The failure of social democracy?

I've been reading Andrew Potter and Joseph Heath's The Rebel Sell: Why the Culture Can't Be Jammed, where they essentially suggest revolution will lead to ineffective 'rebel consumerism' and weaken the ability of the system to reform due to lack of participation. While I agree about the danger of creating simply another 'counterculture' instead of creating real change, I object to the notion that only reforms in the current system can really solve the world's problems-- as I'm sure you all do, this being a revolutionary socialist forum. I don't, however, have sufficient knowledge of economics to justify my position. Could you help with this? I know that allowing bourgeoisie to exist prevents the workers from having their full rights, not to mention the issue of fair trade vs. free trade with the Global South. I'm most interested in an explanation of the fundamental failures of the system, as Celtiberian mentioned here.

Celtiberian wrote:Like most liberals, many of the Occupy Wall Street participants are under the delusion that justice will be achieved when the United States becomes more reminiscent of the Scandinavian social democracies. Unbeknown to them, however, Scandinavia itself is slowly losing its cherished social programs for a number of reasons (all of which are related to capitalism in some capacity). People have to come to terms with the fact that the middle class/social democratic era was a historical fluke, that capitalism cannot sustain a decent standard of living for a significant percentage of a population for any appreciable amount of time. Furthermore, while the welfare state can certainly aid in making life under capitalism more bearable for the working-class, it does absolutely nothing to solve the central injustice of capitalism, namely: wage slavery.

The struggle, therefore, shouldn't be to attempt to revive a moribund welfare state, but rather to fundamentally abolish exploitation by ending bourgeois social relations and ushering in an era of justice characterized by worker control of the means of production and distribution—the benefits the welfare state used to provide can only be sustained within a socialist mode of production.

I've not read The Rebel Sell: Why the Culture Can't Be Jammed, but from what I've read about it, I agree with the authors insofar as counter-culture being incapable of doing anything substantive to advance social justice is concerned. However, I strongly disagree with their disregard of the important role exogenous preferences (i.e., market-induced desires and bourgeois ideology) have in shaping society. Being that they're social democrats, their uncritical view of capitalism doesn't surprise me.

Reformism is a useless venture because any reforms unable to assist in, or at least not obstruct, the process of capital accumulation will either not be achieved or eventually be abolished. The women's liberation movement, for example, succeeded largely because it's beneficial for capital to have as large a labor market as possible. Public education has also been maintained because a certain amount of knowledge is necessary in most contemporary jobs. (Unfortunately, as a consequence of the structure of public education being primarily influenced by the demands of the labor market, the cultivation of other potentials for large segments of the populace is prevented.) However, programs which redistribute wealth or nationalize services which could otherwise be provided for privately are intolerable to the bourgeoisie since it interferes with their ability to make (or retain) more money. Thus most of the global north has been experiencing the gradual privatization of all public services (from transportation to social security) for the last several decades.

Due to allocation of surplus value being controlled by the bourgeoisie, they're in a position to disproportionately shape public policy—which is why Karl Marx argued that "The executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie." Politicians are answerable to those with wealth, since it is they who finance their campaigns, provide them with lucrative careers when their public service has ended, etc. (I suggest viewing the documentary Golden Rule: The Investment Theory of Politics.) What really forced the bourgeoisie into various social welfare concessions in the past was the imminent threat of socialism. They realized that if they failed to appease the working class, those workers just might begin to organize and agitate for more radical changes (which would likely dispossess them), and the Soviet Union was ready to assist in such struggles. Once the Soviet threat receded and bourgeois ideology became more hegemonic, however, they immediately saw their opportunity to start rolling back what they had previously conceded to.

You may find Immanuel Wallerstein's article on the decline of social democracy insightful. Richard D. Wolff's "The Regulation and Reform Dilemma" essay is also quite instructive.