Marx, Keynes, Hayek and the SPD

Economic theories as the key to understanding class relations, economic development and party history

Abstract

The article offers a very short critique of analyses of social democracy that either focus one-sidedly on the primacy of economics, the primacy of politics or a more or less automatic pendulum swing between the two. As an alternative, it suggests using economic theories as a key to understand social democratic policies in the context of changing class relations and economic developments. More specifically, the article shows that, rallying around Marxist ideas, social democracy turned into a potent challenge to capitalist rule. Adopting Keynesian ideas, social democracy was integrated into welfare capitalism and pushed for historically unprecedented social reforms. However, the clash between rising expectation produced by economic prosperity, discontent with the bureaucratic character of the welfare state and a return of economic crisis led to a capitalist turn against the welfare state under Hayekian guises. Social democrats thought they could offer a Third Way between the Keynesnian welfare state and unfettered market capitalism during the New Economy boom of the 1990s but succumbed to austerity policies after the boom. Underlying these social transformations of social democracy is the integration of working classes during the Keynesian age and the unmaking of these classes during the neoliberal age, which leaves social democracy with little counter-veiling powers. The article ends with a few thoughts on the possibilities of turning wide-spread discontents into a new challenge to capitalist rule.