Introduction and Research Question
The international left is facing an identity crisis. In recent years, social democratic and otherwise left-leaning political parties have faced a strange reality: their voter bases are increasingly richer and more highly educated. Take the recent 2024 United States presidential election, for example. According to preliminary data on the election reported on by The Financial Times, high-income and highly educated voters shifted towards the Democratic party while lower-income and lower-educated voters moved heavily against them (Suss et al., 2024). This contributed to losses in the Presidency as well as the first popular vote loss for the Democratic Party since 2004. The United States is not alone in this regard. The United Kingdom’s Labour party, despite making historic gains and gaining a majority of seats in the 2024 parliamentary election, saw decreases in its vote share among less educated voters and those of a lower socioeconomic status, while it saw large increases with upper-middle and middle class, well-educated voters (Skimmer et al., 2024). Similar trends have emerged across other European countries, demonstrating a clear picture that social democratic parties are no longer the parties of the working class, but increasingly the parties of the well-educated middle classes. To many, these parties have clearly shifted their stances on issues affecting the middle class, such as welfare and the economy.
Social democratic political parties have historically represented the working class, holding pro-labor and decommodifying welfare policies throughout the 20th century. However, now social democratic parties are commodifying welfare policies, or welfare policies that require participation within the labor market. What caused this change? This paper seeks to answer that question, investigating what drove the transformation of social democratic political parties. However, this investigation immediately leads to an important question: Why did social democratic parties increasingly focus on commodifying welfare policies in favor of the middle class, rather than continuously sticking to policies that benefited their original working-class base? Was this realignment a top-down driven change, with party elites initiating this policy shift on their own, possibly as part of a larger goal to capture middle-class voters? Or was it a bottom-up approach, with social democratic party leaders reacting to a shift in their political base, where the importance of honing in and maintaining this newly important middle-class base resulted in the adoption of pro-market and commodified welfare policies? This paper will answer which came first: middle-class growth and salience to social democratic political parties, or the adoption of pro-market and commodifying welfare policy by social democratic political parties.
While the answer to this question is contentious, I hypothesize that the shift of social democratic political parties towards adopting more pro-market and commodifying welfare policies was a bottom-up response to middle-class growth as an important political base for the left, rather than a top-down elite-driven change within the party. In testing this hypothesis, I conduct a temporal analysis on both middle-class growth and social democratic political party welfare policy throughout the later 20th and early 21st century, analyzing whether middle-class growth or the official party commodifying welfare policy change came first. Here, I use both sectoral employment data and social democratic party manifesto data from the United Kingdom and Germany. By comparing the results from these two datasets, I find out whether middle-class expansion or elite decisions drove the adoption of commodifying welfare policies by social democratic political parties. In doing so, I find substantial evidence to support the theory that middle-class expansion drove the adoption of commodifying welfare policies, rather than elite-driven change.
Theoretical Significance
This research paper will address debates about political party support regarding the welfare state and how economic class structures and elite ideology play a role in shaping welfare policy. By determining why social democratic political parties adopted commodifying welfare policies, either through a top-down elite-driven model or a bottom-up model of middle-class expansion, I also investigate the level to which changes in class structure affect welfare state policies and if rapid decline in the working class manufacturing sector combined with increase in the middle-class, high-skill services sector can influence welfare policy (Oesch, 2015). In doing so, we can figure out to what extent changes in economic class structure affect welfare policy. Finally, through understanding why social democratic parties shifted towards commodifying welfare policies, we can determine the true ability of parties and political elites in shaping policy without clear support from their political bases.
Social democratic political parties have always had a host of economists and analysts operating as intra-party “elites” to influence party policy since the early 20th century (Mudge, 2018). However, certain questions remain as to how influential they truly are in influencing party policy. Without a clear mandate or indicator of popular support for certain policies, it is questionable how far even the most influential politicians may be able to push forward their preferred policies. We may be able to verify this ability of elites to guide policy on their own if we find that the adoption of commodifying policies was elite-driven. Therefore, understanding exactly why social democratic parties adopted commodifying welfare policies is important because it allows us to examine whether welfare policy change is primarily due to larger economic and class structure shifts or whether it is driven by elite motivations. Welfare policy changes can affect millions of citizens, and determining the cause of these changes can help give us a better understanding of exactly why these changes are made.
Contextual History of Welfare Policy in High-Income Countries
Most social democratic political parties, and especially social democratic political parties in high-income countries, either originated from the labor and trade union movements or have long histories with these movements. Indeed, throughout the 20th century, working-class voters typically composed a majority of these social democratic parties’ political bases, from which they consistently derived support (Diamond, 2024). As a result, these parties usually closely represented the interests of the working class, such as the establishment and expansion of strong welfare states post-World War II, as well as taking up more decommodifying welfare policies which typically supported those less well-off (Diamond, 2024).
However, major factors occurred during the second half of the 20th century that allowed for a political shakeup in welfare policy to occur. First off, massive oil crises in the 1970s helped contribute to the end of the post-World War II economic boom under which the welfare states thrived and expanded, leading to the “Silver Age” of the welfare state (Ferrera, 2008). This marked a general period of increased austerity and retrenchment, with expanded welfare spending becoming less and less feasible due to high inflation and slow economic growth.
The same post-World War II economic boom that allowed for the expansion of the welfare state also allowed for a rising, more highly educated middle class, facilitated by the growth of service sector jobs as a share of employment. This growth within the services sector allowed for a sort of “occupational upgrading” as the labor market created opportunities for those with high skills and high rates of educational attainment, at a time when higher levels of educational attainment became more common (Oesch, 2013). In particular, growth in highly-skilled service sector jobs allowed for the rapid growth of the middle class, which is often in favor of more pro-market welfare state policies (Gingrich & Häusermann, 2015). This rise has heavily increased the salience of the middle class as a key voting bloc within high-income economies, particularly for social democratic political parties.
Some literature suggests that this expansion of the middle class allowed for the rise of commodification and pro-market social policies, often described as the “Third Way.” The “Third Way” was a political movement taken within social democratic and left-leaning political parties, which promoted neoliberal and pro-market welfare and trade policies within social democratic politics during the 1990s and 2000s, thereby pushing these parties to the political center (Leigh, 2003). Rapid changes and stagnation within high-income economies, as well as heavy shifts from the manufacturing sector to the service sector, may have made it imperative for social democratic political parties to adopt these “Third Way” commodifying policies relevant to the new economic situation (Romano, 2009). This also correlated heavily with the fall of the working class as a political group, with heavy declines in the share of jobs held typically associated with “blue-collar” work throughout the end of the 20th century, such as those in manufacturing and agriculture (Harris, 2020). This decline further prompted social democratic parties to move away from decommodifying welfare policies, with the working class no longer a key factor within their political base (Anderson & Camiller, 1994). Instead, the middle class replaced the working class as the key political group for social democrats.
However, other sources of literature argue that this may be due to the influence of pro-market political elites within social democratic circles who pushed for market-conforming policies, such as the idea of “third way” politics within the welfare state. These party elites are primarily represented by finance-oriented economists, think tank analysts, and other advisors to politicians, though social democratic politicians themselves have also advocated for shifts. This particularly happened in the 1990s, where social democratic elites pushed forward the “Third Way” as an ideological force and enforced market-friendly welfare policies (Mudge, 2018). Political strategists within these parties steered social democratic ideology towards more neoliberal and pro-market policies in attempts to appeal to a wider range of voters, initiating this change and doing so against the interests of their constituents and their own partisan interests (Kraft, 2016).
Research Design and Methodology
This paper tests two binary hypotheses. The proposed hypothesis suggests that commodifying welfare policies within social democratic parties emerged as a bottom-up response to middle-class growth. The second, alternative hypothesis suggests that these policies were top-down decisions driven by party elites and their advisors.
To concretely examine whether shifts by social democratic political parties towards commodifying welfare policies were due to increased middle class political power or due to elite-driven policy changes, we must dive into a mix of quantitative and more qualitative data which represents such instances of middle class power or elite policy change, where we must pinpoint two different times: when the middle class became the dominant socioeconomic class, as well as when social democratic parties adopted changes to welfare policy.
In doing so, I wanted to focus on relevant countries that were representative of high-income welfare states, as well as those that had historically powerful social democratic political parties that had the opportunity to define and influence welfare policies. These parties should also have the potential to transform from highly redistributive and decommodifying welfare policies to more pro-market ones. Here, I decided to focus on two countries which I believe achieve these requirements, the United Kingdom and Germany, focusing on their social democratic parties, the Labour Party and the Social Democratic Party (SPD), respectively. These represent countries that had powerful social democratic party elites who actively pushed forward commodifying welfare policies, making them powerful examples of the exact trends needed to examine the question at hand. In addition, the United Kingdom and Germany are prime examples of the Liberal and Christian Democratic welfare states respectively, allowing for an investigation that is representative of multiple welfare regime types and an account as to whether trends in welfare policy changes differ or stay similar between them (Esping-Andersen, 1990). This makes both of these countries suitable case studies for my analysis.
In order to investigate the point at which political party elites adopted and embraced commodifying welfare policy, I evaluate political party manifestos of both the British Labour Party and German Social Democratic Party to determine periods at which party officials may have embraced commodifying welfare policy. To find this, I use the Manifesto Project Database, a dataset that qualitatively assigns different “codes” indicating a certain policy to sentence fragments within political manifestos, then quantitatively summarizes the codes in terms of percent frequency within each manifesto (Lehmann et al., 2024). Here, to measure the prevalence over time of both decommodifying and commodifying welfare policies within social democratic party political manifestos, I will measure two pairs of codes against one another. The first pair of codes consists of “per504”, which measures welfare state expansion, and “per505”, welfare state limitation. This comparison will assist in measuring trends in terms of party elite embracement or rejection of commodifying and decommodifying welfare policy. The second pair of codes consists of “per402”, which measures business incentives, and “per403”, market regulation. While these latter two codes do not directly measure welfare policy, they reflect policies that benefit either the middle class or the working class. Here, the business incentives code measures commodifying policies meant to promote enterprise, such as subsidies or tax breaks, favored by the middle class, while the market regulation code discusses policies meant to protect consumers, benefiting the working class. I calculate the exact proportions of each of these codes within social democratic party manifestos in Germany and the United Kingdom over a period of time ranging from the early 1960s until the present day. In doing so, I aim to analyze the trends in policy priorities within social democratic parties over this time period, particularly analyzing the growth and evolution of commodifying welfare policy within these parties.
We also must examine the point at which we can mark definitive middle-class growth. As with demonstrated increases of the middle class as a percentage of the population, I establish a timeframe in which the middle class grew and became more politically salient and important as a voting base. Conversely, this may also demonstrate a decline in the working class in terms of their political importance. To examine this middle-class growth, we must find concrete data that measures a standardized definition of middle class over time, which is difficult to do when comparing different countries with various factors and measures for socioeconomic data. To use a more standardized measure to quantify the rise of the middle class, I looked at employment data by sector reported over time. Most high-income countries have similar measures for what constitutes a job within certain sectors of the economy, as defined by a three-sector model. This model includes the primary (jobs relating to the extraction of raw materials and agriculture), secondary (jobs relating to manufacturing), and tertiary (jobs relating to services) sectors (Kenessey, 1987). To translate these sectors over to analysis regarding middle class expansion, I will group the primary and secondary sectors, which represent jobs traditionally held by the working class, comparing them with the tertiary, or service sector, which represents jobs held by the middle and upper class. This will involve two datasets representing sectoral employment data for both Germany and the United Kingdom. For Germany, I took data from the OECD Data Explorer under the dataset “Employed Population by Economic Activity,” which summarizes sectoral employment data for the majority of OECD countries (OECD 2024). Equivalently, as the OECD data in this dataset only dates back to around 1997 for the United Kingdom, it was necessary to use a different set of data to evaluate sectoral employment within the country. Here, I used data from the Bank of England, under one of their research datasets titled “A Millennium of Macroeconomic Data,” a section of which details employment by sector (Bank of England 2024). I evaluated both the German and British sector employment data starting from 1962 to ensure a valid comparison and to fully represent the later 20th and early 21st century period, which is when I seek to measure middle class growth. In analyzing this sectoral employment data, I pinpoint when exactly the middle class established itself as the main political voting bloc by looking at two different factors within the data: share by sector, and more importantly, percentage growth by sector over time. At the point when growth in the service sector begins to slow down, it indicates the firm entrenchment of the service sector, and thus the establishment of the middle class as the most important political group.
In order to fully evaluate our hypothesis and alternative hypotheses, I analyze which came first: the establishment of the middle class as the main voting bloc, or shifts to commodifying political language in social democratic political party manifestos. This allows us to determine exactly why social democratic political parties adopted commodifying welfare policies. If growth in service sector employment peaks before social democratic political parties adopt commodifying policy language within their manifestos, then it would indicate a positive result for the hypothesis, demonstrating that the adoption of commodifying welfare policy was in fact due to a bottom-up response to middle-class growth. Conversely, if this peak in middle class growth occurs after the appearance of commodifying language within social democratic political manifestos, then it would support the alternative hypothesis that social democratic party adoption of marketing welfare policies was a top-down driven change.
Results
In order to uncover whether social democratic parties adopted commodifying welfare policies as a result of a bottom-up response to middle-class growth or a top-down elite-driven change, there must be a detailed temporal analysis of both manifesto and sectoral data within the United Kingdom and Germany. Here, trends in commodifying language and service sector prominence are important factors to watch. I divide this section into two main sets of results, the first being the temporal findings of commodifying, or, conversely, decommodifying welfare language within social democratic party manifestos, and the second being the temporal findings of change and level of growth of those employed within the service sector.
Manifesto data representing topics within the British Labour Party demonstrate varying trends in welfare policy. Figure 1 represents data tracking the prevalence of policies regarding both Welfare State Expansion (per504) and Limitation (per505) in the Labour Party’s manifestos over time. Here, aside from a slight increase in the prevalence of welfare state limitation within party manifestos in the late 1960s, the policy has had minimal prevalence in Labour Party literature. Conversely, the idea of welfare state expansion has seen fluctuations in its prevalence in manifesto data, with large decreases in the policy from the beginning of the example period to 1970, with increases in discussions of welfare state expansion continuing until the 1992 Labour Party Manifesto, with the topic discussed in around 14.8 percent of sentence fragments in that document. From here, the prevalence of welfare state expansion policy decreased until the 2010 Labor Party Manifesto, where welfare state expansion was discussed in only 8.2 percent of sentence fragments. Incidentally, the Labour Party was in government for the majority of this period of decline. From here, however, the prevalence of welfare state expansion policies in the Labour party has increased dramatically to the present day.
I find similar trends in Figure 2, representing data tracking the prevalence of policies regarding pro-market Business Incentives (per402) and Market Regulation (per403) in Labour party manifestos since 1964. Here, the two policies represented small and nearly equal percentages of manifesto policy until the 1983 Labour Party Manifesto, at which market regulation nearly doubled in prevalence while business incentives decreased. From here, however, business incentives steadily grew in prevalence within labour manifestos until 2010, while market regulation generally decreased. However, after 2010, this once again changed course, with drastic increases in focus towards market regulation-based language to the present day. Accordingly, Labour Party manifesto language focusing on business incentives has decreased since 2010.
Figure 1.
Figure 2.
Manifesto data representing temporal topic findings of Germany’s Social Democratic party follow some similar, but largely distinct trends from the Labour Party. Here, in Figure 3, much like the trends in the Labour Party, welfare state limitation has not been a highly prevalent topic within the Social Democratic Party manifestos. However, there are notable increases in the 1970s and 1990s, where welfare state limitation is discussed by over 2.7 percent of sentence fragments in the 1998 Social Democratic Party manifesto. On the other hand, welfare state expansion policy decreased in Social Democratic Party manifesto language throughout the late 20th century, decreasing from 15.8 percent of sentence fragments in the 1976 manifesto to a mere 2.4 percent in 2005, marking a drastic decrease in welfare state expansion policy. It is important to note that much of this decrease occurred during times in which the Social Democratic Party held power within Germany’s government, with two different waves of decline from 1976 to 1983 and from 1994 to 2005. After 2009, however, welfare state expansion policy increased heavily, continuing up to the most recent manifesto data.
In Figure 4, there is data regarding market policies for the Social Democratic Party, where language related to market regulation mostly has an inconsistent trend in representation in the manifesto dataset until around 2005, increasing, then decreasing, and increasing again. From there, market regulation policy sharply increased in the 2009 Social Democratic Party manifesto before following a general decrease in representation in the manifestos published since. On the other hand, language related to business incentives policy generally finds a steady increase in prevalence until the 2000s, with major bumps that briefly make it more prevalent than market regulation in 1983 and 1998, peaking at 4.91 percent of sentence fragments within the 1998 manifesto. From then on, business incentives policies have found a general decrease in relevance.
Figure 3.
Figure 4.
Manifesto data generally tracks temporally with one another for both the British Labour Party and German Social Democratic Party, where declines in focus on welfare expansion policies occur particularly throughout the 1990s and 2000s, with similar trends following periods during which these social democratic parties held political power. However, for both political parties, a renewed focus on welfare state expansion policy emerged since the 2010s. In addition, both social democratic parties find general increases in commodifying policies such as business incentives, leading up from the 1980s to the 2000s.
Moving on to the data on sectoral employment over time, I used the two different datasets representing sectoral data in the United Kingdom and Germany, respectively. Using these two datasets, I further calculated both percentage change in employment by sector over time as well as share of employment by sector over time for both the United Kingdom and Germany.
Looking at the sectoral employment trends for the United Kingdom over this time period, as seen in Figure 6, I find that the employment share of the services sector has already outpaced the primary and secondary sectors by 1962, with the gap steadily increasing over time, the service sector reaching past 80 percent of the total share of employment by 2016, and the primary and secondary sectors combined dipping below 20 percent.
This correlates with the patterns seen in Figure 5, which represents the percent change in the sectoral employment per year, where there is a positive trend in service sector employment for nearly the entire period within the United Kingdom. This growth was particularly high during the early part of this time period, with the percent change in service sector employment increasing between 1 and 2 percent each year until around 1980. However, this growth has slowly declined over the years, with nearly a net-zero change in sectoral employment by the end of the data in 2016. Conversely, the primary and secondary sectors faced an increasing decline until around the year 1990, but have rapidly stabilized towards minimal decline since.
Figure 5.
Figure 6.
A similar path in sectoral employment trends follows in Germany. However, unlike in the United Kingdom, when the data starts in 1962, the primary and secondary sectors made up the majority of jobs within the German economy, composing a little under 60 percent of the total employment share, as noted in Figure 8. However, it did not take long for the services sector to grow rapidly and compose the majority of German employment by the mid-1970s. This growth continued steadily, with the service sector reaching 70 percent of the employment share by the late 2000s.
Figure 7, which represents the percent change in German sectoral employment per year, corroborates this data. Here, there are significant increases in the service sector from 1962 to around 1975, where aside from a brief period of time in which the service sector declines, the share of the service sector increases by margins of around two to three percent each year, indicating rapid growth in the share of the service sector within the economy. From the mid-1970s on, there seems to be a slow decline in the percentage growth in the service sector to the present day, with certain fluctuations, such as a large bump in growth during the mid-1990s. This culminates in minor percent growth and even some decreases within the service sector share by the late 2000s and 2010s.
Figure 7.
Figure 8.
Analysis
The results stemming from social democratic manifesto policies, as well as sectoral employment data, reveal clear trends and timelines to interpret in the context of the adoption of commodifying welfare policy. First, I find that within the manifesto data, there are general trends of lower amounts of decommodifying welfare policy language within social democratic party manifestos throughout the end of the 20th century and beginning of the 21st century, as well as increased measures of commodifying language, though this later reversed course by the 2010s. This indicates a period in which social democratic parties officially adopted commodifying welfare policy and at least partially abandoned their traditionally decommodifying policies on welfare.
Second, sectoral employment data indicate explosive growth in the share of the service sector, associated with the rise and expansion of the middle class, between the 1960s and 1980s. This rise in growth transitions into a continued, yet linearly declining growth in the service sector as a share of employment, cementing the transition from an industrial to a service-based economy in Germany and the United Kingdom, something which also demonstrates the establishment of the middle class as the predominant socioeconomic group, with high political importance.
However, to test the hypothesis and alternative hypotheses, evaluating whether this adoption of commodifying welfare policies by social democratic political parties is either a bottom-up process due to middle class expansion or whether it is an elite-driven process, we must temporally compare the manifesto and sectoral employment results given within both the United Kingdom and Germany.
United Kingdom
In analyzing manifesto and policy trends within the British Labour Party against sectoral employment trends in the United Kingdom, clear results generally indicate a “bottom-up” approach to welfare policy adoption, confirming my hypothesis. Here, I find that the percent growth in the service sector as a share of the labor force seems to be at its highest from the late 1960s to around 1981, with a relatively linear decline in growth occurring after this period into the present. This means that the year 1981 likely serves as a marker for the rapid growth of the service sector, and indicates the establishment of the middle class as the dominant socioeconomic class, and thus the dominant political force. Changes to welfare policy after this time period likely indicate appeals to the middle class as a political voting base.
Indeed, in investigating the manifesto results, I find decreased emphasis on topics such as welfare state expansion, which is a decommodifying welfare policy, starting from the 1992 Labour Party Manifesto, continuing to the 2010 Labour Party Manifesto. In combination with this, I find an increase in pro-market and investment policies such as business incentives within Labour Party manifestos until 2010. This demonstrates that trends in increased commodified welfare policy within the Labour Party emerged definitively after the expansion of the middle class and its establishment as a prominent voting base within British politics. While we do see another drastic decrease in discussion of welfare expansion policy in Labour party manifestos during the late 1960s, this decrease in expansionist welfare language does not correspond with simultaneous increases in pro-market policies, and thus does not definitively indicate commodifying welfare policy alone. Of note here is that the prevalence of commodifying policies tends to follow periods when the Labour Party is in power, especially during the period from 1998 to 2010. Here, emphasis on Business Incentives increases during this period while emphasis on Welfare State Expansion heavily decreases.
The rise of commodifying welfare policies came after the 1992 elections within the United Kingdom, and thus firmly after 1981, which marked the peak of service sector growth within the economy and the entrenchment of the middle class as a political force. This temporal alignment gives considerable evidence to support the original hypothesis that the shift of social democratic political parties towards adopting more pro-market and commodifying welfare policies was a bottom-up response to middle-class growth. Equivalently, this also establishes considerable evidence to reject the alternative hypothesis that the shift towards commodifying welfare policies was a top-down driven change started by party elites and politicians, as these policy changes occurred after there was significant incentive to do so with the rise and establishment of the middle class as the dominant political base.
Germany
Comparing manifesto policy within the German Social Democratic Party and sectoral employment trends, I find relatively similar temporal results to those in the British Labour Party, indicating a “bottom-up” approach to commodifying welfare policy adoption in Germany. Here, I find that the percent growth in the service sector as a share of the labor force seems to generally be at its highest from the mid-1960s to around 1975, despite a large decrease in 1969, though this looks to be an anomaly within this period. Since then, much like the British Labour Party, there has been a somewhat linear decline in growth after this period into the present. There have been fluctuations, such as a large increase in the German service sector’s growth rate during the early 1990s. However, the early 1990s marked heavy economic changes within the German economy due to German reunification and the incorporation of the formerly communist East Germany into the economy. During this period, the services sector within the newly reunified East Germany saw massive short-term increases due to wide-scale privatization and the foundation of businesses, while the manufacturing and agricultural sectors saw declines in employment (Pohl, 1991). As a result, this may not necessarily indicate changes in the sectoral employment in all of Germany, but may indicate changes confined to the East German economy. As a result, I define the year 1975 as the end of the rapid growth of the service sector. As is the case with the data in the United Kingdom, this indicates the establishment of the middle class as the dominant socioeconomic and political base in Germany. Once again, massive changes to welfare policy after this time period likely indicate appeals to the middle class as a political voting base.
Indeed, investigating the Manifesto Project’s data for the Social Democratic Party, I find declines in emphasis on welfare state expansion policy starting with 1980 Social Democratic Party Manifesto which occurred in two different waves: the first ending after 1983, and the second which began after 1994 and ended after the 2005 Social Democratic Party Manifesto, with a period in between where welfare state expansion policy stayed relatively constant, with some fluctuations. This coincides with increases in commodifying language within Social Democratic Party manifestos, such as discussions surrounding business incentives, which sees a significant and steady increase in its proportion in the manifestos starting with the 1983 Social Democratic Party Manifesto. The combination of these two trends indicates an increase in commodifying welfare policy within the Social Democratic Party from the 1980s to the early 2000s. In addition, higher trends in commodifying welfare policy language within Social Democratic Party manifestos align heavily with periods in which the Social Democratic Party was in political power, such as the late 1970s to early 1980s, as well as the period from 1998 to 2005, when the self-proclaimed “Third Way” advocate and Chancellor of Germany, Gerhard Schröder, held office.
The rise of commodifying welfare policies by the Social Democratic Party in Germany occurred beginning in the early 1980s, becoming deeply entrenched within party policy by the 1990s, and even expanded upon until the 2000s. This occurs slightly after growth in the German service sector’s share of employment within their domestic labor market peaked and began to decline after around 1975, establishing the middle class as the dominant socioeconomic and political group. This temporal alignment provides strong evidence supporting the primary hypothesis that the shift of social democratic political parties in Germany toward commodifying welfare policies was in fact a bottom-up response to the expansion of the middle class. Conversely, this timeline allows us to reject the alternative hypothesis that social democratic parties’ adoption of commodifying welfare policies was a top-down, elite-driven change independent of middle-class growth.
Further Discussion
The results found in this analysis firmly support the original hypothesis, providing firm evidence that social democratic political parties adopted commodifying welfare policies as a bottom-up response to the expansion of the middle class rather than as a top-down elite-driven change. However, these results also help to contextualize the history of welfare policy within social democratic parties over the past 60 years and help us to investigate how these parties respond to economic shifts, changes in class structures, and allow us to draw up interesting findings and trends surrounding welfare policy stances taken up by political parties, and how they may change over time.
The rise of commodifying welfare policy within social democratic political parties in the late 20th century allows us to question how political parties respond to shifts in the economic and employment landscapes. This allows for a further encapsulation of the idea of the Third Way as an ideology and its rise and fall within social democratic political parties during the 1990s to 2000s. The rise of the Third Way as known today mostly occurred during the 1990s, with the term “Third Way” peaking in usage in 1998 (Leigh, 2003). However, commodifying welfare policies are not exclusive to this Third Way movement within social democratic parties. In particular, there are clear trends in the German Social Democratic Party, which demonstrate a trend towards commodifying welfare policies beginning in the late 1970s and early 1980s. While Third Way politics promoted commodifying welfare policies, the movement was, in all likelihood, not the sole driver of these policies within social democratic political parties. As established by my temporal analysis, social democratic parties most likely adopted these policies in response to economic shifts towards the service sector and middle class expansion. In this sense, the Third Way may have simply been a means to define and label this shift in social policy by social democratic party elites, who promoted it as an ideology (Schröder & Blair, 1998). Indeed, even by the year 2002, discussions regarding the Third Way had already declined heavily within newspapers and academic articles (Leigh, 2003). This may support the conclusion that the Third Way as an ideological front within social democratic parties was driven by party elites, whereas middle-class expansion drove actual shifts toward commodifying welfare and social policies.
Despite this shift towards commodifying welfare policies in the past, the Manifesto Project data demonstrated that in recent years, both the Social Democratic Party and Labour Party reverted towards decommodification, with rapid increases in codes relating to welfare expansion and market regulation since the late 2000s. This pushes against prevailing literature on the evolution of social democratic welfare policy, which focuses on the idea that social democratic parties have undergone a complete transformation and continue to embrace neoliberal and pro-market policies (Mudge, 2018). However, there is an important temporal consideration to consider when analyzing this reversion: the 2008 financial crisis, often referred to as the “Great Recession.” This crisis defined the economic trajectory of the world in the late 2000s, with unemployment rates skyrocketing as well as significant contractions in global gross domestic product (Schanzenbach et al., 2016). This led to contradictory trends within welfare state policy. In the aftermath of the crisis, there was a dramatic increase in demand for expansive and generous welfare benefits, particularly that of unemployment insurance. However, decreased economic growth and financial troubles forced governments around the world to implement austerity measures, which severely reduced benefits (Hemerijck et al., 2012). However, social democratic parties in Germany and the United Kingdom did not hold political power during this period after the Great Recession, corresponding to time periods in which both the Social Democratic Party and Labour saw massive increases in language associated with decommodifying welfare policies. This lack of power and lack of responsibility to balance budget costs may have allowed social democratic parties to adjust their welfare policies in response to the desires of the general public, allowing for a return to decommodifying welfare policies. These trends provide important implications regarding how political parties shape their welfare policies, further providing more context to understand the relationship between economic trends and the evolution of social democratic welfare policy. This trend challenges the narrative of a linear shift towards commodifying welfare policy, and may suggest that welfare policy is even more malleable than otherwise thought.
Conclusion
The ideological direction that political parties take can be hard to predict, particularly on important issues such as welfare policy, which typically affects the majority of people within a country. As time goes on, parties can undergo massive shifts due to a variety of factors, such as changes in their voter base, evolving economic trends, or external crises and major events. This paper specifically sought to determine the cause of one ideological shift in particular. In doing so, it helped answer the question of why exactly social democratic political parties adopted commodifying welfare policies in the late 20th century, and whether this adoption was a bottom-up response driven by middle class expansion, or by a top-down shift driven by party elites. This was tested through a temporal analysis of left-leaning party political manifestos and sectoral employment data. In doing so, the evidence overwhelmingly suggests the original hypothesis, that these shifts were a bottom-up response to middle class expansion rather than a top-down shift driven by party elites.
These findings reveal the importance of class politics and economic trends in influencing welfare policy, demonstrating how responsive social democratic political parties are towards their political voting bases. This responsiveness may even portray the lack of influence party elites and leaders have in creating policy, where elite policy preferences are frequently overruled in favor of appealing to the preferences of their voting base. This demonstrates the central role that the people and class coalitions have in shaping welfare policy, undercutting the notion that party elites have uncontrolled influence in determining policy. As time goes on, socioeconomic trends change over time and welfare policy changes as well, but one thing remains certain: welfare policies in social democratic parties are determined by the people, not elites.
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Featured/Headline Image Caption and Citation: Working Class Movement Library, Image sourced from Wikimedia Commons | CC License, no changes made
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