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The Impossibilities of Reformism CMS Stockholm1 16 November 2011 Introduction The modern Swedish labour movement, its successes

and its failures, can neither be understood nor explained without accounting for the social-democratic form it has taken. The Swedish welfare state is, also within an international context, often viewed as the foremost example of success for social-democratic reformism. In that narrative, people in Sweden are considered to have, or to have had, the welfare, equality and the opportunities that could serve as the prime example of successful reformist socialism. After establishing political and social democracy, Sweden during the 1970s found itself standing at the finishing tape of reaching also economic democracy by way of the wage earner funds. By accomplishing this, socialism would then have been introduced peacefully and Walter Korpi would have been correct in stating that: in Sweden capitalism will not be abolished through revolution, but perhaps on the more trodden path, it will come after referral to concerned parties.2 As is now well known that didn't happen, and in the explanation as to how the worlds most successful social democratic movement first failed in establishing economic democracy and then turned increasingly to the right while polls sank steadily there we also find a large part of the struggle around how the future will take shape. We would like to use this text to begin a dialogue with those comrades within social democracy who contend that the last 25, 15 or 5 years of bleak development is the result of a series of coincidences poor leadership, international pressure, mistakes, cunning opponents, et cetera. and we would instead propose a more fundamental explanation. The authors starting point is within a Marxist tradition, a tradition that not all readers may identify fully with, but we have attempted to explicitly state our premises and empirical material so that all who are open for a discussion amongst comrades can follow the line of argumentation. The problems we point to are not the results of a fundamentally non-antagonistic social development on a reformist basis that has been corrupted by individual actions. Rather, they are problems that are inherent and unavoidable in the very reformist strategy that social democracy is built upon in both its successes and its failures. It is vital to address these problems so that the tragic backlash that social democracy has experienced isn't repeated once more, as farce. In every explanation based on coincidences it is also only coincidences that need to be corrected if it hadn't been for Kjell-Olof Feldt3, the oil crisis,

1 2 3

Local association of Centrum fr Marxistiska Samhllsstudier (CMS), http//www.cmsmarx.org

Quoted in Greider (1998, p. 147)

Swedish minister of finance in the social democratic government 19821990, and widely held to be one of the architechts behind the right wing turn of SAP.

Sture Eskilsson and Timbro4, Prime PR5 etc., successful social-democratic reformism would by now have led us to our goal. Such an explanation is simply incorrect, but nonetheless cherished by many good socialists that we consider as comrades needed in the struggle for a better society. Patient reformism is often contrasted to more radical demands in terms of doing what is deemed possible, as opposed to what would desirable but is deemed impossible. Many social democrats wish for a radical transformation to a society that does not reproduce inequality but enables the free development of individuals. However, since that transformation is currently deemed impossible they instead turn to the reforms deemed possible. We would hereby like to propose that it is the very promises of reformism that today seem impossible to fulfill on the basis of the reformist strategy, which thereby makes radical social transformation the art of the possible. To paraphrase; patient reformism would perhaps be desirable, but as it is impossible right now we must instead advocate a more radical position. Reformism as a concept The meaning of the concept of reformism is often vague. There are a number of different dimensions in the distinction between a reformist and a revolutionary political position. It is possible for example to speak of a distinction in terms of political philosophy. Reformist-oriented socialists have tended to embrace a number of the liberal political institutions (parliamentary democracy, representation primarily through the individual citizen whose individual rights are constitutionally protected, a separation of powers enshrined in the constitution, etc.) and have been skeptical or at times directly hostile to visions of alternative political models oriented towards some form of participatory democracy or other forms of representation, for example inspired by the Paris Commune or the workers' councils of the early 20th century. This distinction spills over onto the conception of political legitimacy in the transition from liberal capitalism to socialism. Reformists have tended to imagine continuity when it comes to the political institutions, as guarantees that this transition will not entail abusing the rights of the individual. The Masses seem to be politically acceptable only if they are channelled, or individualised, through the liberal political institutions. In the cases where reformist socialists have built popular movements they have at the same time tended to accept and affirm a distinction between civil society and state: the reasoning seemingly based on the fact that the trans-individual character of popular movements is politically legitimate only to the extent that it remains within the boundaries of civil society and that there is a more fundamental political order the constitution of the nation state that places the individual in the centre. You could argue that within the reformist traditions there is a certain continuity with John Lockes theses on legitimate revolt: it is only right to revolt if the revolt itself is constitutional.

General director of the Swedish employers organisation (SAF/Svenskt nringsliv) 1970-90 and then chairman of the board of SAFs think-tank Timbro 1978-1998. Considered to be the main ideologue behind the hegemonic shift from keynesianism and social democratic tradition towards monetarism and liberalism in Sweden. 5 PR company whose client list includes Svenskt Nringsliv but at the same time employs people from the right wing of the SAP. It was considered a scandal when information leaked that Svenskt Nringsliv payed Prime to influence the development of SAP and that the members of SAP who worked for Prime had published articles as members of SAP, not as employees of Prime, pushing for the same changes Svenskt Nringsliv had secretly payed Prime to induce within the party.

In this text we would however like to leave reformist political philosophy (its fear of the masses) aside and instead emphasise another dimension of the term. A dimension that appears if one instead defines it in terms of a strategic road towards socialism by progressive reforms implemented through parliamentary decisions. What we want to discuss are the assumptions this strategy is based on and the dilemmas that adhere to it. The expression road towards socialism is emblematic of the way reformist labour movements conceptualise transformation. It implies a sort of straightforward linear progression. The way of thinking, that is revealed in the use of spatial metaphors, is also present in the political analysis; revolutionaries as well as reformists are presumed to be fellow travellers on the same road. The distinction between the two strategies is only about pace and patience, where the revolutionary strategy is often portrayed as only an expression of immature restless adventurism. As we will demonstrate the social democratic historical narrative paints a picture of a reformist movement that has approached socialism step by step, but for different reasons has gone astray. In this narrative there are however no fundamental problems with simply reassuming the trek on the path they deviated from. We would on the other hand contend that a radical transformation of society inherently necessitates something other than an accumulation of reforms of current society. Reforms can establish favorable conditions for a break with the present but it never achieves that break in itself. If we for the moment would continue with the metaphor of a road towards socialism, we would like to claim that the structural character of the relations of production in the economy institutes certain clefts along this road, precipices that the labor movement can pass only by leaping. Our index for judging the successes of reformism in the long term is therefore not welfare reforms (which in and of themselves can be important for peoples lives), but only their impact on the possibilities of a radical social transformation. Such a transformation is dependent on a social force and our standpoint however orthodox it may seem today is that its essential components is the working class. It is not a standpoint based on the heroic struggles in the history of the labor movement, but on the structural position of the working class in capitalism. Francis Mulhern elegantly sums it up: The working class is revolutionary, Marxists have maintained, because of its historically constituted nature as the exploited collective producer within the capitalist mode of production. As the exploited class, it is caught in a systematic clash with capital, which cannot generally and permanently satisfy its needs. As the main producing class, it has the power to halt - and within limits redirect - the economic appratuses of capitalism in pursuit of its goals. And as the collective producer the working class it has the objective capacity to found a new, nonexploitative mode of production. This combination of interest, power and creative capacity distiguishes the working class from every other social or political force in capitalist society, and qualifies it as the indispensable agency of socialism.6 Therefore the effects of reformism on working-class strength and organisational capacity for societal change constitute a starting-point in the following discussion

Mulhern (1984).

on the successes and failures of reformism. This index provides us a way to ask the question of the possibilities of a radical social transformation at different periods in time in the history of reformist social democracy. Social-democratic historiography Let us begin with a brief summary of how the reformist socialists of today commonly explain the success of Swedish social democracy from circa 1920 to 1980, and its decline thereafter.7 The model of explanation of this success, as we perceive it, proceeds approximately in the following way: If the power of the bourgeoisie stems from its control of capital, then the power of the working class stems from its degree of organisation. During the late nineteenth century and early twentieth century this degree of organisation increased more or less continuously. As long as the labour movement was weaker than its counterpart the antagonisms on the labour market were played out in a relatively militant way. Later, when the balance of power between the antagonists began to level, well into the twentieth century, the outcome of conflicts became more difficult to predict and the cost of conflict increased on both parties. This without the labour movement yet being strong enough to challenge the entire capitalist system. Thus arose a mutual interest in a historical compromise. This compromise is brought about in the 1930s. First with the formation of a social democratic cabinet in 1932, and in particular the crisis agreement in 1933 (the socalled kohandeln). Then by the institutionalization of conflict regulation in the Saltsjbaden agreement in 1938. The historical compromise was therefore, according to this perspective, not necessarily a harmonic class cooperation, but rather a modus vivendi, built on a strategic assessment of the balance of power. It constituted, however, a framework within which the working class could continue to successively building up its strength during the post-war era. By its numerical superiority the labour movement could seize political power through parliament that could counteract the economic power of capital. There were thus strategic reasons for seeking to fetter union militancy on a grassroots level in order to secure political success for a social democratic government that prioritized full employment, expansion of the social insurance system, etc. There is a shift of focus, during the post-war era, from the trade-union branch of the labour movement to its parliamentary branch. Decreasing levels of conflict on the labour market are perceived as an expression of cumulative increasing strength of the working class and therefore as a ripening process on the road towards socialism. The decline of the reformist project since the 1970s is then explained in the following terms: the oil crisis that set off in 1973 (OPEC 1) resulted in high inflation in many countries. This gave neoliberal ideologues a pretext to agitate against Keynesian economic policy. In Sweden it was above all Sture Eskilsson, head of the information department of SAF (Swedish Employers Association), that particularly actively tried to seize the initiative in the debate and launches a new offensive in formation of opinion. This work is escalated when Curt Nicolin becomes chairman of SAF in the mid-1970s.

We draw this account from Korpi (1981) and Josefsson (2005) among others. It might be a relatively arbitrary selection, since there also exists other models of explanation in motion within Swedish social democracy. But these texts, or the perspectives that are formulated in them, seems hold a particularly strong position among left-oriented Swedish social democrats.

For some reason, quite unclear, certain leading tiers of the social democratic party begin to embrace this thinking. It is particularly Erik sbrink and KjellOlof Feldt that become advocates of the neoliberal ideas. Behind the backs of Olof Palme, Sten Andersson and the large majority of the party they cooperate with economists in the Swedish central bank to enforce a deregulation of the credit market in November 1985. The political significance of this reform is that it triggers a chain reaction of liberalisations when the state is deprived of an important tool for tempering inflation growth. The deregulation, however, also lead to a real estate bubble and ultimately to the domestic economic crisis in the beginning of the 1990s. By that time, however, the neoliberal ideas have gotten such a foothold in public opinion that the economic crisis can be portrayed as the symptom of an overly large public sector and thus motivate austerity policies and privatizations. To sum up, its fair to say that this historiography, or this way of conceptualising the history of Swedish social democracy, rests on the following assumptions: * Firstly, the account rests on a parliamentary hypothesis. By this we mean the assumption that in a parliamentary democracy the development of society is determined by the character of the parliamentary government. 8 This assumption, in turn, implies a number of other assumptions: (i) that national conditions are by and large independent of international conditions; (ii) that the state is a neutral instrument in the hands of those elected by popular mandate and is not structurally dependent on, for instance, the class nature of the economy. * Secondly, the account rests on a distribution hypothesis. By this we mean the assumption that the working class and the bourgeoisie are two independent agents that contend over the distribution of what is produced within the economy. Antagonism between classes is conceived of purely as a question of distribution or allocation, and thus as if they were isolated from structural contradictions within the production process itself. Relations of production do not seem to constitute any kind of structural obstacle or dilemma for the labour movement in exercising power. Capital seems to be conceptualised primarily in terms of a factor of production. It is only the bourgeoisies control of this factor of production that is politically problematic.9 * Thirdly, the account seems to rest on a stability hypothesis. By this we mean the assumption that economic relations as a rule are stable and that it takes external factors for an economy to be pulled down by a crisis. The consequence of this historiography is that the left within Swedish social democracy perceives the breakdown of reformist socialism in the last decades as a consequence of external historical contingencies and inner enemies. There are consequently no reasons to reconsider this strategy. The question if the breakdown possibly relates to some dilemmas or structural problems that are inherent in the reformist strategy is never raised. The political consequences are that the left within social democracy seems to consider its primary task to accuse
8 9

We borrow this term from Therborn et al. (1979). This way of conceptualising capital could reasonably be called a form of fetishism. What in classical Marxist terms is a relationship of valorization, ultimately a relationship of exploitation (M-C...P...-C'-M'), is here portrayed as something inherent in the means of production.

the social democratic leadership of betraying the labour movement in their turn to the right.10 In our opinion such complaints are both tiresome and unproductive. Therefore there are reasons to review the assumptions that the above historical writing rests upon. Typology of social democracys limitations We will attempt to formulate our objections to these assumptions in a somewhat systematic way. Our arguments can roughly be sorted in to two separate groups. Firstly, we claim that there is a series of mechanisms inherent to the reformist strategy that tend to undermine it. We call this group of mechanisms the strategic limitations of reformism. They raise primarily some questions about the so-called parliamentary hypothesis. Secondly, we claim that there is a series of structural obstacles that confront the reformist strategy. We refer here not to direct forms of organized political opposition but rather structures that are embedded in the way the capitalist economy functions. We consequently call this group the structural obstacles of reformism. This group raises questions concerning the parliamentary hypothesis as well as the assumption of autonomous actors and stable economic relations.

Strategic limitations of reformism 1. The ideological effects of parliamentarism The parliamentary hypothesis implies that state power as a rule is something that is exercised by a population through democratic elections. The institutional configuration of the state as well as its policies reflect in that way the ideas that dominate within this population. State power is for this reason perceived as a secondary phenomena in relation to those processes within civil society according to which certain ideas come to dominate over others. If a large part of the working class is not socialist in political orientation it is because it has been influenced ideologically before and independently of the voting for parliament itself. If the labour movement would be able to win an ideological struggle within civil society, it would presumably be able to use parliament as a neutral tool. We believe that there are good reasons to question these assumptions. If capitalist relations of production divide the population into separate social classes, the parliamentary representation disregard such stratification. Elections to parliament address, or hail, the isolated individual as a private citizen. In parliament the population is represented, abstracted from its division into social classes, such as consisting of equal citizens. A concrete inequality in society at large is represented as formally equality in the state. In parlamentarism, the equal unity that is the abstract result of its specific representative mechanisms, appears as the precondition, or starting point, for self-rule of the masses. For this reason we believe that there is an ideological dimension inherent in the parliamentary institutions themselves. Ideology is consequently not something that is played out exclusively before and independently of voting to parliament.11

10 11

This theme of a betrayed reformism is in a sense a social democratic version of vulgar Trotskyism.

See Anderson (1976).

Our point here is not that social democrats that engage in a parliamentary oriented politics automatically lose a class perspective. There is probably a series of counteracting tendencies here, for example in trade-union organisations. But the ideology inherent in the parliamentary institutions has a tendential influence, with the risk of prevailing in the long run. Instead of conceiving of social democratic MP:s as the parliamentary branch of the labour movement as something instrumental in relation to the goals of the labour movement there is a risk that, with time, a certain loyalty with the institutions themselves will arise and therefore a certain affinity with that sort of unit that is represented there. Even if society still appears as a class society it seems that the ideology of parlamentarism stages the notion of a more fundamental democratic and therefore equal fellowship beneath these class differences. The latter consequently appear as shallow in relation to the more fundamental fellowship beyond class differences. We consequently risk a transition from ideas of socialism to ideas of corporatism and the Peoples Home. 2. The demobilizing effects of parliamentary strategy Parliamentary representation has furthermore the effect of transforming the parties that engage themselves in parliamentarism. The members that become parliamentarians are transformed into representatives of the movement. Conversely, the movement becomes represented by its leaders. Hence, the reformist strategy implies the establishment of a moment of delegation in the structure of the reformist oriented organisation. The mass of party members do not participate themselves in parliamentary work. Their activities are reduced to supporting their representatives, at the same time as the activities of the representatives become detached from the every day life of the masses. Instead of supporting the activities of the mass of party members, parliamentary orientation entails a representation that by and large replaces this activity. The reformist strategy consequently comprises a demobilizing tendency. Furthermore, it seems parliamentarism inevitably forces the reformist party into a position of taking responsibility. In order to maximize its influence in parliament the reformist party must try to win votes outside its own movement. Consequently the partys parliamentarians are set in a situation according to which they come to represent their voters, rather than the movement. This furthers the gap between the party leadership and the rest of the movement. It also generates incentives to subordinate the latter under the former in a stricter way, in order to be able to convincingly stage the promise of representing, and consequently being personally accountable to, the non-movement affiliated voter.12 3. The forming of a parliamentary bureaucracy In mass parties oriented towards parliament the leading activists become professional politicians and potential state administrators with the following consequences: (i) winning parliamentary elections can secure economic privileges for the professional politician, far beyond the conditions of most workers, (ii) the parliamentary system tends to select the best in terms of status and formal education, which rewards a tier of the professional middle class. Both of these processes have the consequence that the leadership of social democratic

See Przeworski (1980).

parties runs the risk of being dominated by persons that in a systematic way distort the goals of the labour movement. 4. The limits of the nation state When the Second International was formed in 1889, the nation states in Europe were the broadest political units capable of intervening in a territorially divided region of world capitalism. It was thus understandable that the political struggle of the labour movement had the conquest of the nation state as its aim. But the accumulation of capital is a process that isn't limited by geography trade is integrated, production units are coordinated and financial capital is transferred through the quest for returns on capital among competing firms. The autonomy of the nation state is consequently restricted as the economy, and the established living standard within the territory where state apparatus has its monopoly on violence, becomes ever more dependent on other regions. This illustrates an obstacle for social democratic parties that are thoroughly national in orientation and have never had a coordinated political strategy across national borders. It puts them at a loss when reformism in one country ceases to be a possibility. Structural obstacles on the parliamentary road 1. Dependence on the capitalist sector The labour that is performed in the capitalist sector results in a product that is distributed between wage labourers, companies, rentiers and the state. People who administer the state hold a position in the economy that gives them opportunities to privileges, wealth and power through its capacity to levy taxes. The state provides the capitalist sector with a juridical system and laws without which it could not operate, but at the same time the state is dependent on tax revenues from the incomes in the sector and credits in order to act in the world economy. This dependency forces state managers to be concerned about maintaining the economic activity, irrespectively of whether they are bureaucrats or elected professional politicians; regardless of whether their goals are to build up military capacity or implement social reforms. At the same time they have to assume an economy-wide perspective in order to keep the destructive effects of the capitalist sector e.g. crises and unemployment in check, or else the state rapidly risks losing political support from other sections of the population on which it is dependent to various degrees. Economic activity is strongly dependent on the level of investments, that both raises the productive capacity and constitutes an important part of the total demand in the economy. This basic fact gives individual capitals a collective veto over policy: Firms make productive investments and rentiers provide credit depending on how they perceive protability and the political-economic climate, that is to say if society is stable; if the economy is expanding; if the demands by the workers movement is kept under control; if taxation of capital does not rise, and so on. If the business condence of capitalists falls, the level of economic activity and hence the scope for state policy does too. This occurs in the context of rivalling states, that historically pre-dates capitalism, which act in a world

economy. An investment strike is followed by capital ight to other states and difficulties in obtaining credits for foreign exchange.13 This structural mechanism disciplines individual states under stable conditions to implement policies that do not harm the condence of owners of capital and, on the contrary, act to maintain a stable development of the entire capitalist sector.14 2. Economic consequences of a high investment rate In a capitalist economy the average rate of return on invested capital is determined in the long term by the balance between three factors: i. ii. iii. Growth rate of the total labour time Growth rate of productivity The share of profits that is reinvested

Factors (i) and (ii) contribute to raising profitability, while the investment level (iii) lowers it.15 A steady inflow of wage labourers thus increases profitability through factor (i). This occurs in an early phase of an industrialising capitalist economy. But this rate of growth cannot exceed the population growth for long, and hence it declines with time as it approaches demographic constraints. Once this happens it is only the balance between the investment level (iii) and the development of productivity (ii) that can counteract a decline profitability that would be cause by demography regardless of the wage level. If the balance that depends on the institutional configuration for investments and the prevailing innovation phase in production isnt advantageous average profitability declines and more and more companies are pushed towards a profitability crisis. Contrary to the stability hypothesis, then, there is an inherent tendency towards crisis in capitalism that a reformist strategy has difficulties to manage: it strives for a high investment level, but if productivity growth is insufficient to counterbalance, profitability is lowered and lack of business confidence to continuing to invest becomes more and more pressuring. Conversely, profitability could be stabilised on a higher level with low investment level but relatively lower productivity growth as its price. But that also means that the scope for reforms is reduced and a larger share of societys surplus product is consumed unproductively instead of being invested. 3. Political consequences of a high investment rate Full employment in capitalism requires a high investment rate, and was achieved in Western Europe after World War II. But the polish economist Michal Kalecki predicted already in 1943 that maintenance of a full employment would cause such social and political changes that it would reduce the confidence of industrial capital:

Nilsson & Nystrm (2008) admit that internationally competitive interest on investments sets a limit for the political possibilities of reformism. But as they don't present any approaches to overcome this limit we have difficulties in perceiving their reformism as a specifically socialist one. 14 This analysis rests on Block (1980). 15 But formally the mean profit ratio follows a dynamic equilibrium rate R* = (a+p+d)/i, that is determined by the growth ratio in the total labour a, growth rate on productivity p, capital depreciation rate d and the relationship between investments and profits i. A derivation and analysis is given in Zachariah (2009).

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 the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension.16 Further, firms would attempt to compensate wage demands and taxes by raising prices, that is to say inflation, that damages the interests of rentiers. In other words, a class configuration between wage labourers, industrial capital and rentiers that enables a high investment rate and full employment would undermine itself because of the shifting balance of power between classes that is its result. 4. Ecological constraints on economic expansion In an industrialised society with increasingly pressing ecological constraints, investments will continue to play an important role in the economy; they are required in order to implement increasingly necessary energy- and labour saving technologies. But in capitalism investments occur through companies in competition for profits and market shares which as a general rule means an expanded production. In other words, in capitalism the progressive resourcesaving potential of a high investment rate is transformed into an expansion of the national product per capita without a balancing reduction of resource consumption. This results in a long-term dilemma for social democracy: maintain a high rate of investment for reformist progress or a sustainable economic development? Historical developments that have enabled and undermines the progress of reformism What significance did long hold on government by social democracy in Sweden have for the successes of reformism? The answer is at the same time everything and nothing. In the following, we will attempt to draw an alternative to the social democratic historical narrative, which we have accounted for above in the section Social-democratic historiography. We describe the labour movements advances and setbacks in Sweden in a way that puts reformism in a new light and brings with it critical objections to the strategys future validity. This also poses a challenge to all those who suggest a return to that strategy, to show how the problems we are describing can be overcome. Prehistory to the advance of Social Democracy in Sweden It is well known that the reformist labour movement in Sweden and Norway has been exceptionally strong during the 20th century, measured in terms of degree of organisation, votes in elections and years of holding government office. But the explanation of this relative success is not to be found in any exceptional

Kalecki (1943).


tactical brilliance of the early Scandinavian labour movement, but in historically given structural circumstances that enabled it to class-based political organisations and alliances.17 More specifically, they were circumstances that favoured a universalistic, solidary form of organisation within the working class and an alliance with the peasant class. Of special significance here is the rate of industrialisation, its dependence on exports, and the peasant classs position at this point in time. Countries with relatively high rate and strong dependence on export, like Sweden, Norway and Holland, separate themselves from those with a slower and less export-dependent industrialisation, for example USA, Germany and France. Firstly, late industrialisation processes tend to be faster and smoother because they catch up to earlier, more drawn out and uneven processes, which enables broader industry-based trade unions instead of fragmented guild-based forms of organisation. Historical cases where democratic rights were attained late in relation to industrialisation, strengthened the formation of national parties with its base in the classes of industrial capitalism instead of pre-industrial divisions. Secondly, in order to protect itself against competition on the world market, the bourgeoisie could in times of crisis sway a section of the working class and other economic classes into a protectionist coalition in economies with large home markets and thereby undermine labour organising. When industrialisation was heavily dependent on exports, however, there were few structural conditions for protectionist alliances on the side of capital. Thirdly the conditions of the peasantry at the time of industrialisation were of crucial significance for its position in political alliances. In the example of Sweden, self-ownership among peasants was widespread early on and variations in land management were evened out before agriculture was subject to the capitalist market. Therefore the Swedish peasants at the time of industrialisation werent tied to any land-owning aristocracy and sufficiently strong to survive the commercialisation of agriculture as a class. They were therefore capable of forming an alliance with the labour movement as a strong part. Where conditions were the opposite, the crises of capitalism tended to drive peasants into conservative protectionist alliances. These three conditions were in combination exceptional in Sweden and Norway and enabled the relative strength of the early social democratic parties in comparison with their comrades in the Second International. The accumulation of capital by industrial firm contributed further, by centralising production in ever larger units, to an expanded reproduction of the social base from which the labour movement gathered its strength. Large and relatively centralised workplaces are more advantageous for the labour movement than tiny

See Joseph (1994)


fragmented workplaces, for three reasons18: (i) They confirm wage labourers class position ideologically because the organisation tends to be more bureaucratic and relations between a massive labour force more non-personal. (ii) They imply a relatively lower cost for union organising. It simply takes more resources to organise a thousand workplaces with a hundred people in each than to organise a hundred workplaces with a thousand people in each. (iii) They tend to relative homogenisation of the conditions of wage labourers and thereby increase conditions for solidary collective organisation. Already before the Swedish Social Democratic party (SAP) was founded in 1889, unions had made progress that would yield dividends when government power was seized: the abolishment of the guild system in 1864 had removed legal constraints for union organisation and had given the early Swedish labour movement relatively better conditions than in many other countries. Three decades before government access in 1932 and the Saltsjbaden Agreement in 1938, a pattern of collective bargaining agreements and deals was established. In a series of collective bargaining agreements 1906-07, that were preceded by great lockouts, the employers and big industry admitted the workers' right to organizing and accepted the principle of collective bargaining agreements.19 This dispels the notion that the parliamentary strength of social democracy was the sole cause to welfare conditions later on, during the second half of the 20th century: The conditions for that strength was determined by the structure of the political economy.20 The welfare state in a Western European context The establishment of the modern welfare state and the historically low unemployment in Sweden is seen by reformist socialists as a confirmation of the parliamentary hypothesis that we described earlier. In that case the historically uniquely long government possession by social democracy would lead to a significantly different development in Sweden than in comparable countries with other parties in government. Let us take a look some of the central progress made in a Western European context. A modern welfare state has a considerable social insurance system and a high share of expenses for social purposes. In Sweden the degree of coverage was already in the 1920s very high in comparison with other countries and didnt change thereafter in any decisive way during the social democratic period. The, for a long time, most considerable state social insurance in the world was
18 19 20

See Pontusson (1995). Therborn et al. (1979, p. 7-10).

This materialistic explanation can for example be read in contrast to LOs former chief economist Dan Andersson (2011), who explains the Nordic welfare state as an effect of a specific Nordic community where people trust each other.


founded in the United Kingdom during the war years by a commission under the leadership of the liberal William Beveridge. Even the success of ATP (the Swedish Supplementary pension) in the year 1959 was comparable with pension reforms in Christian-democratic governed West Germany and conservative United Kingdom around the same year.21 The Swedish state has a longer tradition of relatively large social expenses. About a third of the public expenses went to social purposes in 1890, which can be compared with a fifth and a fourth for the UK and the USA respectively, and less than a tenth in France and a third in Germany 1913. At the time of SAPs ascension to government power in 1932 the share of social expenses in public expenditure was 45%. In 1962, after 30 years of uninterrupted social democratic hold on government office and about two decades of exceptional growth, this share had only grown to 50%.22 If we look at the social expenses as a share of domestic product then Sweden held a middle position for a long time. In 1965 its figure was 13.5%, about two percentiles lower than Belgium, France and Holland that werent dominated by social democracy. It was only by the end of the 1960s that the social expenses expanded heavily, owing a large part to the pensions, and 1973 Sweden, together with Christian-democratic governed Holland, held the top positions with 21.5% and 22.8% respectively.23 If we finally look to unemployment then SAPs access to government did not amount to much; during 1936-40 the rate was around 10% among trade union confederations members, which was the same level as in 1923-30.24 It was only after World War II that the labour movements demands of full employment became a prioritised goal in Europe, until the crisis in the mid-1970s. When unemployment subsequently skyrocketed in the OECD-countries, to rates above 10% in some cases, the four countries with the lowest rates were Switzerland and Japan followed by social democratic Norway and Sweden, all under 4% in 1984.25 The establishment of a modern welfare state and an institutional commitment for full employment was therefore nothing specific to countries that were dominated by social democratic parties. Rather, social democracy was a channel through which high tides from the advanced capitalism of the post-war eras were transported to Sweden. It was certainly not irrelevant where and how such a channel is dug26, which is evident in the universalism of the social-democratic welfare state, based on principles of citizens rights, and its public provision of
21 22 23 24 25 26

Therborn et al. (1979, p. 21-25). Ibid. Therborn (1986, p. 23). Ibid. p. 34. Therborn (1985, p. 42). Therborn (1986, p. 27).


services. But in light of a comparative analysis the parliamentary hypothesis is heavily undermined, given SAPs uniquely long time in government. The high tides were formed by massive destruction and outcomes of the Great Depression and world wars, which altered the balance of forces between peasants, wage labourers, industrial capital, rentiers and state managers on the European continent. War mobilisation and anti-fascist resistance movements had led to a collective and solidary organising of a considerable part of the populations as well as experience of armed struggle. Those obligations also expanded the states role in regulation of production and distribution. State managers prioritised reconstruction and industrial development. The rentiers ability to extract interest and dividends was curbed in order to maintain high investment levels in productive capital. Also, the mobility of capital was restricted by the help of global institutions The Bretton Woods System that were established in the new balance of forces between nation states. At this point in time the potential investment veto of capitalists would have been of marginal significance because the economic situation was already disastrous. At the same time it can be assumed that the expanded rights of the working classes in West Europe were accepted when industrial capital stood to gain from the reconstruction process; nationalisations were a real threat that both states and labour movements had on their agendas; and still worse, Eastern Europe demonstrated on an alternative non-capitalist process. It is in this context that the well-organised and centralised labour movement led the welfare-state project in Sweden. First in alliance with the peasantry, that finally was decimated by industrialisation; then with a section of the rising professional middle class. In perspective, SAPs time in office has shifted between reformist and respectively administrating periods. Two observations can be made here. Firstly, the reform offensives during 1932-48 respectively 1968-76 were preceded by successful waves of industrial conflict. Secondly, they were interwoven with the conjuncture in the global political economy world wars, West European reconstruction, international strike waves, etc. This gives us reason to return to the strategic limitations of reformism and its structural obstacles in order to understand its decline. The decline of reformism The capitalist sector in Sweden, which was intact after 1945, continued a phase of productive expansion that had begun before the labour movement had come to power. 27 Sweden had gone from being one of Europes poorest to having one of the highest incomes per capita just before World War II, and the lead position was maintained with SAP in government office. When the advanced economies stabilised again the dependence on incomes in the capitalist sector resurged.


The following analysis builds upon Zachariah (2010).


In a country like Sweden, with a relatively small domestic market, this dependence assumed its form as the growing weight of export companies over time. Initially the dependence didnt impede social progress because high investment levels contributed to an tremendous development of prosperity, the maintenance of full employment and opportunities for negotiating real-wages increases and a series of social reforms. But the high investment levels also realised the structural obstacles that have been described above and constitute an insuperable challenge to the reformist strategy: (i) The economic consequence was a global declining trend in profitability. The average annual rate of return on the fixed capital was in Sweden already during the 1960s lower than several European countries because of the long period of high investment rate and concentration of capital. And it kept declining. In 1975 it was five percentage points lower than the level in 1965. In order to re-establish profitability to that level, during the prevailing productivity growth and investment level, would have required that the labour force grew at a rate faster than 5% per year. Clearly a rate that is demographically implausible and is impossible under full employment.28 (ii) The political consequence was the growing bargaining power and militancy of the labour movement that challenged the employers ability to dictate the work process. Industrial capital responded to this trend by raising prices that was worsened by OPECs oil price shock. The result was a profitability- and confidence crisis in the capitalist economies during the mid-1970s. The dependence on incomes in the capitalist sector became a pressing obstacle for expansive reforms. To mitigate it the noncapitalist sectors share of production would have had to expand, from which one can redistribute resources. Within the early labour movement it was self-evident that this implied some form of common ownership, but it didn't produce an elaborated theory and practice for how the economy should be organised. Social democracy mainly advocated nationalisation of industries, measures that had emerged during the age of catastrophe 1914-1950 with nationally centred production processes. The welfare-oriented direction that was taken by the movement after the war meant instead that the state would regulate the total demand through growing redistribution of the nation income. In Sweden the public companies' share of the national income was marginal and social democratic politics changed the relations of production foremost through employment in the public sector. In 1985, 38% of the labour force was in the public sector while the corresponding number in France and Great Britain was 26%. 29 But since this sector mostly produces tax-financed welfare services it cannot be a source of economic autonomy. In general European social democracy had no alternative strategy when the capitalist crisis of profitability spread.


Around 1975 the productivity growth was around 2% per year and the quota between gross investments and net profits 1.1 with a capital depreciation rate of 10% per year a recovery of the dynamic equilibrium rate R* to 16% per year (level of 1965) would have demanded that total labour increased with 5.6% per year. Source: Marquetti (2004), and own calculations. 29 Therborn (1995, p. 73).


The two most ambitious plans within the Western European labour movement was the Swedish proposal of wage earner funds and the French reform initiative. LO:s proposal from 1976 was initiated, among other things, in order increase cohesion within the labour movement under the solidarity wage policy. This policy drove up wages in sectors with low productivity for the purpose of accelerating restructuring but moderated wage claims in high-productivity firms in order to avoid compensating price increases. In the wage earner fund proposal a share of value added from these favoured companies would instead be transferred to funds that were controlled by the movement in order to shift the structure of ownership. It would in the long term have weakened the dependency on the capitalist sector, given larger scope for reforms and influence over social development. However the proposal arrived too late to be developed as a political strategy in the international context in the 1980s and it was furthermore undermined by a section of social democracy that firmly held on to a confrontationless reformist strategy whose possibilities were exhausted.30 At about the same time, in 1981, a parliamentary leftist coalition led by the French socialist party pushed through a number of nationalisations of the industrial and financial sectors, as part of a reformist reorientation. But despite generous compensations at that time such politics were met by declining confidence, capital flight and consequently macroeconomic problems. The scope of manoeuvre for the state was further limited by the rules of the European monetary system. The government chose to turn around policy completely by 1983, as predicted by the theory of the state.31 Both examples also illustrate the strategic limitations of reformism. Its demobilizing effects undermine a long-term build up of extra-parliamentary organisation and capacity for confrontation with capital. Such a capacity would have been necessary to manage the conflict that a change in the structure of the political economy necessarily implies. Further it became apparent that the nationcentred strategy had reached the end of the road; had the French socialist party continued its programme it would have necessitated either the abandoning the restrictions of the European monetary system or altering them through political pressure from an internationally coordinated labour movement. Even if it had succeeded, the problems of inflation and current account deficits would possibly have demanded price- and import control, which would have accelerated the crisis of business confidence and flight of capital. At that point it would have been necessary to maintain the productive sectors of the economy by its wage labourers and to uphold trade relations over national borders that in the long term would have been dependent of an international policy to the benefit of the labour movement. Both examples illustrate the potential obstacles that arise when attempting to change the structure of the political economy through the parliamentary road. They point to the conclusion that the possibilities to circumvent the obstacles depend on the labour movements ability to organise outside of the national parliaments. Instead of the workers movement it was the representatives of the rentier interest who took the initiative during the crisis and shifted the balance of forces in the global economy during the 1980s. Capital mobility was opened up, as were new markets and labour reserves in the East. Full employment was abandoned in favour of low inflation and high real interest rates. Privatisations and downsizing
30 31

This in contrast to the enthusiastic reception of the proposal within the trade-union movement. See Meidner (1993). See the above discussion on the dependence on the capitalist sector.


of tax finances welfare services followed. This also meant the end of the welfareoriented reformist strategy. But instead of attempting to attack the cause of the declining scope for reforms the structural dependence of the capitalistic sector social democracy moved away from the question all together and towards the so called Third Way. The national social democratic parties continued to pursue same goals as they were set up to achieve, namely to win parliamentary elections but now with an internationally weakened labour movement, decreasing scope for reforms and the abandonment of the question of an alternative political economy. What remains then is just their role as state administrators instead of being the movements tool for a long term social change. That SAP in a government position would orient itself towards a profit-led capitalist recovery during the 1980s was thus a natural outcome. In practice, therefore, the parties had fewer alternatives to offer other than budget cuts with a human face.32 We contend that the crisis of social democracy and the ideological disarray that in varying degrees passes through Europe is the result of this development. The return of reformism? The above analysis shows historical developments that render a return to the expansive reformist policies improbable. Two crucial historical changes have undermined the effectiveness of the strategy: (i) the limitation of nation-states that have grown in pace with the global expansion of capitalism and (ii) the tendency towards smaller production units. A return to a reformist strategy would demand more than just an increased regulation of the mobility and interests of financial capital, it would demand a coordination of politics between economically integrated countries. At the same time it becomes more difficult to win over the large export firms that are so central in countries like Sweden, because they have little to gain from an expansion of domestic demand. A reformist project today must be established on a continental scale in case it is to be able to reach the same efficacy as during the post-war era.33But the way in which the labour movement succeeded in mobilising the working class during the larger part of the 20th century has been undermined by the fact that capitalisms tendency to centralise production in ever increasing units was reversed around the 1970s. Wage labourers in the advanced capitalist world of today find themselves in increasingly higher degree in smaller workplaces.34 In addition to this we see three structural obstacles as particularly problematic:


It has also left the field open for the extreme Right to win support among the part of the population that has conservative social values but that support progressive economic politics and thus had a reason to vote for social democratic parties. 33 Lindberg (2010) is also on the same track and states that the basic questions of the labour movement can no longer fully be solved on a national level. 34 See the discussion on the effect of centralized workplaces in the section on the prehistory of social democracy.


Firstly, reformist politics relies on the fact that high investment levels increase the net product and lowers unemployment.35 But if the technical development in production isn't sufficiently favourable it will be demographically impossible to re-establish such high levels without lowering average profitability in the capitalist sector and consequently reproducing the same tendency of crisis that followed the post-WWII expansion. Secondly, there exist no technologies through which welfare services can be rationalised in the same way as in industry, which in practice means that a growing share of the total labour needs to perform these services. In order to conduct welfare politics, therefore, a growing share of the economy must be within the tax-finances public sector, which puts such politics in increasing conflict with the capitalist sector. Thirdly, an exponential increase of output per capita is practically impossible to reconcile with a balancing reduction of greenhouse gas emissions and use of limited natural resources. Given the dependence on the incomes of the capitalist sector, the requirements for sustainable development will further reduce the scope of reforms. Conclusions Already in 1958 the social-democratic PM Tage Erlander thought that if the movement could manage to implement the pension reform then the great period of reforms would be over. It would then take a renewing in order to tackle the structural change of the economy that he considered necessary for the welfare society. But he didn't consider himself capable of achieving such a renewal as a prisoner in reformist thinking of an old era.36 We contend that the same can be said of reformist socialists that hope to repeat the successes of reformism from an earlier era. If successful reformist policy is not to be simply torn down by a mere change in government each parliamentary advance must be used to strengthen and expand the labour movements extra-parliamentary capacity to organise people, formulate political programs from their own vantage point and control parts of the economy. We have indicated that the dependence on the capitalist sector is the fundamental obstacle for the progress of reformism this century. What Keynes called a comprehensive socialisation of investments can therefore no longer be avoided; the structure of the political economy must in practice become a central question. Nor is this an issue that can stand back for more topical questions, to be handled when the scope for reform is exhausted or when social democracy has re-established itself as a long term ruling party. The crisis of social democracy is a long term result of its insistence on the goal of winning parliamentary elections without having a developed strategy to overcome obstacles on the parliamentary road to social change. Instead the response has been to switch over to the so-called Third Way towards the abyss.


Johansson & Taalbi (2010) show how strongly unemployment depends of the investment rate, which is the product of the profit rate and the share of investment (out of profits). 36 Erlanders diary notes the 6th of February 1958 quoted by Therborn (1986, p. 19).


Its consequent downward trajectory is not the result of a leadership that has betrayed its members, nor is it by individual mistakes or a matter of chance. They are inevitable consequences of fundamental antagonisms in the reformist road towards socialism a problematic that every radical social transformation must address and overcome. Every comrade within the social democratic movement that postpones these questions gives further reasons to believe that this future will never arrive; never so many terms of office ahead in time. On the other hand, if the primary goal of social democracy no longer is social transformation but instead to be a ruling party, then nothing remains but its role as an administrator of the state and it will be locked in a structural necessity to reproduce capitalist relations of production. In short, it becomes a preserver of class society.

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The impossibilities of reformism CMS STOCKHOLM (Centre of Marxist Social studies) CMS Stockholm draws, in the following short compilation, the outlines in a marxist critique of the inherent limitations of socialist reformism. Often, the slow and steady reformism is placed in opposition to more radical demands. As the possible in opposition to the desirable. Many social democrats wish for a more radical transformation of society, but since they see that transformation as impossible in the present, they instead turn to the possible reforms. We want to hereby propose that it is the very promises of reformism that today seem impossible to fulfil on the basis of reformism, something that thereby places us before radical social transformation as the art of the possible. A slow reformism would perhaps be preferable, but as it is impossible as of today we must instead speak in favour of a more radical position. The crisis of social democracy is not the result of a betrayal by the leadership of its own members, nor is it by single mistakes or mere coincidence. They are unavoidable consequences of fundamental antagonisms in the reformist path to socialism a complex of problems that every radical social transformation has to meet and conquer. 21