DILEMMAS OF SOCIAL DEMOCRACY

...Running through the revisionist thinking of the '50s, which influenced powerfully the approach of the British Labour party in the '60s, is the theme that social democracy (even if still dubbed "socialism" by some of the revisionists) is concerned primarily with societal (and also personal) values and claims no special competence in economic management...

...The man in charge of a switch at a power station or at the wheel of a truck delivering oxygen to industry possesses the sanction for fixing his own reward...

...Today, twice shy of interfering with tradeunion bargaining rights, we have a Labour government effectively abandoning, by the pursuit of monetarist policies, the postwar fullemployment goal that was the founding rock of the social democratic era...

...Put another way, the social democrats are concerned primarily with the redistribution of resources and only secondarily with their creation...

...Since then a number of things have happened...

...Even with a satisfactory rate of growth with moderately stable prices, the social democratic objectives of social justice (which are costly in taxpayers' money) come into conflict with the endeavors of trade unionists to recoup at the bargaining tables what a redistributive government removes from their pay packets...

...The economy appeared to be heading for hyperinflation in spite of sharply increasing unemployment...

...Hence I propose a negative definition: that by "social democracy," in 346 PETER JENKINS contradistinction to "democratic socialism," we mean a form of politics or economic organization that does not envisage, or indeed intend, the achievement of socialism in a future however distant...

...This has been generally the implication of the expression, whether the emphasis was on the democratic means to the socialist end, on the democratic nature of the socialist end, or on both equally...

...In its economic form this dilemma is manifest in all mixed economies with free representative institutions and, as I put it here, it is no more than a sociopolitical description of inflation...

...It becomes a politics of ends without means, devoid of all answers to creating the resources it seeks to reallocate...

...In this predicament—I repeat, made especially acute in Britain by the fact that the conflict between the instrumental behavior of the trade unions and the reforming programs of the Labour party takes place within common institutions—there are broadly three choices...

...The structure of British trade unions would be favorable to sheer syndicalism were it not for the historical fact that it was the unions who at the turn of the century created the Labour party, which rapidly replaced the Liberal party in a two-party system of government...

...The surprise defeat of the Wilson government in 1970 and the sudden dramatic fall of the Heath government in February 1974 were chiefly the consequence of their failure to take the measure of the "union problem...

...Trade unions are so rooted in their opposition to obsolete market economics—an opposition that takes the form of playing the old game without noticing that the rules have long since changed—that they have become the chief agent for ensuring that the working class achieves nothing more than the money illusion...

...In so defining my terms I go some way toward defining what I mean by social democracy...

...So above all else social democracy must face the problem of reward allocation...

...But, for the purpose of constructing a more coherent social democratic ideology, it has the merit of linking the problem of equality with the problems of increasing production or restraining consumption, toward which social democracy— as I have argued—has lacked any distinctive approach...

...Whether or not ideologically congenial, it is surely an accurate enough description of the reality in Britain where, its occasional ritualistic pretensions notwithstanding, the Labour party cannot be said seriously to be an instrument for socialism...

...Trade union organization in Britain is far more extensive than in the United States while at the same time less centralized and less susceptible to discipline at the plant level...

...Without some means of engaging the effective cooperation of the trade unions in the reasonably stable management of a mixed economy, social democracy is left without ideological foundation...

...but others among us, who still insist on the compatibility of socialist values with political liberties, are obliged to find a way out of the Social Democratic Dilemma by moving toward the regulation of reward within a framework of representative government by consent...

...He wrote: "Anything that falls short of abolishing the wage relation has no claim to being described as socialism, although it may be a station on the way thereto...

...To take one often quoted example, the late Hugh Gaitskell's dictum (borrowed from an earlier writer, Arthur Lewis) that "socialism is about equality" would have made no sense to a 19th-century socialist unless Gaitskell had meant (which he did not) that equality was "about" the common or social ownership of the means of production, distribution, and exchange...

...By this definition anything that calls itself democratic socialism has to be at least a station on the way to socialism...

...Since 1967 both Labour and Conservative governments have attempted variously to apply statutory controls to wages and prices and/or to regulate by law the activities of trade unions...

...The social democratic state, because of its greater pretension to the power of justice, becomes the greater victim...

...But an expansion of the role of the state cannot of itself result in a more rational, or productive, or more socially acceptable use of resources...

...For the reality is that the modem state, with its vast responsibilities as employer and perDILEMMAS OF SOCIAL DEMOCRACY 349 sonnel manager, is held responsible for the maldistribution of incomes whether it acts in the matter or not...

...These were important aspects of the transformation of capitalism that was the starting point of the revisionist case...

...For the Labour party, as the exponent of social democracy, this situation of crisis raises fundamental issues...

...The very phrase "distribution of income," as Irving Kristol has pointed out, suggests the existence of some authority dealing the cards...

...350 PETER JENKINS...

...That is to say, the essential terms of the postwar settlement (the settlement of the class war, it seemed at the time, itself an extension and consolidation of the "fairer deal" that was necessary to unite the nation in war) have been upheld until recently by all governments: The ideological rhetoric of the parties at election times belied the fact that in office neither sought to vary significantly the bargain that had been struck between the managed post-Keynesian welfare state and the sectional interest groups that had it in their power to make the state unmanageable...

...The purpose of the departures in the mid'60s, certainly in the case of the Labour government, was not to strike a death blow at social democracy but rather to preserve it by resolving "the Social Democratic Dilemma...

...Nothing so clearly marks the now-ending of that era than the distance between those statements (in The American Democracy [New York, 1948], in which Laski perceived similar tendencies in the American labor movement) and the present reality...

...Recently there has been a tendency among partisans and commentators alike to use the terms more pejoratively...

...The fault lies neither with the aspirations of working people for improved living standards nor with the failure of politicians to pursue what are called, always vaguely, "genuine socialist policies...

...Inequalities of income have become the object of much more profound dissatisfaction, and differences in pay (what in labor-relations jargon are called "differentials") have become more contentious than differences in the distribution of wealth...

...Social democracy originally was to have exactly the same meaning...

...Marx himself in his later days was really a social democrat...

...with nil or negative growth the practice of social democracy becomes virutally impossible, as now appears to be the case...

...The dilemma takes a peculiarly acute form 345 in Britain because of the unusual strength of the trade union movement and because of its institutional interlock with the political party of its own creation...

...his power is not market power but the power of ransom over a technologically interdependent society...

...rather equality was no longer "about" socialism...

...One is to jettison the social democratic commitments to full employment and welfare and attempt to bring inflation under control by the imposition of monetary discipline...

...At an unsatisfactorily slow rate of growth this tension becomes acute, as it did under the last Labour government in Britain...

...It is notorious, for example, that Ford in Britain negotiates with 12 manual workers' unions and others for its white-collar employees...

...That is, again simply, that the instrumental and idealistic goals of organized labor are compatible one with the other and consistent with progress toward social justice in an expanding society...

...But for our purpose here we must be clear as to what we mean...

...Technology confers power that can be translated into unfair gain...

...What he was getting at was exactly the opposite: in his view the ownership of the means of production no longer determined the nature of society, and capitalism, as modified, no longer stood in the way of the goal of equality...

...The resources for investment, whether social or productive, become residuals after private consumption over which government has no control...

...The third course, and the best hope, is to persist in the endeavor to make social democracy work—and this means focusing once again on the very crux of "the Social Democratic Dilemma...

...The unions wield block votes at the policy-making Labour party conference, are the chief paymasters of the Labour party, and sponsor their own members of Parliament...

...Now, nearly 20 years later, a similar complacency is the philosophical foundation of the English "Social Contract," according to which the unions are obliged to do no more than maintain their living standard in the face of inflation in return for the government restoring to them full legal freedom while pursuing a range of redistributive economic and social policies...

...according to this the "social democrats" are the "moderates" who see positive virtue, not least some guarantee of liberty, in a mixed economy while the "socialists" do not and therefore, in extreme cases, are suspect as "democrats" or of only being so in the participatory rather than parliamentary sense...

...Nor did he ignore the problem of inflation, although he concluded that it was not in those days serious enough to warrant any intervention in collective bargaining...

...Whatever the mix of the mixed economy, the wage problem will remain for so long as political democracy survives...

...Indeed, the lacuna of the revisionist position, insofar as it purported to provide a theory and practice of social democracy, was its complacency on the trade union question...

...The two largest trade unions command nearly a quarter of the votes at the Labour party conference...

...For, as Rousseau observed, "The nature of things does not madden us, only ill will does...

...However, none of the revisionists saw any basic contradiction between the aims and methods of the trade unions and their own preoccupation with the creation of a more just and equal society in the conditions of reformed capitalism...

...That is the crux of "the Social Democratic Assumption...

...In English the expression "democratic socialist" implies a stress on the word "socialist" while "social democrat" implies emphasis on the word "democrat"—and the difference is not without ideological innuendo...

...Crosland also perceived and complained about the overnarrow approach by the unions to collective bargaining and their excessive preoccupation with money wages...

...A year after the inauguration of the "Social Contract," pay increases were running at an annual rate of increase of around 30 percent, price increases at above 25 percent...

...Policies to produce greater equalities of opportunity have failed to produce the hoped-for equalities of result...

...In Britain it is customary to use the expressions "democratic socialism" and "social democracy" interchangeably and the word "socialist" as shorthand for both...

...Thus the state, far from becoming the captive of the trade unions, as Laski predicted, becomes the inevitable victim of their displeasure and the ultimate repository of aggregate ressentiment...

...My point here is that there is nothing in the social democratic ideology—nor for that matter in its lack of ideology (i.e., mere populist pragmatism)—that helps it toward a solution of "the Social Democratic Dilemma...

...Apart from the risks in this to democracy itself, no such policy could be contained within even the loose and broad tradition of social democracy...

...The German Social Democrats after 1864 were Marxists and, although parliamentarians, saw themselves nonetheless as revolutionary socialists...

...Shortly after the war Harold Laski—if anyone the apostle of a then dawning, or so it seemed, era of social democracy—could write that "the British trade unions are moving to the capture of State Power in Great Britain, with a view to the transformation of a capitalist into a socialist community...

...and that "the TUC of Great Britain, in a word, is feeling its way to the fulfillment of a socialist philosophy of which the Labour Party is the proposed instrument...

...Some, on the Right and the Left, express glee at the bankruptcy of social democracy...

...Today it is a roadblock to social democracy...

...Their position on this is not essentially affected, whether they take the problem of production to be essentially solved, as they were inclined to do in the late '50s, or stress the importance of economic growth, as they have had to do since the early '60s...

...The notion of a "Social Contract" made a virtue of necessity in that the attempts by the 1964-70 Labour government, first, to apply statutory restraints to wage bargaining and, second, to regulate strikes and other trade union activities (somewhat on Taft—Hartley lines), had brought the labor movement near to splitting...

...The word "socialism" originally had a quite precise meaning and the late George Lichtheim's uncompromising formulation is historically the correct one...

...This, stated simply, is how to reconcile the maintenance of the full-employment welfare state (the political objective of the trade unions in Britain) with the maximization of money wages through unfettered collective bargaining (the industrial objective of the trade unions...

...This can be argued quite independently and separate from the economic case for regulating wages for the purpose of curbing inflation, allocating resources, and promoting economic growth...

...These endeavors were perceived by the unions as misguided and hostile acts and were vigorously opposed...

...Without some planning of incomes, no other forms of economic or social planning are feasible in conditions of political freedom...

...Alternatively, or as now concurrently, inflation gains pace and makes nonsense of an ideology of social justice...

...n the 1950s, when the idea of equality was brought to the center of social democratic thinking, less importance was attached to inequalities of income or reward than to inequalities of opportunity, status, and esteem...

...By this process, full employment and the welfare state, progressively starved of resources, cease to be available as trade-offs for socially responsible and change-accepting trade unionism...

...However, there is more to it than this for Britain—and more to it than this for socialists— because it challenges at the heart what I called elsewhere "the Social Democratic Assumption" (in The Battle of Downing Street, London, 1970...

...It is an elusive concept that has been used confusingly to embrace very different ideological positions at various moments of history...

...Since the war, no matter who has been in office in Britain, social democracy has been in power...

...One of the difficulties with social democracy is that since Marx it has not acquired an ideology worth the name but has picked and chosen eclectically from the socialist and the liberaldemocratic traditions...

...The political support of the trade union movement in the 1974 elections was contingent on the Labour party undertaking to liberate collective bargaining from similar restraints imposed by the 1970-74 Conservative government...

...The English economist John Vaizey suggests that "in a post-Keynesian economy, a social democratic party has no ideological basis" while Michael Harrington drains the concept ideologically dry, for most Europeans, when he writes with the AFL–CIO in mind that "there is a mass social democratic movement in America today in a procapitalist, antisocialist disguise...

...Not only have the vagaries of collective bargaining— a system of reward allocation that perpetuates the arbitrariness of an imperfect market economy—made more contentious the inequalities of income, but so too has technological change...

...Only by giving the word a new and quite unhistorical meaning could this be said to be the case...

...The "Social Contract," as was to be expected, has succeeded in its purpose of papering together the labor movement but so far has failed signally to prevent escalating wage settlements from accelerating the pace of inflation...

...The Labour party has generally preferred to talk about itself as a party of democratic socialism, especially since the German Social Democrats (SPD) officially abandoned socialism at their Bad Godesberg conference in 1959...

...If social democracy is to be in any meaningful or acceptable sense "about equality," it has to be about the distribution of rewards and, perhaps, about actual equality of reward...

...Then, second, there is "socialism," by which in Britain generally is meant remixing the economy to the point at which the public sector becomes dominant and state control the order of the day...

...but it is so 348 PETER JENKINS because the state, for as long as it is a democratic state, is the servant and hence the victim of popular democracy and possesses as yet no means for resolving within its institutions the competing claims of groups upon resources...

...British trade union organization still reflects many of the occupational divisions and craft jealousies of the Industrial Revolution...

...But if we employ today the same terms to describe a very different reality, at least in Britain, we are bound to give them a strikingly different meaning...

...More and more groups are discovering the power of their own indispensability—surgeons and nurses among them—and adding to the resentment of those upon whom technology has not conferred such power...

...If the freedom of collective bargaining as we know it today is asserted as an inalienable freedom, the result may be the extinction of all democratic freedoms— freedom of combination, of course, among them...

...Anthony Crosland, in the seminal work of the period (The Future of Socialism, London, 1956), emphasized the major distribution of national income in favor of the working class, which had already taken place, and also what he described as a "decisive movement of power within industry itself from management to labor...

...By stressing equality as one of the values associated with socialism and recommending its emphasis as a goal of the Labour party, Gaitskell was edging toward a definition of social democracy as a nonsocialist creed...

...Some of the symptoms may appear peculiarly British but what I will call "the Social Democratic Dilemma," and will later define, is of relevance to all advanced industrial and democratic societies...

...This is to say, social democracy has to discover some way of promoting the equitable, fair, and acceptable distribution of income through the regulation of wagefixing by means other than free collective bargaining...

...What is referred to as the "labor movement" consists of the trade union movement (the "industrial wing"), the Labour party (the "political wing") and the now relatively unimportant cooperative movement...

...Market economics no longer provides a rationale for this jungle, no more than it does for the interplay of corporate power...

...Now it is of no practical importance and of small ideological significance whether the British Labour party chooses to call itself ''socialist,'' ''democratic socialist," or "social democratic...

...Innovation is an even more unfair allocator than the market and probably causes more resentment...

...However, for our purpose the importance of these institutional links is that they embody the notion that the interests of the trade unions and the Labour party are not only compatible but complementary...

...Crosland's final words on the subject were: "I judge that a government bent DILEMMAS OF SOCIAL DEMOCRACY 347 equally on avoiding inflation, and creating an egalitarian social climate, could rely quite well on the sense and moderation of the unions to maintain a reasonable degree of internal stability...

...This is not because the state need be unbenevolent or is lacking in skills, nor because the market is an inherently superior allocator (although it may be a necessary guarantor of political liberty...

...The historic partnership between the British Labour party and the British trade union movement was once the envy of social democrats the world over...

...In other words, socialism was not "about" equality...

...the fault is to be found in the contradiction between what one commentator has called "instrumental collectivism" and social democracy's commitment toward growth and social justice...