In this essay I will attempt to firstly define Social Democracy and what advantages and disadvantages it brings to a state. Then I will move on to showing how Social Democracy is still existent within contemporary Britain through the means of public spending on education and benefits. I will explore Labours contemporary policies to show that Socialism is still present in Labour. However I will then explain how the Labour Party, which has its foundations in Socialism, has changed and moved towards the Third Party or ‘New Labour’ which also values Capitalist aims. I will then argue that Britain is becoming more of a Capitalist state under ‘New Labour’ and how globalisation has affected this.
Giddens described social democracy as:
“Social Democracy – moderate, parliamentary socialism – built upon consolidating the welfare state.” (Giddens. A, 1998, p4)
He recognised how Social Democracy differed to Marxism.
“Social Democracy saw free market capitalism as producing many of the problematic effects Marx diagnosed, but believed these can be muted or overcome by state intervention.” (Giddens. A, 1998, p8)
The advantage of Social Democracy is that Socialism uses the welfare state to abolish exploitation within the market system and destroy the division of society in class groups. They aim to remove all inequalities whether it’s economic or political using state intervention when needed. (Przeworski. A, 1985, p29) This gives everyone an equal start in life.
Giddens told of the state intervention as government intervening in family or individual life when needed. Social democracy saw that there was a vital need for state benefits to help those who are unable to fend for themselves. (Giddens. A, 1998, p9) The advantage of this is that it closes the income gap between the different classes.
However Giddens coined the main disadvantage of a Social Democratic state.
“The economic theory of Socialism was always inadequate, underestimating the capacity of Capitalism to innovate, adapt and generate increasing productivity. Socialism failed to grasp the significance of markets as informational devices, providing essential data for buyers and sellers.” (Giddens. A, 1998, p4-5)
In the Labour revolution of 1945-1951 Britain was a planned economy, nationalised industry and expanded welfare state, a Social Democratic state. (Reitan.E.A, 2003, p27) However toward the 1970’s Britain faced lowest productivity within the major industrial states, high unemployment and inflation. There was unwillingness of workers to move around to find employment. Managers were also slow in introducing technology that would improve productivity. (Reitan. E.A, 2003, p141) this shows that at that time the British state was unable to keep up with the market changes and generate increased productivity backing up Giddens claim that Socialism is unable to increase productivity and adapt to the market. (Giddens. A, 1998, p4-5)
There are characteristics of the welfare state within contemporary Britain. We see the state still providing free education. Just recently there are reports saying that there have been increased spending on education. The figures showed that the spending has been increasing for more than 50 years.
The graph below shows the figures of increased public spending on education.
(Derived from http://news.bbc.co.uk/1/hi/magazine/8562405.stm)
The graph shows how in the U.K. the state is spending money on education has increased from 50% to almost 140% in 2005-2006. Spending money on education in the UK will giving everyone an equal start in life and removing inequalities which are characteristics of a social democracy. (Przeworski. A, 1985, p29)
Another demonstration of a Social Democracy within contemporary Britain is the benefit system. The British government provide benefits for those who are disabled, low income, unemployed, have dependent children, aged over 60, pregnant or recently had a child and those who are caring for another.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/index.htm This is a clear indicator of Socialist practise as they are using the welfare state to eliminate the inequalities within a state. (Przeworski. A, 1985, p29) By providing people who are less off with benefits it closes the gap that Capitalism has created for them. (Giddens. A, 1998, p8)
Britain’s current government Labour still has policies that are indicators of Social Democracy.
“We want to rebuild trust in politicsâ€¦put more power in the hands of individual citizens so that they can influence the decisions which affect themselves, their families and local communities”
This aims to equal chances to voice individual opinions. This ensures that power isn’t just given to a certain class and that it is equally distributed between the classes. http://www.labour.org.uk/democracy_and_citizenship
There are also ways of creating equality between genders.
“Introduced the National Minimum Wage – two thirds of the beneficiaries are women and it has played a substantial part in narrowing the gender pay gap.”
Labour believes everyone is entitled to equality. They aim to be fair to those regardless of gender, disability, sexual orientation, age, race, religion or belief.
http://www.labour.org.uk/Equalities This demonstrates Social Democracy’s existence within contemporary Britain.
But there are clear indicators that the British state is moving away from Socialism. Currently Britain is under the Labour Party governance. Social Democracy essentially underpins the British Labour Party with the Labour Parties motto “A future fair for all”.
http://www.labour.org.uk/future-fair-for-all This clearly indicates that their main aim is for equality within the British state. However there has been speculation.
“The evidence shows that labour has become split into two clearly differentiated constituencies: those with secure employment (insiders) and those without (outsiders).”
There has been speculation that there’s a ‘new labour’ party. This was seen arising when Blair was in power. The ‘new labour’ seemed to embrace capitalism and ‘abandoned classical social democracy for the ‘third way’ revised social democracy. (Driver. S, Martell. L, 2006, p26)
“The Third Way was used to mark out Labour’s departure from the politics of the Social Democratic state, signifying a reconfiguration of relationships between the economy and state.” (Newman. J, 2001, p40)
The Third Way is in favour of growth, entrepreneurship, and enterprise and wealth creation. It also values social justice. http://news.bbc.co.uk/1/hi/uk_politics/458626.stm However we see how the Labour Party who once was based on Social Democracy edge away and heading towards Capitalism.
However does contemporary Britain still value social justice over Capitalism under the Third Way? In recent times we see lowered public spending.
“We’ve already spent £4bn less on unemployment benefits and income support for the unemployed than was anticipated.” Comment Alistair Darling to the BBC.
We see lowered welfare spending which raises questions about Labours “a fair future for all”. However ‘New Labour’ sees this less as a social right and more about personal responsibility and social duty.
http://www.oxfordscholarship.com/oso/public/content/politicalscience/9780199266722/acprof-9780199266722-chapter-2.html?q=#acprof-9780199266722-chapter-2 This clearly shows how the Third Way governance is prioritising economic issues over social issues.
The contemporary British state however has many characteristics of a Capitalist state. Globalisation has also contributed to the breakdown of welfare state in contemporary Britain.
We see now that due to globalisation instead of business fighting over market share but now we see states fighting. “States remain interested in survival at the very least, and pursuing power at the most.” (Aydinli. E, Rosenau. J.N, 2005, p127)
Globalisation is described as “the denationalisation of politics” (Aydinli. E, Rosenau. J.N, 2005, p127) which essentially means that states are no longer deciding policies that benefit them but in fact they make policies that suit globalisation.
“The emergence of a global market economy and the need for global competitiveness have handed neo liberalism a powerful new weapon with which to contain and neutralise the counter pressures of domestic politics.” (Mishra. R, 1999, p3)
There is also the belief of the hyperglobalisation thesis where states believe that if their state does not increase incentives for businesses to invest in their state businesses will go elsewhere. States are constantly competing for foreign investment. Therefore they lower corporation tax to increase the incentive. (Ravenhill. J, 2008, p343)
So now we see states producing policies that are business friendly. State aims are to lower inflation and a steady currency which is argued to attract businesses as lower inflation would mean lower raw materials for businesses and steady currency means there is less of a risk for the business to be exposed to fluctuations in exchange rates. (Mishra. R, 1999, p5) States constantly fighting over investment has caused them to jeopardise domestic policies.
“The incremental tightening of domestic environmental policies has sometimes been delayed or blocked for the fear of incurring economic competitive disadvantages.” (Holden. B, 2000, p186)
This shows that states are more concerned about economic growth and not about equality within the social classes.
“Not surprisingly a higher level of insecurity, poverty and equality has become accepted in many countriesâ€¦the retreat from the mixed economy and the welfare state is visible everywhere with the Anglo Saxon countries leading the way.” (Mishra. R, 1999, p3)
A good demonstration of the British state favouring Capitalism over Socialism is recently to the bank crisis. We see the state pouring money into the financial sector instead of using it to close the gap of inequality. http://news.bbc.co.uk/1/hi/business/7666570.stm
It could also be argued that the states increase spending in education
http://news.bbc.co.uk/1/hi/magazine/8562405.stm is purely for Capitalist reasons.
“Better-educated workers are likely to be more productive at their own jobs; they may, at the same time, raise the productivity of their colleaguesâ€¦their importance has valuable implications for the role of public financing as well as for the organisation of education.” (Miles. D, Myles. G.D, Preston. I, 2003, p121)
States invest in human capital to make their domestic workforce more productive. They also benefit an increase in technological progress. States with high economic activity are generally those with a state financed education system. (Miles. D, Myles. G.D, Preston. I, 2003, p121) This can be used to argue that Britain’s public spending on education is purely for Capitalist reasons and not Socialist. Therefore indicating Britain’s welfare system is Capitalist based.
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In conclusion I think the British state still had characteristics of a social democracy but with the changes in the economy due to globalisation states has started to prioritise the market over social equality. The contemporary British state produces too many policies that are Capitalist friendly and they have became even clearer with the recent recession. We see Britain moving away from a Social Democratic state towards a more market driven Capitalist state.
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