Social democracy in Europe faces two big tests next week.

First, on Friday 2 March, we will learn the result of the ballot of members of the German Social Democratic Party (SPD) on whether to re-enter a grand coalition with Angela Merkel and her Christian Democrats.

The coalition agreement was arrived at after painstaking negotiations; it has already ruined the career of the party’s outgoing leader, Martin Schulz, who had hoped to become foreign minister. Five months after Germany’s election, it represents the last chance for putting together a majority government. If the membership turns it down, Germany will probably be heading back to the polls.

The SPD seems to have got a good deal, and most observers think the agreement will be approved. But there is significant opposition, particularly among younger and more left-wing members. They point, not unreasonably, to the sharp drop in the party’s vote after each of its last two experiences in grand coalition.

The second test will come two days later, with the Italian general election (see my advance preview here). The centre-left Democratic Party, trailing badly in the polls, has no hope of outright victory but still aims to deal itself into what will probably be an exhaustive period of post-election manoeuvring.

Its best hope may be a grand coalition along German lines, which would have it playing second fiddle not to a Merkel-style moderate but to the apparently indestructible Silvio Berlusconi.

The contrast is an interesting one: the SPD is the original Marxist party, having undergone numerous shifts and modernisations since the 1860s, while the Democratic Party is a recent creation, bringing together both former Communists and former Christian Democrats. Part of the explanation for Italy’s legendary political instability is that, unlike Germany, it never developed a strong social democratic party.

But neither party seems to have found a solution to the malaise that seems to be afflicting centre-left parties across the continent.

In this context, don’t miss a review essay last week by Frank Bongiorno at Inside Story, based on a book published last November, Why the Left Loses, by Rob Manwaring and Paul Kennedy.

Bongiorno has a lot of interesting things to say about how social democracy has lost its way. But what particularly struck me were some phrases he uses: on the one hand “The adoption of … market-driven politics” and “the accommodations that the Labor Party has made with capitalism”; on the other hand, “the peace that centre-left parties made with finance capital” and “the difficulties that financialisation poses.”

Here, I think, is the key problem. Centre-left parties – like Bongiorno himself – have not distinguished between these things. The embrace of the market has become become confused with the embrace of the market-distorting interests of big business, and especially the finance sector. Peace with capitalism has become confused with peace with capitalists: not at all the same thing.

The more unreconstructed leftists like Jeremy Corbyn are half right – politicians, social democrats among them, have given far too much ground to business and allowed it to milk the consumers and taxpayers. But the solution is not to turn the clock back to anti-market thinking; the solution is to dismantle monopolies and special privileges and let markets do their work.

Social democratic parties can be well placed to do that, provided they remember that their raison d’être is to support the interests of the masses, not the elites. But beset by conflicting pressures from all sides, it’s not at all clear that they will remember it in time.


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