After the Third Way

The eyes of left-leaning people are fixed on François Hollande. But electoral success will not be enough – the left must have its own answers given that the models of neo-liberalism are exhausted, writes Olaf Cramme and Patrick Diamond at the thinktank Policy Network.

These days, the eyes of left-leaning people across the world are fixed on François Hollande. Not just because he has good chance to defeat France’s unpopular President Nicolas Sarkozy: despite a narrowing in the polls, the prospects for change still look strong.

Hollande’s campaign also commands so much attention because should he claim victory, it would be a major coup for social democracy, providing desperately needed momentum across Europe after a staggering 19 European elections lost to Conservative and centre-right opponents since the outbreak of the global crisis. The political message would be this: tough-minded opposition to austerity works; financial capitalism is the new enemy; a sharpened left-wing profile is popular again. It would promise the end of an era where left and right politics were apparently indistinguishable.

But are we really on the brink of a new social democratic era? European social democracy has yet to undergo the serious and profound rethinking necessary to make a success of governing. It has yet to find a convincing answer to why the demise of 1980s neo-liberalism has led to a public debate about the size and efficiency of the state, rather than the inherent instability of markets. The danger is that left parties will be elected by default but will have little idea of what to do with power in the aftermath of victory. Lacking direction, they will quickly flounder – risking catastrophic defeat only a few years later.

The global financial crisis struck like an earthquake at the heart of the institutions, practices and beliefs of past decades. The central question of the crisis is not whether it will rejuvenate nation-state social democracy, but whether it can stimulate new strategies on which a revived platform of egalitarian prosperity and social welfare might be built. The task is to frame a response so that social democracy can benefit from a new openness to ideas in domestic and world politics – against a residual neo-liberalism that would frame the world financial crisis as one of the over-bearing state.

In such an enterprise, several animating themes are immediately resonant. The first relates to the nature of capitalism itself. Historically, social democracy has been developed in conjunction with capitalism. It defined the boundaries as to what is seen as politically feasible. Social democrats remained ahead of the curve by building the institutional pillars which not only shielded citizens from harsh conditions in the market economy, but helped shape it in the first place.

Critics argued that centre-left parties had become “structurally dependent” on capitalism, that is dependent on capitalist markets to generate a surplus for investment in welfare and public services. Yet reform has proven ever more difficult, not least because social democrats have taken their eyes of the fundamental transformation capitalism has been subject to over the last decades. Understanding again the changing character of market capitalism has never been more urgent for the centre-left, which aims to bring about a more just and humane conception of the market economy.

The second theme alludes to the changing nature and form of the state. Again, social democracy has been historically dependent on state power. But the size and complexity of the state makes it more and more difficult for citizens to understand who makes decisions and who should be held accountable. The development of new technologies and scientific innovation places decision-making power in the hands of experts, putting added pressure on modern liberal forms of representative and participative democracy. Large-scale bureaucracies risk fuelling citizen disengagement and declining trust in the political system. There are other pressures on the traditional social democratic conception of the state, such as the ageing society and changing demography that will not disappear.

Finally, left-of-centre parties have been increasingly hampered by cultural cleavages relating to increasing ethnic heterogeneity, the free movement of labour and open migration systems, the rise of new forms of politicised and assertive religious radicalism, and an apparent conflict between “cosmopolitan” and “communitarian” interests. The identities and solidarities on which social democracy in Europe has been built are under increasing strain. New actors on the far left and far right, as well as astutely positioned conservative and Christian democratic parties, will not hesitate to capitalise on the struggle to craft a clear narrative – however myopic and divisive. Providing people with a coherent sense of belonging and collective purpose has to be at the forefront of centre-left thinking, combined with openness to global and world affairs.

Each of these themes must be subject to a further test: are social democrats capable of developing a governing strategy that can live up to these enormous challenges? Although the nation state has become the principal bastion in the fight against the financial and economic crisis, its “golden age” is irrefutably drawing to a close. There is now an urgent need for new capacities and instruments to exercise collective power locally, nationally, and globally.

For social democrats, however, this means a change in mind-set, given the long-held fixation with the levers of national power expressed through the monolithic nation-state. Citizens have to be engaged in a more sophisticated dialogue about the nature of interdependence and the meaning of sovereignty, allowing the centre-left to regain ownership of a changing internationalist agenda – be it European integration, climate change, or the response to humanitarian crises.

This is the terrain on which left of centre parties have to forge new electoral strategies and political identities. That means bringing ideas back into the mainstream of European social democracy. Success is hardly inevitable: events can conspire against the best ideas. But even electoral success will not be enough – the left must have its own answers given that the political and economic models of neo-liberalism are exhausted.

Olaf Cramme and Patrick Diamond are director and senior research fellow at Policy Network and editors of “After the Third Way: The Future of Social Democracy in Europe ” (IB Tauris, 2012).