[There are few people that Jacobin is more indebted to than York University professor Leo Panitch and the group of thinkers around the journal that he co-edited, Socialist Register.

The Register was founded in 1964, right as the New Left was emerging. Its early issues, naturally, display a warranted criticism of conservative social-democratic parties eager to forge corporatist pacts with capital.

Today, in our vicious neoliberal era, it’s common to look back with more fondness on those governments. But in the interview below, Panitch offers a reminder that even if we want to preserve the gains of social democracy, we have to go beyond traditional social democracy and to a more radical democratic socialism.]

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BKS: We talk a lot about how social-democratic parties have lurched rightward in recent decades. But in some ways the dangers of conservatism and bureaucratization was already a topic of discussion within the socialist movement before World War I, when mass workers’ parties began to emerge in Europe.

LP: The essential thing, I think, is to familiarize oneself with a book by Robert Michels, who was one of those amazing early twentieth century European journalists, who wrote in Italian, French, and German, and was a former student of the sociologist Max Weber. Michel wrote a famous book called Political Parties, in which he talks about the “iron law of oligarchy.” In it, he traces the development of these mass socialist parties which had begun outside of parliament, emerging out of working-class organization, between 1870 and World War I, and he says, “Look, you can’t compare these parties to the bourgeois parties which originated in parliament, and which seek above all to maintain the power of a preexisting elite.”

Unlike the bourgeois parties, the parties of socialism originated outside the electoral arena, in the growth of the workers movement, and their sovereign bodies were the mass conference of delegates, representing the mass membership rather than in the parliamentary elite. Michels took the German Social Democratic Party (SPD) as his model and he showed that by World War I, both due to organizational and what he called “psychological” reasons — remember this was the era of Freud — these mass socialist parties had become increasingly dominated by oligarchic leaderships. And he was largely right. He showed that the leadership did not want to go back to the factory, and therefore used its control over the party press, party finances, and the conference agendas in such a way as to reproduce itself.

This gave rise to the “social-democratic centralism” that characterized the Austrian, Swedish, as well as German social-democratic parties right through the twentieth centuries, including in their most successful period of the 1950s and 1960s.

So I think that it is true that this oligarchic tendency, while it was challenged from time to time in pre-World War I social democracy, was not nearly addressed enough, and certainly not nearly enough afterwards. And it has to be said that, except for Bukharin, none of the Bolshevik leadership ever seriously confronted Michels, either.

When I used to be invited to Cuba or Yugoslavia and asked to speak to party meetings there, I would mainly talk about that book, and let me tell you it was very interesting to see the recognition on the faces of the people who would be listening, who’d never heard of this work.

BKS: So, would that support the anarchist critique of party organization, that parties inevitably become bureaucratized and unresponsive to their rank and file?

LP: Well I think there’s something left out of this, which is the ideological and political aspect. If one goes back to Marx’s critique of the German social democrats’ 1875 Gotha Program, he was already identifying, at the very beginning, at the very moment of creation of the German SPD, a tendency towards statism and gradualism in the party’s ideology. And we need to also ask whether built into the logic of trying to win the right to vote for working-class people was a tendency to try to win reforms on the terrain of the existing state, casting working-class politics in a moderate, reformist bent.

BKS: Marx’s criticism of the Gotha Program was mostly about the Lasallian influence on the document, which favored a kind of top-down, elitist reformism.

LP: Exactly. And Marx offered this criticism without breaking with the SPD, which after all had revived the Communist Manifesto as a key text for the socialist movement, after it had largely been ignored for over two decades. Marx’s criticism was of one stream in social democracy, but it was one that was always contested within it, as were the oligarchic tendencies that Michels later identified. Elements in the leadership were trying to combat these tendencies, not least what Michels identified as the “psychological” tendency on the part of the masses to defer to the leadership. The creation of party schools and the practices in them were very much oriented toward developing a critical capacity among the SPD’s membership, including the capacity to challenge the party leadership.

And if you look through the history of the party you find that these debates weren’t simply going on between the base and the leadership, they were going on at the base and they were going on among the leadership. So until 1914, when war fractured the socialist movement, Lenin and Luxemburg were part of social democracy, not something apart from it. They were very much engaged in the struggle to make parties like the SPD radical, democratic organizations, capable of waging a fight against capitalism

BKS: I guess there are two different questions. One, which we’re getting at, is the state of prewar social democracy at the level of its institutions, but the unaddressed question is whether there was an alternative governing program. Because even someone historically from the left wing of the party, like Karl Kautsky, who later got the chance to be a part of nationalization commissions created by newly elected socialist governments in the 1920s, was forced to confront the fact that it was in fact very difficult to figure out a governing program. Social democracy didn’t really know what to do once in power.

LP: Well, if you look at the programs that the mass social-democratic parties developed in the 1890s, they were transformational in their outlook and ambition. They were oriented to the collective ownership of the means of production. And I think they were serious. Whether these parties had figured out how to implement these programs is a whole other question. But that was something they had to discover through the experience of governing. I don’t think the leaders of the socialist movement were naïve at that stage, coming out of the nineteenth century, with so many aristocrats occupying the offices of state personnel, about how much state apparatuses would have to be transformed. But they certainly hadn’t worked out how to transform these institutions.

BKS: And in the case of the social democrats in the interwar period, they were forced to govern through minority governments or in weak coalitions.

LP: In almost every case, that’s right.

BKS: Let’s skip ahead to the most successful example of postwar social democracy, which is the Swedish case. In the years before World War II, the Swedish social democrats managed to win political democracy and begin to govern, then their model really developed with the postwar Rehn-Meidner plan and led to a stunning transformation during the 1950s and 1960s. What kind of structure and party form facilitated this progress?

LP: The Swedish labor movement and the Swedish Workers’ Party (SAP) exemplified the extent to which democratic centralism was to be found in social-democratic parties. In the Swedish case, because the employers centralized so early, creating a powerful employer’s association and coordinating their lockout fund, the labor movement responded even before World War I with a highly centralized structure and a central control over strike fund.

BKS: The Swedish labor federation (LO) was pushed towards centralized patterns of bargaining by the organization of Swedish employers. But obviously there were a combination of factors that shaped the development of Swedish social democracy. Sweden’s a late industrializer, so it develops industrial unionism relatively early on, etc.

LP: With its very militant working-class movement, Sweden was known before World War II as having the “Swedish disease,” which was the term used to characterize how strike-prone the country’s very militant workers were.

It was a militant, but also a highly centralized, working class, and the Swedish party itself was also highly centralized. They only had conventions every three years!

BKS: The Swedish party was built on traditional, Second International–type terms. So, it’s democratic centralist essentially — even though we just associate that today with Communist parties. What was the logic of its governing program, which attempted sweeping transformations but stayed within the confines of capitalism?

LP: It was oriented to developing a modus vivendi with the capitalist class in the view that the further you push the centralization and concentration of capital, the further you are socializing capital itself and the more socialized that capital is, the more likely you’re to be able to get a transition to socialism. That was the orthodoxy of pre–World War I Marxism and the Swedish social democrats held onto that. What they won from capital was the recognition of a powerful labor movement.

So the reason you have 90 percent union density in Sweden is because if you’re going to have unemployment insurance, you get it through the union. And what the state does is it requires some type of collective bargaining that links unemployment insurance to that rather than a state benefit.

This holds even today. The European Union is trying to pass minimum wage regulations and the Nordic countries led by Sweden are rejecting this, because their argument is that this is going to weaken collective bargaining insofar as workers wouldn’t be dependent for their wages on the unions.

BKS: What was the deal Swedish social democrats made with Swedish employers based on this unique strength?

LP: The agreement they made with the small, centralized class of employers back in the early 1950s was the Rehn–Meidner model. Meidner was a socialist, by the way, but Rehn was not. The Rehn–Meidner model was that we will narrow the inequalities within the working class through a deal with capital.

In exchange for agreeing to wage restraint for the highest-paid workers in centralized collective bargaining arrangements, more poorly paid workers were allowed to get higher wages. But their higher wages would mean that less competitive businesses, those with lower profits, couldn’t afford higher wages and would go out of business. Those workers would lose their jobs by not accommodating their wages to those less competitive firms, and then big capital with the aid of the state would retrain those workers so that they could come to work in the larger, more centralized export-competitive industries. And that involved a change in regional inequalities as well.

It above all involved securing from capital the obligation that they would reinvest the profits that they were getting from highly paid workers who are restraining their wage demands. And they did, until about the late 1960s when these large Swedish corporations, Electrolux for instance, started using their profits to invest abroad, for example in the Italian electrical goods industry, as capital began to internationalize.

So insofar they increasingly weren’t only interested in exporting from Sweden, and more and more interested in internationalizing their capital accumulation, Meidner responded to that very early. I know this because I got know him rather well in the early 1990s, and he’s told me himself that he had realized by the late 1960s,”Look, we can’t hold on to the old deal that we struck, what we now need to begin to do is take capital away from capital.” And that’s how the famous Meidner Plan, the “wage-earner funds” proposal to acquire ownership shares in the largest companies, was spawned.

To Meidner’s credit, it wasn’t just formulated at the top. The plan was passed by the LO only after a long process of consultation with the union membership. He once showed me a sixteen-page, single-space response by a steelworker to a survey done as part of the consultations with the LO research department, which Meidner headed up, on what should this plan look like.

And very interestingly when it was finally brought to the LO convention, it was proposed that the Meidner Plan would require of all firms with over one hundred employees to set aside a portion of their profits into a wage-earners fund that the unions would control, which would then be used to take over more and more shares of the large corporations. And there was a revolt from the floor whereby an amendment on that proposal that the wage-earners fund applied to all firms with twenty-five or more employees was passed. And when it was passed, delegates spontaneously started singing the “Internationale,” according to Meidner it was the first time in decades he had heard it sung at an LO convention. Yet Meidner took a view that this extension of the plan to smaller firms was a disastrous mistake because it allowed big capital to mobilize small capital behind it, in opposition to the plan.

BKS: Employers organized mass protests against the Meidner Plan, the largest protests in Swedish history.

LP: Prime Minister Olof Palme, a left-wing social democrat, and the Swedish party leadership in general were against the plan. Palme was not enthusiastic about the wage-earner funds because he recognized that big Swedish capital was not going to collaborate in its own euthanasia. So Palme immediately offered Meidner and the LO the best health and safety legislation in the world if they would drop this. And over time, the Meidner Plan increasingly got watered down in commissions that the party set up with the LO, until by the time it was passed, somebody calculated that it would take 250 years to get 51 percent worker ownership of any major corporations in Sweden.

BKS: So just to recap, Sweden has this fairly unique background and developed highly centralized patterns of labor bargaining. It has a very strong social-democratic party that’s able to cobble together a majority. It pushes this economic program that’s built primarily through the model of centralized bargaining which makes Sweden more prosperous and shifts Swedish manufacturing towards capital-intensive technologies. It’s a hugely productive economy. And a lot of the proceeds from this wealth are used to pay for new social and economic guarantees, so that you have the growth of the Swedish welfare state. And then by the 1960s and 1970s this model seems to be hitting certain barriers. And the Meidner Plan is both an ideological push to make the economy more egalitarian and a practical response to a dilemma.

LP: The Meidner Plan is most of all a practical response to the internationalization of Swedish capital, to the inevitability that capital will not be content to accumulate on its own terrain, however much it still wants to be export-competitive.

BKS: So we socialize our firms not just to gain democratic control over them but because we need to try to control more of the investment function.

LP: In order to preserve the gains of social democracy, you have to go beyond traditional social democracy. And this was recognized by socialists within social-democratic parties everywhere by the 1970s, whereas people like Rehn, people who created the postwar model and were not socialists, thought that they had established a mixed economy that was now stable forever.

What was discovered with the globalization of capital by the 1960s, and then the increasing crisis of the welfare state and the full employment economy, was that a lot of workers were becoming more and more militant and they began to squeeze corporate profits, as more and more of the well-off workers even in Sweden broke with the wage-egalitarian arrangement.

So the Swedish model was already breaking down because of the militancy of highly paid workers by the late 1960s. As I said, Meidner was a socialist. He was oriented towards collectivist, socialized solutions from the beginning. Rehn was one of those who took the view that we had arrived at a compromise with capital and this was the best of all possible worlds which would last forever. Those people were less realistic than the socialists who understood much better that the dynamic of capitalist concentration and centralization was not that it was going to spill over into socialism inevitably. Rather, it would lead to the kinds of contradictions that would undermine the postwar settlement, and eventually the unity and power of the working class. It was not only an ideological difference between Rehn and Meidner, it was also his deeper analysis of capitalism that led him to understand this so well. Meidner was an exception in pushing for socialization. Most social democrats were not prepared to take that risk and lived under the illusion that you could reestablish a stable corporatism at a time when capital was escaping it and when workers were growing restless, as well.

BKS: We could say that, in other words, there was the technical feasibility of a “social democratic road to socialism” through programs like the wage-earner funds and other measures to democratize the state and economy. The problem was really political.

LP: I don’t know about that. We do know that there were people who were prepared to put back on the agenda a democratic path to socialism, but whether they could have achieved that within the framework of social-democratic parties, of Eurocommunist parties, of the bourgeois democratic state, and the framework of the informal American empire that facilitated and informally governed an increasingly globalizing capitalism, we just don’t know. All we know was the attempt was made in the 1970s and the attempt was suppressed, and it was largely suppressed by the dominant forces in the social-democratic parties, including most of the union leadership as well.

One factor that shaped this outcome was that social-democratic parties had not been engaged, as pre–World War I social democracy was, in the political education of the membership, in the use of the party press to develop socialist ideas, socialist viewpoints, analytic capacities.

Even in Sweden, those party presses were no longer playing that kind of role. Swedes could be very proud of their powerful labor movement, of the elements of the welfare state that were so impressive in Sweden, but that is not to say that they were being developed as socialists in any sense.

BKS: But I guess the question is whether there needed to be combined with this push for industrial democracy within the LO, an attempt to transform the structures of the SAP to make it more responsive to rank-and-file pressure and more democratic.

LP: That why I gave the example of the rank-and-file steelworker’s sixteen-page comment during the LO consultation process on the Meidner Plan. This reflected both the capacities of the workers and an attempt to encourage it all the more.

But very little of that was being done, especially in the party.

BKS: We see glimmers of a revolt against the leadership of social-democratic parties, for example in the youth section of the SPD in Germany and a few other places. But nowhere was it really sustained.

LP: Yes, that was there in all of these parties in the 1970s. In the German case, as you say, the Jusos was expelled very quickly by the SPD — which has never been very tolerant — and a lot of them went on to form the Green Party which in its initial phase was very oriented to democratization through the recall of parliamentarians, rotation of elected officials, more referenda, et cetera. In contrast to the immediate expulsion of this democratizing New Left (such as also occurred with the NDP in Canada in the early 1970s), you got the long protracted struggle inside the British Labour Party, with Tony Benn as its most prominent figure, to turn it into a democratic-socialist party, but which was ultimately defeated by the early 1980s.

Just like the attempts of those on the New Left to create a better Bolshevik model failed, the attempts of those who tried to turn social-democratic parties into dynamic democratic-socialist parties failed as well.

BKS: So let’s move forward today and to the small glimmers we have with Corbynism, with Sanders, which seem to be resurrecting some of the classic demands of social democracy, but are doing so in a very different context, the context without a powerful organized labor movement, or even the same working-class subject that sustained our organizing from the middle of the nineteenth century through the 1970s.

It seems to me that despite what happened last month in Britain, we could still cobble together an electoral majority. But do we have the forces to carry out even our immediate program and how do we deal with the fact that we don’t have this organized working-class subject that traditionally was the base of the socialist movement?

For the longest time, we were just trying to organize outside of electoral politics until we got to the point where we could rebuild our forces. And now it seems like we’re operating in reverse, where we’re using this electoral opening and hoping that somehow through rhetoric and discourse alone, we wake up a working-class subject.

LP: Corbyn and Sanders were socialized politically at a moment in the 1960s and 1970s, when there was a real attempt to turn social democracy back into democratic socialism. And it’s very interesting that these figures are of that generation. What they’ve managed to do is to galvanize a new generation behind that project. And it’s been very exciting to see a new generation emerge to take this up.

Despite Corbyn’s defeat this past December, we can look at the 2017 election in Britain only two years earlier, where Corbyn increased the Labour vote to over 40 percent, the largest increase by any party in any election since 1945, which shows that a democratic-socialist electoral strategy could be viable.

What happened between 2017 and 2019 needs to be explained. It partly had to do with Corbyn’s success in 2017, because that meant that [former Conservative prime minister] Theresa May was not able to get Brexit through the British parliament, which trapped Corbyn and the Labour leadership, ironically, inside the parliamentary framework of bourgeois democracy, so that its capacity to continue as a mobilizing agent became very limited.

Moreover, the majority of the parliamentary Labour party remained hostile to Corbyn as a socialist, believing he is at best utterly naïve and romantic in his socialist commitment. They would like a more humane capitalism, but they have no interest in a socialist project.

Corbyn had to lead a party, the vast majority of whose elected leadership was hostile to his political project. And he got caught in that contradiction through the course of the Brexit conjuncture. If Corbyn had won this election, he would’ve had to govern with a majority of the parliamentary party,which was not interested in a socialist project. And if Sanders wins, he will have to govern with the majority of Democrats in Congress who are not interested in that project. The contradictions of that could make what happened with Syriza look mild.

BKS: If anything we’re back to some of the dilemmas of the interwar period.

LP: What was really exciting and important about Corbyn was not the prospect of him winning the next election. I’d never have expected that. Whether he won or not, the limits on his government would have been immense. And the same applies to Sanders. The important thing is the new generation that has been galvanized and that generation is committed to trying to discover through the course of the twenty-first century a democratic path to socialist transformation. And increasingly, I think, the need for that will become obvious, because the logic of capitalism today is producing the type of ecological crisis that could only be solved by democratic-socialist planning. So the attempt to discover this by the new generation is incredibly important — whether they will in fact discover how to do this, only time will tell.

BKS: But I guess what we could be pessimistic about is even the fact that as me and you are discussing this, we’re talking about “the youth,” the “new generation,” we’re not talking in the same way about organized workers at the point of production.

LP: The early mass socialist parties were organizing the workers movement, they were not representing a preexisting, already-made class. Those parties were crucial agents in the making of the modern working class. One of the reasons the US working class was so underdeveloped ideologically, organizationally — so likely to call itself “middle class” — was precisely that after 1896 workers were largely expelled from the political process without having a mass socialist party behind it, whereas the mass parties that arose in other parts of the world were engaged in developing workers’ capacities to think of themselves as workers.

What the new generation will have to be engaged in, as it is engaged in electoral politics, is also a struggle to remake the working class. In the American case, to some extent, to make it entirely anew.

BKS: We never got back to how we solve, rather than just recognize, the “iron law of oligarchy.”

LP: At the very least, being conscious of the tendency to oligarchy should lead us to pay a lot of attention to the question of what organizational forms will less likely facilitate the crystallization of undemocratic practices.

BKS: And avoid shortcuts, even when we have popular working-class leader who it’s more convenient to just keep in office indefinitely.

LP: Yes. And the temptation will always be great. So there’s no point pretending that this is ever something that will be a settled matter.

BKS: I guess the other key point is that we can’t just repave and slowly walk down the social-democratic road until we hit a roadblock again and hopefully we have a way to get around it this time.

The crisis of the 1970s happened after decades of steady social-democratic advance. But we don’t seem to have that time, not only because we don’t have the exceptional conditions of the postwar economic boom, but because we have the looming threat of climate change.

So perhaps the lesson is that in the short-term we can’t just demand a more just redistribution of wealth and social programs, but we need to push for democratization of workplaces and challenge the ownership of capital.

LP: Yes. I think that’s a good way to put it. And at the very least with Corbyn and Sanders there is hope, since they are encouraging a new generation of people toward struggle.

I’m never too optimistic, but I really believe that this new generation is taking a historical responsibility upon itself. Despite the fact that the working class is balkanized, divided, disorganized, much weaker, etc., the current generation has a much better chance of seeing this project through because of the obvious illegitimacy and crisis of those who tell us the answer can be found in reestablishing the partnership with capital tried in the 1950s.

I think increasingly people can see that the old corporatism is not possible. They can see from the crisis of ecological devastation that without democratic economic planning we are not going to be able to resolve our contemporary problems and we’re going to have a host of new ones. So, I think in some ways the chances are greater provided we can develop the institutional capacities, as well as the organizational ones, to begin to remake the class through the process of remaking the politics.

(Leo Panitch was one of the intellectual pillars of the Canadian left and a leading scholar of the global depredations of neoliberalism, who died on 19 December 2020 from COVID-19. He was 75. Bhaskar Sunkara is the founding editor and publisher of Jacobin. Article courtesy: Jacobin, a leading American socialist magazine.)