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As an international political movement and ideology, social democracy has undergone various major forms throughout its history. Whereas in the 19th century it was "organized Marxism", social democracy became "organized reformism" by the 20th century. In contemporary usage, social democracy as a policy regime generally means support for a mixed economy and ameliorative measures to benefit the working class within the framework of capitalism.
Overlap with democratic socialism
In political science, democratic socialism and social democracy are largely seen as synonyms[disputed – discuss] while they are distinguished in journalistic use. Under this democratic socialist definition,[nb 1] social democracy is an ideology seeking to gradually build an alternative socialist economy through the institutions of liberal democracy. Starting in the post-war period, social democracy was defined as a policy regime[nb 2] advocating reformation of capitalism to align it with the ethical ideals of social justice. In the 19th century, it encompassed a wide variety of non-revolutionary and revolutionary currents of socialism which excluded anarchism. In the early 20th century, social democracy came to refer to support for a gradual process of developing socialism through existing political structures and an opposition to revolutionary means of achieving socialism in favor of reformism.
In the 19th century, social democrat was a broad catch-all for international socialists owing their basic ideological allegiance to Lassalle or Marx, in contrast to those advocating various forms of utopian socialism. In one of the first scholarly works on European socialism written for an American audience, Richard T. Ely's 1883 book French and German Socialism in Modern Times, social democrats were characterized as "the extreme wing of the socialists" who were "inclined to lay so much stress on equality of enjoyment, regardless of the value of one's labor, that they might, perhaps, more properly be called communists". Many parties in this era described themselves as Social Democrat, including the General German Workers' Association and the Social Democratic Workers' Party of Germany which merged to form the Social Democratic Party of Germany, the British Social Democratic Federation and the Russian Social Democratic Labour Party. Social Democrat continued to be used in this context up to the time of the Bolshevik Revolution of October 1917, at which time Communist came into vogue for individuals and organizations espousing a revolutionary road to socialism. According to Ely:
[Social democrats] have two distinguishing characteristics. The vast majority of them are laborers, and, as a rule, they expect the violent overthrow of existing institutions by revolution to precede the introduction of the socialistic state. I would not, by any means, say that they are all revolutionists, but the most of them undoubtedly are.
The most general demands of the social democrats are the following: The state should exist exclusively for the laborers; land and capital must become collective property, and production be carried on unitedly. Private competition, in the ordinary sense of the term, is to cease.
As a label or term, social democracy or social democratic remains controversial among socialists. Some define it as representing both a Marxist faction and non-communist socialists or the right-wing of socialism during the split with communism. Others have noted its pejorative use among communists and other socialists. According to Lyman Tower Sargent, "socialism refers to social theories rather than to theories oriented to the individual. Because many communists now call themselves democratic socialists, it is sometimes difficult to know what a political label really means. As a result, social democratic has become a common new label for democratic socialist political parties". According to Donald Busky:
Social democracy is a somewhat controversial term among democratic socialists. Many democratic socialists use social democracy as a synonym for democratic socialism, while others, particularly revolutionary democratic socialists, do not, the latter seeing social democracy as something less than socialism--a milder, evolutionary ideology that seeks merely to reform capitalism. Communists also use the term social democratic to mean something less than true socialism that sought only to preserve capitalism by reform rather than by overthrowing and establishing socialism. Even revolutionary democratic socialists and Communists have at times, particularly the past, called their parties "social democratic."
Social democracy has been seen by some as a revision of orthodox Marxism, although this has been described as misleading for modern social democracy. Some distinguish between ideological social democracy as part of the broad socialist movement and social democracy as a policy regime. The first is called classical social democracy or classical socialism, being contrasted to competitive socialism,liberal socialism,neo-social democracy and new social democracy.
With the rise of neoliberalism in the late 1970s and early 1980s, social democrats incorporated the Third Way and used social liberal policies between the 1990s and 2000s, today, social democracy became synonymous with social liberalism. Many social democrats opposed to the Third Way overlap with democratic socialists in their commitment to a democratic alternative to capitalism and a post-capitalist economy. Those social democrats have not only criticized the Third Way as anti-socialist and neoliberal, but also as anti-social democratic in practice. Some democratic socialists and others have rejected the Third Way's centrism, for the political center moved decidedly to the right during the neoliberal years. Social democratic parties such as the British Labour Party and the Social Democratic Party of Germany have been described as effectively representing a new centre-right or neoliberal party.
Social democracy has some significant overlap on practical policy positions with democratic socialism, although they are usually distinguished from each other. While the now revised version of Clause IV to the British Labour Party Constitution which was implemented in the 1990s by the New Labour faction led by Tony Blair affirms a formal commitment to democratic socialism, describing it as a modernized form of social democracy, it no longer commits the party to public ownership of industry and in its place advocates "the enterprise of the market and the rigour of competition" along with "high quality public services either owned by the public or accountable to them". Many social democrats "refer to themselves as socialists or democratic socialists" and some such as Tony Blair "use or have used these terms interchangeably". Others argue that "there are clear differences between the three terms, and preferred to describe their own political beliefs by using the term 'social democracy' only".
According to both right-wing critics and some supporters alike, policies such as universal health care and education are "pure Socialism" because they are opposed to "the hedonism of capitalist society". Partly because of this overlap, democratic socialism refers to European socialism as represented by social democracy, especially in the United States, where it is tied to the New Deal. Some democratic socialists who follow social democracy support practical, progressive reforms of capitalism and are more concerned to administrate and humanize it, with socialism relegated to the indefinite future. Other democratic socialists want to go beyond mere meliorist reforms and advocate systematic transformation of the mode of production from capitalism to socialism.
Despite the long history of overlap between the two, with social democracy considered a form of democratic or parliamentary socialism and social democrats calling themselves democratic socialists,democratic socialism is considered a misnomer in the United States. One issue is that social democracy is equated with wealthy countries in the Western world (especially in Northern and Western Europe) while democratic socialism is conflated either with the pink tide in Latin America (especially with Venezuela) or with communism in the form of Marxist-Leninist socialism as practiced in the Soviet Union and other self-declared socialist states. In the United States, democratic socialism has been described as representing the left-wing or socialist tradition of the New Deal. The lack of a strong and influential socialist movement in the United States has been linked to the Red Scare and any ideology that is associated with socialism brings social stigma due its association with authoritariansocialist states. As a term, socialism has been used as a scare word or a pejorative term without clear definition by conservatives and libertarians to taint liberal and progressive policies, proposals and public figures. Although Americans may reject the idea that the United States has characteristics of a European-style social democracy, it has been argued by other observers that it has a comfortable social safety net, albeit severely underfunded in comparison to other Western countries. It has also been argued that many policies that may be considered socialist are popular, but that socialism is not. Others such as Tony Judt described modern liberalism in the United States as representing European social democracy.
Social Democratic is the name of socialist parties in some countries. The term came to be associated with the positions of the German and Swedish parties. The first advocated revisionist Marxism while the second advocated a comprehensive welfare state. Today, parties advocating social democracy include Labour, Left and some Green parties. Most social democratic parties consider themselves to be democratic socialists and are routinely called socialist parties. Some such as the Labour Party in the United Kingdom make reference to socialism, either as a post-capitalist order or in ethical terms as a just society, described as representing democratic socialism, without any explicit reference to the economic system. Parties such as the Social Democratic Party of Germany and the Swedish Social Democratic Party[nb 3] describe their goal the development of democratic socialism, with social democracy serving as the principle of action. Today, European social democratic parties represents the centre-left and most are part of the European Socialist Party while democratic socialist parties are to their left within the Party of the European Left. Many of those contemporary social democratic parties are members of the Socialist International, including several democratic socialist parties, whose Frankfurt Declaration declares the goal of the development of democratic socialism. Others are also part of the Progressive Alliance, founded in 2013 by most of current or former member parties of the Socialist International.
What socialists such as anarchists, communists, social democrats, syndicalists and some social democratic proponents of the Third Way share in common is history, specifically that they can all be traced back to the individuals, groups and literature of the First International and have retained some of the terminology and symbolism such as the colour red. How far society should intervene and whether government, particularly existing government, is the correct vehicle for change are issues of disagreement. As the Historical Dictionary of Socialism argues, "there were general criticisms about the social effects of the private ownership and control of capital", "a general view that the solution to these problems lay in some form of collective control (with the degree of control varying among the proponents of socialism) over the means of production, distribution, and exchange" and "there was agreement that the outcomes of this collective control should be a society that provided social equality and justice, economic protection, and generally a more satisfying life for most people".Socialism became a catch-all term for the critics of capitalism and industrial society. Social democrats are anti-capitalists insofar as criticism about "poverty, low wages, unemployment, economic and social inequality, and a lack of economic security" is linked to the private ownership of the means of production.
By the post-World War II period and its economic consensus and expansion, most social democrats in Europe had abandoned their ideological connection to orthodox Marxism and shifted their emphasis toward social policy reform as a compromise between capitalism to socialism. According to Michael Harrington, the major reason for this was due to the perspective that viewed the Stalinist-era Soviet Union as having succeeded in propaganda in usurping the legacy of Marxism and distorting it in propaganda to justify totalitarianism. In its foundation, the Socialist International denounced the Bolshevik-inspired communist movement, "for [it] falsely claims a share in the Socialist tradition". Furthermore, core tenets of Marxism have been regarded by social democrats as having become obsolete, including the prediction that the working-class was the decisive class with the development of capitalism. In their view, this did not materialize in the aftermath of mass industrialization during World War II.
During the Third Way development of social democracy, social democrats adjusted themselves to the neoliberal political climate that had existed since the 1980s. Those social democrats recognized that outspoken opposition to capitalism was politically non-viable and that accepting the current powers that be and seeking to challenge free-market and laissez-faire variations of capitalism was a more immediate concern. The Third Way stands for a modernized social democracy, but the social democracy that remained committed to the gradual abolition of capitalism, along with social democrats opposed to the Third Way, merged into democratic socialism. Although social democracy originated as a revolutionary socialist or communist movement, one distinction made to separate democratic socialism and social democracy is that the former can include revolutionary means. The latter asserts that the only acceptable constitutional form of government is representative democracy under the rule of law.
Social democracy has been described as the evolutionary form of democratic socialism that aims to gradually and peacefully achieve socialism through established political processes rather than social revolution as advocated by revolutionary socialists. In this sense, social democracy is synonymous with democratic socialism and represented its original form, i.e. socialism achieved by democratic means, usually through the parliament. While social democrats continue to call and describe themselves as democratic socialists or simply socialists, with time, the post-war association of social democracy as policy regime and the development of the Third Way,democratic socialism has come to include communist and revolutionary tendencies, effectively representing the original meaning of social democracy as the latter has shifted towards mostly reformism.
Philosophically and etymologically overlapping with democratic socialism, social democracy is a form of reformist democratic socialism. Social democracy rejects the either/or interpretation of capitalism versus socialism. It claims that fostering a progressive evolution of capitalism will gradually result in the evolution of a capitalist economy into a socialist economy. Social democracy argues that all citizens should be legally entitled to certain social rights. These are made up of universal access to public services such as education, health care, workers' compensation and other services including child care and care for the elderly. Social democracy also advocates freedom from discrimination based on differences of ability/disability, age, ethnicity, gender, language, race, religion, sexual orientation and social class.
A portrait highlighting the five leaders of early social democracy in Germany[nb 4]
Later in their life, Karl Marx and Friedrich Engels came to argue that in some countries workers might be able to achieve their aims through peaceful means. In this sense, Engels argued that socialists were evolutionists, although both Marx and Engels remained committed to social revolution. In developing social democracy,Marxist revisionistEduard Bernstein rejected the revolutionary and materialist foundations of orthodox Marxism. Rather than class conflict and socialist revolution, Bernstein believed that socialism could be achieved through cooperation between people regardless of class. Nonetheless, Bernstein paid deference to Marx, describing him as the father of social democracy, but declaring that it was necessary to revise Marx's thought in light of changing conditions. Influenced by the gradualist platform favoured by the British Fabian movement, Bernstein came to advocate a similar evolutionary approach to socialist politics that he termed evolutionary socialism. Evolutionary means include representative democracy and cooperation between people regardless of class. Bernstein accepted the Marxist analysis that the creation of socialism is interconnected with the evolution of capitalism.
August Bebel, Bernstein, Engels, Wilhelm Liebknecht, Marx and Carl Wilhelm Tölcke are all considered founding fathers of social democracy in Germany, but it is especially Bernstein and Lassalle, along with labourists and reformists such as Louis Blanc in France, who led to widespread association of social democracy with socialist reformism. While Lassalle was a reformist state socialist, Bernstein predicted a long-term co-existence of democracy with a mixed economy during the reforming of capitalism into socialism and argued that socialists needed to accept this. This mixed economy would involve public, cooperative and private enterprises and it would be necessary for a long period of time before private enterprises evolve of their own accord into cooperative enterprises. Bernstein supported state ownership only for certain parts of the economy that could be best managed by the state and rejected a mass scale of state ownership as being too burdensome to be manageable. Bernstein was an advocate of Kantian socialism and neo-Kantianism. Although unpopular early on, his views became mainstream after World War I.
In The Future of Socialism (1956), Anthony Crosland argued that "traditional capitalism has been reformed and modified almost out of existence, and it is with a quite different form of society that socialists must now concern themselves. Pre-war anti-capitalism will give us very little help", for a new kind of capitalism required a new kind of socialism. Crosland believed that these features of a reformed managerial capitalism were irreversible, but it has been argued within the Labour Party and by others that Margaret Thatcher and Ronald Reagan brought about its reversal in the 1970s and 1980s. While the post-war consensus represented a period where social democracy was "most buoyant", it has been argued that "post-war social democracy had been altogether too confident in its analysis" because "gains which were thought to be permanent turned out to be conditional and as the reservoir of capitalist growth showed signs of drying up". In Socialism Now (1974), Crosland argued that "[m]uch more should have been achieved by a Labour Government in office and Labour pressure in opposition. Against the dogged resistance to change, we should have pitted a stronger will to change. I conclude that a move to the Left is needed".
In Origin, Ideology and Transformation of Political Parties: East-Central and Western Europe Compared, Vít Hlou?ek and Lubomír Kopecek explain how socialist parties have evolved from the 19th to the early 21st centuries. As the number of people in traditional working class occupations such as factory-workers and miners declined, socialists have successfully widened their appeal to the middle class by diluting their ideology. However, there is still continuity between parties such the German SPD, the British Labour Party and other socialist parties which remain part of the same famille spirituelle or ideological party family as outlined by most political scientists. For many social democrats, Marxism is loosely held to be valuable for its emphasis on changing the world for a more just, better future.
Communist split and the Third Way
Vladimir Lenin, one revolutionary social democrat who paved the way for the split between Communists and Social Democrats[nb 5]
Before social democracy was associated to a policy regime with a specific set of socioeconomic policies, its economics ranged from communism to syndicalism and the guild socialists, who rejected or were opposed to the approach of some Fabians, regarded as being "an excessively bureaucratic and insufficiently democratic prospect". Communists and revolutionary socialists were a significant part of social democracy and represented its revolutionary wing. Although they remained committed to the concept of social democracy representing the highest form of democracy, social democracy became associated with its reformist wing since the communist split starting in 1917.
The Russian Revolution further exacerbated this division, resulting in a split between those supporting the October Revolution renaming themselves as Communist and those opposing the Bolshevik development (favouring the liberal social democratic development as argued by the Mensheviks) remaining with the Social Democrat label. Rather than abandoning social democracy, Communists simply remained committed to revolutionary social democracy, merging into communism. However, they saw Social Democrat associated to reformism, found it irredeemably lost and chose Communist to represent their views. For the Communists, the Social Democrats betrayed the world's working class by supporting the imperialist Great War and leading their national governments into the war. The Communists also criticized their reformism, arguing that it represented "reformism without reforms". This reformist-revolutionary division culminated in the German Revolution of 1919 in which the Communists wanted to overthrow the German government to turn it into a soviet republic like it was done in Russia while the Social Democrats wanted to preserve it as what came to be known as the Weimar Republic. It was those revolutions that essentially transformed the social democracy meaning from "Marxist revolutionary" into a form of "moderate parliamentary socialism".
Anthony Crosland, who argued that traditional capitalism had been reformed and modified almost out of existence by the social democratic welfare policy regime after World War II
While evolutionary and reformist social democrats believe that capitalism can be reformed into socialism, revolutionary social democrats argue that this is not possible and that a social revolution would still be necessary. The revolutionary criticism of reformism, but not necessarily of reforms which are part of the class struggle, goes back to Marx, who proclaimed that social democrats had to support the bourgeoisie wherever it acted as a revolutionary, progressive class because "bourgeois liberties had first to be conquered and then criticised". Internal rivalry in the social democratic movement within the Second International between reformists and revolutionaries resulted in the Communists led by the Bolsheviks founding their own separate Communist International (Comintern) in 1919 that sought to rally revolutionary social democrats together for socialist revolution. With this split, the social democratic movement was now dominated by reformists, who founded the Labour and Socialist International (LSI) in 1923. The LSI had a history of rivalry with the Comintern, with which it competed over the leadership of the international socialist and labour movement.
The social democratic Gaitskellites emphasized the goals of personal liberty, social welfare and above all social equality. The Gaitskellites were part of a political consensus between the British Labour and Conservative parties, famously dubbed Butskellism. Some social democratic Third Way figures such as Anthony Giddens and Tony Blair, who has described himself as a Christian socialist and consider himself to be a socialist in ethical terms, adamantly insist that they are socialists, for they claim to believe in the same values that their anti-Third Way critics do. However, Clause IV's open advocacy of state socialism was alienating potential middle-class Labour supporters and nationalization policies had been so thoroughly attacked by neoliberal economists and politicians, including rhetorical comparisons by the right of state-owned industry in the West to that in the Soviet Union and the Eastern Bloc, hence nationalizations and state socialism became unpopular. In countries such as Britain, Thatcherite Conservatives were adept at condemning state-owned enterprises as economically inefficient. For the Gaitskellites, nationalization was not essential to achieve all major socialist objectives. Public ownership and nationalization were not specifically rejected, but were rather seen as merely one of numerous useful devices. According to social democratic modernizers like Blair, nationalization policies were politically unviable by the 1990s.
Some critics and analysts argue that a number of prominent social democratic parties[nb 6] such as the British Labour Party and the German Social Democratic Party, even while maintaining references to socialism and declaring themselves to be democratic socialist parties, have effectively abandoned socialism in practice, whether unwillingly or not.
As a policy regime, it has become commonplace to reference social democracy as the European social democracies, i.e. the actually-existing states in Northern and Western European countries, usually in reference to their model of welfare state and corporatist system of collective bargaining. European social democracies represents a socio-economic order that has been variously described as starting in either the 1930s, 1940s and 1950s and ending in the 1970s, 1980s and 1990s. Henning Meyer and Jonathan Rutherford associate social democracy with the socio-economic order that existed in Europe from the post-war period up until the early 1990s. This has been accepted or adopted across the political spectrum, including conservatives (Christian democrats), liberals (social liberals) and socialists (social democrats). However, socialists see the welfare state "not merely to provide benefits but to build the foundation for emancipation and self-determination".
Social democracy influenced the development of social corporatism, a form of economic tripartite corporatism based upon a social partnership between the interests of capital and labour, involving collective bargaining between representatives of employers and of labour mediated by the government at the national level. During the post-war consensus, this form of social democracy has been a major component of the Nordic model and to a lesser degree the West European social market economies. The development of social corporatism began in Norway and Sweden in the 1930s and was consolidated in the 1960s and 1970s. The system was based upon the dual compromise of capital and the labour as one component and the market and the state as the other component. From the 1940s through the 1970s, defining features of social democracy as a policy regime included Keynesian economic policies and industrial agreements to balance the power of capital and labor as well as the welfare state. This is especially associated with the Swedish Social Democrats. In the 1970s, social corporatism evolved into neo-corporatism which essentially replaced it. Neo-corporatism has represented an important concept of Third Way social democracy. social democratic theorist Robin Archer wrote about the importance of social corporatism to social democracy in his work Economic Democracy: The Politics of a Feasible Socialism (1995). As a welfare state, social democracy is a specific type of welfare state and policy regime described as being universalist, supportive of collective bargaining and more supportive of public provision of welfare. It is especially associated to the Nordic model.
As a policy regime, social democracy rests on three fundamental features, namely "(1) democracy (e.g., equal rights to vote and form parties), (2) an economy partly regulated by the state (e.g., through Keynesianism), and (3) a welfare state offering social support to those in need (e.g., equal rights to education, health service, employment, and pensions)". In practice, social democratic parties have been instrumental in the social liberal paradigm lasting from the 1940s and 1970s and called as such because it was developed by social liberals, but implemented by social democrats. Since those policies were mostly implemented by social democrats, social liberalism is sometimes called social democracy. The social liberal Beveridge Report drafted by the Liberal economist William Beveridge influenced the British Labour Party's social policies such as the National Health Service and Labour's welfare state development. This social liberal paradigm represented the post-war consensus and was accepted across the political spectrum by conservatives, liberals and socialists until the 1970s. Similarly, the neoliberal paradigm which replaced the previous paradigm was accepted across the mainstream political parties, including social democratic supporters of the Third Way. This has caused much controversy within the social democratic movement.
From the late 19th century until the mid- to late 20th century, there was greater public confidence in the idea of a state-managed economy that was a major pillar of both proponents of communism and social democracy and even to a substantial degree by conservatives and left-liberals. Aside from anarchists and other libertarian socialists, there was confidence amongst socialists in the concept of state socialism as being the most effective form of socialism. Some early British social democrats in the 19th century and 20th century such as the Fabians claimed that British society was already mostly socialist and that the economy was significantly socialist through government-run enterprises created by conservative and liberal governments which could be run for the interests of the people through their representatives' influence, an argument reinvoked by some socialists in post-war Britain. Advents in economics and observation of the failure of state socialism in the Eastern Bloc countries and in the Western world with the crisis and stagflation of the 1970s, combined with the neoliberal rebuke of state interventionism, resulted in socialists re-evaluating and redesigning socialism. Some social democrats have sought to keep what they deem are socialism's core values while changing their position on state involvement in the economy, but retaining significant social regulations.
Although as in the rest of Europe the laws of capitalism still operated fully and private enterprise dominated the economy, some political commentators claimed that during the post-war period, when social democratic parties were in power, countries such as Britain and France were democratic socialist states and the same claim is now applied to Nordic countries with the Nordic model. In the 1980s, the government of President François Mitterrand aimed to expand dirigism and attempted to nationalize all French banks, but this attempt faced opposition of the European Economic Community because it demanded a free-market economy among its members.Public ownership never accounted for more than 15-20% of capital formation, further dropping to 8% in the 1980s and below 5% in the 1990s after the rise of neoliberalism.
One issue of social democracy is the response to the collapse of legitimacy for state socialism and state-interventionist economics of Keynesianism with the discovery of the phenomenon of stagflation which has been an issue for the legitimacy of state socialism. This has provoked re-thinking of how socialism should be achieved by social democrats, including changing views by social democrats on private property--anti-Third Way social democrats such as Robert Corfe have advocated a socialist form of private property as part of a new socialism (although Corfe technically objects to the term private property to collectively describe property that is not publicly owned as being vague) and rejecting state socialism as a failure. Third Way social democracy was formed as response to what its proponents saw as a crisis in the legitimacy of socialism--especially state socialism--and the rising legitimacy for neoliberalism, especially laissez-faire capitalism. The Third Way's view is criticized for being too simplistic in its view of the crisis. Others have criticized it because with the fall of state socialism it was possible "a new kind of 'third way' socialism (combining social ownership with markets and democracy), thereby heralding a revitalization of the social democratic tradition". However, it has been argued that the prospect of a new socialism was "a chimera, a hopeful invention of Western socialists who had not understood how 'actually existing socialism' had totally discredited any version of socialism among those who had lived under it".
Social democratic policies were first adopted in the German Empire between the 1880s and 1890s, when the conservativeChancellorOtto von Bismarck put in place many social welfare proposals initially suggested by the Social Democrats to hinder their electoral success after he instituted the Anti-Socialist Laws, laying the ground of the first modern welfare state. Those policies were dubbed as State Socialism by the liberal opposition, but the term was later accepted and re-appropriated by Bismarck. It was a set of social programs implemented in Germany that were initiated by Bismarck in 1883 as remedial measures to appease the working class and reduce support for socialism and the Social Democrats following earlier attempts to achieve the same objective through Bismarck's Anti-Socialist Laws. This did not prevent the Social Democrats to become the biggest party in parliament by 1912.
Social democracy is criticized by other socialists because it serves to devise new means to strengthen the capitalist system which conflicts with the socialist goal of replacing capitalism with a socialist system. According to this view, social democracy fails to address the systemic issues inherent in capitalism. The American democratic socialist philosopher David Schweickart contrasts social democracy with democratic socialism by defining the former as an attempt to strengthen the welfare state and the latter as an alternative economic system to capitalism. According to Schweickart, the democratic socialist critique of social democracy is that capitalism can never be sufficiently humanised and that any attempt to suppress its economic contradictions will only cause them to emerge elsewhere. He gives the example that attempts to reduce unemployment too much would result in inflation and too much job security would erode labour discipline. In contrast to social democracy's mixed economy, democratic socialists advocate a post-capitalist economic system based on either a market economy combined with workers' self-management, or on some form of participatory, decentralized planning of the economy.
Marxian socialists argue that social democratic welfare policies cannot resolve the fundamental structural issues of capitalism such as cyclical fluctuations, exploitation and alienation. Accordingly, social democratic programs intended to ameliorate living conditions in capitalism--such as unemployment benefits and taxation on profits--creates further contradictions by further limiting the efficiency of the capitalist system by reducing incentives for capitalists to invest in further production. The welfare state only serves to legitimize and prolong the exploitative and contradiction-laden system of capitalism to society's detriment. Critics of contemporary social democracy such as Jonas Hinnfors argue that when social democracy abandoned Marxism, it also abandoned socialism and became a liberal capitalist movement, effectively making social democrats similar to non-socialist parties like the Democratic Party in the United States.
Market socialism is also critical of social democratic welfare states. While one common goal of both concepts is to achieve greater social and economic equality, market socialism does so by changes in enterprise ownership and management whereas social democracy attempts to do so by subsidies and taxes on privately owned enterprises to finance welfare programs. Franklin Delano Roosevelt III (grandson of United States president Franklin D. Roosevelt) and David Belkin criticize social democracy for maintaining a property-owning capitalist class which has an active interest in reversing social democratic welfare policies and a disproportionate amount of power as a class to influence government policy. The economists John Roemer and Pranab Bardhan point out that social democracy requires a strong labour movement to sustain its heavy redistribution through taxes and that it is idealistic to think such redistribution can be accomplished in other countries with weaker labour movements, noting that social democracy in Scandinavian countries has been in decline as the labour movement weakened.
Some critics claim that social democracy abandoned socialism in the 1930s by endorsing Keynesian welfare capitalism. The democratic socialist political theorist Michael Harrington argues that social democracy historically supported Keynesianism as part of a "social democratic compromise" between capitalism and socialism. While this compromise did not allow for the immediate creation of socialism, it created welfare states and "recognized noncapitalist, and even anticapitalist, principles of human need over and above the imperatives of profit". Social democrats in favour of the Third Way have been accused of having endorsed capitalism, including by anti-Third Way social democrats who have accused Third Way proponents such as Anthony Giddens of being anti-social democratic and anti-socialist in practice.
Social democracy's reformism has been criticized from both the left and right, for if the left was to govern a capitalist economy, it would have to do so according to capitalist, not socialist, logic. This argument was previously echoed by Joseph Schumpeter in Capitalism, Socialism and Democracy (1942), writing: "Socialists had to govern in an essentially capitalist world [...], a social and economic system that would not function except on capitalist lines. [...] If they were to run it, they would have to run it according to its own logic. They would have to "administer" capitalism". Similarly, Irving Kristol argued: "Democratic socialism turns out to be an inherently unstable compound, a contradiction in terms. Every social democratic party, once in power, soon finds itself choosing, at one point after another, between the socialist society it aspires to and the liberal society that lathered it".Joseph Stalin was a vocal critic of reformist social democrats, later coining the term social fascism to describe social democracy in the 1930s because in this period it embraced a similar corporatist economic model to the model supported by fascism. This view was adopted by the Communist International which argued that capitalist society had entered the Third Period in which a proletarian revolution was imminent, but that it could be prevented by social democrats and other fascist forces.
^"Social democracy is a political ideology focusing on an evolutionary road to socialism or the humanization of capitalism. It includes parliamentary process of reform, the provision of state benefits to the population, agreements between labor and the state, and the revisionist movement away from revolutionary socialism." "By the early twentieth century, [...] many such [social-democratic] parties had come to adopt parliamentary tactics and were committed to a gradual and peaceful transition to socialism. As a result, social democracy was increasingly taken to refer to democratic socialism, in contrast to revolutionary socialism." "Social democracy refers to a political theory, a social movement or a society that aims to achieve the egalitarian objectives of socialism while remaining committed to the values and institutions of liberal democracy." "In general, a label for any person or group who advocates the pursuit of socialism by democratic means. Used especially by parliamentary socialists who put parliamentarism ahead of socialism, and therefore oppose revolutionary action against democratically elected governments. Less ambiguous than social democracy, which has had, historically, the opposite meanings of (1) factions of Marxism, and (2) groupings on the right of socialist parties."
^"Social democracy therefore came to stand for a broad balance between the market economy, on the one hand, and state intervention, on the other. Although this stance has been most clearly associated with reformist socialism, it has also been embraced, to a greater or lesser extent, by others, notably modern liberals and paternalist conservatives."
^The party's first chapter in its statutes says "the intention of the Swedish Social Democratic Labour Party is the struggle towards the Democratic Socialism", i.e. a society with a democratic economy based on the socialist principle "From each according to his ability, to each according to his need."
^"The notion of 'socialism' became associated with social democratic parties and the notion of 'communism' with communist parties."
^"With the rise of neoliberalism, social democracy turned towards the right and increasingly adopted neoliberal policies. When Tony Blair became British Prime Minister in 1997, his neoliberal vision of social democracy influenced social democracy around the world. The consequence was that social democracy became in many respects indistinguishable from conservative parties, especially in respect to class politics."
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