By Paul Taylor
The world’s fourth-largest economy goes to the polls on Sunday 26 September to decide who will succeed the CDU’s Angela Merkel, who has been the German chancellor for nearly fifteen years.
The polls indicate that no party will be strong enough to form a government by itself.
Chart 1: Election trends
The SPD leads the polls
Towards the end of August, the German Social Democratic Party [SPD] unexpectedly overtook the conservative CDU/CSU in the polls for the first time since the 2017 election. (See chart 1)
There is now a real prospect of an SPD-led coalition. But with whom?
A continuation of the Grand Coalition is possible, but it is much more likely that the SPD will form a government with the Greens. But this will not be enough for a parliamentary majority.
The FDP is the favourite to join with the SPD and the Greens because the FDP will help the leadership of the SPD and the Greens resist social pressure to not implement policies that favour labour over capital.
A Red, Red, Green coalition government with Die Linke is a faint possibility.
However, the leadership of both the SPD and the Greens have expressed open reluctance to a coalition with Die Linke due to its opposition to NATO and its desire to distance Germany from the United States on foreign policy. Die Linke is also much more enthusiastic about a policy of borrowing to invest and raising the living standards of the working class by increasing taxes on the wealthy and big business.
Since the late 1990s the SPD has paid a massive electoral price for its role in imposing defeats on the working class, falling to a level of support it last saw in the 1890s. Its leadership in the latest polls, with a feeble 25% vote share, is due to the unprecedented weakness of the CDU/CSU.
Olaf Scholz, the SPD candidate for chancellor, has been Merkel’s Finance Minister and vice-chancellor since 2017. His campaign focus has been stability and competence. In effect, he depicts himself as Merkel’s heir. One of his campaign films shows him walking in sync with an image of Angela Merkel.
As the New York Times points out, “Scholz has been photographed making the chancellor’s hallmark diamond-shaped hand gesture – the ‘Merkel rhombus’ – and used the female form of the German word for chancellor on a campaign poster to convince Germans that he could continue Ms Merkel’s work even though he is a man…
“‘We would not expect changes in taxes and spending to add up to a big additional fiscal stimulus,’ wrote Holger Schmieding, chief economist for Berenberg Bank in a recent analysis of what a Scholz chancellorship would mean for financial markets. In a coalition with the Greens and the Free Democrats, he predicted, ‘the pragmatic Scholz himself would likely rein in the leftist inclinations’ of his own party base.”
Although the Greens have policies that take climate change seriously, their hostility to China creates obstacles to the global unity needed to avoid catastrophic climate change.
As Steven Erlinger explained, “Wolfgang Streeck, a leftist German economist, once famously called the Greens, ‘the vegetarian section of the Christian Democrats’, noted Hans Kundnani… In the way the party criticizes Russia and China on the grounds of democracy and human rights, Mr. Kundnani said, it is similar to American neoconservatives. ‘The German Greens are now a pragmatist centrist party,’ said Ulrich Speck of the German Marshall Fund in Berlin.’”
Green leader Annalena Baerbock said recently in the Süddeutsche Zeitung, “And we can no longer allow China to buy up important infrastructure in European countries, as it did with the port of Piraeus. China has bought into European infrastructure to the tune of 320 billion euros. This is a strategic attack on German security too… The transatlantic partnership is one of the cornerstones of our country, history teaches us that.”
The party would be the smallest partner in a Red, Red, Green coalition. Although it may struggle to achieve the 5% threshold for election as a party to the Bundestag, it has the potential to qualify due to its strength in a few regions. “They campaign against welfare cuts, but for minimum wage and strict controls of the banking sector. They are the only German party demanding an immediate withdrawal of German troops from missions abroad and a dissolution of NATO.”
Policies of the SPD, the Greens and Die Linke
The SPD supports borrowing to invest. However, Scholz says that Germany must reinstate its “debt brake” in 2023 (the constitutional limit on new borrowing suspended since the outbreak of the pandemic).
The SPD promises to raise the minimum wage to 12 euros an hour (instead of the current 9.60 euros), build 400,000 homes a year (instead of the about 300,000 built in 2020)
The Greens call for a programme of investment in infrastructure financed through debt.
The Left Party want a minimum wage of 13€ an hour and to lower retirement age. They also want to introduce a “solidarity minimum pension” of 1,200€ a month – financed through tax revenue.
The Left Party wants to launch a public housing program worth 15 billion euros a year. It would create 250,000 social housing units and 130,000 municipally and cooperatively owned apartments. They also support a nationwide rent cap and a ban on conversions from rental to owner-occupied housing in tight housing markets and strengthen tenants’ rights.
The SPD wants a wealth tax of 1% on “very high wealth” and easing the tax burden on low and medium earners. To balance that cut, they propose to raise income tax to 45% on incomes over 90,000€ and 48% for incomes over 250,000€ (500,000€ for families). The party also proposes to lower taxes for middle- and low-income earners and raise them modestly for those with incomes of more than 100,000 euros a year.
The Greens want to raise tax thresholds for low and medium earners and increase taxation on high-income earners.
Die Linke wants to raise the basic tax-free allowance to 14,000€. The top tax rate would rise to 53% and apply from 70,000€. The party also wants to tax assets of one million euros or more at 5%. To finance COVID-19 expenses, Die Linke also proposes a wealth tax of between 10-30% for assets over 2 million euros.
Die Linke proposes to dissolve NATO and opposes a European army. The CDU/CSU, the SPD, the Greens and the FDP strongly support both.
The Greens want to remove nuclear weapons from Germany, but are particularly hawkish on German relations with China and Russia. They favour more military spending by Germany.
The SPD advocates a common European army. It is committed to NATO and is less confrontational than the Greens towards Russia and China.
In an election campaign tour in Rostock, Olaf Scholz summed up his foreign policy priority in three words: “I’m an Atlanticist.”
The Greens aim to cut CO2 emissions by 70% by 2030, paid for by the federal government. They have also proposed raising the CO2 emission tax and exiting coal-based electricity production by 2030.
The SPD aims for carbon neutrality by 2045.
Die Linke wants an end to fossil-fuelled combustion engines by 2030, state ownership of Lufthansa and Deutsche Bahn, and coal mining ended before 2038.
The SPD opposes further restrictions on immigration.
The Greens want to facilitate immigration and make naturalisation easier.
Die Linke calls for the legal, political and social equality of all people living in Germany and wants to give all long-term residents the right to vote and stand for election. The party also wants to improve the recognition of foreign qualifications and introduce a quota for people with a migrant background in public administration; calls for the legal, political and social equality of all people living in Germany and wants to give all long-term residents the right to vote and to stand for election.
The end of the social market model & its effects
The social and economic security of the German social market offered to the working class is no more.
The departure of Merkel with no obvious successor and the failure of the two dominant parties to attract more than 25% in the polls are symptoms of increasing social and economic divides accumulating over decades. (See chart 2)
German politics is catching up with the reality of German economics.
Chart 2: German federal election results by party, 1949-2017
Since the end of the long boom in the early seventies, German economic growth has fallen well short of the dizzy heights of the 1960s and 1970s. (See chart 3)
Chart 3: German economic growth 1951-2019
However, German capital has succeeded in creating a new settlement in its interests over the last forty years to maintain its economic power, ably assisted by the CDU/CSU, the SPD, and the FDP.
As Oliver Nachtwey shows in his book Germany’s Hidden Crisis: Social Decline in the Heart of Europe:
“Employees are split into two groups, with a ‘secondary’ imbalance of power between them with respect to their position in the firm and in the general labour market: the permanent staff, who experience their relative security as a privilege; and, on the other side, the precariat…
“The lower 40 per cent of German households – more than 30 million people – have experienced wage stagnation and losses since the 1990s…
“German workers have received a decreasing share of the economic pie, while the portion going to members of the upper classes has grown.”
Chart 4: Agreed pay, consumer prices and productivity, 2000-2020 (Year on-year change in per cent)
The German working class has paid a devastating price for COVID-19.
The annual report of the WSI on collective bargaining in Germany in 2020 reveals that “The Covid crisis led to unprecedented levels of short-time working in Germany… (reaching during April and May 2020 there were some 6 million employees on short-time, around 18 per cent of all insured employees
“Low-paid employees receive a much lower level of top-up than those on higher incomes (Schulten 2020). According to the employee survey conducted by the Hans Böckler Foundation, in June 2020 employees with a net monthly household income of below €1,500, only a third received top-up compared with half of those with an income of between €2,600 and €3,200.”
Who will profit after the election?
If the CDU’s Armin Laschet becomes chancellor, there will be a sustained economic attack on the working class.
With the SPD’s Olaf Scholz as chancellor, there will be a move to the left on the economy, welfare, and climate change.
However, the SPD, especially in a coalition with the FDP rather than Die Linke, will not take the radical measures necessary to overcome the long-term defeats imposed on the working-class, nor engage in the international cooperation required to prevent catastrophic climate change.
A willingness by the SPD and the Greens to support the USA’s Cold War against China will also severely damage the international unity needed to stop climate change.
If the SPD should win on 26 September, it is more likely to lose support than consolidate itself in the coming months. Die Linke may well gain from such disillusionment. But there is a real danger of a resurgence of the right and the far-right.
Links for more information