Social Democracy Can Only Tame Capitalism. We Need to Overcome It.

To achieve radical democracy, we need to rethink our undemocratic economic system.

Joseph M. Schwartz and Bhaskar Sunkara August 30, 2017

In an act of Peaceful Civil Disobedience, a total of nine New Yorkers were arrested on April 20, 2017 protesting President Trumps proposed federal housing cuts. (Erik McGregor/Pacific Press/LightRocket via Getty Images)

This arti­cle first appeared in Jacobin.

To chart a different course, we would need a militant labor movement and a mass socialist presence strengthened by accumulated victories, looking to not merely tame but overcome capitalism.

John Jud­is has all the right inten­tions. He’s look­ing at the resur­gence of open­ly demo­c­ra­t­ic social­ist cur­rents in the Unit­ed States with a mix of excite­ment and trep­i­da­tion. Excite­ment, because he knows how des­per­ate­ly the country’s work­ers need social reforms. Trep­i­da­tion, because he wor­ries that the new left might fall into the famil­iar traps of insu­lar­i­ty and sectarianism.

But while Jud­is wants us to change soci­ety for the bet­ter, his response to the fail­ures of twen­ti­eth-cen­tu­ry state social­ism would lead us into the dead end of twen­ti­eth-cen­tu­ry social democracy.

In his New Repub­lic essay The Social­ism Amer­i­ca Needs Now,” Jud­is makes a pas­sion­ate plea for the rebuild­ing of a social-demo­c­ra­t­ic move­ment — or what he calls lib­er­al social­ism.” He con­tends that the wel­fare state and demo­c­ra­t­ic reg­u­la­tion of a cap­i­tal­ist econ­o­my should be the end goal for social­ists, as past efforts at top-down nation­al­iza­tion and plan­ning yield­ed the repres­sive soci­eties and stag­nant economies of the Sovi­et bloc. In con­trast, Jud­is argues, the Scan­di­na­vian states are dynam­ic cap­i­tal­ist economies that are still far more equi­table and humane than the Unit­ed States.

For him, social­ism — demo­c­ra­t­ic con­trol over work­places and the econ­o­my — con­sists of old nos­trums” whose days have past.

Of course, we urgent­ly need the reforms that Jud­is and the move­ment around Bernie Sanders advo­cate for. No demo­c­ra­t­ic social­ist could oppose efforts to guar­an­tee pub­lic pro­vi­sion of basic needs and take key aspects of eco­nom­ic and social life like edu­ca­tion, health care, and hous­ing out of the mar­ket. It would, as Jud­is writes, bring immea­sur­able ben­e­fit to ordi­nary Americans.”

But we have moral rea­sons to demand some­thing more. After all, we can’t have real polit­i­cal democ­ra­cy with­out eco­nom­ic democ­ra­cy. Cor­po­ra­tions are pri­vate gov­ern­ments” that exer­cise tyran­ni­cal pow­er over work­ers and soci­ety writ large. The cor­po­rate hier­ar­chy decides how we pro­duce, what we pro­duce, and what we do with the prof­its that work­ers col­lec­tive­ly make.

To embrace rad­i­cal democ­ra­cy is to believe that any deci­sion that has a bind­ing effect on its mem­bers — say, the pow­er to hire or fire or con­trol over one’s work hours — should be made by all those affect­ed by it. What touch­es all, should be deter­mined by all.

At min­i­mum, we should demand an econ­o­my in which var­i­ous forms of own­er­ship (work­er-owned firms, as well as state-owned nat­ur­al monop­o­lies and finan­cial insti­tu­tions) are coor­di­nat­ed by a reg­u­lat­ed mar­ket — an econ­o­my that enables soci­ety to be gov­erned demo­c­ra­t­i­cal­ly. In an unde­mo­c­ra­t­ic cap­i­tal­ist econ­o­my, man­agers hire and fire work­ers; in a demo­c­ra­t­ic social­ist econ­o­my, work­ers would hire those man­agers deemed nec­es­sary to build a con­tent and pro­duc­tive firm.

They won’t let us keep nice things.

This, how­ev­er, isn’t a debate about the con­tours of the world we would like to see. While Jud­is rejects the desire of social­ists (and the his­toric goal of social democ­ra­cy itself) to cre­ate a rad­i­cal democ­ra­cy after cap­i­tal­ism, he does so large­ly on prag­mat­ic grounds. The old vision, for him, is not remote­ly viable.”

Yet his­to­ry shows us that achiev­ing a sta­ble wel­fare state while leav­ing capital’s pow­er over the econ­o­my large­ly intact is itself far from viable. Even if we want­ed to stop at social­ism with­in cap­i­tal­ism, it’s not clear that we could.

Since the ear­ly 1970s, the height of West­ern social democ­ra­cy, cor­po­rate elites have aban­doned the post­war class com­pro­mise” and sought to rad­i­cal­ly restrict the scope of eco­nom­ic reg­u­la­tion. What cap­i­tal­ists grudg­ing­ly accept­ed dur­ing an excep­tion­al peri­od of post­war growth and ris­ing prof­its, they would no longer.

The past forty years has wit­nessed an ide­o­log­i­cal and polit­i­cal war against once-pow­er­ful labor move­ments and the wel­fare states they helped build. This bipar­ti­san class war advo­cat­ed for the four d”s of neolib­er­al­ism: dereg­u­lat­ing the econ­o­my, decreas­ing pro­gres­sive tax­a­tion; decreas­ing the scope of pub­lic goods; and decreas­ing the pow­er of orga­nized labor.

Cor­po­ra­tions also moved their invest­ment in pro­duc­tion to new­ly indus­tri­al­iz­ing nations or low­er-wage regions and auto­mat­ed much of the high­er-skilled man­u­fac­tur­ing that remained. The focus of cor­po­rate prof­itabil­i­ty shift­ed to the FIRE econ­o­my (finance, insur­ance, and real estate), an econ­o­my based heav­i­ly on spec­u­la­tion and a low-wage ser­vice econ­o­my that most­ly serves the rich­est earners.

So did it have to end this way? Could the old wel­fare state not only have sur­vived but been expand­ed? Yes, but that would have required push­ing back against capital’s pow­er to with­hold invest­ment. Sim­ply put, that would have required a more rad­i­cal socialism.

Many of the last generation’s social democ­rats knew that cap­i­tal would dis­in­vest from soci­eties that enjoyed strong social rights. Back in the 1970s and 80s there were impor­tant attempts to gain greater con­trol over cap­i­tal to pre­vent just that.

Left social democ­rats in the Swedish labor fed­er­a­tion advanced the Mei­d­ner Plan, which would have taxed cor­po­rate prof­its over a twen­ty-five-year peri­od to achieve social own­er­ship of major Swedish cor­po­ra­tions. The Social­ist-led and Com­mu­nist-sup­port­ed gov­ern­ment in France under François Mit­ter­rand from 1981 to 1983 nation­al­ized 25 per­cent of French indus­try overnight and rad­i­cal­ly expand­ed labor rights (man­dat­ing col­lec­tive bar­gain­ing in firms of fifty work­ers or more).

Of course, these attempts and oth­ers were defeat­ed. France faced a real cap­i­tal strike, where­as the Swedish Social Democ­rats pulled back from adopt­ing the Mei­d­ner Plan out of fears of such a strike. The lag in cor­po­rate invest­ment cre­at­ed a reces­sion in France that led to a major con­ser­v­a­tive vic­to­ry in the 1985 par­lia­men­tary elec­tions. Mit­ter­rand had to dena­tion­al­ize firms and adopt bud­getary austerity.

Jud­is men­tions in pass­ing social democracy’s right­ward lurch over the past thir­ty years. But he fails to men­tion the extent of its neolib­er­al­iza­tion or the his­tor­i­cal les­son we must draw: when cap­i­tal goes on the offen­sive, either labor must do the same or it will be forced to retreat.

In short, Jud­is writes out of his­to­ry the con­scious cor­po­rate offen­sive against con­straints on its pow­er. To sus­tain even the mod­est reforms he sees as the hori­zon of social­ism, we need to legit­i­mate a greater role for demo­c­ra­t­ic and state reg­u­la­tion of capital.

Pri­vate cap­i­tal sim­ply refus­es to invest in those goods need­ed to over­come rad­i­cal inequal­i­ty: afford­able hous­ing, mass tran­sit, alter­na­tive ener­gy, and job retrain­ing. Cap­i­tal is often reluc­tant to risk heavy invest­ment in nat­ur­al monop­o­lies that almost inevitably come under state reg­u­la­tion or own­er­ship (no com­pa­ny would invest in a com­pet­ing alter­na­tive ener­gy grid). Jud­is does not speak of the cli­mate cri­sis, yet there is no road to solv­ing it short of mas­sive pub­lic invest­ment and con­trol over utilities.

Of course, the Unit­ed States is the place where social democ­ra­cy in one coun­try” would be the most eco­nom­i­cal­ly viable. Our domes­tic mar­ket is as large as the Euro­pean Union’s, and we con­trol our own glob­al cur­ren­cy. We are a wealthy soci­ety that could eas­i­ly afford uni­ver­sal health, elder, and child care, as well as high qual­i­ty edu­ca­tion for all. But on the road to achiev­ing those nice things, cor­po­ra­tions would resist and deploy their most pow­er­ful tac­tic: the cap­i­tal strike.

Social democ­rats like Jud­is refuse to grap­ple with this, caus­ing them at key moments to sound the retreat and accom­mo­date cap­i­tal­ist forces, erod­ing the very reforms they hope to preserve.

To chart a dif­fer­ent course, we would need a mil­i­tant labor move­ment and a mass social­ist pres­ence strength­ened by accu­mu­lat­ed vic­to­ries, look­ing to not mere­ly tame but over­come cap­i­tal­ism. A social­ism that refus­es to deal with the old nos­trums about own­er­ship and con­trol of the means of pro­duc­tion” will not only fall short of our demo­c­ra­t­ic expec­ta­tions of what a just soci­ety would look like — it will doom us to failure.

In These Times is proud to fea­ture con­tent from Jacobin, a print quar­ter­ly that offers social­ist per­spec­tives on pol­i­tics and eco­nom­ics. Sup­port Jacobin and buy a four-issue sub­scrip­tion for just $19.95.

Joseph M. Schwartz is the nation­al vice-chair of the Demo­c­ra­t­ic Social­ists of Amer­i­ca, and pro­fes­sor of polit­i­cal sci­ence at Tem­ple.Bhaskar Sunkara is the found­ing edi­tor of Jacobin.
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