The Crisis of German Social Democracy – and its last chance at a future

Is it democracy if there is nobody to vote for who represents your views?

The loss of connection between political elites to the economic reality of large parts of the populations in western democracies has allowed far-right and far-left movements to gain political momentum, polarizing political debates everywhere. Only a realization of this failure and a genuine re-orientation towards the will of the people, as well as clear and people-oriented political communication (as opposed to elitism) will save European social democracy from slowly descending into political obscurity. By focusing on and strategically tackling the challenges that the German economy and society will face from digitalisation and technological change, the German Social Democratic Party (SPD) can regain political ground and credibly return to its political roots through the representation of the common worker that tries to improve his lot in a challenging and ever-changing economy.

The German SPD has seen its election results worsen continuously in recent history. The party stands at 20.5% of the federal vote after the German general election in 2017 and is currently (February 2018) in the process of forming a new government coalition with Angela Merkel’s Christian Democratic Party (CDU).

Federal Election Results

Many believe the SPD to be in a deep crisis although the party is frequently part of governments. Its worsening election results are indicative of a structural issue of the party, not unpopular candidates, many commentators argue. To understand the crisis of the SPD it is necessary to investigate a different phenomenon first: Populism and the rise of the “Alternative für Deutschland”.

Germany has not been exempted from the recent increase in populism that has affected many countries around the world – or so it seems. At least this is what many commentators call the new phenomenon of Trump, Brexit, and Jeremy Corbyn. Usually, originating from the political right, there are new political figures and movements emerging that are seemingly striking a chord with people and thus move into positions of political power quickly. Jeremy Corbyn and his version of Labour in the UK is often identified as the left-wing version of a sort of populism that politically positions itself as anti-mainstream and anti-establishment.

AFD

What unites these movements is the promise of a new politics, a radical break with existing policies that are perceived to clearly favour certain economically privileged groups over others. What they do have in common is that they appeal to a victimhood mentality and claim that the political mainstream has forgotten or ignored a sizeable part of the population.

The AFD in Germany is a party that was initially formed by an economics professor and was conceived to be an anti-EU movement in the wake of the European Debt Crisis. The alternative to the status quo for Germany was thought to be outside of the European economic regime which had publicly failed in 2009 when it clearly revealed its economic and political flaws. Quickly, the party became a broader anti-establishment vote and soon rallied around the sentiment that Germany was being reckless in accepting over 1 Mil refugees in 2015.

By 2017’s general election in Germany, the AFD which had only been officially formed in 2013 and had seen multiple fights over its political leadership and direction was represented in almost every Landtag and won 12.6% of the vote in the federal elections, making it the third strongest political force in Germany.

News agencies and political commentators unanimously call this emergence of movements like the AFD in Germany populism. But what do they mean when they say that? The somewhat notorious political scientist and author Francis Fukuyama recently wrote that “‘Populism’ is the label that political elites attach to policies supported by ordinary citizens that they don’t like.

 

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Francis Fukuyama. Source: Azer Daily

 

Herein lies the crux of the rise of the AFD and the decline of Social Democracy in Germany. The SPD has become part of the established elite and people are increasingly distrustful towards everyone they perceive to be part of the elite or experts. Political commentators and politicians alike lament and ridicule the declining trust in experts among the people, who turn to “obviously” biased alternative sources of information. But have political and economic experts told people the truth in recent decades, and do they have the interest of the common people in mind? Are they so obviously unbiased or do they further an explicit agenda? And do most of them share real exposure to the realities of the common people they are so opinionated over?

Similarly, the supposed free press is hailed in many western societies, and people who shout “Lügenpresse” (Lying Press – or Fake News) on the streets are automatically and uncritically denounced as Nazis – merely because of their distrust of the media. But does the media inform the public in an unbiased way, do they merely report objectively and offer commentators opinions on matters? Do they empathize with the views of the wider public? And have they ever kept the news from the public, obscured facts, spun stories, or driven political or private agendas?

Finally, politicians and commentators criticize and ridicule the public for its apparent decadence and lack of discipline to stand up for themselves due to the ever-declining voting participation in western societies. But do the party systems of the modern liberal democracies truly offer choice to the voting public? Has there almost been an ongoing effort to ignore certain policy options – because there was supposedly no alternative? Have decisions been outsourced to unaccountable technocrats and have certain political positions been outlawed? Is it possible that political apathy and anger can at least partly be blamed on the system itself?

Even the strongest proponent of the policies of neoliberalism, the ECB, and the European Commission cannot claim that these are overly democratic. Is it possible that the public in the west increasingly comes to the realization that the “End of history” has not been achieved at all? Are the people may be sick of being told that they will have to suffer from cuts, because business must be appeased by low public debt, to ensure a stable investment environment, while the same businesses seem to be untouched by the same cuts?

This brings us to the central question and problem of the SPD: What do we need a worker’s party for if its policies are indistinguishable from the ones of the political right?

If you believe that it is important and societally and economically beneficial to have a political institution that represents and fights for the rights of the worker against the exclusive interests of big business – should you be voting for the SPD in Germany?

Whether or not you believe that there is a future for long-term employment, secure working conditions, lower wage inequality and higher wages at the bottom, and institutionalised wage bargaining is again irrelevant. There are many people who desire these things and that are willing to vote for parties that strive to realise these goals, or at least somewhat credibly claim that they hear their concerns and offer some form of solution to their peril. Calling this populism is not constructive.

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It needs to be realised that there are many people in Germany who are not satisfied with their lot. People who feel like they are left behind and ignored. People whose jobs are slowly being lost to off-shoring or automation, people who have seen squeezes on their incomes for decades. These same people have also experienced the orgy of public spending on bailing out the bankrupt Greek state as, so it would be able to pay back its debts to French and German banks, who were unwilling to take a loss on their risky investments. After having been told that the state should stay out of the economy, should not prop up businesses or pay too generous unemployment benefits, the people saw unheard of quantities of money being funnelled towards the financial sector. Unfortunately, or maybe intentionally, this provoked much more fury at the supposedly lazy Greeks, rather than the overly powerful and entitled financial sector.

 Nevertheless, it provoked a profound feeling of being treated unfairly and importantly: being lied to.

Because money seemed to be there – and vast quantities of it – after having heard nothing from politicians than needing to clean up public finances and that the state should not play an active role in the economy.

I think it is not possible to overestimate the impact of the Global Financial crisis and the European Debt crisis on current political events in any area. But when considering the continued demise of the SPD, the rise of the AFD, as well as the increasingly aggressive discontent in Germany, these crises were the initial catastrophe of this century.

The underlying problem is that political elites have insulated themselves from the will of the wider public, often ridiculing anyone who disagrees with the dogma that political experts pronounce. Another policy point that has crystallized and obfuscated this fact in recent years has been the European refugee crisis.

 

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Source: Slate.com

 

The immigration debate in Germany has always been a contentious policy point, but in 2015 this issue was amplified extremely when chancellor Merkel decided to accept 1 million refugees. It was at the time believed to be a move without alternative, and barely anyone in the political scene actively challenged the German chancellor on this policy.

This is emblematic of a general issue that happens too often in modern democracies. Political decisions are being made that have sizeable public opposition. Often these decisions are less controversial among intellectuals and the circles surrounding politics. But nevertheless, vast numbers within the general population which are heavily affected by these policies often object to bailing out failing banks, granting further loans to cash-strapped debtor countries in the European South, reducing taxes on top incomes, or the immigration policy of the leading forces in the German government. It is not relevant what one’s opinion on any of these matters is, merely accepting that these policy points are controversial and generally unpopular with large numbers of voters is key.

In 2015, there was a political vacuum, that the AFD was more than willing to fill.

 

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Bernd Höcke of the AFD. Source: Thüringer-Allgemeine

No party of the established circle was willing to represent the growing popular wish to radically alter Germany’s immigration policy. Although one could argue that the emergence of the AFD is an example of the rise of populism, one could also do a more optimistic spin on this story: The AFD clarified that the German democratic process in many ways still works. There was a policy point that was ignored by the mainstream parties, and quickly a new party formed to address this grievance and voice it with decision-making power. This has now prompted the CDU and to a lesser extent the SPD to change its stance on the immigration issue.

 

You might not agree with what they are saying, but the people found a way to make themselves heard.

This is crucial to take away from the rise of the AFD. The AFD demonstrates that the German political establishment does not accurately represent the will of the German people. But it is not immigration or any other policy point per se that is causing all this chaos:

The current political turmoil in Germany and elsewhere is caused by the ignorance of political elites for the life situation and political wishes of sizeable parts of the population they govern.

Why is this relevant for the SPD?

The general disconnect between what political parties offer in their programs, what they focus on, and what large amounts of voters yearn for extends far beyond the confines of immigration policy. The SPD, just like the German political establishment more widely, has ignored key demands of the German people for too long and is politically penalized at the ballot box for it.

The SPD has historically sought to represent the worker in politics, in the spirit of European social democracy more widely. Recently, little of this historic determination can be found in the SPD.

How did we get here?

Experiencing alarming levels of inflation in the 1970s, western democracies agreed that the wage bargaining power of labour was too strong, driving wage increases which in turn lead to price increases (and so on). A new economic consensus emerged, capital had to be strengthened for economies to do well. The economy should be organized to adhere to the wishes of financiers, to ensure a stable investment climate. State-owned companies were sold off, to gain from the economic dynamism that private ingenuity was exclusively able to provide.

This re-organization of the economy ensured continued economic expansion after the crises of the 1970s that had apparently discredited the post-war consensus of higher state intervention, stronger bargaining power of labour. After the 1980s regional economic integration, Globalisation and off-shoring increasingly created a global economy and importantly: a globalised labour market. The power of workers to unite to demand wage rises was thwarted by the ability of companies to move to lower-wage countries. This change was drastic, but success seemed to prove these policies right. Growth between 1980 and 2000 was steady, apart from minor hick-ups.

Simultaneously, the integration of production processes reduced prices for many consumer products and enabled countries such as China to massively improve the economic well-being of its citizens, as they were finding work to produce goods to be consumed in the west.

In the face of the new economic consensus, European social democracy decided to lean into the developments of the hour and adopt the policies that had originated in the political right. When New Labour under Tony Blair took political power away from the Conservative Tories in the UK, Margaret Thatcher remarked in a private meeting that her greatest political accomplishment had been to force the Labour party to essentially submit to the economic policies her party had advanced years earlier.

New Labour was just as Neo-liberal in their economic trajectory as the Tories had been.

The SPD under Schröder in the early 2000s emulated this change by explicitly transforming the workers’ party into a more small-state, investor-friendly, economically liberal party. Notably, it was under Schröder that the German welfare state was trimmed and streamlined, establishing the Hartz 4 system.

 

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Gerhard Schröder. Source: DW.com

 

While economic growth after the 1980s was substantial, it remains crucial to understand that the neoliberal regime created many losers as well.

Labour markets and workers did not adapt as frictionless to outsourcing as many economists had long assumed. Often, due to geographic for example, people are unable to get new jobs. Labour is after all less mobile than capital – at least for now.

Further, as Mark Blyth remarked in a recent talk – “Nobody lives in an average “, meaning that while wealth has increased substantially even in recent decades, this masks the fact that some people have not seen improvements, and many have become poorer. Even though many hard-line libertarians make the case that inequality is not inherently bad, which is undoubtedly true, we are now possibly seeing the political limits of how unequal a democratic society can be before things get very ugly.

So, what the SPD has failed to realise is that by moving towards the political right, by opening itself to the economic policies of the Washington consensus, it has also moved away from its core constituency. The SPD is not a credible worker’s party anymore. Neither is New Labour in the UK or the Democrats in the US.

This means that new parties can capitalise on the grievances of common working people and mobilise their anger through scapegoats such as immigration. While the immigration policy of the German government must be considered flawed at best, I do not believe this is what drives people to vote for the AFD.

The SPD’s political message on how to improve the welfare of people is too similar to the centre-right parties of Germany.  

But the crises of 2008, 2011, and the refugee crisis of Europe demand policy changes. In the 1970s an arguably minor crisis in comparison lead to a radically different organization of the global economy. But we seem to still pretend like everything could go back to normal while the evidence to the contrary keeps amounting to us.

Given the general feeling that crisis is everywhere, and old modes of operation have been discredited, new political movements offer radically new suggestions on how to ensure continuously growing prosperity in Germany and everywhere in the world. By blaming recent economic hardship entirely on globalisation (Trump -> it’s China who is stealing our jobs, Corbyn -> it is global capital outsourcing your jobs, AFD -> it is the immigrants coming here and taking your jobs) these movements offer seductively simple solutions to the experienced issues of genuinely concerned people.

By explicitly addressing the disenfranchised, the unemployed, the working poor, the underemployed, the people stuck in dead-end jobs, the losers of globalisation and digitalisation, the SPD could return to its historical roots and regain political ground.

Doing so would necessity openly, and very publicly addressing and tackling the elephant in the room:

Digitalisation and technological change.

This massive disruption of the labour market that we are currently witnessing and that will only accelerate in the coming years will be one of the largest challenges for this generation. Technological change already accounts for more loss of jobs than the globalisation of the labour market, so plans on how to organise digitalisation are of utmost essence and urgency. Also, the topic of digitalisation is the greatest chance for the SPD to return to its roots and to make politics with the interest of the common workers in mind, thus regaining political ground.

According to current estimates by McKinsey, up to 50% of jobs could be automated in the next decade or two, not factoring in the technological advances within that same time-frame. Simultaneously, long-term employment in traditional work relations is declining ever more sharply. In the US, the gig-economy is booming more than anywhere else, but Germany will not be able to escape this development for long, as more commerce is migrating online, and the traditional job-creating sectors are decreasing in job-market relevance due to automation.

Yet, there is no coherent policy being advanced by the political establishment on how to manage this monumental shift in the economy. Nobody seems to have the time to address this issue as we seem so preoccupied politically to put out all the fires around us that we overlook the flamethrower in the distance.

The SPD can be the saviour of the working people once more, by tackling one of the biggest questions of the 21st century. Will there still be work when the robots come? Will we have to completely alter our education system? Our pension system? Our workday? Our welfare system?

Who better to address these issues than the party that claims to represent the interests of the working people? The digital revolution – the fourth industrial revolution is about work. This is the time for a worker’s party. We cannot keep overlooking the big challenges that are shaping the lives of increasing numbers of people while getting caught up in the petty political debates of the day. The SPD needs a policy agenda to deal with the digital age and needs to position itself as a party of the present and future – presenting a coherent plan for the digital age and addressing the people that are the SPD’s core constituency – the people who are angry as they demand opportunity and strive for a more equitable society.

This is the last chance of the SPD to realise that its true attraction as a political representative is being a relatively moderate, worker-oriented mass-movement, by addressing the phenomenon of digitalisation which will affect us all, but workers in very specific ways.

If the SPD does not find a way to connect with its core constituency again, other parties will.

 

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