Committed to Social Democracy...
FES in Nepal
FES Worldwide
Media Development
Trade Union Development
Regional Cooperation
Conflict Resolution
Good Governance
Past Activities
FES in the Press
Annual Reports
Seminar/Workshop Reports
List of FES Publications
Book Reviews
FES Publications in University Curricula

The recent trends on Social Democracy

An interaction jointly organized by the BP Thought Academy and FES Office, Nepal in Lalitpur, on 16 June 2014

By Ritu Raj Subedi
Associate Editor
The Rising Nepal

With the collapse of classical communism and cyclic crises in neo-liberalism, social democracy has emerged as a golden mean to achieve the ultimate democratic equality, economic prosperity and lasting peace in the society. There are reasons why social democracy is faring well and becoming a popular means of fulfilling the political, social, economic and cultural aspirations of the people. There is no need to talk about fundamental weaknesses and failure of hardcore Marxist system. Its serious fault-lines and structural limitations are the known facts. What we today routinely confront with is the crises and recessions that the neo-liberal political and economic system churns out on the regular basis, throwing the countries and people into a perpetual funk. Unlike the aforementioned two isms, social democracy seeks the moderate path to realize the genuine goals of humanity. It calls for a democratic compromise wherein the key stakeholders- the government, employers, trade unions, parliament and civil society- come together for their shared prosperity and durable socio-political order.

Social democracy defies free-wheeling market and unrestrained capitalism. While accepting the private property, it demands that the market be tamed by democracy and the life-chances be ensured for all irrespective of their political orientation, economic status and ethnic colour. Social rights, embedded markets, the primacy of democratic politics and a basic line of welfare state security form the basis of social democracy.

"A moment of social democracy has finally arrived," says renowned political scientist professor Dr Thomas Meyer.

Dr Meyer recently visited Nepal and attended several functions where he vouched for social democracy, arguing that a strong wave of social democracy is going to sweep the world.

Speaking at an interaction on 'the recent trends on Social Democracy' organized by the BP Thought Academy and FES, Nepal, Dr Meyer said that social democracy has emerged as the strong alternative to libertine or the US-type democracy, which he said, preponderantly excluded the citizens from wealth, security, good education, social participation and power.

Echoing Dr Meyer, FES, Office Nepal head Dev Raj Dahal said that the irrationality of neo- liberal attack on the welfare state's regulation and individualization of human life and the radical left's vision of withering of the state had been confirmed by the recent developments of historical proportion.

"One suffered from excessive greed and the other from lack of incentive. Loaded with excessive materialistic passion rather than normative drive, both the ideologies have now produced systemic crises," said Dahal.

Dr Meyer and Dahal delivered their thought-provoking views on the theme of social democracy followed by a lively question-answer session at the function attended by the people from different walks of life.

The gist of Dr Meyer speech/working paper

Three main ideologies/forces are currently dominating the world-

1. Libertarian democracy or democracy American type: Election, political and civil rights and free market are its main tenets. Everything beyond these is individual fate. The rule of the market that we have seen made possible by mere market states as they coined, elite or libertarian democracy for the well-to-do is not sustainable because it is systematic exclusion of the many both from government and from wealth of their societies. The present decade witnessed tremendous economic, social and political disasters in many parts of the world starting with the US finance market crises that has been caused by a lack of political regulation and control of the markets in the wake of which dozens of million people have lost their jobs in many places all over the globe. The states were forced to spend gigantic amounts of money to save the failed banks with the consequences that social welfare and security had to be cut where it had been in place after many decades of social and political struggle for it. The rich became richer, the middle class has to pay for the crises and the poor became poorer. It marked a clear violation of social and economic basic rights in favour of big money and the freedom of markets.

Thus, progress towards Social Democracy is obviously what the world needs in order to move in a more sustainable direction after the resounding defeat of neo-liberalist ideas of how to organize the economy in the global finance market crises 2008 and thereafter. The neo-liberal moment that dominated the world since 1980s is spent, a social democratic moment is coming to the fore.

Are the social democratic countries willing to seize this opportunity? In Germany, social democrats are divided into the Left, the Green and the SDP. When Nepal drafts the new constitution, the parties should incorporate social and economic rights in it.

2. Revolutionary Marxism: Those, who are not successful in market, are left out. This creates exclusion marked by protests, alienation and revolution. The protest movement explored revolutionary Marxism. The orthodox Marxism stresses the socialization of the means of production but this does away with freedom, equality and right to dignified works. With the collapse of communism, the orthodox Marxists turned into political fundamentalism. Identity politics entrepreneurs then wanted to organize the people and society according to ethnicity or religion. It became new way of inclusion. The society is being organized along these lines.

3. Social Democracy: You cannot eat democracy. Material means are needed to foster subjective freedom. Equality, life-opportunities, social and economic rights need to be guaranteed. A society that does accept not only the civil and political basic rights of the 1966 UN Charter alone, but also the cultural, social and economic basic rights declared in this document is well called a social democracy as opposed to a merely libertine democracy. The political decision to subscribe to the entire set of Basic Rights implies the embracement of both a coordinated and socially regulated market economy plus a comprehensive welfare state. It aims at making good the promise of full freedom for all human beings comprising both the formal and the material dimensions of it: Having the formal right to things and having the means to do things really. The welfare state does not need to be very generous in the beginning but it has to be comprehensive, delinking the basic social life risks from the degree of market success of the individual persons.

As the 1966 UN Covenant puts it: Free education, sufficient health care, social protection (pensions, unemployment salary and fairly paid jobs). These are the foundations of freedom in its full sense. To restrict the rights of people to the formal entitlements of citizenship alone- like election, press speech and the like- instead of extending them to their real life conditions like education, jobs, social security etc means to deprive them of the very foundations i.e. the reality of freedom.

What is welfare state?

A welfare state is a state in which organized power is deliberately used (through politics and administration) in an effort to modify the play of market forces in at least three directions:

First, by guaranteeing individuals and families a minimum income irrespective of the market value of their work or their property,

Second, by narrowing the extent of insecurity by enabling individuals and families to meet certain social contingencies (for instance, sickness, old age and unemployment).

Third, by ensuring that all citizens without distinction of status or class are offered the best standards available in relations to a certain agreed range of social services.

Social Democracy not luxury goods for rich societies

Social democracy is not luxury goods for rich societies; it is a condition for the inclusion of all, for social peace, for an equitable development for all societies- not the least for the poorer ones. It is a form of democracy that is based on three societal institutions that can be implemented everywhere in the world if the will of the political elites to do it is there.

The three basic institutions are:

1. A participatory political democracy
2. A welfare state (not overly generous)
3. An economic democracy in the sense of embedded and regulated markets plus the social control of private property of the means of production. In Sweden, market is embedded in the ecology and labour rights.

This is the content of social democracy. Researches and experiences have demonstrated that three practical conditions must be fulfilled in order to create the political opportunity for its consequent implementation in any society- rich or not so rich:

a. The resolution of the political elites to realize it,
b. The political mobilization of the society to push for it constantly, and
c. The readiness of both- capital and labour organizations to come to a compromise about it.

Embedded Economy

What social and economic basic rights require in addition to the welfare state is the political embedding and regulation of markets- not their replacement. In a globalised world, it would be counterproductive to follow the rule against markets. What is always needed and possible is framing, correcting and guiding markets on behalf of public welfare and social inclusion. The golden rule is: Markets can be good servants but they are always bad maters. Therefore, as much the market is meaningful and possible so much the regulation is necessary in the service of both Basic Rights and sustainable wealth creation, i.e. social and ecological sustainability.

Within the framework of social democracy, five macroeconomic strategies for regulation have been tested in practices in varying countries:

1. Full economic democracy,
2. Democratization of the rights of owners by creating employees' funds,
3. Keynesian macroeconomic coordination,
4. Different variants of neo-corporatist co-regulation between the state and the social partners, i.e. trade unions and employers federations,
5. Selective political growth strategies (subsidizing lead sectors, taxing problem sector, promoting employment)

All five strategies accept the basic function of capitalist markets to the extent that they do not conflict with public interests. It is a matter of the particular situation of a country and its cultural traditions which of these strategies or what mix of some of them may be found appropriate. The underlying idea of economic democracy is the belief that the market can be successfully regulated by practicing democratic control, framework setting and regulation by tripartite economic councils (employers, employees, representatives from the parliaments and government) at the regional and national levels of the economy. A soft form of it is practiced in some European countries is neo-corporatism, i.e. the informal macro-economic coordination in a dialogue between government, trade unions and employers.

Trade Offs or Win- Win-Games?

A Social Democracy's choice of economic and social policies and instruments needs to pursue a two-pronged strategy by balancing objectives of practical efficacy (productivity, growth) and normative legitimacy (fair distribution of life chances, social inclusion, works). These overall objectives give meaning and legitimacy to the social and ecological embedding of the market economy in such a manner that it serves in a constantly rebalanced way three purposes simultaneously:

1. Optimal productivity and growth of the economic sector.
2. Tamed capitalism in the service of society and democracy.
3. Guarantying high levels of social inclusion and thus societal, economic and political stability.
Recent research has reconfirmed the long standing social democratic conviction that a well designed regulatory framework for the markets and a good welfare state produce by far more win-win effects for growth and productivity then negative tradeoffs.

Social Democratic Compromise

There is a particularly tricky problem about social democracy. In order to implement it, good arguments as rule are seldom sufficient- at least as long as those who think that it runs against their vested interest that they can avoid it. As history shows, insight, analysis, good will and our ability to conceive good and working blueprints for progress are not enough. What is needed is a political-cultural compromise among the key actors of the political economy of a country despite difference in their vested interests. Some shared experiences and convictions must grow if a social democracy is going to happen and be successful.

What has been called the social democratic century in Europe was based on a long time compromise between the social democratic key actors (parties, trade unions, enlightened part of the middle class, the intelligentsia) with refractory social forces that hold the commanding heights of the capitalist economy and their political allies. In fact, it was only the shock of the Great Depression in the 1920s and 30s that laid the foundations for social democratic compromise in Europe and the United States (though only temporarily in the latter).

In the historic moment of shock, there was a widespread perception in all concerned societies that they were now confronted with the fateful choice either to run the risk of lasting protest, social conflict, unrest or revolutionary change on the one hand or to improve the living conditions of the working classes by other welfare means. The choice they made was for the social democratic compromise: The workers' movement accepted the basic outlines of a capitalistic order, private property of the major means of production, and the market economy. In return, the trustees of the economic system would agree to waive a substantial- though negotiable- part of their property rights in favour of workers co-determination, a share in financing the social welfare state, wage increases, better working conditions and macro-economic coordination.

This made possible the Golden Age of Social Democracy after the Word War II or as some say the prospering decades of the Fordist model of capitalism. What we witness in Europe now is that the social and political pressure must be permanent in order to prevent the capitalism side from forgetting about the terms of the historic social democratic compromise. And what we also learn is social democracy needs to go global if it is to continue its functions in a globalised economy.

The Social Democratic Compromise goes global

Richard Sandbrook and a research team of the Toronto University have studied the conditions for a social democratic success story in the global periphery. They found surprising social democratic progress in countries like Chile, Costa Rica, Mauritius and Kerala (Uruguay, West Bengal could be added). They stress that in Third World Countries three conditions have to be in place in order to make the social democratic compromise possible and the political economy of socially embedded markets works:

a. The marketisation of the basic economic relations, particularly in the rural areas.
b. A strong and long term mobilization of civil society, trade unions and networks with social democratic purpose.
c. An atmosphere of and a readiness in the poor sectors of the society to organize the political activities and protests.

In addition, reforms at the global level are required too. Fair globalization, the concept that has been developed by the ILO, is a good translation of social democratic principles into globalization politics. The key concepts are there, practice is lagging far behind.

Forgetting the Shock?

Until recently, the social democratic compromise seemed to have taken roots in European societies. Today, in the wake of globalization, the disgraceful collapse of the communist model, and the state debt crises caused by the financial market collapse, the social democratic compromise is challenged again. The most influential trustees of the interests of capital begin to believe that they can dismantle the parts of the social democratic compromise without having to fear adverse political consequences.

The contradiction of the present day seems to be that exactly in a time when the social democratic moment in terms of the real problems we face is stronger than ever the idea of social democracy is in the defensive in the prevailing ideological debates. The forces that caused the crises still control the public opinion in many countries. One of the reasons might be that welfare standards and regulations are even in the times of crises comparatively high and a bottom line for social protection and market correction is guaranteed in the constitution and the political culture of most European countries. This is in itself a remaining triumph of the historic fight for social democracy but no lasting guarantee.

The famous British historian and social democratic intellectual Tony Judt has dramatically warned us in his famous book Ill Fares the Land. If our societies do not support social democratic policies out of conviction any longer, they should better support them out of fear. The fear that social peace and the pillars of social democracy will soon erode once their social foundations are shattered. We better do not embark on repeating history.

Queries from the floor

Nepali Congress leader and lawmaker Surendra Chaudhari said that even after independence, the countries remain half-free and half-slave. "I want to know how the doctrine of inclusion is different from the so-called doctrine of equality," he said. Professor MP Lohani said that social democracy in the 21st century must go global. But, my question is how the social democratic compromise is possible given the fact that communism has collapsed. Professor Kapil Shrestha that the political parties have over the years expressed their commitment to social democracy but the question is: Whether they have truly applied it or discredited it? Nischalnath Pandey put a query as to how to analyze the rising sentiments of nationalism in Europe, and in Japan, China and Korea. Dhruba Hari Adhikari said that the globalization has become the fact of life. He asked Dr Meyer- will there be second round of globalization? Dr Chuda Shrestha asked how much the economic model of Gujarat, launched by Narendra Modi, is applicable in Nepal. "How do you see the national coffers being spent for the medical treatment of leaders?

Dr Meyer's responses

I do not have all answers of your questions. Here I would like to put forth my views. The equal rights of the Black population in the US were established only in 1960. The libertarian democracy is successful in the US because 90 per cent people are religious and 40 per cent fundamentalists. This substitutes for ideology. The trade union movements were crushed. Ecological and financial problems afflicted all the countries. The global consciousness and response are needed to solve them at the global level. The fair globalization pursued by the ILO has the elements of social democracy. The leaders everywhere forget their promises. The civil societies have to reinforce their commitment. The Europe is facing re-nationalization campaign. Commitment to solidarity is weak. The rich do not bother about this. There are different types of social welfare states in Europe. Market needs to help develop economy. Progressive taxation helps stem economic crisis. Higher the education, better the productivity. There are negative and positive (political) globalizations. Regional political cooperation can answer the transnational challenges at the regional level and it fosters governance. The SAARC can contribute in this regard.

Queries from the floor

Santosh Pariyar said that the political parties often talk about social democracy but are hardly implementing it. How do you see the implementation of social democracy at the global stage? Swaj Raj Kafle expressed his curiosity about the labour rights in the countries practicing social democracy. Manohar Parajuli wanted to know inter-connection between inclusiveness and social democracy. Pradeep Koirala said that late BP Koirala, while being at the helm of the government, implemented many tenets of social democracy. There should be labour participation in the society. The corporate sector should foster social responsibility. Pushpa Bhusal said that social and economic rights are the basic values of social democracy. In South Africa, these rights help reduce poverty. How do we redefine these rights in the Nepalese context? Dinesh Tripathy said that current of negative globalisation is stronger than social democracy. The Washington Consensus is dominating the global economic agenda. New social democracy is fragmented. India's election is not encouraging and is not clear as to whom development is for. Nepal is in the process of transformation. How do we promote positive globalization? Social democracy is taking back seat while WTO on the front seat.

Replies from Meyer:
The Social Democratic Party has 25 per cent of votes. The challenges of globalization have put pressure to respond and demand international cooperation. Experiences offer the best remedy. There is a pressure within the parties to make leaders responsive. The civil society needs to be mobilized and social democracy education should be spread. In Europe, social democracy is an evolution of compromise. Inclusive democracy means that all members are able to participate in the governance system. There are normative reasons for the creation of just society. You need alertness, political direction and mobilization.

Queries from the floor
Saroj Dhakal said that there is the need for market economy and social democracy. The challenge is how to check and balance between the libertarian and social democracy. Gejendra Sharma queries about co-relation between social democracy and electoral system. Rajju-Malla Dhakal said that social democracy is interesting with its focus on regulative market and private sector. But, the private sector has money and power. As the multinational companies are invited to create jobs here, the process of regulation is lost. Rajib Upadhyay said that the rightists are breaking. China and Russia are coming together. The people want delivery. Nepal has big potential for hydropower. Economic prosperity needs to be created. Uddhav Bhattarai asked the prospect of social democracy in Nepal considering the geopolitical situation. Umesh Upadhyaya asked about the role of trade unions in social democracy. Tika Pokhrel asked as to how social and economic factors contribute to social democracy.

Responses from Meyer
India has promised that liberalization will deliver but the poor could not participate in it. To create a stable health care and workforce, the art of politics must combine policy response for uplifting the poor. Electoral system is important for ensuring justice. Proportional system is just but if the country goes to federal system, first-past-the-post is needed. Fair election is a must for stability. Before bringing FDI, create the conditions of regulation and control. The norms are necessary. China has new left party. Many Chinese favour social democracy. Democracy is based on self-determination. You need to be clear as what kind of society you want. It requires identifications of actors and coalitions. The EU is not in final stage. The UK sees the EU merely as a market but others want economic and political integration. Negotiated compromise is needed for the better governance system.

Nepal holds potential for social democracy: Dahal

The head of FES, Nepal Office Dev Raj Dahal said that the irrationality of neo- liberal attack on the welfare state's regulation and individualization of human life and the radical left's vision of withering of the state had been confirmed by the recent developments of historical proportion.

"One suffered from excessive greed and the other from the lack of incentives. Loaded with excessive materialistic passion rather than normative drive, both the ideologies have now produced systemic crises, leaving unintended consequences for environment, societies and the people in the various parts of the world. As a result, it confined the vision of political leadership only to the crisis management" said Dahal and added that on the contrary, the resilience of social democratic state can be attributed to its ability to adapt to technological change, changing value patterns, social solidarity, new social stratification and international division of labour.

"Currently, social democracy holds the possibility of realizing the progressive politics of attacking poverty and inequality through the invigoration of a broader struggle for public good and the reformist imagination of the future."

Dahal noted that social democracy supports democratic politics for the broader spirit of human freedom and advocates the reduction of unequal prospects of life-choices. It has espoused five critical elements- sovereignty of people, social inclusion, principle of affected, subsidiarity and the provisions of both constitutional and human rights.

He said that social democracy is an open-access political order. It provides the citizens power to participate, exert claim and enjoy immunity rights and corresponding responsibilities. "The party programs, development policies, constitutional mandate and people's impulse find greater resonance of social democratic values in Nepali society. Its heritage of tolerance of social diversity and continuous rationalization and reform of societal norms are essential aspects of social modernization.

According to Dahal, the new vision of social democracy marks a shift from centralized planning and decision-making to the bottom-up, decentralized, participatory version. "It advocates justice at ecological, social, gender and intergenerational levels to improve the living standards of all. It opposes fostering a rationality of technical and ideological domination of society through the networks of power and manipulation of cultural industries."

Further highlighting the legal functions of social democracy, he said that it supports specific laws pertaining to labour, women, indigenous people, Dalits, minorities and disabled, thereby, increasing their access to the institutional resources. Many of these social democratic policies are used in Nepal so as to provide opportunity for the social mobility of poor and bridge the development gaps.

Today social democracy has marked a shift from technocratic and economic standardization to a critical reflection on the unrealized aspiration and rights of new groups of society.

Dahal maintained that Nepal holds great potential for social democracy and in order to balance the extremes into middle path required completing the unfinished tasks of constitution making, fostering inclusive and sustainable development and achieving the durable peace. The increased emphasis on public sphere, expansion of labour market, projects for social development and social security, safe migration, support to workers' cooperative, active citizenship, political accountability etc indicate that democratic self-governing process will acquire new vitality and legitimacy in the future.

"Conscious of their needs, rights and duties, the Nepalese citizens are demanding consistency from their leaders between the founding ideologies of parties and their derailed destination and make political power proportional to both social representativeness and fairer distribution of public goods," said Dahal.

Social democracy: a road to progress: Bhattarai

BP Though Academy chairman Haribol Bhattarai said that neither the Marxist fundamentalists not the capitalist economy could be able to deliver justice and peace.

"Social Democracy or Democratic Socialism is the only road to progress and prosperity for the humanity in the years to come," said Bhattarai.

He argued that late BP Koirala had already envisioned the inevitability of democratic socialism more than 50 years ago but political highhandedness, selfishness and abuse of power had posed as a big stumbling block to the realization of social democracy.

Bhattarai underlined the need for devising the local and national instruments to realize the democratic socialism. "We need solidarity at the local and global levels to this end. The objectives and methods should be clarified."

The country should be able to create national capital and thereby granting social security to the people, he added.

Copyright©2001. Friedrich Ebert Stiftung, Nepal Office
The information on this site is subject to a
disclaimer and copyright notice.