Is it dead or only sleeping?

Labour has dumped socialism but, argues Neal Ascherson,the exploited will once again rebel unless we have democracy in the workplace as well as in politics As socialism becomes persona non grata, Neal Ascherson looks at the legacy of a movement that defined the 20th century through revolution and welfare state

It was in the 1960s, and a by-election was being fought in the Glasgow Woodside constituency. In those days, parties too poor to afford posters still used the city's traditional political medium: chalk on the pavement. One day, walking up Lynedoch Street, I found beneath my feet the following slogan, written in large, precise white capital letters:

"IF YOU DO NOT UNDERSTAND AND WANT SOCIALISM, DO NOT VOTE FOR THE CANDIDATE OF THE SOCIALIST PARTY OF GREAT BRITAIN."

For sheer integrity, that slogan cannot be beaten. Its authors, the SPGB, were and still are an austere Marxist sect founded well before the Russian Revolution. But I no longer remember, if I ever knew, how many voters concluded after searching their hearts that they did indeed both understand and want socialism in Woodside and were worthy to cast their ballot for the SPGB. Few, I suppose, but the finest.

Even now, five years after the collapse of the Soviet Union and the disappearance of the world Communist movement, the questions remain. All over the planet, there remain shaken but unrepentant souls who still want socialism. But do they understand it? And if they did understand it, would they go on wanting it?

Last week in Britain, the dreary argument trickled on about whether Tony Blair is a socialist, whether New Labour has betrayed socialism, and if he isn't and they have, whether either Mr Blair or his party should admit it. Plainly, those who keep this argument going neither understand nor want socialism. What they want is the raw material for a headline: "Labour split on conference eve". Nevertheless, a few interesting things have been said, some by Mr Blair himself.

His latest utterance, a hastily written article on Thursday, claimed that New Labour was actually giving new life to the "socialist ideal" (not to socialism as such, be it noted). He went on: "My kind of socialism is a set of values, based around notions of social justice ... Socialism as a rigid form of economic determinism has ended, and rightly. The objective - a modern civic society in which all individuals have the ability to develop their potential - places us firmly within the tradition of social democracy and democratic socialism." When he talked to Rupert Murdoch's janissaries in Australia last year, he said: "the era of the grand ideologies ... is over. In particular, the battle between market and public sector is over. There will be boundary disputes but not war..."

This shows a list of negatives: what Mr Blair thinks "my kind of socialism" should not be. It is not a Marxist prophecy about ineluctable laws of social development. Neither is it a programme for overcoming capitalism and the exploitation of man by man. But Mr Blair is also reasonably clear about what he thinks the "socialist ideal" is for. It is not an end in itself. Instead, social justice is the precondition for creating "a united nation" which thinks of itself as a single community with a common interest, which has left behind sterile conflicts of class and the harmful divisions created by gross contrasts between wealth and poverty.

In short, this sort of "socialism" (or social democracy) is only the means to a basically nationalist end. This is the revival of a "strong" Britain which has "rebuilt social order and stability". This instrumental view of socialism is not heresy but slap in the mainstream Labour Party tradition, because the party - which has never really been a socialist party - has understood itself in essentially patriotic terms. But true socialism it is not. Bismarck imposed a form of welfare state on Germany to forestall proletarian revolution, hold the nation together and shoot the Marxists' fox. If he was a socialist, then so was Konrad Adenauer and Harold Macmillan - and so is Tony Blair.

All the same, it is much too early to say that socialism is dead, even in Britain. The Soviet Union and the Bolshevik Revolution are over, and we are hanging about to see the end of communism in China, Cuba, Vietnam and North Korea. But an ideology as powerful and popular as socialism was in the first half of this century does not evaporate when the climate changes. Instead it retreats underground into the water table of political thought. After Waterloo, there were those who thought that the French Revolution was over and that the ideas of liberty, equality and fraternity were dead. After all, the Napoleonic empire had fallen and the Bourbons were back in Paris. But the Revolution principles, welling up again a few years later in a new mix with liberal nationalism and early socialism, were to dominate 19th-century Europe.

All over the political landscape, elements of socialism have survived. One such element - a Marxist one - is the analysis of "base and superstructure". This is the belief that by altering the economic relationships of a social group their subjective political and cultural attitudes could also be changed. At its crudest, this meant shovelling Polish Catholic peasants into heavy industry so that they would emerge as communist proletarians. That was a famous failure, like many other "social engineering" projects. So it's all the odder that this is one of the socialist ideas which has been absorbed even by the free-market right. When Margaret Thatcher announced that she intended to eradicate socialism in Britain, she proposed to do so by converting the workers into a propertied class of house-owners, so that their political consciousness would be permanently transformed into that of small-bourgeois Tories. Lenin would have understood her perfectly.

Another inheritance of socialism - this time from Attlee or Olof Palme or even from the pre-1914 radicalism of Lloyd George, rather than from Marx or Stalin - is the public attitude to taxation. A tax used to be regarded as a state levy to raise funds for its own use - generally to make war. As such, it was something to be resented, an imposition on the citizen who would get no evident benefit from paying it. Americans, who made a revolution on this point, still see tax in this way. But European social democracy taught something quite different: that taxation was the key tool for social reform. It could soak the rich and redistribute wealth; it could harness private profit to finance a welfare state; it could even, if well targeted, wipe out an oppressive class altogether through, say, a tax on landed estates.

Nobody likes paying tax, not even the long-suffering British. But it is a guilty reluctance. The free-market right wishes that people would learn to be more American and greet the taxman with a levelled musket. But the assumption that taxation is about social justice remains widespread, and remarkably hard to uproot. The poll tax was hated and resisted because it was regressive - making no allowance for the income of the taxed - and therefore seemed morally indefensible. Remembering the poll tax, the public will be cynical about John Major's suggestion last week that cutting taxes is a moral act. Even hardened tax-dodgers will find that shameless.

European social democrats - as opposed to communists - have always been schizophrenic about capitalism. At an early stage, they fell back on a compromise. They rejected a socialist revolution, for which conditions were not ripe anyway. Instead, they allowed private property and enterprise to continue, regulated in very different degrees by the state to limit the social havoc that the uncontrolled free market would cause. At the same time, they clung - as Labour in Britain did - to the dream that one day capitalism would be overcome and that working people would take over the means of production. But the practice frustrated the dream. State regulation, the pattern designed by moderate socialists after 1945 and then imitated by Conservatives and Christian Democrats all over Europe, turned out to be just what capitalism needed to flourish. There followed the most rapid rise in living standards in human history, which left socialist governments totally dependent on private-sector growth for revenue to finance the welfare state.

Nationalisation, once the seizure of "commanding heights" for the advance to full socialism, is now as dead as a doornail. State intervention in the economy has become almost equally unpopular. The state - even under a social-democrat government - seems bound to retreat from the direct protection of living and working standards. Instead, government will concentrate on retraining the labour force and battling to restore order and "cohesion" in economic disaster areas. These are merely new ways of servicing private enterprise and sweeping up the debris of its failures.

But there are beliefs at the heart of socialism which lie much deeper than faith in public ownership or state intervention. One of these is the conviction, a century older than Marxism, that the human race is a naturally co-operative species. The vision is of a small community of producers, human beings who live together without private property or economic privileges and live in a harmony which springs from their dependence on one another. Only anarchists put this vision into practice. But all real socialists are moved by the proposition that men and women are only true to their natures when they collaborate and share, rather than compete. And from this theory came the great working-class ethic of solidarity - all for one, and one for all - which inspired the trade union movement and the web of mutual education and support established by the old socialist parties.

Few scientists would now agree that Man is "naturally" collectivist. Neolithic villages, once thought to be communes of egalitarian peasants who knew neither envy nor ambition, are now studied for evidence of exploitation and strife. As for solidarity, all the efforts of free-market liberalism are now employed to break society down into atomised, helpless individuals.

Only one of the fundamental socialist perceptions is still in reasonably good shape. This is the enduring outrage at individual human waste. It is the sense of unused potential in men and women who have it in them to achieve, to "fulfil themselves" or simply to be happy, but who are condemned by the system to pass stunted lives. This is the one nugget of basic socialism which does sparkle out from New Labour's priorities, and it is no coincidence that faith in the individual's power to change is also the Christian path to socialism. And yet even this is being corroded by free-market philosophers. For them, the notion that human beings have a right to develop a natural potential is sentimental rubbish; the "underclass" is the unusable ash which falls from the wealth-making furnace, perpetuating its misery through its own innate fecklessness.

In other words, it is not just the manifestations of 20th-century socialism - the redistributive state, public ownership, the public provision of education and health, the status of trade unions - which are in retreat. The underlying analysis of human society which has carried socialism is retreating, too. And yet this is not the end of the story.

The world is now dominated, almost exclusively, by free-market liberal democracy. The socialist rebellion against capital has failed. But our system still contains an enormous contradiction, to which it has found no answer.

This system's Ark of the Covenant is individual consumer choice. But there is life beyond supermarket aisles, and consuming is only one of the things we do. The problem is sharply defined by Donald Sassoon in the epilogue to his book A Hundred Years of Socialism.We are offered the image of "individuals exercising their consumer sovereignty by ... opting for Daz over Persil before casting, as sovereign citizens, their ballot for the Left or the Right". But this is only half the picture. Consumers are also producers, and the world of work is entirely different.

He goes on: "In the world of production, authority, hierarchy and discipline prevail. We vote for whomever we like, we buy whatever we can afford, but at work we do as we are told ... Controlling capitalism has proved far more difficult than controlling anything else, because capitalism is a system based on the control of the many by the few - the reverse of the conventional definition of political democracy."

Two centuries ago, the first proto-socialists declared that political democracy was not enough. To be complete and real, democracy must conquer the workplace as well. This contradiction - the brutal contrast between citizen freedom and employed (or unemployed) unfreedom - remains a fissure reaching deep into the bowels of the earth. Socialism has ebbed away down that fissure until it is almost out of sight. But the chasm is still open, and sooner or later it will disgorge rebellion. It may return as a flood: elements of old socialism mixed with new ideologies as yet unformed. But it may also return as fire.