The Disputed Fate of Social-Democracy

It’s not dead; it’s just resting.

Jacobin founder Bhaskar Sunkara has emerged as one of the intellectual leaders of the U.S. Left. His latest analysis of the purported failure of social-democracy deserves critique.

Sunkara reviews the unwinding of socialist movements in Britain and Sweden as evidence for both the achievements of social-democracy and its dissolution. In both tales, the lack of nationalization of the Means of Production (‘NMP’) is taken to be the key dividing line between social-democracy and real socialism, between reformism and some kind of, typically unspecified, revolution.

I would not venture an analysis of the apparent stasis of European social-democracy, except to note a possibility that no other socialist would accept: perhaps most everything that is worth doing has already been done. We still have to note the inflammatory nature of the politics of immigration.

The history of the U.K. Labour Party in power under Ramsay MacDonald is put forward as evidence of the inability of reformism to solve social problems. Oddly, and I would say fatally for his argument, Bhaskar does not mention that the MacDonald governments ran aground for the sake of austerity policies, then and later opposed by no less than John Maynard Keynes. This omission undermines the thesis that British reformism was helpless in the face of the impending world depression, even though the leading British reformer of the era, proposed a different, possibly effective path. Perhaps it would have been fruitless, but neglecting the question does not make the case.

Sunkara cites critically the leading British Labour politician Anthony Crosland for making the important point that what matters is not the NMP in and of itself but the desirable outcomes it is presumed to make possible. Crosland and Sunkara note the antecedents in the work of German socialist leader Edouard Bernstein, the former positively the latter negatively.

I would say the connection is well-taken, and as I’ve said before, Bernstein deserves a resurrection. A problem in this history is the continuity in the U.K. between this view and the elevation of the loathesome Tony Blair. I would dismiss the connotation by suggesting that Blair’s errancy was an artifact of the U.K./U.S. ‘special relationship,’ rather than being inherent in Bernstein-style revisionism. Others are better-situated to dissect the deficiencies of Blair’s domestic policies. As I’ve said, failure to pursue more nationalizations is not necessarily among them. It remains the case that ‘the Left’ in the U.S. lacks a well-articulated vision of foreign policy. Here is a recent effort by a friend of mine. Here is my own sermonette.

There is a similar discussion of the rise and fall of socialism, per Sunkara, in Sweden. Again, that policy stopped short of full-spectrum NMP is implied to be central. It is telling that in his essay, Sunkara does not at all take up the case of Germany, where social-democratic politics had advanced further than anywhere else in the world.

At a certain point, Sunkara clarifies his interest in NMP by conflating it with the establishment of “workplace democracy.” Worker control of their places of work is a building block of market socialism, perhaps the leading radical ideology in the U.S. Left, actively promoted by Jacobin Magazine.

Why is NMP, including the form of workplace democracy so important? I’ve argued it is the wrong way around. Let’s start with the contrary side, why NMP is irreplaceable for socialism.

There is the political argument, which is that without taking over industry and breaking the power of the capitalist class, it could still come back at you and wreak mischief. We might ask, by what means would industry be seized? If taken by compensating the owners, the latter would be sitting on their hoards of wealth, still able and perhaps more motivated, to sabotage the socialist transformation.

If threatened to be taken without compensation, that would surely motivate the owners to put up all the more resistance. Here a sober political note might be mentioned: public support for socialism of any sort has never risen to the level, anywhere, that would permit NMP by force. The furthest it ever got was in Germany near the end of the 19th Century. The politics here is so speculative that for me at least, further elaboration is without purpose.

On the economic front, one naive view is that under NMP, industry profits could be diverted to more humane purposes. This could also be approached through taxation, but it begs the question of from where the funds for new investment would come. The same problem arises if profits are shared amongst a firm’s employees. If new investment must come from the State, where would that revenue come from? It also speaks to my mantra about taxation: to finance socialism, taxation of corporate profits and the rich are inadequate. The numbers aren’t there.

Another naive view is that wealth of the rich could be taken and distributed to the poor. Wealth held by the rich but not consumed is embodied in real capital investment of one sort or another. Would such capital be liquidated by a socialist government to bolster the welfare of the general population, or of the poor? I think not.

It’s really the consumption of the rich that begs for diversion. However scandalous, however, it is a pittance, compared to the resources required for the tasks that confront us. And once you take it, it’s no longer there for a second round. The consumption of the rich is certainly morally repellent and a waste of resources, but once again the numbers fail us.

NMP could take different forms. One is State ownership of companies through share ownership. There is already quite a bit of this in the U.S., in the form of public employee pension funds. Dean Baker has the novel proposal of firms paying their corporate income tax by transferring shares. The government of Norway is said to own 30 percent of Norwegian industry. President Trump is carving out new paths as well. In any such case, growth of public ownership could be incremental, as it is already. Under democratic institutions, nothing but politics prevents further progress.

Another is direct State control of industry firms’ managements. Still another is the use of State loans to influence industry behavior. In all these cases, the Crosland question remains: to what end? How would the outcomes be desirable, compared to what would transpire otherwise?

Sunkara and his colleagues are committed to workers control, which would preclude State-managed firms. Under State share ownership, workers in control of their firms from the shop floor would have to contend with the interests of the State.

Thus far I’ve ignored the fact that workplaces under Capitalism are not autonomous units. There are multi-plant, multi-state, multinational firms. However worker ownership would be decentralized, there is still the planning problem. Friends have worked on how democratic planning would proceeed in conjunction with workplace democracy. Although they have done the research, I’m a skeptic.

I suspect that most workers only care about getting paid for doing what they are told, under safe conditions. They are not interested in company policy. In any case, their grasp of the broader implications of company policy is likely to be weak, and insofar as such decisions are subject to ‘democratic’ procedures, they are also vulnerable to schemes founded on narrow interests

I would approach planning in steps. The first question is what is most urgent to transfer from private ownership and control, a.k.a. “the market,” to the public sector? To me it’s a question of priorities and process. Capitalism does some things better than others.

I would start with health care and energy. Everything else should be properly taxed and regulated, but we really need to focus first on what is most important, especially to the average person. Part of the reason is political. Rather than promise across-the-board NMP, it is more forthcoming to speak of Medicare For All.

Climate change commands an interest in the promotion of sustainable energy sources, and simple efficiency underlines the need for an integrated energy grid for the nation. Otherwise NMP is less important than building out the U.S. welfare state in all its components. There is economic theory on evaluating the merits of NMP in specific cases, but I have never seen it deployed by socialists. It’s usually an all-or-none scenario in which nothing in particular matters.

Even assuming state control of an industry has been accomplished, it would remain the case that whomever was afforded control — either a State bureau or the employees — would have material interests that do not necessarily coincide with the public good.

Government bureaucrats would want their own enterprise to flourish and expand. This would not necessarily be out of malign motives. It is natural for public employees to always want to do more and to do better. A firm’s employees could feel the same. A bigger enterprise means higher compensation, for both employees and managers. Regulation or taxation that might curtail a firm’s operations or revenue would be resisted.

Workplace control in all this is really the small end of the egg, not enough to define a stark separation between social-democracy and democratic socialism. You can call it market socialism if you like, the better to dramatize the break with Capitalism, but there isn’t much more there.

Social-democracy IS democratic socialism. There is plenty of room for more of it, and ‘more’ is more important than where it all might end up. The journey is the reward.