If you look at recent election results, the prospects for European social democracy appear bleak. Whereas in 2000 the EU-15 had 11 centre-left leaders, today there are a mere three: José Luis Rodríguez Zapatero in Spain, José Sócrates in Portugal and our own Gordon Brown. Even in countries with a distinctly social democratic national identity, things are bad. Social democrats are out of power in Sweden and Denmark. In the recent Austrian election, the Social Democrats ended up competing for first place with the neo-fascists.
Britain is the only EU member state where the centre-left has been continuously in office since 1997. The New Labour conventional wisdom is that continental social democrats have underperformed because they have failed to ‘modernise’. Centre-left governments in Italy, and earlier in France under Lionel Jospin, were hobbled by the stranglehold of the far left in their complex coalitions.
However, the reality is different and more uncomfortable. European social democracy has performed badly in recent years, even with ‘modernising’ leaders fighting elections on ‘modernising’ programmes. In the 2006 Dutch election, Wouter Bos’ PvdA won a dismal 33 of the 150 seats. In the 2007 Danish election, Helle Thorning-Schmidt’s Social Democrats hung on to only 25 per cent of the vote, in contrast to the 1990s when Paul Nyrup Rasmussen regularly won 35 per cent. In the 2008 Italian elections, Walter Veltroni scored poorly against Berlusconi despite the creation of the Democrats, bringing together the centre and centre-left’s previously divided forces under an explicitly non-socialist banner.
Like it or not, social democrats have lost bucketloads of traditional working-class votes to the populist far right, as a result of rising anti-immigration feeling. The hateful stirrings of the British National Party are an extreme version of a phenomenon that is widespread across Europe. But mainstream social democrats have also suffered from ‘anti- globalisation’ populism on the left. In the last Dutch elections, the Left Socialists got a sixth of the vote as against just over a fifth for the Dutch Labour PvdA. Today in Germany, recent polls put Oscar Lafontaine’s Left party as high as 13-14 per cent. Anti-globalist sentiment undoubtedly played a significant part in the ‘no’ votes in the French and Dutch referenda on the EU constitution. The one thing that unites every single party of the populist left and right is opposition to the EU.
On the continent, traditional social democratic parties have found themselves squeezed from both the left and the right. Part of the reason lies in the decline of the traditional working class and trade unions in the post-industrial age. In France, only three per cent of private sector employees now belong to trade unions. As a result of increasing insider/outsider divisions in the labour market and growing inequalities between generations, younger working-class people in particular no longer relate to a defensive ‘Labourism’ that they perceive as no longer defending them. The left’s favourite message of extending educational opportunity resonates little among that half of the population that ‘fail’ in the current system, some dismally. This is the first generation where a majority of Europeans think life will be worse for their children than it is for them and that applies in equal measure to the UK. Social pessimism has replaced the optimistic ‘new dawn’ of New Labour’s 1997 victory.
For a decade New Labour has bucked the European trend. Historically, Labour underperformed against continental experience, but in the 1990s New Labour succeeded in removing fears that had held back the party’s electoral potential since its foundation. For all today’s cynicism, New Labour in government built on that by delivering notable public service improvements. We corrected many of the perceived failings of Thatcherism in line with the conventional ideology of the times which remained uncritically free market and pro-business in its economic approach. By contrast on the continent, social democrats found the going tougher against more consensual forms of Christian democracy, which the British Conservative party under David Cameron has been trying to emulate.
A month ago it looked as if the same structural issues that have weakened the centre-left on the continent might now also be shaping Britain’s domestic politics. Labour looked badly damaged, if not fatally weakened. But then the full force of the financial crisis broke. It has given Brown’s government a new sense of direction and purpose.
These developments are in my view politically as well as economically seismic – and could radically change the prospects of social democracy in Europe as well as Britain.
The part-nationalisation of banks is for neoliberalism what the Winter of Discontent in 1979 was for postwar Keynesian social democracy. It dramatically resurrects the social democratic case for an ‘active state’ just as the Conservatives were making headway in positioning themselves as the party of ‘society’ as against the state: little old ladies in church halls are no answer to the problems of a financial system on the brink of collapse.
The crisis has also demonstrated the relevance of Europe. A rescue package for British banks, however multi-billioned in scale, could not in itself provide a solution without parallel action in the EU, given the financial interdependencies of an integrated European and global economy. Brown’s ‘rock of stability’ is not just his conviction that an active British state is necessary to protect ordinary people against destructive market panic, but a renewed commitment to the role of European cooperation in securing the possibilities of financial rescue today (and better regulation tomorrow) that British influence in the EU offers, yet Conservative policies call into question.
More profoundly the task for modern social democracy is to design a new model of welfare capitalism for Europe. There are, of course, dangers here. Today’s policies do not mean we should be dusting down the interventionist policies of Labour’s 1945 manifesto, still less that of February 1974. They failed. This is not the time to return to a protectionist, anti-European, anti-global, ‘socialism in one country’ model. The present crisis should not be the cause of Labour turning its back on the dynamic strengths of the market, but we now are liberated from our neoliberal chains, recognising that its limitations, potential for failure and resulting gross inequalities need to be better managed in the public interest. We need a new paradigm that argues for a state with the necessary strategic capacity to act in order to shape the positive forces of globalisation at national, European and international level, not one that glorifies an all-powerful state and a return to old-fashioned interventionism. This is now the social democratic opportunity, if only we define it correctly.