Social democracy is a political, social, and economic philosophy within the socialist tradition. As an economic ideology and policy regime, it is described by academics as advocating economic and social interventions to promote social justice within the framework of a liberal-democratic polity and a capitalist-oriented mixed economy. The protocols and norms used to accomplish this involve a commitment to representative and participatory democracy, measures for income redistribution, regulation of the economy in the general interest, and social-welfare provisions. Due to longstanding governance by social democratic parties during the post-war consensus and their influence on socioeconomic policy in Northern and Western Europe, social democracy became associated with Keynesianism, the Nordic model, the social liberal paradigm, and welfare states within political circles in the late 20th century. It has been described as the most common form of Western or modern socialism as well as the reformist wing of democratic socialism.
Social democracy originated as a political ideology that advocated an evolutionary and peaceful transition from capitalism to socialism using established political processes in contrast to the revolutionary approach to transition associated with orthodox Marxism. In the early post-war era in Western Europe, social democratic parties rejected the Stalinist political and economic model then current in the Soviet Union, committing themselves either to an alternative path to socialism or to a compromise between capitalism and socialism. In this period, social democrats embraced a mixed economy based on the predominance of private property, with only a minority of essential utilities and public services under public ownership. As a result, social democracy became associated with Keynesian economics, state interventionism, and the welfare state while placing less emphasis on the prior goal of replacing the capitalist system (factor markets, private property and wage labor) with a qualitatively different socialist economic system.
Social democracy seeks to humanize capitalism and create the conditions for it to lead to greater democratic, egalitarian, and solidaristic outcomes. It is characterized by a commitment to policies aimed at curbing inequality, eliminating oppression of underprivileged groups, and eradicating poverty—as well as support for universally accessible public services like care for the elderly, child care, education, health care, and workers' compensation. It often has strong connections with the labour movement and trade unions, being supportive of collective bargaining rights for workers and measures to extend decision-making beyond politics into the economic sphere in the form of co-determination—or even social ownership—for employees and stakeholders. The Third Way, which ostensibly aims to fuse liberal economics with social democratic welfare policies, is an ideology that developed in the 1990s and is sometimes associated with social democratic parties, but some analysts have instead characterized the Third Way as an effectively neoliberal movement.
Overview
Definition
Social democracy is defined in the Encyclopædia Britannica as:
espousing state regulation (rather than state ownership of the means of production) and extensive social welfare programs.
While the term is often confused with democratic socialism, modern day usage of social democracy is generally defined as an increase in welfare policies or an increase in government services, and may be used synonymously with the Nordic Model. As a political movement, its eventual long-term goal is to achieve socialism through gradual and democratic means. The definition of the term has changed considerably over time. Historically, the term had greater overlap with socialism. This concept goes back to the influence of both the reformist socialism of Ferdinand Lassalle as well as the internationalist revolutionary socialism advanced by Karl Marx and Friedrich Engels, from whom social democracy was influenced.
As an international political movement and ideology, social democracy has undergone various major forms throughout its history. Whereas in the 19th century it was "organized Marxism", social democracy became "organized reformism" by the 20th century. In contemporary usage, social democracy as a policy regime generally means support for a mixed economy and ameliorative measures to benefit the working class within the framework of capitalism.
Overlap with democratic socialism
In political science, democratic socialism and social democracy are largely seen as synonyms while they are distinguished in journalistic use. Under this democratic socialist definition, social democracy is an ideology seeking to gradually build an alternative socialist economy through the institutions of liberal democracy. Starting in the post-war period, social democracy was defined as a policy regime advocating reformation of capitalism to align it with the ethical ideals of social justice. In the 19th century, it encompassed a wide variety of non-revolutionary and revolutionary currents of socialism which excluded anarchism. In the early 20th century, social democracy came to refer to support for a gradual process of developing socialism through existing political structures and an opposition to revolutionary means of achieving socialism in favor of reformism.
In the 19th century, social democrat was a broad catch-all for international socialists owing their basic ideological allegiance to Lassalle or Marx, in contrast to those advocating various forms of utopian socialism. In one of the first scholarly works on European socialism written for an American audience, Richard T. Ely's 1883 book French and German Socialism in Modern Times, social democrats were characterized as "the extreme wing of the socialists" who were "inclined to lay so much stress on equality of enjoyment, regardless of the value of one's labor, that they might, perhaps, more properly be called communists". Many parties in this era described themselves as Social Democrat, including the General German Workers' Association and the Social Democratic Workers' Party of Germany which merged to form the Social Democratic Party of Germany, the British Social Democratic Federation and the Russian Social Democratic Labour Party. Social Democrat continued to be used in this context up to the time of the Bolshevik Revolution of October 1917, at which time Communist came into vogue for individuals and organizations espousing a revolutionary road to socialism. According to Ely:
[Social democrats] have two distinguishing characteristics. The vast majority of them are laborers, and, as a rule, they expect the violent overthrow of existing institutions by revolution to precede the introduction of the socialistic state. I would not, by any means, say that they are all revolutionists, but the most of them undoubtedly are. The most general demands of the social democrats are the following: The state should exist exclusively for the laborers; land and capital must become collective property, and production be carried on unitedly. Private competition, in the ordinary sense of the term, is to cease.
As a label or term, social democracy or social democratic remains controversial among socialists. Some define it as representing both a Marxist faction and non-communist socialists or the right-wing of socialism during the split with communism. Others have noted its pejorative use among communists and other socialists. According to Lyman Tower Sargent, "socialism refers to social theories rather than to theories oriented to the individual. Because many communists now call themselves democratic socialists, it is sometimes difficult to know what a political label really means. As a result, social democratic has become a common new label for democratic socialist political parties". According to Donald Busky:
Social democracy is a somewhat controversial term among democratic socialists. Many democratic socialists use social democracy as a synonym for democratic socialism, while others, particularly revolutionary democratic socialists, do not, the latter seeing social democracy as something less than socialism—a milder, evolutionary ideology that seeks merely to reform capitalism. Communists also use the term social democratic to mean something less than true socialism that sought only to preserve capitalism by reform rather than by overthrowing and establishing socialism. Even revolutionary democratic socialists and Communists have at times, particularly the past, called their parties "social democratic."
Marxist revisionist Eduard Bernstein's views influenced and laid the groundwork for the development of post-war social democracy as a policy regime, Labour revisionism and the neo-revisionism of the Third Way. This definition of social democracy is focused on ethical terms, with the type of socialism advocated being ethical and liberal. Bernstein described socialism and social democracy in particular as "organized liberalism". In this sense, liberalism is the predecessor and precursor of socialism, whose restricted view of freedom is to be socialized while democracy must entails social democracy. For those social democrats, who still describe and see themselves as socialists, socialism is used in ethical or moral terms, representing democracy, egalitarianism and social justice rather than a specifically socialist economic system. Under this type of definition, social democracy's goal is that of advancing those values within a capitalist market economy as its support for a mixed economy no longer denotes the coexistence between private and public ownership or that between planning and market mechanisms, but rather it represents free markets combined with government intervention and regulations.
Social democracy has been seen by some as a revision of orthodox Marxism, although this has been described as misleading for modern social democracy. Some distinguish between ideological social democracy as part of the broad socialist movement and social democracy as a policy regime. The first is called classical social democracy or classical socialism, being contrasted to competitive socialism, liberal socialism, neo-social democracy, and new social democracy.
Social democracy has often been conflated with an administrative command economy, authoritarian socialism, big government, Marxist–Leninist states, Soviet-type economic planning, state interventionism and state socialism. Austrian School economists such as Friedrich Hayek and Ludwig von Mises also continually used socialism as a synonym for central planning and social democracy for state socialism, conflating it with fascism and opposing social democratic policies, including the welfare state. This is notable in the United States, where socialism has become a pejorative used by conservatives and libertarians to taint liberal and progressive policies, proposals and public figures. Those confusions are caused not only by the socialist definition, but by the capitalist definition as well. Christian democrats, social liberals, national and social conservatives tend to support some social democratic policies and generally regard capitalism as compatible with a mixed economy. On the other hand, classical liberals, conservative liberals, neoliberals, liberal conservatives and right-libertarians define capitalism as the free market. The latter support a small government and a laissez-faire capitalist market economy while opposing economic interventionism, government regulations and social democratic policies. They see actually existing capitalism as corporatism, corporatocracy, or crony capitalism. This has resulted in socialism and by extension social democracy being defined in countries such as Norway and the United Kingdom as "what a Labour government does".
With the rise of neoliberalism in the late 1970s and early 1980s and the Third Way between the 1990s and 2000s, social democracy became synonymous with it. Many social democrats opposed to the Third Way overlap with democratic socialists in their commitment to a democratic alternative to capitalism and a post-capitalist economy. Those social democrats have not only criticized the Third Way as anti-socialist and neoliberal, but also as anti-social democratic in practice. Some democratic socialists and others have rejected the Third Way's centrism, for the political center moved decidedly to the right during the neoliberal years. Social democratic parties such as the British Labour Party and the Social Democratic Party of Germany have been described as effectively representing a new centre-right or neoliberal party.
Social democracy has some significant overlap on practical policy positions with democratic socialism, although they are usually distinguished from each other. While the now revised version of Clause IV to the British Labour Party Constitution which was implemented in the 1990s by the New Labour faction led by Tony Blair affirms a formal commitment to democratic socialism, describing it as a modernized form of social democracy, it no longer commits the party to public ownership of industry and in its place advocates "the enterprise of the market and the rigour of competition" along with "high quality public services either owned by the public or accountable to them". Many social democrats "refer to themselves as socialists or democratic socialists" and some such as Tony Blair "use or have used these terms interchangeably". Others argue that "there are clear differences between the three terms, and preferred to describe their own political beliefs by using the term 'social democracy' only".
Democratic socialism is generally defined as an anti-Stalinist left-wing big tent that opposes authoritarian socialism, rejecting self-described socialist states as well as Marxism–Leninism and its derivatives such as Maoism and Stalinism. Besides social democrats, democratic socialists also include some anarchists, classical Marxists, democratic communists, libertarian socialists, market socialists, orthodox Marxists such as Karl Kautsky and Rosa Luxemburg as well as revisionists such as Eduard Bernstein.
As a term, democratic socialism represents social democracy prior to the 1970s, when the post-war displacement of Keynesianism by monetarism and neoliberalism caused many social democratic parties to adopt the Third Way ideology, accepting capitalism as the current status quo and redefining socialism in a way that maintains the capitalist structure intact. Like modern social democracy, democratic socialism tends to follow a gradual, reformist or evolutionary path to socialism rather than a revolutionary one. Policies commonly supported by both are Keynesian in nature and include some degree of regulation over the economy, social insurance schemes, public pension programs and a gradual expansion of public ownership over major and strategic industry.
According to both right-wing critics and some supporters alike, policies such as universal health care and education are "pure Socialism" because they are opposed to "the hedonism of capitalist society". Partly because of this overlap, democratic socialism refers to European socialism as represented by social democracy, especially in the United States, where it is tied to the New Deal. Some democratic socialists who follow social democracy support practical, progressive reforms of capitalism and are more concerned to administrate and humanize it, with socialism relegated to the indefinite future. Other democratic socialists want to go beyond mere meliorist reforms and advocate systematic transformation of the mode of production from capitalism to socialism.
During the late 20th century, those labels were embraced, contested and rejected due to the emergence of developments within the European left such as Eurocommunism, the rise of neoliberalism, the fall of the Soviet Union and Revolutions of 1989, the Third Way and the rise of anti-austerity and Occupy movements due to the global financial crisis of 2007–2008 and the Great Recession, the causes of which have been attributed by some to the neoliberal shift and deregulation economic policies. This latest development contributed to the rise of politicians such as Jeremy Corbyn in the United Kingdom and Bernie Sanders in the United States who rejected centrist politicians that supported triangulation within the Labour and Democratic parties.
Despite the long history of overlap between the two, with social democracy considered a form of democratic or parliamentary socialism and social democrats calling themselves democratic socialists, democratic socialism is considered a misnomer in the United States. One issue is that social democracy is equated with wealthy countries in the Western world (especially in Northern and Western Europe) while democratic socialism is conflated either with the pink tide in Latin America (especially with Venezuela) or with communism in the form of Marxist–Leninist socialism as practiced in the Soviet Union and other self-declared socialist states. In the United States, democratic socialism has been described as representing the left-wing or socialist tradition of the New Deal. The lack of a strong and influential socialist movement in the United States has been linked to the Red Scare and any ideology that is associated with socialism brings social stigma due its association with authoritarian socialist states. As a term, socialism has been used as a scare word or a pejorative term without clear definition by conservatives and libertarians to taint liberal and progressive policies, proposals and public figures. Although Americans may reject the idea that the United States has characteristics of a European-style social democracy, it has been argued by other observers that it has a comfortable social safety net, albeit severely underfunded in comparison to other Western countries. It has also been argued that many policies that may be considered socialist are popular, but that socialism is not. Others such as Tony Judt described modern liberalism in the United States as representing European social democracy.
Political party
Social Democratic is the name of socialist parties in some countries. The term came to be associated with the positions of the German and Swedish parties. The first advocated revisionist Marxism while the second advocated a comprehensive welfare state. Today, parties advocating social democracy include Labour, Left and some Green parties. Most social democratic parties consider themselves to be democratic socialists and are routinely called socialist parties. Some such as the Labour Party in the United Kingdom make reference to socialism, either as a post-capitalist order or in ethical terms as a just society, described as representing democratic socialism, without any explicit reference to the economic system. Parties such as the Social Democratic Party of Germany and the Swedish Social Democratic Party describe their goal the development of democratic socialism, with social democracy serving as the principle of action. Today, European social democratic parties represents the centre-left and most are part of the European Socialist Party while democratic socialist parties are to their left within the Party of the European Left. Many of those contemporary social democratic parties are members of the Socialist International, including several democratic socialist parties, whose Frankfurt Declaration declares the goal of the development of democratic socialism. Others are also part of the Progressive Alliance, founded in 2013 by most of current or former member parties of the Socialist International.
What socialists such as anarchists, communists, social democrats, syndicalists and some social democratic proponents of the Third Way share in common is history, specifically that they can all be traced back to the individuals, groups and literature of the First International and have retained some of the terminology and symbolism such as the colour red. How far society should intervene and whether government, particularly existing government, is the correct vehicle for change are issues of disagreement. As the Historical Dictionary of Socialism argues, "there were general criticisms about the social effects of the private ownership and control of capital", "a general view that the solution to these problems lay in some form of collective control (with the degree of control varying among the proponents of socialism) over the means of production, distribution, and exchange" and "there was agreement that the outcomes of this collective control should be a society that provided social equality and justice, economic protection, and generally a more satisfying life for most people". Socialism became a catch-all term for the critics of capitalism and industrial society. Social democrats are anti-capitalists insofar as criticism about "poverty, low wages, unemployment, economic and social inequality, and a lack of economic security" is linked to the private ownership of the means of production.
Development
During the late 19th century and the early 20th century, social democracy was a broad labour movement within socialism that aimed to replace private ownership with social ownership of the means of production, distribution and exchange, taking influence from both Marxism and the supporters of Ferdinand Lassalle. By 1868–1869, the socialism associated with Karl Marx had become the official theoretical basis of the first social democratic party established in Europe, the Social Democratic Workers' Party of Germany. By the early 20th century, the German social democratic politician Eduard Bernstein rejected the ideas in orthodox Marxism that proposed specific historical progression and revolution as a means to achieve social equality, advancing the position that socialism should be grounded in ethical and moral arguments for social justice and egalitarianism that are to be achieved through gradual legislative reform. Following the split between reformist and revolutionary socialists in the Second International, socialist parties influenced by Bernstein rejected revolutionary politics in favour of parliamentary reform while remaining committed to socialization.During the 1920s and 1930s, social democracy became a dominant tendency within the socialist movement, mainly associated with reformist socialism whilst communism represented revolutionary socialism. Under the influence of politicians like Carlo Rosselli in Italy, social democrats began disassociating themselves from orthodox Marxism altogether as represented by Marxism–Leninism, embracing liberal socialism, Keynesianism, and appealing to morality rather than any consistent systematic, scientific or materialist worldview. Social democracy made appeals to communitarian, corporatist and sometimes nationalist sentiments while rejecting the economic and technological determinism generally characteristic of both orthodox Marxism and economic liberalism.
By the post-World War II period and its economic consensus and expansion, most social democrats in Europe had abandoned their ideological connection to orthodox Marxism and shifted their emphasis toward social policy reform as a compromise between capitalism to socialism. According to Michael Harrington, the major reason for this was due to the perspective that viewed the Stalinist-era Soviet Union as having succeeded in propaganda in usurping the legacy of Marxism and distorting it in propaganda to justify totalitarianism. In its foundation, the Socialist International denounced the Bolshevik-inspired communist movement, "for [it] falsely claims a share in the Socialist tradition". Furthermore, core tenets of Marxism have been regarded by social democrats as having become obsolete, including the prediction that the working-class was the decisive class with the development of capitalism. In their view, this did not materialize in the aftermath of mass industrialization during World War II.
During the Third Way development of social democracy, social democrats adjusted themselves to the neoliberal political climate that had existed since the 1980s. Those social democrats recognized that outspoken opposition to capitalism was politically non-viable and that accepting the current powers that be and seeking to challenge free-market and laissez-faire variations of capitalism was a more immediate concern. The Third Way stands for a modernized social democracy, but the social democracy that remained committed to the gradual abolition of capitalism, along with social democrats opposed to the Third Way, merged into democratic socialism. Although social democracy originated as a revolutionary socialist or communist movement, one distinction made to separate democratic socialism and social democracy is that the former can include revolutionary means. The latter asserts that the only acceptable constitutional form of government is representative democracy under the rule of law.
Social democracy has been described as the evolutionary form of democratic socialism that aims to gradually and peacefully achieve socialism through established political processes rather than social revolution as advocated by revolutionary socialists. In this sense, social democracy is synonymous with democratic socialism and represented its original form, i.e. socialism achieved by democratic means, usually through the parliament. While social democrats continue to call and describe themselves as democratic socialists or simply socialists, with time, the post-war association of social democracy as policy regime and the development of the Third Way, democratic socialism has come to include communist and revolutionary tendencies, effectively representing the original meaning of social democracy as the latter has shifted towards mostly reformism.
Philosophy
Philosophically and etymologically overlapping with democratic socialism, social democracy is a form of reformist democratic socialism. Social democracy rejects the either/or interpretation of capitalism versus socialism. It claims that fostering a progressive evolution of capitalism will gradually result in the evolution of a capitalist economy into a socialist economy. Social democracy argues that all citizens should be legally entitled to certain social rights. These are made up of universal access to public services such as education, health care, workers' compensation and other services including child care and care for the elderly. Social democracy also advocates freedom from discrimination based on differences of ability/disability, age, ethnicity, gender, language, race, religion, sexual orientation and social class.
Later in their life, Karl Marx and Friedrich Engels came to argue that in some countries workers might be able to achieve their aims through peaceful means. In this sense, Engels argued that socialists were evolutionists, although both Marx and Engels remained committed to social revolution. In developing social democracy, Marxist revisionist Eduard Bernstein rejected the revolutionary and materialist foundations of orthodox Marxism. Rather than class conflict and socialist revolution, Bernstein believed that socialism could be achieved through cooperation between people regardless of class. Nonetheless, Bernstein paid deference to Marx, describing him as the father of social democracy, but declaring that it was necessary to revise Marx's thought in light of changing conditions. Influenced by the gradualist platform favoured by the British Fabian movement, Bernstein came to advocate a similar evolutionary approach to socialist politics that he termed evolutionary socialism. Evolutionary means include representative democracy and cooperation between people regardless of class. Bernstein accepted the Marxist analysis that the creation of socialism is interconnected with the evolution of capitalism.
August Bebel, Bernstein, Engels, Wilhelm Liebknecht, Marx and Carl Wilhelm Tölcke are all considered founding fathers of social democracy in Germany, but it is especially Bernstein and Lassalle, along with labourists and reformists such as Louis Blanc in France, who led to widespread association of social democracy with socialist reformism. While Lassalle was a reformist state socialist, Bernstein predicted a long-term co-existence of democracy with a mixed economy during the reforming of capitalism into socialism and argued that socialists needed to accept this. This mixed economy would involve public, cooperative and private enterprises and it would be necessary for a long period of time before private enterprises evolve of their own accord into cooperative enterprises. Bernstein supported state ownership only for certain parts of the economy that could be best managed by the state and rejected a mass scale of state ownership as being too burdensome to be manageable. Bernstein was an advocate of Kantian socialism and neo-Kantianism. Although unpopular early on, his views became mainstream after World War I.
In The Future of Socialism (1956), Anthony Crosland argued that "traditional capitalism has been reformed and modified almost out of existence, and it is with a quite different form of society that socialists must now concern themselves. Pre-war anti-capitalism will give us very little help", for a new kind of capitalism required a new kind of socialism. Crosland believed that these features of a reformed managerial capitalism were irreversible, but it has been argued within the Labour Party and by others that Margaret Thatcher and Ronald Reagan brought about its reversal in the 1970s and 1980s. While the post-war consensus represented a period where social democracy was "most buoyant", it has been argued that "post-war social democracy had been altogether too confident in its analysis" because "gains which were thought to be permanent turned out to be conditional and as the reservoir of capitalist growth showed signs of drying up". In Socialism Now (1974), Crosland argued that "[m]uch more should have been achieved by a Labour Government in office and Labour pressure in opposition. Against the dogged resistance to change, we should have pitted a stronger will to change. I conclude that a move to the Left is needed".
In Origin, Ideology and Transformation of Political Parties: East-Central and Western Europe Compared, Vít Hloušek and Lubomír Kopecek explain how socialist parties have evolved from the 19th to the early 21st centuries. As the number of people in traditional working class occupations such as factory-workers and miners declined, socialists have successfully widened their appeal to the middle class by diluting their ideology. However, there is still continuity between parties such the German SPD, the British Labour Party and other socialist parties which remain part of the same famille spirituelle or ideological party family as outlined by most political scientists. For many social democrats, Marxism is loosely held to be valuable for its emphasis on changing the world for a more just, better future.
Communist split and the Third Way
Before social democracy was associated to a policy regime with a specific set of socioeconomic policies, its economics ranged from communism to syndicalism and the guild socialists, who rejected or were opposed to the approach of some Fabians, regarded as being "an excessively bureaucratic and insufficiently democratic prospect". Communists and revolutionary socialists were a significant part of social democracy and represented its revolutionary wing. Although they remained committed to the concept of social democracy representing the highest form of democracy, social democracy became associated with its reformist wing since the communist split starting in 1917.
The Russian Revolution further exacerbated this division, resulting in a split between those supporting the October Revolution renaming themselves as Communist and those opposing the Bolshevik development (favouring the liberal social democratic development as argued by the Mensheviks) remaining with the Social Democrat label. Rather than abandoning social democracy, Communists simply remained committed to revolutionary social democracy, merging into communism. However, they saw Social Democrat associated to reformism, found it irredeemably lost and chose Communist to represent their views. For the Communists, the Social Democrats betrayed the world's working class by supporting the imperialist Great War and leading their national governments into the war. The Communists also criticized their reformism, arguing that it represented "reformism without reforms". This reformist–revolutionary division culminated in the German Revolution of 1919 in which the Communists wanted to overthrow the German government to turn it into a soviet republic like it was done in Russia while the Social Democrats wanted to preserve it as what came to be known as the Weimar Republic. It was those revolutions that essentially transformed the social democracy meaning from "Marxist revolutionary" into a form of "moderate parliamentary socialism".
While evolutionary and reformist social democrats believe that capitalism can be reformed into socialism, revolutionary social democrats argue that this is not possible and that a social revolution would still be necessary. The revolutionary criticism of reformism, but not necessarily of reforms which are part of the class struggle, goes back to Marx, who proclaimed that social democrats had to support the bourgeoisie wherever it acted as a revolutionary, progressive class because "bourgeois liberties had first to be conquered and then criticised". Internal rivalry in the social democratic movement within the Second International between reformists and revolutionaries resulted in the Communists led by the Bolsheviks founding their own separate Communist International (Comintern) in 1919 that sought to rally revolutionary social democrats together for socialist revolution. With this split, the social democratic movement was now dominated by reformists, who founded the Labour and Socialist International (LSI) in 1923. The LSI had a history of rivalry with the Comintern, with which it competed over the leadership of the international socialist and labour movement.
The social democratic Gaitskellites emphasized the goals of personal liberty, social welfare and above all social equality. The Gaitskellites were part of a political consensus between the British Labour and Conservative parties, famously dubbed Butskellism. Some social democratic Third Way figures such as Anthony Giddens and Tony Blair, who has described himself as a Christian socialist and consider himself to be a socialist in ethical terms, adamantly insist that they are socialists, for they claim to believe in the same values that their anti-Third Way critics do. However, Clause IV's open advocacy of state socialism was alienating potential middle-class Labour supporters and nationalization policies had been so thoroughly attacked by neoliberal economists and politicians, including rhetorical comparisons by the right of state-owned industry in the West to that in the Soviet Union and the Eastern Bloc, hence nationalizations and state socialism became unpopular. In countries such as Britain, Thatcherite Conservatives were adept at condemning state-owned enterprises as economically inefficient. For the Gaitskellites, nationalization was not essential to achieve all major socialist objectives. Public ownership and nationalization were not specifically rejected, but were rather seen as merely one of numerous useful devices. According to social democratic modernizers like Blair, nationalization policies were politically unviable by the 1990s.
Some critics and analysts argue that a number of prominent social democratic parties such as the British Labour Party and the German Social Democratic Party, even while maintaining references to socialism and declaring themselves to be democratic socialist parties, have effectively abandoned socialism in practice, whether unwillingly or not.
Policy regime
As a policy regime, it has become commonplace to reference social democracy as the European social democracies, i.e. the actually-existing states in Northern and Western European countries, usually in reference to their model of welfare state and corporatist system of collective bargaining. European social democracies represents a socio-economic order that has been variously described as starting in either the 1930s, 1940s and 1950s and ending in the 1970s, 1980s and 1990s. Henning Meyer and Jonathan Rutherford associate social democracy with the socio-economic order that existed in Europe from the post-war period up until the early 1990s. This has been accepted or adopted across the political spectrum, including conservatives (Christian democrats), liberals (social liberals) and socialists (social democrats). However, socialists see the welfare state "not merely to provide benefits but to build the foundation for emancipation and self-determination".
Social democracy influenced the development of social corporatism, a form of economic tripartite corporatism based upon a social partnership between the interests of capital and labour, involving collective bargaining between representatives of employers and of labour mediated by the government at the national level. During the post-war consensus, this form of social democracy has been a major component of the Nordic model and to a lesser degree the West European social market economies. The development of social corporatism began in Norway and Sweden in the 1930s and was consolidated in the 1960s and 1970s. The system was based upon the dual compromise of capital and the labour as one component and the market and the state as the other component. From the 1940s through the 1970s, defining features of social democracy as a policy regime included Keynesian economic policies and industrial agreements to balance the power of capital and labor as well as the welfare state. This is especially associated with the Swedish Social Democrats. In the 1970s, social corporatism evolved into neo-corporatism which essentially replaced it. Neo-corporatism has represented an important concept of Third Way social democracy. social democratic theorist Robin Archer wrote about the importance of social corporatism to social democracy in his work Economic Democracy: The Politics of a Feasible Socialism (1995). As a welfare state, social democracy is a specific type of welfare state and policy regime described as being universalist, supportive of collective bargaining and more supportive of public provision of welfare. It is especially associated to the Nordic model.
As a policy regime, social democracy rests on three fundamental features, namely "(1) democracy (e.g., equal rights to vote and form parties), (2) an economy partly regulated by the state (e.g., through Keynesianism), and (3) a welfare state offering social support to those in need (e.g., equal rights to education, health service, employment, and pensions)". In practice, social democratic parties have been instrumental in the social liberal paradigm lasting from the 1940s and 1970s and called as such because it was developed by social liberals, but implemented by social democrats. Since those policies were mostly implemented by social democrats, social liberalism is sometimes called social democracy. The social liberal Beveridge Report drafted by the Liberal economist William Beveridge influenced the British Labour Party's social policies such as the National Health Service and Labour's welfare state development. This social liberal paradigm represented the post-war consensus and was accepted across the political spectrum by conservatives, liberals and socialists until the 1970s. Similarly, the neoliberal paradigm which replaced the previous paradigm was accepted across the mainstream political parties, including social democratic supporters of the Third Way. This has caused much controversy within the social democratic movement.
Implementation
From the late 19th century until the mid- to late 20th century, there was greater public confidence in the idea of a state-managed economy that was a major pillar of both proponents of communism and social democracy and even to a substantial degree by conservatives and left-liberals. Aside from anarchists and other libertarian socialists, there was confidence amongst socialists in the concept of state socialism as being the most effective form of socialism. Some early British social democrats in the 19th century and 20th century such as the Fabians claimed that British society was already mostly socialist and that the economy was significantly socialist through government-run enterprises created by conservative and liberal governments which could be run for the interests of the people through their representatives' influence, an argument reinvoked by some socialists in post-war Britain. Advents in economics and observation of the failure of state socialism in the Eastern Bloc countries and in the Western world with the crisis and stagflation of the 1970s, combined with the neoliberal rebuke of state interventionism, resulted in socialists re-evaluating and redesigning socialism. Some social democrats have sought to keep what they deem are socialism's core values while changing their position on state involvement in the economy, but retaining significant social regulations.
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When nationalization of large industries was relatively widespread in the 20th century until the 1970s, it was not uncommon for commentators to describe some European social democracies as democratic socialist states seeking to move their countries toward a socialist economy. In 1956, leading British Labour Party politician and author Anthony Crosland claimed that capitalism had been abolished in Britain, although others such as Welshman Aneurin Bevan, Minister of Health in the first post-war Labour government and the architect of the National Health Service, disputed the claim. For Crosland and others who supported his views, Britain was a socialist state. According to Bevan, Britain had a socialist National Health Service which stood in opposition to the hedonism of Britain's capitalist society.
Although as in the rest of Europe the laws of capitalism still operated fully and private enterprise dominated the economy, some political commentators claimed that during the post-war period, when social democratic parties were in power, countries such as Britain and France were democratic socialist states and the same claim is now applied to Nordic countries with the Nordic model. In the 1980s, the government of President François Mitterrand aimed to expand dirigism and attempted to nationalize all French banks, but this attempt faced opposition of the European Economic Community because it demanded a free-market economy among its members. Public ownership never accounted for more than 15–20% of capital formation, further dropping to 8% in the 1980s and below 5% in the 1990s after the rise of neoliberalism.
One issue of social democracy is the response to the collapse of legitimacy for state socialism and state-interventionist economics of Keynesianism with the discovery of the phenomenon of stagflation which has been an issue for the legitimacy of state socialism. This has provoked re-thinking of how socialism should be achieved by social democrats, including changing views by social democrats on private property—anti-Third Way social democrats such as Robert Corfe have advocated a socialist form of private property as part of a new socialism (although Corfe technically objects to the term private property to collectively describe property that is not publicly owned as being vague) and rejecting state socialism as a failure. Third Way social democracy was formed as response to what its proponents saw as a crisis in the legitimacy of socialism—especially state socialism—and the rising legitimacy for neoliberalism, especially laissez-faire capitalism. The Third Way's view is criticized for being too simplistic in its view of the crisis. Others have criticized it because with the fall of state socialism it was possible "a new kind of 'third way' socialism (combining social ownership with markets and democracy), thereby heralding a revitalization of the social democratic tradition". However, it has been argued that the prospect of a new socialism was "a chimera, a hopeful invention of Western socialists who had not understood how 'actually existing socialism' had totally discredited any version of socialism among those who had lived under it".
History
Legacy
Social democratic policies were first adopted in the German Empire between the 1880s and 1890s, when the conservative Chancellor Otto von Bismarck put in place many social welfare proposals initially suggested by the Social Democrats to hinder their electoral success after he instituted the Anti-Socialist Laws, laying the ground of the first modern welfare state. Those policies were dubbed as State Socialism by the liberal opposition, but the term was later accepted and re-appropriated by Bismarck. It was a set of social programs implemented in Germany that were initiated by Bismarck in 1883 as remedial measures to appease the working class and reduce support for socialism and the Social Democrats following earlier attempts to achieve the same objective through Bismarck's Anti-Socialist Laws. This did not prevent the Social Democrats to become the biggest party in parliament by 1912.
Similar policies were later adopted in most of Western Europe, including France and the United Kingdom (the latter in the form of the Liberal welfare reforms), with both socialist and liberal parties adopting those policies. In the United States, the progressive movement, a similar social democratic movement predominantly influenced more by social liberalism than socialism, supported progressive liberals such as Democratic presidents Woodrow Wilson and Franklin D. Roosevelt, whose New Freedom and New Deal programmes adopted many social democratic policies. With the Great Depression, economic interventionism and nationalizations became more common worldwide and the post-war consensus until the 1970s saw Keynesian social democratic and mixed economy policies put in place, leading to the post-World War II boom in which the United States, the Soviet Union, the Western European and East Asian countries experienced unusually high and sustained economic growth, together with full employment. Contrary to early predictions, this period of high economic growth and national development also included many countries that have been devastated by the war such as Japan (Japanese post-war economic miracle), West Germany and Austria (Wirtschaftswunder), South Korea (Miracle of the Han River), France (Trente Glorieuses), Italy (Italian economic miracle) and Greece (Greek economic miracle).
With the 1970s energy crisis, the abandonment of both the gold standard and the Bretton Woods system along with Keynesian social democratic, mixed-economy policies and the implementation of market-oriented, monetarist and neoliberal policies (privatization, deregulation, free trade, economic globalization and anti-inflationary fiscal policy, among others), the social democratic welfare state was put in doubt. This caused several social democratic parties to adopt the Third Way, a centrist ideology combining progressivism and social liberalism with neoliberalism. However, the Great Recession in the late 2000s and early 2010s cast doubts to the so-called Washington Consensus and protests against austerity measures ensued, causing a resurgence of social democratic parties and policies, especially in the United States and the United Kingdom with the rise of politicians such as Bernie Sanders and Jeremy Corbyn, who rejected the Third Way, after the economic recession caused the Pasokification of many social democratic parties.
The United Nations World Happiness Report shows that the happiest nations are concentrated in social democratic nations, especially in Northern Europe, where the Nordic model is applied. This is at times attributed to the success of the social democratic Nordic model in the region, where similar democratic socialist, labourist and social democratic parties dominated the region's political scene and laid the ground to their universal welfare states in the 20th century. The Nordic countries, including Denmark, Finland, Iceland, Norway and Sweden as well as Greenland and the Faroe Islands, also ranks highest on the metrics of real GDP per capita, economic equality, public health, life expectancy, having someone to count on, perceived freedom to make life choices, generosity, quality of life and human development while countries practicing a neoliberal form of government have registered relatively poorer results.
Similarly, several reports have listed Scandinavian and other social democratic countries as ranking high on indicators such as civil liberties, democracy, press, labour and economic freedoms, peace and freedom from corruption. Numerous studies and surveys indicate that people tend to live happier lives in countries ruled by social democratic parties, compared to countries ruled by neoliberal, centrist and right-wing governments.
Criticism
Social democracy is criticized by other socialists because it serves to devise new means to strengthen the capitalist system which conflicts with the socialist goal of replacing capitalism with a socialist system. According to this view, social democracy fails to address the systemic issues inherent in capitalism. The American democratic socialist philosopher David Schweickart contrasts social democracy with democratic socialism by defining the former as an attempt to strengthen the welfare state and the latter as an alternative economic system to capitalism. According to Schweickart, the democratic socialist critique of social democracy is that capitalism can never be sufficiently humanised and that any attempt to suppress its economic contradictions will only cause them to emerge elsewhere. He gives the example that attempts to reduce unemployment too much would result in inflation and too much job security would erode labour discipline. In contrast to social democracy's mixed economy, democratic socialists advocate a post-capitalist economic system based on either a market economy combined with workers' self-management, or on some form of participatory, decentralized planning of the economy.
Marxian socialists argue that social democratic welfare policies cannot resolve the fundamental structural issues of capitalism such as cyclical fluctuations, exploitation and alienation. Accordingly, social democratic programs intended to ameliorate living conditions in capitalism—such as unemployment benefits and taxation on profits—creates further contradictions by further limiting the efficiency of the capitalist system by reducing incentives for capitalists to invest in further production. The welfare state only serves to legitimize and prolong the exploitative and contradiction-laden system of capitalism to society's detriment. Critics of contemporary social democracy such as Jonas Hinnfors argue that when social democracy abandoned Marxism, it also abandoned socialism and became a liberal capitalist movement, effectively making social democrats similar to non-socialist parties like the Democratic Party in the United States.
Market socialism is also critical of social democratic welfare states. While one common goal of both concepts is to achieve greater social and economic equality, market socialism does so by changes in enterprise ownership and management whereas social democracy attempts to do so by subsidies and taxes on privately owned enterprises to finance welfare programs. Franklin Delano Roosevelt III (grandson of United States president Franklin D. Roosevelt) and David Belkin criticize social democracy for maintaining a property-owning capitalist class which has an active interest in reversing social democratic welfare policies and a disproportionate amount of power as a class to influence government policy. The economists John Roemer and Pranab Bardhan point out that social democracy requires a strong labour movement to sustain its heavy redistribution through taxes and that it is idealistic to think such redistribution can be accomplished in other countries with weaker labour movements, noting that social democracy in Scandinavian countries has been in decline as the labour movement weakened.
Some critics claim that social democracy abandoned socialism in the 1930s by endorsing Keynesian welfare capitalism. The democratic socialist political theorist Michael Harrington argues that social democracy historically supported Keynesianism as part of a "social democratic compromise" between capitalism and socialism. While this compromise did not allow for the immediate creation of socialism, it created welfare states and "recognized noncapitalist, and even anticapitalist, principles of human need over and above the imperatives of profit". Social democrats in favour of the Third Way have been accused of having endorsed capitalism, including by anti-Third Way social democrats who have accused Third Way proponents such as Anthony Giddens of being anti-social democratic and anti-socialist in practice.
Social democracy's reformism has been criticized from both the left and right, for if the left was to govern a capitalist economy, it would have to do so according to capitalist, not socialist, logic. This argument was previously echoed by Joseph Schumpeter in Capitalism, Socialism and Democracy (1942), writing: "Socialists had to govern in an essentially capitalist world [...], a social and economic system that would not function except on capitalist lines. [...] If they were to run it, they would have to run it according to its own logic. They would have to "administer" capitalism". Similarly, Irving Kristol argued: "Democratic socialism turns out to be an inherently unstable compound, a contradiction in terms. Every social democratic party, once in power, soon finds itself choosing, at one point after another, between the socialist society it aspires to and the liberal society that lathered it". Joseph Stalin was a vocal critic of reformist social democrats, later coining the term social fascism to describe social democracy in the 1930s because in this period it embraced a similar corporatist economic model to the model supported by fascism. This view was adopted by the Communist International which argued that capitalist society had entered the Third Period in which a proletarian revolution was imminent, but that it could be prevented by social democrats and other fascist forces.
