I. THE 1970 AND THE “CRISIS OF CAPITALISM”
The sharp increase in petroleum prices in 1973 was the trigger that led to widespread inflation in the economically advanced world while growth rates faltered. At first this favored the socialist parties because it was generally assumed that in order to restore growth, employers and governments would have to reach some understanding with the trade unions and that a socialist government would be in a better position to act as a mediator. Further evidence that the general conjuncture of the mid-1970 favored the left was provided by the collapse of the three remaining right-wing dictatorships of southern Europe—Portugal, Spain, and Greece (where there had been a military takeover in 1967). As democracy became consolidated the socialists were able to elbow out their communist rivals, become the leading party of the left and achieve political power.
The idea of a crisis of capitalism reappeared in political discourse. A growing ecological consciousness (see Ecology), though not necessarily aligned with socialism, implied that unchecked capitalist growth was inimical to the environment. Feminism challenged conventional conservative morality. US prestige had been weakened by the Vietnam War, concluded in 1975 with the victory of communist North Vietnam, and by the Watergate scandal that led to the resignation of President Richard Nixon.
II. THE TURNING TIDE OF THE 1980
By the late 1970 and early 1980, however, the tide, at least in northern Europe, particularly in Britain and Germany, was turning against the left. Rising unemployment had weakened the trade unions and, by increasing poverty and the problems associated with it, made social protection via the welfare system far more costly than it had been in the days of full employment. To maintain welfare standards while unemployment increased required a high level of taxation to be extracted from those still in employment. This proved unpopular. Conservative parties detached themselves from the political consensus and argued that it was necessary to “roll back the State”, reduce public spending, and privatize state-owned companies. Socialists were increasingly on the defensive. They were accused of being “statist”, bureaucratic, and spendthrift. By 1980 the size of the factory-based proletariat was in decline throughout Europe. Increases in productivity were no longer paralleled by the creation of new jobs. On the contrary, they enabled increased production to be achieved at the expense of employment while redundant workers were no longer absorbed in expanding sectors. Though the socialists never depended exclusively on the working class for their electoral victories—indeed, a significant proportion of workers always voted for Conservative and Christian Democratic parties—the shrinking of the traditional working class in the 1970 and 1980 further weakened the appeal of the socialists. Working-class identity became far less pronounced in this period while the divisions between workers deepened. The prosperity of skilled workers employed in successful private enterprises contrasted sharply with a growing pool of casual and unskilled labor—many of whom were immigrant workers or women employed part-time. To regard the working class as a “universal class” which prefigured a post-capitalist future seemed increasingly anachronistic. The growing economic interdependence that rapidly developed in the 1970 and 1980, and was often referred to as globalization, meant that traditional macroeconomic Keynesian policies had become less effective. Domestic reflation (pumping money into the economy to achieve an increase in demand) brought about balance of payments problems (since some of the demand was for goods produced abroad) and inflationary pressures. Socialist governments discovered this to their cost in Britain in the 1970 and in France in the 1980.
In Britain and Germany the socialist parties lost elections in, respectively, 1979 and 1981. They remained out of power until the second half of the 1990. Matters changed significantly, however, in France and in Italy. In both countries the left, instead of being dominated by socialists as in the rest of Western Europe, was deeply divided between socialists and communists. This had helped centrist parties (the Gaul lists in France and the Christian Democrats in Italy) to remain in power continuously until 1981 (France) and 1994 (Italy). In France, communists and socialists had begun to patch up their differences in the 1960 but the rapprochement was long and tortuous. It paid off in 1981 when the socialist leader François Mitterrand was elected president, and a government dominated by the socialists, and which included the communists, was formed. No such entente was reached in Italy where the socialists remained the junior partner in a succession of Christian Democratic governments. It was only after the collapse of the governing parties in 1991-1992, in the wake of sensational corruption scandals, that a reconstituted communist party, now known as the Left Democrats, could achieve power at the head of a heterogeneous coalition from 1996 to 2001, when it lost power to a new right-wing government led by the media magnate Silvio Berlusconi.
In international affairs most socialist parties sided with the West during the Cold War, even though important minorities within each party sought a middle way between capitalist democracy and Soviet communism, denounced US foreign policy, and voiced their solidarity with the developing world. On the whole socialist parties in power followed a bipartisan foreign policy.