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Social democracy is a social, economic, and political philosophy within socialism that supports Democracy and economic democracy and a gradualist, reformist, and democratic approach toward achieving social equality. In modern practice, social democracy has taken the form of predominantly capitalist economies, a robust welfare state, policies promoting social justice, market regulation, and a more equitable distribution of income.
Social democracy maintains a commitment to representative and participatory democracy. Common aims include curbing inequality, eliminating the oppression of Social privilege groups, eradicating poverty, and upholding universally accessible public services such as child care, education, elderly care, health care, and workers' compensation. Economically, it supports income redistribution and regulating the economy in the public interest.
Social democracy has a strong, long-standing connection with trade unions and the broader labour movement. It is supportive of measures to foster greater democratic decision-making in the economic sphere, including collective bargaining and co-determination rights for workers.
The history of social democracy stretches back to the 19th-century labour movement. Originally a catch-all term for Socialism of varying tendencies, after the Russian Revolution, it came to refer to reformist socialists who were strategically opposed to revolution as well as the authoritarianism of the Soviet model, nonetheless the eventual abolition of capitalism was still being upheld as an important end goal during this time. However, by the 1990s social democrats had embraced mixed economies with a predominance of private property and promoted the regulation of capitalism over its replacement with a qualitatively different socialist economic system. Since that time, social democracy has been associated with Keynesian economics, the Nordic model, and .
Social democracy has been described as the most common form of Western or modern socialism. Amongst social democrats, attitudes towards socialism vary: some retain socialism as a long-term goal, with social democracy being a political and economic democracy supporting a gradualist, reformist, and democracy approach towards achieving socialism. Others view it as an ethical ideal to guide reforms within capitalism. One way modern social democracy can be distinguished from democratic socialism is that social democracy aims to strike a balance by advocating for a Mixed economy where capitalism is regulated to address inequalities through social welfare programs and supports private ownership with a strong emphasis on a well-regulated market. In contrast, democratic socialism places greater emphasis on abolishing private property ownership in favor of full economic democracy by means of cooperative, decentralized, or centralized planning systems. Nevertheless, the distinction remains blurred in colloquial settings, and the two terms are commonly used synonymously.
The Third Way is an offshoot of social democracy which aims to fuse economic liberalism with social democratic economic policies and center-left social policies. It is a reconceptualization of social democracy developed in the 1990s and is embraced by some social democratic parties; some analysts have characterized the Third Way as part of the neoliberal movement.
In political science, democratic socialism and social democracy are sometimes seen as synonyms, while they are distinguished in journalistic use. Under this democratic socialist definition, social democracy is an ideology seeking to gradually build an alternative socialist economy through the institutions of liberal democracy. Starting in the post-war period, social democracy was defined as a policy regime advocating the reformation of capitalism to align it with the ethical ideals of social justice.
What socialists such as anarchists, communists, social democrats, syndicalists, and some social democratic proponents of the Third Way share in common is history, specifically that they can all be traced back to the individuals, groups, and literature of the First International, and have retained some of the terminology and symbolism such as the colour red. How far society should intervene and whether the government, mainly the existing government, is the right vehicle for change are issues of disagreement. As the Historical Dictionary of Socialism summarizes, "there were general criticisms about the social effects of the private ownership and control of capital", "a general view that the solution to these problems lay in some form of collective control (with the degree of control varying among the proponents of socialism) over the means of production, distribution, and exchange", and "there was agreement that the outcomes of this collective control should be a society that provided social equality and justice, economic protection, and generally a more satisfying life for most people". Socialism became a catch-all term for the critics of capitalism and industrial society. Social democrats are anti-capitalists insofar as criticism about "poverty, low wages, unemployment, economic and social inequality, and a lack of economic security" is linked to the private ownership of the means of production.
Social democracy or social democratic remains controversial among socialists. Some define it as representing a Marxist faction and non-communist socialists or the right-wing of socialism during the split with communism. Others have noted its pejorative use among communists and other socialists. According to Lyman Tower Sargent, " socialism refers to social theories rather than to theories oriented to the individual. Because many communists now call themselves democratic socialists, it is sometimes difficult to know what a political label really means. As a result, social democratic has become a common new label for democratic socialist political parties."
In the 21st century, it has become commonplace to define social democracy in reference to Northern and Western European countries, and their model of a welfare state with a corporatist system of collective bargaining. Social democracy has also been used synonymously with the Nordic model. Henning Meyer and Jonathan Rutherford associate social democracy with the socioeconomic order in Europe from the post-war period until the early 1990s. Social democratic roots are also observed in Latin America during the early 20th century; this was the case in Uruguay during the two presidential terms of José Batlle y Ordóñez.
While the welfare state has been accepted across the political spectrum, particularly by conservatives (Christian democrats) and Liberalism (social liberals), one notable difference is that socialists see the welfare state "not merely to provide benefits but to build the foundation for emancipation and self-determination". In the 21st century, a social democratic policy regime may further be distinguished by a support for an increase in welfare spending policies or an increase in .
Some distinguish between ideological social democracy as part of the broad socialist movement and social democracy as a policy regime. They call the first classical social democracy or classical socialism, and the latter as competitive socialism, liberal socialism, neo-social democracy, or new social democracy.
In the 20th century, the term came to be associated with the positions of the German and Swedish parties. The first advocated revisionist Marxism, while the second advocated a comprehensive welfare state. By the 21st century, parties advocating social democracy include Labour, Left, and some Green parties. Most social democratic parties consider themselves democratic socialists and are categorized as socialists. They continue to reference socialism, either as a post-capitalist order or, in more ethical terms, as a just society, described as representing democratic socialism, without any explicit reference to the economic system or its structure. Parties such as the Social Democratic Party of Germany and the Swedish Social Democratic Party describe their goal as developing democratic socialism, with social democracy as the principle of action. In the 21st century, European social democratic parties represent the centre-left and most are part of the Party of European Socialists, while democratic socialist parties are to their left within the Party of the European Left. Many of those social democratic parties are members of the Socialist International, including several democratic socialist parties, whose Frankfurt Declaration declares the goal of developing democratic socialism. Others are also part of the Progressive Alliance, founded in 2013 by most contemporary or former member parties of the Socialist International.
Later in their lives, Karl Marx and Friedrich Engels argued that in some countries, workers might be able to achieve their aims through peaceful means. In this sense, Engels argued that socialists were evolutionists, although both Marx and Engels remained committed to social revolution. In developing social democracy, Eduard Bernstein rejected orthodox Marxism's revolutionary and materialist foundations. Rather than class conflict and socialist revolution, Bernstein's Marxist revisionism reflected that socialism could be achieved through cooperation between people regardless of class. Nonetheless, Bernstein paid deference to Marx, describing him as the father of social democracy but declaring that it was necessary to revise Marx's thought in light of changing conditions. Influenced by the gradualist platform favoured by the Fabian movement in Britain, Bernstein advocated a similar evolutionary approach to socialist politics that he termed evolutionary socialism. Evolutionary means include representative democracy and cooperation between people regardless of class. Bernstein accepted the Marxist analysis that the creation of socialism is interconnected with the evolution of capitalism.
August Bebel, Bernstein, Engels, Wilhelm Liebknecht, Marx, and Carl Wilhelm Tölcke are all considered founders of social democracy in Germany. However, Bernstein and Lassalle, along with labourists and reformists such as Louis Blanc in France, led to the widespread association of social democracy with socialist reformism. While Lassalle was a reformist state socialist, Bernstein predicted a long-term coexistence of democracy with a mixed economy during the reforming of capitalism into socialism and argued that socialists needed to accept this. This mixed economy would involve public, cooperative, and private enterprises, and it would be necessary for an extended period before private enterprises evolve of their own accord into cooperative enterprises. Bernstein supported state ownership only for certain parts of the economy that the state could best manage and rejected a mass scale of state ownership as being too burdensome to be manageable. Bernstein was an advocate of Kantian socialism and neo-Kantianism. Although unpopular early on, his views became mainstream after World War I. In The Future of Socialism (1956), Anthony Crosland argued that "traditional capitalism has been reformed and modified almost out of existence, and it is with a quite different form of society that socialists must now concern themselves. Pre-war anti-capitalism will give us very little help", for a new kind of capitalism required a new kind of socialism. Crosland believed that these features of reformed managerial capitalism were irreversible, but it has been argued within the Labour Party and by others that Margaret Thatcher and Ronald Reagan brought about its reversal in the 1970s and 1980s. Although the post-war consensus represented a period where social democracy was "most buoyant", it has been argued that "post-war social democracy had been altogether too confident in its analysis" because "gains which were thought to be permanent turned out to be conditional and as the reservoir of capitalist growth showed signs of drying up". In Socialism Now (1974), Crosland argued that "much more should have been achieved by a Labour Government in office and Labour pressure in opposition. Against the dogged resistance to change, we should have pitted a stronger will to change. I conclude that a move to the Left is needed".
In Origin, Ideology and Transformation of Political Parties: East-Central and Western Europe Compared, Vít Hloušek and Lubomír Kopecek explain how socialist parties have evolved from the 19th to the early 21st centuries. As the number of people in traditional working-class occupations such as factory workers and miners declined, socialists have successfully widened their appeal to the middle class by diluting their ideology; however, there is still continuity between parties such as the SPD, the Labour Party in Britain, and other socialist parties which remain part of the same famille spirituelle, or ideological party family, as outlined by most political scientists. For many social democrats, Marxism is loosely held to be valuable for its emphasis on changing the world for a more just, better future.
The Russian Revolution was a pivotal moment that furthered the division between reformists and revolutionary socialists. Those supporting the October Revolution renamed themselves as Communists while those opposing the retained the Social Democrat label. While both groups technically shared the goal of a communist society that fully realized the principle of "from each according to his ability, to each according to his need", the Communists sought to distance themselves from to Social Democracy
The Bolsheviks split from the Second International and created their own separate Communist International (Comintern) in 1919 that sought to rally revolutionary social democrats together for socialist revolution. With this split, the reformists founded the Labour and Socialist International (LSI) in 1923. The LSI had a history of rivalry with the Comintern, with which it competed over the leadership of the international socialist and labour movement.
During the 1920s and 1930s, social democracy became dominant in the socialist movement, mainly associated with reformist socialism while communism represented revolutionary socialism. Under the influence of politicians like Carlo Rosselli in Italy, social democrats began disassociating themselves from orthodox Marxism altogether as represented by Marxism–Leninism, embracing liberal socialism, Keynesianism, and appealing to morality rather than any consistent systematic, scientific, or materialist worldview. Social democracy appealed to communitarian, corporatist, and sometimes nationalist sentiments while rejecting the economic and technological determinism generally characteristic of orthodox Marxism and economic liberalism.
By the post-World War II period and its economic consensus and expansion, most social democrats in Europe had abandoned their ideological connection to orthodox Marxism. They shifted their emphasis toward social policy reform as a compromise between capitalism to socialism. According to Michael Harrington, the primary reason for this was the perspective that viewed the Stalinist-era Soviet Union as having succeeded in usurping the legacy of Marxism and distorting it in propaganda to justify totalitarianism. In its foundation, the Socialist International denounced the Bolshevik-inspired communist movement, "for it falsely claims a share in the Socialist tradition". Furthermore, core tenets of Marxism have been regarded by social democrats as having become obsolete, including the prediction that the working class was the decisive class with the development of capitalism. In their view, this did not materialize in the aftermath of mass industrialization during World War II.
In Britain, the social democratic Gaitskellites emphasized the goals of personal liberty, social welfare, and social equality. The Gaitskellites were part of a political consensus between the Labour and Conservative parties, famously dubbed Butskellism. Some social democratic Third Way figures such as Anthony Giddens and Tony Blair, who has described himself as a Christian socialist and a socialist in ethical terms, insist that they are socialists, for they claim to believe in the same values that their anti-Third Way critics do. According to those self-proclaimed social democratic modernizers, Clause IV's open advocacy of state socialism was alienating potential middle-class Labour supporters, and nationalization policies had been so thoroughly attacked by neoliberal economists and politicians, including rhetorical comparisons by the right of state-owned industry in the West to that in the Soviet Union and the Eastern Bloc, and nationalizations and state socialism became unpopular. Thatcherite Conservatives were adept at condemning state-owned enterprises as economically inefficient. For the Gaitskellites, nationalization was not essential to achieve all major socialist objectives; public ownership and nationalization were not explicitly rejected but were seen as merely one of numerous useful devices. According to social democratic modernizers like Blair, nationalization policies had become politically unviable by the 1990s.
During the Third Way development of social democracy, social democrats adjusted to the neoliberal political climate that had existed since the 1980s. Those social democrats recognized that outspoken opposition to capitalism was politically non-viable and that accepting the powers that be, seeking to challenge free-market and laissez-faire variations of capitalism, was a more immediate concern. The Third Way stands for a modernized social democracy, but the social democracy that remained committed to the gradual abolition of capitalism and social democrats opposed to the Third Way merged into democratic socialism. Although social democracy originated as a revolutionary socialist or communist movement, one distinction between democratic socialism and social democracy is that the former can include revolutionary means. The latter proposes representative democracy under the rule of law as the only acceptable constitutional form of government.
During the Great Recession, Social Democratic parties in Europe increasingly adopted austerity as a policy response to the economic crisis, shifting away from the traditional Keynesian response of deficit spending. According to Björn Bremer, this shift in thinking was due to the influence of supply-side economics on Social Democratic leaders and by electoral motivations whereby Social Democrats wanted to appear economically competent to voters by adopting orthodox fiscal policies.
Democratic socialism represents social democracy before the 1970s, when the post-war displacement of Keynesianism by monetarism and neoliberalism caused many social democratic parties to adopt the Third Way ideology, accepting capitalism as the status quo for the time being and redefining socialism in a way that maintains the capitalist structure intact. Like modern social democracy, democratic socialism tends to follow a gradual or evolutionary path to socialism rather than a revolutionary one. Policies commonly supported are Keynesian and include some degree of regulation over the economy, social insurance schemes, public pension programs, and a gradual expansion of public ownership over major and strategic industries.
According to both right-wing critics and supporters alike, policies such as universal health care and education are "pure Socialism" because they are opposed to "the hedonism of capitalist society". Because of this overlap, democratic socialism refers to European socialism as represented by social democracy, especially in the United States, where it is tied to the New Deal. Some democratic socialists who follow social democracy support practical, Progressivism reforms of capitalism and are more concerned with administrating and humanising it, with socialism relegated to the indefinite future. Other democratic socialists want to go beyond mere meliorist reforms and advocate the systematic transformation of the mode of production from capitalism to socialism.
The lack of a strong and influential socialist movement in the United States has been linked to the Red Scare, and any ideology associated with socialism brings social stigma due to its association with authoritarian socialist states. Socialism has been used as a pejorative term by members of the political right to stop the implementation of liberal and progressive policies and proposals and to criticize the public figures trying to implement them. Although Americans may reject the idea that the United States has characteristics of a European-style social democracy, it has been argued by some observers that it has a comfortable social safety net, albeit severely underfunded in comparison to other Western countries. It has also been argued that many policies that may be considered socialist are popular but that socialism is not. Others, such as Tony Judt, described modern liberalism in the United States as representing European social democracy.
When nationalization of large industries was relatively widespread in the 20th century until the 1970s, it was not uncommon for commentators to describe some European social democracies as democratic socialist states seeking to move their countries toward a socialist economy. In 1956, leading Labour Party politician and British author Anthony Crosland said that capitalism had been abolished in Britain, although others such as Welshman Aneurin Bevan, Minister of Health in the first post-war Labour government and the architect of the National Health Service, disputed the claim. For Crosland and others who supported his views, Britain was a socialist state. According to Bevan, Britain had a socialist National Health Service, which opposed the hedonism of Britain's capitalist society.
Although, as in the rest of Europe, the laws of capitalism still operated fully and private enterprise dominated the economy, some political commentators stated that during the post-war period, when social democratic parties were in power, countries such as Britain and France were democratic socialist states. The same claim has been applied to Nordic countries with the Nordic model. In the 1980s, the government of President François Mitterrand aimed to expand dirigism and attempted to nationalize all French banks, but this attempt faced opposition from the European Economic Community because it demanded a free-market economy among its members. Public ownership never accounted for more than 15–20% of capital formation, further dropping to 8% in the 1980s and below 5% in the 1990s after the rise of neoliberalism.
The collapse of the legitimacy of state socialism and Keynesian interventionism (with the discovery of the phenomenon of stagflation) has been an issue for social democracy. This has provoked re-thinking of how socialism should be achieved by social democrats, including changing views by social democrats on private property—anti-Third Way social democrats such as Robert Corfe have advocated a socialist form of private property as part of new socialism (although Corfe technically objects to private property as a term to collectively describe property that is not publicly owned as being vague) and rejecting state socialism as a failure. Third Way social democracy was formed in response to what its proponents saw as a crisis in the legitimacy of socialism—especially state socialism—and the rising legitimacy of neoliberalism, especially laissez-faire capitalism. The Third Way's view of the crisis is criticized for being too simplistic. Others have criticized it because with the fall of state socialism, it was possible for "a new kind of 'third way' socialism (combining social ownership with markets and democracy), thereby heralding a revitalization of the social democratic tradition"; however, it has been argued that the prospect of a new socialism was "a chimera, a hopeful invention of Western socialists who had not understood how 'actually existing socialism' had totally discredited any version of socialism among those who had lived under it".
Similar policies were later adopted in most of Western Europe, including France and the United Kingdom (the latter in the form of the Liberal welfare reforms), with both socialist and liberal parties adopting those policies. In the United States, the progressive movement, a similar social democratic movement predominantly influenced more by social liberalism than socialism, supported progressive liberals such as Democratic presidents Woodrow Wilson and Franklin D. Roosevelt, whose New Freedom and New Deal programmes adopted many social democratic policies. With the Great Depression, economic interventionism and nationalizations became more common worldwide and the post-war consensus until the 1970s saw Keynesian social democratic and mixed economy policies put in place, leading to the post-World War II boom in which the United States, the Soviet Union, the Western European, and East Asian countries experienced unusually high and sustained economic growth, together with full employment. Contrary to early predictions, this period of high economic growth and national development also included many countries that were devastated by the war, such as Japan (Japanese post-war economic miracle), West Germany and Austria (Wirtschaftswunder), South Korea (Miracle of the Han River), France (Trente Glorieuses), Italy (Italian economic miracle), and Greece (Greek economic miracle).
With the 1970s energy crisis, the abandonment of both the gold standard and the Bretton Woods system along with Keynesian social democratic, mixed-economy policies and the implementation of market-oriented, monetarist, and neoliberal policies (privatization, deregulation, free trade, economic globalization, and anti- fiscal policy, among others), the social democratic welfare state was put in doubt. This caused several social democratic parties to adopt the Third Way, a centrist ideology combining social democracy with neoliberalism; however, the Great Recession in the late 2000s and early 2010s cast doubts on the Washington Consensus, and protests against austerity measures ensued. There was a resurgence of social democratic parties and policies, especially in the United States and the United Kingdom, with the rise of politicians such as Bernie Sanders and Jeremy Corbyn, who rejected the Third Way, after the economic recession caused the Pasokification of many social democratic parties.
The United Nations World Happiness Report shows that the happiest nations are concentrated in social democratic nations, especially in Northern Europe, where the Nordic model is applied. This is at times attributed to the success of the social democratic Nordic model in the region, where similar democratic socialist, labourist, and social democratic parties dominated the region's political scene and laid the ground for their universal welfare states in the 20th century. The Nordic countries, including Denmark, Finland, Iceland, Norway, and Sweden, as well as Greenland and the Faroe Islands, also ranks highest on the metrics of real GDP per capita, economic equality, public health, life expectancy, solidarity, perceived freedom to make life choices, generosity, quality of life, and human development, while countries practising a neoliberal form of government have registered relatively poorer results. Similarly, several reports have listed Scandinavian and other social democratic countries as ranking high on indicators such as civil liberties, democracy, Press freedom, Labour rights and Economic freedom freedoms, peace, and freedom from corruption. Numerous studies and surveys indicate that people live happier lives in countries ruled by social democratic parties than those ruled by neoliberal, centrist, and right-wing governments.
Marxian socialists argue that social democratic welfare policies cannot resolve the fundamental structural issues of capitalism, such as cyclical fluctuations, exploitation, and alienation. Accordingly, social democratic programs intended to ameliorate living conditions in capitalism, such as unemployment benefits and taxation on profits, creates further contradictions by further limiting the efficiency of the capitalist system by reducing incentives for capitalists to invest in further production. The welfare state only serves to legitimize and prolong the exploitative and contradiction-laden system of capitalism to society's detriment. Critics of contemporary social democracy, such as Jonas Hinnfors, argue that when social democracy abandoned Marxism, it also abandoned socialism and became a liberal capitalist movement, effectively making social democrats similar to non-socialist parties like the Democratic Party in the United States.
Market socialism is also critical of social democratic welfare states. While one common goal of both concepts is to achieve greater social and economic equality, market socialism does so through changes in enterprise ownership and management. Social democracy attempts to do so by subsidies and taxes on privately owned enterprises to finance welfare programs. Franklin Delano Roosevelt III (grandson of United States President Franklin D. Roosevelt) and David Belkin criticize social democracy for maintaining a Property income with an active interest in reversing social democratic welfare policies and a disproportionate amount of power as a class to influence government policy. The economists John Roemer and Pranab Bardhan point out that social democracy requires a strong labour movement to sustain its heavy redistribution through taxes and that it is idealistic to think such redistribution can be accomplished in other countries with weaker labour movements, noting that social democracy in Scandinavian countries has been in decline as the labour movement weakened.
Some critics say social democracy abandoned socialism in the 1930s by endorsing Keynesian welfare capitalism. The democratic socialist political theorist Michael Harrington argued that social democracy historically supported Keynesianism as part of a "social democratic compromise" between capitalism and socialism. Although this compromise did not allow for the immediate creation of socialism, it created welfare states and "recognized noncapitalist, and even anticapitalist, principles of human need over and above the imperatives of profit". Social democrats in favour of the Third Way have been accused of endorsing capitalism, including anti-Third Way social democrats who have accused Third Way proponents such as Anthony Giddens of being anti-social democratic and anti-socialist in practice. Some critics and analysts argue that many prominent social democratic parties, such as the Labour Party in Britain and the Social Democratic Party of Germany, even while maintaining references to socialism and declaring themselves democratic socialist parties, have abandoned socialism in practice, whether unwillingly or not.
Social democracy's reformism has been criticized by both the left and right, on the grounds that if reformist socialists were left to govern a capitalist economy, they would have to do so according to capitalist, not socialist, logic. For example, Joseph Schumpeter writes in Capitalism, Socialism and Democracy (1942): "Socialists had to govern in an essentially capitalist world... a social and economic system that would not function except on capitalist lines.... If they were to run it, they would have to run it according to its own logic. They would have to 'administer' capitalism". Similarly, Irving Kristol argued: "Democratic socialism turns out to be an inherently unstable compound, a contradiction in terms. Every social democratic party, once in power, soon finds itself choosing, at one point after another, between the socialist society it aspires to and the liberal society that lathered it". Joseph Stalin was a vocal critic of reformist social democrats, later coining the term social fascism to describe social democracy in the 1930s because, in this period, it embraced a similar corporatist economic model to the model supported by fascism. This view was adopted by the Communist International, which argued that capitalist society had entered the Third Period in which a proletarian revolution was imminent but could be prevented by social democrats and other fascist forces.
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