On the Limitations of Reformist Socialism

On the Limitations of Reformist Socialism

Center for Marxist Social Studies

ABF-huset, Stockholm

October 20th 2013

CMS Stockholm (ABF) On the Limitations of Reformist SocialismOctober 20th 2013 1 / 27

Goals of the talk and text

Figure : The Impossibilities of Reformism, samizdat, 2011.

Explaining rise and fall of reformism: ‘Opportunism’ and‘leadership betrayal’ are not adequate nor fruitful.

Present a framework to grasp the limitations of reformist socialismbased on past research and debates.

Enable a structured discussion on strategy across the socialist Left.


Reformism as a strategic path

Common goal amongst socialists:

A society that does not reproduce social inequalities but ratherenables the free development of individualities.

Requires a transformation of the political economy ⇒ popularcontrol of the productive assets.

Reformist socialism as a strategic path to reach the goal:

Centered on winning national-parliamentary elections to graduallyimplement a series of reforms which transform the structure of thepolitical economy.



Common goal amongst socialists:

A society that does not reproduce social inequalities but ratherenables the free development of individualities.

Requires a transformation of the political economy ⇒ popularcontrol of the productive assets.

Reformist socialism as a strategic path to reach the goal:

Centered on winning national-parliamentary elections to graduallyimplement a series of reforms which transform the structure of thepolitical economy.



Figure : The bearers of reformist socialism? SAP 1925 och PT 2005.


Social-democratic conception of history

Three phases of the conceived strategy in SAP:

political democracy → social democracy → economic democracy

Figure : Bearers of reformist socialism in Sweden.



Three phases of the conceived strategy in SAP:

political democracy → social democracy → economic democracy

Understood as a cumulative process in Sweden from 1890s to 1970s......until a series of events derailed the movement:

OPEC oil price hike

Counter-offensive by business community

Internal traitors: Kjell-Olof Feldt, et al.

External saboteurs: Prime PR, et al.

...



In sum:

1 The collapse of reformist socialism as a project is conceived as theoutcome of contingent factors and/or leadership betrayals.

2 Consequently, dilemmas or structural problems inherent to thereformist strategy cannot be examined and exploration of viablealternative paths to the socialist goal is precluded.



Hidden assumptions in this conception:

Parliamentary hypothesis: Societal development is primarilydetermined by the character of the national-parliamentarygovernment. The state is a neutral instrument in the hands ofnational representatives.

Stability hypothesis: Economic conditions are in the main stableand external factors set the economy into crisis.

Distribution hypothesis: Conflicts between the working class andbourgeoisie are primarily a struggle over distribution, not astructural feature of the production process.


The limits of reformist socialism

Strategic limitations: Inherent limitations which tend to underminethe strategy.

Structural obstacles: Obstacles inherent in the mode of operation ofcapitalist economies that confront the strategy.



Strategic limitation #1: The ideological effects of parliamentaryinstitutions

Formal separation between political and economic order.Individuals within unequal class relations are represented asformally equal citizens.

Parliamentary institutions appear as the embodiment of abstractgeneral public: fictional unity which expresses the self-governanceof the people despite their separation and nonparticipation.

Parliamentary elections in and of themselves tend to ideologicallyaffirm a liberal conception of society. Counter-tendency possibleonly through class-polarizing and conflict-based mobilization.



Strategic limitation #2: The demobilizing effects of parliamentarystrategies

The MP:s of the movement are transformed into representatives inan institution that is based on nonparticipation of membership.Within parliamentary-oriented movements the activity of therepresentatives tends to displace the activity of the movement.

In order to garner votes beyond the movement, the potential MP:sneed to be responsive to nonmember voters, rather than themovement. Incentives subordinate the movement to the partyleadership.



Strategic limitation #3: Formation of a parliamentary bureaucracy

The political profession secures economic privileges and theparliamentary system tends to select people based on status andformal education.

The professional politicians of the party tend to be dominated bypeople who systematically distort the goals of the labourmovement.



Strategic limitation #4: The limits of the nation state

Focus on the national parliament affirms the nation ideologicallyas the natural political unit. But capital accumulation proceedsbeyond these boundaries.

Lacking a coordinated political strategy the reformist partiescripple when the possibilities of ‘reformism in one country’ vanish.



Strategic limitations

1 The ideological effects of parliamentary institutions

2 The demobilizing effects of parliamentary strategies

3 Formation of a parliamentary bureaucracy

4 The limits of the nation state

⇒ Demobilization of the labour movement



Structural obstacle #1: The dependency on the capitalist sector

The state provides the capitalist sector a legal system etc., but isin turn dependent on tax revenues from the sector.

State managers must ensure that economic activity is maintained.This is largely determined by the level of investments within thesector.

Potential investment strikes and capital flight constitute astructural mechanism which disciplines states to pursue policieswhich do not harm the business confidence.

Contra the parliamentary hypothesis



Structural obstacle #1: The dependency on the capitalist sector

The state provides the capitalist sector a legal system etc., but isin turn dependent on tax revenues from the sector.

State managers must ensure that economic activity is maintained.This is largely determined by the level of investments within thesector.

Potential investment strikes and capital flight constitute astructural mechanism which disciplines states to pursue policieswhich do not harm the business confidence.

Contra the parliamentary hypothesis



Structural obstacle #2: Economic consequences of high rate ofinvestment

Average rate of return on invested capital stock is determined by thebalance of three factors

⇑ Growth rate of total labour-time

⇑ Growth rate of productivity

⇓ Investment level

The reformist strategy strives for high levels of investment, but if thisbalance is not favourable the result is a crisis of profitability.

Contra the stability hypothesis



Structural obstacle #2: Economic consequences of high rate ofinvestment

Average rate of return on invested capital stock is determined by thebalance of three factors

⇑ Growth rate of total labour-time

⇑ Growth rate of productivity

⇓ Investment level

The reformist strategy strives for high levels of investment, but if thisbalance is not favourable the result is a crisis of profitability.

Contra the stability hypothesis



Structural obstacle #3: Political consequences of high rate ofinvestment

Class configuration which enables high investment levels and fullemployment unravels due to shifting balance of forces.

Indeed, under a regime of permanent full employment, the‘sack’ would cease to play its role as a disciplinary measure.The social position of the boss would be undermined, and theself-assurance and class-consciousness of the working classwould grow. Strikes for wage increases and improvements inconditions of work would create political tension.(M. Kalecki, 1943)

Contra the distribution hypothesis



Structural obstacle #3: Political consequences of high rate ofinvestment

Class configuration which enables high investment levels and fullemployment unravels due to shifting balance of forces.

Indeed, under a regime of permanent full employment, the‘sack’ would cease to play its role as a disciplinary measure.The social position of the boss would be undermined, and theself-assurance and class-consciousness of the working classwould grow. Strikes for wage increases and improvements inconditions of work would create political tension.(M. Kalecki, 1943)

Contra the distribution hypothesis



Structural obstacle #4: Ecological limits to economic expansionrate

High investment level is required for a transition to resource- andlabour-saving technologies.

In capitalism, high investment levels result in growth of output percapita, but in general lacking counterbalancing reduction of finiteresource extraction.

High investment levels for advancing reformism or sustainabledevelopment?

Dilemma inherent to strategy



Structural obstacle #4: Ecological limits to economic expansionrate

High investment level is required for a transition to resource- andlabour-saving technologies.

In capitalism, high investment levels result in growth of output percapita, but in general lacking counterbalancing reduction of finiteresource extraction.

High investment levels for advancing reformism or sustainabledevelopment?

Dilemma inherent to strategy



Strategic limitations

1 The ideological effects of parliamentary institutions

2 The demobilising effects of parliamentary strategies

3 Formation of a parliamentary bureaucracy

4 The limits of the nation state

⇒ Demobilization of the labour movement

Structural obstacles

1 Dependency on the capitalist sector

2 Economic consequences of high investment rate

3 Political consequences of high investment rate

4 Ecological limits to economic expansion

⇒ Dependency on capitalists’ investments


The rise of reformism in historical context

1 The preconditions for the parliamentary strength of SocialDemocracy were given by the structure of the political economy.

2 Despite exceptional parliamentary strength of Social Democracy inNorway and Sweden, comparable quantitative development ofwelfare-state policies and employment in several other advancedeconomies.

3 SAP 1920-2012 shifted between administrative versus reformistperiods depending on the politico-economic conjuncture.

4 Establishment of welfare states and full employment policies onlyafter Second World War.

5 Destruction of the Great Depression and the outcome of WWIIaltered the balance of forces between state apparatuses, workers,capitalists, and peasants in Europe, and enabled therefore thebreakthrough of the reformist project.























The rise of reformism 1945-1975

Workers

Industrial capital

Finance capital

Figure : Balance of forces circa 1890.



Workers

Industrial capital

Finance capital




Workers

Industrial capital

Finance capital


New balance of forces with high levels of investment:

High rates of capita growth

Full employment

Implementation of welfare-state policies

Rising real wages

Initially proceeding without the collapse of business confidence.



1965 1970 1975 1980 1985 1990 19955

10

15

20SWE

Pro

fitk

vo

t (%

pe

r å

r)

Figure : Decline in average profitability...



1965 1970 1975 1980 1985 1990 19955

10

15

20SWE

Pro

fitk

vo

t (%

pe

r å

r)

Figure : ... as a consequence of high level of investment



High investment level ⇒ full employment

1940 1950 1960 1970 1980 1990 20000

10

20

30

40

50

60

70

80

90

Arb

ets

Instä

llels

er

pe

r m

iljo

n a

nstä

llda

Figure : Sweden is a part of an international wave of labour militancy


The decline of reformism 1983-1990

1 ⇒ Crisis of profitability and confidence for owners of capital.

2 No coherent strategy to address the declining scope of reformistpolicies that follow from the dependency on investments in thecapitalist sector.

3 Two most ambitious attempts: LO:s wage-earner fund proposal(1976) and the reform offensive by the French Socialist party(1981) fail due to the demobilizing effects of the strategy.

4 Organized representatives of financial capital take the lead:

Low inflation and high real interest rates are prioritizedCapital mobility and labour reserves in the East are opened upPrivatization and cuts in tax-financed services...

















Workers

Industrial capital

Finance capital




Workers

Industrial capital

Finance capital


Social-democratic parties carry on with same objectives: winnational-parliamentary elections, but now in the context of

Internationally weakened labour movement

Declining scope of reformist policies

Abandonment of any alternative political economy

What remains is therefore their role as state managers and anorientation towards profit-led capitalist recovery.


The return of reformist socialism?

Historical changes that weaken the strategy:

The decreasing autonomy of individual nation states

The trend towards smaller workplace units

Rising structural obstacles:

1 Return to high levels of investments lacking a balancingtechnological pattern will reproduce crisis tendency.

2 Welfare policies become increasingly contested due to thelabour-intensive character of services and growing social needs.

3 Exponential growth required for reformist policies increasinglyincompatible with sustainable development.

⇑ Dependency on the capitalist sector


The return of reformist socialism?

Historical changes that weaken the strategy:

The decreasing autonomy of individual nation states

The trend towards smaller workplace units

Rising structural obstacles:

1 Return to high levels of investments lacking a balancingtechnological pattern will reproduce crisis tendency.

2 Welfare policies become increasingly contested due to thelabour-intensive character of services and growing social needs.

3 Exponential growth required for reformist policies increasinglyincompatible with sustainable development.

⇑ Dependency on the capitalist sector


Conclusions

1 The strategic limitations and structural obstacles of reformistsocialism:

Demobilization of the labour movementDependency on investments in capitalist sector

2 The crisis of European Social Democracy as a long-term result ofclinging to the objective of winning parliamentary elections whilelacking a set of strategies to circumvent the obstacles on theparliamentary road.

3 Each parliamentary advance must be used to strengthen andexpand the extra-parliamentary strength of the labour movement.

4 The question of control of investments and the structure of thepolitical economy must therefore become the central issue inpractical politics.

If the primary goal is to be a ‘party of government’ then all thatremains is the role as state managers and, out of necessity, asguardians of a class-divided society.


Conclusions






If the primary goal is to be a ‘party of government’ then all thatremains is the role as state managers and, out of necessity, asguardians of a class-divided society.


Conclusions






If the primary goal is to be a ‘party of government’ then all thatremains is the role as state managers and, out of necessity, asguardians of a class-divided society.CMS Stockholm (ABF) On the Limitations of Reformist SocialismOctober 20th 2013 27 / 27

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On the Limitations of Reformist Socialism