THE SOCIAL
DEMOCRATIC PARTY IN GERMANY

Caught Between the Fall of the Berlin Wall
and the Rise of The Left

INGO SCHMIDT

The development of social democracy in Germany since 1989 can be understood as a series of hopes, disappointments, misunderstandings, and belated learning processes. In 1989 the Berlin Wall had just fallen and West Germany’s Social Democrats were looking into the future with confidence. Though they were as confused as anyone else about the unexpected changes in the East, they were hoping to win the next federal election, scheduled for January 1991. During the late 1980s, increasing numbers of voters had become discontented with the conservative government of the CDU (Christlich Demokratische Union Deutschlands, or Christian Democratic Union) and the CSU (Christlich-Soziale Union in Bayern, or Christian Social Union), which was seen as unwilling or unable to allow the wealth of the upper classes to trickle down to ordinary people under conditions of robust economic growth. Consequently, polls showed a negative trend for the conservatives and a positive one for the Social Democratic Party of Germany (the Sozialdemokratische Partei Deutschlands, or SPD). However, the speedy accession of East Germany to West Germany’s Federal Republic (FRG), which led to a federal election in the fall of 1990 that nobody had foreseen a year earlier, impaired the Social Democrats’ electoral prospects drastically. The unexpected disintegration of the state socialist German Democratic Republic (GDR) turned the political tides away from Social Democrats, whose unconditional commitment to the free world was mistrusted, and toward the conservatives and their unequivocal dedication to German unity under the auspices of private property, the European Single Market, and camaraderie with NATO. As a result, Social Democratic hopes for an election victory were disappointed.

The next to be disappointed were the people of East Germany. The industries that they had, at least nominally, owned under the state socialist regime were taken over by Western corporations and downsized, their jobs were cut, and the East German economy became dependent on a constant flow of fiscal transfers from West Germany. Disaffection with economic decline and the new domination by the West turned the Party of Democratic Socialism (PDS), the successor of GDR’s ruling Socialist Unity Party (the Sozialistische Einheitspartei Deutschlands, or SED), into an important political factor in the East. All across the country, the short-lived euphoria about German unification was followed by growing discontent with neoliberalism, which was slowly but steadily fed by austerity policies and pressures to increase international competitiveness at the expense of wages, social spending, and working conditions.

What Marx ([1865] 1986c, 149) had denounced as a “conservative motto” in 1865 was still a widely shared consensus in the 1990s: “A fair day’s wage for a fair day’s work.” When more and more people in East and West Germany felt that shareholders’ profit claims and CEO’s hiring practices denied them fair wages or access to a fair day’s work, consent for economic and political conditions became weaker. However, far from following Marx’s 1865 suggestion, the “abolition of the wages system,” they turned to parties that promised social justice and employment. Those who were less dependent on the wage system because of their social status were also seeking electoral alternatives because the conservatives, who had been in power in (West) Germany since 1982, looked increasingly self-righteous, arrogant, and disconnected from the new challenges of globalization. As a result, an alliance of Social Democrats and Greens — promising a new economy, ecological modernization, and a commitment to civil liberties — won a series of state elections and, eventually, the federal elections in 1998 (Handl and Jeffery 2001).

As it turned out, though, the rising tide of electoral support for the SPD was based on mutual misunderstandings between the party and its voters. The former, at least its dominant wing, thought it would lead the emancipation of its reluctant followers from the authoritarian rule of employers and welfare state managers to global civil society and a knowledge economy free from manual and alienated work (Zohlnhöfer 2004). Many among its voters, however, had a clear sense that access to this society might be limited to a happy few and therefore voted for the SPD, a party from which they were hoping to get more social security, justice, and job creation than from the conservatives. Not long after the 1998 elections, reservations about the promises of global prosperity outside the confinements of state intervention proved to be well founded in two respects. First, the NATO-led war against Yugoslavia in 1999 started a series of wars that clearly revealed the violent underpinnings of the new global economy, created a repressive political climate, and diverted resources from the welfare state to a war economy that had nothing to do with global civil society. Second, the economic crisis that ended the dot-com boom in 2001 prompted welfare state retrenchment on a scale unseen under conservative governments. Domestic attacks on the welfare state were even more unpopular than the foreign wars in Yugoslavia and Afghanistan. However, the buildup to the war on Iraq came with an explosion of anti-war sentiment. By expressing opposition to this war, Social Democratic chancellor Gerhard Schröder managed to garner at least enough sympathy to win a second term in 2002 (Maier and Rattinger 2004). He couldn’t reverse the Social Democrats fortunes, though. Voters and members kept fleeing the party in droves. Early elections in 2005 resulted in the SPD becoming the junior partner in a government led by a conservative coalition of the CDU and the CSU (Wüst and Roth 2006). Four years later, the Social Democratic vote dropped to its lowest level in postwar history, sending the party back to the opposition benches (Schmidt 2009a). An overview of German election history is provided in table 1.

TABLE 1 Election Results in (West) Germany

This low point for German social democracy was not the only remarkable aspect of the 2009 election; the other was that it was held during the deepest economic crisis since the 1930s. The Social Democratic comeback in the 1990s had happened at a time when neoliberal globalization seemed unstoppable, and consequently, SPD leaders saw the abandonment of any commitment to the Keynesian welfare state as a necessary adjustment of their politics to new economic and social realities. This adjustment caused disappointment among voters when Social Democrats applied their Third Way policies as governing party in the early 2000s. Yet, the financial and economic crises in 2008–9 were so deep that everything that had been considered a new and unchangeable reality a decade earlier was called into question. What began as a housing crisis in the United States in 2007 turned into financial panic and a global economic downturn in 2008–9; it eventually became a veritable crisis of neoliberalism, which created rather unexpected opportunities for new political projects. This includes the possibility for Social Democratic reorientation although neither the contours nor the direction of a social democracy after the Third Way are apparent at this point.

Social Democrats learned the hard way that their electoral success in the 1990s was not built on the unstoppable rise of new middle-class constituencies bred by a global knowledge society but, to a large extent, on a still-existing taste for the welfare state among working-class voters. These voters, in turn, being more dependent on the welfare state than others, had to learn that social democracy had ceased to be a vehicle to satisfy such tastes. The welfare state wing of the SPD, which was increasingly marginalized inside the party despite having mobilized significant numbers of voters for the 1998 election, eventually lost many of its members to the newly formed Electoral Alternative Work and Social Justice (Wahlalternative Arbeit und Soziale Gerechtigkeit, or WASG), which in 2007 joined forces with the Party of Democratic Socialism (Partei des Demokratischen Sozialismus) to become The Left (Die Linke) (Nachtwey and Spier 2007). Though this party caters to working-class voters, it is far from being a working-class party. Increasing numbers of the working class abstain from voting, while many others cling, usually without much conviction, to the SPD or even the conservative CDU. Under conditions of economic crisis or slow growth, the SPD leadership and many of its cadres abandoned the welfare state and thus furthered a lingering crisis of representation of working-class interests. The foundation of The Left is certainly a contribution to the rearticulation of such interests and, as such, part of a learning process that seeks to solve this crisis of working-class politics (Schmidt 2005, 2007). Recent crises of the world economy and neoliberal politics, though, have already shown what a difficult process this is. Hopes that The Left would be the beneficiary of these crises, attracting everybody discontented with the other parties’ embrace of neoliberalism, were quickly disappointed. Under the reign of neoliberalism, The Left was able to attract people who were opposed to it, but now that this hegemonic political project is itself in crisis and no longer functions as a negative point of reference. Ironically, even The Left, as the one party in the German electoral system that defined itself in opposition to neoliberalism, has to reorient itself during the current crisis of neoliberalism (Schmidt 2009c).

GERMAN UNITY: SOCIAL DEMOCRATIC HOPES DASHED

The late 1980s were a good time for West Germany’s SPD. Long-lasting conflicts between a corporatist bloc made up of industrialists and organized labour and the agendas of new social movements, which had been influencing electoral politics since the Greens began competing for voters in the early 1980s, were pushed into the background. A new balance among work, life outside the workplace, and nature gave the impression that the Social Democrats were more modern than the conservatives and, unlike the Greens, not focused on a rather narrow set of ecological and libertarian issues. Moreover, a renewed commitment to policies of détente seemed a better fit for Gorbachev’s Soviet Union than the Cold War policies and attitudes that so deeply penetrated the conservative CDU. As a result, polls indicated that the SPD had been able to turn around its downward trend, which had seen the party go from an all-time high of 45.8 percent of the total vote in 1972 to 37 percent in 1987. The party seemed to have a good chance of forming a coalition government with the next election.

Meanwhile, the winds of perestroika and glasnost blew away the fear of a military confrontation between the Eastern and Western blocs. In the early 1980s, when the Second Cold War started, such fears were running high and brought hundreds of thousands of peace protestors to the streets. Nobody expected the Eastern or Western blocs to disappear any time soon. Even staunch anti-communists saw the Soviet Empire as a necessary evil. When the unthinkable implosion of the Eastern bloc happened, many hoped that the domestic policy menu would become more versatile. Freed from real or perceived burdens of the Cold War, pressures on domestic welfare systems, wages, and working conditions might loosen and even leave room to live the post-materialist values that figured so prominently in some middle-class milieus. The Greens and Social Democrats were all too willing to lend their voices to such widespread hopes and desires.

However, the moment of hope for a peaceful, socially just, and ecologically sustainable future didn’t last long. When the breakup of Eastern state socialism accelerated, the political tide turned to nationalist sentiment and power politics (Jarausch and Gransow 1994, chap. 4). Initially, East Germans were just enjoying the newly gained freedom to go west, but very quickly, they discovered that access to Western consumer capitalism required hard currency, which East German jobs didn’t pay. This was the conservatives’ chance to suggest, instead of a democratization of East German socialism, the accession of the GDR to they FRG. Deftly, the conservatives promoted the idea that monetary union with and accession to the FRG were easily surmountable hurdles on the way to an Eastern economic miracle (Dale 2006; Jarausch 1994; Kuechler 1992). All of a sudden, the Social Democrats had to react to expectations that didn’t revolve around welfare state protection and post-materialist values but, once again, around fair wages for a fair day’s work, upgraded with Western norms of consumption. Eastern euphoria about the coming economic miracle spilled over to the West; West Germans showed their hard-earned accomplishments with pride to East Germans, who still had ahead of them the work-filled road to the mature stage of mass consumption.

Social Democrats found it hard to grapple with this unexpected zeitgeist change. The carefully crafted consensus between welfare-state and post-materialist agendas fell apart, and the general plea for policies of détente and multilateralism as opposed to power politics and bloc confrontation lost much of its relevance in the face of the swift dissolution of the Cold War order, or so it seemed to many. Instead of pursuing one common set of policies, the SPD was pulled in different directions (Chatzoudis 2005). Its frontrunner, Oskar Lafontaine, warned that the East German economy would collapse under the competitive pressure of premature economic integration with West Germany, one of the world’s leading export nations. He also expressed concern over rising nationalist sentiments in the process of German unification (Grebing 2007, 228–32). Soon, both warnings turned out to be well founded. The East German economy collapsed in the first years after unification and could only revive as a dependent annex to the West German economy (Hickel and Priewe 1994). At the same time, a wave of racist violence and electoral success for far-right parties swept across the whole country (Lewis 1996). During the euphoria over unification that had followed the opening of the Berlin Wall, warnings about economic crisis and a resurgence of nationalism had mostly been seen as misplaced quibbling. In those days, Willy Brandt, honorary leader of the SPD and former chancellor of West Germany, had been much more in line with mass sentiments than with the candidate for chancellor, Lafontaine. Like the incumbent conservative chancellor Helmut Kohl, Brandt had denounced Lafontaine’s warnings of economic decline and the dangers of nationalism as petty-minded and an inappropriate lack of national pride (Walter 2002, 224). Torn apart over the question of German unity and running a top candidate who was widely out of touch with the “Let’s go, Germany!” mood of a majority of voters, the SPD lost the 1990 election. Instead of reversing their long-lasting downward trend, the Social Democrats scored another low with only 33.5 percent of the total vote.

Particularly disappointing for the SPD were the results in East Germany, where people voted for the FRG’s Parliament for the first time. Historically, East Germany had been one of social democracy’s heartlands. It was there that the famous Eisenach, Gotha, and Erfurt programs, which were a source of inspiration and leadership for socialists in many other countries during the time of the Second International, had been discussed and passed (see Dowe and Klotzbach 1990, chaps. 9–11). The industrial districts around Berlin, Dresden, and Leipzig had been some of the organizational centres of the party from its early days until the Nazis took power in 1933 (Ritter 1990). Yet after twelve years of Nazi dictatorship and forty years of state socialism, East Germans, and the blue-collar working class in particular, shied away from what they saw as social democratic strangers. Social democratic milieus that had developed over decades in the nineteenth century couldn’t simply be revived after brutal suppression under the Nazis and partial integration into the state apparatus of socialist GDR.

Thus, one reason for the SPD’s electoral defeat in the East was the demise of social democratic milieus and affiliations. Another reason was the reservations about German unity that were expressed by some Western Social Democrats, including their frontrunner, Lafontaine. To many East Germans, these reservations, coming from Westerners, smacked of arrogance and resentment. A third reason was the SPD’s organizational weakness in East Germany. In the fall of 1989, a new Social Democratic Party of the FRG was founded from scratch (Grebing 2007, 233–37; Grof 1996). It lacked a membership and activist base as much as it lacked a strategy to manoeuvre through the muddy waters of German unification. Joining the West German SPD in September 1990 (SPD Vorstand 1990), only three months prior to the election, opened access to resources but couldn’t fix the problem of the lack of strategy and activists in the East. While the Social Democrats were anxious not to engage with any of the parties or institutions of the GDR, which they considered totalitarian, the West German CDU proved to be much more flexible. During the Cold War, the conservatives had always suspected the SPD to be Moscow’s or East Berlin’s fifth column. However, West German conservatives’ professed anti-communism did not prevent them from uniting in 1990 with the East German CDU, which had supported the GDR regime as a member of the National Front for decades. Such a move improved the conservatives’ electoral outlook as they immediately obtained some organizational capacity in the East. A fourth reason for the SPD’s electoral defeat in 1990 was an unexpected long-term effect of the policies of détente toward the East (Hofmann 2009). These policies were very popular in the 1970s when they facilitated travel between the GDR and the FRG, but after the fall of the Berlin Wall, a fair number of East Germans saw them as a sign of complicity with the hated SED (Socialist Unity Party) regime. Such allegations hurt Social Democrats badly because most of them had built the policy of détente on a rock-solid basis of anti-communism and with the intent to corrode state socialism through co-operation with the capitalist West. Yet hurt feelings don’t win elections.

The SPD’s inability to attract more voters in East Germany was even more painful because the PDS attracted 11.1 percent of the East German vote from those who were against the winds of anti-communism that were blowing strong in 1990. Much support for the PDS came from a cadre of the GDR’s decaying state apparatus who understood that the transition to capitalism meant the loss of jobs and social status for most of them. However, hardly any East German workers, who at that time still thought unemployment was just a spectre used by SED propagandists to denounce Western capitalism, voted for the PDS. If any party could claim to be a workers’ party in East Germany in 1990, it was the CDU. Ironic though it may seem, 50 percent of East German workers (compared with only 42 percent of East Germany’s total electorate) voted for the CDU, a party that socialists in both the East and West have typically characterized as representing monopoly capital and political reaction. These election results illustrate that a problem that had developed slowly in West Germany’s SPD, a growing disconnect from its original working-class base, plagued East Germany’s PDS right from the start. In addition, while significant currents in the SPD still sought to cater to working-class constituencies in the early 1990s, particularly through links with organized labour (Engholm 1991), links between unions and the PDS were all but absent at that time. West German unions, which were linked to the SPD for more than a century, had just taken over the unions of former GDR and were seen by many East Germans as another Western intrusion in the East, where the PDS had its social base (Arbeiterpolitik 1990; Bormann 1991).

Neither the PDS nor the SPD, let alone a coalition of the two, was able to create a progressive political project by merging discontent with state socialism in the East, discontent with neoliberal capitalism in the West, and uncertainty over future political and economic developments in the face of the crumbling GDR regime. Instead, the conservative CDU seized the opportunity to turn different kinds of social discontent into a widely shared feeling of national community and euphoria about the prosperity to come. This conservative moment set the stage on which SPD and PDS had to find their roles over the next years.

IN THE SHADOW OF CONSERVATISM, 1990–97

After the election in December 1990, the conservative CDU/CSU formed a government with the much smaller liberal Free Democratic Party. The coalition government’s main foreign policy goal was to increase its leverage in international affairs without alienating its Western allies (Webber 2001). But the government also showed its increased will and capacity to pursue its own interests. Much to the dismay of the British and French governments, the Germans unilaterally recognized independence of Slovenia and Croatia. At the same time, they showed their continuing commitment to the Western allies by supporting the US-led war against Iraq in 1990/91. The same dual strategy was applied to the EU. On the one hand, the German government was willing to reconfirm its commitment to the EU by accepting a common currency, which implied giving up the much-vaunted Deutschmark. On the other hand, it pushed policy guidelines through EU negotiations that made the Maastricht Treaty, the roadmap to European Monetary Union, look like a European version of the hardline monetarism pursued for many years in the past by the German Bundesbank (Parsons 2003, chap. 7). The Germans, expecting to be the first to conquer new markets, also pushed for the EU membership of Eastern European countries and accepted the eastward expansion of NATO, a primary goal of the Americans (Fierke and Wiener 1999).

In the same way that the German government sought more influence in foreign policies while maintaining long-established partnerships, Germany’s capitalist class was looking for ways to expand its power over its domestic working class without confronting organized labour head-on (Thelen 2000). Chances for success were good because the introduction of the Deutschmark in the East in 1990 didn’t take into account West Germany’s superior productivity, which was estimated to be four times higher than that of East Germany. As a result, after German monetary union, products from the East were much more expensive than Western imports and were widely seen as inferior in quality. Rapid deindustrialization sent unemployment rates in East Germany from zero in 1990 (under state-socialism, full employment had been the norm) to 10.3 percent a year later and to a peak of 21 percent in 1998. With unemployment in the East being twice as high as in the West and with union memberships dwindling rapidly in the East and more slowly in the West (Schnabel and Wagner 2003), employers were able to negotiate a two-tier wage system (Arbeiterpolitik 1993). This was a breakthrough in the sectoral bargaining patterns, which had secured more or less equal minimum standards within industries throughout the history of West Germany. Now, employers would use lower wages in East Germany, combined with the threat of abandoning sectoral bargaining completely, as a lever in collective bargaining in the West.

Contract negotiations between employers and unions were not the only field in which workers East and West were pitted against each other in a Germany that was united on capitalist terms. Another such area was benefits. In 1993 the so-called unification boom, largely triggered by German monetary union and one-time government spending, ended in a severe recession. This was followed by rising unemployment in East and West, and mediocre growth. Consequently, decreasing revenues and increased spending of unemployment benefits put pressure on the welfare state (Hefeker and Wunner 2003). The policy strait-jacket of the Maastricht Treaty aggravated the ensuing fiscal crisis. Fiscal transfers from the West were necessary to balance the higher-than-average unemployment and lower wages in the East. These uneven economic conditions were regularly used by West German politicians to grumble about the fiscal drain to the East, while East German politicians complained about Western arrogance, dominance, and even colonization.

SOCIAL DEMOCRATIC PROMISES: GLOBALIZATION WITH A SOCIAL AND ECOLOGICAL FACE

The CDU had clearly taken a lead in pushing for unification, designing domestic policies, and redefining Germany’s role in international affairs. The SPD followed this lead: reluctantly and with the right amount of reservations to keep them distinguishable from conservatives, Social Democrats accepted the German and European monetary unions, the prospect of the Eastern enlargements of EU and NATO, and the possibility that German troops would engage in out-of-area missions under a UN mandate (Dauderstädt 1997; SPD 1991, 1992; SPD Parteitag 1993).

The SPD was well known for endless internal debates. The impression those controversies left on the public was that of a “talk shop” rather than of a party relentlessly hammering out political alternatives. The best one could expect from the many different views and currents within the party was that one of the suggested strategies might, at some point, match the political and economic conditions outside the party. The SPD’s rather passive and observant posture both reflected and reinforced the subordinate role of social democracy in Germany’s political system since the late nineteenth century (Klönne 1989, chap. 6; Luthardt 1978; Pirker 1965). In the FRG, the conservative CDU was often seen as the natural ruling party and the Social Democrats as the natural opposition. Arguably, this widespread public perception was also, at least to some extent, internalized by many SPD members, functionaries, and leaders.

It is a long-standing tradition within the SPD to expect a broadening of its electoral base from social changes and economic growth rather than from political mobilization. Attempts to mobilize its followers beyond the ballot box have been decried as voluntarism ever since Rosa Luxemburg advocated for mass strikes in the late nineteenth century. Patient organizing has been seen as preparation for the moment in which the winds of change would blow favourably in social democracy’s direction. And this is exactly what eventually happened. The recession in 1993 finished off the euphoria of German unity. Disappointment with the economic miracle that hadn’t materialized, actual or feared job losses, pressure on wages and benefits, and rising taxes for decreasing government services all served to diminish the conservative vote. Moreover, after the SPD won state elections in Lower Saxony in 1990 and Saxony-Anhalt in 1994, the conservatives and their liberal allies lost their majority in the Federal Assembly, which represents the states of the FRG on the federal level. Although Social Democrats and conservatives didn’t have major differences, the federal government, led by the conservatives, and the Federal Assembly, now dominated by Social Democrats, ended up in a stalemate. The blame for this political deadlock was mostly laid at the CDU’s door. Rather suddenly, the conservatives didn’t look like the guarantors of stability and reliability, one of their main selling points in the past, but like a party paralyzed by its arrogance of power and an apparent inability to adjust to the challenges of globalization.

The vague term globalization had become the major point of reference for political debates in the 1990s. The Social Democrats briskly presented themselves, just as the Clinton Democrats had done in the US, as moderators of globalization. The SPD promised support of world market access to the business community and protection from unfettered market competition to unions and working-class voters. These rather different, if not antagonistic, promises were packaged and sold as “The New Middle” (Hombach 1998), a notion that was clearly an adaptation of Tony Blair’s Third Way (Unger, Wehr, and Schönwälder 1998). It catered to professional middle classes directly and presented them as the productive core of the economy, driven neither by unrestrained greed, like the messengers of shareholder capitalism, nor by an outdated sense of entitlement that, supposedly, was still prevalent among the clientele of the old, redistributive welfare state. As an alternative to greed at the top and passivity at the bottom of society, the SPD promised to activate all available human resources for the battle for world market share. Anticipating that many potential voters would fearfully ask themselves whether they would qualify for this competitive race, the Social Democrats also promised to transform the redistributive and costly welfare state of the past into a more efficient European Social Model (SPD 1998).

These ideas weren’t completely new. Export-led growth had been accepted as the key to welfare state development since the SPD had turned from reformist socialism to welfare capitalism in the 1950s. The disillusionment after the euphoria about German unification, inextricably linked to the CDU, just gave the SPD the opportunity to present itself as the better agent of both world market success and moderation of social inequality resulting from such success. To do so, and to win back working-class voters whose abstention from the Social Democrats was the key factor for the conservative victories in 1990 and 1994, the old friendship with organized labour was reactivated.

In 1995 the leader of the metal workers’ union (IG Metall), Klaus Zwickel, suggested the formation of a Coalition for Jobs to the re-elected conservative government and employers’ associations (Arbeiterpolitik 1996a). His idea was to trade wage moderation for job creation. Critics within the union movement said this proposal would confirm the employers’ argument that the only way to higher employment would be through wage constraint. Therefore, the Coalition for Jobs could easily undermine the unions’ bargaining power. Whatever unionists had to say about Zwickel’s suggestions, employers at that time considered unions weak enough to pursue their own agenda without the need for a corporatist deal. In unison with the government, they declined Zwickel’s proposal. In return, they declared the days of social consensus over. This harsh rejection of long-established corporatist arrangements between organized labour and capital rang the alarm bells in union halls across the country. In the summer of 1996, the Confederation of German Trade Unions (DGB) mobilized 300,000 workers to protest against the conservative government, their anti-union agenda, and their corporate friends (Arbeiterpolitik 1996b). Shortly thereafter, and obviously out of touch with widely shared sentiments among working people, the government announced drastic cuts in sick pay. These plans were quickly withdrawn when thousands of metal workers spontaneously struck against such ideas. The next year saw miners in militant protest against layoffs (Arbeiterpolitik 1997). Such labour activism was just the visible expression of a groundswell of discontent and a desire for political change. It was more this atmosphere than the catchy “New Middle” slogans that earned the social democrats 40.9 percent of the total vote in 1998 and allowed them to form a government with the Greens, who won 6.7 percent of the vote (Walter 2002, 247–49).

THE PDS: IDEOLOGICAL DIVERSITY IN EAST GERMANY’S PEOPLE’S PARTY

The SPD was not the only party benefiting from rising discontent with the conservatives, and the 1994 election in Saxony-Anhalt was not just a turning point toward a Social Democratic revival. The PDS support for a minority SPD government in that state also marked the PDS’s consolidation as a permanent factor in East German politics. Compared to the federal election in 1990, when the PDS was almost unanimously labelled as an untouchable offspring of the SED, this was quite a remarkable change. However, the party’s consolidation in the East went hand in hand with its continuing marginalization in the West. The majority of West German workers, employed or unemployed, either stuck with the SPD or, if they were dissatisfied with them, abstained from elections. Voting for the PDS was simply not considered an option. This was even truer for working-class constituencies in the West who had religious ties to the conservatives.

Repeated attempts by the PDS to gain ground in West Germany therefore failed, and the PDS remained a regional party in the East. There it developed a multitude of programmatic currents, from Soviet-style communists to social liberals, and single-issue networks. These postmodern worlds of discourse, more diverse than anything the thoroughly argumentative SPD had ever seen and in starkest contrast to the monolithic SED, were loosely wrapped around a core of representatives in parliaments and governments on the municipal, county, and state levels. These representatives were, and still are, more committed to the pragmatic administration of various state apparatuses than to programmatic debate. Of course, their access to state resources makes this pragmatism a powerful factor within the party. Nominations for positions in the party or institutions of the state are often decided in favour of self-styled men and women of action who, revealingly enough, can easily outtalk theoreticians of all sorts. The inconsistencies between various programmatic circles within the PDS and the widely shared weakness of those circles in comparison to the pragmatists, with their affiliations to the state, correspond with the East’s subordinate role in united Germany.

Rapid deindustrialization and skyrocketing unemployment since 1990 has triggered a net flow of fiscal transfers from West to East (Sell, Greiner, and Maab 1999), which was necessary to pay for unemployment benefits, public works programs, and pensions in a region where tax revenue was permanently depressed by economic decline. Further transfers were needed for public infrastructure investments that were meant to create local centres of accumulation, without much success, and to attract foreign direct investments, with slightly better success (Günther and Gebhardt 2005). The economic result was continuing dependence on and domination by West German corporations and taxpayers; these results were mirrored by an inferior role for East German companies and trade union branches. Not surprisingly, therefore, a feeling of Western domination that was shared by many East Germans from different social backgrounds overlaid the formation and representation of working and capitalist classes in the East.

The state played as big a role in East Germany as the conflicts between organized workers and capitalists because it guaranteed and managed substantial inflows of money. At its peak, one-third of incomes earned in the East were generated in and funnelled from the West. Thus, a redistributive Keynesianism developed between East and West Germany that helped to stabilize the East economically and socially (Schmidt 2007). However, Keynes’s idea of jump-starting private investment with public money didn’t work because the terms of German unification had turned East Germany into a wasteland in which private investment was permanently constrained by overcapacities elsewhere. Under these conditions, the PDS was, no matter how many versions of socialism were discussed in its ranks, more an East German peoples’ party than a socialist organization. As a regional party, it never gained ground in the West. It was only after the SPD lost much of its welfare state wing because of the way it handled the economic stagnation from 2001 to 2005 that a political organization, the WASG, developed in the West with which the PDS could co-operate.

THE REDDISH DECADE: WAR AND AUSTERITY UNDER SPD LEADERSHIP, 1998–2009

The SPD’s 1998 election victory was largely based on voters’ discontent with a conservative government that was increasingly seen as disconnected from the problems and aspirations of wide layers in German society, unable to create enough jobs, and unwilling to provide social protection against the rigours of world market pressures. Suddenly, notions of globalization — which had in the past been created and successfully used by capitalists and their political allies to push through layoffs, wage cuts, and welfare state retrenchment — produced unintended side effects. Increasing numbers of people turned against globalization and the policies that were associated with it. Instead of accepting further welfare state retrenchment, they asked for protection against world market pressures in general and for employment policies and protection of jobs more specifically. The conservatives had nothing to offer to match these popular demands, but the Social Democrats did. They offered global governance and a European Social Model where political regulations on the global and European levels were meant to tame unfettered world markets and also to create a framework to balance efficiency and equality. The stage to implement such regulations was already set by centre-left governments in other EU countries and in the United States. Together with his political allies Tony Blair, Bill Clinton, Lionel Jospin, and Romano Prodi, newly elected Chancellor Schröder would be strong enough to tighten strings on internationally mobile capital, or so it seemed (Paterson and Sloam 2006).

However, the idea that after a decade-long transition period of conservative rule, a global compact between classes and countries would finally supersede Cold War power politics (SPD Grundwertekommission 2000; Held 2004) was soon to be challenged by the centre-left US government. Clinton advanced a purely neoliberal design of the World Trade Organization (WTO) against the protests of unions in the US and other countries who were advocating for the adoption of labour standards in the WTO agreements. He also pushed, against initial reservations of some of his NATO partners and without a UN mandate, for a war against Yugoslavia. Now it turned out that significant forces within the SPD and the Greens, who together formed the German government in the fall of 1998, were more than willing, against internal party opposition, to join the US’s new imperialism. Moreover, rifts over the balance between welfare state and export promotion, carefully plastered over during the election campaign, resurfaced soon after the election. After the dot-com boom turned bust in 2001, this question became a turning point for the SPD. The business-oriented wing of the party sidelined the Keynesian-minded welfare state wing. The long-standing, and not always peaceful, coexistence between both wings ended. Attempts to balance the imperatives of capital accumulation and the interests of the working class, particularly its unionized segments, were replaced by a strategy to use corporatism and a downsized welfare state as tools to improve international competitiveness. During the election campaign, the SPD’s two frontrunners — the designated chancellor, Schröder, and the designated minister of Finance and Economics, Lafontaine — symbolized the delicate balance between the welfare state and the business wing of the party. After the inauguration of the new government, Lafontaine clashed with Schröder and the Greens because he was unwilling to lower corporate taxes. After he urged the European Central Bank, which is always ready to aggressively defend its autonomy, to lower interest rates and also advocated for tighter regulations of financial markets, the British tabloid The Sun denounced him as “the most dangerous man in Europe.” On 11 March 1999, only five months into his term but just before the NATO bombing of Yugoslavia began on 24 March, Lafontaine resigned (Lafontaine 2000, 147–59; Schröder 2007, 107–29). The doors to the Third Way and “humanitarian” intervention were open.

Several factors contributed to this rapid transformation of the SPD after it became the governing party of Germany in the late 1990s. First, the Greens, notwithstanding their roots in the New Left activism of the 1970s, had developed into a party of middle-class professionals with hardly any ties to the labour movement. Their libertarianism was blended with neoliberal economic policies. Thus, instead of helping to modernize the welfare state agenda, as the original architects of the “red-green” alliance had hoped, the Greens pulled the SPD toward fiscal austerity and lower labour standards (Wolf 2007).

Second, the heads of centre-left governments in other countries were as firmly committed as Schröder to Third Way politics at home and humanitarian intervention abroad and were equally willing to confront the welfare state wings within their respective parties or coalitions. In fact, Romano Prodi lost his majority in the Italian Parliament in October 1998 — ironically, the month Schröder was inaugurated in Berlin — because he had unapologetically pushed fiscal austerity to comply with the Maastricht rules for European Monetary Union (Unger 2001). In another irony, Prodi was then elected president of the European Commission on the first day of the war against Yugoslavia. He effectively used this new position to enforce the Maastricht’s monetarist guidelines all across the EU. Schröder, together with his British colleague Blair, prominently committed himself to this new course in a declaration that was soon known as the “Schröder-Blair paper” (Schröder and Blair 1999). Only Jospin in France tried to keep the balance between welfare state and neoliberal agendas. On the one hand, he introduced a reduced work week of thirty-five hours; on the other hand, he pushed privatization like none of his conservative predecessors had done. These latter measures were enough, though, to lose his governing majority after one term in office and also to suffer a crushing defeat in the presidential elections of 2002 (Budgen 2002).

Third, spurred by the hope for change that had developed prior to the 1998 election, union members in Germany were keen on making up for years of real wage stagnation and even losses. An economic boom that had swelled corporate earnings but hadn’t trickled down into pay cheques fuelled such aspirations even further. Under pressure from members’ high expectations, union leaders negotiated wage increases exceeding, for the first time in years, inflation plus productivity growth. Corporate leaders, quite correctly, sensed that this bargaining outcome had become possible because the rank-and-file pressure within the unions was supported by the government Keynesians around Lafontaine. Real wage increases, to match productivity increases over the medium term, were a key plank of their economic plan. Such ideas, no matter how carefully couched in New Economy and globalization rhetoric, were clearly at odds with accumulation strategies that essentially aimed at higher profits at the expense of wages. Already annoyed with Lafontaine’s reservations about corporate tax cuts, his seemingly detrimental effect on wage bargaining was the last straw before the business community pushed massively against him.

The Third Way SPD that came out of the factional battle with its Keynesian welfare state wing enjoyed a short period of grace between 1999 and 2001. Though the war against Yugoslavia wasn’t very popular, opposition against it was fairly moderate, especially when compared with the mass protests against the Iraq war in 2003. Thus, the government could concentrate on its economic agenda: tax breaks for corporations and private wealth, along with fiscal austerity, to stimulate private investment; flexibilization of labour markets to create jobs, particularly in the low-wage sector; and first steps to replace pay-as-you-go pensions with private pension funds. The test for the German version of the New Economy came in 2001, when the turn of an ordinary business cycle from boom to bust, which New Economy experts had declared impossible, led to a stock market crash, revealing the whole dot-com, IT economy as a speculative bubble rather than an accelerator of productivity growth.

The economy in the US, home of the New Economy, overcame the crash quickly and didn’t suffer much from the stock market crash. This recovery became possible because the government and central bank in Washington injected some real money into the economy and also helped to bloat another speculative bubble to fire up wealth holders’ propensities to invest and consume. This didn’t work in Germany. The statute of the European Central Bank and the fiscal policy guidelines of the Maastricht Treaty, whose extension into the Stability and Growth Pact in 1997 the SPD had supported, put the brakes on any kind of expansionary policies. Third Way Social Democrats, just freed of their Keynesian companions, remained true to their monetarist principles. They were backed by capitalists who used investment restraint and subsequent increases in unemployment to scale up pressure on wages and welfare provisions. Just as the conservative government had done so many times in the past, the “red-green” coalition reacted to such pressures with spending cuts. As a consequence, working-class voters, who had been crucial to win the election in 1998, exited from Germany’s Third Way project. Schröder was therefore in serious doubt about his re-election when George Bush, unexpectedly and unintentionally, saved him. While the latter put a coalition together that was willing to topple the former US ally Saddam Hussein, the former showed a keen sense for rapidly spreading anti-war sentiment in Germany. Without considering troop withdrawal from Afghanistan or the denial of logistical support for the anti-Hussein forces, he announced that Germany wouldn’t send combat troops to Iraq. This move gained him enough popularity to win a razor-thin majority, again in alliance with the Greens, in 2002. However, disappointment among core constituencies didn’t stop him and his government from continuing their unpopular policy of welfare state retrenchment. Quite to the contrary, in March 2003 another round of spending cuts and structural changes to the German welfare state was announced (Schröder 2003).

Whereas the conservatives never moved beyond the rollback of social standards within a largely unchanged institutional setting, the Social Democrats now proved themselves to be dedicated counter-reformists. They broke the links among work, wages, and unemployment benefits, which had been a cornerstone of Germany’s welfare state. The role of the welfare state as an automatic stabilizer of aggregate demand was in fact considered to be just a secondary factor by Third Way social democracy. Primacy was given to the redefinition of the productivist consensus around which the German welfare state was built right from its beginnings in the late nineteenth century. According to this view, workers who had worked hard in the past and were not accountable for the loss of their jobs were entitled to unemployment benefits calculated on their previous pay if they demonstrated their willingness to work. In future, the Schröder government told them, the eligibility period for this kind of benefit would be reduced from two years to one. Also, the reduced benefits for which people were eligible after two years of unemployment and that still had been linked to previous pay were to be replaced by welfare cheques at a subsistence level calculated by the government after only one year. Because fear of job loss was running high, Germany in 2003 was already in its third year of crisis and unemployment rates were increasing, workers beyond the ranks of the unemployed felt that this measure could have a severe negative impact on their lives. Resentment against the Social Democratic government, which was spreading, turned into mass protest and triggered further losses of members and voters.

Schröder — proving again, as he had before the 2002 elections, that his skill in employing smart tactics was better than his capability for pursuing winning, long-term strategies — understood that the SPD was destined for a crushing defeat if approval rates continued to fall steadily until the next regular elections in 2006. Because he had no idea how to turn this downward trend around and was unwilling to give up his unpopular policies, he decided to minimize the loss of votes by calling an early election in 2005. This move was at least sufficient to avoid a remake of a coalition between the conservatives (the CDU) and the liberals (the FDP); it saved a junior role in a CDU-led government for the Social Democrats (Hillebrand 2005).

The loss of the chancellorship was not the only price the SPD paid for its abandonment of redistributive social policies and its reorientation toward Third Way–inspired austerity. The other was that membership losses, which had begun in earnest in the early 1990s and weren’t even stopped by the rise in electoral approval ratings leading up to the 1998 election victory, took a more organized form when mass protests against government policies began. Social Democrats who were committed to the Keynesian welfare state began to organize, first on a local basis and eventually in the WASG. This organization, instead of turning into an independent party running in elections, joined forces with the PDS in 2007 and formed The Left. Thus, the Social Democrats’ former welfare state wing found a new home, the PDS had a chance to reach out into the West, and the SPD, which had never been seriously challenged from the left during its postwar history, eventually found itself confronting a left-wing competitor.

THE LEFT: NOT A WORKING-CLASS PARTY

After the PDS consolidated itself in East German state, county, and municipal parliaments and governments in the mid-1990s, the party was, albeit with ups and downs, on an upward trend. With voter shares up to 30 percent in some states, it became the second strongest party, behind either the SPD or the CDU, in several East German states (Behrend 2006; Koß and Hough 2006). However, increasing voter approval didn’t translate into rising political clout because developments in the East were, and still are, highly dependent on investment decisions by Western corporations and public policy on the federal level. To impact the latter, a regional party from East Germany, which has less than a quarter of the total population living in the region, needs allies in the West. As just mentioned, the WASG became such an ally and allowed the PDS to transform itself, through the accession of the PDS and the subsequent renaming as The Left, into a political party with a significant membership and voter base in East and West (Kroh and Siedler 2008). Continuing disparities, however, should not be concealed. One year after its inception, two-thirds of its 76,000 members still came from East Germany (based on data from Die Linke, http://die-linke.de). Electoral approval in the East ranged from 15 percent to 30 percent, whereas it hovered around 5 percent in the West (based on data from pollster Infratest Dimap, http://www.infratest-dimap.de). Despite these significant quantitative differences, there can be no doubt that The Left became a political factor in East and West Germany.

The Left filled the vacuum in West Germany’s political spectrum that had opened up when the SPD unequivocally turned toward the Third Way after the resignation of Lafontaine, who became, together with East Germany’s Lothar Bisky, a chairperson for The Left (Olsen 2007). The party not only added a progressive choice to the rather uniform menu of neoliberal parties, which included a number of right-wing alternatives, but also marked a historical break in the development of the FRG. From its foundation in 1949 until the emergence of The Left, the SPD had been the only electoral representation of working-class interests on the left (Schmidt 2009b). The Communist Party was marginalized in the early 1950s, and in 1956 it was legally banned. A new communist party, founded in 1968, attracted a fair number of union and other activists but quickly turned out to be an electoral failure. The same is true for a number of Maoist parties and a left-wing SPD offspring formed in 1982. This group, the Democratic Socialists, stood in opposition to Helmut Schmidt, then the SPD leader and chancellor, who had turned from Keynesian demand management to fiscal austerity and was also a major advocate for NATO plans to install a new generation of nuclear missiles in West Germany. Only after losing government power to the conservatives in 1982 did the Keynesian, welfare state–oriented wing raise its voice again within the SPD. The only new party that could establish itself in West Germany’s political system before The Left was the Green Party, founded in 1980. Most of its first-generation activists came from the 1970s multitude of Maoist, and a few Trotskyite, groups, who deserted their self-proclaimed vanguardism in search of a mass base. However, these socialist roots dried up quickly and gave way to a party of middle-class professionals, many of them advocating libertarian agendas on public payrolls.

After the Social Democrats turned to the Third Way in the late 1990s, working-class voters, earning less and facing more job insecurity than those who tended to support the Greens, were left without much choice. They could vote for either the CDU or the SPD. The former managed to moderate and suppress class conflict to some degree, on the basis of Christian notions of reconciliation, while the latter presented the development of the welfare state as a more secular way to gradually move beyond such conflict. Faced with this choice, a majority of working-class voters voted for welfare state protection rather than God’s blessings, although it should also be mentioned that the conservatives always had, and still have, a certain working-class following. Nevertheless, it is fair to say that, from the heyday of the Keynesian welfare state to its Third Way turn, the SPD was the party of the West German working class. However, this didn’t make it a working-class party. Because its core constituencies of skilled manufacturing workers never sufficed to win elections, the SPD, which even in its early days had been more a party of parliamentary reform than of socialist revolution, sought to win non-proletarian voters beginning in the mid-1950s. During the postwar boom, it was quite successful in attracting rising numbers of white-collar workers and even some managers and industrialists. Though the latter were few, they played an important role in advocating for and implementing corporatist relations within companies and the state. However, the analogous growth of the Social Democratic electorate and welfare state expansion stopped at the same time as the postwar boom turned to significantly slower growth in the 1970s.

After that slowdown, white and blue collars drifted apart and the SPD found it ever more difficult to moderate between those who wanted welfare state protection and those who wanted to be protected from the state’s tax collectors. This parting of ways led to the rollback of Keynesianism and social reform within the party and their final replacement by purely middle-class-oriented Third Way policies. But the turn from long boom to slow growth was not the only reason for the transformation of the SPD. Another was its complete ignorance with regard to transformations within the working class. Past images of the working class as an assembly of skilled factory workers were so powerful — and were reinforced through the organizing practices of West Germany’s industrial unions — that workers who didn’t fit into this picture were never targeted as potential voters. Even worse, in an attempt to keep together the corporatist alliance between skilled workers, engineers, and managers, carefully crafted during the heyday of the postwar boom and welfare state expansion, growing numbers of unskilled or ostensibly unproductive workers were repudiated. Thus, the SPD represented mostly the higher strata of the working class. Transformations that changed the composition of the working class as a whole were by no means reflected in the organizing and campaigning strategies of the SPD.

After its mutation into a Third Way party, the SPD largely abandoned potential working-class voters of all kinds and accepted the fact that without such votes, its electoral success was limited. Fewer workers than ever were now represented by the political system. In this regard, workers whose standard employment contracts and entitlements to social benefits had integrated them into the political system and the welfare state in the past increasingly joined the political abstention that has always been prevalent among different kinds of non-standard workers. The lack of representation was now shared across different layers of the working class. Though The Left has attracted some workers who are dissatisfied with the SPD (Hildebrandt 2010), it is far from breaking the trend toward the non-representation of the working class in the political system that is clearly reflected in increasing abstention from the ballot box. The gap between votes for The Left and a professed desire for political alternatives that are geared toward social security and job creation is still very large. The difficulties in filling this gap are twofold.

First, within The Left there is, as there was within the PDS, a pragmatist wing, and, in ideological terms, it is actually not far from Third Way social democracy: both share a deep commitment to market imperatives and suspicion vis-à-vis public deficits. Thus, the conflict between a Keynesian welfare state orientation and the Third Way that tore the SPD apart in the past now bedevils The Left. It may not be as apparent as it was in the SPD because The Left’s pragmatists are more centred around and dependent on the state apparatus whereas the Social Democratic Third Wayers were more focused on the upper echelons in private companies. The pragmatists’ state-centeredness doesn’t make them Keynesians, though. To the contrary, because their power depends on their role in the allocation of state money, they are particularly concerned about Keynesian policies that might eventually lead to deep spending cuts, which, in turn, would reduce their own political leverage. However, the Keynesian wing of The Left has a strong base within Germany’s two largest unions, IG Metall and the service sector union Verdi. One organizes mostly workers in export-oriented industries and is thus, to some degree at least, committed to international competitiveness. The other represents mostly public sector workers and is as afraid of Keynesianism, with its supposedly excessive deficits and subsequent spending cuts, as are the pragmatists in the party. Therefore, the Keynesianism of The Left is stronger in words than it is in substance.

Second, whatever the weight of the Keynesians within The Left may be, the party has also to decide whether it wants to be a party of protest or of government. Coalitions with the SPD on the state level, in Mecklenburg Western Pomerania from 1998 to 2006 and in Berlin from 2001 to 2011, indicate that The Left, playing a subordinate role in government, has lost substantial appeal as a progressive alternative. However, in order to build its power as a protest party with the prospect of taking over government positions sometime in the future, and based on a largely extended social basis, it has to develop a political project that doesn’t rely solely on the rejection of current economic and social conditions but also suggests concrete steps to change these conditions. At this point, The Left is programmatically torn between the desire to reinvent a true social democracy, applying Keynesian policies to build a welfare state, and various abstract utopias, mixing socialism, libertarianism, and earth friendliness in different ways. For good reasons, many members and potential voters consider the first option an impossible return to the future and the second option alternative ways to nowhere. The Left faces the enormous challenge of bridging the gap between the unrepresented, vaguely articulated interests of masses of workers and crafting an alternative that transcends the current stalemate among pragmatism, concrete utopias of the past, and abstract utopias of the futuree.

SOCIAL DEMOCRATS, THE LEFT, AND THE GREAT RECESSION

Before the Great Recession, it seemed as if neoliberal capitalism had established itself as a relatively stable model of accumulation in the rich countries (Boyer 2000). This was certainly the view of a new generation of SPD leaders who worked hard to fit the party into those new economic and social realities (Walter 2010). Voters who were discontented with social democracy’s neoliberal turn eventually had the opportunity to cast their ballots for The Left. That party was still a long way from representing the working class under the reign of neoliberal capitalism in ways comparable to the SPD’s representation of working-class interests during the era of the Keynesian welfare state; many of its leaders weren’t even convinced that they should aim for such representation. But at least one could expect that continued accumulation of capital and inequality would produce ever-increasing numbers of people who were receptive to alternatives to neoliberalism, and The Left was waiting for them. When the Great Recession began to unfold, many inside and outside the party were expecting the Left Party support to grow dramatically. After all, had The Left not been the only voice in electoral politics that had spoken out against neoliberalism, which was now entering a severe crisis? Yet the party was unable to increase its support in polls and elections beyond the level it had reached immediately after its founding in the pre-crisis year 2007. Somewhat surprisingly, even the Social Democrats — although they had embraced neoliberalism just a few years earlier — presented themselves as defenders of a more just and stable variety of capitalism as soon as the crisis hit. Faced with financial panic and a sharp economic downturn, and still in government as the conservatives’ junior partner, Social Democratic leaders adopted an anti-neoliberal rhetoric that almost made them sound like spokespersons from The Left. Yet while The Left couldn’t win support through the crisis, the SPD actually lost even more support than before the crisis. The 23 percent of the total vote the party received in the September 2009 elections was even lower than the 29.2 percent it had received in its first postwar electoral performance in 1949. After a decade in office, first as leader of a “red-green” coalition and later as the CDU’s junior partner, the Social Democrats were back in opposition (Albrecht 2009).

Since the end of the Cold War, neoliberalism had been a point of reference; one could adopt this political project like Third Way Social Democrats had or reject it like The Left had. Because the financial and economic crisis of 2008–9 was so deep, earning it the title “Great Recession,” policy makers around the world opened the floodgates of central bank liquidity, bailout money for failed banks, and fiscal stimulus to such a degree that neoliberal principles were easily swept away. Some economists saw Keynes making a comeback (Skidelsky 2009), and some people in the SPD, The Left, and the broader, non-partisan Left, thought this would create an opening for something like a twenty-first-century Keynesian welfare state. However, the short moment of large-scale government and central bank intervention and subsequent explosions of public deficits also saw a radicalization of neoliberalism. After the economic crisis had been transformed into a fiscal crisis of the state, neoliberals began pressing for austerity harder than at any time since their monetarist offensive in the late 1970s. Whether this is a last effort before its eventual demise or the beginning of a renewed neoliberal hegemony is, at this point, still undecided; that will depend on the strategies, mobilizations, and conflicts in which different social actors, far beyond electoral politics, will engage. The Social Democrats could use this change to reinvent themselves after the Third Way turned out to be such a dismal dead end. The Left has the opportunity to expand its political clout by transforming itself from a party whose widely different currents are only united in their opposition to neoliberalism into a force that develops and struggles for actual alternatives (Thompson 2009).

In terms of electoral arithmetic, the chances for a left turn in Germany are actually very good. The push from corporate Germany and its allied media and think tanks has thrown the conservative-liberal coalition government into a deep crisis. In the aftermath of the Great Recession, the conservatives are facing the same problems the SPD had after the 2001 recession. Under capital’s pressure to cut taxes for the rich and social spending for the poor, the CDU is losing support from the working class. Even middle-class voters, who supported neoliberalism as long as they were, or believed they were, on the winners’ side, are now deserting the conservatives because they live in fear that the next round of neoliberal policies will restructure them into losers. Fear among the middle class has had an even stronger impact on the liberals. While still under the immediate impact of the Great Recession, the liberals (the Free Democratic Party) scored its best result ever, 14.6 percent of the total vote, in the September 2009 election. Many voters saw the tax cuts that the party had promised during the election campaign as the only way to maintain their middle-class status. Half a year later, they realized that tax cuts were either totally off the agenda or reserved for the truly rich. As a result, support for the liberals plummeted by more than half, bringing them dangerously close to the 5 percent threshold that parties have to pass to win seats in Parliament. As a result of dwindling support for the conservatives and liberals, the SPD and The Left, together with the Greens, have an absolute majority in the polls. Yet this shift does not necessarily indicate a shift toward a social democratic or even socialist alternative to neoliberalism. The main beneficiary of discontent with the conservative-liberal government is the Green Party with its strange brew of libertarianism and neoliberalism. Should the Greens be more successful in meeting middle-class voters’ expectations than the liberals, they will have to pursue politics that would make it very difficult, if not totally impossible, to be part of an alternative project that could supersede neoliberalism. However, as part of such a project, they wouldn’t be able to serve their middle-class supporters. Fear among the middle class, and volatile voter behaviour resulting from it, along with the continued crisis of working-class representation are the initial conditions under which an alternative to the neoliberal bloc could be built. The desire for such an alternative is clearly there, but whether it will find programmatic and organizational expressions to turn it into a viable political force is an open question.

CONCLUSION

Common explanations for the early 1980s shift from social democratic to conservative governments in Germany and many other countries have referred to changes in social and economic structure that, supposedly, undermined the electoral basis of social democratic parties (Piven 1992; Pontusson 1995) as much as the regulatory capacities of social democratic governments (Scharpf 1991). These explanations suggest that, even if blue-collar workers were to keep on voting for social democracy as they did in the past, their declining numbers would make it difficult to win social democratic majorities. But should the unexpected happen, the hands of social democratic governments would be tied by the threat of capital flight. Unlike in the past, the argument goes, higher wages and taxes, two of the economic main pillars of expanding welfare states, couldn’t be enforced against the will of mobile capital, which would relocate to low-wage and low-tax areas.

Building on this set of arguments, social democratic strategists began to advocate for a shift from class-based politics to voter mobilization through appeals to libertarian values in the late 1980s (Kitschelt 1994). The sociology underpinning this strategic advice implied that increasing numbers of well-educated employees in the service sector would be more interested in personal lifestyle choices than in the redistribution of income that was identified as the main concern of blue-collar workers. The shift from income redistribution to libertarian values also had the advantage of avoiding conflict with capital’s increased taste for lower taxes and lower wages. At the same time, service employees wouldn’t be affected by capital’s new economic agenda because their income would be determined by human capital and not by union bargaining or welfare state programs. The electoral success of Third Way social democracy in the late 1990s could be seen as confirmation of the reorientation from a blue-collar base and redistributive politics toward quasi-professionals and service sector professionals, and an appeal to libertarianism (Merkel 2008).

Such an interpretation, however, fails to explain why the success of libertarian social democracy did not endure for long. If it were true that social and economic transformations from nationally regulated industrial economies to a global service or knowledge society was the basis for the social democratic comeback in the 1990s, one would assume that, based on these trends, a whole new era of social democratic hegemony had just begun. This is clearly not the case. Social democracy’s sudden resurgence was quickly followed by an equally sudden decline. These gyrations can’t be explained with the gradual but steady changes from manufacturing industries to services and from national economies to an integrated global economy.

The German experience suggests that social democracy’s electoral fortunes can be explained more consistently by economic cycles and changes in world politics. More specifically, the German Social Democrats had electoral success when they appeared as agents of economic modernization and social justice. During the New Economy boom of the 1990s, profit growth outpaced job creation and wages so that increasing numbers of working-class voters were asking for what they considered their fair share of economic prosperity. These voters saw the SDP as the party of employment growth and a fair distribution of incomes. Moreover, for their wholehearted support of technological innovation, the Social Democrats won support from voters of different class backgrounds. The hope for permanent prosperity tied this cross-class coalition of voters together. However, economic growth on the one hand and a desire for social justice and innovation on the other do not automatically lead to social democratic election victories. The late 1980s witnessed this same combination of factors that led social democracy to electoral success in 1998. In 1990, though, the Social Democrats were defeated because the unexpected accession of the GDR to the FRG was accompanied by a wave of nationalism that easily swept aside notions of social justice and innovation. It didn’t matter how much Social Democrats had bowed to the national flag in the past; if nationalism runs high, the conservatives win the day.

However, times of economic crisis lead to Social Democratic decline, as elections, membership numbers, and approval rates following the downturns in 2001 and 2009 clearly showed. Attempts to square social justice and innovation, notions around which cross-class support at the ballot box has been built, collide with capital’s quest to consolidate profits at the expense of wages and the welfare state. Eventually, Social Democrats lose on all fronts: working-class voters feel they don’t get the social protection they want, capital thinks it doesn’t get enough working-class rollback, and middle-class voters are afraid they will be squished between the tax burden of the welfare state and political support for big corporations. From Social Democratic experiences during economic crisis, it can be concluded that cross-class alliances are not the way out of structural decline caused by a permanently shrinking blue-collar base, but a way toward electoral failure.

One of the ironies of social democracy’s experience after the Cold War is that the GDR’s former ruling party found a new role as the organized expression of economic decline and social degradation in post-unification East Germany. When disappointment about social democracy grew after the 2001 crisis, this party, transformed from ruling party of a sovereign nation state to regional opposition party within a state, served as an organizational platform around which disenchanted Social Democrats could coalesce. The Left that came out of these organizational efforts can try to reinvent social democracy as a political force trying to build cross-class alliances whose common denominator is the wish for economic growth. Alternatively, The Left can draw lessons from social democracy’s failed reliance on growth and cross-class support, and try to reinvent working-class politics. Such politics would not prioritize the mobilization of the current electorate but would contribute to the remaking of a working class that, at present, has neither a voice in Parliament nor much mobilizing power in the workplace or on the street.