A Social Democratic Failure

Mel Leiman

Is Socialism Doomed?
The Meaning of Mitterand
By Daniel Singer
Oxford: Oxford University Press, 1988, $24.95.

SOCIAL DEMOCRACY has intermittently held the reigns of state power during the last half-century in many Western European countries. Social democratic parties have traditionally championed a pragmatic blend of the welfare state, selective nationalization of industry (with considerable variation from one country to the next), a more enlightened stand toward Third World countries, a somewhat less belligerent stand on the armament-disarmament issue and government intervention to fine-tune the economy.

The limits, as well as the contradictions, of social democracy, are brilliantly probed and analyzed in Daniel Singer’s Is Socialism Doomed? The Meaning of Mitterand. Singer examines the Mitterand phenomenon against a background of a striking set of changes in French political and economic life in the post-World War II era.

This period was characterized by dramatic rises in output and real wages as well as a severe reduction in the number of peasants, small merchants and artisans. Immigrant workers were absorbed into the industrial labor force in large numbers during the expansionary ’50s and ’60s without resistance from the French working class.

The historic post-war compromise between Labor and Capital took the form of rising living standards and extension of the welfare state for wage and salary earners, in return for their acceptance of employer hegemony at the point of production. This process of expansion and prosperity began to reverse in the mid- 1970s, and with it has come an unraveling of the left-liberal package of the earlier era.

Great Expectations

A growing economic crisis in the world capitalist economy, which quite naturally embraced France, started in the Giscard d’Estaing regime (1976-1981) preceding Francois Mitterand. It was this crisis, in fact, that propelled Mitterand and his Socialist Party to victory on May 10, 1981. It was greeted with enormous enthusiasm by that part of the French mass hoping for a decisive break with capitalism.

These hopes were not totally irrational at the time. Singer notes that before Mitterand became president in 1981, he blamed the social democrats for not attacking the capitalist system in its very foundations. Planning, at least on paper, was supposed to dominate the market, and the “mixed economy” was perceived as a period of transition, however slow, toward a different society. During the first year of Mitterand’s regime, significant changes were indeed introduced. Five leading industrial companies and the principal insurance and investment banking groups were nationalized, and the nationalization of commercial banks was completed with the stockholders, as expected, well compensated. The minimum wage, old-age pensions and family allowances were raised, and the degree of inequality (one of the highest in the advanced capitalist world) was reduced.

Mitterand’s hope that former capitalist stockholders would reinvest their compensation funds in non-nationalized sectors was, however, soon dashed. Fearing still further nationalization, capital made a hot flight from France to safer capitalist havens abroad. Productive investment by the private sector had been declining steadily for more than a decade and was unlikely to pick up even if Mitterand created a favorable business climate.

Furthermore, the attempt to redistribute income to those at the low end of the socio-economic ladder led to domestic inflation and an enlarged foreign trade deficit, since French consumers partly turned to foreign imports as a substitute for higher-priced consumer goods. Two devaluations of the franc produced little relief. To cap it off, the outflow of capital funds from France increased the pressure on the franc and further aggravated the trade deficit.

France faced the same dilemma that all bourgeois regimes, with the partial exception of Japan, have confronted since the early 1970s-the beginning of what appears to be a secular decline of world capitalism. The most obvious symptom has been a sharp decline in real economic growth rates. In addition, these regimes have found that they cannot reduce unemployment without provoking inflation, and they cannot reduce inflation with accelerating unemployment Keynesian-type policies advocated so staunchly for so many years by virtually all social democrats lose most of their effectiveness.

By the end of his first year in power, Mitterand was at a fork in the road. He had to either take the uncharted route toward further planification of the economy or to retreat toward the market. Although it was not inevitable, Mitterand opted for the latter strategy.

He instituted a policy of rigueur (austerity) which, in effect, took back many of the previously distributed benefits. This policy was designed to curb inflation and to reduce the trade deficit by taking purchasing power out of the hands of the public through using some of the same devices practiced by many capitalist governments.

Austerity’s Victims

As austerity became the new order of the day, the older, less efficient plants in the nationalized sector were closed down, putting thousands of workers, who for the most part had been Mitterand or Communist supporters, on the unemployment rolls. By 1984, unemployment rose to 10 percent of the labor force.

Whether or not Mitterand was aware of it, he, in effect, became an administrator for the restructuring of French capitalism. This necessarily entailed checking the power of the French working class.

Singer’s treatment of the ambiguities and contradictions in Mitterand’s variegated strategies is subtle and incisive. He says:

“By the time they reached office [1981], the era of reforms without tears was over [that is, the long-post-World War II advance had turned into a secular decline]. A more radical posture was needed, and they were unprepared to assume it. Faced with the rugged reality of a world economic crisis without the active support of a mass movement, they were disarmed.”

In turn, a basic reason that Mitterand was unable to generate this mass movement was the Socialist Party’s compromising positions (for example, whether to aim at a break with capitalism or to attempt to make it more effective) and its hierarchical decision-making process.

It is inevitable that a single country attempting the socialist route will face formidable domestic and foreign opposition. The only possible way of galvanizing mass support among the working class is through a grassroots transformation of the capitalist structure rather than attempting a modest and guided transformation from above.

The left, says Singer, created an “ideological vacuum” that has often been filled by the right Mitterand did not use the mass media or the educational system as part of an egalitarian transformation. Instead he sought compromise between different layers of society, which satisfied none of them.

Singer makes the point that the French education system, although based on competitive examinations (even at the level of the grandes ecoles), replicates the stratified class structure of French society. He then makes the telling criticism that ‘The Socialists did not govern in a way fundamentally different from that of the [conservative] predecessors.”

Nationalization or Soclalism? Even nationalization of various enterprises does not necessarily advance socialism. French experience under Mitterand proves that nationalization is only an extension of state capitalism unless it is accompanied by genuine empowerment of the working class (what Singer calls the “vision of a different society”).

This is exactly what the Socialist Party in power was unable or unwilling to do. Pragmatism among the leading French socialists took the form of shelving radical ideas like autogestion (workers’ control), and subordinating the market to the planning system.

The power structure that runs French society was barely touched by the Mitterand government. To this day, this society remains elitist, with a privileged caste in virtually all positions of power.

Another reason why nationalization of specific industries ought not to be equated with socialism is that nationalized units operating within a private­profit, market-directed system have to be run according to profit criteria rather than social benefit This means that nationalized management must use almost all the weapons employed by their private-enterprise counterparts.

The French social democrats wanted to change some of the priorities of the system without understanding that the priorities themselves are embedded in the system. Mitterand’s experience reveals that the state cannot introduce policies, such as imposing heavy taxes on profits or redistributing income to workers, that significantly affect the rate and amount of the capitalists’ profit without creating fiscal and political problems of an order that seriously interfere with the functioning of the system.

As long as capitalist relations of production remain dominant, the state can, at best, place very limited constraints on private capitalist operations. To do otherwise is to run the risk of impairing the functioning of the economy. The special burden of social democracy is that it has neither the micro-level efficiency of capitalism nor the macro-level efficiency of a planned economy.

Despite Mitterand’s efforts to allay the fears of the capitalists, his first year’s policies were seen as infringing on the imperatives of a capitalist system. The welfare and nationalization measures adopted by social democracy were perceived by the capitalists as not compatible with the rules of capital accumulation. This is what stimulated an exodus of French capital.

In the last analysis, Mitterand and the social democrats were unable to formulate an alternative to the logic of capitalism. Their policy changes did not lead to the necessary structural changes. Probably many workers intuited that if the so-called Socialist government was going to operate within the capitalist rules of the game (despite some party intellectuals who maintained hostility to capitalism on a theoretical level), it would perhaps be somewhat better if capitalist politicians ran the game.

Welfare State and Empire

Singer suggests that Mitterand’s Reaganite-type foreign policy reduced still further his margin of maneuverability for dealing with the international economic crisis by depriving French industry of the resources required for the revitalization of the economy. Furthermore, military spending is a far less efficient way of utilizing labor than domestic spending. It would be a mistake to interpret Mitterand’s foreign policies in simplistic economic terms. The cultural hand of the past reveals itself in part as a nostalgia for the days of empire. As part of the logic of restructuring capitalism, French capitalists — with the backing of Mitterand — want to carve out areas of neo-colonial market power. This is smart business since France is one of the biggest arms sellers operating today.

ln effect, Mitterand wanted to create an alliance between a modified welfare state and an empire. Unfortunately for him, he could not accommodate a welfare state to capitalism in a period of structural crisis, since modernizing the French economy under this situation meant imposing at least a partial restraint on the welfare state.

In their ideological retreat from socialist principles, the Mitterand forces shifted emphasis from concern with equality to creating conditions for profitable private operations. In this new scenario, the state would help the capitalist market to function more effectively. No attempt would be made to go beyond a mixed economy.

Mitterand addressed his appeal to the populace on the grounds of general social justice rather than socialism. Social democracy wants to substitute class harmony for class conflict because it sees as essential for furthering the modernization of the economy. Thus the politics of consensus replaced the politics of class. Singer raises the provocative question of whether or not a medium-sized state like France can break with capitalism and start the process of constructing a socialist alternative. His answer, based on the French experience, is that this single state does have temporary room for maneuverability in the face of opposing domestic and foreign forces, but it will remain in a precarious position until the movement spreads to the rest of Europe. The limited resources of the individual country can only be overcome by the combined strength of the larger group.

Singer also implies that the Socialist Party must deepen its socialist roots within the working class, the only class capable of making a radical break with capitalist society. Socialism, says Singer, “must be brought to power by a vast social movement,” and not simply by winning an election. Its strategy and tactics must be openly stated to the masses and continued interchange maintained between the rank and file and the leadership, especially if temporary retreats are required.

Losing the War

The bankruptcy of the Mitterand-led Socialist movement is shown by its unwillingness to project beyond the electoral level. According to Singer, Mitterand “showed the socialists of the Western world how to win an electoral battle and lose the political war.”

Mitterand’s policy in the recent elections of May-June 1988 (after the appearance of Singer’s book) of opening up the party and government to centrist political forces may well have aided the Socialist Party in extending its appeal beyond its traditional base in the working class to the middleclass, but will certainly not aid the more difficult process of constructing socialism. The former involves making the kind of class compromises that ensure the hegemony of bourgeois political and economic institutions, while the latter involves moving rapidly beyond the mixed economy to a democratic planned economy that subjects the resources of society to conscious human control.

Singer takes a clear-cut stand in rejecting the politics of gradual reformism in favor of a more thoroughgoing struggle:

“The French events shatter the hopes or illusions that the transformation [from capitalism] can be carried out gradually, without any break, within existing institutions, by purely parliamentary means, without the active participation of the people in their factories and their offices, without the unconcealed vision of another world indispensable to produce such a mobilization.”

Singer understands that the structural crisis in world capitalism has led certain sectors of the ruling establishment in France and elsewhere to repudiate the post-war labor-capital consensus. This crisis, accompanied by stagnating production and unemployment, is eroding the economic base of the welfare state and consensus politics. That country’s capitalists gain most (relative to others) who can wring the greatest concessions out of their particular working class. Politically it becomes expedient to find scapegoats.

Singer describes these changed conditions:

“The Establishment could no longer preserve its supremacy by preaching compromise…it had to split, whenever possible, the employed from the unemployed, the natives from the foreigners, to oppose income differentiation to the spirit of workers’ solidarity ….Even the welfare state came under attack as being too costly and harming economic development.”

Social democracy requires an expanding economy to carry out its blend of mixed economy and social justice. In the current secular decline of capitalism, its social role is similar to that of any bourgeois party, that is, to contain working class insurgency. In doing so under the present conditions of economic decline, social democracy is the unwitting handmaiden of the right.

Rise of the Right

By raising aspirations that it cannot fulfill Gob expansion at rising real wages, for example), social democracy unintentionally accelerates the search for scapegoats rather than for uncovering the underlying cause of the current economic malaise. The combination of its austerity policy and the under-utilization of labor in a secularly declining economy strengthens this right-wing tendency.

The rapid rise of Le Pen’s racist National Front, which received 14.4 percent of the popular vote in the last presidential election, is concrete evidence of this phenomenon. The failure of social democracy to pose a significant socialist alternative is, in effect, stoking the fires of ethnic chauvinism, which could have the unfortunate effect, under certain historical conditions, of greasing the skids toward fascism.

Social democracy is incapable of mobilizing the masses for a politics of radical change since the democracy that it favors leaves intact the property base of an exploitative system. Hence, its policy of democratization is limited, and the disillusionment and political volte-face (turn-about) of the masses is inevitable. This helps to explain the widely accepted view that at least five to ten percent of Le Pen’s support comes from ex-Communists.

Social democracy has no theory for explaining the political turn to the right in almost all capitalist countries during the last decade.

The vast majority of social democrats see themselves as beset with certain problems that require a judicious mix of government and market, but not with fundamental contradictions. They are sensitive to the signs of cyclical crisis but not to its interaction with a secular crisis that prevents any permanent solution within the existing structure.

When, for example, they make a choice to nationalize this or that firm or industry, the reason is their conviction that these units will perform more efficiently under public ownership rather than some underlying theory or class loyalty.

Singer’s overall conclusion is that new forms of struggle for socialism have to be “reinvented.” A genuine social revolution against the capitalist class is required even in cases when the social democrats run the state as the theoretical defenders of the working class.

In a stage of secular decline, Western social democracy increasingly becomes an impediment to the root and branch transformation of capitalism, which is so quintessential to the evolutionary advance of mankind. Singer is unequivocal in stating that Mitterand has hindered the search for a socialist future.

This reviewer hopes that Singer will extend his analysis of the Le Pen movement in his future work Especially worthy of close examination is the clash within the right-wing UDF-RPR (Union pour la Democratie Francaise-Rassemblement pour la Republique) coalition between those conservatives who reject Le Pen and those who are willing to make a deal with him to more effectively counter the Socialist Party. The role of the far-left groups also merits more analysis since they may form part of the core of a reorganized and hopefully more effective French left movement.

Singer’s study is essential for specialists seeking specific enlightenment on the complexities of French politics, as well as for general readers interested in the theory and problems of socialism. It well deserves a large audience.

January-February 1989, ATC 18