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Germany’s Hidden Social Crisis

Germanys Hidden Crisis cover

Germany’s Hidden Crisis: Social Decline in the Heart of Europe by Oliver Nachtwey. Translated by Loren Balhorn and David Fernbach.

Victor Grossman is an American journalist and author who has lived in Berlin for many years. His most recent book is A Socialist Defector: From Harvard to Karl-Marx-Allee (Monthly Review Press, 2019).

Oliver Nachtwey, Germany’s Hidden Crisis: Social Decline in the Heart of Europe (New York/London: Verso Books, 2018), 256 pages, $26.95, paperback.

Germany is commonly perceived as a strong, dependable island amid a sea of gyrating European uncertainties, a down-to-earth, dependable ally in attempts by the better U.S. presidents to move the world forward as steadily as possible. For the past thirteen years, this view has been personified in the clear, undramatic words and deeds of Angela Merkel, Chancellor of Germany since 2005.

Considerable doubts in this appraisal, with evidence that Germany, like every other country, has never been a monolith free of class conflict and other contradictions, are addressed in Germany’s Hidden Crisis: Social Decline in the Heart of Europe by the economic-sociologist Oliver Nachtwey, now a professor at the Swiss University of Basel. In describing West German, then all-German, developments from the end of the Second World War until the present, it analyzes from the left, unafraid to utilize the ideas of Karl Marx as well as a host of more recent analysts of many shades. Written in a readable style, even a relative layperson like myself was able to understand it, but the reader does need to concentrate; it is, not surprisingly, no novel.

At the start, Nachtwey recalls that Germany has traditions going back to the days of Chancellor Otto Bismarck, who combatted the rapid rise of the leftist Social Democrats by both forbidding them and, in 1883, co-opting them through the establishment of a limited health care, invalidity, and pension system. These, augmented by women’s suffrage and jobless insurance, were defended during the Weimar Period between the First World War and even partially in the Adolf Hitler era.

After 1945, there were further improvements. A foundational aspect of the Federal Republic was the constitutional protection of the right to join a union, to use strikes to improve conditions, and, in large plants, to have worker representation on the ruling board, though the owners had final control.

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The establishment of a welfare state—a crucial part of postwar democracy—influenced development for many years. The rapid rise in postwar industrial growth and a shortage of workers in the early years provided the newly formed industrial unions with a strong stand. Corporations proved willing to accept fairly mild bargaining positions on many issues. This led to a remarkable level of prosperity, proudly labeled the economic miracle. Before long, most working-class homes, now increasingly privately owned, had modern sanitation, washing machines, television sets, and a car—at first, often a Volkswagen Beetle. Something hardly dreamed of in past generations became possible: a vacation trip to southern locations like Italy.

The old proletarian, plebeian aspects of working-class life were largely overcome. There was a new feeling of equality, if not in income then in citizenship, with class distinctions no longer seeming so impenetrable. Education, which now extended far beyond earlier limitations of simple reading, writing, and arithmetic, opened the way for some from lower classes, or their children, to ascend from manual jobs in industry into middle-class, white-collar positions, often in public service. The feeling of greater economic democracy with the associated upward mobility is described by Nachtwey as a kind of elevator effect, with all groups moving up. While levels of prosperity were not the same for everyone, they were all higher than they had been. In terms of the law, as he writes, this “was not a society of equals, but a society of people on equal terms.”

This elevator effect moved many toward a more individualistic approach, away from the class consciousness once so strong in Germany. Aside from a fight to achieve the forty-hour work week and the truly tough struggles to gain, for some, the thirty-eight or even thirty-five hour work week, the labor unions overall grew satisfied with sitting peacefully at the negotiating table behind closed doors, without any mass participation or action by the membership aside from their Yes or No votes. Parallels with developments in the United States are unavoidable.

This period of so-called upward mobility in much of the western world reached its German zenith toward the end of the 1970s, when Willy Brandt and then Helmut Schmidt, both Social Democrats, headed the West German governments. The sudden decision by Richard Nixon and fifteen government officials at Camp David on August 13, 1971, to suspend convertibility of the dollar into gold is seen by Nachtwey as a turning point. The relative equilibrium based on U.S. domination, as agreed upon in 1944 in Bretton Woods, New Hampshire, was replaced by a state of international financial instability lasting until today and only partially supplanted in Europe by the enforced discipline of the European Union and its euro currency.

What developed, impelled by lower profit rates, was a turn from the priority of producing goods, financed essentially by way of the stock market, toward a growing reliance on financing by the banks. This meant greater stress on making big profits fast, less entrepreneurial development but quick, sure-fire gains with as little risk as possible. There was a rapid expansion into Eastern Europe after the velvet revolutions of 1989–93, where skilled but hungry workforces, compelled to find any work, were willing to accept very low wages and far fewer rights. This applied even more to new workers in the southern continents, especially South and Southeast Asia.

But the lust for quick profits demanded by the finance market, with many large companies directly tied up with banks, was also felt at home. The welfare state, despite some happy op-eds, had definitely not abolished classes even when permitting increased upward mobility. There was less confidence in the trickle-down rationale—that huge profits for the big shots would bring higher incomes for just about everybody, that a rising tide would raise all the boats. The growing reprivatization of public services, from transportation and energy to health and education (much as in the United States, the United Kingdom, and elsewhere), meant a turn away from any post-Keynesian concern for all citizens toward the tough neoliberalism of Friedrich Hayek and Milton Friedman. Fewer workers could rely on the traditional lifetime jobs with a single company, the rise in factory status and wages and getting a tolerable pension, companies offering security, or basic upward mobility in exchange for skills and loyalty.

Nachtwey calls the result a period of “regressive modernization,” also involving electronics and productivity measurement, even down to the individual level, and describes what pressures this produced, not only for production workers. Next to the ascending elevator, now grown creakier, there was also a descending escalator. Though never easy, it was still possible for many to get a college degree. But with fewer safe government jobs or steady positions in fields like journalism and law, that was no longer a guarantee of security, even for students from upper middle-class families, despite their big head start. For many, especially working-class youth, their endeavors, even with degrees, recalled—to stick with the metaphor—the childhood experience of trying to run up a down escalator.

As for those at the top since birth, they could only be reached with a very exclusive ladder, most rungs of which were removed for all those lower in rank.

As the 1970s moved along, and then during the 1980s, the economic situation grew tighter. From 1969 until 1982, the Social Democratic Party led the government, headed at first by Brandt, who gained fame and praise by ending the total boycott and ostracization of the Eastern Bloc, finally recognizing Polish boundaries and paying tribute to the Warsaw Ghetto resistance. This easing of Cold War tension, including its most overt pressure against the (East) German Democratic Republic (GDR), meant replacing confrontation with seduction. It was unhappily accompanied by tightened restrictions on the West German left, with hundreds of thousands checked for undesirable ideas and hundreds fired from government jobs, such as teaching and postal service. Joe McCarthy, though dead, was not fully buried.

Eastward seduction finally worked, though the harvest was reaped and German unification achieved by the conservative Christian Democratic Union of Germany (CDU) politician Helmut Kohl, who ruled the roost for sixteen years, partly due to the gratitude for his efforts. His successor in 1998 was again a Social Democrat, Gerhard Schröder, who shared cabinet posts with the Green Party. A child of the student-led protests of 1968 with their revolutionary slogans and sometimes bloody actions, the Green Party was founded in 1980 as a radical protest party, but by 1998 had become quite tame, partly under the influence of newly absorbed GDR’s so-called dissidents, most of whom were very conservative.

The Social Democrat-Green coalition, lasting seven years, was marked by two decisive events. Less than half a year after taking over, Schröder and his Green Foreign Minister Joschka Fischer ignored all United Nations (UN) rules by joining the North Atlantic Treaty Organization in bombing Serbia over Kosovo—the first military deployment of German soldiers since the Second World War. This was made possible by unification, since there was no critical GDR as a counterpart, demanding peace. The narrow reelection victory four years later was seen as a result of the controversial decision to stay out of the Iraq War, which similarly disregarded UN rules, international law generally, and the Geneva Conventions in particular.

After earlier cuts in the pension system, encouraging dubious private pensions, the Social Democrats and the Greens established Schröder’s mixed bag known as Agenda 2010, passed step by step in 2003 and the two years that followed. Its key section, named Hartz 4 for the corrupt legislator who framed it, cut unemployment assistance, hitherto unlimited in length, to only one year (two years for those over 55). After that, jobless workers receive a barely survivable monthly sum plus heating and rent costs (up to a certain limit), but must accept any and every job offered to them, regardless of qualifications, wages, or working conditions. They must present written proof monthly of their constant attempts to find work. In some cases, they are assigned obligatory job training. At the compulsory monthly visits to so-called job centers, unemployed people must provide total ongoing disclosure of all bank accounts, insurance policies, and any assets or property of value, from cars to jewelry. Anything above a certain low threshold triggers cuts in the monthly payments; anything considered a violation, like a missed appointment at the job center, brings sanctions—that is, cuts in the allowance. They must always be available by phone and request approval for vacation trips or other travel, with all the details. For those jobless for over a year, this requires radical changes in their way of life, perhaps because they have one room too many, savings for children, or valued objects—even when they hope to regain employment in their learned trade. The many angry demonstrations against these rulings failed and fizzled out, but it was certainly because of Agenda 2010 that the coalition lost its majority in 2005 and Merkel took over, without the Greens and now with the Social Democrats as the junior partners.

The new cuts and controls brought new, widespread fear and a decrease in fightback on wages or working conditions that might mean losing one’s job. The pauperizing menace of Hartz 4 lurked over millions like a terrible ogre—or drone. The most important result was an increase in half-time work, work without regular contracts, for indefinite lengths and indefinite hours—in brief, precarious work. Big business, with its risk-reluctant trend, was all in favor of an increased ability to hire workers rapidly when they were needed and lay them off just as rapidly when they were not, strongly affecting labor relations. The relatively high German wage level stagnated and receded, giving the economy additional advantages in export trading and permitting the government to boast of its low unemployment rate, while much unemployment was hidden under a lid of half-day work, temporary jobs, useless schooling at taxpayer expense, and enforced, beggarly paid jobs. Currently, two million people depend on Hartz 4.

Working people are often split between securer, better-paid regulars and the precarious staff, often rented out by crooked agencies. Sometimes solidarity developed, but all too often the regulars took advantage of their preferred positions, looking down on the others—a situation facilitated and encouraged by management. This split undermines the strength of employees in work councils and in their legally authorized participation in board meetings, where precarious workers are rarely represented. Their frequent willingness to accept any indignity or speed up in hopes of gaining regular status or in fear of losing what they have can also be contagious. Many regulars fear becoming precarious, or losing out fully, with even the most famous, established corporations cutting down or closing any plants that do not bring in quick enough returns.

Two other key subjects were often discussed by Nachtwey. In the early welfare-state years, many women left traditional home seclusion with cribs and pots and pans to get jobs. Large numbers had to work during the war as well as afterward, when large numbers of men did not return or, for prisoners of war, did not quickly return. More women earned work experience by necessity—and did not then want to give up their newly won independence or their needed paychecks. Many branches of industry welcomed them—but always at far lower wage levels than men, often in the most menial or repetitive jobs, discriminated against in every way, with almost no chance of upward mobility.

The situation improved somewhat over the years, with new attention aroused under the banner of feminism. But all too often this meant improvements for a thin stratum of upper middle-class women—or higher ranks—but little or nothing for working-class women.

In a related way, foreign workers were also misused. With able-bodied men in short supply in the earlier years, jobless workers were hired from Portugal, Spain, and Italy. While the southern Europeans often left after a few years in Germany, and after the East German source of job seekers was halted by the building of the Berlin Wall, huge numbers of Turkish workers were brought in by government agreement, often with peasant backgrounds in poverty-stricken Anatolia. A high proportion of Turks and Kurds chose to stay, and remain today, now in their second and third generation. Despite progress for some with better chances of integration, many are still doing the worst-paid menial and heavy labor, or are being denied jobs as soon as their Turkish names are recognized.

By and large, too few of the established labor unions have grappled sufficiently or satisfactorily with these problems, but are often content to protect a core of regular workers in privileged islands of great export importance like the automobile industry, worrying less about the individualized, often isolated jobless and precarious workers, male, female, of immigrant background, or native so-called bio-Germans. Nachtwey is not too optimistic about much future improvement from that quarter.

There have been various kinds of revolts: student uprisings of 1968 and the following years; dramatic demonstrations against the storage of atomic waste or to prevent construction of a giant, wasteful railroad project in Stuttgart; against the monopoly-ruled Transatlantic Trade and Investment Partnership trade agreement planned between the United States and the European Union; antiwar demonstrations; and, more recently, protests against fascists, racists, and xenophobes. Some were big and heart lifting. But most such demonstrations—aside from those of Kurds and pro- or anti-Erdogan Turks—were organized and attended by middle- or upper middle-class, white-collar, and professional people, and rarely by many from the working class.

There have been some union battles in recent years too, mostly in service- and care-industry jobs where strikes are especially disruptive and hence effective: hospital personnel, kindergarten teachers, railroad engineers, pilots and other airline personnel, and postal-delivery workers. In some of these fights, women were at the forefront. Despite constant pressures toward individualistic struggles for personal well-being or survival, such signs of fightback provided hope and occasionally displayed some of the old-time spirit of mass action. Any mention of long-term goals to address the growing systemic failure, however, was less than rare and too agitational and extreme to be effective.

Some forces were all too successful in utilizing mass action. For years, the far right consisted mostly of small groups of elderly Hitler-lovers and young, racist, antileftist thugs. But, after 2014, there were weekly anti-Muslim marches concentrated in eastern Saxony, especially Dresden. They burgeoned into a major force in present-day Germany: a party called Alternative for Germany (AfD), with ninety-two loud, nastily racist deputies in the Bundestag and others in all sixteen state legislatures. Not a few veer close to overt fascism. In Eastern German states, the AfD has reached third or second place among six parties and threatens to win next year’s state election in Saxony. At first its main target was the European Union, but it now mobilizes hatred against the many refugees welcomed into Germany by Merkel in 2015. Using chauvinism and xenophobia, they misdirect the worries of lower middle-class people fearing downward mobility for themselves or their children, and growing numbers of workers as well, into blaming “those foreigners” for getting homes, jobs, and official support of which they, too, are in need. This leads to a rejection of both government parties, a weakening of Merkel’s Christian Democrats, and a far worse decline for the Social Democrats, now down to 14–16 percent in the polls. Voters who reject the so-called grand coalition of the two traditionally ruling parties are commonly taking one of two main paths: those infected with xenophobia vote for the AfD, while those who want change but reject racism for humanitarian reasons, religious beliefs, or family memories of German wartime refugee suffering, now turn in surprising numbers to the Greens. Despite their visible rightward drift, joining with the Christian Democrats in four state governments, they, at least, are not in the unpopular federal government. The Greens, with an Eastern-based component called Bündnis 90 (1990 Federation), defend the rights of immigrants, women, and the LGBTQ+ community. But the party is led by largely intellectual upper middle-class professionals, with no connections nor great interest in working-class problems. And the Greens lead all parties in their belligerent, even bellicose, policy toward Russia, recalling a certain sector of U.S. Democrats.

Die Linke, or Left Party, was situated to fill the ensuing gaps. As Nachtwey observes, it did for a time, becoming the main opposition party and growing accordingly. In the eastern states, where it won nearly a quarter of the electorate, this led to often successful endeavors to join in state-level coalition governments, with some leaders dreaming of the national level. But this very success, or endeavors in that direction, made many dissatisfied, angry voters see Die Linke as yet another establishment party, turning instead to the AfD or the Greens, or staying home on election day.

Germany’s Hidden Crisis was written before recent developments in Die Linke—a possible new insurgency by some further left-leaning party members, led by its charismatic caucus cochair Sahra Wagenknecht, in the Bundestag. Wagenknecht aims to end the stagnant image of Die Linke with a new collective movement, explicitly not forming a new party but rather appealing to protesters in all parties, including her own, disappointed Social Democrats, and even nonracist followers of the AfD. This attempt, called Aufstehen (Stand Up), seeks inspiration from Jeremy Corbyn in England and Jean-Luc Mélenchon in France. Whether it moves the German scene to the left, as hoped by some, or causes a destructive split, as feared by others, remains a burning question with an uncertain outcome. And with the oncoming departure of Merkel from the political scene and the growth of the AfD, nothing in Germany is very certain.

Nachtwey’s book provides a detailed analysis of postwar developments in Germany from a left-wing, working-class, and sociology-based perspective. I can highly recommend it to everyone interested in the past, present, and future of this crucially important country, many of whose problems face other Europeans and people in the United States as well, in particular the danger of some variant of fascism, most alarmingly in case of a repetition of the 2008 crisis—perhaps a far more serious one.

Nevertheless, I would like to express one interesting criticism. As someone who spent most of the years described in the GDR, I feel that Nachtwey disregards the interplay between the two states in Germany before 1990—a trait common among those who grew up in West Germany. He does mention the GDR, though rarely, while largely neglecting the Cold War. A major foundation for West Germany in achieving its welfare state was the official U.S. decision (with most western countries going along) to permit a return of German economic strength and, gradually, military strength as well. It was to be a bulwark against any influence from the GDR, a bastion and possible starting ramp in an aggressive balancing policy on the brink of atomic war. This meant a comeback for the mighty empires of Bayer and BASF; the guilty engineers and profiteers of Auschwitz; Hitler’s financiers, Deutsche Bank and Allianz insurance; powerful export companies like Daimler, BMW, Volkswagen, Porsche, and Opel; the Krupps, Flicks, Rheinmetall and others in the military-industrial complex, which regained power and wealth based on the toil of millions of slave laborers, prisoners of war, and concentration-camp inmates. Such giants, all completely expropriated and nationalized in East Germany, formed the backbone of the West German economy. Then, too, the reparation burden was pushed almost entirely onto far frailer East German shoulders while the Marshall Plan provided huge additional doses of investment capital in an overt program of confronting socialist influence. Early attempts to nationalize banks and industry in West Germany, especially in the key state of Hesse, were swiftly scotched, while Washington, the Pentagon, the media, and sisterly kinfolk in DuPont, Standard Oil, General Motors, Ford, and a dozen others helped make West Germany an enticing model for all in Eastern Germany and East Bloc Europe.

This involved concentrated endeavors to entice East Germans with valuable skills—doctors, managers, engineers, well-trained workers of all kinds—to move west, until the Berlin Wall made this extremely difficult and usually dangerous. But there were other aspects that were sometimes indirectly positive. West German union officials have often described how contract negotiations were affected by an invisible GDR seat at the bargaining table. Its superior working conditions were never to become so sharply apparent that they lessened the lure of a commodity-rich West German market economy for East Germans or led to any undesirable comparisons by West Germans. As long as the GDR existed, the corporations remained relatively, all things considered, lenient. After unification, with that seat at the table now empty and no more rivalry, economic screws could be tightened and benefits reduced. This is what is happening. After 1990, East Bloc markets were opened wide for sales and investment, and many West German companies were freed from bothersome rivalry with competing eastern firms. The buyout or destruction of all of East German industry, always weaker than that of West Germany yet still worldwide in the upper ranks, brought a giant increase in wealth at the top while the swift strangulation opened up a large source of highly skilled workers desperate for jobs under almost any conditions.

It also led to the disappointment of millions in East Germany who, promised “blossoming landscapes” in 1990, became angry, sullen, and then suspicious of “rival foreigners.” Although the latter were far less numerous in East Germany (under 1 percent in Saxony), this mistaken envy opened the door to the growing fascist menace.

I can understand that Nachtwey could not expand his book indefinitely—and what he covered, he covered well. Yet, I think the Cold War aspects, the differences and influences in both directions, above all in Germany, deserve great attention. Examining the GDR experience, its attempt to defy all odds and achieve socialism—with all the positive and negative results for working people—can help those in the United States and elsewhere in search for solutions to problems that are growing ever-more grave.

2019, Volume 70, Issue 11 (April 2019)
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