How Blair and the new left could protect capitalism from itself

THE EUROPEAN left hauled up two flags last week. One was Tony Blair's 'Change and National Renewal', his statement for the Labour leadership election. The other, barely noticed over here, was the big speech by Rudolf Scharping, leader of the Social Democrats in Germany, entitled 'For Democratic Change'.

They were made in very different contexts. Blair is going for the leadership of his party, at a moment when it has done formidably well at local and European elections but with a general election several years away. Scharping was speaking at a special SPD congress in Halle, only four months before the German elections on 16 October; the SPD did poorly in the European poll and its prospects for unseating Chancellor Kohl are not brilliant. But the two declarations have a lot in common.

Above all, they are not nostalgic. They are at home in the new economic climate of western Europe. Once, socialists and social democrats thought that only capitalist monsters and reptiles could survive in this raw landscape. Now there is a social democrat generation which has learnt not only how to live in it but how to civilise it. Both Blair and Scharping accept that there is no way back. The boom of the 1980s and its spread of new opportunities were facts. So was the recession which followed. For both men, it showed that the boom had been hopelessly mismanaged, and that moderate-left governments could steer the new capitalism better.

Scharping said at Halle that 'economic recovery for all is our aim, not a development which accepts sinking employment, disrupts the state's finances, tolerates indefinite mass joblessness and piles up more social explosive'. He promised not to raise the total tax burden, but to offer tax breaks for entrepreneurs who can create jobs and increase competitiveness. Blair says: 'The market economy is in the public interest. But the public interest is not satisfied merely by having a market economy.' Like Scharping, he rejects state intervention but offers a range of ways in which government can help private enterprise to modernise and invest.

For both of them, the precondition for 'democratic change' or 'national renewal' is growth. This is old social democratic dogma. The tax revenue from an expanding private economy pays to repair the damage done by capitalism. But the equally old idea that growth pays for direct redistribution, for more equality, has vanished. It was in a forgotten age that Tony Benn preached 'a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families'. Instead, 'the dynamic market economy . . . must enhance individual and common welfare through a revolution of opportunities' (Blair).

The Blair paper is more subtle than the Scharping speech. But their purple passages are remarkably similar. They are about restoring the devastated sense of public interest and community. The SPD leader declared that 'the power of our society to create human community has been damaged. This government has not merely tolerated but encouraged egoism and callousness'. Tony Blair writes that the Tories 'saw all forms of social co-operation as inherently wrong . . . the result was to tear apart the social fabric and encourage a narrow view of self-interest which was both selfish and ultimately self-defeating'. But what does 'community' mean to these two gentlemen? What exactly is it that ought to be more united?

For old socialists, the solidarity of mining villages or of Clyde shipyard workers ('one for all, and all for one') would become the ethic of the whole land after the victory of the working class. The danger now is that with the end of class- war politics, a vacuum opens which is filled by diluted nationalism. A united nation is a strong nation] A country divided by gross differences of wealth, whose rich reject responsibility for the poor while the poor reject responsibility for their neighbours, will grow weak.

That is the logic of 'one nation' Toryism, and of Christian Democracy. Under a cloak of moral concern, it can amount to little more than debased nationalism. And it is this ground, abandoned by the right under hard free-market leadership, which is being slowly occupied by social democrats. Thatcher, Kohl, Major have been 'divisive'. But society can be glued together again, and the nation saved, by caring social democrats. If this were all that Scharping and Blair meant by 'community', they would be wasting our time.

Tony Blair falls into this trap - but skips out of it again. He complains that 'the Tories have systematically divided our nation and eroded the social fabric that holds us together', and that 'we cannot create a strong united society with such levels of deprivation'. The old Tory grandees blamed Mrs Thatcher on the same grounds. But Blair is a crafty lad, and after a bit it should dawn on the reader that he is using the safe word 'unity' to replace the dangerous old word 'equality'.

For him, ''unity' is what people gain from a reformed Welfare State which meets their needs, which does not reserve good education for an elite, which does not edge the poor into a ghetto. It has nothing to do with obedience or conformity. Still less does it mean centralised government. Blair is at his best when he says flatly that 'our political system is a conspiracy against reason: outdated, unfair . . .' He wants a Scottish parliament and the return to local government of their looted powers. Labour will be 'the party of strong communities'.

For many years, social democracy was dragged along, howling and rolling in the dust, behind the swift chariots of Thatcherism. Now the chariot is in the ditch, and leaders like Scharping and Blair are free. They know that the old socialism is dead, with the old working class that made its vision plausible. Only capitalism exists, that force for which every stable social order is an enemy. Socialism is contained within it, 'the radical- reformist self-criticism of capitalist society', as the German philosopher Habermas puts it.

The job of social democrats today is to harness market forces. To put it another way, Tony Blair and Rudolf Scharping are out to save capitalism from wrecking not only society but - in the end - itself. They have to invent forms of community which are not smashed by economic forces but constantly adapt to them - and to make those forces adapt to the community.

Social democrats, ironically enough, have taken the place of conservatives as the 'party of order'. Blair and Scharping are no Red Heroes. Yet, oddly enough, the way they talk recalls the remark of a Red Heroine: Rosa Luxemburg, who said that the choice was between 'socialism or barbarism'. Or, as Blair might put it, between 'a strong civic society' and the jungle.