Theodor Bergmann 2005

Germany Today: The Role of Germany in the Global Crisis of Capitalism

Source: New Interventions, Volume 12, no 1, Spring 2005. Prepared for the Marxist Internet Archive by Paul Flewers.

The present world-wide crisis is not the first one and no surprise for Marxists. Karl Marx described the crisis of 1857. And the world has experienced similar ones since then. The cycles are not appearing in a precise rhythm, but their phenomena and effects reappear – with a difference in the economic and geographical dimension. Since 1945 Germany has experienced five such economic crises.

One of the deepest ever crises began on Black Friday, 24 October 1929, when the New York Stock Exchange (Wall Street) crashed, the soap bubble burst and shares lost seven-eighths of their ‘value’. This deepened and aggravated the German economic crisis which had already started in 1926; the word was: ‘When New York is coughing, Germany has pneumonia.’ Large enterprises and banks crashed; small shopkeepers had to close. Mass unemployment sprang up in two years to more than six million (the total population then was 65 million). And most of the jobless had a family at home. The government cut salaries by more than 10 per cent. The capitalists did the same and even more – up to 15 per cent. The eight-hour day, a result of the November Revolution in 1918, was abolished and working hours extended. The dole was cut – a lower payment for a shorter period; after a short while only one-sixth of the jobless received the full amount.

The two large workers’ parties were involved in an internecine fight. The Social Democratic Party did not even want to fight against this joint offensive by the state and the capitalists; they ‘tolerated’ the bourgeois government ‘to avoid the greater evil’ of fascist dictatorship. The ADGB (the main trade union centre), dominated by the SPD, followed this line; it asked three economists (Wladimir Woytinski, Fritz Tarnow and Fritz Baade) to draft an alternative economic plan, but avoided all mobilisation of the working class in favour of this plan. It remained an academic exercise. The Communist Party of Germany isolated itself by its ultra-left rhetoric and its attempts to split the trade unions.

The de-classed elements of the middle and working class were seduced by the pseudo-socialist demagoguery of the ‘National Socialists’, who promised a national paradise for all Germans, once the Jewish capitalists have been liquidated. The German industrialists and bankers financed the fascist party (NSDAP); the army gave arms to its paramilitary terror forces, the SA and SS. Military exercises were conducted on the large estates of the big landlords. The upper level of the state bureaucracy was sympathetic to the fascists, as were the courts and the police. Professors created the justifying ‘theories’: that is, Germany a nation without space, justifying the imperialist plans to conquer the ‘East’, the Ukrainian granary, and to reconquer ‘our colonies’. The imperialist plans of 1914 were revived; only the preparations for the Second World War were more intensive and more concentrated.

The bitter poverty, the hunger, the hopelessness, the inactivity of the labour movement prepared the soil for the fascist propaganda; and thousands of the hopeless were recruited by the SA, which offered them food, a uniform, a home in a barracks and a weapon to be used against all socialists, all Jews, all opponents. The bourgeois parties faded away, bourgeois democracy was hollowed out, and the capitalist class transferred state power in a ‘legal form’ to the fascists on 30 January 1933. The rest is well known: terror, rearmament, war. The beginning of the arms race in the industrialised world prepared the economic ‘recovery’, and the massive destruction of the war opened the path to a new phase of investment and reconstruction.

The 60 years since 1945 saw five smaller economic crises in Germany and Europe. The notion of cyclical capitalist crisis was not mentioned in the media, only minor ‘recessions’. The big bang came again from the leading and largest capitalist economy, the United States. And again the close international interaction has led to an avalanche in the whole capitalist world. Bankruptcies are spreading like an epidemic in the US and from there to Germany, from the ‘finance industry’ to the real economy. While the managers – whether ‘successful’ or not – can leave their job unharmed and with a very generous pension, tens of thousands are dismissed with empty hands into extended unemployment.

At the peak of the past boom we still had more than five million registered jobless, in reality more than six million. Now the administration has corrected statistics so intensively that the figure in November 2008 came down to 2.95 million. The reality is about five million. The number of the working poor has risen dramatically.

In the last few years of the moderate boom, profits were rising, and managers and shareholders increased their ‘remuneration’. Profits were so large that they started large-scale speculation, seeking out the highest profits for their idle capital – profit maximisation was and is the law of capitalism.

But this last boom was different from normal booms. Real wages and salaries declined, unemployment settled at a high level. In the capitalist offensive many achievements of a century of struggle were abolished. The number of workers with ‘tenure’ is declining rapidly: all sorts of precarious types of employment are increasing. Fewer and fewer employees are covered by social and health insurance. Unemployment is high, but unemployment statistics are constantly being ‘improved’. Wage agreements are not national any longer nor do they cover all those employed in a particular branch, since many enterprises leave their organisations. Step by step we return to the labour market conditions of early capitalism, while the work process itself is intensified and workers are worn out long before pension age, which has now been raised from 65 to 67 for men. The managers aim at a remuneration equal to US levels, while the workers are to be pushed down to the level of Calcutta.

The managers have gained a lot from our modesty, and during the boom they experienced a trickle-up effect; they accumulated huge profits which called for maximum interest for this wandering capital – over-accumulation. The CEO of Germany’s largest bank, Deutsche Bank, Josef Ackermann asks for 25 per cent interest per year. This free capital of many billions initiates the spiral of rising profits, speculation, the ‘creation of new products’ – bubbles without any backing in real production.

Our trade unions are not in a good shape. While we still lived in the last ‘boom’, their wage demands were much too modest. Wage agreements were too soft with all types of ‘opt-out clauses’. The leader of the metalworkers’ union, Klaus Zwickel, offered an ‘alliance for employment, training and competitiveness’, which implied readiness for wage dumping against our peers in other countries – in spite of the fact that German industries are highly competitive. This approach was particularly strong after the SPD formed a government with the Greens in 1989. Gerhard Schröder (SPD), the elected chancellor, very soon showed his real intentions. With Agenda 2010 he organised the general attack on the established system of social security. Walter Riester, formerly a metalworker, now Minister of Social Affairs, began to dismantle and privatise the old-age pension scheme and demanded that everyone should take out an additional private insurance. The second phase of the dole, for which we had paid during our employment, was abolished, and after 12 months the jobless are sent to the ‘welfare department’, where one receives the minimum of 345 Euros per month, but one is dependent on the goodwill of the officers.

This was called modernisation and reform, thus entirely changing the sense of reform, which now in fact implies planned deterioration of the living conditions of the working class. The leadership of the SPD and the trade unions fulfilled the wishes and demands of the capitalists. The union leadership felt bound to support their ‘ruling’ comrades. Already in the late 1920s the leftist writer Kurt Tucholsky said: ‘They believe they are in power; but they are only in government posts.’ One of the disastrous effects of this for the trade unions is a heavy exodus of members.

The leadership of the SPD has ‘developed’ from reformism (in the old sense) to modernisation management. From party and ministerial office they directly move into the management of large capitalist enterprises. Chancellor Schröder became an ‘employee’ of three international firms. Dr Wolfgang Clement (SPD) organised the destruction of the unemployment insurance scheme; he is now a boss in a large energy firm. Norbert Hansen, head of the railway union Transnet, switched in one day over to the management of the German railways. Gerster, former minister in Mainz, became the head of a ‘yellow’ union, financed by new private logistics firms. More such examples could be cited.

In the recent aggravated economic crisis strikes are more frequent than before, but naturally become more difficult. The slowdown of industrial production and the crisis in the ‘finance industry’ lead to more dismissals, compulsory vacations, etc. Therefore mass demonstrations, pressure from the ‘street’ on the government and an alternative programme of action are called for. The union leadership, however, keep silent.

The mood is different among the union membership and the local officials who maintain contact with reality and feel the anger of their members. It is necessary to organise a huge national demonstration like the one in 2004 with more than half a million participants. That one was organised from below! But the leaders succeeded after the demonstration in obstructing any follow-up.

Without strong pressure outside parliament the government will solve the crisis the capitalist way: bailing out the bankrupt financial institutions and offering generous subsidies to the industrial enterprises, which avail themselves of the opportunity to ask for the same. The Finance Minister, Peer Steinbrück (SPD), offered 500 billion marks to the banks, twice the size of the state budget. This was voted through the Diet in two hours. Just a few weeks earlier the government could not find the money to raise the dole for the long-term jobless from 345 Euros. The distribution of the huge subsidies is supervised by the beneficiaries themselves and their lobbyists – a self-service store for the bankers and industrialists – not by the parliament. No conditions are stipulated. It is doubtful whether the heavy injection of state money will have a stabilising effect.

What are the actual demands of the working class?

Summing up, this is not the first economic crisis of capitalism and no surprise for socialist observers. It will not be the last if the working class tolerates these irresponsible exploiters. Their governments tell us that at the next meeting of the 20 largest economies in the spring of 2009, they will determine measures which will ensure that such disasters cannot be repeated. That we have heard before. The Social Democrats were sure in the 1920s and assured the German workers that they had domesticated capitalism and that ‘we will peacefully grow into socialism’. At best this is a misunderstanding of the internal laws of capitalism. Today we have professors teaching ethics of economy to the managers.

Only if the working class supersedes capitalism and fights for a socialist society will we rid ourselves of this plague. Deep economic crises are immanent to the capitalist system. The bourgeois democratic state is owned by the bourgeoisie; the entanglement of the capitalist class with the state administration is tighter than ever before.

The working class will have to pay for the huge subsidies given out to the capitalist enterprises in different ways; we will be the losers. Some entrepreneurs will be swallowed by their larger competitors, but will not be joining the jobless. In this process economic power will concentrate even further and thus also political power. The working class has no alternative to organised struggle.