Socialism 101
Page 16
The Beveridge Report was an unexpected bestseller. Eager to get a copy, people lined up outside the Stationery Office the night before it was released, as excited as if it were the latest volume in the Harry Potter series. More than 100,000 copies were sold the first month; 800,000 copies were sold in total. It was translated into twenty-two languages, distributed to the British troops, and airdropped over Nazi Germany. Beveridge became an unlikely popular hero, known as “The People’s William.”
THE BRITISH WELFARE STATE
Between 1945 and 1951 Attlee’s government built the British welfare system using The Beveridge Report as its guide. The National Insurance Act provided retirement pensions, unemployment benefits, sick pay, maternity benefits, and funeral benefits. The Industrial Injuries Act paid for occupational disabilities. The National Health Service Act, passed in spite of the hostility of Britain’s medical community, made complete medical care available to all residents of Britain.
Nationalization
During the same period, the Labor government nationalized the Bank of England, railways, long-distance hauling, telecommunications, coal mines, civil aviation, canals and docks, electricity, gas, and the iron and steel industries. All were basic to the economy or public utilities. None of them was flourishing prior to nationalization, with the exception of long-distance hauling.
The idea of introducing industrial democracy or worker control over the nationalized industries was never considered. Government-appointed boards managed the nationalized industries. Unlike the seizure of major industries in Russia, former owners were compensated for their property.
The only serious opposition to Attlee’s program of nationalization came over the iron and steel industries, which were stable and had good relationships with their unions. The act of nationalizing these industries was the only measure proposed during Labour’s term in office that the House of Lords delayed. The act became law in 1949, and took effect in 1951.
Soon after the law took effect, Labour lost the general election. The Conservative Party reprivatized iron and steel as soon as they took office in 1951. Iron and steel were the only industries to be returned to the private sector prior to the 1980s.
THE SCANDINAVIAN MODEL
Socialism in the North
The Swedish Social Democratic Labor Party (SAP) pioneered the creation of “mixed economies,” which combined largely private ownership of the means of production with government direction of the economy and substantial welfare programs. Other nations’ socialist parties followed their lead.
HJALMAR BRANTING
Hjalmar Branting (1860–1925) was the driving force behind the formation of the Swedish Social Democratic Labor Party in 1889. The son of one of the developers of the Swedish school of gymnastics, Branting was educated in the exclusive Beskow School in Stockholm and studied mathematics at the University of Uppsala. After graduating, he took a position as the assistant to the director of the Stockholm Observatory in 1882.
Traveling across Europe the following year, he stumbled across socialist doctrines everywhere. He attended lectures in Paris by revolutionary Marxist Paul Lafargue. He learned about social democracy from Eduard Bernstein in Zurich. He discussed revolution in Russia.
In 1889 Branting and trade union leader August Palm (1849–1922) formed the Swedish Social Democratic Labor Party, taking the German Social Democratic Party as their model. At its initial congress the party passed a resolution disclaiming any intention of violent revolution.
Branting was elected to the Lower Chamber of the Riksdag (parliament) in 1896. He remained the only socialist in the parliament until 1902, when the social democrats won four of the 230 seats in the Lower Chamber. At the next election they won thirteen. By 1917 the social democrats controlled enough seats to unbalance the two-party system. They formed a short-lived coalition government with the Liberals, with Branting as minister of finance.
THE GREAT DEPRESSION AND SWEDEN’S FIRST SOCIAL DEMOCRATIC GOVERNMENT
The full impact of the Great Depression reached Sweden in March 1932, when the collapse of “match king” Ivar Kreuger’s business empire nearly brought down the Swedish banking system. During World War I Kreuger succeeded in bringing Sweden’s match production into a single firm. After the war he tried to expand his monopoly worldwide, often using short-term credit from Swedish banks to make long-term loans to countries that were short of foreign currency in exchange for agreements giving him a monopoly. By 1928 Kreuger controlled more than half of the match production in the world. With the onset of the global depression, Kreuger’s ability to juggle his debt burden failed. He killed himself on March 12, 1932.
A number of Swedish banks that had loaned Kreuger money had to be bailed out by the Swedish government. Kreuger’s failure affected more than the banking system. He had extensive holdings in other Swedish companies. When his shares were dumped on the market, stock prices spiraled down. Personal fortunes evaporated and export sales fell. Production dropped 34 percent in the export industries and 13 percent in domestic industries. The number of unemployed workers rose from a pre-depression low of 10,000 to 189,225 in 1933.
Wigforss and Hansson Tame Unemployment
In 1931, months before the collapse of Kreuger’s matchstick empire, economist Ernst Wigforss (1881–1977) developed a radical program of massive government intervention to fight unemployment and stimulate economic recovery. His program rested on two basic ideas:
1. The systematic use of government-financed public works to provide employment and stimulate the economy.
2. An effort to increase purchasing power using deficit government financing and redistribution of income in the form of social services and subsidies to the industrial working classes and farmers.
The Swedish Social Democratic Labor Party (SAP) took Wigforss’s program to the polls in the 1932 elections, winning more than 40 percent of the vote.
Under the leadership of Per Albin Hansson (1885–1946), who served as premier four times between 1932 and 1946, the SAP implemented a reform plan based on Wigforss’s program. With the informal support of the Agrarian Party, the SAP government transformed an existing system of relief work into a dynamic public works program. They began work immediately on any state and municipal public works that were already on the planning board for the future: schools, hospitals, railways, roads, harbor construction, and improvements in forestry and agriculture. The old relief system paid workers 15 percent less than the minimum wage an unskilled worker could earn in the open market. Men employed on the new public works program were paid a full market wage. The government borrowed money to fund the public works projects rather than raising the money through taxes, which would have neutralized the stimulus to the economy.
Social Democratic Rule
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Between 1932 and 1976 the Swedish Social Democratic Labor Party ruled Sweden without interruption. Since 1976 the SAP has been removed from office four times: in 1976, 1991, 2006, and 2010. The first three changes in government brought no major shifts in Sweden’s social welfare programs.
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At the same time, the government introduced new social security measures, which were designed both to provide an economic safety net for the poor and to increase their purchasing power: unemployment insurance, increased old-age pensions, and housing loans for large families. They also implemented guaranteed prices for agricultural goods, special grants for rebuilding farm buildings, and easier access to agricultural credit. (The same banks that were willing to lend Ivar Kreuger millions were less welcoming to small farmers.) Sweden paid for these services through a progressive income tax. Altogether the Wigforss program reduced unemployment from 189,225 in 1933 to 9,600 in 1937.
FOLKHEMMET
The key idea in Swedish social democracy is folkhemmet: the concept that the society and state are the people’s home. Per Albin Hansson described the concept of folkhemmet in an often-quoted statement:
The basis of the home is togetherness and commo
n feeling. The good home does not consider anyone either as privileged or unappreciated; it knows no special favourites and no stepchildren. There no one looks down upon anyone else, there no one tries to gain advantage at another’s expense, and the stronger do not suppress and plunder the weaker. In the good home, equality, consideration, co-operation, and helpfulness prevail. Applied to the great people’s and citizen’s home this would mean the breaking down of all the social and economic barriers that now divide citizens into the privileged and the unfortunate, into rulers and subjects.
THATCHER AND PRIVATIZATION IN THE UK
The Clock Turns Back
Margaret Thatcher (1925–2013), born Margaret Roberts, became Britain’s first female prime minister on May 3, 1979. Unlike many leaders of the Conservative Party, who have typically come from privileged backgrounds, Thatcher grew up in a cold-water flat above her parents’ grocery store. During her childhood her father held a number of local political offices, including justice of the peace, town alderman, and mayor.
Thatcher was interested in politics from an early age. While studying chemistry at Oxford, she became one of the few woman presidents of the Oxford University Conservative Association. After she graduated in 1946, she worked as a research chemist for four years, reading for the bar in her spare time. In 1954 she began working as a barrister, specializing in tax law. Like many self-made successes, Thatcher believed in the power of individual enterprise and rejected the value of state support.
Thatcher As Education Minister
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Thatcher’s record as education minister illustrates her underlying political philosophy. During her tenure Thatcher eliminated a program providing free milk to schoolchildren, causing opponents to call her “Thatcher the milk snatcher.” On the other hand, she also created more comprehensive schools than any prior education minister, providing a rigorous academic education to working-class children.
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Thatcher first ran for Parliament in 1950, while still in her twenties. She lost but increased the Conservative vote for the district by 50 percent. In 1959 she was elected as the member of Parliament for the “safe” conservative district of Finchley. When she took her seat, she was the youngest woman in the House of Commons. She rose quickly within the Conservative Party. By 1970 she was a member of Edward Heath’s Conservative government, holding the position of secretary of state for education and science.
After Heath lost two successive elections in 1974, Thatcher challenged him for the Conservative Party’s leadership. With the backing of the party’s right wing, she was elected party leader in 1975. In 1976 a speech against communism won her the sobriquet “the Iron Lady” in the Soviet press, a tag she carried with apparent pride.
BRITAIN’S “WINTER OF DISCONTENT”
Thatcher led the Conservative Party to a decisive victory in 1979, following what the press dubbed Britain’s “winter of discontent.” In the winter of 1978–1979 inflation was hovering at 25 percent. Prime Minister James Callaghan’s Labour government sought to control the rate of inflation by capping pay increases at 5 percent. Unions responded with widespread strikes that resulted in gas and food shortages, power cuts, uncollected garbage, and hospital care limited to emergency cases. An unofficial strike by gravediggers in Liverpool provided images of unburied coffins that inflamed an already exasperated public.
THATCHERISM
During her first term as prime minister, from 1979 to 1983, Thatcher began by fulfilling her campaign promise to cut the power of the unions. Supported by memories of six weeks of rotting garbage and unburied coffins, the Conservative government passed a series of measures designed to limit the unions’ power to strike, including laws that banned closed union shops, required unions to poll their members before organizing strikes, and made sympathy strikes illegal.
Mineworkers’ Strike
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The National Union of Mineworkers’ 1984 strike was emblematic of Thatcher’s relationship with the unions. The mineworkers went on strike to prevent the government from closing twenty coal mines that were deemed unproductive. The strike lasted nearly a year. Thatcher refused to meet the union’s demands. In the end the miners returned to work without winning a single concession.
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Having pulled the unions’ fangs, Thatcher struck out at what she dismissed as the “nanny state.” She introduced budget cuts for social services, such as education, the National Health Service, the social security system, and public housing. At the same time, she reduced or eliminated governmental regulations and subsidies to businesses and privatized state-owned industries and services. She also attacked inflation by limiting the amount of money printed, following Milton Friedman’s theory of monetarism.
Thatcher successfully reduced inflation, but unemployment doubled between 1979 and 1981. She was elected to a second term by a landslide, owing in part to her decisive leadership in the Falkland Islands War (1982) and to deep divisions in the Labour Party, which ran on a radical platform that critics called “the longest suicide note in history.”
In her second term Thatcher began to sell shares in companies that were previously state-owned, tripling the number of individual stockholders in the country by the end of the 1980s. The government also sold 1.5 million publicly owned houses to their tenants. Both policies brought supporters to the Conservative Party. Meanwhile, the disparity in income between the wealthy and the working class increased.
In 1989 Thatcher pushed a flat-rate poll tax through Parliament, which led to violent riots. Spurred by public disapproval of the poll tax and Thatcher’s increasingly strident tone, Conservative members of Parliament moved against her in November 1990. She defeated her senior opponent but did not have enough votes to retain the party leadership. Instead of contesting the election with a second ballot, Thatcher resigned from office as Conservative Party leader and prime minister on November 22, 1990, leaving behind crippling unemployment and rising welfare costs.
Monetarism
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The economic theory of monetarism holds that the rate at which an economy grows is linked to increases in the economy’s money supply. Monetarists believe that the government can promote economic stability by controlling the rate of growth of the money supply.
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SOCIALISM IN THE DEVELOPING WORLD
From Kibbutzes to Nasser
Socialism in developing nations has been tightly interwoven with nationalism. As European colonies in Asia, Africa, and the Middle East won their independence in the years after World War II, many of them created socialist governments. Some combined aspects of indigenous traditions with the Marxist-Leninist model of one-party rule. Others followed the gradualist policies of the social democrats or the Fabian Society. Most received aid from the Soviet Union and/or the People’s Republic of China, which saw the newly formed socialist regimes as chess pieces in the Cold War.
THE KIBBUTZ MOVEMENT IN ISRAEL
The kibbutz movement was an outgrowth of Zionism. Although Jews had long dreamed of returning to Israel, the political movement known as Zionism took shape at the end of the nineteenth century in Central and Eastern Europe. Zionism was nationalism with a twist: Instead of reclaiming their nation from a colonial power, members of the Jewish diaspora wanted to build a homeland for their nation.
Emigration to Palestine
The Zionist movement accelerated after the failed Russian Revolution of 1905. A wave of pogroms inspired an increase in emigration among Russian Jews. Many went to America. Others decided to try the Zionist dream and go to Palestine as pioneer settlers.
The first kibbutz was founded at Degania in 1909 on land owned by the Jewish National Fund. Others were created in the following years. By 1914 there were roughly 90,000 Jews in Palestine, 13,000 of them living in agricultural settlements. By the early twenty-first century there were more than 250 kibbutzim in Israel, with a total population of more than 100,000.
What Is a Kibbutz?
There are two different types of cooperative settlements in Israel: the moshav and the kibbutz. In a moshav each family is an economic and social unit that lives in its own house and works its own fields. Although each farm family is independent, the village cooperative purchases supplies and markets produce. The cooperative also provides the farmer with credit and other services. The first settlements of this type were founded in Jezreel Valley in 1921.
A kibbutz is a true collective that holds all wealth in common and pools both labor and income. Most kibbutzim are agricultural, but a few have expanded into industrial production. Most members work on the kibbutz itself. Kibbutz members receive no salary or wages because the kibbutz fulfills all the members’ needs.
At first the kibbutz community took precedence over the family. Adults had private quarters, and children were housed and cared for as a group. Today, most children sleep in their parents’ house but spend their days with their peer group. Cooking and dining are communal. Profits are reinvested in the settlement after members have been provided with food, clothing, shelter, and social and medical services.