More German than Left

This post is the first in an occasional series on the European Left and the Euro-impasse that we will run over the course of the next few months. We shall begin with a series of posts from the editors and guest contributors on the German Left.

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More German than Left

The German Left has always been a lynchpin for the international left. For that very reason it has also been a disappointment. From the failed hopes of 1848 to Ferdinand Lasalle’s cooperation with Bismarck; from Bernsteinian revisionism to the SPD’s vote for war credits during WWI; from the failed revolutionary years of 1918-1923 and the split between communists and socialists in the interwar period; from post-war, Brandt-era ambivalence and indecision to the decisive abandonment of socialism by the 1980s, the German Left’s potentiality never quite measured up to its actuality. Nobody has been sharper on its failings than its own progeny. Marx’s famous critique of Lasalle, Luxemburg’s condemnation of reform, to name just two, mark not only the missed historical possibilities but the dashed hopes. There was a moment but it was never realized.

Today, Germany remains the center of Europe, and the German Left the only agent able to shape a different course than the current sadomonetarism emanating from the Bundesbank. The election of Hollande in France yielded the sop of high marginal tax rates, but within the context of a concession to austerity. Some brief sparks were ignited in Greece, during last year’s election campaign, but the leader of Syriza – Alexis Tsirpas – blinked and eventually caved into the prevailing ‘bail-out in exchange for cuts’ consensus. The SPD’s lukewarm reaction to Syriza, replicated in many other Left parties across Europe, contributed to its capitulation.

The historical difference now is that there is not much reason even to view the German Left as…Left. Angela Merkel’s recent appointment to a third term as chancellor, under a Grand Coalition including the SPD, involves a nominal turn leftward on condition that everyone accept more of the same with respect to the major economic issue of the day: the euro and its debt problems. Sabine Lautenschläger’s nomination to replace Jörg Asmussen at the ECB came with a promise to increase German pressure to focus on inflation rather than employment. As Wolfgang Munchau recently commented, among the rather narrow mainstream alternatives, the idea of debt mutualization and bank backstopping appears to have finally lost out to “austerity and price deflation.” The SPD, meanwhile, happy for scraps at the table, refuses to fight for leadership of Germany, let alone Europe.

The problem for the European left is that Germany is the core. Without the SPD breaking from its benighted belief that the rest of Europe needs to follow its decade of ‘virtuous’ wage-suppression, not to mention its ruinous embrace of European-wide internal devaluation, there is little wiggle-room for the rest. The dismal LTROs, ELA, and other monetary efforts, which receive only reluctant German support as it is, all come with the austerian string attached. The German Left has accepted the basic equation that since their workers have been sucking it up, it’s time for everyone else to do the same. This demonstrates a distinct lack of trans-European solidarity, let alone serious assessment of the possibilities. Moreover, the unwillingness of the German Left to articulate a clear alternative strategy means it tacitly participates in the increasingly nationalist terms in which the whole Euro drama has been cast. Ugly nationalist stereotypes have been trotted out to explain everything from ‘Mediterranean’ stagnation to the so-called dangers of eastern immigrants to the ‘virtues’ German prudence. In the absence of a conflict within Germany between concrete alternatives – alternatives that can be repeated across Europe – Germany appears unified around trying to punish the rest of Europe. And as Marx once said: “relations…appear as what they really are.” The German Left really is, at this point, more German than Left. The Left in Germany (and elsewhere for that matter) has never been rewarded for being the junior partner in a national coalition, but until it becomes willing to take risks and challenge its major opposition, it will remain what it appears to be. It could be more.

The meaning of Merkel’s victory

Originally published in the October issue of Le Monde Diplomatique

Angela Merkel and her Christian Democrat party (CDU/CSU) have won a resounding victory in Germany’s general election. Merkel has broken what had become an established rule of European politics since the beginning of the crisis: incumbents don’t get re-elected.

Merkel had seen this at first hand as close working relationships with other European politicians were felled by electoral fortunes. The peculiar alliance of France and Germany (“Merkozy” to the European press) was undone as Nicolas Sarkozy lost out in the 2012 French presidential election to his Socialist challenger, François Hollande. Mario Monti, another favourite partner of Merkel, was routed in Italy’s election earlier this year by the comedian-cum-blogger Beppe Grillo and his Five Star movement. Incumbents have lost out across southern Europe — Spain, Greece, Portugal — as voters hope that a change in government might mean a change in fortunes. There has been no decisive shift left or right, just a broad and sweeping dissatisfaction with existing governments. Apart from Germany.

Merkel’s re-election doesn’t mean that nothing has changed in Germany or that it has been blissfully untouched by the Eurozone crisis. Looking at the substance rather than at the party labels, we see shifts. The more dogmatically free-market FDP, Merkel’s coalition partner in the outgoing government, failed to secure any parliamentary representation at all. The Left Party, Die Linke, a persona non grata for mainstream German politicians because of its roots in East German Stalinism and its opposition to NATO, now has more parliamentary seats than the German Greens. If the Social Democrats (SDP) enter into a coalition with Merkel’s party, then Die Linke will lead the opposition within the Bundestag.

The policies of Merkel herself have steadily drifted leftwards as she has taken on ideas first floated by the SDP. From military conscription to a minimum wage and rent controls, Merkel has adopted policies that first came from the left. This had the effect of emptying much of the campaign of any traditional ideological conflict. German voters have not been divided by the politics of left and right, given the vastly similar programmes adopted by the main parties. Merkel has even given up on nuclear power, in a move that pulled out from under the feet of the Green Party their most distinctive policy position. Instead, the campaign was fought around the language of risk and of personality. Germans preferred Merkel’s low-key, homely aspect to Steinbrück’s debonair image and, seeking reassurance in the widespread depoliticisation, voted for Merkel’s motherly, risk-averse approach.

Political stability in Germany reflects its unique position in Europe as the country that has survived the crisis. Not unscathed, as the leftwards shift suggests, but markedly better off than any other country. Having reformed itself in the early 2000s, German industry rode an export-led boom that continues today. As trading partners in Europe — from Eastern Europe through to southern Mediterranean economies — crashed and burned from 2009 onwards, Germany compensated by expanding sales in non-European export markets. What it lost by way of demand in Europe it has gained in emerging markets, especially in Asia. Germany’s current account surplus, at $246bn over the last year (6.6% of GDP), is greater than China’s. Along with a more flexible labour market that is keeping unemployment low (but part-time employment high), we have the material foundation for Merkel’s victory. But though this foundation is solid, Germany is not booming. Since the early 2000s, German wage growth has been very limited. Moreover, few Germans own their own homes, meaning that they have not experienced the same wealth effects of rising house prices felt by a chunk of the British middle- and upper-middle class, the Dutch, Italians and Spaniards. They have been saved from the effects of collapsing property prices but have not known the heady days of year-on-year price rises. Merkel’s cautious optimism reflects the attitude of a large part of the German working and middle class who feel that their relative prosperity is precarious and needs to be closely guarded.

The meaning of Merkel’s victory for the rest of Europe is mixed. It is possible that Merkel will soften her stance to some extent now the election is over, though we should not expect any sudden U-turns on something like Eurobonds. A slow recalibration of the Eurozone economy is more likely, as crisis-hit countries like Spain and Ireland regain some competitiveness via internal adjustments to wages and prices. Where Merkel may compromise is on measures to boost domestic demand. If Germans were to consume a little more rather than save so much, that would help pull other Eurozone economies out of their deep depression. Though something like this may happen, any recalibration will still occur within the context of a Eurozone marked by massive disparities in wealth and spatially organised around a clear logic of centre and periphery.