Predicaments and Prospects of European Social Democracy Amidst Multiple Crises

The global financial crisis， the refugee crisis， the COVID-19 pandemic and the Ukraine crisis have been compounded with one another， bringing a heavy blow to European economy and society. Meanwhile， center-left parties in most of the European countries are suffering severe electoral setbacks with a steep decline in public support for various reasons. European social democracy is obviously losing its way and how to break the current predicaments becomes its highest priority.

Decline of European Social Democratic Parties

The ultimate goal of European social democracy is to “tame capitalism” and enhance social solidarity and equality. It advocates income redistribution through state intervention， and supports using macroeconomic regulations to ensure that economic development serves the interests of the general public， so that the capitalist society will become more democratic， just， and united. European social democrats， therefore， are often labeled as “spokesmen for the vulnerable”.

From the end of the World War II to the early 1970s， Europe enjoyed rapid economic and social advances， giving rise to the development of social democratic parties. In this period of time， center-left parties took the initiative in shaping the values of social democracy， promoting social reforms， and correcting the flaws of capitalism. They identified themselves as reformist parties in a capitalist system. In the mid-1970s， the prevalent stagflation crisis in Europe brought challenges to the traditional welfare state system and led to the rise of neoliberalism. European countries then decided to turn right and their economic policies focused more on efficiency. Center-left parties， with concerns for electoral performance and pressure from the competitors， began to uphold pragmatism and passively accept some political ideas and policies of the right-wing camp. They gradually moved away from the tradition and goals of social democracy. At the end of the 20th century and the beginning of the 21st century， social democracy， once again， became popular and set off a pink tide in Europe， with all 15 EU member states but Spain and Ireland being governed or co-governed by center-left parties.

The 2008 financial crisis and the tide of globalization directly resulted in the fall of European social democracy. The COVID-19 pandemic further exacerbated inequality and wealth disparity in Europe， making the underclass increasingly dissatisfy with center-left parties. Despite the upturn of social democratic parties in some European countries in 2021， the momentum was once again interrupted by the Ukraine crisis and the ensuing refugee crisis. The center-left parties in major EU countries such as Germany and France witnessed an obvious decline. Although the Social Democratic Party of Germany won the 2021 federal election and ended the 16 years’ governing of center-right parties， it had to form a coalition government with the Green Party and the Free Democratic Party due to a low vote share. And its popularity has been decreasing since then， with a support rate of only 15% in January this year， behind the center-right Christian Democratic Union and the far-right Alternative for Germany. In 2012， the French Socialist Party’s candidate Francois Hollande won the second round of the presidential election with 52% of the vote. But it has lost its way since then. In the 2022 legislative election， with single-digit support， the Socialist Party had to form an alliance with other left-wing parties to run for the election. The Socialist Party’s failure is partly attributed to the lack of innovation in policy making， which is common to see in many other European left-wing parties.

The Labour Party in the UK suffered four consecutive defeats in general elections since 2010. However， over the past three years， its support rate has steadily increased to become the most popular political party in the UK. Its current leader Sir Keir Starmer takes a centrist approach with focus on social welfare and public services. He is striving to make the party appealing and convincing to win next general election.

In Northern Europe， the long-standing governing position of the center-left parties is under threat. The Social Democratic Party， the largest party in Sweden， has a cumulative governance of 72 years. But after the outbreak of the European debt crisis， it was surpassed by the Moderate Coalition Party in the 2010 general election， the first time in history and its support rate plummeted from nearly 50% to below 30%. In Finland， the Social Democratic Party won the highest number of votes in two of seven parliamentary elections from 1999 to 2023， and remained in the top four in the rest. In 2006， the party won the presidential election， but then its support rate has fallen and gradually lost its advantage. In Norway， the Labour Party won more votes than other parties in six parliamentary elections since the beginning of this century and maintained its position as the ruling party for many consecutive years. However， its support rate has dropped to below 20% since 2021 while that of the Conservative Party has been on the rise to over 30%. The Social Democratic Party in Denmark is an exception. It was in power， either alone or in coalition in 2011， 2019， and 2022. The Party has been centrist on economic and social policies and conservative on immigration and integration issues. Its approach has alleviated public concerns about immigrants excessively enjoying welfare benefits and the emergence of “parallel societies”.

In Southern Europe， the fall of Greece’s center-left parties is an extreme example. The Panhellenic Socialist Movement won the 2009 election with 43.92% of the votes. However， after the outbreak of the European debt crisis， the Troika （the European Commission， the European Central Bank and the International Monetary Fund） imposed coercive austerity measures on Greece， leading to a rapid decline and loss of power of the Panhellenic Socialist Movement. Italy has also seen a gradual decline of its Democratic Party. The party held power from 2006 to 2008 and again from 2013 to 2018， but was challenged by the anti-establishment “Five Star Movement” in the 2018 election and lost almost all its votes in southern Italy， Sardinia， and Sicily. In Spain， the decline of the Socialist Workers’ Party has been very noticeable since 2008. It was the largest party in the 2008 Spanish parliamentary election with 43.9% of the popular vote， but saw a drop to 28.8% in the 2011 election. Although it returned to power in 2019， the support rate was only 28.7%. To maintain its advantage in the parliament， the Socialist Workers’ Party formed a ruling coalition with the far-left parties. Portugal is an exception. The Socialist Party has stayed ahead since 2012. Its leader António Costa was elected as the Prime Minister in 2015 and was successfully re-elected in 2019 and 2022. His success is mainly attributed to the stable economic growth during his tenure.

Reasons for the Decline of European Social Democracy

Social structural changes， increased inequality， as well as ideological changes and organization problems of center-left parties have led to the downfall of European social democracy.

I. Social Structural Changes Bring About the Loss of Core Voters

First， the working class has shrunk and trade unions have become weak. Many European countries have witnessed a gradual decrease of manufacturing sector employment since the late 1960s， and a rapid drop of number of trade union members since the late 1970s. In the face of a shrinking working class， European center-left parties aspired to win more middle-class voters. However， the middle class has diversified and changing values， interests， types of work， and lifestyles， making it difficult for center-left parties to meet all their demands. In addition， when competing with right-wing parties for middle-class voters， the center-left parties have moved further away from the traditional ideology of social democracy.

Second， conflict of interests among different groups makes it difficult for center-left parties to expand their voter base. European social democrats， after absorbing neoliberal ideas， implemented more active labor market policies by delaying retirement age， encouraging female employment， and creating more opportunities for flexible employment. These reforms contribute to a significant increase of the number of people in informal employment who view themselves as “outsiders” of the labor market. For “insiders” who have already entered formal employment， they are concerned about the free flow of capital brought by globalization， and the emergence of artificial intelligence and automatic production. The conflict of interests among the “insiders”， and that between the “insiders” and the “outsiders” make it more difficult for center-left parties to adopt policies that satisfy everyone.

II. Rising Inequality and Poverty Undermine the Appeal of Center-Left Parties

Justice and equality， which have long been advocated by European social democrats， have not been truly realized， and the wealth gap is still alarming in many European countries. Successive crises have brought a heavy blow to the European economy and society， and greatly affected the income of workers. Statistics from the German Federal Statistical Office show that， from 2008 to 2022， the real income index in Germany grew by 6.9%， while the consumer price index increased by 26.8%. This means that people’s cost of living became higher during that period and their quality of life declined. The Ukraine crisis brought a surge in energy prices to Europe， which in turn led to inflation and high living costs. In 2022， the inflation rate in the 27 EU countries reached 9.2%. The COVID-19 pandemic further exacerbated the income gap， health care inequality， and education disparity in Europe， resulting in an escalation of social conflicts， lack of security of the public， and disputes on wealth distribution system. The foundation of European welfare states has thus been shaken.

Center-left parties advocate generous refugee policies and immigrant integration. But the continuous influx of immigrants and refugees into Europe since 2015 makes the lower strata of society feel that their interests are being undermined and public resources are being occupied. First， the vulnerable groups who are already struggling in finding a job are facing greater pressure of employment. Second， public resources including education， public housing， and healthcare become scarcer. Third， the transfer payments of welfare states are under pressure. All these make the underclass believe that center-left parties are unable to protect their social rights or eliminate inequality， thus some of them turn to support far-left or far-right parties.

III. Ideological Changes

European social democrats have gradually moved away from their traditional ideology after absorbing neoliberal ideas. Social democracy was once very popular thanks to its progressive taxation and expansionary fiscal policies. But the stagflation crisis that broke out in Western Europe in the 1970s resulted in limited capital accumulation and low profits， which eroded the economic foundation of social democracy. At the end of the 20th century， in order to outcompete their competitors， European center-left parties decided to adopt some neoliberal ideas when making economic and social policies. This is the so-called “Third Way”. But neoliberalism， in its nature， advocates market-based individual competition， which is vastly different from communitarianism and welfare state system advocated by the majority of the working class. Such a shift in policy led to the loss of some traditional supporters and potential voters of the center-left parties. That social democracy is in decline after turning to neoliberalism also reveals the deep-seated crisis of capitalism. European social democracy has neither “tamed capitalism” nor “reformed capitalism”， but converged with capitalism.

The international financial crisis reflects flaws of neoliberalism’s growth model. In the end， center-left parties failed to realize economic growth and deliver benefits to voters by deregulating the market. The failure of the “Third Way” reveals the inefficiency of neoliberalism’s growth model. After the outbreak of the financial crisis， European center-left parties once again turned to the right by implementing austerity policies of cutting social welfare and raising taxes. The most vulnerable lower class thus bore the brunt and were very unsatisfied with austerity policies since necessary social investments could no longer be made， nor could social security be guaranteed. Such dissatisfaction contributed to the rise of populist parties. The crisis should have been an excellent opportunity for left-wing parties to “tame capitalism”， but they failed to come up with effective alternatives other than neoliberalism.

IV. Organization Problems

The decline of center-left parties in Europe is also due to organization problems. First， center-left parties are no longer the parties of the working class. In the old days， leaders of center-left parties would spend many years working at the grassroots organizations or trade unions before they took on leadership positions. But now senior officials of center-left parties are more likely to be university graduates or middle class who know little about the concerns and needs of the people. Therefore， their policies can neither address the concerns nor meet the needs of the people and they gradually become distanced from the people. Second， center-left parties have evolved from mass parties to cartel parties by seeking cooperation with other establishment parties. Cartelization waters down the left’s distinctive historical profile. They focus more on the effectiveness of power management and their policies become increasingly similar to those of center-right parties.

Prospects of European Social Democracy

Center-left parties in Europe appear helpless when facing current predicaments. They have lost many core voters without winning new ones. In addition， they are unable to offer feasible alternatives to the public after the failure of neoliberalism. European center-left parties are less likely to return to their heyday for the following reasons.

First， sluggish economy. It is difficult for European countries to revitalize the economy in the short term amid multiple crises. Besides， Germany and other EU countries are adopting a de-risking strategy when facing increasing trade protectionism and geopolitical risks， which has weakened the role of trade and investment in driving economic growth. The slowing economic growth makes it difficult for European countries to implement welfare policies that are advocated by center-left parties. And people will vote to show their dissatisfaction with the increasing inequality and poverty.

Second， political fragmentation. Increasingly diversified interests of Europeans have led to the development of newly-founded parties that focus on new issues and have different forms of organization， making the political landscape of Europe more fragmented. In such circumstances， the declining center-left parties may lose votes to both traditional competitors and newly-founded parties. Some of them thus have no other choice but to form alliances with other parties to run for elections. Even if they win， many center-left parties still have to form a governing coalition to have an overall majority in parliament.

Third， incapability to provide feasible solutions to current challenges. European social democracy reached its pinnacle after coming up with the idea of welfare state but then gradually lost the momentum. To regain the momentum， center-left parties in different countries made adjustments to their policies and platforms， either to turn further left， or to turn right by embracing neoliberalism， or shift to the center by adopting policies that are a mix of left and right. Unfortunately， none of them works. They are also at their wits end in the face of such emerging issues as anti-globalization， climate change， green development， immigrants， refugees， and gender. If center-left parties in Europe cannot come up with effective economic and social policies， they are less likely to win continuous support from the public.

Conclusion

The trend of political fragmentation continues in Europe， leading to the loss of ideological advantage and votes of center-left parties. The emergence of new parties in some countries reflects the incapability of traditional parties， especially those of the left， to effectively respond to the changing geopolitical situation， social issues and diversified demands of the public. Such incompetence disappoints the people， who naturally turn to other parties that can represent their interests.

At the same time， the trend of shifting to the right in Europe would pose a direct threat to center-left parties. In a considerable period of time， mainstream parties in Europe boycotted far-right parties in elections and refused to form coalitions with them at various levels of government. However， the rise of right-wing populist parties， ongoing political fragmentation， and the tendency of far-right parties to be less populist make center-right parties in some countries change their minds and start to cooperate with right-wing populist parties. A report by the European Council on Foreign Relations （ECFR） released in January 2024 anticipates that the European Parliament election in June will see a right-wing surge and the emergence of an all-right coalition of conservatives and radical right MEPs for the first time. The shift to the right in the EU and its member states will undermine the power of center-left parties in handling domestic and international affairs and will also have an impact on the policies adopted at both the national and the European level.

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Yang Xiepu is Director of China-Germany Cooperation Center of Chinese Academy of Social Sciences