Germany: the government has collapsed – and so will capitalism!

The German government has fallen. The dispute over the draft budget for 2025 was the coup de grâce. For months, the ruling coalition of social democrats (SPD), Greens and liberals (FDP) struggled to find a solution to the economic crisis, as Germany faces its second consecutive year of recession. Despite this, the government was unable to unite and decide on an approach. Those in power are divided over the question of whether the time is right for a general attack on the working class and the poor.

[Originally published in German at derkommunist.de]

A draft document by the now former Finance Minister Christian Lindner (FDP) was leaked – allegedly unintentionally – in which he attacked the economic and financial policies of his coalition partners. He made a fundamental change in economic policy a condition for his party to remain in the coalition. The SPD and the Greens refused. As a result, Chancellor Olaf Scholz (SPD) dismissed the Finance Minister, thus sealing the fate of the coalition government.

Companies clamour for subsidies

The government's failure shows the true depth of the crisis of capitalism in Germany. According to the German Economic Institute, government investment in infrastructure needs to reach at least €600 billion over the next ten years in order to remain competitive. Healthcare and rearmament are left out of this calculation. The state is also expected to invest hundreds of billions in the military over the next decade. Who is going to pay for all this?

The plans in the draft budget – which has now brought down the government – provided for ‘investments’ of €81 billion. The majority of this, however, was not to be channelled into environmental development or infrastructure, but into increasing equity in Deutsche Bahn and investments in the stock market, in order to cushion the increase in pension contributions.

FDP gets out the axe

Lindner’s document proposes a plethora of cuts / Image: Olaf Kosinsky, Wikimedia Commons

The FDP knows who it wants to pay for all this. Lindner’s document proposes a plethora of cuts. For example, the FDP wants to cut the unemployment benefits and money for asylum seekers, increase the retirement age and abolish the limit on daily working hours. In addition, rates of sick leave “are too high in Germany compared to international standards”, according to their document. In other words, the liberals also wanted to take an axe to sick pay.

In addition, the FDP wants to withdraw all ‘new regulations’ such as the Collective Labour Agreement and the Supply Chain Act, which would mean further attacks on workers’ rights. In doing so, they want to save money by cutting staff in the state bureaucracy. The FDP also proposes tax breaks for the bosses, and abandoning Germany's targets for climate change and renewable energies. Subsidies, meanwhile, should only be given out to certain specific companies.

Capital was delighted – SPD and Greens were not

The bosses were delighted with the former Finance Minister's proposals. Stefan Wolf, head of the bosses’ union Gesamtmetall, praised the plans as “very good” in view of the German economy’s drastic situation. Friedrich Merz – chairman of the right-wing Christian Democratic Party (CDU) and candidate for chancellor – also had warm words for the FDP’s plans. In fact, some of the proposals were taken verbatim from motions that the Christian Democratic parliamentary group had tabled in the Bundestag over the past two years. As the traditional party of big business, the CDU knows what ‘the economy’ wants.

But the SPD and the Greens were not willing to play along. Even without the coalition’s premature end, campaigning for the regularly scheduled elections in autumn 2025 would soon have begun. The Social Democrats immediately rejected the FDP’s plans in their entirety. As a reformist labour party, the SPD cannot launch a blatant attack on the working class without alienating its voters. The Greens are also trying to score points among their voters by appealing to social and climate concerns.

The SPD and the Greens both wanted to finance their plans without any major attacks on the masses. However, due to Germany’s constitutional limit on state borrowing, the necessary investments cannot be funded solely through debt. This is where the coalition parted ways. Capital wants the government to relax the state debt limitations – which would require an amendment to the constitution – while at the same time pursuing a policy of savings and cuts. The party that embodies precisely this approach is the CDU.

What will new elections bring?

Chancellor Scholz is planning for new elections in March 2025, and aims to remain in power as a minority government in the meantime, in order to pass legislation on pensions and ‘stabilising the economy’. However, Merz has offered the CDU's support for these plans on the condition that Scholz immediately calls a vote of confidence in the government. If this failed, new elections would then be held within 60 days. Representatives of big business, as well as the smaller opposition parties AfD and BSW, are also in favour of an immediate end to Scholz's minority government.

According to current polls, the likeliest result of an election right now would be a ‘Grand Coalition’ of the CDU and SPD with Merz as chancellor. This would be the best option for capital. In order to carry out its attacks, it must keep the working class quiet. The SPD, with its roots in the trade unions and social organisations, could sell the upcoming cuts as a necessity to ‘save democracy’. The CDU, meanwhile, has ruled out a coalition with the Greens. A Grand Coalition would currently be the only way to form a government without the participation of the AfD.

The CDU and SPD are already united in their isolationist asylum policy, support for increasing armament and repressive domestic policy. After the stabbing in Solingen earlier this year – carried out by an individual with suspected ties to Islamic State – the coalition's attempt to expand the state's ‘security powers’ failed only because of the opposition of the FDP. The government recently passed a resolution ‘against anti-Semitism’ together with the CDU and AfD. Anyone who questions Israel's right to exist will face harsh penalties under a Grand Coalition government. Both the SPD and the CDU support the wars in the Middle East and Ukraine. They want to assert the interests of German imperialism by playing a leading role within the EU, including militarily. The current rearmament is intended to serve this purpose.

No way out of the crisis

The coalition government was a government of crisis from the outset. The same will apply to a Grand Coalition and all future governments. The crisis in the German economy cannot be solved under capitalism. The ruling class and every government – regardless of its composition – face a hopeless situation. Even if they continue to take on debt, it will have to be repaid at some point. Under capitalism, this can only be done by attacking the working class.

The coalition government was a government of crisis from the outset / Image: European Parliament, Flickr

The capitalists sell these attacks as a necessary evil to stop deindustrialisation, which would result in the loss of hundreds of thousands of jobs. But companies have not been investing for decades and will not do so now, no matter what ‘incentives’ the state provides.

Even if the working class is forced to tighten its belt, better times are ruled out on a capitalist basis. The system is in a deep crisis worldwide. All over the planet, we are seeing how the struggle for markets is intensifying due to global overproduction. Wars and protectionism are an expression of this.

Germany will not be able to hold its own in competition with big players like the USA and China. The ruling class is trying to rely on the EU, but this ultimately consists of nation states that are in competition with each other. The decline of German capitalism is unstoppable.

Vote for revolution!

In the upcoming elections, there is no party that represents the interests of the working class. With its behaviour in the regional government negotiations in Brandenburg and Thuringia, BSW has already proved that it is prepared to make rotten compromises in order to get to the state feeding trough. The Left Party is once again giving advice on how best to save the rotten status quo. In terms of its programme, the AfD stands for the same attacks on workers as the FDP and CDU. At the same time, it is undermining the common struggle of the working class through its divisive rhetoric around race, gender, sexuality and religion.

Anyone who really wants to fight against the AfD, Scholz, Merz etc. and the system they all stand for must build the Revolutionary Communist Party. There will be countless opportunities to do so. Billions and billions of euros are being channelled into desperate attempts to rescue the ailing economy, into barbaric wars and weapons that only bring misery. At the same time, the living standards and democratic rights of the masses are constantly under attack. For ever broader sections of the population, the only real choice will therefore become apparent: revolution.