Social Democracy, Soviet Socialism and the Bottom 99 Percent

By Stephen Gowans

A measure of just how far to the right US electoral politics are is that the country doesn’t have a mainstream social democratic party. This absence prompted Seymour Martin Lipset and Gary Marks to write It Didn’t Happen Here (1), the “it” being a social democratic party that could count on the ongoing support of a sizeable fraction of the working class population. By contrast, Western Europe and Canada have long had such parties, and social democratic parties have formed governments in Britain, France, Germany, Italy, Spain, Greece and Canada as well as in Scandinavia and other places.

Many left-leaning US citizens are envious of countries that have strong social democratic parties, but their envy is based mainly on romantic illusions, not reality. Western Europe and Canada may be represented by mass parties at the Socialist International, but the subtitle of Lipset and Marks’ book, Why Socialism Failed in the United States, is just as applicable to these places as it is to the United States. For socialism—in the sense of a gradual accumulation of reforms secured through parliamentary means eventually leading to a radical transformation of capitalist society–not only failed in the United States, it failed too in the regions of the world that have long had a strong social democratic presence. Even a bourgeois socialism, a project to reform (though not transcend) capitalism, has failed.

This essay explores the reasons for this failure by examining three pressures that shape the agendas of social democratic parties (by which I mean parties that go by the name Socialist, Social Democrat, Labour, NDP, and so on.) These are pressures to:

• Broaden the party’s appeal.
• Avoid going to war with capital.
• Keep the media onside.

These pressures are an unavoidable part of contesting elections within capitalist democracies, and apply as strongly to parties dominated by business interests as they do to parties that claim to represent the interests of the working class, labour, or these days, ‘average’ people or ‘working families’. The behaviour and agenda of any party that is trapped within the skein of capitalist democracy and places great emphasis on electoral success—as social democratic parties do–is necessarily structured and constrained by the capitalist context. As such, while social democratic parties may self-consciously aim to represent the bottom 99 percent of society, they serve–whether intending to or not—the top one percent.

So how is it, then, that egalitarian reforms have been developed in capitalist democracies if not through the efforts of social democratic parties? It’s true that social democrats pose as the champions of these programs, and it’s also true that conservatives are understood to be their enemies, yet conservatives have played a significant role in pioneering them, and social democrats, as much as right-wing parties, have been at the forefront of efforts to weaken and dismantle them. Contrary to the mythology of social democratic parties, the architects of what measures exist in capitalist democracies for economic security and social welfare haven’t been social democrats uniquely or even principally, but often conservatives seeking to calm working class stirrings and secure the allegiance to capitalism of the bottom 99 percent of society against the counter-example (when it existed) of the Soviet Union.

Pressure to Broaden the Party’s Appeal

Social democratic parties are usually made up of core supporters drawn from the bottom 99 percent of society who are committed to an underlying set of principles that they are unwilling to move away from, and an opposing faction, also drawn from the 99 percent, that is ready to compromise on principle to make the party more popular and increase its chances of electoral success.

The latter group is typically made up of the party’s candidates and elected officials, who have a direct personal interest in expanding the party’s base of support to win public office and secure its attendant perquisites. Owing to this interest, they are often willing to sacrifice principle for immediate electoral gain.

On the other hand, supporters of core principles tend to be non-elected members. Their role is to furnish the party with cash and volunteer labour. Without a direct personal interest in sacrificing principle to broaden the party’s appeal, they insist that principle be adhered to, even at the expense of limiting the party’s popularity. To these party members, politics is about changing popular sentiment to match the party’s principles, not changing the party’s principles to match popular sentiment.

Of course, these are only tendencies. Some elected members are uncompromisingly committed to principle, while some grassroots members are prepared to sacrifice principle for electoral gain.

The conflict between the two factions is hardly an equal one. Since social democratic parties exist to select candidates and get them elected, the party’s parliamentary caucus, and its aides and advisors, wield outsize influence. The party leader and key advisers determine the party’s electoral platform, its strategy in opposition, and its agenda in government. The grassroots members of the party have little or no influence over the party’s parliamentary agenda. Except for electing candidates and a leader, they play an indirect and very limited role in setting the party’s direction.

Hence, social democratic parties are dominated by a stratum whose direct personal interests are defined by the electoral successes of the party. Since electoral success depends on the degree of overlap between party principles and popular sentiment—and since it is often easier to change the party’s platform than public opinion– this faction will often find itself ready to compromise on principle as the easiest way to expand the party’s popularity. And since it is this stratum that sets the party’s parliamentary and electoral agenda, it is almost inevitable that founding principles will be sacrificed to electoral expediency.

Avoiding War with Capital

If that weren’t enough, even a social democratic party that comes to power with undiluted reformist ambitions will find that compromise is necessary for political survival. Social democrats believe that it is possible to reform society in egalitarian directions within the context of capitalism. Even democratic socialists, who favour a radical socialist transformation of capitalist society, pledge to bring this about in a gradual, parliamentary fashion. This means working within the political institutions of capitalist society.

But egalitarian reforms are never in the direct interests of capital, although they may be it its indirect, defensive, interests, if its dominant position in society is threatened. Under these circumstances, banks, corporations and major investors—the top one percent—may, either directly, or through the governments they dominate, offer concessions and reforms to the bottom 99 percent as a necessary sop to preserve their place at the top. This only happens, however, in the face of impending revolutionary upheavals, or where an alternative system threatens to illuminate the failings of the capitalist system and undermine its legitimacy.

But absent an inspiring counter-example or threat of insurrectionary disturbance, compromises are unnecessary. And social democratic parties are nothing if not adverse to revolutionary upheavals and alternatives that operate outside a capitalist framework. Consequently, members of the top one percent have no fear that social democratic parties will seek to topple them from their privileged position at the apex of society. On the contrary, social democratic parties are more likely to strive to demonstrate that they can be relied upon to act as trustworthy guardians of the capitalist economy (and therefore of the interests of the one percent who own and control it.) The action of Greece’s Socialist government to protect the investments of lenders at a considerable cost to the Greek working class, and over the class’s fierce resistance, is a case in point.

Meaningful efforts to transfer part of the profits of capital to funds for improving the economic security and social welfare of the bottom 99 percent (that is, efforts to reclaim part of the surplus the 99 percent produce) never get very far before meeting determined resistance. And capital’s ability to combat threats to its profits and property is formidable. Its control over the media and interests in public relations firms allow it to launch public opinion assaults on egalitarian reforms to bleed them of popular support. A social democratic government might back off its reforms, reasoning that its chances of future electoral success are unpromising in the face of a harshly negative media climate.

More significantly, capital may relocate to other, more accommodating jurisdictions, or threaten to do so, thereby touching of or threatening to touch off an economic crisis, in turn destabilizing the rule of any government that challenges it. Corporations may also curtail investments, either as a punitive measure, or because reforms have attenuated returns on investment. In either case, a social democratic party that seeks to undertake reforms within a capitalist framework must bend to the logic of capitalism–and the logic is hardly friendly to egalitarian reforms.

Egalitarian reforms, however, have been achieved over the years in Western capitalist societies, despite these obstacles, and this reality would seem to call my argument into question. Yet the number and nature of the reforms have fallen short of the original ambitions of social democracy, and in recent decades, have been abridged, weakened and sometimes cancelled altogether, often by social democratic governments themselves.

The first social insurance schemes were developed in Germany, not by social democrats, but by Prince Otto von Bismarck, a conservative who understood the value of social insurance in pacifying a restive working class. The British Liberal governments of 1906-1914 followed with their own ambitious schemes of pensions and health and unemployment insurance to calm working class stirrings. (2) In the United States, the idea of social security didn’t come from unions or the Democrats but from the Rockefellers, who were searching for ways to avert labour unrest and avoid unionization. Likewise, collective bargaining wasn’t the brainchild of unions, but of corporate leaders who wanted to reduce the violence and uncertainty of labour relations. (3) Social democracy often claims credit for these gains, but it was conservatives who conceded them to protect the tranquil digestion of the profits, interest and rents of the top one percent from the disturbances of the bottom 99 percent.

Many reforms were introduced after World War II, at a time Western Europe lay in ruins, and was struggling to pick itself up from the devastation of the war. Liberal democracy had lost its sheen, and in the face of economic tribulations and the rising star of the Soviet Union, socialism had gripped the popular imagination. There was a very real possibility that Western Europeans would turn away from capitalism, and the United States, and the new Western European post-war governments, laboured to inoculate Europe against the threat of socialism. Part of the effort involved the introduction of major social welfare reforms, such as the National Health Service in Britain. True, the NHS was introduced by a Labour government, but conservative governments in Western Europe introduced similar programs at the same time—and for the same reasons. (4) It was the need to secure the allegiance of Western Europeans to capitalism against the threat of socialism, not social democratic parliamentary activism, that brought forward important concessions to the majority.

Thus, conservatives seeking to eclipse threats to the stability of capitalist society posed by extra-parliamentary agitation and the counter-example of the Soviet Union have been the principal architects of ambitious schemes of social insurance. Social democrats may have been involved, however not as instigators, but as participants in essentially conservative schemes aimed at safeguarding the top one percent from the potential revolutionary action of the bottom 99 percent. With labour largely quiescent in recent decades and far from revolutionary, and the demise of the Soviet Union (and China’s taking the capitalist road) leaving the world with few living counter-examples to capitalism, capital has been able to revoke reforms it conceded in more restive times. The Occupy Wall Street movement, and anti-austerity agitations in Europe, are early signals of a possible reversal of tide.

The Soviet Counter-Example

It is instructive to consider Soviet social welfare, to understand what capitalist democracies once competed against, and to appreciate its breadth and depth. Although it is certainly unfashionable in capitalist democracies to say so, it is true all the same that the Soviet Union was organized to serve the interests of the mass of its people, and not to enrich an elite of bankers, major investors and corporate titans, as is true in our own societies, and in Russia and other countries of the former Soviet Union today.

Some will object that the USSR was organized to serve the interests of the Communist Party elite, and that it too was divided between the 99 percent and the one percent. To be sure, the Soviet Union was not built along anarchist lines. There was an elite, but the advantages the elite enjoyed were picayune by the standards of capitalist democracies. The elite lived in modest apartments and had incomes relative to the average industrial worker that were no greater than the incomes of physicians in the United States relative to the average US industrial wage. Top Communist Party officials did not own productive property and therefore could not transfer it, and neither could they transfer position or privilege, across generations to their children. Moreover, the very mild level of income disparity in the Soviet Union was mitigated by the reality that many necessities were available free of charge or at highly subsidized rates. (5)

Employment in the USSR was guaranteed—indeed, obligated (an important point to correct one of the cruder misconceptions that socialism amounts to the unemployed collecting welfare cheques.) Work was considered a social duty. Living off of rent, profits, speculation or the black market – social parasitism – was illegal. Education was free through university, with living stipends for post-secondary students. The USSR had a lower teacher to student ratio than the United States. Healthcare was free, and drugs prescribed in the hospital or for chronic illness were also free. The Soviet Union had the greatest number of doctors per capita of any country in the world and had more hospital beds per person than the United States or Britain. That US citizens have to pay for their healthcare was considered extremely barbaric in the Soviet Union, and Soviet citizens “often questioned US tourists quite incredulously on this point.” (6) Soviet workers received an average of three weeks of paid vacation per year. Necessities, such as food, clothing, transportation and housing were subsidized. By law, rent could exceed no more than five percent of a citizen’s income, compared to 25 to 30 percent or more in the United States. Women were granted paid maternity leave as early as 1936. The constitution of 1977 guaranteed that “The state (would help) the family by providing and developing a broad system of childcare…by paying grants on the birth of a child, by providing children’s allowances and benefits for large families.” All Soviet citizens were eligible for generous retirement pensions—men at age 60, women at 55. Concerning women’s rights: “The Soviet Union was the first country to legalize abortions, develop public child care, and bring women into top government jobs. The radical transformation of women’s position was most pronounced in the traditionally Islamic areas, where an intense campaign liberated women from extremely repressive conditions.” (7) The work week was limited to 41 hours and overtime work was prohibited except under special circumstances. Night-shift workers worked only seven hours per day (but were paid for eight), and people who worked at dangerous jobs (coal miners, for example) or jobs that required constant alertness (physicians, for example) worked shorter shifts but received full pay. (8)

To be sure, life could be harder in the Soviet Union compared to what it was for middle- and upper-income citizens of the rich capitalist democracies (but not the poor of these countries nor the millions of Blacks and Hispanics in US ghettoes nor the denizens of the capitalist global south, i.e., the bulk of humanity.) Housing was guaranteed and rents extremely low, but the housing stock was limited. The Nazis had destroyed much of the country’s living accommodations, and the USSR’s emphasis on heavy industry slowed the building of replacement stock. Incomes, too, were lower, but the Soviet Union had started at a particularly low level of economic development, and despite rapid gains, had not caught up to the West at the point of its demise. Still, life was more certain. And on such human development measures as infant mortality, life expectancy, doctors per capita, adult literacy, daily calories per person, and educational attainment, the Soviet Union and other communist countries performed at the same level as richer, industrialized capitalist countries, and better than capitalist countries at the same level of economic development. (9)

But didn’t the Soviet Union come to an end because its publicly-owned and planned economy broke down? Not at all. Excluding the war years, the Soviet economy grew every year from the point socialism was introduced in 1928 until the last Soviet leader, Mikhail Gorbachev, began to dismantle it in the late 1980s. And for most of those years it grew faster than the capitalist economies of North America and Western Europe. (10) Indeed, by the mid 1970s, there was serious concern in Washington that the Soviet economy would soon surpass that of the United States. (11)

The Soviet Union’s demise is more aptly described as a capitulation (some say suicide (12)) rather than an economic collapse. The torrid pace of Soviet economic growth began to slow in the 1970s, for a variety of reasons. An exhaustive examination of all the reasons would require more space than is available here. But there is one reason worth quickly mentioning. The country’s efforts to keep pace militarily with the United States and NATO monopolized research & development, depriving the civilian economy of the fuel it needed to innovate to overtake the US economy. (13) (Complaints may have frequently been made about the quality of Soviet consumer goods, but no one complained about the quality of Soviet military hardware. (14)) If the Soviets failed to surpass capitalism, or worse, fell behind, the commitment of Soviet citizens to socialism would weaken. What’s more, the country’s ability to defend itself would either atrophy, or the country would be called upon to allocate increasingly larger proportions of its budget to defence. Neither option was sustainable.

To address these looming problems, Gorbachev formulated a two-prong solution. First, he would yield to the Americans on a number of foreign policy fronts. Second, he would reduce the role of planning in the economy in favour of enterprise autonomy and markets. The first prong would reduce military tension with the United States and lessen the burden on the Soviet economy of military spending and aid to national liberation movements and socialist allies. The second, it was hoped, would kick the economy into a higher gear. Neither worked. Gorbachev’s capitulations on foreign policy and abandonment of socialist allies emboldened counter-revolutionary forces in Eastern Europe and dispirited Communist parties on the USSR’s western borders. Eastern Europe’s governments fell. The successor governments reoriented their economies to the West, disrupting the Soviet economy, which had been tightly integrated with them. At the same time, the abrupt transition to enterprise autonomy and markets sent the Soviet economy into a tail-spin. GDP fell sharply—not because the socialist economy had broken down, but because it was being torn apart. Gorbachev’s conciliation with US foreign policy and steps toward market socialism transformed a manageable difficulty into a catastrophe. As one wag put it, Stalin found the Soviet Union a wreck and by building socialism left it a superpower. Gorbachev found it a superpower and by abandoning socialism left it a wreck.

The point, however, isn’t to explore the reasons for the Soviet Union’s demise, but to show that while it existed, the USSR provided a successful counter-example to capitalism. The ideological struggle of the capitalist democracies against the Soviet Union entailed the provision of robust social welfare programs and the translation of productivity gains into a monotonically rising standard of living. Once the ideological struggle came to an end with the closing of the Cold War, it was no longer necessary to impart these advantages to the working classes of North America, Western Europe and Japan. Despite rising productivity, growth in household incomes was capped, and social welfare measures were systematically scaled back.

Social democracy did nothing to reverse or arrest these trends. It was irrelevant. When strong social welfare measures and rising incomes were needed by the top one percent to undercut working class restlessness and the Soviet Union’s counter-example, these advantages were conferred on the bottom 99 percent by both social democratic and conservative governments. When these sops were no longer needed, both conservative and social democratic governments enacted measures to take them back.

Keeping the Media Onside

Capitalist domination of the mass media also acts to pressure social democratic parties to move toward the right. This happens because:

• The mass media define the legitimate range of policy options, and public opinion settles within it.
• Ambitious social democratic leaders shift the party’s agenda to the right to intersect with mass media-shaped public opinion.
• Party leaders keep the party’s agenda within the confines of the legitimate range of policy options to avoid negative, or no, media coverage during elections.

Since capitalist forces would use the high-profile and visible platform of their mass media to vilify and discredit any party that openly espoused socialism or strongly promoted uncompromisingly progressive policies, social democratic parties willingly accept the capitalist straitjacket, embracing middle-of-the-road, pro-capitalist policies, while shunting their vestigial socialist ambitions to the side or abandoning them altogether. They planted themselves firmly on the left boundary of the possible, the possible being defined by conservative forces.

Conclusion

When social democratic parties espoused socialism as an objective, even if a very distant one, the socialism they espoused was to be achieved with the permission of capital on capital’s terms–an obvious impossibility. It is perhaps in recognizing this impossibility that most social democratic parties long ago abandoned socialism, if not in their formal programs, then certainly in their deeds. That social democratic parties should have shifted from democratic socialist ambitions to the acceptance of capitalism and the championing of reforms within it, and then finally to the dismantling of the reforms, is an inevitable outcome of the pressures cited above.

But the outcome is ultimately traceable to what history surely reveals to be a bankrupt strategy: trying to arrive at socialism, or at least, at a set of robust measures congenial to the interests of the bottom 99 percent, within the hostile framework of a system that is dominated by the top one percent. The best that has been accomplished, and its accomplishment cannot be attributed to social democratic parliamentary activism, is a set of revocable reforms that were conceded under the threat, even if unlikely, of revolution and in response to capitalism’s need to compete ideologically with the Soviet Union. These reforms are today being revoked, by conservative and social democratic governments alike. The reality is that social democracy, which had set out to reform capitalism on behalf of the bottom 99 percent, was reformed by it, and acts now to keep the top one percent happy in return for every now and then championing mild ameliorative measures that conservative forces would concede anyway under pressure.

There are three lessons to be drawn from social democracy’s failure.

• Measures of economic security and social welfare within capitalism come not from social democracy but from militant, extra-parliamentary activity which threatens business’s tranquil digestion of profits.
• These measures—granted by conservative forces, not taken by the bottom 99 percent–remain revocable within capitalism, and are munificent as the degree of working class stirrings and presence of counter-examples allow.
• In absolute terms, the Soviet system of public-ownership and economic planning proved to be as successful and often more successful than the capitalism of the richest countries in providing employment and secure access to health care, education, housing and child care and was more successful relative to its level of economic development.

What social democrats claimed to achieve (but didn’t), Soviet socialism did achieve. And what Soviet socialism did achieve was lost the moment the last Soviet leader steered his country along the path of social democracy.

1. Seymour Martin Lipset and Gary Marks. It Didn’t Happen Here: Why Socialism Failed in the United States. W.W. Norton & Company. 2000.

2. Eric Hobsbawm. The Age of Empire: 1875-1914. Abacus. 1987. P 103.

3. G. William Domhoff, Who Rules America? Power & Politics. Fourth Edition. McGraw Hill. 2002. pp 164-169

4. Albert Szymanski. The Capitalist State and the Politics of Class. Winthrop Publishers, Inc. 1978. p .268

5. David Kotz and Fred Weir. Revolution from Above: The Demise of the Soviet System. Routledge, 1997, pp. 26-28

6. Howard J. Sherman. The Soviet Economy. Little, Brown and Company, 1969.

7. Albert Szymanski. Human Rights in the Soviet Union, Zed Books Ltd, London, 1984.

8. I’ve drawn from numerous sources on Soviet social welfare and employment policy. Albert Szymanski. Is the Red Flag Flying? The Political Economy of the Soviet Union Today, Zed Press, London, 1979; Michael Parenti. Blackshirts & Reds: Rational Fascism and the Overthrow of Communism. City Light Books, 1997; Roger Keeran and Thomas Kenny. Socialism Betrayed: Behind the Collapse of the Soviet Union, International Publishers, New York, 2004; David Kotz and Fred Weir. Revolution from Above: The Demise of the Soviet System. Routledge, 1997.

9. Shirley Cereseto, “Socialism, Capitalism and Inequality,” The Insurgent Sociologist. Vol. XI, No. 2, Spring 1982.

10. David M. Kotz. “The Demise of the Soviet Union and the International Socialist Movement Today”. Paper written for the International Symposium on the 20th Anniversary of the Former Soviet Union and its Impact, Beijing, April 23, 2011.11.

11. David M. Kotz. “Socialism and Capitalism: Are They Qualitatively Different Socioeconomic Systems?” Paper written for the symposium “Socialism after Socialism: Economic Problems,” sponsored by the Institute of Economics of the Russian Academy of Sciences, Moscow, December 6-8, 2006.

12.”Socialism,” Castro said, “did not die from natural causes; it was a suicide.” Roger Keeran and Thomas Kenny. Socialism Betrayed: Behind the Collapse of the Soviet Union, International Publishers, New York, 2004. P 222.

13. On the role of R&D in the slowdown of the Soviet economy see: Robert C. Allen. Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution, Princeton University Press, 2003; Peter Schweizer. Victory: The Reagan Administration’s Secret Strategy that Hastened the Collapse of the Soviet Union, The Atlantic Monthly Press, New York, 1994; and Howard J. Sherman. The Soviet Economy. Little, Brown and Company, 1969.

14. David M. Kotz. “What Economic Structure for Socialism?” Paper written for the Fourth International Conference “Karl Marx and the Challenges of the XXI Century, Havana, May 5-8, 2008.