The Social-Democratic/Keynesian Symbiosis and Neo-Corporatism
With the Cold War, we suggested, the anti-capitalist vocation of social democracy was blurred completely, and it henceforth became synonymous with ‘reformism’. The blossoming of mature social democracy was deeply bound up with the expansion of the role of the state and Keynesianism. The discrediting of laissez-faire capitalism following the interwar depression, the highly active role of the state during the war, and the enormous tasks of reconstruction thereafter created an economic and intellectual framework which was conducive to the legitimation of state intervention. In addition, Keynesian policy imparted a ‘rational’ economic foundation to the postwar egalitarian surge: the smooth operation of the economy henceforth depended on strengthening domestic consumption through a more equitable distribution of income and wealth, in the framework of an economically and socially active state.1 More particularly, through the public financing of investment and the maintenance of demand by means of budgetary policy, the state could satisfy simultaneously the imperative of economic growth and the aspiration to social justice. Here various ideas dear to left-wing parties (active state, wealth redistribution, prioritization of consumption, protection of the weakest) found an ideal ground – and the appropriate economic techniques social democracy had lacked in the interwar years – for their implementation.2 In circumstances of rapid growth and a significant increase in living standards, the social democrats’ main objectives were full employment, increases in the real income of wage-earners, development of a social security system, equal participation in all the benefits of the education and health system, and improvement in public infrastructure.3
These objectives found support in a whole institutional apparatus – of varying complexity and efficiency, depending on the country – of consultation, negotiation and decision-making between the social partners (employers, unions), under the auspices of the state (social corporatism or neo-corporatism). The mainspring of this institutional apparatus, as well as of the symbiosis between social democracy and Keynesianism, was the social-democratic compromise, involving the institutionalization of a mode of regulation of social conflict based on the multiplication of bi- or trilateral arrangements between unions, employers and state.
As a general rule, the bi- or trilateral system, often dubbed neo-corporatist, had the following characteristics, as described by Ferdinand Karlhofer:
•small number of labour and employer organizations (monopoly or oligopoly);
•high degree of concentration and organizational centralization;
•a certain degree of autonomy of the elites from the rank and file (upward delegation, downward control);
•existence of inter-organizational networks of interest representation ensuring stable and calculable political exchange;
•co-ordination and synchronization of sectoral collective bargaining by the national peak associations;
•collaboration of worker and employer organizations with the government in macro-economic steering (in particular concerning income policy).4
The neo-corporatist apparatus is a system of ‘regulated exchange’.5 Wage moderation, industrial peace, profit rates sufficiently high to maintain and strengthen the competitiveness of firms – more generally, the acceptance by the organized working class of the capitalist logic of profit and the market – these constituted the first plank in this ‘system of exchange’. Solidaristic wage-bargaining, the establishment of an ambitious social state, an expansionary budgetary policy, the strengthening of ‘workers’ collectives’ in the firm, and often an active labour-market policy – these constituted the second plank of the exchange, the plank of compensation.6 In effect, the system of bi- or tripartite negotiation, whether centralized or semi-centralized, aimed at more than the mere regulation of industrial conflict. Combined with an economically active state, it formed part of a more general economic and social order, the ‘Co-ordinated Market-Economies’ or, in a different terminology, the ‘Organized Market Economies’.7 Their distinguishing characteristics were a capitalist economy with high wages, relative egalitarianism, a well-designed social state, a high level of competitiveness, and an absence of major industrial conflicts. On these grounds they differ from the ‘Liberal Market Economies’ of the Anglo-Saxon variety, which are less egalitarian, possess a less active state, and have fragmented systems of negotiation.
Thus defined, the institutional set of ‘social partnership’ was not really established outside central and northern Europe. Strictly applied, this definition covers Sweden, Austria, Norway and, in a less structured version, Denmark. In the Netherlands and Belgium, too, the consociational process of decision-making approximated to neo-corporatism. Germany shared some of these characteristics, notably during the period of ‘concerted action’ (1967–76). The superficial unity of British trade-unionism and its extremely decentralized (or, better, minimally articulated) structure, as well as the matching inability of the British employers’ associations ‘to enforce collective agreements on employers’,8 largely account for the less developed and very unstable character of ‘corporatist’ arrangements in the United Kingdom.
In Finland, Italy, and France (after the left’s arrival in power in 1981), in Spain and, to a lesser extent Portugal and later Greece (the 1990s), steps were taken towards the adoption of a more neo-corporatist format.9 But while the results were not always disappointing (the Finnish experience being the most advanced), they fell short of the objectives.
From the perspective of day-to-day co-operation – but also from a strictly institutional and juridical viewpoint – there were very considerable differences between the various national types of institutionalized collective bargaining. From the more decentralized model of German ‘co-determination’ to the more egalitarian, solidaristic and ‘inclusive’ Scandinavian system, via the less egalitarian and more consensual Austrian Chambers system, the scenarios of national and sectoral macro-negotiation were many, varied, and original.10 However, the pact between capital and labour found its consummate expression in Sweden, a country whose social system was profoundly marked by this grand ‘coalition for growth’.
This compromise, whose first significant appearance dates back to Sweden and Norway in the 1930s, reached a peak in the period 1960 to 1973.11 Thus, approximately fifty years after the first revisionist crisis, in its practice and ideology social democracy implemented a dual compromise between capital and labour on the one hand, the state and the market on the other.12 The social-democratic synthesis was of great significance in the formation of a fundamental consensus after the Second World War. It established the social-democratic model of problem-solving, the social-democratic paradigm, as the central reference point for a whole period. This was the era of the social-democratic ‘consensus’ or, as some had it, ‘civilization’. For indeed, as Alan Wolfe has emphasized: ‘What is surprising about social democracy is not that it exists in a capitalist world system, but that in some ways it actually organizes that system and defines its priorities.’13
The Social-Democratic Compromise: Capitalist Regulation or Expression of the Strength of Labour?
The social-democratic model of social compromise becomes possible only when the social partners accept the capitalist order and contribute to its macro-economic management. In other words, the horizon of social-democratic reformist action, and of neo-corporatist regulation, is determined by an impassable boundary, though the latter varies depending on the particular period and society: protection, in the macro-economic sense, of capitalist accumulation, and hence profit. This border puts property in a position of strength vis-à-vis the unions. The privileged position of capital consists in the fact that investment decisions – a necessary condition for the production of wealth – are a private prerogative, attaching to property, and have as their purpose profit. ‘Society’s structural dependence vis-à-vis capital’ is the origin of the deterrent – and persuasive – power of employers. ‘Businessmen do nothing more than persuade,’ Charles Lindblom has written.14 Thus the satisfaction of working-class interests, like those of every social group, depends largely on their compatibility with the private profits of the owners of capital. When such compatibility does not exist (e.g. the Swedish trade-union left’s option for ‘wage-earner funds’, which was perceived as hostile to employers’ interests), capital gets out.
An invariably unstable balance between unequal forces constitutes the prior given framework, ‘past, present and to come’, of the social-democratic compromise. The flourishing of this ‘tripartite’ policy was undoubtedly linked in part to the intellectually and economically propitious postwar context. For the social democrats it supplied an electorally effective and economically coherent response to the major difficulty – and basic contradiction – of the social-democratic project: ‘constraining business while relying on it to maintain high investment’.15
For all that, was the social-democratic compromise, as well as the whole neo-corporatist consensus bound up with its most advanced forms, a mere shadow theatre bereft of utility for the working class?
The most advanced forms of ‘policy-making’ of a neo-corporatist type unquestionably seem to be linked to national situations characterized by a powerful working-class movement. According to Walter Korpi’s calculations, the group of countries where the working class was strongest in 1946–76 – strength being calculated according to three quantitative indicators (rate of unionization, electoral support for left-wing parties, length of time in government) – comprised Sweden, Austria and Norway, countries with a long social-democratic tradition. These same countries were, however, also ‘highly corporatist’. The ‘power resources’ of the working class, its union and political strength, exerted significant influence on the establishment and development of the neo-corporatist apparatus: growth in this power seems to act positively, and its decline negatively, on the stability and productivity of the apparatus. In this sense, the neo-corporatist participatory process is not simply a ‘means of control and integration’ of the working class. No doubt it is that too. But at the same time, it translates and validates the political and trade-union strength of wage-labour at an institutional levels.16
Moreover, it exercised significant influence over public policies, which were more ‘sensitive’ to the interests of wage-labour (active employment policies, wage solidarity, a more developed social state than elsewhere, protection and enhancement of trade-union rights). Thus, particularly in social-democratic regimes,17 the neo-corporatist apparatus – supported by, and in turn supporting, the Keynesian social state – ‘partially decommodified labour insofar as it reduced workers’ dependence on the market for economic security’.18 Paul Boreham and Richard Hall’s data point in this direction:
Both macroeconomic and microeconomic advantages appear to flow to labour where a sustained strategy of political unionism is pursued. By contrast, where union strategy remains locked into the level of the enterprise only, whether through strategic choice, the influence of policy conditions or institutional design, significant gains for labour at both levels remain elusive.19
Thus everything suggests that a weak degree of contractual regulation of class confrontation and, consequently, a high level of industrial conflict are often – but not always – a sign of weakness, rather than an expression of the strength of the working-class movement. Moreover, one reason for the ongoing destabilization of corporatist structures today is the weakening of the political and, above all, trade-union left.
The Decisive Role of the Party/Union Pair
The participation of labour unions in the ‘generalized exchange’ represented by the neo-corporatist process is shaped, inter alia, by two conditions. The first consists in the unions’ capacity to control a potential crisis of representation within the organized working class. For compromise to be possible, union organizations must be representative and ‘centralized’; or the relationship between the base and the leadership must at least be ‘well-articulated in the sense that ‘any activism of the rank and file is contained within forms and goals consistent with and interdependent with the strategy of the national leadership’.20 Such unions are in a position to have the commitments they make in their name respected by their base and the mass of workers.
The second condition – which we shall discuss at greater length – relates to the existence of a powerful, favourably disposed – that is to say, socialist or social-democratic – government. Such a government not only represents the guarantor of the results anticipated from the exchange: like every government, it puts pressure on the two social partners to reach agreement. This pressure is exerted in the name of the general interest, and particularly of ‘third parties’, who are usually the ‘innocent victims’ of labour disputes and bipolar confrontation.21 Such a government also – and above all – acts on the formation of coalitions within the triangle and, as a result, on the outcome of the tripartite negotiation. Working-class and trade-union interests are given more weight when left-wing parties ‘occupy the seat of power’. According to Francis Castles, class co-operation ‘can only be advantageous to the working class when the dominant political force in society is either an agency of working-class interests as such or is, at least, quite explicitly not a creature of the political Right’.22 It is equally clear that the presence of a powerful social-democratic party in government – and, consequently, the perspective of an extended period of social-democratic government, is an effective motive for trade-union participation in neo-corporatist arrangements. The ‘contractual’ process of regulating class confrontation is nearly always, implicitly and explicitly, a three-sided game. The political ‘complexion’ of the third party – that is, the state – largely determines the strategic calculation of the working-class partner. Basically, despite a widespread thesis to the contrary, the requirement of mutual reciprocity – the principle of ‘I give so that you will give’ (Do ut des) – governs the logic of centralized or semi-centralized collective bargaining only partially. This exchange ‘involves “univocal reciprocity” where A may give to B but receive from a third party, and B may receive from A but give to another party, rather than “mutual reciprocity” where A and B both give and receive’.23 In this sense, if neo-corporatism contributes to short-circuiting the power of the state; if private associations (unions and employers) find themselves accorded ‘an authority in place of the state in whole sectors of public life’,24 the role of the state remains directly or indirectly central.
Thus, the likelihood of a union adopting a ‘confrontational’ strategy would appear less if union density is high, the union is unified and centralized, its relations with the socialist or social-democratic party are close, and the ‘governmental fitness’ of this party is high. The quasi-exception to this tendency is British trade unions, which are among the most ‘conflict-oriented’ despite their close links with Labour, a party with a high governmental quotient until the late 1970s. The main explanation for this is the superficial unity of British trade-unionism, and its decentralized structure. The French case, an instance of ‘concertation without labor’, affords a contrario proof of the tendency. The problem of ‘class struggle’ trade-unionism in France lies not in some option for ‘class struggle’, but in its representative weakness. Marked by the vicious circle of its contradictions (division, politicization, weakness), and confronted (in George Ross’s excellent expression) with the ‘dilemma’ of being ‘hostage to a friendly opposition’,25 French trade-unionism before 1981 directed its mobilizing powers not towards the institutionalization of social conflict but towards open conflict, in the perspective of the left’s accession to power. After 1981, the absence of a social-democratic-type structure, the socialists’ difficulty in managing a fratricidal trade-union pluralism, and adverse economic circumstances objectively encouraged – as in Spain, Portugal and Greece – a policy of seeking to outbid rivals and reversion to the logic of governmental regulation. The weakness and fragmented texture of French trade-unionism, combined with the representative weakness of the employers’ organizations, were among the factors that led to weak institutionalization of social conflict.26
Class Compromise and the Social-Democratic Configuration
By making the welfare state and growth their aim, and Keynesianism and tripartite decision-making the appropriate instruments, social-democratic parties could finally reconcile the imperative of efficiency and the aspiration to equality in pragmatic fashion. They could thus perform the dual function – which was electorally very rewarding – of being simultaneously working-class parties and parties of all the people, presenting and often establishing themselves with voters as guarantors of working-class interests and the general interest alike.
Thus, the social-democratic experience of the 1950s and 1960s represented a particular way of managing the social question. And the ‘social-democratic regime’27 was not – to adopt an Aristotelian term while altering its sense – that of the ‘median’, but of the ‘mixed’ polity. A widespread view to the contrary notwithstanding, it was not a project for the promotion of a ‘third social force’, that is, the middle classes (to meson auxein – ‘to increase the middle class’ – as Aristotle put it), but a modern version of the classical bipolarity between the propertied and the unpropertied. The logic of the social compromise thus rested firmly on the institutionalization – and hence the enhancement – of organized capital, organized labour, and the conflict between them. Social-democratic logic did not challenge class antagonism; it presupposed partners with specific identities and interests, not amenable to some Rousseau-style ‘general will’.
In its neo-corporatist form, the social-democratic compromise was not, therefore, an antidote to the class mentality. Obviously, this experience was not the only possible version of modern class struggle, and perhaps it is only a borderline case. But in its fashion, it clarifies an important dimension of modern class struggle. Within this mode of managing things, class struggle became a central institutional element of the ‘normal’ daily operation of the economic and social system. The class system in each society is, by definition, unique, and precludes any ‘block’ reflection and interpretation. But at least in Scandinavia – to varying extents, depending on the country – the visibility and transparency of class structuration was strong, and was further strengthened – even if this might initially seem paradoxical – by ‘triangular’, and often peaceful, regulation of the social question. Ironically, with neo-corporatism class fronts were strengthened, but head-on class confrontation abated.
If the institutionalization of social conflict enhanced its visibility, it simultaneously rendered the emergence of a ‘revolutionary consciousness’, involving perception of the capitalist order as fundamentally illegitimate, more difficult. Institutionalized collective bargaining strengthened the ideology of moderation (taking account of the interests and logic of the opponent/partner), and the ideology of the national interest, within trade-union federations, thus considerably strengthening their bureaucratic character and organizational conservatism. In this system the working class was regarded as a tranquil force, rather than as the dangerous class. In this sense, the social-democratic experience represents the example of a class struggle without revolutionary potential, without a ‘universal class’, without red banners, without ‘everything or nothing’, and without a ‘final’ break.
Even so it was a class struggle. It was a class struggle that did not challenge the capitalist mode of production, and did not only not seek to eliminate the old ‘machinery of oppression’ constituted by the state, according to Marx, but attempted to utilize it. In the social-democratic experience, however, the working class was neither an ‘atomized’ class, nor a class with a ‘trade-unionist’ culture whose horizon was limited exclusively to the economic struggle. It was more than a ‘class in itself’: it was a class constituted as a class, as an autonomous force, and proud of so being. It did not simply intervene on the political front, but tended to influence and shape the whole political system, intervening in its macroeconomic options. It was thus entitled to speak in the name of the general interest. Trade-unionism became a popular-national institution with the right – and the duty – jointly to administer the public interest. And in the countries of ‘labour dominated corporatism’ (Sweden, Austria, Norway, Denmark), it established itself as an important pillar of the political system.28
So the social-democratic compromise emerges as a class enterprise closely bound up with the distinctive characteristics of social democracy:
(a)it was a class compromise, since it instituted a ‘pact’ between the two central poles of the classic economic and social cleavage, capital and labour;
(b)it presupposed, as a condition of its success, social-democratic entrenchment in the world of labour, and hence the constitution of the social-democratic party as a working-class/popular party;
(c)its foundation consisted in the conjunction and synergy of party and union, the veritable dual centre of the social-democratic ‘constellation’;
(d)its precondition was a culture of moderation and pragmatism. Now, this pragmatism, a distinguishing characteristic of social-democratic culture, reflected the strong domination exercised by the party of a social-democratic type over the ‘left’ part of the electoral and political spectrum. It was this domination, and the persistent absence of a significant left-wing competitor, which widely encouraged the adoption of moderate positions, and hence negotiation and compromise.
Thus, the distinctive features of social democracy (party/union link, anchorage in the popular electorate, control of the left of the political scene, pragmatic and consensual culture) lay, to a considerable extent, at the foundation of the neo-corporatist edifice. The logic of this centralized co-operation was in part linked to the ‘identity specificity’ of the social-democratic parties. Their more or less enduring character traits, and their macro-policies – of which tripartite systems of negotiation were an expression and a supporting structure – were ‘dynamically consistent’. These institutional-political characteristics imparted coherence to public policies that varied significantly, and were implemented in highly diverse economic and political circumstances. From this perspective, social democracy is a particular species, and therefore rare, and trying to find it amid the immense variety of existing political forms would inevitably lead to the dilution of the concept, stripping it of any distinctive power. Social democracy is identifiable with neither moderation nor ‘reformism’, even if social democrats are profoundly moderate and reformist. Before being a doctrine, ideology, mentality, or mode, social democracy is a specific and original mode of structuring the left. The social-democratic compromise was in large part simply a particular product – the ‘output’ – of this structuration.
Notes
1.Stephen Padgett and William Paterson, A History of Social Democracy in Post-War Europe, Longman, London and New York 1991, p. 12.
2.Alain Bergounioux and Bernard Manin, Le Régime social-démocrate, Presses Universitaires de France, Paris 1989, pp. 65–6.
3.See Fritz W. Scharpf, Crisis and Choice in European Social Democracy, trans. Ruth Crowley and Fred Thompson, Cornell University Press, Ithaca, NY and London 1991.
4.Ferdinand Karlhofer, ‘The Present and Future State of Social Partnership’, in Günter Bischof and Anton Pelinka, eds, Austro-Corporatism, Contemporary Austrian Studies, vol. 4, 1996, p. 120.
5.Thomas Janoski, Citizenship and Civil Society, Cambridge University Press, Cambridge 1998, p. 118.
6.It is superfluous to point out that the content of the exchange, the terms of the quid pro quo as described here, is only indicative. National traditions, the balance of forces, the conjuncture, and institutional forms mean that centralized or semi-centralized systems of negotiation produce different results. For example, policies of solidaristic wage-bargaining were of great importance in Scandinavia, whereas the objective of wage solidarity was never central in Austria, a country with very considerable wage diversity.
7.See Torben Iversen, ‘Wage Bargaining, Hard Money and Economic Performance: Theory and Evidence for Organized Market Economies’, British Journal of Political Science, no. 28, 1998, p. 34.
8.Bruce Western, Between Class and Market: Postwar Unionization in the Capitalist Democracies, Princeton University Press, Princeton, NJ 1997, p. 47.
9.Colin Crouch, ‘The Fate of Articulated Industrial Relations Systems: A Stock-Taking after the “Neo-Liberal” Decade’, in Marino Regini, ed., The Future of Labour Movements, Sage, London 1992.
10.For a more detailed analysis, see below, Chapter 10.
11.The first major experiment in the postwar period was undertaken in Britain in the years 1945 to 1950. Through the adoption of Keynesian methods and the establishment of a mixed economy, the Labour Party was able to pave the way for the welfare state, the centrepiece of which was the National Health Service. A number of industries and utilities were nationalized, and full employment was provisionally achieved with a significant improvement in working-class living standards.
12.Bergounioux and Manin, Le Régime social-démocrate, p. 69.
13.Alan Wolfe, ‘Has Social Democracy a Future?’, Comparative Politics, October 1978, p. 103; emphasis added.
14.Charles Lindblom, Politics and Markets, Basic Books, New York 1977, p. 185.
15.Andrew Glyn, ‘The Assessment: Economic Policy and Social Democracy’, Oxford Review of Economic Policy, vol. 14, no. 1, 1998, p. 16.
16.Walter Korpi, The Democratic Class Struggle, Routledge & Kegan Paul, London 1983, pp. 40, 181.
17.Gøsta Esping-Andersen, The Three Worlds of Welfare Capitalism, Polity Press, Cambridge 1990.
18.Philip O’Connell, ‘National Variation in the Fortunes of Labor: A Pooled and Cross-Sectional Analysis of the Impact of Economic Crisis in the Advanced Capitalist Nations’, in Thomas Janoski and Alexander Hicks, eds, The Comparative Political Economy of the Welfare State, Cambridge University Press, Cambridge 1994, p. 220.
19.Paul Boreham and Richard Hall, ‘Trade Union Strategy in Contemporary Capitalism: The Microeconomic and Macroeconomic Implications of Political Unionism’, Economic and Industrial Democracy, vol. 15, Sage, London 1994, p. 342; emphasis added.
20.Crouch, ‘The Fate of Articulated Industrial Relations Systems’, p. 170.
21.Mario Telo, ‘Les representations de l’adversaire et compromis social dans la politique de la social-démocratie allemande’, AFSP, Fourth Congress, Paris, September, 1992.
22.Francis G. Castles, The Social Democratic Image of Society, Routledge & Kegan Paul, London and Boston, MA 1978, p. 125.
23.Peter Ekeh, quoted in Janoski, Citizenship and Civil Society, p. 77.
24.Dominique Pélassy, Sans foi ni loi? Essai sur le bouleversement des valeurs, Fayard, Paris 1995, p. 277.
25.George Ross, ‘The Perils of Politics: French Unions and the Crisis of the 1970s’, in Peter Lange et al., eds, Unions, Change and Crisis: French and Italian Union Strategy and the Political Economy, 1945–1980, George Allen & Unwin, London 1982, p. 73.
26.Ross has described the ‘cycle of contradictions’ in the French trade-union experience as follows: division – weakness – unity-in-action – growing power – politicization – division – weakness (ibid., p. 16).
27.See Bergounioux and Manin, Le Régime social-démocrate.
28.Basically, the social-democratic experience offers a dual challenge to the Marxist equation trade-union = reformism, party = revolution (an equation which, moreover, does not derive from Marx, as Étienne Balibar has rightly stressed). It obliges us to reflect on a very controversial aspect of class theory: the different ‘levels’ of class consciousness. In fact, the social-democratic experience illuminates the elliptical and reductive character of the distinction between ‘class in itself’ and ‘class for itself’ – a distinction which, at least in some of its applications, raises more questions than it answers.