|Social democracy is at an impasse, bereft of an economic programme, but history is on the march. Democratic wealth-holding can give social democrats a new set of economic institutions and political power bases.
Social democracy seems perpetually at a crossroads. But today, more than a hundred years after the first of the parties affiliated to the Second International won a plurality in a parliamentary election (in Finland in 1907; Anderson, 1992, 307), social democrats may finally be running out of rope. All the main European social democratic parties are facing a crisis, registering at long last endlessly postponed questions about their fundamental purpose.
As with the last great crisis of social democracy in the 1970s, today’s stark choices are being posed as the result of a major economic shift within capitalism: the deep disruption of capital accumulation as a consequence of the crisis in global financial markets unleashed in 2008. Social democrats have been dealt a tremendous double whammy. On the one hand, their decade-long strategy of full accommodation to neo-liberalism in order to skim off the surplus for ameliorative social spending has collapsed. On the other, contrary to expectations, the crisis has not thus far unseated neo-liberalism as the reigning economic paradigm, and financiers and the political right have neatly turned the tables on the centre-left. The big banks, having caused the crisis in the first place and led governments to borrow vast sums to come to their aid, have successfully redefined the resulting fiscal deficits as entailing cuts to public spending and social protection.
Stuck in this quandary, social democracy is unlikely to be afforded any relief by the markets. Rather than giving way to a resumption of growth, the Great Recession shows every sign of turning instead into a Long Slump.
Nature, too, has some nasty surprises in store for us. As a result of global warming that has already occurred it is now too late to avoid ‘a cascade of local and regional “natural” disasters in the medium term’ (Barnes and Gilman, 2011, 43). Price shocks, supply disruptions, dislocations, the rising costs of urban coastal infrastructure and remediation is the shape of things to come.
Even when – if – growth resumes, it will not deliver on the promises with which it is being invested. A modelling exercise for the Resolution Foundation by the Institute for Employment Research and the Institute for Fiscal Studies finds that on the basis of annual average UK growth of 2.5 per cent from 2015-2020 – an optimistic scenario – and no further cuts in public spending, living standards will fall for low and middle income households by between 3 and 15 per cent (Brewer et al., 2012). Only the rich will escape this ravening maw of austerity.
How have Europe’s social democrats responded to this conjuncture? The early signs are not propitious.
The politics of austerity is proving as disruptive as the economics. To the ‘zombie households, companies and banks’ of the post-crisis landscape (Giles, 2012) must now be added ‘zombie governments’. A horror show of decrepit political formations not seen since the inter-war years has been exhumed from the crypt and installed across Europe: national governments, externally-…