken by those who
favor a free society, the starting point of "third-way" adherents
is not the freedom of the individual but the collectivistic ideas
that are alive still in the background of socialist thinking.
Therefore, the collective--not the individual--is important; the
politician--not the entrepreneur or the wealth-seeking
individual--is at the heart of the socialist design.
I
have great doubts that policies based on socialist ideology will
prove helpful in meeting the challenges with which we are
confronted. The social democratic "third way" is a halfway house in
which the ideas of the old left remain prominent, and it shows that
no full-fledged alternative to contemporary libertarian thinking
has been formed yet.
Christian
Watrin, Ph.D., is a professor at the Institute for Economic Policy
Research at the University of Cologne, Germany.