From Socialist Voice, May 2010

The limits of social democracy

Part 1

We might think that, at a moment when capitalism is in something approaching crisis and many of its shortcomings have been exposed for all to see, people unhappy with either the effects of the crisis or some of the social consequences of capitalism would begin to question the system itself.
     Unfortunately, this is not happening. Indeed, such has been the success of capitalism in the ideological struggle in the decades since 1990 that people seem much more likely to insist that it is socialism that does not work than to look at what the recession and crisis tell us about capitalism as a way of organising the economy and society.
     But it would be wrong to think that there is not widespread dissatisfaction and anger at the failure of the ruling class to meet the basic social, economic, political and cultural needs of people to live decent, fulfilling lives. Vincent Browne regularly points to the systematic inequalities of capitalism and its dire social effects; five thousand Irish citizens die prematurely every year because they are poor. The ICTU and the trade unions based their campaign against Government budgetary strategy on the slogan “A better, fairer way.”
     Parties such as the Labour Party and Sinn Féin are genuinely in favour of a more equal society and understand much of the human suffering that is caused by the great inequalities that exist. Rank-and-file trade union members in the public service know that they are under attack, ideologically and materially, and want to fight back. The liberal and centre-left academics and commentariat endlessly dissect the crisis, proposing all manner of ways in which the system can be improved or repaired to provide better lives for citizens.
     The problem is not that people think the present way of doing things is fine; they don’t. The problem is that they do not identify capitalism itself as the cause of the inequalities and social devastation that raise their dissatisfaction and anger, and do not understand that capitalism, whether run with the greatest or least amount of probity, systematically produces these outcomes.
     So, the solutions that are proposed are more regulation of capital, more encouragement of entrepreneurship, greater competitiveness, reform of the political process and institutions, fewer TDs, abolition of the Seanad, and list systems to elect legislators rather than client-servicing politicians. The thinness of these solutions and their similarity to what already exists should alert everyone—including those who propose them—to the fact that there is a problem here, that these solutions are not going to work.
     But, having rejected socialism, the social democrats and republicans cannot see beyond a reformed, fairer capitalism. While this is almost self-evidently destined to lead to failure, it is worth while examining once again the limits of social democracy. Three recent examples of social-democratic thinking are an article in the Irish Times (8 March 2010) from twenty-eight economists and social scientists; the response of the trade union and labour leadership to the attacks on the public service; and the “Renewing the Republic” series in the Irish Times.
     In the article headed “All the wrong options have been pursued,” the economists and social scientists correctly conclude that the deflationary policies being implemented by the Government are likely to lead to low growth, high debt, high unemployment, and greater inequality. In place of this they propose a “modernisation” of the economy and society. Sustained investment and a reform of corporate governance practices are required, and investment in education is the key, because it increases employment in the short term and increases competitiveness and productivity in the medium term.
     They say that the resources and labour needed for this project are available; political will and vision are lacking. While the principal thrust on funding is for borrowing (new bonds, off-balance-sheet borrowing and investment, accumulated borrowings in exchequer cash balances), they also address taxation and reform of the public service.
     On taxation they recommend non-deflationary ways of increasing revenue, such as property taxes, the removal of regressive tax breaks, environmental taxes, and broadening the tax base through social insurance and local taxes. For the public service they suggest that public-sector workers should become “partners” in increasing productivity and efficiency: employee-driven innovation is the best way to reduce costs and raise output.
     They conclude that investment in sustainable growth and full employment must complement addressing the Government deficit.
     Clearly this is a better strategy for Government policy in several respects: stimulation seems a better option than deflation if growth and jobs are to be created; investment in education and indigenous industry is a more sustainable strategy than relying on attracting foreign investment; improved regulation of corporate practices is in the interest of everyone who is not on the take; the proposals on taxation are broadly progressive and would make the better off pay a larger and fairer share of taxes; and involving workers in bringing change to the public services might produce a better outcome for all concerned.
     But when it is looked at in this way it is quite a limited programme, and it is clear that it would not change much about the nature of either the economy or society. We can support this agenda to the extent that, in the struggle over budgetary strategy, it generally makes demands in the right places (stimulation not deflation; investment in indigenous industry; a greater proportion of taxes paid by the better off; no imposed cuts in public services, and so on).
     And this is important. The real lives of workers are affected by Government policy: reversing Government attacks on workers’ pay and conditions and on public services would be a significant victory and would improve the lives of ordinary people in measurable ways. Also, any victories at this time are important in boosting morale and showing that struggle is meaningful and can produce results.
     However, this programme also reveals all the shortcomings of social democracy. In a sense, though none of the usual countries are cited in the article, it reflects the Irish social-democratic dream: make us like Sweden or Denmark, or wherever, and everything will be better. It is a hankering for the European social-democratic model of capitalism, where a higher tax take funds a bigger government sector, which provides decent public services.
     And there is the nub of the problem: a strategy that pursues a fairer form of capitalism is still pursuing a capitalist solution. It does not identify capitalism as the source of the problem.
     If we understand capitalism as a system with inherent contradictions (overproduction and underconsumption; overaccumulation of capital and problems in finding outlets for investment) that lead to periodic recession and crisis, then ameliorating some of its most destructive effects in the short term is not without merit, but it cannot prevent us returning again and again to crisis and the devastation of ordinary people’s lives. Something more is required.
     Alongside the failure to identify capitalism as the problem, the social democrats also, inevitably, fail to identify properly the class interests involved. In a broad plea for greater fairness in taxation and the distribution of financial burdens there is a recognition that the great inequalities in Irish society need to be tackled and reduced. But they do not ask the crucial questions: Who produces the wealth in society? How is that wealth distributed? What effect has budgetary strategy on this distribution? Who is paying for specific items of budgetary policy? Who gains most from and contributes most to the overall budget?
     These are class questions, and the answers are pretty much self-evident. All wealth is created by people who do work—workers. Capitalists appropriate (I prefer the word “steal”) as much of this wealth as they can and seek to reinvest it to extract ever larger amounts of the wealth created by workers. Budgetary strategy can move the balance in one direction or another but never addresses the answers to the first two questions.
     In time of recession, government—a committee of the ruling class, after all—invariably seeks to make workers pay for the crisis and protect the position and privilege of the better off and capitalists as much as possible.

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