A fascination with European welfare
states is commonplace among Canadian
and American unionists and leftists. Recently
the creation of The Left (Die Linke)
party in Germany gained some more concrete
interests. Compared to the disappointments
with the Pluralistic Left in France,
recent splits in the British Respect coalition
and the crushing defeat of Italy’s
Rifondazione Communista at the last election,
growing numbers of members and
voters let The Left appear as a beacon of
hope in Western Europe. However, the following
ramble through East and West
Germany’s labour history shows that The
Left currently benefits from widespread
discontent with neoliberalism but still has
to hammer out economic alternatives,
which would grossly depart from
Germany’s export-oriented capitalism, if
it wants to establish itself as a lasting and
viable force for social change. Particularly
the failure of the “Red-Green” government
from 1998 to 2005 to develop a progressive
alternative to neoliberalism may contain
some lessons for The Left.

 THE NEOLIBERAL PROJECT OF THE ‘RED-GREEN’ ALLIANCE

In 1998 a government of Social Democrats
and the Green party was elected, from
which voters expected social protection
against the impositions of neoliberal globalization.
People with such expectations,
which were shared in East and West, were
disappointed, just as with the hopes for an
economic miracle after German unification
in 1990. Instead of prosperity with a welfare
state, modelled after West Germany’s
post-war experience, the newly elected
government prescribed another round of
neoliberal globalization. The blueprints for
Germany’s new Social Democrats were
imported from Clinton’s United States.
Though Clinton was very popular in Germany,
the New Economy he was advocating
for was seen with considerable scepticism.
Its reliance on free trade was seen as
a threat to the world market position of
German export industries in the face of
competition coming from Asia’s emerging
economies. Its reliance on financial markets
was at odds with the productivist ideology
that was built into (West) Germany’s
persistent corporatist consensus.

Germany’s Social Democrats, as much
as their companions in other EU countries,
tried to put an end to such reservations with
the notion of an European Social Model,
which was defined as a New Economy plus
welfare state. Practical measures, however,
were geared toward a New Economy
against the welfare state. Compared to their
Conservative predecessors, Social Democrats
and Greens accelerated the rollback
of the welfare state even further.

Once the Social Democrats regained
government power, it turned out that the
party had fundamentally changed while it
was in opposition from 1982 to 1998. The
party had lost power in the early 1980s for
two reasons. One was its inability to reach
out to parts of a young generation that was
concerned with technocratic rule of the
welfare state and the environmental impact
of industrial production. The other were
embryonic steps toward welfare state retrenchment,
which led to the estrangement
between the party on the one side and parts
of its working class base and the unions
on the other side. As an opposition party,
the Social Democrats prepared for a political
project that was meant to reconcile
the welfare state and its constituencies with
the environment and the Green party. However,
an erosion of the party’s working
class base accompanied the process of strategic
and programmatic reorientation. Under
pressure from the German and international
bourgeoisies to dismantle the welfare
state in the course of the 2001 economic
crisis the welfarist faction within the
party was already too weak to reject such
claims.

 A NEW LEFT ALTERNATIVE EMERGES

Disappointment and frustration with
the Social Democratic turn against their
own historical project, the welfare state,
led to a wave of protest, unprecedented
quarrels between the Social Democratic
Party and the unions, and eventually secession
of those party currents that were
still committed to some kind of social
democratic reformism and Keynesian economic
policies. This “Electoral Alternative
for Jobs and Social Justice” united with
the SED’s successor organization, the
“Party of Democratic Socialism” into a
new party, “The Left” in 2007. The membership
and voter base of this new party
still lies mostly in East Germany, where
the Party of Democratic Socialism attracted
people who regretted the disintegration of
GDR or were suffering from economic and
social degradation that came with the
deindustrialization of East Germany after
1990. Only when the economic crisis of
2001 led to unprecedented cuts of unemployment
and welfare benefits such degradation
also occurred in West Germany
and created a social base for The Left party
in the West. Since its foundation the party
could not only increase its membership but
also win seats in four of West Germany’s
provincial parliaments. Pollsters find approval
rates between 10 and 14 percent on
the federal level.

The creation of The Left is the most
visible indication of widespread discontent
with neoliberalism. However, such sentiments
are prevalent way beyond the ranks
of members or voters of The Left. Much
to the dismay of most capitalists,
neoliberalization has come to an almost
complete halt in the political system. The dominant currents within Germany’s two
main parties, the Christian Democrats
(CDU) and the Social Democrats (SPD),
are afraid of not only offending voters by
continued assaults on the remnants of the
welfare state but also of driving them into
the arms of The Left. Thus, there is a deep
rift between a majority of people, not only
from the working class but increasingly
from an insecure middle class as well, that
are looking for alternatives to neoliberalism
and a political establishment that
doesn’t want to deliver any such alternatives.
This establishment constrains its
neoliberal policies only because it fears the
actual crisis of legitimacy of neoliberal
capitalism might turn into powerful anticapitalist
sentiments. Therefore, the political
conditions for The Left, or any other
political or union organization, organizing
for change seem quite good.

 THE LEFT PARTY IN ITSELF IS NOT ENOUGH: BUILDING AN ANTI-NEOLIBERAL BLOC

However, the subjective and economic
conditions are more complicated.
Neoliberalism is rejected by workers in
export-industries whose owners’ aim at
higher profits and market shares through
relentless speed-ups, lay-offs and use of
labour-saving technologies. Public sector
workers and the recipients of any kind of
welfare expenditures whose jobs and incomes
are under threat from fiscal constraints
also reject it. Increasing numbers
of precarious workers reject neoliberalism
because they neither earn living wages nor
entitlements to welfare expenditures beyond
a very basic level. It is difficult, not
just for The Left party but for unions and
any other social movement as well, to
merge those differing and legitimate concerns
into a coherent program, around
which an alternative historical bloc to the
crisis-ridden neoliberal bloc could be built.

The welfare state in (West) Germany
was always, and still is, based on exportled
growth economically and on
corporatism politically. Under those conditions
individual as well as organized
workers in export industries were, and still
are, susceptible to neoliberal arguments
that explained stagnation and job losses
with increasing tax burdens and their detrimental
effects on international competitiveness.
For this reason, workers resistance
against industrial restructuring in this
sector was always constrained by the, perceived
or actual, needs to maintain or restore
international competitiveness. At the
same time, the leeway for fiscal redistribution
was as widely accepted as the need
for austerity that constrained public sector
employment.

The Social Democrats, before they
were elected in 1998, were well aware of
this conflict between international competitiveness
and a redistributive welfare
state. Leaving the imperatives of the
world market unchallenged, they declared
this conflict could be resolved by transforming
fiscal redistribution into an “activating”
welfare state. Once in power, it
became perfectly clear that the vague term
was just a linguistic cover for a massive
rollback of the then existing welfare state.
Politically, discontent with Social
Democracy’s neoliberal turn produced The
Left. However, it remains to be seen
whether this new party will be able to invent
economic alternatives to
neoliberalism. Without such alternatives,
the Social Democratic experience of the
early 2000s suggests, the widespread and
deep-seated discontent with neoliberalism
can’t be consolidated into a power that
produces real social changes. Challenging
the economic primacy of export-oriented
growth, as (West) German history since the
Second World War implies, would be a
prerequisite for a political economy geared
toward jobs, justice and environmental
sustainability.

 WELFARE CAPITALISM IN THE WEST AND STATE SOCIALISM IN THE EAST

The other prerequisite is a break with
the corporatist traditions in East and West
Germany. Though welfare capitalism in the
West and state socialism in the East were
fundamentally different modes of production,
there also were important parallels in
terms of political structures. In both countries
decision-making powers were taken
away from rank-and-file workers and concentrated
in state, union, and party bureaucracies.
As long as workers interests were
represented, at least to some extent, by
these bureaucracies, the subsequent political
systems were widely, though not enthusiastically,
accepted. This has changed
since union bureaucracies, mostly clinging
to the corporatist welfare state, lost
their counterparts in the political system.

The Social Democratic turn toward
neoliberalism and the ever-deeper penetration
of state apparatuses with neoliberal
bureaucrats led to a crisis of legitimacy of
actually existing forms of political representation.
Thus, the founding of The Left
party may not be sufficient to rebuild working
class power. To this end a broader
working class culture, which allows the
articulation of ideas and aspirations outside
the political system, is needed. Without
such a socio-cultural basis the new
party might, just as other workers parties
in the past, be drawn into a political system
that represents business interests
against workers.

However, not even the unionists and
socialists within The Left party can agree
on a strategy for working class renewal.
Some of these labour forces aim at reinventing
politically negotiated class compromises,
some at winning government
positions at all costs and others at some
sort of rainbow coalition that either ignores
or denies the actual and potential roles of
class. To be sure, other social forces are
active in the party as well. The Left party
was founded, and developed up until now,
as a rallying point of all kinds of people
who were discontent with neoliberalism.
By no means, the party can be called a
workers party of any kind. Since its inception,
the character of the party and its current
and future strategies was ambiguous.
Yet, the economic conditions under which
it operates, started to shift the same year
the party’s founding convention was held
in 2007.

The U.S. housing crisis sparked a
world economic crisis that hit the highly
export-oriented German economy, so far
at least, even harder than the American
economy, which, after all, is less dependent
on imports than other countries are
on exports. Particularly hard hit by the crisis
in Germany are export-sectors such as
automobile, machine tools and chemicals,
which are also the sectors with comparatively
strong union representation, and the
contingent workforce whose growth was
significantly fostered by Red-Green labour
market reform. Because The Left, whatever
else its internal differences were, had
fairly consistently opposed such measures
and advocated for better labour protection,
it was widely expected that the party would
win support from deteriorating economic
and social conditions. So far, that hasn’t
happened. In fact, The Left is struggling
to maintain its 10 – 14 percent-share of
the popular vote; the only party whose
approval rate increased since the crisis became
serious in September 2008 is the Liberal
Party, doubling its share from 8 to 16
percent. While the government, formed by
a coalition of Social Democrats and Conservatives
since 2005, jumped, reluctantly
though, onto the international bandwagon
of fiscal stimulus and ultralax
monetary policies, the
Liberal Party could gather the
hard core of tax-cutters
around it.

At the other end of the
economic policy spectrum,
The Left party lost its unique
selling point. Before the crisis,
The Left was the only
party in Germany advocating
for Keynesian policies.
Though these policies were
never unanimously supported
within the party, public perception
saw The Left much
more as Keynesian welfare
state than as a workers or socialist
party. Now, its claims
for public expenditures and
employment programs pale
compared to the
government’s spending
spree. It is certainly true that
the government spends most
money for banking bailouts whereas The
Left party advocates for publicly funded
protection and creation of jobs but, until
now, it didn’t succeed in making these differences
known to potential voters.

Though Keynesianism had a certain
resurgence over the last months, it wasn’t
The Left party that benefitted from this
unexpected departure from neoliberal policies.
To be sure, some within the party, and
even more in the broader, particularly the
activist left is skeptical about Keynesianism
anyways and would rather suggest the
nationalization of banks and industries.
And in fact, The Left gave up its hesitation
to advocate such measures in tandem
with Keynesian spending programs. However,
the government had already occupied
this political territory through a preemptive
political strike. While The Left was
still debating the pros and cons of state
ownership, given the party’s roots in East
Germany’s state socialism this is certainly
understandable enough, the government
had no difficulty in broadening its policy
toolbox beyond neoliberalism. As in the
case of public spending, nationalizations
on government terms are not meant to help
workers but to socialize private losses and
moderate the process of devaluation of
over-accumulated capital, while The Left’s
ideas on nationalization might actually
help to protect jobs and redirect the
economy from exports to ecological
sustainability.

However, nationalization
is another field in
which The Left doesn’t
appear as a driving force
but rather an organization
driven by economic
changes and the governments’
quick responses to
these changes. The test for
The Left will come once
these government responses
either completely
fail or once workers can
clearly see that the government-
mix of neoliberalism
with Keynesianism,
topped with sprinkles of
nationalization, only
serves the rich and powerful.