Germany: no longer Europe’s bulwark of stability

Once hailed as Europe’s bulwark of stability, Germany is entering a period of deep turmoil. The era of economic growth and class peace is at an end. Now, Germany is experiencing an intense crisis, as all the pillars of its former ‘success model’ are crumbling, causing profound divisions in the ruling class and a ferment among the masses.

The global crisis of capitalism is hitting Germany particularly hard, leaving the German ruling class in an indissoluble dilemma. Fundamentally, the German economy is dependent in its entirety on markets in the US and China, and is reliant on world trade to maintain its access to cheap raw materials. As we have reported previously, however, the ongoing rivalry between these imperialist giants is threatening the economic security of the EU in general, and Germany in particular.

This has expressed itself in a palpable unease among the ruling class about the future of German capitalism. Capital has been flowing out of Germany en masse since before the COVID-19 pandemic. As the fissures in world relations continue to deepen, more and more chickens have flown the coop. Last year, more corporate capital flowed out of Germany than ever before, as European investments in Germany collapsed, while almost 70 percent of German investments went to other European countries.

On top of this, private investment is also extremely low in absolute terms. For decades, the ruling class has invested only about 20 percent of net profits in new industry. Labour productivity per worker has only increased by 0.3 percent per year over the last decade, despite the continual intensification of the exploitation of the working class.

This situation threatens a terminal decline for the private sector in Germany. The country’s public sector is faring little better. The austerity and privatisation policies of the last decades have crippled Germany’s public services. The ruling class now depends primarily on the infrastructure of the past, yet schools, universities, railways, hospitals etc. are rapidly becoming dilapidated.

In the recent period, the German economy – once the powerhouse of Europe – has been hit by a perfect storm of crises. There is a shortage of labour in all sectors of the economy. High energy costs are putting increasing pressure on industry and small businesses. Insolvencies are steadily increasing. Goods exports to countries outside the EU are falling. 

This is a recipe for disaster across the board. Certain sectors, such as Germany’s automotive industry – once the envy of the world – have already experienced a severe fall in output, with no relief in sight. It will not be possible for the German ruling class to export itself out of this crisis, as they could after the crisis of 2008.

At the same time, inflation remains stubbornly high. Bread prices have risen 19.2 percent, dairy product and egg prices have risen 21.6 percent, and vegetable prices have risen 21.7 percent. This is just the tip of the iceberg.

Austerity and polarisation

Germany’s automotive industry – once the envy of the world – has already experienced a severe fall in output / Image: Klaus Nahr, Wikimedia Commons

As the cost of living becomes increasingly untenable for the masses, class polarisation is growing enormously. Already in 2021, over 14 million people in Germany were considered “at risk of poverty”; after two years of inflation and economic turmoil, this number has undoubtedly increased significantly.

The German ruling class is now calling for an ‘Agenda 2030’, reminiscent of the ‘Agenda 2010’ programme of labour and welfare counter-reforms. Under the slogan of ‘flexibilisation’, they want to increase weekly working hours and raise the retirement age to 70, having already increased it.

While the government seeks to squeeze the working class harder than ever, the bosses are crying out for all kinds of subsidies to guarantee their profits. The government has had to resort to so-called ‘shadow budgets’, which allow it to borrow money to subsidise the bosses’ profits, without overstepping Germany’s constitutional limit on state borrowing. While Germany’s official national debt is currently a whopping €2.4 trillion, this hides a further €869 billion borrowed through shadow budgets.

In addition to the ‘special fund’ of €100 billion, which was announced last year to upgrade Germany’s military, the government has taken on €200 billion in special debt to pay for a cap on energy prices. On top of this, an ‘industrial electricity price’ is being planned, which will further subsidise the energy industry. Fundamentally, this represents a policy of protectionism by the German government, which is piling up debts in order to line the pockets of the capitalists.

The government's budgets for this year – and the planned budgets for next year – are austerity budgets, which will be forced on the working class in the middle of a recession. This will rightly be seen as a major provocation by the masses, who are forced to suffer unbearable cuts, while the bosses grow fat on government money.

Crisis of confidence

With the economy in an ailing state and the government unable and unwilling to address the problems of the working class, the establishment is suffering a deep crisis of confidence.

Not one minister of the federal government, including the chancellor, is trusted by the masses. In opinion polls, no more than 20 percent of people are satisfied with any current minister. More generally, all political parties have very low popularity ratings, and recent polls put satisfaction in the government at just 27 percent, having halved in the course of the year.

The three parties in the ruling coalition have plummeted in popularity over the recent period. The Green Party has fallen to 15 percent from almost 25 percent in the polls last year. It recently received its worst result for 20 years in the Bremen state elections. The Social Democratic Party has likewise gone from almost 26 percent popularity at the time of the 2021 election to just 17 percent now. Finally, the liberal FDP has almost halved in popularity since 2021, achieving a meagre 7 percent in recent polls.

Recent weeks have also seen a precipitous decline in support for Chancellor Olaf Scholz. Polling at the end of August found that two thirds of Germans are dissatisfied with his premiership, with only 18 percent saying they would vote for him as Chancellor if given the choice.

Recent weeks have also seen a precipitous decline in support for Chancellor Olaf Scholz / Image: Olaf Kosinsky, Wikimedia Commons

The only party that is currently gaining any significant support is the right-wing Alternative for Germany (AfD), which is now the second strongest party. The AfD’s growth of support is due less to its political programme and more due to its ‘anti-establishment’ credentials. It is also one of the only parties not to have been in government in recent years, meaning that unlike the traditional parties of German capitalism, it is yet to be tested in power.

Now a battle has broken out in the establishment over how to deal with the AfD. More and more voices are being raised within the conservative CDU calling for cooperation with the AfD at the local level. This strikes fear into the hearts of the ‘sensible’ layers of the ruling class, however, who would rather avoid the openly reactionary AfD altogether.

If the AfD is able to maintain its current support, it will likely become the strongest force in some state elections next year. This will only exacerbate the tensions within the ruling class. Already, fear of the influence of the AfD is the driving force behind the increasing emphasis on the ‘culture war’ and ‘lesser evilism’. Such divisive distractions from class politics will continue to be wheeled out by the ruling class in the coming period.

Class struggle on the horizon

Die Linke (The Left Party) is unable to offer any real alternative. Rather than putting forward a socialist response to the social and economic crisis, the party is wracked with divisions at all levels, which threaten to tear it apart. The party is in a state that could become its final crisis. Its apparatus is disintegrating and there are hardly any active members left at the grassroots level. 

As a result, while the increasing polarisation to the right finds its expression in the AfD, leftward shifting moods are blocked on the political plane by the degeneration of Die Linke. This creates the illusion that there is a rightward shift in consciousness, but this is purely superficial.

Die Linke (The Left Party) is unable to offer any real alternative / Image: DIE LINKE Nordrhein Westfalen, Flickr

The trend is towards a leftward radicalisation of consciousness, expressed in hard-fought collective bargaining struggles. In Hamburg, 2,000 transport workers paralysed the city at the beginning of the year. While their struggle was eventually sold out by the leadership, the workers continually pushed their union to escalate the fight against the bosses. In the public sector, there was an inspiring collective bargaining struggle earlier this year, with 100,000 workers – including many young people – joining the union. This resulted in the so-called ‘mega-strike’ in March.

Ultimately this strike was only ‘mega’ in words, as the union bureaucracy shamefully split the struggle and undermined its real potential. But a new layer of young workers in Germany is looking for a way to fight for their interests and is increasingly putting the trade unions to the test.

The reduction of working hours will be a crucial issue in the coming period, as the demand for a four-day week, without loss of pay, is very popular among the working class in Germany. In the steel industry, the steelworkers’ union is already demanding a four-day week. This is only the beginning, and the demand will be taken up in more and more sectors of the economy. 

18 percent of the workers in Germany are already “quiet quitting”. Another 69 percent of workers say that they refuse to do anything outside the remit of their position. 45 percent say they would change jobs for a four-day week. These numbers are indicative of a profound discontent that will sooner or later express itself in the trade unions.

Large layers of German society are becoming disillusioned with the capitalist system. Marxism, socialism and communism are increasingly popular among the youth. We are already seeing the first signs of the monumental struggles to come. Lacking a political outlet for this class anger, an enormous social explosion is being prepared in Germany, which will shake the foundations of capitalism in Europe and internationally.