The power split in social democracy

by Patrick Diamond

Ideological contestation over the nature of power in contemporary societies will dominate the post-crisis landscape. Social democrats have to bridge this central state vs. local empowerment divide.There are many different ways of characterising debates about the strategic purpose of contemporary social democracy. Of course, social democracy is a multifaceted and hybrid tradition with no eternal essence and a historical lineage stretching back several centuries. What has endured across time is faith in the capacity of democratically accountable institutions to ameliorate inequality, to promote social and economic justice, and to supplant markets with politics. However, this is not the end of the argument, merely the beginning of a vibrant debate about how social democrats best realise their values in complex and increasingly fragmented domestic and global conditions. It is unlikely that the question of exactly which doctrines best animate social democracy will ever be settled once and for all. Social democracy is an inherently plural and contested tradition.

Among the most important fault-lines to have emerged within social democracy over recent decades is between proponents of central state action, and those who assert the role of localism and ‘bottom-up’ action as a means of achieving social democratic goals. This debate is played out differently across national contexts and social democratic traditions. Latin American social democracy has historically placed a significant emphasis on the role of the local state and community participation. The Nordic countries have long combined relatively high levels of public expenditure and a progressive taxation system with devolution and autonomy for local institutions. Indeed, the capitalist regime that has evolved in Germany is predicated on strong decentralisation and a pivotal role for the regional lander in banking and industrial development. The UK, particularly the constituent nation of England after devolution, remains one of the most centralised states in the world. So the fault-line is inevitably played out differently across countries.Nonetheless, statism versus localism is a potent divide which appears set to dominate debate about what form post-crisis social democracy must now take. The divide between ‘statists’ and ‘localists’ mirrors to some extent the debates of the 1950s and 1960s over the role of nationalisation, public ownership and central planning in the development of democratic socialism. This was reflected in the SPD’s statement of aims at Bad Godesburg, the debates in the British Labour Party over Clause Four, and later attempts by the Swedish SAP in the 1970s to develop the Rehn-Meidner model. Of course, these debates have proved compelling as they go to the heart of what social democracy should aspire to be: whether the purpose of social democratic politics is to humanise capitalism, achieving a more stable and efficient economic order, or whether social democracy should seek to replace capitalism with an alternative economic system no longer based on private profit and greed. These debates may have been relegated since the process of doctrinal modernisation was initiated by the European left in the early 1990s, but they have hardly disappeared and look set to re-emerge in the wake of the global financial crisis.

The new ideological divide in social democracy is about the central state versus local empowerment. At root, this is a debate about the nature of power and the constitution of power relations in contemporary societies. On the one hand, power is regarded as increasingly plural and diffuse; accelerated since the 1970s by the break-up of industrial age organisations both in the public and private sectors. On the other hand, power might be seen as more concentrated than ever: the crisis has demonstrated the continuing influence of financial interests, intersecting with increasingly dominant political elites in national parliaments, infecting the ideology of global institutions. Colin Crouch’s recent work on The Strange Non-Death of Neo-Liberalism aptly captures this interpretation.

This debate about the nature of power shapes subsequent views about the relative roles of the central state and localism. Those who subscribe to the former view of power tend to align themselves with localist prescriptions, although these vary hugely from a more active, democratically accountable local state to a stronger emphasis on civil society in organising the welfare state and public services: a position captured in Cameron’s evocation of the ‘big society’ and within some elements of the European Christian Democratic tradition. Those who see power as increasingly concentrated, as exercised by dominant financial and political interests, regard a strong central state as an essential bulwark against the virulent strain of neo-liberal global capitalism which attempts to transcend the democratic authority of sovereign states.

Inevitably, framing the debate in such a way involves caricature and generalisation between inherently complex and internally diverse positions. But it does help to illuminate among the most important questions facing the contemporary left. Some of these are largely domestic in orientation. They concern how, for example, to ensure equality of outcome given more diverse, heterogeneous communities and more fragmented structures of delivery, especially in healthcare and education. They relate to how far governments can respond to the aspirations of their citizens to exercise more control over their lives, to shape the future of the neighbourhoods and communities in which they live, to promote new forms of well-being and life satisfaction.

Other questions are of an altogether more international nature. Among the most compelling is how nation-states can protect people from adversity in the aftermath of a global economic crisis graver than any since the early 1930s. The eurozone crisis is a stark reminder that the forces of international capital remain potent: across Europe, markets are undermining democratically elected governments and EU institutions which seek to protect and advance the public interest. The imposition of austerity programmes on periphery countries in the eurozone has been problematic precisely because they appear to undermine democratic legitimacy and accountability. They call into question the very basis of state authority.

The scale of the economic crisis appears to warrant ‘activist’ government in order to counteract the dramatic contraction in global demand and the inherent instability of the world financial system. As Helen Thompson argues in a recent article on ‘the modern state and its adversaries’, the claim that modern states are losing power and authority to their adversaries in the liberal global economy and international institutions is illusory . Nonetheless, it is mistaken to conclude that governments will simply carry on doing all the things they used to do in the 1940s and 1950s in the halcyon days of the post-war settlement. National governments need strategies to reflate their economies without resuscitating fundamentally broken growth models. This requires major structural reforms which encourage the emergence of new forms of production and innovation, as Robin Murray has argued elsewhere. The crisis demands more radical solutions than our political system has so far proved itself capable of initiating.

At the same time, the notion that nation-states might ‘go it alone’ will also prove illusory. They need to work in tandem at the national and international level, initiating new forms of multi-level governance. That requires the development of a European and global polity not simply as a forum for coordinated decision-making, but as a space for political argument and debate. An important consequence of the eurozone crisis has been the increasing influence of technocratic forms of governance, as policymakers understandably seek to navigate a rational path through turbulent conditions. However, this is no substitute for public deliberation about the alternative options available to states, or for convincing populations of the importance of swallowing harsh austerity measures after those alternatives have been properly considered. In truth, little headway will be made without giving proper space to politics. The apparent omnipotence of the leaders gathered at the recent G20 summit in Cannes underlines the absence of serious proposals at the international level for reviving the European growth and jobs agenda.

But determined action at the global and European level has to be augmented by sensitivity to the regional and local dimensions of democracy, the importance of places, neighbourhoods, the enduring ties of family, community and solidarity. Yes, voters want to be shielded from the myriad insecurities wrought by globalisation. But they still value the capacity to control and govern their own lives, and those of their communities. The challenge for social democracy is to work through this conundrum of balancing central state power with local discretion and control. If the crisis has proved anything, it is the obvious truth that while politics matters, politics can achieve little without ideas. Of course, contingent events and circumstances will always conspire against the best ideas. But without ideas, there is no hope.

Patrick Diamond is senior research fellow at Policy Network and visiting fellow at the Department of Politics & International Relations, University of Oxford.