The End of Social Democracy

There are twenty-three small towns and villages clustered together in the former Yorkshire coalfield that I call home. I have represented them in parliament for three decades now. They have voted Labour since 1918. The feeling in the air these days is frustration and anger; the fraying of social bonds and the search for scapegoats; disorientation and anomie where once this community knew what it was about. People are turning to Reform.

This is a familiar story across Europe, but it looks a little different from my perch. The major culprits, clearly, are grand historical forces; deindustrialisation was experienced as abandonment, where capital moved elsewhere for higher profits and left behind only the ruins of past plunder. Even the experience of time changed, once glory ceased to be a name for the future and became a name for the past. We also had our cast of villains, from Thatcher to Blair.

But between these two well-documented levels, the individual and the impersonal, something else is less often noted. Ideology is also part of this story — and not just neoliberalism as an ideology of the right. The present crisis of social democracy can be narrated as the unravelling of its historical project by the late 1970s, and its failure to define a new one.

The political consequences of that intellectual failure are among the major problems for Andy Burnham’s government. Burnham appears to have broken (at least in part) with the prevailing consensus by speaking out for working-class communities across the North and beyond, and we should give him time to flesh out his policy framework. But the left must also recognise the depth of our current problems, and the fundamental process of political-economic reordering they require.

It is too soon to say where Burnham’s leadership will take Labour, but what is clear is that social democracy in the party has been squeezed dry. It has been replaced by a rolling coup which constituted a new, centre-right revisionist politics, far removed from Labour’s founding purpose. This politics is now deeply rooted in our structures, in our parliamentary party and in our National Executive Committee.

Socialism and Growth

How did we get to this point? My basic argument is as follows. The Labour Party was long divided between socialists and social democrats. Those of us in the socialist camp have always thought that a good society requires the abolition of capitalism. Social democrats meanwhile championed the pursuit of equality while suggesting that capitalism could deliver the goods, if only it was managed and restrained by a robust and redistributive welfare state. A key historical context framed this dispute, which emerged fully in the 1950s.

The magic ingredient was economic growth, of a particular kind: high capitalist profits produced by large industrial labour forces, who had to be fed and clothed to keep the show on the road. Bosses saw the need for happy workers. Against this backdrop, peculiar to the middle of the twentieth century, social democracy made sense as a strategy for governing capitalism, promising to replace 1930s penury with a measure of working-class dignity through full employment and a high social wage in the form of public services.

But once profits were squeezed, productivity was stagnant, and jobs were going, the class compromise broke down. From that moment on, mid-century social democracy was dead in the water. Social equality and capitalist profits stopped marching hand in hand, guided by the state. What strategy for equality did social democrats conjure to meet the moment? None. Their project for a good society had lost its historical foundations, and the right and centre of the Labour Party have presided over a vacuum ever since. Without stable jobs and economic growth to sustain their vision of the good life, the people who used to weigh votes in Yorkshire coalfields had less and less to offer their constituents. This is the story that still needs telling, the origins of the crisis that Burnham has inherited.

A Classless Society

The Labour Party acquired an explicit commitment to socialism in 1918. Its factions then agreed that capitalism was a dead nineteenth-century creature, belonging to an age of top hats and imperial confidence that crashed into the trenches of the First World War. Sidney and Beatrice Webb co-wrote a 1918 Party programme, Labour and the New Social Order, which proposed ‘democratic control of industry’ to deliver ‘surplus wealth for the common good.’ By 1937, Clement Attlee was clear: 

Socialists do not propose to substitute the domination of society by one privileged class for that of another. They seek to abolish class distinctions altogether. The abolition of classes is fundamental to the Socialist conception of society. 

In office from 1945, Attlee did not abolish class society. Yet many of the ambitions of 1918 were advanced by the postwar Labour government, which nationalised and redistributed, and promised a new Jerusalem from housing to health.

That opened up an intellectual uncertainty by the early 1950s. ‘Is this socialism?’ asked GDH Cole, who ultimately reckoned that it wasn’t. Cole worried that a new caste of state managers were simply administering capitalism, while workers remained under the control of bureaucrats from whom they felt alienated. The abolition of classes ought to mean the coming of freedom, wrote Aneurin Bevan in the same moment, where workers would go from being cogs in a machine to makers of their own lives. Democratic control was the socialist promise.

Social democrats, on the other hand, were busy redefining socialism. In 1956 in The Future of Socialism, Anthony Crosland argued that the traditional socialist focus on controlling the economy was no longer necessary or efficient for delivering a happier public realm: a ‘classless society’, as he put it, could come from redistribution, state regulation of industry, strong unions and social changes to ebb away at Britain’s old class institutions such as its private schools. The good life was achievable for all in an egalitarian community, given state direction of capitalist prosperity.

Social democracy therefore amounted to a limited endorsement both of state power and of capitalist exploitation, in the service of economic and social equality; this replaced the demand for social control over social life. John Maynard Keynes had suggested in the hungry 1930s that capitalist prosperity must first be restored to permit the social democratic state to redistribute. In the 1950s and 60s, that seemed to be happening. Crosland argued fervently that capitalist growth would continue. It was the precondition for his hopes. 

The Coup

By the early 1970s, Crosland knew this project was in trouble. In a remarkably candid lecture for the Fabian Society, A Social Democratic Britain, he opposed both New Left talk of alienation and freedom, and environmentalist scepticism about growth. Both, he recognised, challenged the fusion of bureaucratic state power and capitalist expansion that propped up social democracy. Bigger problems were emerging too; after the price of oil quadrupled in 1973, the decades of cheap energy fueling easy growth came to look like a blip. 

After that, Labour’s social democrats still sometimes spoke like Crosland. The first time I met John Smith, Labour’s leader in the early 1990s, he walked into my office and said, ‘You know, Jon, it doesn’t matter who owns our services, the central point is whether they provide high quality to our people.’ I didn’t agree — my socialism preferred democratic control over services to reliance on capitalists — and we had a ferocious argument. But as he beamed one of his famous smiles, I knew he was genuinely motivated by equality. The shadow budget he produced in 1992 evidenced that with its central commitment to redistribution through taxing the rich. 

Tony Blair was a different beast entirely, and Labour’s old social democrats knew it. Roy Hattersley had been deputy leader of the Party from 1983 to 1992, hailing from the old Labour right. Continuing to insist on the pursuit of equality, he launched a scathing attack on Blair after his second election victory: ‘One by one,’ he told the BBC, ‘the policies which define our philosophy have been rejected by the Prime Minister.’ He went on to suggest that ‘we could rise up against the coup d’état which overthrew the legitimate philosophy’ within Labour. 

But social democrats were poorly equipped to explain their own defeat. Deindustrialisation and exploding asset prices connected capitalist growth more and more to a narrow, financialised economy in London and its periphery. British capitalism was no longer interested in sustaining stable lifeworlds across the towns and villages that had once fired its furnaces.

New Labour was a response to this new condition. Slowly and subtly, they abandoned the pursuit of absolute equality and a classless society in favour of ‘equality of opportunity’, deliverable through funnelling profits from the City of London into limited interventions against child poverty. ‘Meritocracy’, which was coined as a pejorative by an earlier thinker of the Labour right, now became a term of praise. If everyone could climb the social ladder, Labour would have achieved its egalitarian principles.

This was a further redefinition of socialism, after social democrats had earlier traded control for equality. Where the old Labour right celebrated industrial prosperity and remoulded socialism in its image, the New Labour right wanted a brand of ‘progressive’ politics moulded to the age of finance. 

Stagnation

One link between Crosland and New Labour, however, was the pursuit of capitalist growth as the basis for left-wing ambitions. When growth disappeared entirely after the 2008 financial crisis, restoring it became an obsessive priority, and all social objectives — not just social democratic equality, but even equality of opportunity — faded from view. If growth was the goal, and finance capital had recently delivered it, the only feasible agenda was to restore finance capital to good health.

I spent the time between the 2008 crash and Labour’s 2010 election defeat in Downing Street working as Gordon Brown’s Parliamentary Private Secretary. I attended every cabinet meeting up to the defeat. The state borrowed large amounts of money to stabilise the banking sector and the rest of the economy. It ought to have been a classic social-democratic moment, with a Labour government massively intervening in the market in order to protect the wider social interest.

But the Labour right continually insisted that the Prime Minister must cut public services. They had swallowed the argument that the British financial sector was the ‘goose that laid the country’s golden egg’. Its agenda, including austerity to free up cash for further bailouts, therefore went unquestioned. The Brown government ruled out any structural critique of finance capital and its distorting effects on our economic and social structures. After Ed Miliband was elected Labour leader in 2010, he called me with an apology: he was sorry, he said, but ‘we will continue on the austerity track’. Keynesian arguments against austerity inhibiting growth were allowed to some degree (Tory cuts were ‘too far and too fast’, said Ed Balls as Shadow Chancellor) but there was little space for more fundamental criticism of political decisions taken in the service of finance capital. 

That brings us to the contemporary period, when Starmer’s Labour government devoted itself to delivering elusive GDP increases, with Rachel Reeves celebrating growth figures that are a whisker off 0 percent and then staying quiet the following quarter when the economy moved back into recession.

The elephant in the room is that the British economy has not seriously grown since 2008. While Starmer’s offer consisted largely of framing the Conservative Party as incompetent managers, and himself as a more efficient one, any level-headed analysis makes clear that the problems of British capitalism cannot be reduced to problems of personnel in Downing Street. In a private conversation shortly after he was elected as leader, Starmer told me, ‘There is no such thing as Starmerism, and there never will be.’ We have come very far from the days of Crosland, when social democrats offered people a vision of a meaningfully better life — yet the seeds of our present still lie within that past.

The Populist Challenge

My decades close to power in the Labour Party look different to me today, amid our long post-2008 stagnation. The last seventy-five years now feel like a tragic play in three acts. First, social democracy made capitalist growth the basis for socialist promises. Later, New Labour responded to the changing form of that growth by drastically altering the contents of their hopes, swapping full employment and economic equality for the thinner promise of meritocracy. That set the stage for our present, third and final chapter in the deterioration of social democracy: with growth gone and socialist objectives forgotten, Labour politicians are fixated only on restoring the former.

The new right in European and American politics, by contrast, offers both a promise of growth and a vision for life. By doubling down on fossil fuels, they propose a last ditch bid for capitalist prosperity on a dying planet. It is hardly a happy prospect, just as their offer of restored dignity and meaning by slashing the welfare state and deporting a million of our neighbours will cause suffering rather than hope. But social democrats are struggling to defeat this noxious politics because they have lost any guiding philosophy, any theory of what the good life looks like.

We might learn from populists the necessity of identifying some enemies: the asset class, for example, who have creamed off profits from a stagnating British economy for decades now, making life unaffordable for the rest of us. But the point is not to remain at the populist level, identifying conflicts rather than answers. The challenge is to restore that long-lost socialist sense that we seek not simply jobs but happier and healthier lives, growing not numbers on a spreadsheet but the things that really matter: the quality of our time, our space and so our experience of community with others. Needless to say, that relies on a society no longer organised around the imperatives of profit. Today it falls to socialists to reiterate this point which the dominant forces in Labour seem unwilling to accept, even in spite of the apparent shift away from Starmer’s hyper-factional leadership model.

A century ago, when Labour Prime Minister Ramsay MacDonald attempted to cut unemployment benefits to please financiers, he was (unlike Starmer) drummed out of the Party. The Labour intellectual RH Tawney delivered a verdict that remains true today:

The gravest weakness of British Labour is . . . its lack of creed. The Labour Party is hesitant in action, because divided in mind. It does not achieve what it could, because it does not know what it wants. There is a void in the mind of the Labour Party which leads us into intellectual timidity, conservatism, conventionality, which keeps policy trailing tardily in the rear of realities. 

Tawney continued with a warning against the entire social-democratic outlook, with its hopes in slow and steady progress that mortgaged the socialist dream to capitalist methods. You can peel an onion layer by layer, he wrote, but capitalism is a tiger. And ‘you can’t skin a live tiger claw by claw.’ The goal is to skin the tiger, not to feed it.