EUROPEAN SOCIAL DEMOCRACY-NEW PROBLEMS, NEW PROSPECTS: THE POSTWAR TRANSFORMATION OF EUROPEAN SOCIAL DEMOCRACY

...A second root of the international debate on "workers' participation" has been the 254 introduction in Tito's Yugoslavia in 1950, two years after the break with Stalin, of a system described as "workers' self-management...

...The "limits of growth"—which in general are not absolute limits, but foreseeable dangers of the exhaustion of specific raw materials or sources of energy—require similar action, because the market is apt to react with price increases only when much of the damage has already been done...

...The workers also reaped a share of the profits...

...A new concept of the way to equalize educational chances, which was adopted by the British, Swedish, and West German social democrats in the postwar period, was the idea of the "comprehensive school...

...BOTH in England and in Germany, though not in Sweden, the transition to full employment policies had first been made in a war economy—by Hitler before the war and by the British coalition government during it...

...The struggle of the social democratic parties to achieve greater equality and social security by secondary redistribution was extremely relevant, and so was the struggle for equal opportunity in education...

...without the pragmatist, it ceases to be relevant to the political issues of the day...

...But all of them have had an important share in the broadening or in the very creation of democratic institutions in their countries, and all of them have been most consistent defenders of those institutions when they were threatened from within (as in Germany and Austria in the 1930s) or from without (as by Hitler during and by Stalin after the Second World War...

...This association of "socialist" planning with national sovereignty was the basic reason for the German Social Democrats' initial opposition to the creation of the European Coal and Steel Community in a "capitalist" framework, and for the prolonged opposition of British Labour to the European Economic Community...

...But these, again, have been generally questions of degree, with the notable exception of the dramatic controversy over the Ostpolitik of the German Social Democrats...

...More recently, the impact of experience has led to the partial correction of such measures...

...By the time the demand of the German trade unions was actively taken up by the German Social Democrats as part of their immediate program, it was no longer regarded as a substitute for nationalization, in the sense of a secondbest, but preferable to it...

...EDs...

...of participation by the workers in management, and of "democratization" in general...

...If, by accomplishing that, they can help to improve our international cooperation and to establish the international mechanisms of decision we need, and gradually to develop forms of democratic control for them, that might be the most relevant task of all...

...But they welcomed the idea of strengthening the direct interest of the workers, and specifically the trade unions, in the prosperity of the economy...

...On the one hand, a policy of pure defense of the social achievements of labor proved impossible in these conditions, as the fate of the German Social Democrats proved most dramatically...

...The approach achieved its greatest successes in Sweden, where it had been practiced for the longest period, but it began to reach a saturation point there in recent years as the tax progression came to be resented as excessive by a growing part of the electorate...

...Others, such as the Danish and Swedish parties, have never had such a tradition—while the British Labour party experienced a substantial irruption of Marxist ideas as late as the 1930s but was able to digest it...

...and none of the major powers has come near to meeting the standard of allocating 1 percent of its national income for that purpose...

...The German Social Democrats opposed Ludwig Erhard's 1948 decision to dismantle the rationing and allocation regulations, which proved an immense success...

...This participatory upsurge, expressed in demands for the democratization of universities and schools, of news media and churches as well as in the mushrooming of local "citizens' initiatives" is based on the general argument that parliamentary democracy combined with bureaucratic administration has become too remote to be "relevant" to the issues that really concern people...

...A more general reason for the spreading interest in the idea of workers' participation in management, also underlying the Titoist experiment, was the spreading disappointment with the fruits of nationalization for the workers of both East and West...

...This tendency, dramatized by the oil crisis and by a number of debates and votes in the United Nations, is welcomed by the Communist powers, but due in the main not to their diplomacy and propaganda, but to the serious worsening in the economic situation of a majority of LDCs over a prolonged period...

...Because this period of accelerating inflation preceded and continued into a worldwide recession, the distributive struggle was further sharpened...

...The Gradualization of the Old Issues THE ABANDONMENT of the belief in detailed physical planning by the social democratic parties (with the partial exception of British Labour), and the acceptance of the need for Keynesian "global planning" by most nonsocialist parties (including since 1967 those of the Federal Republic), have greatly diminished the traditional difference between socialists and nonsocialists in the field of general economic policy...

...The social democrats, linked as they are to the trade union movement, generally have advocated sticking to the voluntary method— apparently the least drastic remedy...

...While they recognize the argument of leading Western economists that some specific proposals, such as the tying of commodity prices to an index of prices for industrial machinery, are impracticable and would be highly inflationary if put into practice, they insist that such arguments are no alibi for doing nothing, and that the burden rests on the West to find better ways of meeting the real grievances of the poor nations...

...of the control of inflation and the role of the trade unions in it...

...but both, and particularly the latter, were damaged by irrelevant ideological concepts of a utopian kind of equality...

...Accordingly, they have supported Western unity on such constructive programs as the Marshall Plan, but also on resistance to such Soviet encroachments as Stalin's Berlin blockade, the Soviet-supported Korean War, and later Khrushchev's Berlin ultimatum and his Cuban missile crisis...

...But in the NATO countries the social democrats have generally supported NATO...

...Of course, practical differences remain on many concrete economic decisions, but it has become difficult to formulate them in terms of general ideological principles...

...This concept was based on the memory of planning measures that had emerged as a means of national selfprotection in the face of the collapse of the international currency and credit system during the world crisis...

...The effort at such a secondary redistribution by progressive taxation of income, by social services including free medical treatment and public old-age pensions, by public provision of low-cost housing for the lower income groups, etc., was greatly facilitated throughout the postwar quartercentury by the steady increase in total national income...

...Finally, there is one vital issue for the future of the industrially advanced democracies where the socialist outlook may have a contribution to offer: the need for greater international cooperation, and indeed for international institutions with powers of decision...

...We have described the "gradualization" of old party conflicts in such vital areas as economic planning, nationalization, foreign policy, and defense...

...Under this system, the "management committees" elected by the workers' councils of nationalized enterprises could elect the director, subject to the agreement of local and national authorities, and share with him in the running of the enterprise...

...In these circumstances, it was natural that a general search for methods to "control" that struggle, and specifically to achieve a moderation of wage demands, should begin in the advanced Western countries...

...They appear here with the permission of the Institute...

...It aims, instead, to present what appear to be the most significant trends in their outlook and practice...

...But it must be understood that the socialist concept of justice implies more equality and social security, and the socialist concept of solidarity greater emphasis on communal needs, than the automatism of a market would produce by itself—just as the socialist concept of freedom implies the active participation of the citizen and not only his right to be left in peace...

...The growing importance of demands by the workers or their representatives for a share in the management of both private and nationalized enterprises is the reverse side of the disappointment...

...The nationalized industries in Britain and France—not to mention those in the Soviet bloc—have not been felt by their workers to be different in style of management from privately owned, capitalist industries...

...It seems likely that this pathbreaking example, known as "the social contract," may be followed in future crises and in other countries, turning the big organized interest groups not into corporative institutions but into a recognized part of the constitutional reality, even while they retain their independence...

...Accelerating inflation not only interferes seriously with the calculations of investors and leads to harmful waste of capital...

...Before the new system could be consolidated in England or Sweden, and indeed before it was at all widely introduced in Germany, the struggle for its introduction and consolidation was overtaken and complicated by the impact of a new didactic ideology...

...The negotiation with the poor countries has to be conducted by the advanced countries with a common policy, not in order to "negotiate from strength" like a cartel, but because no single country can make the necessary sacrifices unless its competitors join in...

...The Social Democrats thus acquired a control of the Swedish government that was to last, practically without interruption, for 44 years...

...It had its most dramatic postwar start in Britain, with the introduction of National Health Service and the housing policy conceived by Aneurin Bevan, but part of the gains were lost there in later years as (under both Labour and Conservative governments) economic growth continued to lag behind other advanced Western countries and as new forms of marginal poverty emerged...

...On one side, the total amount of development aid offered from all sources—private and public, Western and Eastern—has always been insufficient...

...Conclusion: The Question of Relevance FIRST of all, democratic socialist parties are parties committed to Western democracy...

...Revolutionary preparation for the overthrow of the political system was a matter of course under Czarist despotism in Russia and in 248 some of the Balkan countries...

...The world economic crisis of 1929-32 became the starting point for a major change...

...The remaining democratic socialist parties became reformist defenders of the old and new democratic states, and many of them repeatedly joined coalition governments with nonsocialist parties or, like the British Labour party, formed minority governments that depended on nonsocialist toleration...

...They may be seen as a guide to an ideal society, to a utopia where they are fully realized or "maximized...

...and this implies an international solidarity that cannot be indifferent to the absence of freedom and justice anywhere, including the injustice of international distribution...

...It has limited inflation in Sweden to a level there regarded as tolerable, and reduced it to a much lower level—by now 4 percent in the Federal Republic...

...The same applies to the achievements of the "welfare state," which have largely been the handiwork of the democratic socialist parties: the "bourgeois" parties have generally accepted them as part of the given economic and social landscape, and only criticize specific defects in their operation (defects to which the democratic socialists are not insensitive either...

...of the adaptation of planning to the new awareness of environmental problems and the "limits of growth...

...Franklin D. Roosevelt's electoral victory that same year was also followed by a broadly successful, though very imperfectly conceived, policy of "priming the pump...

...The real cause of the resistance of some of the rich countries, strongly resented by the poor, is, of course, that any effective measures along this line would amount to some substantial international redistribution from the rich to the poor—a course that is prima facie unlikely to recommend itself to the electorate of the rich countries...

...The concept of workers' participation in management has proved relevant both to the individual worker's status and conditions of work and to continuity of production and social peace, and so has the development of "concerted action" into a mechanism of actual negotia259 tion between democratic government and the great, organized interest groups...

...In a number of cases, social democrats have favored experiments on the basis of equality of results...

...Environmental Protection, Limits of Growth, and the Need for "Structural"Planning THE CRITICAL YEARS since the late '60s have also brought a new awareness both of the dangers of the despoliation of the environment and of the "limits of growth" throughout the advanced industrial world...

...They have always fought, not only for free elementary education, but for free secondary and finally tertiary education for all those whose parents could not afford to pay...

...and of the changing 252 relationship between the industrially advanced democracies and the poor, less developed countries...

...Zero growth is not considered inevitable, and it is unacceptable not only because of its likely consequences for 257 the internal distributive struggle but also because of the vital interest of the poor and underdeveloped countries in further growth...

...The control of investment with due regard to the "limits of growth" cannot be effectively undertaken by any one industrial country, if its competitors continue to approach these limits heedlessly...

...2) the creation of a new, flexible world currency system at Bretton Woods...

...From Equality by Redistribution to Equality by Education IN A BOOK on socialist theory published during the 1950s, the late British Foreign Secretary Anthony Crosland stated categorically that "socialism is about equality...

...Attitudes to defense have varied in accordance with national situations: the Austrian, Swedish, and Swiss social democrats have joined with most other parties in their countries in affirming their neutrality and, of course, the Finns had no choice...

...As a result, generally, the British Labour leadership has not bowed to the pressure of its left-wingers for new measures of nationalization, notably of the banks and insurance companies, even when such demands have commanded a majority at party congresses...

...In addition to efforts to achieve greater equality through redistribution, democratic socialists have always known that essential equality of individual chances depends to a large extent on the structure of public education...

...It made also considerable progress in West Germany during the long period of nonsocialist rule, but in part under the pressure of the strong Social Democratic opposition, which shared in framing the housing law and in passing the introduction of "dynamic," i.e., index-based, old-age pensions...

...hence in the early postwar years both the British and German socialists came to see austerity planning as a necessary part of social justice, and therefore as a necessary part of "socialist planning...

...Backed by the national experience of prolonged mass unemployment in the 1920s and 1930s and followed by full employment in wartime, the adoption of Keynesian ideas contributed vitally to Labour's victory in 1945...

...The common characteristics of both problems are that they point to the destructive aspects of the recent unparalleled unleashing of our productive forces, and that they cannot be solved by the automatism of the market alone...

...Moreover, the combination of the introduction of the comprehensive school with experiments in the new didactics exposed the former to the criticism that it was conceived as an instrument not for the equalization of opportunity, which was widely popular, but for the equalization of results, which is clearly rejected as an ideological fad by the majority everywhere in Europe...

...But even this has had no influence on the practical policy of social democratic governments, except in neutral Sweden...

...but their basic commitment to universal values and an internationalist outlook should enable their more far-sighted leaders to cast aside the blinkers and look beyond a narrow conception of their national interest...

...Under this system, children of all social classes should be taught together for the first five or six years and then be sorted out for different branches of the educational road according to their natural talents and efforts, as measured by general results in class or by an examination...

...The rise of more radical demands among the French left is, in fact, part of a general upsurge, beginning with the students' revolt of the middle 1960s, of demands for "democratization" transcending both the institutions of political democracy and the field of industrial democracy...

...A living socialist party needs both types...

...More, during most of the postwar period—except for the Korean and Vietnam War booms and the immediate aftermath of the oil boycott this price relation has tended to change heavily to the disadvantage of the raw-material producers...

...Democratic socialists have generally agreed with the majority of expert opinion that such a moderate inflation—in Western Europe for two decades an average of 2-3 percent per year—is not too high a price to pay for the benefits of full employment, steady growth, and improving social services...

...In fact, internal discussion in the German Social Democratic party in recent years has largely revolved around the issue of "investment control," with the party's Young Socialist left wing (the Jusos) stressing the need for new institutions to enforce control by making major investments dependent on specific permission...

...Conversely, these conclusions are likely to be accepted as natural by proponents of democratic socialist thought...

...The struggle will not be fi.n, ally won until a new world currency system is established under the management of an international institution...

...These are the issues of equality by redistribution and of equalization of chances by educational reforms...

...Their indebtedness has increased to the point where many can no longer bear the burden...

...The Scandinavian Social Democrats have never been addicted to the doctrine that the fair distribution of shortages, however inevitable at certain times, was something inherently "socialist...

...Hence the concept of planning seemed to comprise not only monetary and fiscal planning of the total volume of economic activity but such "physical planning" for austerity as the limitation of imports, the rationing of food, and the allocation of raw materials...

...It may be said that the latter party has by now been officially converted to the need for a serious effort to meet the demands of the 258 poor countries, even though the West German coalition government, under the influence of its Liberal Minister of Economics, was until recently a major opponent of such measures...

...While many of the complaints about the inefficiency of nationalized enterprises are partisan exaggerãtions, referring to industries that suffer from such structural handicaps as do the coal mines and railways of Britain, the fact remains that nationalization has not generally been able to overcome such handicaps...

...Prior to the oil crisis, these demands found very little echo among the "rich" nations...

...The expansion of scholarships to grammar schools and universities in postwar Britain—and the corresponding expansion in 253 the number of universities—has in fact caused a major change in the social composition of the educated classes...

...The German law falls short of the union demand for a 50 percent share by reserving one of the seats on the workers' side of the board to salaried executives...

...Although they acknowledge that control of the direction of investment in the light of the need for long-term conservation of resources is likely to imply a slowdown of economic growth, the Social Democrats have resolutely turned down the concept of "zero growth" advocated by some leftists...

...A second obstacle is that the most practicable measures, such as price stabilization by means of international buffer stocks for raw materials, would be contrary to the received doctrine of a "free world market...

...Relations with the Less Developed Countries ONE OF the great new problems for the industrially advanced democracies is the dangerous deterioration of their relations with most of the less developed countries (LDC...

...Also, democratic socialists believe in the universality of those values...

...0 260...

...That is one of the principal reasons for the continuing gulf between the party's leadership in government on one side, and the majorities at its party congresses on the other...

...since then, the need for negotiations on these matters has come to be generally recognized, but progress continues to be exceedingly slow...

...Commitment to "planning" for full employment and steady growth thus became a central part of the social democratic program on an international scale...

...Again, public policy—and more likely than not international public policy—will have to take responsibility for timely action to stop or slow down the growth of production lines and techniques that are wasteful of potentially scarce and at the moment irreplaceable materials, and to encourage lines and techniques that are material-saving or energysaving...

...Autarkic" Austerity Planning— or Growth in a Worldwide Framework...

...Again, the Labour party's commitment to wartime planning and to immediate postwar austerity was extremely relevant to the survival of British democracy...

...and the British Labour party continued many wartime regulations longer than the people thought necessary...

...The Struggle against Inflation and the Role of "Concerted Action" EXPERIENCE has shown and economic theory explained that the combination of full or near-full employment with free price formation in the market and free trade unions is inseparable from at least a moderate inflation...

...All the more important, therefore, is the initiative of the social democrats of some of the smaller countries and their growing influence on opinion in some of the bigger parties, such as the German SPD...

...However, the reaction of the electorate is likely to force them back to the more limited concept of equality of opportunity—a concept clearly more appropriate for a society that depends on the maximum performance of its citizens in international competition...

...It is therefore an important fact that the social democratic parties of some of the smaller "rich" countries, notably Sweden and the Netherlands, have shown an early sympathetic understanding for the plight of the LCDs, and that their example has begun to influence party opinion in some of the bigger Western democracies...

...Here, however, we are approaching a policy area where consensus is generally less developed—that of relations with the Third World, to be discussed later...

...The British trade unions in particular are still largely opposed to what many of them, like their American colleagues, regard as involvement on the employers' side of the negotiating table, while the most militant French confederation, the independent but pro-Socialist CFDT, is committed to more far-reaching demands for "autogestion" or workers' selfmanagement...

...The social democrats have generally tried to channel this upsurge—in Germany by adopting the formula that democracy should be "extended to wider fields of social activity"—without yielding the prerogatives of the elected parliament and of the government based on it to autonomous decisions of "those concerned...

...Reformism" in practice could have only meant piecemeal social improvements of the situation of the working class, though most of the party programs retained as a definition of the socialist goal nationalization of the large corporations in at least key industries and banking...

...That process has continued under socialist-led governments even during the recent recessions...

...By contrast, in Germany, where the Social Democrats had rejected the advice of tradeunion economists to adopt a program similar to Sweden's, the desperate demand for a strong, active government to create work contributed to the collapse of democracy and to the rise of Hitler's dictatorship—and it was the Nazi regime that created full employment, within the framework of massive rearmament...

...Together, these innovations may become as central to the coming period of Western development as the "welfare state" was for the quarter-century after the war...

...The issue, on the whole, is hardly alive any more...

...In defeated and destroyed Germany with its worthless currency, austerity conditions continued up to the currency reform and the beginning of the Marshall Plan...

...They have concentrated on proposals for "indexing" or other forms of stabilization of raw-material prices, and for preferences for the sale of the products of their light industries in the markets of the advanced countries...

...This argument gradually made the idea also more acceptable to other West German parties and finally led to its application, in modified form, beyond the coal and steel industries to all enterprises employing more than 2,000 people...

...In practice, however, there have been a number of failures where the system was introduced before enough comprehensive schools had been built and enough teachers trained for them...

...From the workers' point of view, they continue to represent an alien power...

...And again, such action—even if it makes the least possible use of bureaucratic regulation and the greatest possible use of monetary incentives and disincentives on the market—amounts to a critical step in the transition from purely global planning of the volume of investment to structural planning of its direction...

...According to this ideology, what had been regarded as differences of natural talent had also to be largely attributed to the different family environment in which children grow up...

...In both cases, it had thus been born amidst critical shortages of foreign exchange and foreign supplies...

...But that meant a change in the nature of "reformism" as hitherto conceived: the improvement of the workers' lot by piecemeal reforms, while still important, now took second place to a deliberate attempt to change immediately the dynamics of the capitalist economy as a whole...

...At this point, the government proceded from consultation to actual extra-parliamentary negotiation, 256 obtaining the vital consent of the unions to wage restraint in return for the pledge of specific changes in taxation...

...Plans for putting a growing share of capital in the workers' hands through legislation, such as the American workers have achieved by tariff agreements about pension funds, have played a growing role in West German and Swedish public discussion in recent years, but have not yet passed into law...

...On the other side, the price relation between the raw materials exported by many of those countries and the industrial machinery imported by all of them has been extremely unstable...

...The latter attempt would also be severely limited by the resistance of trade unions and professional associations...

...On the other, in Sweden, where a brilliant school of economists had developed the "Keynesian" ideas independently and indeed ahead of Keynes, the Social Democrats won a majority in 1932 with a program calling for state intervention of a primarily fiscal and monetary type to overcome the crisis and restore full employment...

...Methods proposed, and partly tried, have ranged from imposed wage-and-price controls to suggestions for institutionalizing the major interest groups in a kind of corporative chamber so as to bring them under government discipline— and also to the now familiar methods of "concerted action," i.e., voluntary regular consultation of the major interest groups by the government on the state of the economy and on a desirable economic policy...

...Some of them, such as the German, Austrian, and Norwegian parties, have had to overcome the ambiguities of a powerful Marxist tradition to become fully conscious of that commitment, although it had long been implicit in their practice...

...However, even that policy has been conducted within the framework of a general Western, and particularly American, policy of detente...

...It should therefore be at least supplemented by the democratic self-government of "all concerned" in those various places—if not replaced, as the more radical groups have argued, by an idealized type of "Council (Soviet) Democracy...

...It also seeks to combine the right of the workers to direct election of their representatives with the eligibility of "outsiders," i.e., trade union officials, which had been opposed by the nonsocialist parties...

...The second is that of the practical politician who despite his "pragmatism" has not renounced a commitment to his basic values...

...The first approach is that of the ideologist who, owing to his youth or his specialization, is remote from practical experience...

...And I am convinced of the urgent relevance of negotiating a fairer deal for the poor, underdeveloped countries—despite the irrelevance and utopianism of some of these countries' concrete ideas...

...Without the ideologist, it ceases to produce cohesion and commitment among its members and followers...

...Illustrations will be chiefly taken from the development of the German SPD, because it is most closely known to the author, but comparative glances The four articles in this section—written by Richard Lowenthal, Bogdan Denitch, Jeam-Pierre Worms, and Robert E. Lane—were originally papers presented at the Conference on Democratic Socialism, held by the Research Institute on International change, Columbia University, on October 7, 1976...

...g., by direct decisions to make or postpone investments at a given time—has also been eroded as the financial complications of such decisions have become apparent...

...It has resulted in removing some specifically German territorial disputes that the Western powers had no inclination to make their own, in improving security, and in diminishing the causes of friction in Berlin...

...it also embitters the distributive struggle, particularly between the part of the working population that is sufficiently well-organized to force regular adjustments of its income to the rising price level, and the receivers of fixed incomes and the small savers...

...By the early 1960s, the apparent weakening of differences between the major parties of "left" and "right" in the Western democracies had become a general topic of discussion among political analysts...

...Preventive action involves the transfer to the polluter of communal costs caused by pollution, and the imposition of conditions or outright bans on methods of production shown to be potentially or even inevitably harmful...

...In Britain, the adoption of Keynesian ideas by the Labour party was first advocated by John Strachey in 1939, and incorporated in Labour's postwar election program by Herbert Morrison...

...But values may be interpreted in two ways in political debate...

...Democratic socialists are, of course, as much tied to national interests, and as liable to nationalist blinkers, as are other people...

...In fact, the opting by the German Social Democrats for Western democracy has been clear from the early days of Kurt Schumacher and Ernst Reuter...

...After the formation of the Communist International, most of the revolutionary wing joined it and became formally committed to the revolutionary overthrow of "bourgeois democracy" and the goal of party dictatorship...

...The Social Democrats of Scandinavia have built up a number of new industries and mines that are state-owned, but in their decades of 251 government have not nationalized any existing enterprises...

...At the same time, the shock of 255 the participatory upsurge may have led to a healthy increase in the sensitivity of politicians in general and social democratic politicians in particular to the need for timely consultation with those locally affected by central administrative decisions...

...In other words, it requires that public policy no longer confine itself to regulating the total rate of investment by monetary and fiscal measures, but influence the direction of investment by means of taxes or conditional subsidies, imposed safety measures, or outright bans...

...The social democratic leaders probably had no illusions that enterprises with 50 percent or slightly fewer trade unionists on their board would be necessarily easier to control by government directives...

...The negative lesson of Germany and the positive example of Sweden caused a number of social democratic parties to adopt programs of "planning for full employment" in the following years...

...This concept arose as a goal for West German trade unions as a result of their early role on the boards set up by the Anglo-American authorities for the management of the "decartellized" enterprises of the coal and steel industries of the Ruhr—and as a result of the West German Social Democrats' failure to achieve the nationalization of those enterprises and the introduction of a "socialist planned economy," either under occupational rule (when General Lucius Clay vetoed a "premature" decision on nationalization), or after the creation of the Federal Republic, when they had no majority...

...These values may be variously defined...

...It was based also on the memory of the role of such measures in the fair distribution of later shortages...

...will also be cast at the British Labour party and the social democratic parties of Scandinavia...

...The growing share of the populations of advanced countries engaged in such "postindustrial" activities as government, education, and health care, in which the share of wage costs in total costs is far above average and the growth of productivity far below it, has been diagnosed as another permanent inflationary factor...

...By contrast, the method of voluntary consultation or "concerted action," when practiced by social democratic governments close to the unions, has proved remarkably successful...

...With this cautionary provision, the principle of "investment control" or "structural planning" has indeed been incorporated into the 15-year program adopted by the Mannheim party congress of 1975...

...Such conclusions will hardly find a congenial reception among political parties closely tied to specific interests that may be negatively affected, or among parties wedded to a doctrinaire belief in a "free market economy...

...The basic problem here is to find ways to transfer a share of capital ownership to wage-earners without discouraging investment...

...However, the problem became far more serious when inflation began to accelerate in the middle 1960s under the impact of the increasingly negative American balance of payments, caused in part by the Vietnam War and in part by inflationary forms of capital export, "infecting" the world economy because of the dollar's privileged position in the Bretton Woods system...

...In Central Europe, where the German and Austrian empires combined the ultimate power of the monarch with free elections to a parliament of limited influence and with considerable scope for trade union activity, the dominant outlook among the social democrats was a combination of revolutionary rhetoric with reformist practice, with "revisionist" or "left radical" minorities calling for greater consistency in one or the other direction...

...As a principle of social justice, this idea has come to be widely accepted...

...The small nations, under social democratic leadership, have advocated, on grounds of distributive justice and not merely diplomatic expediency, a search for ways to meet the demands for rawmaterial price stabilization in substance...

...Second, democratic socialists are committed to socialist values...

...For the Norwegian party (which had once belonged to the Communist International and had retained dogmatic Marxist traditions long after it left the International in 1923), the adoption of such a "full employment" plan became in 1934 the occasion for the party's emancipation from dogma, for its return to the Socialist International, and, in 1935, for the formation of a long-lasting labor government...

...The German Social Democrats regard nationalization as a weapon of last resort rather than an important part of their program...

...the failure of the German Social Democrats to adopt a comparable program in time made them irrelevant to the crisis that led to the rise of Hitler...

...Most democratic socialists understood that an approach to economic equality relying on raising directly the share of wage incomes within the national income, or on reducing directly the income differentials between the wage-earning and salaried occupations, would be severely limited by economic laws...

...At the same time, it was combined with a continued firm commitment to the Western type of pluralistic democracy under the rule of law, and to its defense against all internal subversion and external pressure on the part of the Communist parties and powers—all of which became defining characteristics of the democratic socialist parties...

...Participation and "Democratization" ONE OF the principal new themes introduced into social democratic discussions in the course of the postwar era has been that of the participation of the workers—or rather of their representatives—in management ("CoDetermination," "Mitbestirnmung...

...the one important temporary exception—the initial opposition of the German SPD to a West German "defense contribution" was based on specific wishes for American military assurances and specific hopes for German reunification by four-powernegotiation, not on any pacifist or "neutralist" principles...

...The result has been that many of the LDCs have lost more on the commodity markets than they have gained from development aid...

...This prescription, however questionable in its consequences, could be understood in the special context of dealing with disadvantaged racial minorities in the United States, where it had partly originated...

...This was so thanks to three interrelated postwar developments: (1) the adoption of a highemployment and growth policy (however imperfectly executed at the time) by the leading Western economic power, the United States...

...A similar development has taken place with regard to the issue of nationalization...

...As a result of both developments, the West German trade unions began to regard their own generalized representation on the boards of all major West German corporations as a substitute for "socialist planning" by the government...

...I believe that the struggle for extending public control of the direction of investment so as to take the "limits of growth" into account will be as vitally relevant as the ideological formula of "zero growth" is irrelevant...

...However, since then a number of new, divisive issues have increasingly come to the fore, greatly influencing the policies and programs of the democratic socialist parties...

...Since then, the German example has led to widespread discussions about the desirability of imitating it in other West European countries, prompted more by the example of "social peace" in West Germany than by militant trade union pressure...

...3) the initial American policy of granting massive credits for international reconstruction, notably the Marshall Plan...

...Yet, in fact, a policy of full employment and steady growth proved compatible with the abandonment of "autarky planning," the restoration of a functioning credit network, and an intense division of labor among the industrially advanced democracies...

...The method of imposed price-and-wage limits has been tried with litte effect in the United States, and has failed dramatically under the British Conservative government, whose resistance to massive wage increases was broken by equally massive strike action...

...This macroeconomic policy could well be described as a synthesis of earlier "reformist" and "revolutionary" concepts, accom249 panied as it was by the nationalization of key industries under the first Labour majority government, and also under the postwar government of France in which the socialists participated...

...Social democratic leaders have generally argued, not always convincingly, that they could negotiate with the Soviets to better effect than their opponents, and that they could reduce the burdens and diminish the risks of competitive armaments...

...This enabled them in 1966-67, when the absence of a well-planned high-employment policy produced a recession in the Federal Republic, to enter the Grand Coalition government with a Keynesian plan that proved successful and helped to pave the way for the Social Democratic victories of 1969 and 1972...

...or they may be viewed as criteria for choice in dealing with practical problems as they arise...

...The foregoing analysis has given examples both of issues where democratic socialist parties have been and are extremely relevant to the major issues of our time, and of issues where—misled by one-sided experience or lack of experience and building ideological programs on that basis—they were not...

...Finally, there are now hardly any differences of principle between democratic socialists and their opponents on foreign policy and defense...

...This period of increasing affluence and social security could not have been brought about by a pure capitalist "freemarket economy," as some of its ideological defenders maintained, nor by "socialist" national planning for austerity, but only by the actually practiced methods of monetary and fiscal planning for high employment and 250 steady growth operating in a worldwide market economy...

...Hence economic egalitarianism had to rely in the main on a secondary redistribution of income and (as far as possible) of capital ownership, by taxes on one side and social security benefits on the other...

...More than that, both the British and the German parties long continued to hold a concept of planning as primarily national planning...

...In Britain, because of the massive loss of foreign assets, such austerity conditions continued for some years after the war...

...At the same time, moderate leaders are warning against the danger of wasteful bureaucratic methods approaching those of Soviet planning, and they are stressing the need for primary reliance on monetary incentives and disincentives that would work through the market rather than trying to replace it...

...The Post- Keynesian Change in "Reformism" IN THE social democratic movement before the First World War it was usual to distinguish a "revolutionary" from a "reformist" tendency: the dividing line was the attitude toward the existing state...

...The British Labour party— operating in a country where periodic balance-of-payments crises, brought about for other reasons, permitted no steady growth—has never completely overcome the belief of many of its intellectuals and trade union leaders that Britain could do better if more physical "controls" were imposed, and that this would somehow be more socialist...

...There have also been many complaints about the psychological pressures created among children by the approach of the examination...

...The combined effect of these policies has been the unparalleled quarter-century of high employment and steady growth that followed the end of World War II...

...This paper aims neither at a comparative documentary study of successive party programs adopted by the governing, or potentially governing, social democratic parties of Northern and Central Europe, nor at a history, however sketchy, of the policies pursued by each of them in the last three decades...

...hence the task of the school, from an egalitarian point of view, was not to open the better career to the more talented, but to equalize the "natural" inequality by special efforts for the less gifted pupils, even at the risk of slowing down the more gifted ones...

...The German Social Democrats speak of "Freedom, Justice, and Solidarity...

...Differences between social democrats and other parties have of course existed, and continue to exist, on concrete questions of diplomatic policy and military expenditure...

...but the ideological fixation on national austerity planning as if it was a socialist goal made them largely irrelevant to the postwar development of Western Europe...

...In practice, the creation of quasicorporative institutions has not been tried in any democratic country...

...They are differences of degree, of priorities, and of group interests—not of concepts of the economic system...

...Most dramatic has been the case of Britain, where a Labour government coming to power when the situation was completely out of hand, following the unions' victory over its Conservative predecessor, at first allowed the inflation rate to increase even further, until the unions themselves had to face the fact that recovery from threatening national catastrophe depended on them alone...

...Neither have these nationalized industries generally shown superior efficiency...

...Beginning with the first session of the United Nations Conference on Trade and Development in 1964, a steadily increasing number of LDCs have therefore united in more and more specific demands for what they call a "New Economic Order...

...Finally, the belief that nationalization would give the government an additional lever for steering the economy as a wholee...

...The struggle against inflation and recession would have utterly failed if the major industrial nations, instead of seeking a common way out, had each tried to save itself by "beggar-my-neighbor" policies (as they did with disastrous effect in the world crisis of 1929-32...

...According to this view, the primary difference between the democratic socialists and their conservative opponents did not concern such structural economic questions as the degree of planning or the share of nationalized ownership of the means of production, but the struggle to overcome or maintain the social gulf between the classes—a gulf that had always been felt particularly deeply in Britain...

...The Godesberg program of the German Social Democrats, adopted in 1959, and their subsequent explicit acceptance of the policy of Western integration initiated by their Christian Democrat opponents, which paved the way for the Grand Coalition of 1966-69, are viewed as the classic examples of this more general process...

...The damage caused to our natural environment by modern techniques of production has assumed proportions that make preventive and remedial action imperative...

...Inside the social democratic parties, the struggle about this new concept of equality has not yet been concluded...

...Reformist acceptance of functioning within the given constitutional framework generally prevailed in those Western democracies where government was responsible to democratic control and where the principle of equal suffrage was fully or approximately applied (at least for men...

...The German Social Democrats got gradually cured of it by experience, without adopting the opposite doctrine of a "free-market economy" defended by their domestic opponents...

...Yet ideological experiments in "democratization" of functional institutions seem to have proved irrelevant and harmful...

...One issue about which social democrats in many countries have been more critical of American policy than have their opponents has been the war in Vietnam...

...In the process, they have in several countries—notably in parts of West Germany, in Denmark, and the Netherlands— accepted forms of "democratization" of the education system that are clearly in conflict with its function for society as a whole, and that have combined with the didactic egalitarianism discussed above to lower the standards of many of those institutions...

...This increase generally permitted an "upward" equalization in which the lower income groups benefited absolutely and relatively, while the higher groups lost only relatively...

...Results in the redistribution of capital ownership by taxation have generally been far less substantial, despite such measures as stiff English death duties and West German introduction of "capital-forming savings" as an addition to workers' wages...

...In the different context of Western Europe, it had only ideological zeal to recommend it and was likely to do serious harm to the general level of school education...

...Within three years after the end of the war, Soviet suppression, persecution, and "forced fusion" of the democratic socialist parties of Eastern Europe succeeded in uniting the Western social democrats in the realization that their very existence would be threatened by any further Soviet advance...

...When primary necessities are scarce, rationing on the basis of equality is indeed the alternative to the injustice of "rationing by the purse...

...The early "Keynesianism" of the Swedish social democrats was extremely relevant to the problems of the world economic crisis...