Insofar as Western Europe is beginning to resemble the United States—in respect to income levels, social fluidity, and the breakdown of inherited class and caste structures—its society begins to reproduce some of the patterns of a modern industrial democracy with which Americans are familiar. Concurrently, there arises the problem of reshuffling the traditional division into agrarian-conservative, bourgeois-liberal, and labor-socialist (or communist) parties. These divisions stem from the “first industrial revolution,” and are now in part outmoded, at any rate in the more advanced regions of Western Europe. The traditional class structure—landed proprietors, bourgeois owners of industry and commerce, industrial proletariat—which underlies the familiar Marxist three-class model, has begun to dissolve under the impact of technological change and social upheaval. At the same time, the role of the state has changed; from an “executive committee of the bourgeoisie” (in Marx’s familiar phrase—originally coined in 1848, when Louis Philippe was on the throne of France’s “bourgeois monarchy”) it has turned into the arbiter of a society in which capital and labor confront each other as equals, while the growing technocratic and managerial stratum aspires to the coordinating role. Hence the problem of formulating a political doctrine that responds to the altered situation without renouncing traditional attachments.
The issue is not altogether novel. In a sense it has been troubling political theorists since the early years of the century, which was also the time when the European socialist movement first made the acquaintance of “revisionist” doctrines. But it was only after World War II that thinking really began to catch up with the facts. Even now we still lack an adequate theory of how industrial democracy operates, or can be made to operate, in the age of world-wide economic planning; but we are at least beginning to acquire the rudiments of one. It is, for example, becoming evident that the state can no longer be thought of either as a policeman “holding the ring” while competing private interests slug it out in the market place, or as the instrument of the possessing class in control of the means of production. Such notions—more or less adequate in the 19th century, when the first industrial revolution made its impact on Europe—simply will not do in present-day circumstances. A fully developed industrial democracy, with mass organizations barely controllable by an elite of elected leaders, cannot be adequately described in terms derived from classical liberal philosophy. But neither is the traditional socialist doctrine altogether operative in an environment which in many respects resembles that foreseen by Saint-Simonians and Marxians. It is just because so many of their predictions have come true—not, as is sometimes argued, because things have worked out differently—that socialist doctrines have begun to wear a somewhat antiquated look. As a theory of how the industrial revolution would progressively destroy the inherited class structure, socialism—like positivism, which was conceived at the same time, in the 1830′s and 1840′s—has fully justified itself. Where in recent years it has begun to falter is in its ability to render a coherent account of what is now beginning to be called “the second industrial revolution.”
The concept of industrial society is indeterminate as between the rival economic systems of capitalism and socialism, and for this reason tends to be looked upon with some suspicion by economists and politicians alike. Considering the frequent misuse of an allegedly neutral and “value-free” sociology to underpin conclusions agreeable to the defenders of the status quo, this mistrust cannot be described as unjustified. Nonetheless, there is a sense in which an industrial society can be said to have a structure peculiar to it. There is no need to inquire whether societies should be regarded as “organic wholes,” or indeed whether the economic “base” can be clearly differentiated from the “social superstructure.” There are alternative ways of looking at such matters, but as long as all concerned are agreed that the concepts of “growth” and “evolution” are applicable to the totality of the system, it does not matter much in what language we express the intuition that the “whole” has a specific mode of functioning. The difficulty lies rather in determining the particular historical stage which has been reached at a given moment as a result of some major political upheaval coinciding with a basic change in the underlying social texture. The impact of the two world wars on European society appears to mark a genuine “historical change,” inasmuch as it hastened the collapse of the old pre-1914 social order, which broadly speaking rested upon a symbiosis of bourgeois and pre-bourgeois elements, with the latter generally in control of the state.
The significance of this fact is open to various interpretations, depending on whether one accepts the notion that bourgeois society is not a completely self-sustaining organism but requires political rule by a non-bourgeois stratum for the most part drawn from the ancient territorial nobility or the bureaucracy and its hangers-on. This problem is not peculiar to Europe. It has its counterpart in Latin America (though not in the United States). But for historical reasons it is of primary importance to West Europeans, because Western Europe is the only part of the world to have evolved a fully developed bourgeois-capitalist society on the ruins of a feudal past. For the same reason, it is the only continent where authentic conservative, liberal, and socialist (or communist) parties genuinely confront one another. Elsewhere, one or the other of these elements is commonly missing. Thus the United States has not so far evolved a socialist labor movement (though Australia has done so, and Canada seems about to follow suit), while in some pre-industrial countries, parties or movements bearing the socialist label are plainly no more than organizations of the political elite, quite unconcerned with the interests of the working class (which may not even be in existence). The extreme case—but one which by now is not at all uncommon—is that of a “socialist” movement in fact spearheading a capitalist form of economic development. One may hazard a guess that in a good many, if not all, backward countries, this particular form of delusion or self-delusion (“ideology” in the strict Marxist sense) is likely to have a fairly lengthy run. To the despairing question “How can we sell capitalism to the masses?” the obvious answer would appear to be: “By calling it socialism.”
Such stratagems need not be conscious; they are indeed more likely to be successful if the exponents of the official creed are in good faith. But for obvious reasons they can work only in backward countries and with fairly unsophisticated electorates (if indeed there is any intention of consulting the voters at all). Where democracy and literacy have already had a trial run, most people are likely to see through such conscious or unconscious maneuvers, whereby the political elites seek to mobilize support for industrialization policies that must initially demand heavy sacrifices, notably from the peasantry. A relatively backward country that introduces the apparatus of parliamentary democracy before industrialization is complete may find that while the ruling elite of army officers, politicians, and intellectuals is on the side of forced-draft modernization, the peasant voters will have none of it. In a situation of this kind the elite then faces the awkward choice of scrapping either democracy or modernization. Turkey is a case in point. In such cases, if the ruling minority decides to press on with modernization against the will of the backward majority, it may find it necessary to seek a legitimation in “socialism.” Its political doctrine will then be undemocratic and may come to bear some resemblance to either fascism or Stalinism—as the case may be—though in point of fact it simply serves to spell industrialization, quite possibly laying the foundation of a subsequent development along fairly ordinary capitalist lines.
This particular problem clearly belongs to the typology of backwardness. In non-Soviet Europe it is of importance only in Turkey, Yugoslavia, Greece, and the Iberian peninsula. Western Europe proper—including Italy, which suffered its last relapse under Fascism—has moved out of the range of forced-draft modernization, and into an era of rapid self-sustained progress under conditions where industrialization begins to pay dividends. In a situation of this kind, the only real threat to political stability comes from mass unemployment (which hits the workers) and/or inflation (which affects primarily the salaried middle class). Political alignments consequently tend to shape themselves around the twin issues of full employment and monetary stability. In a fully industrialized society, “conservatism” signifies not defense of pre-capitalist interests (e.g., in agriculture), but rather the maintenance of middle-class values and standards such as home ownership, educational privileges, and various amenities associated with possession of individual property. “Liberalism” may come to stand for economic planning—a far cry from Cobdenite or Gladstonian orthodoxy. “Socialism” signifies concern for the status of lower-paid wage earners, while the historic goal of superseding “private ownership of the means of production” is tacitly abandoned, at any rate so long as the economy maintains full employment. The classical case is Scandinavia under Social Democratic management, but Britain and the remainder of Western Europe show signs of following suit.
Under circumstances of this sort, with growing wealth making for political quiescence, socialism loses its revolutionary edge, so that it is finally left to a minority of syndicalists and other enthusiasts to keep the pure flame of faith burning. It is, however, misleading to attribute this change in the political climate to embourgeoisement on the part of the workers or their leaders. The fact is that a society of this kind, though it may still be capitalist, cannot any longer be described as bourgeois.
In contemporary Western Europe, the common ground occupied by social classes and political parties is the welfare state. This term is to be understood as signifying something beyond the enactment of legislation on public housing, unemployment compensation, progressive taxation, and other measures designed to equalize incomes and guarantee a minimum of social stability. Basically, it relates to the maintenance of full employment in a “mixed economy” which is still capitalist in the sense that the majority of investment decisions are made by private firms. Compared with the 1930′s, when the unregulated market economy collapsed all over the Western world, the change is twofold. In the first place, the authorities now acknowledge their responsibility for maintaining something like full employment; secondly, the expansion of the public sector, plus governmental control over the central banks, enables them to adopt counter-cyclical measures, even if “business” (i.e., the private sector) lacks the necessary confidence to invest. A structure of this type is still basically a market economy, in that most decisions are decentralized and made by private individuals; but government intervention restricts the free play of the market in the interest of social stability and an adequate rate of growth. Income redistribution, through taxation and expansion of the social services, has the twofold object of ensuring economic growth and limiting inequalities. The rationale of this policy stems from the recognition that the traditional large disparities in income are no longer needed to provide the savings necessary for capital investment. This role is now increasingly shouldered by the state and by institutional saving of a kind not dependent on private wealth. The welfare state thus rests upon a mixed economy in which the public sector is large enough to set the pace for the kind of growth rate which society considers desirable.
The European boom of the 1950′s and 1960′s has been in part at least attributable to the adoption of this degree of conscious control over the economy; so, on the other hand, has the inflationary pressure which has now become the chief obstacle to balanced growth. The mixed economy sets targets which are difficult to reconcile: full employment, high investment, equitable income distribution, democratic decision-making, and price stability. The tug between public and private interests, and at a remove between rival political parties, turns upon the issue of achieving a proper balance. In principle, there is nothing in this picture that does not apply to the United States as well as to Western Europe. America led the world in the great depression of the 1930′s and in the subsequent introduction of full employment and welfare measures (though it took the war to lift the economy out of its stagnation). Since 1946, the United States has been officially committed to the goal of maintaining a condition of more or less full employment. Yet for reasons having to do with the socio-political texture—notably the greater prestige of the business community as compared with Europe—the change-over to Keynesian, or welfare-state, economics has been halfhearted, while the West European governments have consciously adopted the mixed economy as the guideline of public policy. (Even West Germany has done so in fact, though not in form.)
The Keynesian doctrine that an unregulated market economy will tend to equilibrate at a level below the maximum—or even the optimum—employment of capital and labor is not seriously challenged in Europe, and since mass unemployment is no longer politically tolerable, the governments concerned have more or less consistently adopted the necessary measures to ensure a rate of investment adequate to a state of (almost) full employment. Such measures do not necessarily entail regular budget deficits, but they do make for a level of public spending that precludes a return to low taxation; they also demand a constant effort at income redistribution so as to maintain purchasing power. The record shows that when not upset by wars leading to sudden price fluctuations, the system can cope with inflation while maintaining a rapid rate of growth. The secret of success is public control, not the automatism of the market, which by itself tends toward cyclical depressions and a rate of growth significantly below the optimum level.
Intellectually, the mixed economy is validated by the Keynesian orthodoxy in economics; politically, it corresponds to the pressures generated by a democracy with a strong organized labor movement. And since it is indeterminate as between capitalism and socialism, it can be operated by conservatives, liberals, and socialists alike. Stability is guaranteed as long as the parties respect the principle of balance between the public and private sectors of the economy, with the authorities reserving the right to lay down the general guidelines demanded by public opinion (or, what comes to the same, enforced by the mechanism of majority rule in a democracy). If labor is in power, the system acquires a “laboristic” bent which, however, does not alter its character sufficiently to make it possible for socialists to feel quite at home with it. Laborism is not socialism, though it tends in that direction. In itself it represents a compromise solution whereby society consents to leave the principal means of production—though not essential public utilities such as railways and power stations—in private hands, on the tacit understanding that the regulated market economy will conduce to a state of full, or almost full, employment. Governmental imposition of a growth rate adequate to this purpose follows from the discovery—now scarcely denied any longer by reputable economists—that the market economy by itself tends to stabilize below the full employment level.
It hardly needs emphasis that all this relates only to highly industrialized, and fully democratic, societies. Under pre-industrial conditions, state intervention has an altogether different function, though the difference is veiled by the current habit of describing as “socialist” both the welfare state in advanced and the authoritarian state in backward countries. In the latter, state control of the economy aims at speeding the process of industrialization, whereas in a fully developed welfare democracy of the Western type, the need for central control of the market economy arises from the maturity of an industrial society which has outgrown the liberal stage.
There is indeed a common factor linking the two types, inasmuch as in both cases it is the failure of the market to sustain a high rate of growth that compels the intervention of the public authorities. In this rather general sense, the imposition of central planning in pre-industrial countries can be described as “socialist,” though in the long run it may lead to the emergence of a “normal” capitalist market economy. But for theoretical purposes the two cases must be rigorously distinguished, if only because anti-democratic movements feed on the confusion engendered by describing as “socialist” any and every form of state control, no matter what its political content.
If Western democratic socialism is in question, it should be plain that industrial maturity is among its preconditions, just as it should be evident that “socialist” dictatorships are a concomitant of backwardness. The kind of socialism appropriate to industrial society is democratic, and conversely the mixed economy that responds to democratic pressures under conditions of industrial maturity has a socialist, or socializing, bent: not—as conservative writers, following Schumpeter and Hayek, tend to assert—because the intellectual climate is hostile to private enterprise, but rather because the private sector is seen to play a subordinate part in mobilizing society’s economic resources and ensuring a sufficiency of aggregate demand. The fact that this particular problem arises under conditions of full industrial maturity—i.e., after the phase of “primitive accumulation of capital” has been left behind—naturally alters the character of the debate between defenders and critics of the market economy. Controversy between liberals and socialists occurs not before but after liberal democracy has stabilized itself, and it concerns the problem of safeguarding individual and group freedoms within an increasingly planned and centralized economy.
Terminology apart, this debate has little in common with the argument over dictatorial rule in backward countries, where “surplus value” has to be squeezed out of a reluctant peasantry for the purpose of financing industrial construction. “Socialization in a state of maturity,” to employ Schumpeter’s phrase, is a problem peculiar to cultures that have passed beyond this primitive stage. This is the ultimate reason why arguments between Eastern Communists and Western Socialists tend to be fruitless: even where both sides employ Marxian language, they are not talking about the same thing.
To stay for a moment longer with the mixed economy and the welfare state: for all the latter’s socializing tendencies, it differs radically from a genuinely socialist system, in that the public authorities do not themselves engage in production, but rather act to provide markets for commodities produced by privately owned industry and farming. To the extent that this distinction obtains, even Yugoslavia under a self-styled Communist regime is not completely socialist. It is, however, unnecessary for a socialist system to dispense with pricing and the market. The fact that this has been done in the USSR proves nothing except the mental rigidity of the planners. Likewise, there is no need for socialist authorities to do away with private farming. In principle it would be possible for the Soviet government to restore private property in agriculture (and in small-scale manufacturing and trade) without compromising the socialist character of the system. That this is not being done has no relevant cause except doctrinal fanaticism, and its sole result is to promote inefficiency and irrationality.
A socialist system is compatible with a market economy, provided the basic decisions are made by the planners and provided the public sector is dominant, which in practice means that it must embrace large-scale industry and banking. Conversely, the mixed economy in Western Europe is not socialist while governments merely act to ensure a high level of aggregate demand, thus providing the fuel for private investment. As long as capital accumulation proceeds primarily under private control, one cannot speak of socialism. The proper designation of political parties operating a democratic welfare state of this kind is “laborist” rather than “socialist,” and the British Labor party has shown wisdom in retaining its traditional appellation, though it could equally well style itself “Social Democratic” without misleading anyone. After all, the German and Scandinavian Social Democrats have long made it plain that the operation of a mixed economy through democratic controls defines the kind of society they want to maintain.
Tensions arise at this stage of social evolution that are common to all mixed societies, whether governed by conservative, liberal, or laborist parties. Basically, they arise from the unsolved problem of establishing a social mechanism whereby conflicting sectional claims can be harmonized without damage to the public interest. By itself, the market economy cannot organize more than the material forces of society. Since these forces are not harmonious, they have to be arbitrated, and once the welfare state is in being, the role of arbiter falls to the government. The great economic interests are so many “solidarity blocs” pressing their sectional claims upon the authorities.
Under 19th-century liberalism this problem solved itself automatically in favor of the business class, which was virtually in control of the market economy and could inflict crises of “confidence” and mass unemployment upon society whenever its claims were disregarded. Under welfare-state democracy, with capital and labor confronting each other as equals or near-equals, their sectional bargaining tends to promote constant inflationary pressures unless the government steps in. Inflation benefits the strongest sectors—monopolistic industry and the most powerful labor unions—at the expense of the weaker and more numerous members of society. Wage and price increases emerging from the inflationary spiral may even make consumer goods too expensive for the mass of buyers and thus precipitate the familiar cyclical depression due to insufficient demand. If the traditional disciplines of competition and unemployment are no longer adequate to restrain sectional conflicts in a fully democratized society, the public authorities have to step in and impose price and wage controls. Hence the extreme sensitiveness of labor movements to the issue of a wages policy, without which the system cannot be operated.
In the long run it may indeed be to the advantage of trade unions and labor parties to take the initiative in formulating such a policy, which is anyhow in tune with the central tenets of socialism. But it is precisely at this point that socialist doctrine and laborist interest fail to harmonize. Nothing sounds more reasonable than to say that society must, in the last resort, decide how it wants to remunerate miners, nurses, policemen, etc; but in practice, “society” boils down to the government of the day/or the central planning authorities, however democratically controlled. By what criterion—other than that of the market, which may no longer be effective—does one decide how much more a schoolteacher should be paid than a street cleaner? It is because Western industrial society is free and democratic that the operation of a planned economy raises problems quite unheard of in lands where freedom is merely a name.
An inability to perceive these facts is among the marks of Soviet theorizing, which still operates with the concept of bourgeois-proletarian class conflict, as though nothing had happened since 1914. The obverse of this mistake is made by those interpreters of the “conventional wisdom”—with American academics well to the fore—who discuss the welfare state as though it merely signified (in the words of a recent Twentieth Century Fund Survey of Western Europe) “government responsibility for assuring to all citizens a standard of living at a ‘health and decency’ level and basic security against life’s economic hazards.” Although these aims have consistently figured in the literature of Fabianism and “collectivist liberalism” since before 1914, it does not follow that they adequately describe the present state of affairs in Western Europe. (They may designate the current aims and limitations of American liberalism, but that is a different matter.)
In reality, social welfare legislation and income redistribution are aspects of a socialization process that circumscribes the operation of the market economy. The other half of this process is constituted by the expansion of public ownership, and by the deliberate establishment of a balance between the public and private sectors. What underlies the whole movement is the persistent tension between social and market values, with the former gradually getting the upper hand. It is misleading to describe this (as is done by the authors in question) by saying that “the proletariat at the base of the income pyramid and the idle rich at the peak have both disappeared, and people everywhere are acquiring middle-class habits and attitudes along with middle-class incomes.” This is the language of political propaganda. The “idle rich” never mattered to anyone but sensational journalists, and the disappearance of the proletariat does not turn the working class into a middle class. (If it is in the “middle,” who is at the bottom?) Least of all does it follow that industrial society retains a “bourgeois” complexion. There cannot be a bourgeoisie without a proletariat, and if the one is fading out, so is the other, and for the same reason: modern industrial society does not require either for its operation. It is useless to pretend that one can have bourgeois society without classes, or a differently stratified society in which everyone belongs (a) to the middle class, (b) to no class at all. Yet American sociology seems largely devoted to the hopeless task of affirming both these contradictory propositions at once. It thus threatens to become the inverted mirror image of the Soviet theorizing it is trying to combat.
The reality is that contemporary industrial society is increasingly “post-bourgeois,” the 19th-century class structure tending to dissolve along with the institution of private entrepreneurship on which it pivoted. Hence the uncertainty that afflicts so much of current political thinking. The “crisis of socialism” is also a “crisis of liberalism,” not to mention the conservative defenders of pre-industrial traditions, which indeed are now virtually identified with backward countries. In Western Europe proper, “conservatism”—whether on the British Tory model or the corresponding Christian Democratic formations in Continental Europe—is in principle classless rather than aristocratic, and in practice a defensive organization of the old and new middle classes. Like other political movements it is torn between the conflicting claims of social and market values, though the dominant role of the business community within the middle class tends to weight the scales persistently in one direction. Conversely, the evolution of the traditional socialist movement since 1945 has proceeded along the lines of transforming it into an alliance of organized labor and a section of the professional middle class, with the technical intelligentsia as its core. It is this realization that distinguishes modern socialism from the pre-1945 variety, and causes political figures like Mr. Gaitskell or M. Mendès-France to present so strange an appearance against the background of cloth-capped class consciousness typical of the traditional labor movement.
If the foregoing remarks deal primarily with the conflicting claims of liberal and socialist theorizing, the reason is that one cannot seriously speak of a conservative sociology (setting aside the traditional Catholic doctrine, whose practical application appears for the moment to have run aground amid the sandbanks and shallows of the “corporate state”). Western European Christian Democracy is a “solidarity bloc” of middle-class and peasant interests, held together by the desire to slow down the tempo of social change so as to make it tolerable to those concerned, plus a left wing of Catholic labor unions with quasi-socialist tendencies. Its doctrine is necessarily eclectic, though on the whole democratic. Elsewhere, conservatism presents itself as an amalgam of traditional pre-industrial and modern big-business attitudes. The “thinking” it inspires is of the kind associated with privileged classes all over the world: mountains labor and bring forth the status quo.
It would be unprofitable to inquire into the rationale of British Toryism since the end of Empire deprived it of its traditional raison d’être, and in any case it does not possess a distinctive theory of modern society. The same may be said of other conservative parties committed to the defense of traditional hierarchies and established values. Gaullism makes a partial exception: its intellectual spokesmen appear to be moving toward a doctrine in which technocratic echoes mingle with authoritarian notions of planning and state control. They seem at least to have grasped the fact—apparently still concealed from their liberal critics—that parliamentary government of the classical kind is no longer feasible. At this point they encounter their left-wing opponents, who are likewise committed to central planning, though with more emphasis upon popular participation. On the whole, conservative parties and schools of thought appear uncertainly suspended between pre-liberal and post-liberal attitudes and modes of thought.
At the extremes, fascist slogans of elite rule, and Communist harping on the class struggle, set up a minor cacophony of discordant noises. For all their verbal ruthlessness, these totalitarian movements are beginning to look somewhat dated when set against the backdrop of contemporary Western society, though they are still capable of impressing and confusing the intellectual elites of backward countries. Of the two, fascism derives some short-term advantage from its traditional association with nationalism, but fails all the more decisively in the long run. Its intellectual equipment is anyhow too meager to warrant serious consideration. The rival totalitarian movement is in temporary disarray, Stalinism having been discredited, at any rate in Western Europe, which leaves the Communist party with the problem of bringing its petrified doctrine up to date.
We are thus left with the difference between liberal and socialist theories of what has been happening to Europe’s traditional structure, and with the political philosophies respectively derived from classical liberalism and 19th-century socialism—the latter of course primarily Marxian, though not exclusively so. It is beginning to look as though the mixed economy may become the forerunner of something resembling a genuinely planned one, but it does not necessarily follow that democratic socialists will be any happier than liberals with some of the political consequences of this evolution. Leaving aside the Soviet orbit, which is perhaps too immature politically and economically to count for our purpose—many of its problems of growth seem due to lack of capital and similar marks of underdevelopment—it is still possible to say that, despite the rise of central planning, democratic forms of public life have been preserved and even strengthened.
It cannot be denied, however, that there has in recent years been a remarkable outcrop of technocratic tendencies—notably in such unlikely places as France. By technocracy is meant a tendency for authoritarian regulation of economic life, of a kind that is not, properly speaking, either liberal or socialist, and whose pivotal elements are neither employers nor industrial workers, but the planners themselves and their hangers-on, plus the managerial stratum as a whole. If this tendency should continue unchecked, state control may come to mean—temporarily anyhow—the rule of a new privileged stratum (not a “class,” and certainly not a “new class,” but rather a political elite with technical functions and a near-monopoly of specialized knowledge). This would be a curious gloss on some of the Utopias we have been promised. The awkward thing is that such a state of affairs might even have to be regarded as “historically progressive” (whatever that may mean) while it lasts. So far, this is no more than a rather large cloud on the horizon. It will probably depend on the political maturity of democratic electorates whether the threat materializes.