From 1886 to 1887, the Fabian Society held a series of debates to decide whether or not it would adopt anarchism as the official position of the group. George Bernard Shaw had at one time had a favorable opinion of anarchism. He had even contributed to Henry Seymour's paper The Anarchist. Shaw came to reject anarchism and the free-association approach to socialism. Charlotte Wilson, who was also a member of the Fabian Society, was an anarchist, and the debates were to determine whether Wilson's anarchist views were shared by other members of the Society. Wilson had founded an anarchist newspaper with Peter Kropotkin. The Fabian Society ultimately rejected anarchism in favor of representative democracy. The Fabians decided that they were social democrats rather than anarchists.
Even in his tract critiquing anarchism, Shaw shows a great deal of understanding of, as well as sympathy for, anarchist ideas. He even points out that anarchists and Fabians are in agreement to some extent:
"Indeed, in the mouths of the really able Anarchists, Anarchism means simply the utmost attainable thoroughness of Democracy.... so that Kropotkine is not at all afraid of the democratic machinery and the majority power. Mr. Tucker speaks of 'voluntary association,' but gives no illustrations, and indeed avows that 'Anarchists are simply unterrified Jeffersonian Democrats.'"―George Bernard Shaw (The Impossibilities of Anarchism)
In its most realistic form, anarchism is a form of radical republicanism. It is delegative democracy and confederalism. This is very similar to the representative democracy and federalism of the social democrats. The problem with anarchism is that it is too purist in its conception of what socialism ought to be. It is too utopian. It paints a picture of a confederation based around absolute free-association. The problem is that free-association doesn't always work. People who live in the same neighborhood can't just decide to freely disassociate when they have a disagreement. The communist neighbor can't just raid the capitalist's garden, and the capitalist can't just enforce his arbitrary property claims in a vacuum. In reality, some sort of democratic arbitration and regulation has to take place. Anarchism, then, appears to be an unattainable ideal, and social democracy seems to be an attainable one. The anarchists were simply inconsistent in their own views. On the one hand, Proudhon, Bakunin, and Kropotkin advocated the governing of communes/municipalities through delegative democracy and the free confederation of communes. On the other hand, they wanted absolute free association. But these two anarchist notions―participatory democracy and free association―aren't really as compatible as anarchists might hope. The neighbor who disagrees with the communities rules can't just opt out and go about his business on the same land. He must be coerced into following community standards or else society will devolve into chaos.
Shaw points out that the fear of the "tyranny of majorities" is well-founded but not sufficiently dealt with by anarchists. In reality, the majority has the power to oppress the minority, regardless of whether or not there is a democracy. If the majority will oppress the minority, it will do so regardless of whether there is social democracy or anarchy in place. If the populace is predominantly Muslim and believes that homosexuality is a sin that ought to be punished by death, they will persecute homosexuals regardless of whether they live under a democratic system or in an anarchic society. The only real way to keep majorities from oppressing minorities, in Shaw's opinion, is to educate people and convince them that it is better not to oppress minorities.
The social democracy that the Fabians came to advocate was influenced heavily by anarchism. Like social anarchism, the Fabians presented a model of municipal socialism based on local participatory delegative democracy. Personally, I follow the anarchist lead and advocate having representatives/delegates subject to recall and replacement by their constituents, along with other more libertarian practices.
Beginning in the 1920s, Shaw's views took a plunge into the hell-fire abyss of authoritarian socialism. Shaw became a tankie in his latter years. He became infatuated by fascist leaders, and admired such dictators as Mussolini, Lenin, Stalin, and Hitler. He lost faith in the likelihood of bringing about social reform through democratic means and became convinced that a socialist dictator would be more likely to succeed in bringing about a socialist society. His defense of totalitarian regimes and genocidal practices in the second half of his life left an everlasting stain on his reputation. In 1911, the libertarian writer Alexander Horr had described Shaw as being 'steadfast in the truth, enthusiastic for liberty, and loyal to principle.'(Cf. Alexander Horr, Fabian Anarchism) That saintly figure who Horr admired would basically become a Nazi over the course of the following decade.
This is the tragedy of George Bernard Shaw, that he at one time represented some of the best democratic ideas and at another time defended the worst imaginable fascist ideologies.