Asking whether socialism is back immediately invites us to consider what socialism actually is. Since the early 20th century, it might be argued that the Labour party has adhered to three distinctive conceptions of ‘socialism’.
The first conceives socialism as about nationalisation and public ownership. This doctrine is embodied in the original clause IV of the party constitution adopted in 1918, drafted by one of the Fabian Society’s founders, Sidney Webb. The view that socialism can be equated with public ownership reached its pinnacle with the 1945 Attlee government which brought a sweep of war-ravaged industries into state control. Alongside the establishment of the post-war welfare state, the essence of socialism between the 1920s and the 1950s was the nationalisation of the British economy’s ‘commanding heights’.
However, by the late 1950s an alternative conception of ‘socialism’ was taking shape which eschewed Webb’s elevation of public ownership as the fundamental socialist ideal. Writing in The Future of Socialism (1956), Anthony Crosland argued that socialism had ‘no precise, descriptive meaning’, and was a set of values rather than a definitive programmatic commitment. For Crosland, socialism was fundamentally concerned with equality, although his work also emphasised the importance of liberty, insisting that equality and liberty are indissolubly linked.
A further aspect of Crosland’s argument was that socialism was no longer about ownership and state control since modern capitalism itself had been reformed out of existence. Capitalism was becoming more managerial and technocratic, less focused on profit maximisation and more accepting of national systems of regulation. Growth seemed limitless and benign; social security and the welfare state would take the sharp edges off the market economy, ushering in an era of ‘capitalism with a human face’.
This view of socialism was dominant in the party between the 1950s and the 1990s, although there were attempts following the failure of the Wilson-Callaghan governments to return to public ownership as the defining programmatic emblem.
In the 1990s, Labour’s view of socialism was revised once again to emphasise the centrality of ‘community’ rather than equality of outcome and reward. The rewriting of clause IV meant that a new communitarian ethic inspired by ethical socialism animated party doctrine; social equality was perceived as implying a commitment to ‘levelling down’, and throughout the Labour governments after 1997, most Labour politicians were reluctant to use the language of equality.
These periodic revisions of what socialism is were necessary to keep pace with changing circumstances, although each required an overly-dramatic break with the ideological past. The Future of Socialism is a fine work of political theory, but it overstated how far capitalism has really been transformed in Britain. The capitalist system remains short-termist and heavily financialised in the 2010s; it is notoriously difficult to control through national regulatory intervention; global capitalism is characterised by rising inequality; the managerial class has not replaced a ruthless cadre of profit-maximising speculators, although many capitalists are focused on genuine wealth creation; the financial crisis of 2008 is a reminder that structures of ownership still matter. Moreover, Labour in the 1990s too readily ditched the ethical framework of equality, which has rightly been the ideological lodestar of social democrats around the world.
Nonetheless, any return to the form of post-war socialism based on nationalisation in the immediate future appears unlikely. The British economy is less industrialised – it is increasingly small-scale, powered by SMEs and micro-enterprises not large factories – and there are still deficiencies in public ownership relating to efficiency and productivity which Labour was unable to resolve. There is, moreover, seemingly little public appetite for large-scale nationalisation (although a majority of UK voters currently support the renationalisation of the railways).
So what should modern socialism or ‘social democracy’ mean for today’s world, if not state ownership of the productive assets of the economy?
First, it should be concerned with reshaping the culture of capitalism and markets, through the politics of partnership as much as confrontation. Second, social democracy emphasises that the state must play an active role in the economy through a state investment bank, active regional policy, industrial strategy, and so forth. Third, our society must become more equal not only through social security and a decent welfare state, but through the fundamental redistribution of ownership, assets and human capital: what Amartya Sen terms our ‘capabilities’. Finally, modern social democracy has to be avowedly internationalist. Not only do we have a moral duty to help the dispossessed around the world, but there is little we can achieve for social justice in the UK without acting in concert with our European and global partners.
This is a modern and reformist conception of what social democracy means for today’s world, inspired by socialist thought and writing throughout the ages.
This article is based on a speech to the Midlands’ Fabian Conference on reforming global capitalism. Patrick Diamond is Lecturer in Public Policy at Queen Mary, University of London, and Vice-Chair of Policy Network.