Issue 224 of SOCIALIST REVIEW Published November 1998 Copyright Socialist Review

The tide turns red?

The election of social democratic governments in most of Europe represents a significant shift to the left. Yet, as Kevin Ovenden explains, the desire for change which brought them into power could also present them with their biggest headache

Germany's general election at the end of September brought a stunning defeat for Tory chancellor Helmut Kohl who was swept out of office after 16 years.

The coming to office of the SPD (equivalent of the Labour Party in Britain) dramatically underlined the sharp swing to the left that has taken place in European politics over the last three years. The SPD/Green coalition headed by Gerhard Schröder is only the latest of the European left parties to take over government.

In 1995 Europe's four biggest economies, Germany, France, Britain and Italy, were all governed by the right. At the beginning of last month Labour or social democratic parties held office in all four. The seismic shift in the composition of Europe's governments has confounded those who argued in the late 1980s and early 1990s that Tory parties were destined to be in power for a generation because workers had accepted the core of the free market ideology.

To appreciate the scale of the upheaval and its ideological impact, consider what most political commentators were saying until very recently.

It was not only the representatives of the Thatcherite right who argued that Labour type parties would never again win elections. Eric Hobsbawm spoke for many on the British left in the 1980s when he argued in his Forward March of Labour Halted that the electoral base of the Labour Party was crumbling because the working class was vanishing as a social and political force.

Many more interpreted the fall of the Berlin Wall and of the state capitalist regimes in Eastern Europe in 1990 and 1991 as a political and ideological defeat for the left of world historic proportions from which it would take decades to recover.

A string of defeats for social democratic parties at the polls in the early 1990s seemed to confirm the unstoppable march of the right. The Labour Party in Britain and the SPD in Germany lost closely fought elections in 1992 and 1994 respectively. The French and Italian Socialist Parties were routed. In each country there was talk of electoral pacts with centre parties, like the Liberal Democrats in Britain, as the only way the left could hope to win again.

This magazine was one of the few voices which explained that the working class remained a powerful force, even as it was being reconstituted in new industries, and that the ideological hold of the free market right was shallow.

The return of social democratic governments and the fall of the Tory right are therefore all the sharper when read against this recent past. The electoral success of European social democracy is unprecedented in a broader historical sense too. Never before have such parties held the levers of government across so much of Europe simultaneously.

Yet together they face potentially their deepest crisis at the very moment of their greatest triumph. The central contradiction facing Tony Blair, Gerhard Schröder, Massimo d'Alema, the former Communist who has just taken over as prime minister of the Italian government, and the rest is the chasm that exists between the expectations of those who voted them in and the policies they want to implement. Voters across Europe abandoned the Tories out of disgust with the pro-market policies they had pursued and in the hope of far reaching change to the good of working class people.

The election victories were a belated official endorsement of a deep radicalisation and move left among workers in Europe. This is most obvious in France. The dour leader of the Socialist Party, Lionel Jospin, won a landslide in May 1997 because in 1995 the biggest strikes since May 1968 had broken the back of the Tory government. A wave of strikes and demonstrations in Germany in the summer of 1996 and mass protests against attacks on pensions in Italy the same year had a similar, if less spectacular, effect.

The strikes were symptomatic of a far more profound rejection of Tory policies which embraced the mass of workers who lacked the confidence to strike or take to the streets after the defeats and demoralisation of the previous two decades. Tony Blair claims the votes of 'Middle England' brought him to office; Gerhard Schröder says he captured the support of the 'New Middle' in Germany. But every serious analysis of the elections shows they won because workers swung behind them. Furthermore, on many issues most of their voters want policies to the left of what the social democratic leaders offer.

The high levels of support in the polls for renationalising the utilities in Britain and for other radical policies bear that out. So does the course of the election campaign itself in Germany. Gerhard Schröder tried to present himself as a 'Clinton/Blair' figure--a moderniser who would shift his party to the right and embrace business. However, he was forced to downplay his right wing policies on the economy and law and order because his attempts to echo Kohl resulted in the SPD falling in the polls.

There is unevenness between Europe's social democratic governments. There are subtle differences of political shading. Blair stands on the hard right; Jospin is at the left of the spectrum. But each of them has set a course of headlong confrontation with their working classes. Blair's pro-business policies make this process plainest in Britain. But in Germany too the gap between Schröder and SPD voters is symbolised by the row over Jost Stollmann, the businessman who has refused to join the government, and the more left leaning Oskar Lafontaine, who becomes finance minister.

Jospin faces the working class which has the most militant recent history in Europe. He has pushed policies such as a 35 hour week to try to accommodate them. However, strikes and protests, like the mass, spontaneous school students' movement last month, continue. His popularity remains high--the expectations of workers and young people are higher still.

The confrontation between Europe's rulers and workers is set to grow as governments try to make workers pay for the gathering economic recession. The tensions described above exist even before recession sets in. France and Germany, the two key European economies, are growing modestly. Unemployment peaked at about one in nine in both countries earlier this year and is filling slightly. The fragile recovery is likely to prove extremely short lived.

The continental European economies are out of kilter with the US and Britain, but they cannot insulate themselves from the global financial and economic crisis which has spread from east Asia over the last three months.

The tide turns red?

The immediate impact of the turmoil have been to cast the 'social market' policies which have dominated postwar Europe in a flattering light. The tighter financial regulations in Germany and the relatively high levels of public ownership in France look very sensible when a single unregulated gambling syndicate, the Long Term Capital Management hedge fund, almost destroyed the world's banking system in September. The free market crisis has, for example, emboldened Germany's new finance minister, Oskar Lafontaine, to quietly question the stranglehold the nonelected Bundesbank has on Europe's largest economy. But this is not leading to confidence in an ideological alternative to free market theology.

In fact it is sharpening the tensions within the SPD, and within the French government, among others, between those who favour greater state intervention and those, like French finance minister Dominique Strauss-Kahn, who want privatisation and deregulation. For while the free markets go haywire, Europe's more regulated economies continue to suffer low profits and a crisis of productivity.

All wings of Europe's governments accept workers will have to make sacrifices to boost big business. And they are all committed to the launch of the single European currency in January which is based on the kind of crazy bankers' economics which helped deepen the Depression of the 1930s.

Capitalism's long boom in the 1950s and 1960s brought social democratic reforms in Europe irrespective of whether reformist parties were in government. Capitalism is now in its fourth crisis in 25 years--the era of gradual reform based on a consensus between bosses' and labour leaders is over. Who will benefit from the political turmoil as social democracy attempts to rescue capitalism?

The right in Europe is weak. The Tory Party in Britain expresses the right's disarray in an extreme form. The Nazis in France and Germany have built a base, but over the last year have been checked from making further inroads. In Germany, for example, the Nazi DVU won 13 percent in local elections in Saxony-Anhalt in the summer, but the combined vote of the three Nazi parties at the general election was a humiliating 3 percent. Tories and Nazis can, however, grow quickly if economic crisis turns hopes to despair. The ruling Greek social democrats led by Costas Simitis have launched a savage austerity and privatisation programme which has provoked resistance. But it also helped the Tories win local elections last month. Le Pen still has 15 percent in the polls in France.

So far the crisis facing European social democracy has brought gains for the left. Social democrats have governed Sweden for 57 of the last 66 years. Over the last few years Swedish prime minister Göran Persson has cut public spending, slashed welfare and deregulated business. His party's vote slumped to its lowest level since the First World War in September's general election. The right gained nothing; the former Communist Left Party doubled its vote to 12 percent. The Refounded Communist Party's vote in Italy grew from 3 percent to 8.5 percent at the general election in 1996. There has been a left wing split from Pasok in Greece and the former Communist PDS increased its vote in Germany's general election to over 5 percent, winning some support in working class areas in the west.

All these parties propose more left wing reforms than mainstream social democracy, though each has moved to the right over the last few years. But they too are unstable and face crisis. They often talk of mobilising workers and have in some cases called significant protests. However, their political strategy is to act as ginger groups on the social democratic governments and, crucially, they are not for a complete break with capitalism.

This brings them into conflict with workers and their own supporters. So the Refounded Communists in Italy, who claim 150,000 mainly working class members, supported the government's huge budget cuts last year despite their left wing rhetoric. They have now split between left and right. But the crisis is not confined to disagreements between right wing social democrats and left wing ones, organised inside mainstream reformist parties or in breakaways. It is a crisis of social democracy itself.

That opens up the prospect of considerable growth for revolutionary socialists. Candidates for the revolutionary socialist groups LCR and Lutte Ouvrière in France won close to 1 million votes in local elections earlier this year even though the Socialist and Communist parties stood on relatively left wing platforms. But the alternative to social democracy finds only a pale expression in elections.

The class struggle has shaped French politics, not simply acted as a barometer of political consciousness. Germany's trade union leaders are desperate to avoid confrontation with the government but some of them have been forced to reflect their members' hopes by putting in for big pay increases which if awarded will cut into big businesses' profits. Whether there are strikes or not, the question of an alternative to Schröder is raised in every workplace. Everywhere the audience is growing for a clear political and ideological alternative to capitalism.

That does not mean masses of workers will automatically draw revolutionary conclusions from the crisis in the reformist parties which have held their allegiance. Left social democrats with all sorts of confused ideas gain a hearing. But each will be put to the test of events.

The isolation and defeat of the Russian Revolution in the 1920s marginalised revolutionary ideas and helped social democracy dominate the working class for the next two generations. It is now going through the mangle as it governs in a world beset by economic crisis. This creates a historic opportunity for revolutionaries to win a big audience and begin to have a decisive influence on the outcome of that crisis.

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