Social democracy in a state of collapse

The defeat of the Social Democratic Party (SPD) led government in the recent German elections and the surge in support for the extreme right Alternative for Germany (AfD) further highlight the bankruptcy of the mainstream reformist parties across the Western world. The SPD proved incapable of providing any positive alternative to the threat posed to workers and all the oppressed by the AfD. Indeed, the SPD’s policies facilitated the rise of the far right.

The “traffic light coalition” government of the SPD with the Greens and neoliberal Free Democrats presided over rising unemployment and falling working-class living standards, with sharp increases in rent and food prices. The capitalists continued, of course, to rake it in, the SPD refusing to increase taxes on the rich. Workers were made to pay the cost of massively increased military spending, much of which was used to arm Israel, with cuts to spending on education and housing.

To compound this appalling picture, the SPD capitulated to the AfD’s vile racist campaign against migrants. SPD Chancellor Olaf Scholz declared in October 2023: “We have to deport more people and faster”.

Little wonder then that the SPD’s vote collapsed by more than a third, to just 16.4 percent—its worst result since the 1890s—while the increasingly fascist AfD doubled its support to 20.8 percent.

It is not just in Germany that the total unwillingness of social democratic and Labor parties to defend the living standards of their traditional working-class supporters from attacks by an increasingly aggressive capitalist class or to provide any alternative to the far right has led to electoral oblivion.

In Greece, in what became known as Pasokification, the Pan Hellenic Socialist Movement (PASOK) suffered a monumental collapse in its vote, from 43.9 percent in 2009 to a mere 4.7 percent in 2015, after it imposed harsh austerity measures to meet the demands of the European capitalist class.

In France, years of austerity and attacks on living standards under Socialist Party (SP) President François Hollande led to a wipeout, the SP down to a derisory 1.75 percent in the 2022 elections.

In Austria, the far-right Freedom Party finished in first place in last September’s elections with 28.8 percent. The Social Democratic Party, which in the 1970s regularly polled 50 percent, recorded its lowest vote—21.1 percent—since before World War I.

In the Netherlands, Labour formed governments with conservative parties in the 1990s and embraced privatisation and welfare “reforms” that led to serious protests from the unions. Its vote fell to 5.7 percent in the 2021 elections.

In Portugal, the Socialist Party, after nearly a decade in government, was swept from office in March 2024, its vote plunging 13 percent to 28 percent. In New Zealand, Labor lost the 2023 elections, its vote almost halving to just 26.9 percent.

In Norway, Labour had an absolute majority in parliament from 1945 to 1961 but polled just 26 percent at the last elections in 2021. The party has been increasingly neoliberal since the 1980s and, inspired by Tony Blair’s New Labour in Britain, carried out the most widespread privatisation in Norway’s history.

In Britain, Labour leader Keir Starmer managed to win office last year. But Labour’s vote rose only a measly 1.6 percent to 33.7 percent despite facing a decrepit and deeply unpopular Tory government in office for 14 years.

Because of its inability to offer any hope of a better future and its attacks on living standards, the tide rapidly turned against Starmer’s Labour. Support for the right-wing racist Reform party surged in opinion polls to between 24 and 28 percent, with Labour down to around 24 percent.

Here in Australia, despite the widespread unpopularity of the previous Morrison government, Labor just scraped into office in 2022 with 32.58 percent of the primary vote, less than it attracted in the previous election. It was Labor’s lowest vote since the Great Depression of the 1930s, when the party had fragmented. Now Albanese’s first term government is hanging on for dear life.

The overall pattern is one of reformist parties responding to the end of the postwar capitalist economic boom in the mid-1970s by a sharp shift to the right. Without exception, they embraced neoliberal policies of privatisation of core public services, substantial cuts to the welfare state, so-called deregulation of the labour market that led to increased unemployment and job insecurity, combined with attacks on workers’ rights to organise.

It led to a marked fraying of workers’ attachment to their traditional parties, reflected at an electoral level but even more sharply in terms of active working-class membership of these at one time mass parties.

It is worth looking in detail at Swedish Social Democracy, for decades held up as the shining example of successful reformism, with low levels of unemployment and a strong welfare state funded by high marginal tax rates. The Swedish model combined strong state intervention into the economy with close collaboration of party and trade union leaders with the employers’ federation.

Sweden was also seen as having a left-wing foreign policy, the country acting as a haven for political refugees and former Prime Minister Olof Palme speaking out strongly against the US war in Vietnam.

In 1967 Gunnar Adler-Karlsson, a sympathetic historian of social democracy, likened the reformist project to the successful social democratic effort to divest the Swedish king of all power except for formal grandeur: “Without dangerous and disruptive internal fights ... After a few decades they [the capitalists] will then remain, perhaps formally as kings, but in reality as naked symbols of a passed and inferior development state.”

This utopian vision was never to be. The Swedish capitalist class did not have the slightest intention of surrendering their wealth and power. They asserted themselves forcefully in the 1980s to compel the Social Democrats to make a decisive turn to anti-worker free market policies.

Founded in 1889, the Social Democratic Party (SAP) is Sweden’s oldest and largest party. From the mid-1930s to the 1980s, the SAP won more than 40 percent of the vote, the Communists polling an additional 5 to 6 percent. From 1932 to 1976, the SAP was continuously in office and then, from 1982 to 2022, it was regularly part of coalition governments.

The Swedish welfare state model was underpinned by economic expansion and high profit rates for key Swedish capitalist firms. Unlike most of Europe, Sweden’s economy was not ravaged by World War II. Indeed, it did very nicely out of the slaughter, as, behind a facade of neutrality, it was a major supplier to Nazi Germany’s military machine.

But by the late 1970s the boom was over. Business profitability had fallen substantially, and investment was low. The bosses went on the offensive.

In response, the SAP initiated a virtual socioeconomic counter-reformation in the early 1980s. Party and trade union leaders determined that wages would have to be held down and profits pumped up.

Social Democrat Finance Minister Kjell-Olof Feldt embraced the neoliberal approach sweeping the capitalist world. Marketisation, privatisation and deregulation became the new priorities.

Speculative capital was allowed to run rampant. A financial crisis in 1991 brought an end to full employment in Sweden, and taxpayers had to fork out 4 percent of GDP to bail out the banks.

Harsh austerity measures that promoted inequality and profiteering were pushed through in the 1990s by both SAP-led and right wing-led coalition governments. Taxes on inheritance, wealth and residential property were cut to zero, social security scaled back and the health system run down.

By the 2000s, Sweden had become a tax haven for the wealthy. Forbes business magazine declared: “Sweden Heads the Best Countries for Business for 2017”.

Economic inequality soared, wealth distribution becoming the most uneven in Western Europe. In 2002, Sweden’s top 1 percent owned 18 percent of all household wealth; by 2017 they owned 42 percent.

The Swedish “socialist” model had never been as good as it was cracked up to be. It involved a high level of class collaboration with the top bosses by SAP officials and the union bureaucrats, who headed a highly unionised workforce. The centralised system of wage bargaining that the Swedish Trade Union Confederation relied on incorporated promoting business efficiency and productivity as one of its key aims.

The SAP was never a genuine socialist party fighting for the class interests of workers. It had long appealed to Swedish nationalism to incorporate liberals, sections of the middle class and small farmers. As early as 1917 it joined a coalition government with Liberals and did so again in 1936 and 1940.

During World War II Sweden’s “neutrality” involved the Social Democrats in cordial relations with Hitler’s regime. The foreign policy radicalism of the 1970s has long gone, and the Social Democrats strongly backed Sweden joining NATO in 2024.

By 2018 the SAP, along with the four main bourgeois parties, viewed migrants as the main “problem” facing the country, competing with each other to be the one best placed to implement racist measures. This laid the basis for the rise of the Sweden Democrats, which had Nazi roots and gained 17.5 percent of the vote in the September 2018 elections. The SAP’s share of the working-class voted plunged.

At the most recent elections in 2022, the Social Democrats polled just 30.3 percent. The coalition they led lost to a right-wing government propped up by the racist far-right Swedish Democrats that polled 20.5 percent.

The global picture is very clear: the traditional reformist parties are utterly bankrupt. They are incapable of standing up to the threat posed by the far right.

They offer nothing when it comes to defending, let alone improving, working-class living standards and democratic rights. But they have been very successful in propping up the profits of big business and transferring wealth into the hands of the billionaire class.

Reformism is not about to disappear as a political force. The traditional parties still have a base amongst the trade union bureaucracy, and they can gain a vote as a lesser evil to the likes of Dutton and Co., especially if no fighting socialist alternative has been built.

At times the old parties can revive with a left face like Jeremy Corbyn in Britain or new reformist parties can be thrown up, like Syriza in Greece, Podemos in Spain or Die Linke in Germany. But neither Corbyn nor Syriza nor Podemos nor Die Linke has been able to stand up to the pressure of the capitalist class.

The approach of even the most left wing of the reformists, of working for change within the framework of the capitalist system rather than challenging the system outright, is a dead end. The Western ruling classes have shown over the last 40 years that they are fully determined to roll back the gains of a previous era. They are not about to surrender meekly.

The only road forward is a concerted working-class mobilisation to take on the bosses and the far right. The reformist parties are not going to lead that fight. That makes building a socialist party, which is genuinely up for a fight, a vital task for anyone who wants to see a better world.