1

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 world’s 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,

1Local association of Centrum för Marxistiska Samhällsstudier (CMS), http//www.cmsmarx.org

2 Quoted in Greider (1998, p. 147)

3 Swedish minister of finance in the social democratic government 1982–1990, and widely held to be one of the architechts behind

the right wing turn of SAP.

2

Sture Eskilsson and Timbro4, Prime PR

5 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 Locke’s theses on

legitimate revolt: it is only right to revolt if the revolt itself is constitutional.

4 General director of the Swedish employers’ organisation (SAF/Svenskt näringsliv) 1970-90 and then chairman of the

board of SAF’s 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 Näringsliv but at the same time employs people from the right wing of the SAP. It

was considered a scandal when information leaked that Svenskt Näringsliv 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 Näringsliv had secretly payed Prime to induce within the party.

3

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 people’s 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, non-

exploitative 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

6 Mulhern (1984).

4

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 so-

called “kohandeln”). Then by the institutionalization of conflict regulation in the

Saltsjöbaden 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.

7We 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.

5

For some reason, quite unclear, certain leading tiers of the social democratic

party begin to embrace this thinking. It is particularly Erik Åsbrink and Kjell-

Olof 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, it’s 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 bourgeoisie’s 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

8We borrow this term from Therborn et al. (1979).

9 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.

6

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 democracy’s 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

This theme of a betrayed reformism is in a sense a social democratic version of vulgar Trotskyism. 11

See Anderson (1976).

7

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 People’s 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 party’s 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

12

See Przeworski (1980).

8

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 profitability 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 confidence 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

9

economy. An investment strike is followed by capital flight 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 confidence 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. Growth rate of the total labour time

ii. Growth rate of productivity

iii. 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 – isn’t 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 society’s

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:

13

Nilsson & Nyström (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).

10

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 resource-

saving 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 movement’s

advances and setbacks in Sweden in a way that puts reformism in a new light and

brings with it critical objections to the strategy’s 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

16

Kalecki (1943).

11

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 class’s 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

weren’t 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

17

See Joseph (1994)

12

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 Saltsjöbaden 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 didn’t

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

See Pontusson (1995). 19

Therborn et al. (1979, p. 7-10). 20

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”.

13

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 SAP’s

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 weren’t 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 SAP’s 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 movement’s 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 dug”26

, which is evident in the universalism of the social-democratic

welfare state, based on principles of citizens’ rights, and its public provision of

21

Therborn et al. (1979, p. 21-25). 22

Ibid. 23

Therborn (1986, p. 23). 24

Ibid. p. 34. 25

Therborn (1985, p. 42). 26

Therborn (1986, p. 27).

14

services. But in light of a comparative analysis the parliamentary hypothesis is

heavily undermined, given SAP’s 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 state’s 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, SAP’s 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 Europe’s 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.

27

The following analysis builds upon Zachariah (2010).

15

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 didn’t 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 1960’s 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 OPEC’s 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 non-

capitalist sector’s 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.

28

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).

16

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 nation-

centred 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

This in contrast to the enthusiastic reception of the proposal within the trade-union movement. See Meidner (1993). 31

See the above discussion on the dependence on the capitalist sector.

17

of tax finances welfare services followed. This also meant the end of the welfare-

oriented 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 movement’s tool

for a long term social change. That SAP in a government position would orient

itself towards a profit-led capitalist recovery during the 1980’s 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.33

But 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 capitalism’s 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:

32

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.

18

● 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 movement’s 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.

35

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

Erlander’s diary notes the 6th of February 1958 quoted by Therborn (1986, p. 19).

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.

References

Anderson, P. (1976). The Antinomies of Antonio Gramsci. New Left Review,

I/100.

Andersson, D. (2011). Välfärd bygger på tillit. Tiden. URL:

http://www.tiden.eu/default.aspx?page=3&nyhet=384

Block, F. (1980). Beyond Relative Autonomy: State Managers as Historical

Subjects. Socialist Register , 17 .

Greider, G. (1998). Arbetarklassens återkomst. Albert Bonniers förlag.

Johansson, T., & Taalbi, J. (2010). Full sysselsättning och ekonomisk politik.

Nya värderingar, nytt samhälle? Arbetarrörelsens forskarnätverk.

Josefsson, D. (2005). Korståget mot välfärden eller Den svenska elitens

våldsamma revolt. Ordfront, nr 10.

Joseph, A. (1994). Pathways to Capitalist Democracy: What Prevents Social

Democracy? The British Journal of Sociology, 45 (2).

Kalecki, M. (1943). Political Aspects of Full Employment. Political Quarterly,

14(4).

Korpi, W. (1981). Den demokratiska klasskampen. Tidens förlag.

Lindberg, I. (2010). Nästa vänster – efter den nationella klasskompromissens tid.

Ny tid, rapport 4 . Arena Idé.

Marquetti, A. (2004). Extended Penn World Tables.

Meidner, R. (1993). Why Did the Swedish Model Fail? Socialist Register, 29 .

Mulhern, F. (1984). Towards 2000, or News From You-KnowWhere. New Left

Review, I/184 .

20

Nilsson, A., & Nyström, Ö. (2008). Reformismens möjligheter – Åter till den

bättre framtiden. Premiss förlag.

Pontusson, J. (1995). Explaining the Decline of European Social Democracy: The

Role of Structural Economic Change. World Politics, 47 (4).

Przeworski, A. (1980). Social Democracy as a Historical Phenomenon. New Left

Review, I/122 .

Therborn, G. (1985). Nationernas ofärd – Arbetslösheten i den internationella

krisen. Arkiv förlag.

Therborn, G. (1986). The Working Class and the Welfare State. A historical-

analytical overview and a little Swedish monograph. Det nordiska i den nordiska

arbetarrörelsen. Finnish Society for Labour History and Cultural Traditions.

Therborn, G. (1995). European Modernity and Beyond. Sage.

Therborn, G., Kjellberg, A., Marklund, S., & Öhlund, U. (1979). Sverige före och

efter socialdemokratin – en första översikt. Arkiv, 15-16.

Zachariah, D. (2009). Determinants of the Average Profit Rate and the Trajectory

of Capitalist Economies. Bulletin of Political Economy, 3 (1).

Zachariah, D. (2010). Socialdemokratin – statsbärare eller samhällsomvandlare?

Arbetarrörelsens forskarnätverk. URL http://forskarnatverket.se/

21

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.

22