Category: social democracy

National Socialism versus Social Democracy versus National Capitalism

Sheri Berman’s The Primacy of Politics: Social Democracy and the Making of Europe’s Twentieth Century (Cambridge UP, 2006) has been sitting on my shelf a long time, but I only just got around to reading it, partly in response to John Quiggin’s recent declaration that he has given up on the term “social democracy.” My discussion of that decision is here and here.

One virtue of Berman’s book is that it shows how both Mussolini and Hitler were socialists—that is, both the fascists and the Nazis established strict governmental control over the economy (“the primacy of politics” over economics in Berman’s phrase). In particular, the fascists and the Nazis developed full employment programs that used public works as a last resort for the unemployed, created or enhanced social welfare and insurance programs, and established firm state control over capital flows and investment. The enthusiasm for Mussolini, in particular, that many (not just clowns like Ezra Pound) expressed in the late 1920s and early 1930s becomes much more understandable when reading Berman’s account of his regime’s fairly successful attack on the poverty and inequality capitalism wrought in post-World War I Italy. Of course, the fascists and the Nazis did not dismantle capitalism entirely; in particular, they did not threaten private ownership. But they did sharply curtail the autonomy of property; the Faustian bargain made by the capitalists was that they would accept a lesser level of profit and massive government interference in what and how they produced things in return for “order” and for a guarantee that property would not be confiscated or nationalized. But, especially, by the standards of our own dark times, Mussolini’s and even Hitler’s economic policies look “progressive.” For starters, their policies were Keynesian, depending on large public expenditure to provide employment and to jump start a depression economy back to something like prosperity.

Of course, much of that Keynesian spending was on the means for war. Both regimes can look like giant potlatches—building up vast stores of military hardware in order to destroy them all in an orgy of destruction. And the regimes had the same attitude toward citizens as they did toward tanks: they are expendable; plenty more where they came from.

The point, naturally, is not to praise Mussolini or Hitler. The Nazis, in particular, dismantled liberal democracy in incredibly short order. All other parties were outlawed by six months after Hitler’s becoming Chancellor. And the left-wing economics were yoked to right-wing nationalism, to the mythos of the fatherland and of “blood.” Violence was baked in from the start, as Walter Benjamin told the world in 1936. The only possible end game was war—and that was explicit, a feature not a bug.

But Berman’s work led me to a rather different dark thought. What does it mean to say that the only successful assaults on capitalism in the 20^th century were accompanied by the destruction of democracy? We might be able to dismiss Lenin and Stalin’s madness quickly by saying that the economics were impossible even apart from political crimes. But what happens if we say that Mussolini’s Italy came pretty close to achieving an economic realm that most social democrats can recognize as their aspiration? In short: can we get to social democratic heaven if we hold resolutely to the democratic part? Does democracy—the rule of law, elections, legislative bodies, civil liberties along with property rights—afford capitalists too many tools for withstanding any and all attempts to gain political control over capitalist practices? The impatience with liberal democracy everywhere evident in the 1930s reflected the inability of democracies to act quickly and decisively. The post-2008 actions of the EU, especially, with its ongoing (even now, ten years later) constant kicking of the can down the road, appear to confirm the claim that democracies find it hard to act. (The exception, always noted, is the US response to World War II; slow to get going, the historians say, but what a behemoth once roused; but it took a war for the US to end its depression, with precisely the kinds of Keynesian spending and government intervention into the economy that even the New Deal could never install.)

So here’s the horrible thought: only a non-democratic regime, one that steps on the “rights” of property owners and the many ways that the rich can control elections and elected officials, will be able to break the stranglehold that capitalism has on modern political communities. Capitalism both strives to escape political (democratic) accountability wherever possible—and uses all the intricacies of democratic procedures to its advantage in holding off change. Well-intentioned liberals and leftists, who play by the rules, are played by the business barons. We are getting a demonstration of that dynamic now. We had the corruption free, good governance folks who were the Obama administration; the absolute epitome of high-minded liberals. And now we are seeing the kinds of ethics that prevail among the pocket-lining hacks of the right, who could care less if the agencies they preside over actually function.

It has become clear—if it wasn’t in the past—that the Milton Friedman insistence that capitalism and democracy went hand-in-hand is simply wrong. Capitalism hates democracy, as the US support of right-wing dictators throughout the world should have made clear. But the more worrying thought is that democracy does not pose an existential threat to capitalism, just an annoyance, a low-grade fever, that capitalism has learned how to keep under control. Capitalism can tolerate low-grade democracy, just as it can tolerate gay marriage, antagonistic art works, and academic freedom, confident in its ability to not let such things get out of hand. True, the right is always hysterically claiming that chaos is nigh—if not already here. But such fulminations on Fox don’t register in the corporate boardrooms, not the ways that tax and regulation evasion strategies do.

In short: for social democracy to work, the left has to get the democracy part in order first. This is Berman’s “primacy of politics.” Without a very firm democratic mandate, establishing the economic policies of social democracy would seem a non-starter. But there are so many structural obstacles to establishing that mandate that stand in the way—even if the needed majority existed. (Thus, something like gun control offers an object lesson in all the ways majority opinion can be thwarted in the scheloric American political system.) With the democratic hill so high to climb, hope for the economic transformation wanes. We know what needs doing: higher taxes, public housing, fully funded public education and public transit, universal health coverage, etc. etc. But the ability of our political system to deliver any of these things is very doubtful.

And (again it is very odd to say this) the fascists and Nazis look good in comparison to the current political landscape. They mobilized nationalism to authorize the state’s taking control of the economy—and molded that economy in ways that, to a fairly large extent, benefited the majority. (Another horrible thought: you can only mobilize people by providing them with an enemy to fear and hate; the Carl Schmidt notion. So you couldn’t really form the democratic majority that would take control over capitalism unless you identified a “class enemy” or a “non-national” enemy. Someone has to be “not us” and a legitimate target of rage and mistreatment. You can only benefit the majority by persecuting the minority.)

But how do the fascists and Nazis look good? Because at least they were using the poison of nationalism and the powers of the state to rein in capitalism. Today’s right wing aims to serve capitalism, not control it. They mobilize the state to augment capitalism’s power. National capitalism instead of national socialism. Singapore, China, the UK, and the US. Different degrees of assaults of civil liberties; different degrees of direct state subsidies to corporations. But the same basic model based on the same nationalistic principle: the nation’s glory resides in its wealth, along with the fraudulent promise that the prosperity at the top will generate (trickle down) prosperity for those below them. Perversely, this vocabulary of national greatness is accompanied by a dismantling of all public services or any notion of public goods. Capitalism will provide all that is needed; market failures do not exist, just as externalities are not admitted. The state exists to smooth capitalism’s path—and to beat the nationalistic drum.

I understand that these dark musings are the voice of despair speaking. Our world has become so cruel, the hypocrisies of the right so all encompassing, and the use of democracy’s trappings to forestall any change in a leftist direction so pervasive, that fears such as those expressed here seem inevitable. It is simply not clear that our political system can deliver the changes needed. Its inability to do something as simple as ban assault weapons feeds that fear. There’s plenty of overt oppression—from mass incarceration to the unfreedoms experienced everyday at the workplace by most employees—just as there is plenty of overt corruption (all those politicians on the billionaire’s dole). But there is also the general grinding of the gears in the Circumlocution Office, which keeps enthralled, obsessed people like me (there are so many of us!) reading the newspaper every day to monitor the drip, drip, drip, as if something this time, against all our prior experience, is going to come of it. But nothing ever does come of it—and some days it seems that that perpetual inaction is precisely the point.

What’s In a Name?

John Quiggan (author of Zombie Economics [Princeton UP, 2012] and a regular blogger on the best blog in the universe, Crooked Timber), recently decided to jettison the name “social democracy” as a description of his political position. Here is his complete post on that decision:

“As I mentioned a while ago, in the years that I’ve been blogging, I’ve described my political perspective as “social-democratic”. In earlier years, I mostly used “democratic socialist”. My reason for the switch was that, in a market liberal/neoliberal era, the term “socialist” had become a statement of aspiration without any concrete meaning or any serious prospect of realisation. By contrast, “social democracy” represented the Keynesian welfare state I was defending against market liberal “reform”.

In the decade since the Global Financial Crisis, things have changed. Socialism still describes an aspiration, rather than a concrete political program, but an aspiration to a better society is what we need now as a positive response to the evident failure of neoliberalism.

On the other side of the ledger, nominally social democratic parties nearly all failed the test of the crisis, accepting to a greater or lesser degree to the politics of austerity. Some, like PASOK in Greece, have paid the price in full. Others, like Labor in Australia, are finally showing some spine. In practice, though, social democracy has come to stand, at best, for technocratic managerialism, and at worst for capitulation to the demands of financial capital.

So, I’ve changed the description of this blog’s perspective to socialist. I haven’t however, adopted the formulation “democratic socialist” which was used, in the 20th century, to emphasise a rejection of the Stalinist claim to have produced “actually existing socialism” in the Soviet Union and elsewhere. That’s no longer necessary.

As has been true for most of the history of the modern world, the only serious threat to democracy is now coming from the right. So, it’s important to defend democracy as well as advancing the case for socialism.”

This is more sparse and more cryptic than one would have wished, but it does speak to one of my obsessions: why isn’t social democracy, which seems to have the best track record of actually delivering (particularly in Scandinavia, but elsewhere in Europe as well) general prosperity, equitably distributed, along with robust civil liberties and a functioning safety net, the preferred position on the left in 2018? Social democracy has had demonstrable, on the ground, successes—which is more than can be said for any of the left’s other alternative programs. And neoliberalism, recognizing that fact, has devoted most of its energies to discrediting and dismantling the gains social democracy made from 1900 on. The neoliberals know where the greatest threat to their hegemony lies.

So: to abandon social democracy seems to me to let the neoliberals win. They set out to drive it from the field—and the left is folding up its tents and ceding the field to our new overlords. We will console ourselves with vicious attacks on center-left politicians like the Clintons and hasten to the highlands of a pure “socialism” that is even more vague than it is pure.

Obviously, I think the left should be doubling down on social democracy, on fighting to protect and/or restore what social democracy put in place in the 1945 to 1970 period, while also offering an extension of social democratic policies (universal health care, progressive tax rates, strict regulation of financial and other markets, government thumb on the scale to insure a balance of power between labor and capital when negotiating conditions of employment etc.). There is good evidence that these things work; capital’s hatred of them is just one parcel of that evidence.

Yet: Quiggan’s post gives me pause on three counts.

I take very seriously the fact that social democracy, as a rallying cry and as a program, seems to hold no appeal for young left leaners. Let’s say “young” means anyone under 45. It just doesn’t resonate. Again, that may be just a symptom of how successful the neoliberal smear campaign has been, but that doesn’t change the fact on the ground that clamoring for social democracy is not going to galvanize the left today.
More substantially, of course, Quiggan’s assertion is that social democracy has discredited itself (no matter what discrediting neoliberalism engineered) by acquiescing in the austerity policies imposed after 2008. Bernie Sanders calls himself a socialist, but all his policies are recognizably social democratic. He pretty much wants to enact “the second bill of rights” that FDR proposed in his 1944 State of the Union address. Perhaps today’s “socialist” is just yesterday’s “social democrat” coming to us under a new, more fashionable, name. We would have to get some fleshing out of what “socialism” is meant to convey in order to answer that question. Old wine in new bottles? It would be a classic case of claiming that those who call themselves “social democrats” have sold out, are no longer really worthy of the name because they didn’t stand up for social democracy in the aftermath of 2008, so we are going to walk away, cede them the name, call ourselves socialists, and fight for what they betrayed. The left (and the right) fractures in this way all the time.
The true substantial nub, however, remains where it always has been in the debate between social democrats and socialists: can a leftist politics tolerate the existence of a capitalist market? Is regulation good enough, supplemented by declaring certain crucial things—like health care and transportation—“public goods” whose supply cannot be entrusted to the market? Or is the capitalist market so antithetical to equality, justice, and democracy that it must be dismantled in favor of a different way of organizing economic production and consumption? Socialism, as I understand it, always thought the market—even a regulated market—was unable to deliver a society or a polity that could deliver socialism’s goals. There could be—and should be—no compromise with markets. Whereas social democracy was all about forging such a compromise.

What Quiggan tells us—and I certainly agree—is that the social democrats caved in, for whatever reason (threats of capital flight or total market collapse or the sheer corruption of political elites in cahoots with the rich), to capital’s demands following 2008—and gave away most of the store. The issue, of course, is whether, when push comes to shove, social democracy will always cave, that capital always holds the cards that allow it to blackmail the politicians into doing capital’s bidding. That is the conclusion socialists reach: social democracy is no bulwark against capital’s depredations—and never can be. And so we need something completely different.

If that is claim, then the socialists need to step up to the plate. What do they propose? And how do they propose to get there? These are familiar, time-worn questions—greatly complicated if the soi-disant socialist also proclaims strict fidelity to democracy. What democratic pathways can be mobilized to get from here (neoliberalism) to there (socialism)?

The State

If, as yesterday’s post argued, trade unions are no longer in a position to effectively counter-balance the power of capitalism, then some other site of power, some other institution, must play that role. The contemporary right (the neoliberals, if we are going to use that terminology) demonizes trade unions at every turn. The moral fury they direct against even the slightest hint of collective action on the part of workers has always baffled me. Just what is morally wrong here? Why is such collective action so reprehensible? Other forms of collective action—political parties, lobbyists, trade and professional associations, the NRA and the AARP—are not anathematized, but trade unions are somehow beyond the pale. I refuse to reduce this to sheer economic interest and bad faith; their moral outrage would be unsustainable if it didn’t somehow resonate beyond the quarters in which it directly serves economic interest.

Of course, the primary rhetorical move is to claim trade unions are an infringement on freedom. Even workers who don’t endorse the union must pay their union dues. A similar argument, of course, is made against the state—with taxes standing in as tyrannical in the way that union dues are. The union and that state are both robbers.

The right’s commitment to undermining unions (which has a long and continuous history dating back to the 1870s) goes hand-in-hand with it more recent commitment to undermining the state. And I think the right is absolutely correct to see the state, like the unions, as a potential danger to its deep commitment to economic inequality. The state is a threat to profit insofar as everyone of its regulations—from labor law to environmental and public health measures—makes doing business more costly.

Despite the right’s (or neoliberalism’s) obvious desire to decrease the power of the state, the left has been much more lukewarm in its embrace of the state. [A side-note: yes, the American right wants to increase the power of the state when it comes to regulating private conduct and in matters relating to “national security.” Capitalism—as the Marriott response to socially conservative legislation shows—has no particular sympathy for the issues that motivate conservative moralists. But the right is still the “party of order”; it does want a strong police force and military; it just doesn’t want any of that state power directed toward reining in money-making practices.)

While you would be very hard pressed to find a leftist who does not think unions are a good thing, attitudes toward the state are more ambivalent. I don’t think the right is wrong when it identifies the state as a potential problem for the achievement of its ends. The state is the only plausible (it seems to me) site of a power strong enough to combat capitalist power. So why don’t leftists rally to the state’s support?

Let me try to count the ways.

The insistence that the state has been entirely captured by the capitalists—and only serves their interests. This morphs into a necessitarian doctrine that such must always be the case. The state will always be in cahoots with capitalism. (The fallacy here is turning a contingency into a necessity. Plus it would seem to encourage a fatalistic quietism; we are doubly screwed because political and economic power work hand-in-hand and it is useless to try to pry them apart. My argument, finally, is that the chances of grabbing political power are, at the moment, better than the chances of grabbing economic power. We have at least a fighting chance on the political battlefront, whereas the legal—and moral and habitual—protections afforded private property make wresting economic power away from the corporations and the wealthy much less likely. It will take a political victory to begin to undermine the sources, structures, and institutions of economic power.)

If #1 is a version of the left’s time-worn critique of “liberalism” and the “liberal state,” now we can entertain the anarchist suspicion of the state, most recently given voice in James Scott’s Against the Grain (Yale UP, 2017). The notion here is that all concentrations of power are inevitably bad. My riposte is that, yes, power tends to accumulate—and that accumulations of power are generally not conducive to the general welfare. But I don’t think there is any wishing away of power—or of its tendency to accumulate. Thus, one needs to find ways to counterbalance powers (in the plural). In a world in which economic power has concentrated on a scale perhaps unprecedented (the “perhaps” because, arguably, the Dutch and English East India companies of the 16^th and 17^th centuries were more powerful than Google and Apple today), to abandon the state as a possible counterweight seems suicidal. There is certainly no reason to think Google is going to be more beneficent than a state—or more accountable. To dismantle political power unilaterally in the face of economic power is to refuse to engage in the contest that we wish to win. It is certainly deeply concerning that, as economic centers of power get larger and larger, political units get smaller and smaller (the break-up of Czechoslovakia and Yugoslavia, the possible break-ups of Britain and Spain).

A harder to characterize, but no less real, general disillusionment with politics as dirty, corrupt, and indirect (taking so much time to effect such imperfect pieces of legislation and the cumbersome bureaucratic state action that follows legislative victories). I feel this way myself some 75% of the time. One result of this sentiment is to turn one’s back on the state and get involved in “service” work. We have seen a huge proliferation of “humanitarian organizations.” These seem “clean” in a way politics is not—and also go out into the field and actually do the work of helping people. The results—even if limited to a fairly small number of beneficiaries—are at least visible in the way that the beneficiaries of state policies rarely are. (We see that the number of uninsured has gone down after the enactment of ObamaCare, but those are numbers not visible people). Despairing of the state’s ability to deliver the goods, many leftists (especially among the young) have turned to non-state charity operations. Letting the political, the state, off the hook in this way, not pressuring it to provide for its citizens, is a bad idea in my view—even though, as a personal choice about where to put one’s efforts, it seems to me more than easy to understand, to be a more appealing course to follow.

The final position, which seems that of Hardt/Negri and some other recent writers, is that the state is a spent force, that it actually no longer has sufficient power to hem in economic power. We must mobilize another kind of power altogether if we are to bring neoliberalism to its knees—or even mitigate some of the suffering it inflicts. Conspicuously absent from such views is any plausible agent of this force that will stop neoliberalism in its tracks. Now, of course, an analysis of the state’s deficiencies need not present something to take the state’s place. If I cannot walk with a broken leg, it does nothing to undermine the truth of my statement that I cannot walk if I do not consider alternatives to walking. The argument that the state is powerless usually point to three factors: 1) capital flight in the age of globalization means the state cannot impose terms/regulations on capital because it will just move to jurisdictions that give it a better deal. We are in a race to the bottom that the state is helpless to stop. 2) Even though the multinational and international organizations—like the GHO and GATT—and the international trade agreements—like the EU and NAFTA—are not particularly effective, they are constraining upon state actions, so power is leaking away from the national state; and 3) the blackmail and direct power of capital is such that most countries are now democracies in name only. There is no path toward citizens getting the state to serve their interests as opposed to the interests of capital. [This last point is a new version of the classic complaint that the state is just an agent of the capitalists. It tends to come accompanied with the notion that the state, therefore, is at best useless and at worst another enemy that must be overcome in the larger fight against capitalism. And the solution offered is usually the direct action of the populace, bypassing the state as its instrument, against the forces of capital. Hence the recurrent dream of the general strike. Refusal, non-compliance, civil disobedience on a grand scale.]

The main burden of this post, then, is that the left abandons the battle to capture the state—and to put its power to work advancing the left’s agenda and curtailing economic power—only at the risk of making a bad situation worse. Despair about the state is really despair about the very possibility of democracy. It can never be a government of, by, and for the people. It will always be the instrument of the economic royalists.

To be concrete: what the state can do to rein in (at the very least) economic power is not a mystery. Three strategies (all of which, I believe, are necessary) are in play.

Interference (regulation and establishing the rules of the game) in productive and money-making operations themselves. This strategy covers everything from setting conditions of work, guarantees of employment and minimum compensation, worker’s rights, unemployment insurance, etc. That is, various laws that alter distribution of effort, risk, and profit internal to capitalist procedures. Protection of—nay, promotion of—union creation and activity. These are all mechanisms to shift the distribution of market inputs and outcomes.

Interference external (or after the fact) of market processes and outcomes. In a word, taxes. Progressive taxation–including income, wealth and estate taxes—that work against the tendency of capital to accumulate in a few hands. Similarly, stringent anti-trust laws to combat the tendency toward monopoly.

Regulation of “externalities”(notably pollution) in the name of the public good, along with the positive provision of certain goods (transportation, health, parks, sanitation, public utilities, and education—I would add housing) that are not well handled by market processes. Here we get environmental regulations and public health measures, plus transit systems, municipal water and electricity, parks, libraries, schools etc.

All of this provides a suitably ambitious agenda for a left that intends to capture the state to serve its vision of the public good—a good that necessarily entails limiting the power of markets to determine either public or individual fates.

Two issues remain.

Must we reconcile ourselves to the existence of markets? Not only are there factions on the left that want to ignore or dismantle the state, there are also factions who declare any tolerance for markets apostasy. I think a regulated market is preferable to any of the alternatives currently on offer (and I mean on offer theoretically as well as in reality.) I would love to be convinced otherwise, to be shown a model of a non-market society that seemed to me both plausible and desirable. Until then, I am going with regulated markets.

The big question. Can the state actually counterbalance the power of capital? If capital is mobile precisely where the state it tied to a territory and most citizens are immobile due to legalities of citizenship and the realities of economic means, then what can the state leverage against capitalism? As I have argued in previous posts, the only place capitalism is vulnerable is the bottom line. You must hold some power over profits, have some way to damage profits, if you want to bring capitalism to heel. Yet it is exactly when the state interferes in profit-making, that capital flees to a new jurisdiction. What can possibly halt capital flight? The answer, it seems to me, is stability. Despite all the rhetoric, lots of capital (hardly all, but hardly an insignificant amount either) hates risk. There wouldn’t be so much money invested in US Treasury bonds (at a paltry return) if safety wasn’t the highest priority for lots of capital. What the rich Western countries have to offer capital are stable political and social orders, along with proximity to rich consumers. This isn’t a pretty answer. It means the West has a market advantage because of its contrast to more turbulent and more impoverished parts of the world. But, at this moment at least, the West needs to trade on this strength by making capital pay for the privilege of investment in the West. It just means the cost of doing business in the West will be higher (because of taxes and regulations) and, in addition (this is where the state needs to start throwing its weight around) there will also be a cost exacted for whatever functions capital exports in order to get around those higher costs. Call this protectionism or whatever you will. But—just as we need a transaction tax to raise the costs to financial capital of its various speculative moves—we need a “flight tax” that does not allow capital to move seamlessly across borders. And if a corporation retaliates by moving wholesale to the Bahamas, then there needs to be an “access tax” to gain entry to the US or UK or French market. These things are not impossible. States have been way too timid in the face of capital flight—especially when those states have jurisdiction over very large markets and enjoy political and social stability.

Enough for today. Plenty to chew on and follow up about.