Joseph Stalin pinpoints the failure inherent in social democracy

The aim which the Americans are pursuing, arose out of the economic troubles, out of the economic crisis. The Americans want to rid themselves of the crisis on the basis of private capitalist activity, without changing the economic basis. They are trying to reduce to a minimum the ruin, the losses caused by the existing economic system. Here, however, as you know, in place of the old, destroyed economic basis, an entirely different, a new economic basis has been created. Even if the Americans you mention partly achieve their aim, i.e., reduce these losses to a minimum, they will not destroy the roots of the anarchy which is inherent in the existing capitalist system. They are preserving the economic system which must inevitably lead, and cannot but lead, to anarchy in production. Thus, at best, it will be a matter, not of the reorganisation of society, not of abolishing the old social system which gives rise to anarchy and crises, but of restricting certain of its excesses. Subjectively, perhaps, these Americans think they are reorganising society; objectively, however, they are preserving the present basis of society.

That is why, objectively, there will be no reorganisation of society.

Nor will there be planned economy. What is planned economy? What are some of its attributes? Planned economy tries to abolish unemployment. Let us suppose it is possible, while preserving the capitalist system, to reduce unemployment to a certain minimum.

But surely, no capitalist would ever agree to the complete abolition of unemployment, to the abolition of the reserve army of unemployed, the purpose of which is to bring pressure on the labour market, to ensure a supply of cheap labour. Here you have one of the rents in the “planned economy” of bourgeois society. Furthermore, planned economy presupposes increased output in those branches of industry which produce goods that the masses of the people need particularly. But you know that the expansion of production under capitalism takes place for entirely different motives, that capital flows into those branches of economy in which the rate of profit is highest. You will never compel a capitalist to incur loss to himself and agree to a lower rate of profit for the sake of satisfying the needs of the people. Without getting rid of the capitalists, without abolishing the principle of private property in the means of production, it is impossible to create planned economy.

From this interview between H.G. Wells and Stalin, which is also entertaining for Stalin’s disdain for Wells.

What Stalin recognized was that social democracy cannot succeed over the long-term because it does not reorganize the capitalist structures of power. While social democracy does a good job of providing moderate improvements to the material conditions of the working classes, it exist within capitalism and is therefore deeply limited in terms of what it can accomplish. Such material improvement does offer an empowerment of the marginalized groups that benefit most strongly from social democracy, but eventually the capitalist classes are able to re-assert their power, as seen by the abandonment of social democracy beginning in the 1970s in favour of neoliberalism. Another clear example can be seen in the collapse of chavismo upon the death of Hugo Chavez and the decline in the price of oil that Chavez had largely depended upon to fund his social programs. Chavismo failed not because it was socialist, but because it was not socialist enough. Though Chavez improved the conditions of the working class in Venezuela, he did not attempt to break the political power of the bourgeoisie.

Social democracy is but a temporary check on the destructive force of capitalism.