The 20th century begins with socialist parties on the threshold of political power. This caused enormous strains within the movement; as millenarian theories about capitalism’s fall were replaced by pragmatic ideas, allowing for an accommodation with the nation state. Over the next thirty years socialism, international in ideology but national in atmosphere, was absorbed into the political and economic life of the European establishments. It was highly successful, achieving many of its political and some of its social goals; although it accepted the fundamental nature of the European state and its economy: the dominance of big business with its conservative and liberal elites. Capitalism could not to be overthrown, it was believed, instead it would be administered by socialist managers.
By the 1950s the vision was reduced still further: the dynamism of the post war economy would create a social democracy without the need for large-scale redistribution of wealth. Growth would make everyone richer; and through astute manipulation of taxation and social spending a more equalitarian society would emerge. Capitalism, it was now thought, had become socialism’s friend.
In fact the socialists had become dependent upon the capitalists. Both suffered a crisis in the 1970s. The movement never recovered. Not like the radical right, who, reinvigorated by the restructuring of the international economy, which reduced social democracy to neo-liberalism, came to dominate the debate.
Socialism’s biggest success was in the 1920s and 30s when it helped transform the culture and the economy. A period when economic development was seen in national terms, and the state was expected to play a much greater role in its management. With planning more pervasive politics became more important; with increasing pressure for social equity; culminating in the liberal reforms of the post war Labour government.
A culture had been created that was to last until the 1980s. It arose out of an accommodation between the left parties and the reigning establishments; leaving the latter effectively untouched. Very apparent in Britain, where the old regime, created in the decades following the revolution of 1688, were still in charge; even into the 1960s. It had its own mentality, which believed governance was a craft that the ruling class acquired through a shared ethos and through the practice of power. With the perceived decline of Britain this tradition, now called The Establishment, was put under severe strain in the early sixties, when a new type of rule was advocated: by the technical expert. He floundered in the following decade under structural readjustment and the complexities of a modern economy.[ii]
Western socialism was poor in practical economic ideas. Its theorists had fantastic insight into how the modern economy worked, but the movement lacked the ability to create radical and feasible alternatives; relying on non-socialists, like Keynes, to supply the intellectual tools they needed. Contrast this with Japan. As Chalmers Johnson notes in classic work,[iii] before the war leading Japanese Marxists were part of influential state bureaucracies; whose aim during the American occupation was the regeneration of economic power to enable Japan to achieve its independence; the national goal since the Meiji Restoration in 1868.[iv] To accomplish this goal the Japanese state, building on the mistakes of earlier interventions in the interwar years, radically restructured the economy, creating possibly the most innovative reforms in modern capitalism; producing great national wealth and a relatively equalitarian society.
The process was enormously complicated, and much was dependent on Japan’s own peculiar history; it is not a model that can be replicated; though its success can offer insight as well as inspiration. It was a lesson that the West took a long time to learn, and its socialists never did: the most radical attack on capitalism is not its overthrow but its transformation.
Part of Japan’s success was that the business community, however reluctantly, were prepared to accept the bureaucrats’ directives; which they believed were designed to improve Japanese capitalism not destroy it. Western socialism’s revolutionary rhetoric, which often disguised conservative practice, prevented such economic radicalism. Socialists, for all their aggressive talk, were, when in power, often too nice to big business, who took them at their word – extreme rhetoric a useful prophylactic against radical reform.
[ii] See David Marquand’s analysis in Britain Since 1918, The Strange Career of British Democracy. This is his central argument.
[iv] An excellent overview of this period, and which sets it within a wider historical frame, of a country that has tried various means of protecting its freedom – first by autarky, and later, when this became impossible, by international competition in war and industry -, is L.M. Cullen’s A History of Japan 1582-1941.