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Social Democracy From 1884 to the 21st Century

For historical reasons, modern social democrats are sometimes called democratic socialists. However, social democrats today generally do not advocate socialism proper. When you look at the Nordic Model of social democracy or at the ideas of people like Bernie Sanders and Alexandria Ocasio-Cortez, their actual position is far more centrist than leftist and also much closer to neoliberalism than to true socialism. Nevertheless, in order to understand modern social democracy, it is important to understand the role that socialism played in its historical development.

Social democracy traces its roots back to the General German Workers’ Association, founded by Ferdinand Lassalle, and the International Workingmen’s Association, with which Pierre-Joseph Proudhon, Louis Auguste Blanqui, Karl Marx, Mikhail Bakunin, and their respective followers were associated. The term social democracy became popular with the rise of the Social Democratic Workers’ Party of Germany, founded in 1869. “Social democracy” was originally a catch-all term for a broad range of socialist ideologies and movements, but Karl Marx and Friedrich Engels convinced the Social Democratic Workers’ Party to embrace Marxism as its official ideology and the Social Democratic Workers’ Party joined the International Workingmen’s Association.

Classical Marxism is laid out in the Communist Manifesto, which teaches the following:

(1) historical materialism (or dialectical materialism), a deterministic view of history that asserts that all historical progress is determined by socio-economic forces, that the history of society is the history of class struggle, and that understanding the science of sociology/economics allows one to make accurate predictions of the future
(2) that the profit-motive under capitalism will encourage employers to provide their workers with the lowest wages possible and that employers will refuse to spend money on safety measures in order to maximize their profits, and that this process will result in the immiseration of the proletariat (i.e. the total impoverishment of the working class)
(3) that, as a matter of historical necessity, this natural progression of capitalist exploitation will leave the workers so impoverished that they have no choice but to rebel against the capitalist class, throw off their chains, and violently take control of the government and the means of production, establishing a dictatorship of the proletariat
(4) that the cycle of recessions/depressions in capitalist economies results from the anarchy of production, whereby producers produce without knowing for certain what the consumers need, and that this anarchy leads to a disequilibrium of supply and demand; that each new recession is worse than the last and that the capitalist system will eventually fail as a result of its own internal contradictions; following from this, that the only solution to the boom-and-bust cycle is to have government step in and coordinate production through central planning, and that this alone can save the economy from impending collapse
(5) that all industry must be publicly-owned and centrally-planned; the goal of Marxian socialism is government-ownership of all industry and the abolition of private property in the means of production

Towards the end of their lives, Marx and Engels became more open to the idea of achieving socialism through more peaceful means. They acknowledged the utility of using the electoral process to improve the condition of the working class. At the same time, they never came to reject the insurrectionary and revolutionary approach of The Communist Manifesto. Within the early social democratic movement, Karl Kautsky and Rosa Luxemburg clung to the revolutionary socialism of early Marxism, while Eduard Bernstein clung to, and further developed, the evolutionary socialist direction that the later works of Marx and Engels were already heading in. The Orthodox Marxists (Kautsky), Libertarian Marxists (Luxemburg), and Revisionist Marxists (Bernstein) all represent genuine developments within the framework of ideas put forth by Marx and Engels. Though quite different in their thinking, each of these schools has a legitimate claim to being the true heirs of Marx, as each group clings to and develops different aspects of Marx’s thought while rejecting other parts.

The Emergence of Democratic Socialism

What is typically referred to as social democracy today traces back to the revisionist marxism of Eduard Bernstein in Germany and to the fabian socialism of Sidney and Beatrice Webb, George Bernard Shaw, and Annie Besant in England. It was also influenced heavily by the emergence of, and its own integration with, liberal democracy and neoliberal philosophy.

"A spectre is haunting Europe — the spectre of communism. All the powers of old Europe have entered into a holy alliance to exorcise this spectre: Pope and Tsar, Metternich and Guizot, French Radicals and German police-spies." — Karl Marx and Friedrich Engels (The Communist Manifesto)

The revision of Marxism had already begun with Marx and Engels themselves, but Eduard Bernstein took it further. The further development of capitalism disproved certain predictions made by The Communist Manifesto. The Manifesto predicted a gradual worsening of the condition of the workers or the immiseration of the proletariat: with the progression of capitalism the proletariat would become impoverished, wages would be so low and working conditions so harsh that the people would have no choice but to rise up and take control of the government. When workers rise up, they will take over the government and establish a dictatorship of the proletariat. They will impose social-ownership of the means of production and the rational organization of production and distribution. The market and the State will ultimately wither away. These predictions did not turn out to be correct.

As socialism became more popular, politicians began to implement policies and reforms within capitalism that improved working conditions, raised wages, and prevented the immiseration of the proletariat. The “bourgeois democracy” associated with capitalism allowed for reforms that prevented history from developing the way that Marx had predicted. Seeing the specter haunting Europe, conservatives like Otto von Bismarck made sweeping reforms to improve the conditions of workers and the poor. By creating rules and regulations to raise wages, ensure safer working conditions, provide food to the poor, and provide healthcare to all, Otto von Bismarck was able to satiate the masses and prevent them from rising up and overthrowing the government.

Since the immiseration never happened, the working class never became radicalized by their own economic oppression. Thus, it became apparent that no classically Marxist revolution could ever come about. However, Bernstein did not see this as a reason to reject Marxism altogether. In his estimation, Marxism was essentially correct on many points and the points where Marx was wrong were merely accidental (non-essential) points. Instead of revolutionary socialism, Bernstein advocated evolutionary socialism. The working class constitutes the majority of the populace under capitalism, so universal suffrage could be the means by which the proletariat takes control of the State. Eduard Bernstein’s vision of social democracy basically aligned with the vision of the Fabian Socialists in England, who had independently developed a theory of evolutionary social democracy. Bernstein emphasized not just the importance of parliamentary action and electoral politics, but also of radical labor organization and direct action on the part of trade unions; and he was hopeful about the prospects of the co-operative movement and the trend towards municipal socialism―these were all ideas championed by the Fabians. Furthermore, like the Fabians, Bernstein had a greater appreciation for anarchist ideas, even though he rejected anarchism. The early social democrats were willing to admit that Pierre-Joseph Proudhon and Peter Kropotkin had made many interesting and important points in their critique of classical Marxism. The Fabian Society had actually considered embracing anarchism over democratic socialism, but the arguments of democratic socialists like George Bernard Shaw and William Morris ultimately convinced the Fabians and other early social democrats that the difference between anarchism and democratic socialism is one of degree rather than principle. The anarchists insisted upon delegative democracy and confederation, whereas the democratic socialists wanted representative democracy. Anarchism, then, according the Morris and Shaw, seems to just be an idealized and utopian version of democratic socialism.

The Schism Between Communists & Democratic Socialists

In Russia, and later in China, a bastard child was born out of Marxism. Since the conditions in Russia and China were so different from those in Germany and France, revolutionaries there took it upon themselves to make a massive revision of Marxist doctrine. Thus was born Marxist-Leninism, followed by Stalinism and Maoism. These movements substantially revised Marxist theory and represent a huge departure from the vision of Karl Marx himself. Vladimir Lenin sought to bring about a socialist revolution in a country that was not fully industrialized, whereas Marx held that the revolution could only come about in an advanced capitalist society. Marxism predicts that as capitalism develops the number of workers increases and the number of owners of productive property decreases, while the profit motive also forces wages down and keeps working conditions wretched. As capitalism develops, the working class will become more and more impoverished, until the workers (who are the majority of the populace) can no longer bear it and spontaneously rise up in rebellion. This meant that no Marxist socialist revolution would be possible in Russia. Lenin realized this and revised Marxism into a form that bears little resemblance to classical Marxism. The role of the proletariat was replaced largely by the role of the peasantry. This is why Leninism adopted the hammer and sickle imagery, with the hammer representing the proletariat and the sickle representing the peasantry. Instead of the majority of people becoming impoverished by capitalist exploitation and revolting spontaneously, in an almost democratic fashion, as Marx envisioned, Lenin envisioned a vanguard party or elite clique that would take control and impose socialism against the will of the majority. Thus, most of what people regard as Marxism or communism today is actually a bastardized version of Marxism.

The movement for social democracy ended up splitting between the democratic socialists (Revisionists, Fabians) and the communists (Leninists, Stalinists, Maoists). Over time, democratic socialism would be substantially watered down and the term social democracy would become used almost exclusively to refer to reformist democratic socialism. Thus was born modern social democracy as a distinct movement. The social democrats increasingly became known for advocating welfare measures, universal healthcare, minimum wage laws, progressive taxation, and such. The goal of abolishing capitalism became less prominent among social democrats over time. It was realized that taxation and redistribution could be used as a sort of analogue to public-ownership. Social democratic policies did improve the conditions of the working class, but they also placated the proletariat. While Norway still has the nationalized oil industry, Sweden predominantly has private-ownership. And even Norway has more private than publicly-owned industry. Thus, the Nordic model of social democracy is not socialism proper but rather a mixed-economy. The end goal of social democracy was originally social-ownership of the means of production, but most modern social democrats have abandoned this goal altogether.

Fabian Socialism

Fabian socialism, as espoused in the 1889 Fabian Essays in Socialism, was a genuinely democratic socialist ideology. The Fabians embraced the historical materialism of Marxism, believing that socialism was inevitable. Capitalist competition leads to the emergence of monopolies. Certain companies will inevitably put their competitors out of business and even buy up smaller competing companies. The tendency, under competitive capitalism, is towards monopoly. Monopolies tend to offer the worst possible service at the highest possible cost, so the government tends to take over natural monopolies. Witnessing the emergence of municipal socialism, the Fabians saw municipal governments taking over the monopolies on utilities, sewage, and water. This trend, according to the Fabians, was an indication of things to come. Eventually, all enterprises would be taken over by the government and done on a socialist basis. As far as the Fabians were concerned, there was no need to have a revolution — socialism was inevitable and its emergence merely needed to be hastened through democratic reform. In the meantime, while awaiting the inevitable coming of socialism, Fabians needed to fight for better wages, safer working conditions, etc. The Fabians lobbied for the imposition of the minimum wage law in England and they pushed for universal healthcare. They supported the National Insurance Act, a health insurance mandate for all employed people, which ultimately gave way to the National Health Service, the United Kingdom’s socialized medicine system.

The Lange-Lerner Model

In the late 1920s and the 1930s, Oskar Lange, Abba Lerner, and Fred M. Taylor developed the Lange-Lerner model of market-socialism in response to the Austrian School economic critique of socialism. These socialists argued that socialism could be implemented without abandoning markets and the price system. The government could simply take over ownership of industry and provide all citizens a social dividend out of the profits of these socialized industries. This would mean that all citizens would have a guaranteed income provided by the government and that private ownership of land and industry would be totally abolished.

Fully-Automated Luxury Communism

Aaron Bastani’s Fully-Automated Luxury Communism (FALC) combines socialism with techno-utopian ideas that verge on transhumanism. We are seeing the development of lab-grown meat that requires fewer resources to produce and doesn’t require the death of an animal. We’re seeing a trend towards technological unemployment, where automation is eliminating jobs in industry after industry. Cashiers are being replaced by self-checkout kiosks, automated cars and trucks are threatening to rapidly eliminate trucking and delivering jobs, and the rate of job elimination is projected to grow faster than the rate of new job creation. Unemployment will go up and the jobs are not going to return, but this doesn’t need to be a bad thing, Bastani argues. Instead, “automation could set us free.” (Cf. Aaron Bastani, The World Is a Mess. We Need Fully Automated Luxury Communism.)

By investing in automation and other technologies that are for the good of humanity and eliminating production for profit by abolishing private-ownership, the proponents of fully-automated luxury communism argue that we can save the world from global warming, provide for everyone’s wellbeing, and free mankind from the necessity of labor. Global warming is a threat to human civilization and a large portion of our greenhouse gas emissions is directly related to food production. If we can produce all of our food in petri dishes and provide people with more nutritious food while using fewer resources at the same time, we will make it much more feasible for mankind to actually live sustainably upon this Earth.

Bastani and the fully-automated luxury communists, though sympathetic to the idea of universal basic income, prefer universal basic services instead. Having a certain disdain for markets and money, they think it would be preferable for the governement to directly provide people with food, shelter, and other services rather than provide individuals with a guaranteed income sufficient for them to purchase the things they need.

The RICH Economy

Robert Anton Wilson and L. Wayne Benner supply a partial answer to the question of how we can transition from capitalism to fully-automated market-socialism. Wilson and Benner have given us the four-stage RICH economy proposal. RICH is an acronym for Rising Income through Cybernetic Homeostasis.

Stage 1: Push for further automation. Offer people rewards for inventing machines that can replace them in the workplace.

Stage 2: Create a universal basic income to guarantee everyone an income sufficient for them to live on. This will serve as a safety net to save those who will lose their jobs due to automation.

Stage 3: Gradually increase the basic income for every citizen until it reaches the level of a National Dividend, where the total paid out in National Dividend payments is equal to the Gross National Product. Raise the basic income by 5% per year, until the basic income is equal to the Gross National Product. (This will amount to socialism. 100% of rent and profits will be confiscated and redistributed to the members of the community in an egalitarian fashion, which basically assumes that all land and industry belongs to the community as a whole. This entails the abolition of private property.)

Stage 4: Invest in higher education. As jobs become more scarce and basic income is implemented, people will only work for higher pay. The jobs that are left will increasingly be jobs that require greater education.

Stage three is where the RICH economy proposal meets classical democratic socialism. Since the basic income is going to increase by 5% per year, this means that tax revenue must also increase by that amount. At the outset, in stage two, the adoption of a land value tax (as proposed by Henry George) will be necessary in order to fund the universal basic income. In stage three, corporate taxes and progressive income taxes ought to be increased gradually in order to fund the higher basic income each year. Ultimately, the taxes will confiscate 100% of profits from all sectors and redistribute them back out to the citizens as a national dividend. Poverty and inequality will be absolutely eliminated.

Third-Way Social Democracy: Eduard Bernstein, Anthony Crosland, & Anthony Giddens

Eduard Bernstein, while continuing to identify as Marxist, ended up recognizing that the core predictions made in the Communist Manifesto were wrong. Instead of revolutionary socialism, we need an evolutionary socialism that gradually emerges through democratic reform. In his 1909 book Evolutionary Socialism, Bernstein taught the following, which seems to be a set of antitheses to the theses of the Communist Manifesto:

(1) that historical materialism is basically correct, that the progress of society is directed by socio-economic forces and that understanding sociology/economics (the science associated with those forces) can allow one to make accurate predictions of future socio-economic developments

(2) that the profit-motive under capitalism does encourage employers to provide low wages and cut corners on safety, but that liberal democracy also tends towards universal suffrage (the right to vote) and that this allows the working class to raise their position through democratic means— the workers end up voting for progressive politicians that implement policies to ensure workplace safety and decent wages; thus, the immiseration of the proletariat will never take place.

(3) that since the dreaded immiseration or impoverishment will never take place, the working class will never become fed up and spontaneously rebel; the working class will be made better through peaceful evolution through democratic processes rather than through violent revolution

(4) that the cycle of recessions/depressions will not necessarily result in economic collapse; that more moderate policies could mitigate the negative effects of anarchic market allocation

(5) that private property and the market system are fundamentally good and ought to be preserved; although the market does sometimes fail, it usually does pretty well; government ought only to intervene in those places where markets fail — the goal of abolishing private property and the market system ought to be abandoned

To genuine Marxists, socialism is government-ownership of industry in a centrally-planned economy, whereas capitalism is private-ownership of industry within a market system. From the perspective of actual socialists, what we typically call “social democracy” is just a modified version of capitalism.
Following in this tradition, Anthony Crosland published The Future of Socialism in 1956, integrating fabian socialism, Keynesianism, and welfare state ideas into his new social democratic platform. Crosland acknowledged the contributions of Marx and of the Fabian society, but also praised the welfare state tradition, adding it to his summary of socialist traditions.

“(10) The Welfare State or paternalist tradition: the rejection of the laissez-faire doctrine that the state has no obligation to its citizens (save for the protection of property), and indeed a positive obligation to remain inactive: and the affirmation of the opposite view that the state must accept responsibility for preventing poverty and distress, and for providing at least a subsistence minimum of aid to such citizens as need it.” — Anthony Crosland (The Future of Socialism, Ch. 3)

Crosland himself acknowledges that the welfare state tradition “has not always been a distinctively socialist doctrine” and is “widely accepted outside the socialist parties.”(ibid.) He integrates this tradition with his vision of democratic socialism, playing down the role that conservatives played in establishing the welfare state. He essentially incorporates the core insights of neoliberalism into his socialism, while shifting emphasis away from the idea of government-ownership and towards co-operativism and redistribution. Unlike Bernstein, who moved in the direction of distributist property-owning democracy, Crosland does not embrace private-ownership as being ideal, yet he does cease to push for the full socialization of all industrial production.

Modern social democrats like Anthony Giddens, writing in the 90s, have argued that modern social democracy is really neither pure capitalism nor socialism. Instead, it is a third way beyond capitalism and socialism. Under social democracy, rights of private property may be restricted (e.g. the government may break up monopolies in order to restore something more like pure competition) and the government may intervene in the market to correct market failures (e.g. guaranteeing universal healthcare through single-payer or socialized medicine). At the same time, social democrats today do not advocate for government-ownership of industry. The market usually does pretty well at producing things like houses, food, cars, entertainment, etc.
There is no logical reason to socialize such things. What we need is a mixed-economy. The existence of socialized medicine and welfare programs does not make a country any more socialist than the existence of government-run police and military do. This is not unregulated laissez-faire capitalism, nor is it socialism proper — it is a third way beyond conventional capitalism and conventional socialism.

Anthony Giddens has referred to modern social democracy as a third way that embodies the radical center, steering between the errors of right-wing libertarian capitalism and left-wing socialism. The renewal of social democracy, according to Giddens, entails the embracing of radical centrist ideas. Giddens sees the value in the insights of both the left and the right and advocates a nuanced approach that balances egalitarian tendencies with “philosophic conservatism.” (Cf. Anthony Giddens, The Third Way: The Renewal of Social Democracy)

Anthony Giddens argued that classical social democrats tended to expand government and that this was a mistake. Instead, third-way radical centrist social democrats ought to apply the principle of subsidiarity. “Subsidiarity” is the notion that all matters ought to be managed by the smallest unit of organization/government capable of effectively managing it. This is a principle that has guided confederalists and distributists.

“The neoliberals want to shrink the state; the social democrats, historically, have been keen to expand it. The third way argues that what is necessary is to reconstruct it — to go beyond those on the right ‘who say government is the enemy,’ and those on the left ‘who say government is the answer’….
“The crisis of democracy comes from it not being democratic enough….
“The issue isn’t more government or less, but recognizing that governance must adjust to the new circumstances….
“The state must respond structurally to globalization. The democratizing of democracy first of all implies decentralization — but not as a one-way process. Globalization creates a strong impetus and logic to the downward devolution of power, but also to upward devolution. Rather than merely weakening the authority of the nation-state, this double movement — a movement of double democratization — is the condition of reasserting that authority, since this movement can make the state more responsive to the influences that otherwise outflank it all round. In the context of the European Union, this means treating subsidiarity as more than a doctrinal term: it is the way to construct a political order which is neither a super-state nor only a free trade area…” — Anthony Giddens (The Third Way: The Renewal of Social Democracy, Chapter 3)

The third-way social democrat envisions a framework for global governance based on free contract or confederation internationally. You could globally construct something like the EU that serves as a free trade area and confederation for global governance without constituting a global government. In order to establish legitimacy for government in general, power will have to be decentralized and we will have to engage in new forms of democracy. Traditional representative democracy will not be overturned, but direct contact between citizens and government will have to be re-established through “experiments with democracy,” including “local direct democracy, electronic referenda, citizens’ juries, and other possibilities.”(ibid.)

The Nordic Model, with its mixed-economy and robust welfare state, has come to be identified with modern social democracy, so much so that most American socialists will distinguish between socialism and social democracy. Third-way social democracy and the Nordic Model, unlike Fabianism and the Lange-Lerner Model, is really much closer to neoliberalism than it is to socialism since it embraces private property and the free-enterprise system.

Concluding Thoughts

While third-way social democracy, represented by the Nordic Model, overlaps substantially with neoliberalism, it is worth remembering that social democracy is a broad term that also encompasses some varieties of market-socialism and that its adherents tends to be less wary of big government. For instance, while neoliberals look to universal basic income or a minimum income guarantee as the best way to eliminate poverty, social democrats are more likely to look to universal basic services and programs like Bernie Sanders’ proposed federal jobs guarantee. This means that there is a substantial difference between neoliberalism and social democracy, in spite of the significant overlap.

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Comments

Whilst I like this article, there is a fair bit here which isn't quite right, even from a brief reading.

For example, the review of "Classical Marxism is laid out in the Communist Manifesto". It is a semantic quibble, but the title is "The Manifesto of the Communist Party" (De: Manifest der Kommunistischen Partei), although "the Communist Manifesto" or just "the Manifesto" is a common abbreviation.

More importantly, neither historical materialism or dialectical materialism is "laid out" in the Manifesto. The original term is a "materialist conception of history", and it wasn't until 1880 that Engels abbreviated it as "historical materialism". Neither Marx nor Engels ever used the phrase "dialectical materialism", that was coined in 1887 by Joseph Dietzgen (and subsequently used by Kautsky), which represented a more metaphysical rather than historical conception. The claim that history is the history of class struggle has an important footnote by Engels in the 1888 edition that this refers to written history, compared to early societies with common lands. i.e.,

"In 1847, the pre-history of society, the social organisation existing previous to recorded history, all but unknown. Since then, August von Haxthausen (1792-1866) discovered common ownership of land in Russia, Georg Ludwig von Maurer proved it to be the social foundation from which all Teutonic races started in history, and, by and by, village communities were found to be, or to have been, the primitive form of society everywhere from India to Ireland. The inner organisation of this primitive communistic society was laid bare, in its typical form, by Lewis Henry Morgan's (1818-1881) crowning discovery of the true nature of the gens and its relation to the tribe. With the dissolution of the primeval communities, society begins to be differentiated into separate and finally antagonistic classes."

The claim that "that understanding the science of sociology/economics allows one to make accurate predictions of the future" is certainly not part of the Manifesto or really of any subsequent texts. There are few phrases at all in the works of Marx and Engels which have predictive or prescriptive claims, with The Civil War in France and Critique of the Gotha Programme providing a few assertions.

As for the profit motive, it isn't mentioned at all in the Manifesto, although there is plenty of discussion of property. The elaboration of profit is more found in Das Kapital. The idea that capitalist will pay the lowest wage possible actually comes from Lasselle, "das eiserne und grausame Gesetz" (the iron and cruel law), which combined Malthus and Ricardo, although one does find "The average price of wage-labour is the minimum wage, i.e., that quantum of the means of subsistence which is absolutely requisite to keep the labourer in bare existence as a labourer" in the Manifesto. Marx actually argued to the contrary, that there was a *tendency* for wages to fall, there was also (following Ricardo) tendencies for increases (e.g., "the requirements of accumulation begin to surpass the customary supply of labour, and, therefore, a rise of wages takes place", Das Kapital, Book I, Chap XXV https://www.marxists.org/archive/marx/works/1867-c1/ch25.htm). This has important implications for claim 3.

Again, capitalist cycle theory was not really developed in the Manifesto, but rather in Das Kapital (Book III, chapter XIII). Marx argued that the tendency of the rate of profit to fall was independent of market fluctuations, or "the anarchy of production" but rather had a systemic cause due to an ever-increasing fall in the contribution of organic capital to value under capitalist property relations. It was, however, a tendency, not inevitable and Marx mentioned a multitude of counter-trends.

Finally, as is clear in the Manifesto, the perspective of "classical Marxism" is explicitly opposed to the idea that all industry must be publicaly-owned and centrally-planned. "The distinguishing feature of Communism is not the abolition of property generally, but the abolition of bourgeois property.. In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property... Do you mean the property of petty artisan and of the small peasant, a form of property that preceded the bourgeois form? There is no need to abolish that; the development of industry has to a great extent already destroyed it, and is still destroying it daily..." The Manifesto explicitly seeks the abolition of property acquired through wage-labour.