Copyright © 2022 Inclusive Society Institute 50 Long Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or its Board or Council members. All records and findings included in this report, originated from a dialogue on the Meaning of Social Democracy in the Modern World, which took place on 23 November 2021. Author: Dr Klaus Kotze Editor: Daryl Swanepoel
Setting the scene
On 23 November 2021, the Inclusive Society Institute hosted the first of a two-part international dialogue on social democracy. This first discussion asked what does social democracy mean in the modern world? The second, to be held in 2022, will reflect on what preconditions are required in a country for it to advance towards a welfare state? Recognising the need for social democratic solutions in the current unstable global political climate, the Institute invited an international group of social democrats to reflect on the positioning, role and effect of social democracy in contemporary politics. The dialogue sought to contribute to an important global discussion, while providing guidance to South Africans to advance social democracy in the domestic context. The discussion asked: Is social democracy still relevant today? What would it take to return it to its former influence over global politics? And to look forward, beyond the COVID-19 pandemic, which approaches would be necessary to expand its reach and impact? The discussion revealed several prisms through which to understand the unfolding discussion. It highlighted key areas for future collaboration among like-minded organisations. And from the discussion five themes are enumerated here to focus and advance the cause of social democracy. Participating panellists in the discussion included:
Mr Johan Hassel, International Secretary of the Swedish Social Democratic Party
Ms Buyelwa Sonjica, former South African Minister of Water and Environmental Affairs
Lord Peter Hain, former UK Labour Cabinet Minister and anti-apartheid activist
Dr David Masondo MP, South African Deputy Minister of Finance and Principal of the Oliver Tambo School of Leadership, South Africa
Ms Dagmar Freitag, former SPD member of the German Bundestag
Dr Lisa Pelling, head of Swedish Social Democratic think tank, Arena Idé
Ms Katharina Hoffman, Head of Social Democracy, Friedrich Ebert Stiftung
Prof Chris Mullard, Author, former Professor of Education and Ethnic Studies at the University of Amsterdam and Visiting Professor at the University of London and at the Royal Agricultural University. Co-founder of Focus Consultancy, UK
Mr Mariano Schuster, Editor, Nueva Sociedad, Argentina
Mr Sebastian Sperling, South Africa Country Representative of the Friedrich Ebert Stiftung
The moderator to the discussion was Mr Roelf Meyer, former Minister of Constitutional Development and currently Director of the In Transformation Initiative.
Establishing a forum on social democracy
Remarks by the Inclusive Society Institute
Vusi Khanyile, Chairperson of the Inclusive Society Institute & Daryl Swanepoel, CEO of the Inclusive Society Institute
The Inclusive Society Institute of South Africa, after two years of its existence, has created this forum to reflect on what social democracy is today, and especially what it means in Africa. From these deliberations, the Institute seeks to gain an increased understanding of the conditions and policies that would lead to a more inclusive society.
The discussion about the meaning of social democracy in the modern world is an important one. Many social democratic parties around the globe seem to be struggling to define their message in a way that establishes clear, blue water between themselves and the centre, centre-right. Could this be because many centre, centre-right governments have taken ownership of what would, traditionally, have been defined as typical social democratic programmes? Look at the National Health System in the UK for example, listening to a, typical, Tory MP, one could well believe that it is they that introduced it. But no, it wasn’t. It was the Labour Party in 1945. Aneurin Bevan, the then Labour Minister of Health, was given the task of introducing the service.
Similarly, social grants and worker’s rights such as basic conditions of employment, have become the hallmark also of the centre, centre-right. Could it be that the centre, centre-left have systematically shifted to the economic right? Even here in South Africa, the line is being blurred between the centre-left and the centre-right. In the South African setting, the ruling party is committed to social and national democracy. At the same time, it prides itself on being a broad church capable of accommodating a wide spectrum of individuals from various ideological persuasions. This may be good from a support perspective, but does it promote policy cohesion? And how does it impact party messaging?
There has recently been much talk about introducing a basic income grant, a national health insurance, and a social security fund, etc. All typical, social democratic ideas. But can these be effectively pursued when the message is not clear, and the pathway not spelt out clearly? To advance a progressive programme, one needs the right environment and resources.
With a high unemployment, a small tax base and economic backlogs, this may prove quite challenging at this stage. A new pathway needs to be plotted. That said, in many countries centre-left parties now seem to be rediscovering a more progressive social economic agenda. The SPD of Germany is a prime example, albeit within a coalition environment. Social democrats should draw lessons from each other. To consider the lessons that can be learnt, the Inclusive Society Institute is hosting this two-part dialogue with the aim to contribute to the global discussion as well as provide guidance to the South African context.
Executive summary
Context
The Inclusive Society Institute has identified that social democratic parties around the world appear to be struggling to put forward a coherent and persuasive message. That there is an existential struggle for the identity of social democratic parties. In the growing battle for influence, social democratic parties must rediscover and redefine their agenda and approach. While in some countries there appears to be re-discovery of progressive values, others struggle to define this for themselves. The case for international cooperation among progressives is clear. In this light the engagement between ideologically similar parties and organisations will allow for reciprocal learning and sharing. South Africa will particularly benefit from this engagement. While the ruling party pursues a socially equitable society, there are many areas where policy cohesion and implementation remain lacking. The engagement among other social democratic groupings will allow for insight and reflection that otherwise may remain constrained. For these reasons, these dialogues present significant opportunities.
Strategic themes
Social democracy requires a strategic definition
To advance social democracy in the modern world, it is first necessary to clearly define the concept and its strategic pursuit. Social democracy is a broad term with its origins in socialism. Its adaptation to vis-à-vis rejection of capitalism ensures that the term is not static, but one of application. The following description offers a sturdy basis for expansion:
“Social democracy is a variant of socialism distinguished by a conviction that democracy makes it both possible and desirable to take advantage of capitalism’s upsides while addressing its downsides by regulating markets and implementing social policies that insulate citizens from those markets’ most destabilizing and destructive consequences”[1].
For social democracy to be strategic in the contemporary era, it must establish with clarity its core 1) values; 2) pathways; and 3) goals.
The values of social democracy are perhaps the more apparent. The Friedrich Ebert Stiftung in its document Basics on Social Democracy refer to freedom, solidarity, and equality and justice as the core values of social democracy. These values originate in the humanistic thoughts of the French Revolution and are reflected in the foundations of the United Nations. These values form the political compass of social democratic parties.
Freedom refers both to positive (freedom to) and negative (freedom from) aspects. To social democrats, freedom has a broader foundation than the mostly negative freedom upheld by liberals. Freedom has social preconditions and aims. Some in society should not be able to be free while others are not. A free society is thus one where all have the possibility to be free. Freedom therefore entails a level of responsibility or solidarity to society at large. Solidarity is a wilful expression of relation or sympathy with others. The Southern African term Ubuntu, often translated as “I am because you are”, offers a fine understanding. Lastly, equality and justice are closely linked to freedom and solidarity. A society cannot be free if all its people do not have equality of opportunity and are treated as equals. To advance equality and justice, society should be ordered along a needs-based approach.
The pathways or approach to social democracy was discussed in the dialogue by John Hassel as the state’s role in distributing, redistributing and regulating society across all its functions. To do so effectively the state must take a leading role in comprehensively working with all sectors of society. Together, a reasonable path forward must be planned.
Lastly, the goals must not be defined abstractly or without context but should be based on what is clearly feasible and should follow careful consideration. While goals such as inequality, access and effective redress of injustices and inequalities are primary, it is first needed to enable a suitable environment.
Social democracy is about people
The values, pathways and goals of social democracy should all align towards a strategy that advances the society as a whole, while affording equity to those most in need. Social democracy is an approach which places people, and not profit, first. Strong, ethical politics that first consider society is primary, vis-à-vis an economic focus which places individuals and their interests first. The policies and actions of all spheres of society, including business, should be strategically aimed towards the benefit of people. The age of corporate dominance must be strategically ended through the imposition of appropriate mechanisms such as regulation. Social democracy also recognises that social agents, not simply management-oriented technocrats, run institutions and states. By restoring people as the end of government and by keeping people responsible for their actions, recognition and trust become highlighted. These features are foundational to a state with strong politics. One that places the direct improvement of the lives of people first.
Social democracy requires an internationalist approach
To be successful and persuasive, social democrats must actively realise an international solidarity among parties and like-minded organisations. With the world becoming increasingly connected and with people around the world facing similar challenges, there lies great strategic potential in joining forces. To rally towards an internationalist approach for social democracy in the modern world.
Social democrats the world over share the same foundational beliefs and aspirations. Today’s social problems know no boundary. When considering inequality, migration and especially environmental degradation, these are all global concerns that can only be addressed when social democrats cooperate on a multilateral basis. Unlike during the late 20th-century decline of social democracy, where neo-liberalism gained the upper hand due to its pan-global reach and physically disconnected and unconstrained ways, today digital connectivity allows politics to again take an upper hand. This will require localised organisations and parties to partner in strategic, mutually beneficial ways so as to advance social programmes globally. These networks can find direction from the progressive solidarity of old (for example the international anti-apartheid movement), while drawing on successful social democratic parties, such as those in Germany, Portugal and New Zealand.
Social democracy must advance a credible alternative to neo-liberalism
Whereas centre-right parties appropriate leftist policies, the onus is on social democrats to put forward comprehensive alternatives and thereby win back popular support. This is slowly taking place in some countries already mentioned. It is now incumbent upon social democrats to put their stamp on the state, to return peoples’ interests to the core of the work of the state. To deal with corruption, with the regulation of mega corporations and with the inefficiencies of the state. As stressed in the dialogue by Lord Hain: “To retain taxpayer’s support the state needs to be efficient, effective, honest and responsive to public demand”. Reform cannot simply be the goal, instead the broader goals should be articulated appropriately. State interventionism would not only be tolerated but also be endorsed when people see that the state is clean and capable. That its actions put the interests of the people first, regardless of political affiliation, race or creed. That the state leads and tackles important questions such as land and economic development.
Social democracy requires a persuasive narrative
Communication is the more decisive discipline of the 21st century. All matters of public and private life are communicated for purpose. It is critical that social democrats assemble and persuasively propagate a credible and persuasive narrative. The propagation of this message must be comprehensive. It relies on all sectors of society to do their part. Whereas politics is about organisation, the modern world sees organisation largely taking place in the digital realm. Social democrats must develop an attractive digital narrative strategy.
For the narrative to be effective, it should be clear and relatable. While stressing the failures of neo-liberalism is necessary, a strategic narrative cannot be arrogant in simply rejecting another narrative. It needs to put viable, attractive ideas forward. It needs to be constructive, compiling an alternative using examples. The narrative should bring people together rather than pull them apart. It should offer certainty in this time of great uncertainty. It should promote social mobility. It must be inclusive while recognising the diversity of people. In the dialogue, Professor Mullard stressed that today it is common for people to claim societies as heterogenous, as multicultural, whereas in fact they are not. These are societies that are descriptively heterogenous while structurally being far from it. A strategic social democratic narrative must be courageous in calling out these and other modern fictions. It must do so boldly.
First, it must attend to the themes addressed above and particularly the need for strategic definition. Finally, for the narrative to be effective, it must be the product of conversation between leaders and the society at large. It must raise and address the real concerns of people while laying down a concise list of core interests and non-negotiables.
Remarks by panellists
“Social democrats should return to the basic principles of social democracy: distribute, redistribute and regulate” – Johan Hassel
Johan Hassel, International Secretary of the Swedish Social Democratic Party
The insights regarding the development of social democracy in Sweden are relevant to South Africa’s case and the struggle ahead for the ANC. When its Social Democratic Party was founded 100 years ago, Sweden was a poor country fighting for the right for both genders to vote. It was a struggling society, but the first reforms of the social welfare state were already evident through social investment, which has been the approach behind the social democratic project within Sweden. To invest in people and human skills from a very young age, but also throughout life and throughout working life.
In that regard, contributing to economic development and to producing and developing an economy which can be competitive on the global stage. And ensuring a contract between the state, society and individuals, with trade unions and parts of the labour market playing a crucial role together with the political parties. That trust is what has enabled the forums and managing of the crisis over the years.
Sweden’s golden years of social democratic welfare expansion occurred during the fifties, sixties and seventies. This was a period of economic growth, of huge investments in social insurance, unemployment benefits, health insurance, but also in establishing a pension system, and childcare and universal education. This was thirty years of welfare state expansion in which people put their trust in society in order to advance economic prospects for not only society in general, but also for individuals. All citizens paid high taxes, a well-known fact about Sweden, but there was a very high return on those contributions.
Trust in a working society was built over those thirty years. People’s expectations were met, and the state managed to deliver welfare, social improvement and social justice to the people. That could only happen because of the strong institutions that were free from corruption and based on the rule of law and fairness. There were no problems with nepotism or any other such issue. There was a very strong civic and civil society in which labour unions played a huge part, as well as education centres, institutions, the church, and all the sports communities. That created vigorous checks and balances.
At that time, the Social Democratic Party’s electoral support was sitting at around 45%, something to be very proud of. But this period of success was followed by the years of retrenchments when, economically, neoliberalism took hold, not only in Sweden but in the rest of the world too. That proved to be the setting for the next three decades. When Sweden saw that it had an increase in the global financial markets, the country became more dependent on the financial system and the global economy.
During the nineties, after Sweden had joined the European Union, the country was hit by a financial crisis, which paved the way towards Swedish welfare privatisation. Today, Sweden has one of the most privatised systems when it comes to education and, partly, when it comes to healthcare.
Though Sweden stood as a bastion of social democracy, neoliberalism and the shift in economic policy took root, together with a social chasm, creating an exacerbated situation of ‘us and them’. The threat of terrorism was very real, and also the sense that prejudices and racism had grown in society. The financial crisis of 2007-2008 made it clear that the level of inequality had risen, and segregation gained a foothold within Swedish society. That opened the way for populist parties – the right-wing, populist, racist, nationalist, conservatives – in most of the European countries as well as in the US. This was during the surge of the Trump era, garnering a highly divided political landscape.
Now, the pandemic has touched all corners of society. It has been a reminder of the importance of a strong society, of universal healthcare and of the need for resilient societies. It has emphasised that the ordinary workers in the hospitals, grocery stores, public transportation, are the ones carrying society. It is not the bankers and financial investors that society turns to in a crisis, but rather, it is the ordinary folk with ordinary – but important – jobs who keep a society working.
The second crisis that needs our attention is the climate crisis – a structural crisis. Industry needs to change, together with commercial and consumer behaviour. Social life cannot continue to be based on the same level and kinds of consumption, which is killing the planet.
This dilemma requires urgent social input. There is no company or industry that could alone take up the task of changing the way the business industry or the global playing field is currently functioning. This is why it was so important that the Paris Agreement was accepted and that there was a decent result at the Climate Change Conference in the UK.
These crises are opportunities for social democracy because they are unlike those of the eighties and nineties, which lead to more privatisation, more involvement from the financial systems, more trickle-down economics. The dilemmas we face today can only be solved through international cooperation, multilateralism and global agreements, when changing the global playing field for business and industry.
This can only be changed through infrastructure investment such as the ‘Build Back Better’ agenda put forward by President Joe Biden and the US Democrats, and through strong, resilient welfare societies taking care of people and instilling trust. We are standing at the forefront of a game-changing time in history which makes social democracy more relevant in the modern world than it has ever been during the last three decades.
Social democrats should return to the basic principles of social democracy: regulate, redistribute and distribute. There is a need to regulate the business industry, to ensure that politics has the upper hand in the financial markets of the economy. That politics is the law, and not the economic system. However, regulations cannot work on a state-by-state basis; there need to be multilateral solutions.
Secondly, there is a need to redistribute. Neoliberalism came to an end during the financial market crisis of 2007-2008, but it still lingers. Equality is good when more people have more to spend; and when people are making social investments, more long-term, sustainable growth is made possible. Higher taxes should be placed on the rich, on large corporations, and on pollution. But none of this can be achieved by any single country alone – the world has to work together and in collaboration with the global labour movements.
The key principle, though, is distribution. Societies should invest in people, which increases human capital. This is what happened during the golden decades, when the principles of the welfare state were established. Using social investment with the added value of social democracy together with very targeted investments in infrastructure, builds inclusive societies where everybody can take part in the city.
Today, most social democrats in Sweden talk about ordinary people, about increasing pensions, about universal healthcare. They are recognising that the division between people is based on increased inequality, that people no longer feel they have the same opportunities and, therefore, the same desire to strive for the future. Too much of the system has been individualised and there has been too little collective bargaining between the political parties, the state and the labour markets. One of the advantages of social democracy is that it is a broad, collaborative movement.
COVID-19 is revealing the importance of a strong welfare society where every person has equal access to healthcare within their society. This is what creates trust in a society. When there is excessive privatisation, such as there is in Sweden, or rampant corruption, as is the case in South Africa, trust is broken. It is important that South Africa finds a long-term social democratic argument that benefits all which citizens can rally around to grow the economy.
“Democracy is about social justice of the structure” – Buyelwa Sonjica
Ms Buyelwa Sonjica, former South African Minister of Water and Environmental Affairs
Social democracy is political ideology that originally advocated a peaceful evolutionary transition of society from capitalism to socialism using established political processes. In the second half of the twentieth century, there emerged a more moderate version of the doctrine which, generally, espoused state regulation rather than state ownership as the means of production and extensive social welfare programmes.
It is important that while the ANC in the evolution of its policy was leaning more on an outfit that would change the capitalist system to a certain extent, that system had to be changed because it was more alienated and disenfranchised the black majority. The ANC did not define the actual outfit, but there was intention to change the status quo which was alienating society. The ANC gave power to the state to intervene on behalf of the people on matters of social and economic development.
The ANC’s societal outlook is one that is born out of the Freedom Charter and the reconstruction and development programme and, ultimately, the Constitution of the new democratic order, which is hailed as one of the most democratic constitutions in the world. The Constitution of South Africa captures the aspirations of the people. It seeks to establish a society based on democratic values through fundamental human rights and social justice. All of these raised the expectations of the people of South Africa that the democratic state would end all ills of society. For example, they had hoped that it would eradicate poverty, it would end racism, and it would ensure that there were equal opportunities for all regardless of race, colour and creed.
The Constitution envisages a peaceful and equal society in which all shall and will enjoy their human value and dignity, which was denied for some under apartheid. So, although there were some compromises during the writing of the Constitution, in its letter and spirit the ANC ensured that the Constitution tried to accommodate these sentiments. However, in order for any government to achieve and implement the Constitution, it needs power. Not only political power but also, and more importantly, economic power. Moreover, it needs the support and the will of the people.
But neither power nor support were necessarily that possible to achieve, for two main reasons. Firstly, South Africa’s settlement was negotiated. In essence, as much as there was a protracted struggle to get its democracy to a particular point, in the end it was negotiated, or concluded through negotiations. In its governance, the ANC would have had to honour those agreements made between the parties at the time. Second, the economic power, which was also taken away or usurped when land was taken, was still in the hands of the few, leaving the majority of people homeless and impoverished and the state with insufficient resources to democratise society. But still, the people had hope.
To a very large extent, the state has achieved a lot in its cause of democratising South Africa, in its attempt to restore economic power to the people. As a consequence, many progressive policies and much legislation has been developed. For example, the Mineral and Petroleum Resources Act, Land Reform Act, Human Settlements National Resources Act, and so on. Trade and industry also had its own policies that were meant to transform that part of the state, and to a certain extent, those policies have brought about significant changes.
But to what extent has the state been able to meet the expectations of the people? That is the key question. To what extent has South Africa achieved equality or closed the gap between the rich and the poor? The Inequality Trends in South Africa report – a multidimensional diagnostic of inequality – produced by Statistics South Africa (Stats SA) suggests that a huge amount of work still needs to be done. This report says that the financial value of all assets owned by an individual or household is a measure of the wealth of that individual or household. In South Africa, wealth inequality is considerably higher than income inequality. Furthermore, while the top 10% of the population has a 56-58% share of the income, they have, approximately, 95% of all the wealth.
A number of questions regarding the national situation arise. Are these inequalities persisting because our policy framework is not relevant enough? Or if policies are relevant, are they being implemented?
Ninety percent of land remains and is owned by just a few individuals, companies and trusts, according to the Land Audit Report 2017, produced by the Department of Rural Development and Land Reform. Is this situation also as a result of policy implementation? Or is it a challenge of policy not being developed enough to deal with the land issue?
Resolving inequality also meant transforming business to end its monopoly and racial bias. Policy had to be developed to achieve this objective. During the post-1994 period, a number of policy instruments were initiated to help government hold business to account and, therefore, generate the revenue required to run government and provide quality public services for the struggling majority of South Africans.
Such policy interventions include the Division of Revenue Act, intended to ensure an equitable division of fiscal resources amongst South Africans, to remedy the disparities of the apartheid era. Other important legislation and actions include the Employment Equity Act, the Labour Relations Act and affirmative action, which all became part of the instruments that were created and implemented to address the inequalities in the labour market.
And all of this legislation was created in line with the provisions originally stipulated in the Freedom Charter, which was adopted in 1955. Past regimes accepted the national wealth of the country, stating that “the heritage of all South Africans shall be restored to the people”. Are we any closer to achieving the noble objectives of the Freedom Charter? It also states that “the mineral wealth beneath the soil, the banks and the monopoly industry shall be transferred to the ownership of the people as a whole”. Again, this begs the question, has this been achieved?
The political and social environment partly changed as a result of the change brought about by a constitution that is embedded in human rights. But the majority of South Africans believe that democracy is not working and has no meaning for them. After all, they still live in poverty, and they are unemployed due to the social conditions under which they live: in squalor. If anything, democracy is about social justice of the structure, but you cannot achieve equality without the economic inclusion of the people in a meaningful and significant way.
“A priority today should be, surely, to persuade the world that there is an alternative. A social democratic alternative for the suffocating embrace of global neoliberalism” – Lord Peter Hain
Lord Peter Hain, former UK Labour Cabinet Minister and anti-apartheid activist
Having been ascendant after World War II, especially in Europe, social democracy has been in retreat since the dawn of the neoliberal era, around 1980, even in Scandinavian countries where social democratic parties were dominant. Neoliberalism tolerates government regulation only where absolutely necessary, whatever the consequences for social justice. This has resulted in grotesque inequality, including in South Africa, in a system that seeks to shrink the size of the state by slashing the budgets that public services depend upon, and which pay for the pensions, child benefits and social security entitlements that cut poverty, encourage greater equality and promote social justice.
In that cause, a priority today should surely be to persuade the world that there is an alternative. A social democratic alternative for the suffocating embrace of global neoliberalism infecting every country from South Africa to Namibia, from Britain to the United States, from China to Russia, from India to Brazil. Each country has different state and economic formations, but they all share a neoliberal imperative under this global context.
Squeezed budgets have been the dominant feature of Britain’s neoliberal government policy since the conservatives reclaimed their seats in office by beating the Labour Party in 2010. For the next ten years, they took some 150 billion pounds of spending power out of the United Kingdom economy – 80% of it in the form of public spending cuts, proportionately bigger cuts than any in the rich world following the global banking crisis.
That decade of savage cuts is the reason why 20,000 police jobs disappeared, why the National Health Service in England faced COVID-19 short of 10,000 doctors and 40,000 nurses and with over 100,000 unfilled vacancies for adult social care workers. It is why Britain has only two-and-a-half hospital beds per 1000 population, while France has six beds and Germany has eight. It is what shrinking the role of the state means in practice and why social justice and equality of opportunity remains well out of reach in neoliberal Britain today. Even die-hard neoliberal purists, who for a long time had screamed magic money tree at those advocating more and not less public investment, accepted that without massive state intervention decline will not be reversed. They accepted that borrowing heavily in order to spend record sums on support for business, for families and for the National Health Service and social care was the right thing to do. The very opposite of the neoliberalism they had so fervently preached. Yet there are still free-market fundamentalists and right-wing ideologues calling on Britain’s Finance Minister to reign it in and to return to austerity.
They claim that with national debt now running at nearly 100% of national income in Britain, the country cannot afford to borrow more to pay for more public spending. But Britain’s national debt was over double current levels – nearly 250% of national income – after World War II, and the Labour Government then still managed to create a welfare state, a National Health Service and a fast-growing, fully-employed economy which built millions of publicly-funded houses.
Turning to South Africa. Although there is a fervent debate on how to achieve essential economic transformation, that ambition cannot be achieved in isolation, because South Africa is not insulated from the globalisation or the financialisaton that has swept the world in parallel with the advance of neoliberalism, since 1980. Nor can it succeed without tackling corruption at the same time. The radical economic transformation faction is about self-enrichment for a chosen few, for themselves and their cronies, and not for greater equality for all.
South Africa should not have to choose between a neoliberal small state and its current corruptly bloated state. To succeed, South African progressives of the left and the centre-left, in other words the social democrats, need to redefine their stamps on the state. Not least as a credible alternative to the neoliberals’ small state, which will otherwise continue to sweep the board. To retain taxpayers’ support, the state needs to be efficient, effective, honest and responsive to public demand. Not swollen, hopeless, corrupt and indifferent to citizens’ needs, as the South African state has now become, undermining Mandela’s legacy. It simply is not sustainable for 70% of tax revenues in South Africa to be spent on public sector wages and servicing the national debt.
Private sector workers are suffering real wage declines and economic growth is stagnant to negative. The South African state needs to be radically transformed. There are around 900 state-owned enterprises, most of them inefficient, many bankrupt, leaching off the taxpayer, who should be funding other vital aspects such as better education, health, housing, infrastructure and scientific research and development.
A neoliberal small state is not the answer in the modern age, if it ever was. In the most successful economies, the state plays a vital role. Not simply by providing high-quality public services, but also by encouraging economic growth, in part, by actively promoting innovation. A smarter interventionist, risk-taking, entrepreneurial state is therefore the answer for social democracy. The iPhone’s technology was not actually invented by Apple, rather, the internet, GPS, touchscreen displays, and Siri voice-activated facilities all originated from American state-funded research and development programmes, but a private risk-taking entrepreneurial company such as Apple was needed to bring them to market in a way that the state could never have done. Of course, an active entrepreneurial state needs to be well-financed, which also means ending the low tax obsessions of the neoliberalists. These are amongst the biggest challenges for social democracy today, which must be resolved successfully.
“To achieve a social democracy, whilst reversing neoliberalism, South Africa requires a competitive as well as an inclusive economy. A social democracy is not just about distribution of social welfare. It is about developmental strategy” – Dr David Masondo
Dr David Masondo MP, South African Deputy Minister of Finance and Principal of the Oliver Tambo School of Leadership, South Africa
The Social Democratic Parties have shifted to the right. This has to do with stagflation. The economic framework which supported social democracy, particularly, after the Second World War, was a Keynesian model. This was predicated on what economists call the Phillips curve, where some inflation is tolerated as long as there is growing employment. With more employment, there is a growth in the demand for goods, resulting in more inflation. Inflation can thus be tolerated if there is growing employment.
But the stagflation of the seventies landed the Keynesian model and the Social Democratic Parties in trouble. The Keynesian model could not provide a solution to stagflation, a situation where rising unemployment and rising inflation takes place at the same time. Social democrat macroeconomic policy has not provided an answer to this dilemma either. It was not by accident that the neoliberals, Friedman and others, provided a solution, which was to focus on inflation and forget about unemployment. An economic paradigm that the social democrats embraced.
The problem of stagflation was not embedded; a social democratic solution was still needed. Furthermore, whilst neoliberalism was being implemented, the right-wing actually dealt with the real economic issues. They appropriated the economic solutions that were historically provided by the social democrats. In addition, the right-wing began to take seriously issues with regards to immigration, from a right-wing, racist point of view. Minorities were scapegoated. The right-wing did appropriate some economically left ways, but on cultural and social issues, they remained staunchly right-wing.
South Africa can learn from social democracies like Sweden. One approach would be to develop and implement a development strategy that is not simply about welfare, but also about establishing a developmental state. Historically, in its pre-1914 origin, social democracy mainly dealt with the effects of capitalist development. As capitalism developed, it excluded people. This necessitated the development of a welfare state. So, in that regard, the origin of the social democracy welfare state emerges in the context of economic development. There is no doubt that the Industrial Revolution or the capitalist economy which started after the Black Death, and agrarian capitalism which first broke out in England, have generated enormous economic growth. But that economic growth also incurred great exclusion. Social democracy was a response by labour movements to that problem.
Now, in the post-colonial situation, there exists not only the need to deal with the effects of capitalism, but also the effects of underdeveloped colonial capitalism, of low growth, the exclusion of black people, women and so on, as well as an undiversified industrial structure. In the South African context, in 1994 the manufacturing contribution to GDP was 24%. It is now down to around 11-12%. So, notwithstanding the fact that South Africa is relatively developed, it is not diversified. And the country imports a large portion of its goods, manufacturing, etc. The achievement of the developmental state first requires considerable catching up.
There is no dichotomy between social democracy or a welfare state, and a developmental state. According to the ANC, both can exist simultaneously, while also addressing critical issues such as climate change. The lessons of post-Second World War planning and developmental strategy must be reconsidered, to address climate change and the concerns regarding just transitions.
To achieve a social democracy, whilst reversing neoliberalism, South Africa requires a competitive as well as an inclusive economy. A social democracy is not just about distribution of social welfare. It is about developmental strategy, where labour, business and the state – not just the state – agree how they are going to compete.
They need to critically engage on the best ways of being globally competitive using the principles of social democracy, which are pro-worker and pro-environment.
In the South African context. the platform for this kind of conversation has been weakened over the years, with social democrats sometimes being accused of being sell-outs, reformists and the like. However, it is, from an historical perspective embedded in the Freedom Charter. Social democrats should be more open about their attachment to its ideals, come out of the closet and be counted.
“For social democratic parties to create distinction from the centre-right, they must work on the communication between voters and parties” – Dagmar Freitag
Dagmar Freitag, former SPD member of the German Bundestag
After two decades of bad electoral losses, social democratic parties in Norway, Denmark and Germany appear to be staging a kind of comeback, although these institutions are not as popular as they used to be due to a fragmented party landscape. Of course, in a parliament with six parties ranging from the right-wing AFD all the way to the left, a large share of the so-called cake will always be hard to get. And it is self-evident that electoral results of about 35%-40% have become unrealistic. But that does not mean that social democracy has become irrelevant. In more and more diverse societies social democratic parties are still urgently needed.
The basic values of a social democracy are sorely needed to allay the fears of worried citizens who feel they have lost their political compass. Every effort must be made to give people new direction in order to save and preserve societal solidarity in these challenging times.
Social democratic parties, for a very long time, received strong support from the working-class and strong trade unions. For these voters, it was really important to have representatives from social democratic parties that spoke their language and knew about their specific problems. Many of them feared being left behind. This is the moment for a shift to parties that offer the simple, right answers. This situation is multi-layered. In Germany, however, the answer is somewhat complicated as the Conservative Party of acting Chancellor Angela Merkel has over the years become more and more socially democratic. Examples of this include minimum wage and climate change.
For social democratic parties to create a distinction from the centre-right, they must work on the communication between voters and parties. Social democratic goals must be clear, comprehensible and apply to the everyday realities of the voters. For this purpose, the language together with the actions of social democrats must be seen as honest and understandable to the target groups.
In addition, in some ways they need to be more emotional. Despite the developments already mentioned, and in spite of current difficulties, there are encouraging signs that social democracy is growing. Emerging cohorts of voters are more in favour of progressive positions and are persistently preferring parties that offer a clear and progressive profile in this dimension. Social democratic parties should build a new progressive political coalition that includes finding new ways of engaging and incorporating membership as well as strengthening ties with civil society actors.
The appetite for social democracy is re-emerging. This can be seen from the latest election results in Germany. There are many signs that suggest success is possible if social democrats can reach the voters emotionally, and with clear positions and aims. Olaf Scholz, the new Social Democrat German Chancellor, had the word respect as central to his election repertoire. Respect for everybody. This was not only a word, but it was also an emotion and people could feel what he meant. There are many reasons why people are open to social democratic values. Social democrats are the ones tackling the credibility of the right-wing’s positions on issues such as racism, homophobia, antisemitism with progressive arguments.
Furthermore, social democrats always think multilaterally and that means they know about the importance of a close and reliable cooperation between countries across the continents. The great Swedish social democratic leader, Olof Palme, and the German Chancellor, Willy Brandt both preferred multilateral approaches. They were the kind of leaders that could face up and defeat the right-wing in the Trump era.
What happens when the right-wing populace rises to power? The era of President Trump in the United States is a good example of the consequences – a textbook case of how politics change when it switches from a bilateral approach to a multilateral approach. It is up to social democrats to ensure the values of social democracy prevail.
“These political parties are part of one big family. They share a set of ideas, an alternative to neoliberalism, that defines them as social democrats” – Dr Lisa Pelling
Dr Lisa Pelling, head of Swedish Social Democratic think tank, Arena Idé
Social democrats and progressives alike form part of a huge movement. A movement of hundreds of political parties, organisations and trade unions. Great inspiration can be taken from all parts of this movement. Today, social democrats are gaining traction around the world. This is clear when one looks at election gains in Portugal, Germany, New Zealand and Italy. These are all inspiring stories.
And they are interlinked. These political parties are part of one big family. They share a set of ideas, an alternative to neoliberalism, that defines them as social democrats. A focus that refuses that the market should be in the driving seat and instead places regulation, redistribution, democratisation first.
Modern social democracy faces many challenges. First, the climate crisis. The big challenge of the climate crisis is to ensure that the transition from fossil fuels to green energy does not take place at the expense of workers - neither in the fossil fuel sectors, the oil sector, the coal sector, nor any other sectors. Arena Idé has published a book to guide this process, No Time for Illusions, a Travel Guide. The book is a travel guide on how social democrats can define an industrial policy that makes sure that this transition is made while securing jobs and increasing employment, and at the same time moving fast enough to make sure that the climate crisis is appropriately addressed.
The second challenge is privatisation. The NHS is a great success of the British welfare state where health is seen as a right. It is provided based on people’s needs and not on the basis of people’s ability to pay for health services. In the last four decades any system that resembles the British National Health System, including the health system in Sweden, has been under attack by privatisation and fragmentisation of new public management methods. Arena Idé seeks to highlight examples where there has been a successful fight against privatisation. To show where there are alternatives to the so-called freedom of choice, which has meant the freedom of choice for private equity capital firms to buy bits and pieces of the commonwealth sector and not really the freedom of choice of citizens. It has been a great inspiration to see how Scotland has been able to choose a different path from the rest of the UK.
A third challenge is housing policy. Defining housing as something that should be left to the market is one of the largest threats to social democratic welfare states and welfare models, and one of the greatest achievements of neoliberalism of the last few decades. Social democrats need to remake its politics, inspired by cities and countries where housing is not left to the market, but where housing is seen as something that should be taken care of by the community.
Vienna is a great example. It is an affordable housing paradise which is partly why Vienna is voted year after year as the most liveable city in the world, the city with the highest quality of living. Vienna’s success started off as a social democratic vision, and ambition just after the First World War in 1918 when the city became the first capital in the world to be governed by a social democratic mayor. The first social democratic capital in the world inherited an alarming housing crisis and decided that they would solve the crisis through a massive construction programme. Sixty-five thousand flats were built in a little more than ten years. Social innovation was key, one being taxation. In Vienna, the idea was to design a tax per square metre per person, so that people living in huge imperial flats in the centre of the city would pay a high tax. And this tax would be used to provide more square metres of affordable housing for the working-class in Vienna.
What is the Vienna model of today? It is one where both construction and housing is subsidised and the distribution of the flats that are the result of this policy, are distributed on the basis of needs, not economic demands. It’s not the one that has the largest purse, but the one that has the largest need who gets access to a flat first. It is built on strategic partnerships with not-for-profit construction companies – a crucial part of regulating markets. State debt should not be an obstacle. Welfare can be built even in indebted states.
“Social democratic parties should reconnect. This is very urgent. Democracy is under attack and has to be defended and built globally” – Katharina Hofmann
Katharina Hofmann from the Friedrich Ebert Stiftung
The topic of modern social democracy is important. According to The Economist, the biggest wealth class in the eighteenth century was farmland. In the nineteenth century it was factories. Today it is residential real estate. The magazine estimates that 170 thousand billion euros are invested in residential real estate worldwide. It is access to real estate, among other modern factors, that is driving up inequality. Inequality and especially the concentration of wealth does not help society.
There is a real need worldwide to revitalise the spirit of internationalism. According to Kate Pickett from the UK, violence and physical and mental diseases are more prevalent in unequal societies. To reprove to people that they can still believe in social democracy given the disappointment of neoliberal globalisation, social democrats need to find and propagate solutions to global problems like poverty, climate change and democratic governance. This can only be achieved by reinventing multilateralism. The European Union is in crisis. Migration and climate change issues remain unsolved, and the right-wing and nationalistic groups are gaining power. Parties must reactivate the Socialist International 2.0 and bring socialists and social democrats from all over the world together.
Social democratic parties should urgently reconnect. Democracy is under attack and has to be defended and reinforced globally. Hardly any Asian country has a social democratic or a democratic spirit. Even India with the biggest democracy in Asia is turning to Hindu nationalism. In Latin America, the military is growing and regaining power. In Chile, both political candidates are from the extremes. And one sees the same in the US and in many European countries. It all leads to growing polarisation.
The need to rebalance the damage of thirty years of neoliberalism is acute. Social democrats must actively endeavour to rebalance the relationship between capital, work, welfare, health and education. In all these spheres the state must be empowered. People around the world must deal with the crisis of the legitimacy in democracies. Social democrats must regain trust in scientific institutions and sanction people who love writing false information on social media. It is very urgent, not only in other countries, but also in Germany and Europe.
“There is a need to rearticulate the ethical base, not as an individual act of philanthropy, but as a collective one. A group act, a global act that separates from altruism and, in so doing, immediately moves into a new arena of equality and justice.” – Professor Chris Mullard
Professor Chris Mullard, professor at the University of Amsterdam, and visiting professor at the University of London and the Royal Agricultural University.
The assumptions of social democracy seen from a theoretical instead of empirical view opens them up to criticism, allowing the viewer to revisit the fundamental, ethical and moral basis thereof. It is easy to recite the history, to talk about Marx, to talk about Lassalle, to talk about all the great writers and thinkers and the development of the great German Social Democratic Party. Indeed, it is easy to document all the revolutions of the nineteenth century and how they dovetailed and related to an expanding capitalism, colonialism and, if you like, the growth of the state.
What is not so easy, is to look at them critically.
First, social democracy is based upon a set of assumptions which are, essentially, Western. That is, they have arisen, as we all know, out of the dilemmas, the inequalities, the injustices of peoples who have been exploited within Western society. Whether one looks at this historically or contemporaneously, these are Western ideals. Other perspectives, African or Asian are also required.
Second, social democracy is based upon the modality of capitalism. Under capitalism hides, or can be seen, a myriad of inequalities of one kind or another. In fact, that is why social democracy found its rootage.
A third assumption is that in some social democracies it is a racially constructed concept. This is not simply referring to South Africa, but in the world at large.
The fourth assumption is institutional altruism, or institutional philanthropy, which has sprung from a Western voluntary movement of philanthropy and the concern about those who are worse off than those who are in control of a society. Be it a class group, a racial group or other. It has grown out of this notion of altruism.
The fifth must be the rights of the individual. The rights of the individual, in both early and contemporary social democracies, give credence and legitimacy to capitalism against the rights of the group, or the community. Underneath these assumptions lies a very basic paradigm: the paradigm between the haves and the have nots. It is a paradigm between one race and another, between one class and another. One having power and one not having power. This is a very simple and well-worded paradigm. So, social democracy as an ideology, social democracy as a set of policies, has to wrestle with this paradigm.
How should these assumptions be addressed?
First, there is a need to rearticulate the ethical base, not as an individual act of philanthropy, but as a collective one. A group act, a global act, that separates from altruism. And, in so doing, immediately moves into a new arena of equality and justice.
Secondly, there is a need to be courageous as a party or as a group or as a movement. To recognise that societies are heterogeneous, that they are multicultural. This is something that is clear in South Africa, but it isn’t recognised in Europe. There is talk about it, people describe these societies as plural, as multicultural. But that is a purely descriptive form of talking about society. It is not structural. Social democrats should start rejecting notions of multicultural society as simply a descriptor, and notions of homogenous societies.
The third is to look at the distribution of power, or rather, to look at redistribution on a global basis. Inherent in the constitution and the constitutional thinking is the need to bring the economic, the social and the cultural together. Seen in South Africa and contemporary politics, it is, in fact, a disintegration. There are separate political and economic power structures.
It is critical, therefore, to consider a new model of social democracy. An inclusive model. An inclusive social, ethical, structural and cultural one. COVID-19 has reminded the world that people are not simply individuals, but come from and belong to a community, a group. Group solidarity, group respect and group responsibility – that is what social democrats should focus on.
“It is critical to not only have ideas, but to win elections. To put forward alternatives to the right-wing. To put forward a very strong criticism of neoliberalism.” – Mr Mariano Schuster
Mr Mariano Schuster, Editor, Nueva Sociedad, Argentina
Considering the past and future of social democracy only along Western lines is problematic. Such thinking excludes societies that are not Western, including all the non-Western actors of these societies. Doing so could lead to deficient thinking regarding race, gender and religion, while other topics might not be contemplated at all.
In general, social democracy is freedom and equality. It strives for a model that will overcome capitalism. Many different movements, such as socialism, were founded upon the ideal of emancipation. Are social democrats today talking about socialism? Is socialism regarded as it was in previous centuries, where social democrats were excluded from power? Where were they excluded from social interventions and started to look at workers to see how they could put them in counter organisations? They talked about working-class literature, music that the workers could have access to.
It was only after the Second World War that social democrats started to become governing parties. It was then that they started shifting from the role of education, of organisation, because now they had a responsibility to govern. In most cases, they did good work, especially in the fifties and sixties, at a time of great prosperity.
The phenomena of African colonialism and the social outbursts in Latin America were not the making of social democracy, but rather, they were responses to previous power arrangements. Neoliberalism was imposed as an answer. Today, young social democrats and progressives are recovering what had been lost. They are finding pathways towards their ideals through social democracy.
But it is critical to not only have ideas, they need also to win elections. To put forward alternatives to the right-wing. To put forward a very strong criticism of neoliberalism. To this end, great inspiration can be found in the strong ideas and ways demonstrated in the global south.
Takeaways from the dialogue
Sebastian Sperling, South Africa country representative: Friedrich Ebert Stiftung
In reflecting upon the day’s dialogue, there are five key takeaways that can be summarised as follows:
Social democracy is not static
Social democracy is not cast in stone. It is not a textbook ideology that just needs to be implemented; it changes over time. While there are underlying values that remain, such as freedom, equality and solidarity, there are different ways and interpretations that depend on context and grouping.
What has changed over time is the interpretation of these values and how to pursue them. This is why discussions like this one are so important. These discussions must, however, be more inclusive, including more young people.
Social democratic consensus
It is important that social democrats find consensus and work together towards a shared future. It has become clear from the discussion that while there are shared values, there is still some way to go. All societies grapple with inequality. COVID-19 and the climate crisis are deepening these inequalities, while the neoliberal zeitgeist with its agenda of privatisation, austerity, concentration of economic power, dismantling of public goods and the state, is still very much alive. Like a fish in water, social democrats around the world have sometimes not even noticed that they are also contributing to this neoliberal zeitgeist. To acknowledge past mistakes is part of this joint reading of the status quo that is needed.
Inequalities have led to the crisis of democracy which we now face. To break the marriage between neoliberal policies and the liberal democracy is critical.
Social democracy is about uniting people
Social democrats make and implement policy with the broad majority in mind. It is not the politics of the few. Neoliberalism’s stroke of genius is packaging the interests of the few as that which makes common sense. This has seen them gaining majorities in elections.
And a strong case was made for why economic and political power is needed to achieve our goals. We need to build broad alliances, and in evermore-fragmented societies, social democrats are the best placed to build these necessary alliances. And this needs a narrative under the banner of respect and unity, under a system that believes in people, in dialogue and in organisation.
Social democracy is about showing that an alternative is possible
What is this alternative? Well, it is the primacy of politics. It is an understanding of the role of the state, and not simply reducing it to a welfare state. There is more to social democracy than that. It is a developmental state, a state of social compacts. A state where there is regulation, redistribution, taxation of the rich, public investment in people, in critical infrastructure for all the necessary transformations. A state that is putting risk and innovation on the agenda, that is investing in public goods, transport and housing, etc.
Social democracy is an international agenda
Social democrats need to be more internationalist in their orientation. On the other side of the street, people are much more internationalist-orientated and better organised. Social democrats are fragmented at the international level. Internationalism has various dimensions: it is about how issues are addressed, how alliances are built. This dialogue, which was facilitated in an international fashion, is exemplary. More of this type of dialogue is needed to rebuild strong internationalism.
[1] Sheri Berman, 2020. “Can Social Democrats save the world (again)?” Foreign Policy, January 15.
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This report has been published by the Inclusive Society Institute
The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals.
Email: info@inclusivesociety.org.za
Phone: +27 (0) 21 201 1589
Web: www.inclusivesociety.org.za