The rise of social democracy
After World War II, capitalism in many Western countries evolved into a mixed economic system, characterised by the extension of public ownership to a range of industries and most infrastructural assets. Moreover, governments adopted a form of planning (indicative planning) to stimulate economic growth and the development of science and technology, raise the standard of living, enhance social protection and well-being (welfare), and expand educational and employment opportunities. In general terms, such measures were said to be aimed at creating better societies. The management of the economy by governments, in consultation with employers and trade unions, was, following Keynesian teachings, widely regarded as legitimate or1 even necessary to “tame” capitalism, to prevent a repeat of the (1929) economic crisis that caused the social, economic, and political disintegration during the 1930s (notably in Germany) that had led to WWII, and to increase economic prosperity.
The label commonly used to refer to these political-economic regimes is social democracy. Social democracies combine a liberal democratic political system and a mixed economic system, with variable degrees of public ownership and economic steering. It has been argued that the ideology underlying social democracy assigns primacy to politics and community over economics, rejecting both unbridled capitalism and Marxism.[1] As such, it has been sometimes portrayed as a “Third Way” approach[2] between economic liberalism and socialism based on the claim that capitalism can be reformed to serve broader interests rather than those of the few, including a more egalitarian society, full employment and job security, rising standards of living and social welfare. As Berman notes, social democracy “creates a capitalism tempered and limited by political power and often made subservient to the needs of society.”[3]
In this context, it is essential to distinguish between social-democratic and democratic-socialist systems, as these labels are often used interchangeably. A democratic-socialist system combines a (more or less) democratic political system with a socialist economic system. In a democratic-socialist system, most of the means of production are publicly/collectively owned rather than privately owned; governments play a dominant role in the management of the economy through central planning; and governments are formally committed to socialism and to reducing inequality, while the political system is (more or less) democratic. While in their early stages, social democratic regimes shared a commitment to socialist goals or ideals, they sought to advance these within a capitalist framework. Thus, they accepted capitalism and assumed that the goals of socialism could be advanced within liberal-democratic capitalist systems.
Before the rise of neoliberalism in the 1970s and 1980s, many Western European countries, including the Scandinavian countries, Germany, the Netherlands, France, and Italy, fell into this category, as did Australia, New Zealand, Canada, and arguably even the United States. However, it must be emphasised that, despite varying degrees of public ownership in these countries, most of their economies (including the means of production and finance) remained in private hands. Moreover, social democratic parties in many of these countries abandoned the goal or commitment to create a socialist system. In fact, following the revisionist turn in socialism that began in the 1890s but that became mainstream after WWII, when the social-democratic parties in many European countries forged (coalition) governments, social-democratic parties officially dropped their historical commitment to Marxism, communism and/or even to socialism and adopted the general aim of improving societies within a capitalist system.[4] In line with this, they also continued to accept that most economic decision-making (notably regarding production and investment) should remain in the hands of “private” actors and “the market,” rather than be based on a central plan. Thus, while a significant part of the means of production in these countries was publicly (state) owned, and governments played a significant role in managing the economic systems, these political-economic regimes were not (democratic) socialist.
Green social democracy?
Social-democratic regimes are commonly regarded as being relatively more receptive to integrating environmental concerns than authoritarian, socialist, and free-market capitalist regimes. Some of these regimes, including Sweden and the Netherlands, have often been referred to as environmental leaders. However, in large part, this has been attributed to the cooperative or consensual style of policy-making characteristic of corporatist regimes.[5] Such regimes developed a tradition of cooperation among government, business, and labour in the management of the economy, notably regarding wages and inflation. It has been argued that this policy style was also conducive to incorporating environmental advocates into public policy development, giving them a voice, particularly in decisions with significant environmental impact.[6] Therefore, the superior environmental performance attributed to countries like Sweden and the Netherlands should perhaps be attributed more to their inclusive and consensual (or corporatist) policy style or tradition than to the influence of social democracy. However, in some countries, corporatism and social democracy were strongly intertwined. But, as Jahn’s research found, the electoral strength of social democratic parties correlated with higher environmental performance only when they were in opposition, not when they were in government.[7]
It is therefore questionable to what extent social democracies have genuinely integrated environmental imperatives into their policies and institutions, as well as into the overarching cognitive frameworks or worldviews that guided their policies.[8] The participation of environmental advocates in corporatist regimes (which are not necessarily dominated by social democrats) requires a willingness to compromise and to work within the prevailing system and political-economic paradigm. This creates the risk that participating environmental advocates and groups may lose their independence and critical edge.[9] On the other hand, groups perceived as radical and irresponsible are often excluded from such corporatist institutions and processes, condemning them to continue operating mainly outside the formal political system, thus limiting their ability to influence government policies and decisions affecting the environment. Both courses and risks create an ongoing dilemma for environmental advocates, and, by extension, all advocates who aspire to fundamental political and economic change, which is very difficult to achieve. In practice, in many liberal democratic regimes, this dilemma is “resolved” by the diversity within the environmental movement, with some groups willing to compromise to achieve very modest gains while other, more radical groups, choose to remain independent and keep their hands clean. Thus, in many cases, both strategies coexist.
More fundamentally, it is very doubtful that even if environmental advocates had (or have) been given a greater say in social-democratic regimes, they would have been able to address the root causes of environmental pressures and problems. The priorities of social democracies were to promote economic growth, full employment, social welfare, and to raise the standard of living of the working class. In these respects, they have been highly successful in the decades following World War II. The high economic growth rates achieved in most Western European countries from 1945 to the early 1970s[10] provided a basis for low unemployment levels, rising wages, improved social welfare, and higher living standards. However, the higher levels of production and consumption also led to increased environmental pressures and problems that became increasingly apparent in the late 1960s and early 1970s, which gave rise to the first wave of environmentalism. However, these emerging problems did not lead governments to assign lower priority to economic growth. If anything, the economic stagnation in the 1970s made the restoration of higher growth levels even more important. Whatever the motivations behind the Keynesian model, limiting, let alone ending, economic growth for environmental reasons was not one of them. Since the limits-to-growth discourse emerged on the global agenda in the early 1970s, governments have consistently denied the incompatibility between economic growth and environmental protection.
Hence, notwithstanding the seemingly promising moves towards environmental integration made by social democratic and corporatist regimes during the 1970s and 1980s (such as the adoption of green planning), the fundamental contradiction between economic and environmental imperatives remained. The capitalist economic systems of social democracies were left mainly untouched despite their mixed-ownership features. Government-owned businesses continued to operate within a predominantly capitalist system, and government policies aimed to make that system run more smoothly (mitigating economic downturns, keeping unemployment low and placating the labour movement with rising wages). This does not diminish the positive socio-economic achievements of social democracies. Social democratic policies led to a significant decline in income inequality in the 1960s and 1970s, though more so in some countries (notably Sweden) than others.[11] Housing conditions, health care and education opportunities improved significantly for many (notably working-class) people. In many countries, wealth inequality decreased between 1910 and 1970, primarily due to the destruction of capital during both world wars; however, it bottomed out in the 1970s.[12] However, the self-perpetuating nature of economic inequality and the mechanisms by which it reproduces itself were not uprooted in any liberal-democratic country with a mixed economy. As such, these regimes can be said to have saved capitalism from its demise, which seemed not unlikely in the wake of the major economic crisis that began in 1929 and resulted in World War II.
The neoliberal turn: decline of social democracy
Nonetheless, the question of whether social democracies offer more promising prospects for meaningful environmental integration than other regimes has, to a large extent, been overshadowed by recent developments. During the 1970s, governments faced growing inflation and sluggish economic growth (stagflation). In response, many, if not most, liberal democracies adopted a “purer” form of capitalism in which government ownership of the means of production (including infrastructure) was significantly diminished through privatisation and changes in government management and regulation in favour of decision-making by the free market. Responsibility for monetary policy, a cornerstone area of neoliberal policies, was taken out of government hands and assigned to independent central banks. This neoliberal turn, however, was not simply a rational response to a growing economic problem. Instead, it was inspired and driven by an ideological and political agenda to push through political-economic reforms that would tilt the institutions of the state “once and for all” towards capitalist interests, while gutting the power of the labour movement.[13] Policies were adopted that severely weakened the power of trade unions and created greater “labour market flexibility” with adverse effects on job security, working conditions and wages. Tax reforms were introduced that favoured the owners of capital (the wealthy) and the higher incomes, worsening inequality in wealth and income.[14] Although the social welfare policies and institutions (including free education and health care) created by social democratic governments were not totally dismantled, they were severely clipped. The neoliberal reforms were revolutionary and tilted the political-economic battlefield, including that of the state, so much in favour of the owners of capital that, from a Marxist perspective, this amounted to a major victory for capital in its war on labour.
Although structural socio-economic changes, notably the expansion of the (private) service industry and the decline of large-scale industries, also contributed to a weakening of the (working class) support basis of social democracy,[15] social democratic parties and governments appeared to be unable or even unwilling to block these developments. In several countries, including Sweden, New Zealand, and the Netherlands, these parties have been instrumental in initiating and pushing through neoliberal reforms,[16] even though these reforms primarily served the (accumulation and profit-maximising) imperatives of capitalism and rolled back the power of the labour movement. Many if not most social democratic parties have come to accept neoliberalism and its prescriptions, although governments have differed in the ways and extent to which they have continued to pursue traditional social democratic principles, including a commitment to greater equality (of ohigher-income groups and continued to assign a role to the state in pursuing these goals.[17] But where governments tried to resist neoliberal (austerity, “labour market flexibility”) policies and/or continued to follow the Keynesian approach, like in France, they were virtually forced into adopting them by international market (capital) forces.[18] To the extent that governments (including social democratic governments) accepted the need for, or desirability of, oopeningup the economy to international investments and competition to promote economic growth, and have become heavily dependent on exports, imports and foreign capital, their ability to pursue independent policies has been more or less diminished.[19]
Concurrently, the acceptance of neoliberal prescriptions implied that social democrats also accepted the idea that governments should adopt a less prescriptive approach to addressing environmental problems and rely more on “market instruments” and voluntary agreements. For instance, the green planning system of the Netherlands, once held up as a model to other countries, was quietly abandoned in favour of an approach in which businesses were granted responsibility for ssettingtheir environmental targets. At the same time, the Ministry for the Environment (VROM) was dismantled. Euphemistically, Dutch governments referred to this as a “lowering of environmental ambitions”, mainly for economic reasons.[20] In Sweden, political commitment to environmental integration was weakened by the adoption of neoliberal policies based on voluntary agreements, privatisation, and market-based policies inspired by the “Dutch governance model”.[21] While these two countries were often held up as environmental leaders and arguably took the echallenge of environmental integration more seriously than many others, their efforts and performance on this front suffered a significant setback after their governments took a neoliberal turn.
The neoliberal turn taken by social democratic parties and governments led to a loss of credibility as advocates of political-economic reform aimed at creating better and more egalitarian societies. Not surprisingly, in many countries, this led to a crumbling of their social, political, and electoral support base after 2000, in some countries to the point where social democratic parties became politically marginal and ran the risk of annihilation, as in the Netherlands and France.[22] Although views differ on whether social democracy is still alive (if not well),[23] it is no exaggeration to say that social democracy as an ideology and programme aimed at reforming (rather than abolishing) capitalism to create a more egalitarian society that puts the well-being of people first, is in crisis.[24] While analysts disagree on the factors that have contributed to this decline, with some emphasising external factors like social changes (a shrinking working class) and/or material factors (economic constraints imposed by globalisation), and others emphasising internal ideological and institutional factors (linked to choices made by social democratic parties themselves),[25] it remains doubtful that social democracy can make a come-back as a credible alternative to neoliberalism, despite the efforts of social democrats to revive Keynesianism with Green New Deal programmes.[26]
The decline or demise of social democracy and its replacement by neoliberal political-economic regimes demonstrate the limitations and vulnerability of efforts to reform capitalism. During the first two decades after World War II, a virtual consensus emerged regarding the need for governments to play a significant role in economic management, and widespread optimism prevailed that major economic crises were a thing of the past. Government ownership of key sectors and industries was broadly accepted as rational. There was a growing belief that economic policies could and should serve the public good and interest, and that it was desirable to extend democracy into the economic realm by increasing worker participation and industrial democracy. The need for a socialist revolution seemed less than ever before as the ideal of a better and more egalitarian society was considered well on its way to being realised through gradual reform.
Yet, what was overlooked in these reveries was that the fundamental contradictions of capitalism, its dependence on continuous expansion, its competitive nature and need to prioritise profit and squeeze the costs (and power) of labour, and its proneness to crises, were not eliminated by giving governments a greater role in its management. These contradictions were masked by the favourable conditions for economic growth that resulted from the large-scale destruction of capital by the economic crisis of the 1930s and WWII, but they were bound to reappear. When they did, during the 1970s, they provided an opportunity for the capitalist class, which had been on the defensive during the decades following World War II, to regain its power and grip on these political-economic regimes, in large part by boosting, financing, and deploying the cognitive power of neoliberal advocates.[27] Social democracy became the object of reform based on a redefinition of capitalist imperatives.
Lessons to be learned
These developments offer three crucial lessons:
First, efforts to reform capitalism for social, environmental, and/or any other public interest purposes are doomed to fail because capitalism, with its inherent contradictions and imperatives and its capitalist class, cannot be reformed away.
Second, linked to this, as long as social-democratic political-economic systems continue to operate in, and remain heavily dependent on, an international or global economic system (for imports and exports as well as capital), their policies (and their effectiveness) will be severely constrained and compromised (“disciplined”) by international market forces and the capitalist competition imperative.
Third, it is possible to fundamentally change a political-economic regime through powerful and well-orchestrated agency. Neither the creation and rise of social democracies nor their replacement by neoliberal capitalist political-economic regimes with less democratic features occurred by chance. They were the result of deliberate, purposeful, and powerful agency that was able to have its way by mobilising its power resources and because of conditions that created favourable opportunities. However, the changes sought or achieved by social democratic actors did not go far enough and did not fundamentally alter the core features of capitalism.
A priori, there is no reason why capitalism cannot be abolished and replaced by a different economic system through a similar exercise of agency when the time is ripe, as socialist revolutions have shown. These lessons must be heeded when considering the fundamental change required to advance environmental integration.
References
[1] Berman, Sheri (2006), The Primacy of Politics: Social Democracy and the Making of Europe’s Twentieth Century. Cambridge: Cambridge University Press.
[2] It must be noted that this label has become more closely associated with Tony Blair’s and Anthony Giddens’s views of the future of social democracy based on an acceptance of neoliberal principles and “reality”. Giddens, Anthony (1988), The Third Way. The Renewal of Social Democracy. Cambridge: Polity Press; Clift, Ben (2002), “Social Democracy and Globalization: The Cases of France and the UK”, Government and Opposition, Vol. 37, No.4, 466-500. Historically and more broadly, the concept depicts the idea that socialist ideals can be achieved via a non-revolutionary way within a (liberal-) democratic context. This view was most effectively promulgated by Edward Bernstein. Steger, Manfred B. (1997), The Quest for Evolutionary Socialism. Eduard Bernstein and Social Democracy. Cambridge: Cambridge University Press; Berman, Sheri, The Primacy of Politics: Social Democracy and the Making of Europe’s Twentieth Century. Cambridge: Cambridge University Press.
[3] Berman, Sheri, The Primacy of Politics: Social Democracy and the Making of Europe’s Twentieth Century, 2.
[4] Ibid.
[5] Lijphart, Arend and Markus M. L. Crepaz (1991), “Corporatism and Consensus Democracy in Eighteen Countries: Conceptual and Empirical Linkages”, British Journal of Political Science, Vol . 21, pp.235-256; Lijphart, Arend (2012), Patterns of Democracy.New Haven, United States: Yale University Press, 275-287.
[6] Crepaz, Markus M.L. (1995), “Explaining National Variations of Air Pollution Levels: Political Institutions and Their Impact on Environmental Policy-Making”, Environmental Politics, Vol.4, No.3, pp.391-414; Scruggs, Lyle (2001), “Is There Really a Link between Neo-Corporatism and Environmental Performance? Updated Evidence and New Data for the 1980s and 1990s”, British Journal of Political Science, Vol.31, No.4, pp.686-692; Jahn, Detlef (1998), “Environmental Performance and Policy Regimes: Explaining Variations in 18 OECD-Countries”, Policy Sciences, Vol.31, No.2, pp.107-131.
[7] Jahn, Detlef (1998), “Environmental Performance and Policy Regimes: Explaining Variations in 18 OECD-Countries”, 23.
[8] Interestingly, Berman’s sympathetic account of social democracy, written in 2006, overlooks environmental issues and the need for social democratic parties to green their platforms.
[9] Dryzek, John S., et al. (2003), Green States and Social Movements: Environmentalism in the United States, United Kingdom, Germany, and Norway. New York: Oxford University Press. On the trend towards the de-radicalisation of Green Parties participating in governments, see Rihoux, Benoît and Wolfgang Rüdig (2006), “Analyzing Greens in Power: Setting the Agenda”, European Journal of Political Research, Vol 45, No.1, pp.1-33; Bomberg, Elizabeth and Neil Carter (2006), “The Greens in Brussels: Shaping or Shaped?”, European Journal of Political Research, Vol 45, No.1, pp.99-125.
[10] Gill, Indermit S. and Martin Raiser (2012), Golden Growth. Restoring the Lustre of the European Economic Model. Overview Washington: The World Bank, 3; Crafts, Nicholas (2003), Fifty Years of Economic Growth in Western Europe: No Longer Catching up but Falling Behind? Stanford, CA: Stanford Institute for Economic Policy Research, Table 1.
[11] Piketty, Thomas. Capital in the Twenty-First Century. Cambridge, Mass.: Belknap Press, loc.5579.
[12] Ibid., Chapter 10.
[13] MacLean, Nancy, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America. Scribe Publications; Harvey, David, A Brief History of Neoliberalism. Oxford and New York: Oxford University Press.
[14] Piketty, Thomas, Capital in the Twenty-First Century, Chapters 9 and 10.
[15] Pontusson, J. (1995), “Explaining the Decline of Europe in Social Democracy”, World Politics, Vol . 47, 495-533.
[16] Steinmo, Sven (2005), “The Evolution of the Swedish Model”, in S. Soederberg, et al. (eds.), Internalizing Globalization: The Rise of Neoliberalism and the Decline of National Varieties of Capitalism. Houndsmills, Basingstoke, Hampshire: Palgrave Macmillan, 149-164; Mitchell, William and Thomas Fazi (2017, e-book ed.), Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World. London: Pluto Press, 6-7; Kelsey, Jane (1995, 1997), The New Zealand Experiment: A World Model for Structural Adjustment? Auckland: Auckland University Press; de Jong, Alex (2013), “The Netherlands: Neoliberal Dreams in Times of Austerity”, New Politics. Vol.XIV, No.2, https://newpol.org/issue_post/netherlands-neoliberal-dreams-times-austerity/.
[17] Clift, Ben (2002), “Social Democracy and Globalization: The Cases of France and the UK”, Government and Opposition, Vol. 37, No.4, pp.466-500; Merkel, Wolfgang, et al. (2008), Social Democracy in Power. The Capacity to Reform. London and New York: Routledge.
[18] Chandrasekhar, C. P. (1982), “Social Democracy and the Capitalist Crisis: Mitterand’s New Austerity Drive”, Social Scientist, Vol . 10, No.9, 40-43.
[19] The susceptibility of Swedish governments to neoliberal policies was also increased by the economy’s heavy dependence on big “private” corporations, whose interests required boosting international competitiveness in the face of growing competition from Japan and other “Asian tigers”. See Steinmo, Sven (2010), The Evolution of Modern States: Sweden, Japan, and the United States. Cambridge, U.K.: Cambridge University Press.
[20] Hoogervorst, N. J. P. and F. J. Dietz, Ambities in Het Nederlandse Milieubeleid: Toen En Nu. Den Haag: Planbureau voor de Leefomgeving.
[21] Persson, Åsa, et al. (2016), “Institutionalization or Wither Away? Twenty-Five Years of Environmental Policy Integration under Shifting Governance Models in Sweden”, Environment and Planning C: Government and Policy, Vol. 34, No.3, pp.478-495.
[22] The Dutch Labour Party (PvdA) began to adopt neoliberal policies during the 1990s. However, it was only after the departure of its charismatic leader, Wim Kok, in 2002 that the party, which had commonly won between 25 and 30 per cent of the parliamentary vote, began to lose popularity. In the 2017 elections, its share of the vote dropped below 6 per cent, and it remained at that level in 2021. The slide in electoral support for the Swedish and German Social Democrats has been less dramatic. Still, in Sweden, in 2018, it reached 28 per cent of the vote, the lowest level since the early 20th century, and in Germany, in 2017, it was less than half the level received during the heyday in the 1970s. Wikipedia (2021), Swedish Social Democratic Party, https://en.wikipedia.org/wiki/Swedish_Social_Democratic_Party (Accessed: 7 April 2021); Wikipedia (2021), Social Democratic Party of Germany, https://en.wikipedia.org/wiki/Social_Democratic_Party_of_Germany (Accessed: 7 April 2021); Wikipedia (2021), Labour Party (Netherlands), https://en.wikipedia.org/wiki/Labour_Party_(Netherlands) (Accessed: 7 April 2021); Bandau, Frank (2019), “Was Erklärt Die Krise Der Sozialdemokratie? Ein Literaturüberblick”, Politische Vierteljahresschrift, Vol 60, 587-609. Loxbo et al. link the decline in electoral support for social democratic parties to the level of generosity and security a welfare state provides, with lower levels making parties more vulnerable. Loxbo, Karl, et al. (2019), “The Decline of Western European Social Democracy: Exploring the Transformed Link between Welfare State Generosity and the Electoral Strength of Social Democratic Parties, 1975-2014”, Party Politics, Vol . 20, No.10, 1-12.
[23] Consider, for instance, the different takes on Sweden on this point. Steinmo takes the view that the Swedes still adhere to egalitarian values and the welfare state, Lindvall argues that corporatism has been seriously eroded, while Therborn notes that Swedish politics and society have changed fundamentally, that the welfare state is being dismantled and that wealth inequality in Sweden has become even greater than in the United States. Steinmo, Sven, “The Evolution of the Swedish Model”, in Soederberg, S., G. Menz and P. Cerny (eds.), Internalizing Globalization: The Rise of Neoliberalism and the Decline of National Varieties of Capitalism. Houndsmills, Basingstoke, Hampshire: Palgrave Macmillan, pp.149-164.; Lindvall, Johannes and Joakim Sebring (2005), “Policy Reform and the Decline of Corporatism in Sweden”, West European Politics, Vol 28, No.5, 1057-1074; Therborn, Göran (2017), “The ”People’s Home” Is Falling Down, Time to Update Your View of Sweden”, Sociologisk forskning, Vol.54, No.4, 275-278.
[24] Bandau, Frank (2019), “Was Erklärt Die Krise Der Sozialdemokratie? Ein Literaturüberblick”, Politische Vierteljahresschrift, Vol.60, pp.587-609; Ryner, J. Magnus (1999), “Neoliberal Globalization and the Crisis of Swedish Social Democracy”, Economic and Industrial Democracy, Vol.20, 39-79.
[25] For an emphasis on the importance of the former factors, see Pontusson, J. (1995), “Explaining the Decline of Europe in Social Democracy”, World Politics, Vol . 47, pp.495-533. And for a leading proponent of the latter view, see Kitschelt, Herbert (1994), The Transformation of European Social Democracy. Cambridge: Cambridge University Press. Benedetto, Hix, and Mastrorocco link the decline to two factors: the decline of industry and the number of industrial workers, as well as the decrease in public-sector spending. Benedetto, Giacomo, et al. (2020), “The Rise and Fall of Social Democracy 1918 – 2017”, American Political Science Review, Vol . 114, No.3, 928-939. For a broader discussion of the literature on this topic, see Bandau, Frank (2019), “Was Erklärt Die Krise Der Sozialdemokratie? Ein Literaturüberblick”.
[26] Aşıcı, Ahmet Atıl and Zeynep Bünül (2012), “Green New Deal: A Green Way out of the Crisis?”, Environmental Policy and Governance, Vol . 22, No.5, pp.295-306; Willis, Rebecca, Green New Deal: The UK Edition. New Economics Foundation, https://neweconomics.org/2019/02/the-green-new-deal (Accessed: 22 March 2019).
[27] MacLean, Nancy, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America. Scribe Publications; Mayer, Jane, Dark Money. The Hidden History of the Billionaires Behind the Rise of the Radical Right. New York: Doubleday; Harvey, David, A Brief History of Neoliberalism. Oxford and New York: Oxford University Press.