Phenomenal World

Phenomenal World

June 13th, 2019

Elections, Social Democracy, and the Neoliberal Shift

—   Maya Adereth

Elections, Social Democracy, and the Neoliberal Shift

—   Maya Adereth

 

Campaign poster for Salvador Allende

 

Recovery from the 2008 financial crisis has coincided with the revival of social movements like Occupy Wall Street, the movement of the squares, and Black Lives Matter, and their corollaries in policy proposals aiming to democratize access to wealth and political influence. These movements are rooted in an international radical tradition that, throughout the 20th century, was plagued by its relationship to existing state institutions. Across Western Europe, labor movements found political expression in parties like the Swedish Social Democrats, the German SPD, and the French Socialist Party. These organizations were widely criticized by the movements they represented for moderating popular demands in favor of cross-party compromise. And, while social democratic governments did make significant gains in the postwar period, today’s landscape seems to testify against the durability of these reforms.

The same dynamics extend far beyond the history of left wing politics: whether or not politicians prioritize the needs of their constituents, they often fail to deliver on their promises. This Spring, I met with Adam Przeworski—Professor of Politics at NYU, former member of the September Group of analytical Marxists, and a leading theorist of political economy—to discuss the role of elections in effecting social change, and the political transformations underway today.

During a career spanning thirteen books and more than 150 published articles, Przeworski’s foremost contributions have been in the study of democratic transitions, distributional politics, and the determinants of economic growth. In Democracy and Development, he persuasively challenged modernization theory by proposing an alternative causal narrative: While economic growth does not by necessity generate sustainable democratic institutions, Przeworski found that rich countries that experience radical movements for democracy are more likely to see successful transitions. In Democracy and the Market, he analyzes the political, factional, and economic dynamics behind the wave of revolutions that swept Eastern Europe and Latin America during the late 20th century. Using philosophy, economics, and game theory, Przeworski offered an intricate and groundbreaking evaluation of the failures and successes of movements for democracy and liberal markets. With this unique methodology, in Capitalism and Social Democracy he studied the choices faced by social democratic movements throughout the 20th century, modeling the decisions of both their leaders and supporters through the framework of rational choice.

His most recent book, Why Bother with Elections? wrestles with both the necessity and imperfections of electoral politics. His next book, Crises of Democracy, is forthcoming in September from Cambridge University Press.

An interview with Adam Przeworski

Maya Adereth: Could you start by telling us about your early political development?

Adam Przeworski: I grew up in communist Poland, where both domestic and international politics impacted everyone’s life at all times; I have politics in my blood. As for political science, it was an accident. I’d been studying philosophy and sociology in Warsaw, and a visiting American professor of political science asked me whether I would like to go to the United States and study political science. I didn’t know what political science was, we didn’t even have it as a discipline. But I was 21, and I would have gone anywhere to do anything, so I said why not?

ma: What were the big questions that concerned you when you started out? How have they changed over time?

ap: Initially I was very interested in how different political regimes affect economic growth. That interest is one which persisted throughout my life; I wrote my dissertation on it, I wrote a big book about it in 2000, I just published an article on it. Beyond that, I’ve always had methodological interests. When I left Poland and came to the US, I couldn’t study domestic politics because I knew nothing about them, but I also didn’t want to study Poland from the outside, because I don’t believe in doing that. So I settled on methodological work, which was my primary preoccupation until I landed in Chile.

I lived in Chile first in 1968 and then for a year in 1970-71, which was Allende’s first year in office. Then came the coup in 1973, and the question of democracy became paramount. There were two aspects to this question: the first had to do with which reforms could be achieved through democratic means, and the second was how democracies could be destroyed.

This was when I realized that while we were dreaming of transitions to democracy, we never thought about democracy itself. At that time, we thought of democracies as everything good, and dictatorships as everything bad. All we wanted was to stop the killing and establish democracy, and we assumed everything would be fine. We used to joke—first you have liberalization, then you have transition, and then you have disillusionment. It was during this time that I started thinking about democracy systematically.

Chile

ma: I'd like to ask more about your experience in Chile. I've always thought of the lessons from Chile in terms of the power of the capital strike: property relations were highly unequal at the time Allende took power, and investment came to a standstill in response to his policies, so the economy collapsed and political chaos ensued. Do you agree with this analysis?

ap: I was actively sympathetic towards the “Allende experiment” as it was called. He put forward a reasonably moderate program; it included some nationalizations, but they were mainly motivated by the highly monopolized and inflationary nature of the Chilean economy. It was not ideological. The problem was that Allende did not control his supporters, and the movement was divided over whether to prioritize socialism or democracy. There were some people who said that socialism could not be reached through democratic means because those whose interests were going to be adversely affected would necessarily resort to violence to prevent socialism. And there were some, like Allende, who had a reformist strategy, who basically held that they could do everything for which they had popular support, and nothing more. If they were to lose the next election, they would simply hope to win again some time in the future and make further progress.

The problem was that Allende’s own party did not believe in socialism through democratic means. In fact, the only responsible people in his coalition were the communists. They were very disciplined and they took a long term perspective. But many other groups in the coalition urged him to do things that were undemocratic and illegal. It was not completely infeasible that they would have gone further, because the center left party agreed to compromise on nationalization. But this agreement broke down, and once it did there were no legal instruments for Allende to make use of and the situation turned to violence.

I think the entire left learned a big lesson from that experience. As a matter of fact, the Italian communist party published a document written by Enrico Berlinguer titled “Reflections After Events in Chile.” The conclusion was basically that jeopardizing democracy is a big tactical error. From a strategic angle, the idea of democratic socialism was then theorized mainly by the Italian political philosopher Norberto Bobbio, who said that liberal values are fundamental to any socialist vision.

Elections and Social Change

ma: The time-honored question on the left has always been “reform or revolution.” It seems like your answer is neither. Can you elaborate on the constraints that you see on electoral change, specifically with reference to the argument that elections can only give us the best possible solution for the most number of people, which you make in your most recent book? And, given that you have argued that revolution by a minority is unlikely to have long term democratic consequences, do you think there is any way to enact meaningful political and economic transformations?

ap: I don’t think that elections are an instrument of change. I think they are impotent when it comes to reducing inequality. It’s astounding that we have persistent inequality; not the same in all countries, not the same at all times, but we have persistent inequality in countries which satisfy all the criteria for democracy. There are all kinds of mechanisms for why that happens, but that is the sad conclusion.

The point of departure for thinking about this problem has to be that we live in capitalist societies. Most decisions concerning employment and investment are privately made, and they are made to maximize profit. Any government has to anticipate the effect of its decisions on the reaction of firms, as indicated by the stock market. I’ll give you an interesting fact from Larry Bartels’ Unequal Democracy. One of the things Larry shows is that poor people are more likely to vote for the incumbent following an increase in the income of the top quintile one or two quarters before an election. Why is that?

In this country, the piece of information you get several times a day about the economy is the Dow Jones. Where is stock value going? To the top 10%. But that’s the information the public is bombarded with. So I think this is one generic constraint of capitalism. In 1985 I wrote a book called Capitalism and Social Democracy, where I tried to understand how that works. Suppose you have a completely pro labor government, and it chooses the tax rates. It knows, however, that if taxes increase, investment will decline, reducing everyone’s future consumption. It is therefore forced to exercise tax moderation. The same with unions: take for example Scandinavian unions, which at one time had monopoly power. They had to practice systematic wage restraint, precisely for those reasons. These are just constraints imposed on democracy in a society where decisions on investment are privately made: capitalist society.

Now, this doesn’t mean that there is no room to make progress. I think there is limited room—some parties and some societies were able to both produce development and reduce inequality. But these societies are still pretty unequal.

Most people obey the results of elections when they don’t lose too much. If a left wing party were to come to power and redistribute a lot of income, and the right had no chance to win any elections in the future, I think they would revert to other means. Which means that in elections, you cannot do too much at a time, and you also have to lose from time to time, which means you get some social change, but not much.

Neoliberal Shift

ma: The experiment of social democracy was basically present during a brief period in European history during which trade unions exercised wage restraints and employers made some concessions. But then came the 1970s, and that social contract fell apart. I read a paper you wrote about this transition, called "How Many Ways Can Be Third." You describe the shift in terms of policy regimes: there were competitive elections, one party had a political innovation, they ran on that innovation, they won, and then subsequent parties adopted that policy. To me, that sort of ideological explanation for neoliberalism doesn’t seem to capture all of the forces at play. I’m wondering whether you can elaborate on why the social democratic system was unsustainable, and how we can best understand the neoliberal shift.

ap: We can begin to understand these dynamics initially just by looking at one graph: productivity and wages from the mid-century to now. Have you seen this graph?

Clearly something happened in the late-70s. One crucial element is the deliberate offensive against trade unions: Thatcher halved union membership; Reagan also destroyed them. I think of the neoliberal shift as an autogolpe—a self-coup. It was deliberate, it was planned—it was the second bourgeois revolution. There were think tanks, blueprints, international organizations like the IMF, the World Bank, and the US Treasury, which began to impose these policies on countries around the world. What I don’t understand, and where you’re completely correct to comment, is what happened to social democrats.

People don't realize this, but the social democratic ideology and strategy were not motivated by justice and equality. To some extent that language was used, but the motivating belief behind the program was that social expenditures are productive. It was a development strategy. I frequently cite the Swedish minister Olin, who said something like, “We used to think that expenditures such as housing and health are consumption. But now we understand that they are an investment in the most important resource we have: the people itself.” That was the motivation: when you make people healthy, when they live well, when they are educated, they’re going to be more productive.

In the ‘70s we got the oil crises, and inflation skyrocketed. Everyone started to talk about the fiscal crisis of the state, arguing that we cannot support “decommodification,” in the words of Claus Offe. And the Social Democrats began speaking like neoliberals. Once I asked the secretary of Andalucia why the Spanish socialist party was falling apart—was it corruption, or what? His response was telling. He said, “They made us speak a language that wasn’t ours.”

ma: I’m thinking about the Callaghan government, which ran on a left wing platform but ended up restructuring the economy before Thatcher came to power. Part of that had to do with the weakening of the Soviet Union and the proliferation of American-backed debt—in 1946, Attlee was able to leverage the availability of Soviet finance to ensure that the loans from the US allowed for a Keynesian fiscal policy. In 1976, Callaghan wasn’t able to do that.

ap: Well, yes. He made a mistake and he had bad luck. He should have called for an election before the winter; he was hit by a bad winter and the oil crisis combined. But why would this cause him to change his entire worldview? I’ll tell you two stories: Felipe Gonzalez, the former prime minister of Spain, once said that during the run on the peseta in 1985-6 he lost his annual health budget over the course of three days. And I once had a conversation with the former president of Brazil, Fernando Henrique Cardoso, in which I asked him, “What do you find to be the greatest constraint on your decision making, public opinion?” and he said “Eh, public opinion... I go on television.” “The congress?” I asked. “I can deal with them,” he said. “So what is it?” And he answered, “the stock market.” But why is it that the stock market was not a huge constraint before the 70s, and suddenly came to constrain everyone? I don’t know.

One thing I do know: the transition was not due to visible economic success. When the Swedish Social Democrats came to power, by sheer luck, they had great success. Everyone looked at their economy and thought, “This really works!” It was not like that with neoliberalism. These policies produced destruction for years. The conservative French Minister of Justice, Alain Peyrefitte, said, I think in 1980: “This is not gonna last, this is producing terrible results.” And yet…

Social Democracy and Authoritarianism

ma: There is some sort of fracturing of the neoliberal consensus in the contemporary political landscape. How do you feel about the change in narrative that we’re experiencing?

ap: I am pessimistic because I think that the current situation has very deep social and economic roots. This is not just a matter of Trump winning, or the AfD gaining 12% of the votes, or Front National getting 33%, or any of that. This is something deeply embedded within our social structure. People often talk about polarization. In my view polarization has two aspects: the first is how far the preferred policies of different people are from one another; the second, which I think people haven’t studied systematically enough, is what people with different preferred positions are willing to do to one another. There was a study which showed that last year Thanksgiving dinners in which attendees lived in oppositely voting districts were nearly 30 minutes shorter than those where they came from the same district. Why? Because people are afraid to talk to each other. In 1960 about 5% of people said they would be unhappy if their offspring married a person from the opposite party. Now this is in the range of 50%. So this has entered into the basic unit of social structure—the family.

Why this is happening is extremely hard to tell. Economists think everything is driven by economics, so they say it’s because of the economy. And there are good reasons to think it’s because of the economy. However, if you look at systematic research, you find that economic factors always matter, but less than assumed. They are always statistically significant, but they don’t add up to everything. There was one European study which I like very much, which studied the effect of industrial job loss on votes. It concluded that job losses account for 0.5% of right wing votes. For the German AfD, this would be 11.8% instead instead of 12.3. What accounts for the rest?

These changes are somewhere deep in the social and economic transformations of recent decades, and I don’t think palliative policies will be effective.

ma: It doesn’t seem like you’re particularly hopeful about the resurgence of social democracy as a political force.

ap: This country is the only one among rich democracies where you’ve begun to hear social democratic voices. I recognize them. Strangely enough—I have to admit, this is my daughter’s observation—the fact that Donald Trump broke so many taboos on the right may have had the effect of breaking taboos on the left. We can say things on the left now that we couldn’t before. And some of them are wonderful. So maybe I’m not as pessimistic as I said. Even if a fraction of the policies being proposed are realized, things are going to improve.

Larry Bartels also has this graph of inequality by administration: every time Republicans come to power, inequality increases. Then, when the Democrats come to power, it just stays stable. But some of these ideas—free health care and the like—are wonderful. They’re not going to change the relations of political power in the foreseeable future, but they might generate improvements.

ma: I know you’re skeptical of the media frenzy over the rise of authoritarianism. You wrote in your most recent book that Trump and Le Pen ran on populist messages which offered greater public participation, rather than an authoritarian message.

ap: My target with this argument is twofold. I have a problem with analogies to the Weimar period. Both for ideological reasons and economic reasons, I think that’s just wrong. But I also have more empathy for “populism.” A lot of people complain at the same time about inequality and populism. But doesn’t our persistent inequality indicate that something is wrong with our representative institutions? You can’t just say “Inequality is terrible, but the institutions are perfect.”

I feel more alarmed by the recent discovery we seem to have made, that one can destroy democracy by democratic means. Governments take a series of steps each of which seems to be democratic, and undermine the possibility of being removed or resisted. Think of the use of legally ratified national emergencies.

When I look at the experiences of Erdogan, Chavez-Maduro, Orban, to some extent my native country—it’s all legal, it’s all constitutional, it’s all democratic. I call that “subversion by stealth,” and it really worries me.

ma: Can you elaborate on this tendency with respect to the theory you developed with Fernando Limongi, which states that democracies with a high enough per capita GDP never die?

ap: At that time I was not sensitive to the gradual erosion we are seeing today. I think the consequences of this type of transition remain unclear. When we were writing that article, Botswana was a case in some ways similar to the ones we see today. The country gained independence in 1975, and the same party has won every election since then. It has unions, it has freedom of the press, but is it a democracy? This was a country we couldn’t classify at the time. What’s happening now is that the number of these cases is growing. This process of gradual erosion has become much more widespread than it used to be. There are fewer clearly marked events—democracies seem to be dying slowly.

Game Theory

ma: The final question I have for you is about game theory. What value do you see in game theoretical models, predictive or otherwise?

ap: I think of game theory as in line with the natural way we think about people. People want something, they think something, and they try to do what they think is best. It is intuitive that people think strategically. If I made sense at one time of the politics of social democracy—and I think I did—I did it precisely because at one time I asked myself: what would I have done if I were in their shoes?

The problem with game theory in big terms is that it only works if it’s accompanied by good sociology: that is, if we know who the relevant actors are and what they want. It’s hard to theorize based on an abstract notion of “individuals.” Economists say: “all individuals care about consumption and leisure,” and they get theory out of it. In politics it doesn’t work that way. We have to get the actors right.

Game theory has changed a lot. We can accommodate people who have “false” beliefs, we can accommodate people who are “stupid”—that is, people who behave the same way regardless of the outcome. We don’t have to make the assumption that people are selfish, rational, hold accurate beliefs, or act based on their beliefs. So game theory is just about thinking that people behave strategically, based on the options that they have before them. And I can’t imagine that things happen otherwise.

Title Elections, Social Democracy, and the Neoliberal Shift
Authors Maya Adereth
Date 2019-06-13
Collection Miscellaneous
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