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.