Germany's Hidden Crisis

Social Decline in the Heart of Europe

Oliver Nachtwey, David Fernbach, Loren Balhorn, David Fernbach, Loren Balhorn

• Publisher: Verso
• Year: 2018
• Print ISBN:
  9781786636348
• eBook ISBN:
  9781786636355
• Topic: Politics & International Relations
• Subtopic: German History
• Index: Politics & International Relations

One of the German-speaking world's leading young sociologists lays out modern Germany's social and political crisis and its implications for the future of the European hegemon.

Upward social mobility represented a core promise of life under the "old" West German welfare state, in which millions of skilled workers upgraded their VWs to Audis, bought their first homes, and sent their children to university. Not so in today's Federal Republic, however, where the gears of the so-called "elevator society" have long since ground to a halt. In the absence of the social mobility of yesterday, widespread social exhaustion and anxiety have emerged across mainstream society. Oliver Nachtwey analyses the reasons for this social rupture in post-war German society and investigates the conflict potential emerging as a result, concluding that although the country has managed to muddle through the Eurocrisis largely unscathed thus far, simmering tensions beneath the surface nevertheless threaten to undermine the German system's stability in the years to come.

Nachtwey's book was recipient of the Friedrich Ebert Foundation's 2016 Hans-Matth?fer-Preis for Economic Writing.

1

Social Modernity

Viewed with hindsight, the post-war decades in the Federal Republic of Germany were marked by a unique economic, social and political constellation. The politically polarized society of the Weimar Republic, riven by class conflict, had been followed by the Nazi dictatorship. After its collapse, a relatively stable democracy arose in the Federal Republic, and above all, it was one that was secured socially. In this book I refer to this epoch as social modernity.

The material foundation for this was economic prosperity. In the short period from 1950 to 1973, the annual growth rate in Western Europe averaged 4.8 per cent—the result of Keynesian capitalism. This steady growth made possible a breakneck social modernization, which embraced work, life, culture and politics, and restructured all of these fields.¹

THE SIGNIFICANCE OF THE WELFARE STATE

The roots of the welfare state in Germany stretch back to the Bismarck era, with the first legislation on sickness and accident insurance in 1883, followed by contributory pensions in 1889. This was Bismarck’s reaction to the growing strength of the workers’ movement, and at the same time a project of modernizing early capitalism. Under the Weimar Republic, further centralized welfare measures were introduced, particularly unemployment insurance in 1927, but it was only through post-war democracy that the welfare state was comprehensively achieved—not least because even large sections of the social and political elites had lost confidence in an unregulated laissez-faire capitalism that obeyed only the laws of the market. The ‘great transformation’ that the Austro-Hungarian economic historian Karl Polanyi had predicted in 1944, even before the end of the Second World War, basically came into being. Polanyi argued that the idea of a self-regulating market—as would later be propagated again by neoliberalism—was bound to remain a ‘stark utopia’.² If such a utopia were to be realized, this would mean as a final consequence the total dislodgement of the economy from society. According to Polanyi, a society subjugated to the market in this way could not exist without dissolving its own substance—in other words, human beings and nature.³ All attempts to approximate the optimal market society would ultimately produce counter-moves seeking to re-embed the economy in society.⁴ For example, in the United States after the crash of 1929, urban workers, the poor and socialists, as well as farmers and conservatives, worked together for a new social policy. The welfare state established after the Second World War, not just in Germany but also in other (West) European countries, was close to the institutionalized form of a counter-movement as analysed by Polanyi.⁵

The characteristic feature of the proletarians, for Marx, was that they possessed neither capital nor means of production. This meant that they had no alternative to selling their labour-power.⁶ Under capitalism, labour is a commodity that is bought and sold on the labour market, and workers are consequently exposed without defence to the dangers of this market—poverty, sickness, old age and unemployment. The welfare state succeeded in limiting the degree to which labour has this commodity character; it is a ‘de-commodifying’ institution, since it socializes the aforementioned risks.⁷ French sociologist Robert Castel therefore refers to the complex of claims to social security, pensions, public goods and services as ‘social property’.⁸ The welfare state does not function the same way everywhere: some of its expressions are widespread and universally applied, others are conservatively oriented at maintaining stability, while others again offer scarcely more than a social minimum.⁹

Besides, the welfare state is not a philanthropic agent, but contains a productivist dualism. It seeks, on the one hand, to attenuate the life risks of wage earners, but on the other hand, to ensure that those able to work actually do so. By health and work protection, welfare policy creates a basic precondition for a sufficient supply of healthy labour-power to be available. No one, however, is to lie back and do nothing. Those able to work are to seek it, or else be subject to sanctions.¹⁰

The idea of who exactly forms part of the potential labour army has changed time and again in the course of history. In the early stage of capitalism, it was taken for granted that women and children belonged to this group. The struggle against child labour was long, and lasted into the early twentieth century. During this time, the image of women’s roles changed, insofar as they were now given primary responsibility for children and household. They were to be chiefly housewives, while their husbands earned money.

The essential point remains, however: the welfare state was a central instance of social progress in social modernity. Wage earners were visibly able to expand their social property and their share of social wealth, while social welfare and health care legislation was extended. The poor and an underclass certainly continued to exist, but the extent and nature of their deprivation had changed. Both absolute and relative poverty declined, and the glaring pauperism of certain sections of workers belonged to the past.¹¹ Social need, where it still existed, was at this time above all outside the sphere of paid employment. This is precisely what is changing in today’s society of decline (see Chapter 4).

NORMAL LABOUR RELATIONS

The upheaval of social modernity was not confined to the introduction and expansion of the welfare state; it was both wider and deeper in scope. The whole system of paid employment was transformed, leading to an age of industrial mass production. The first decades of the twentieth century saw the rise of gigantic chemical, steel and automobile factories. Henry Ford was the first to systematically introduce the assembly line in his workshops. He took up the basic idea of scientific management that Frederick Taylor had developed: he systematically separated mental and manual work, and applied a strict division of labour to all processes, which were standardized and hierarchically managed. Regulation theory, following Italian Marxist Antonio Gramsci, characterized this mode of production as ‘Fordism’. Though developing in the 1920s, it reached its maximum scope only after 1945.¹² This economic model is characterized by a long-term logic of production and less by the external demands of the market. Mass production meant simultaneous participation in mass consumption. Rising wages and falling prices for consumer goods enabled German working-class families for the first time to afford automobiles, televisions and washing machines, which had previously been only within the means of a privileged minority.

These developments culminated in the establishment of so-called ‘normal labour relations’.¹³ Under pre-Fordist industrial capitalism, labour had basically been almost completely flexible and insecure. Normal labour relations, on the other hand, typically included permanent full-time employment, with job security and social insurance, as the precondition for a self-directed life; they also included the possibility of collective participation in the shaping of labour relations themselves. A condition in which workers were subject to insecurity, anxiety and disorder was replaced by the basic pillars of certainty, predictability and relative social security. Work was now endowed with a certain degree of dignity. The Bavarian-Saxon Zukunftkommission (‘Committee on the Future’) reported that in 1970, 84 per cent of all jobs were subject to normal labour relations.¹⁴

All of this, of course, took place against the backdrop of an extremely low rate of unemployment. In those years, the supply of labour power was scarce, and in many countries, Germany in particular, there was almost full employment. Trade unions gained new strength, and almost 80 per cent of employees were covered by collective wage agreements. Low unemployment induced employers, who at that time were not yet driven by principles of ‘shareholder value’, to apply particular personnel strategies. Even in areas of low-skilled work, this phase saw so-called ‘closure processes’ in company labour markets.¹⁵ This means that companies offered even unskilled workers long-term employment prospects, with the possibility of gaining skills and promotions within the company—not least in exchange for their know-how and loyalty.

Even at this time, however, there existed forms of atypical employment, principally among women. Insofar as they were not housewives, they worked in less protected jobs with lower skill levels, or as supporting family members in small enterprises.¹⁶ Shortly before the end of Germany’s economic miracle, in 1966–67, the first recession of the post-war years, part-time workers only represented 6.5 per cent of all workers.¹⁷ By 1970, this proportion had already risen to 9.3 per cent. The main forms of precarious employment today, however, either did not exist at that time, or did so very little. Subcontracted work was completely banned until 1972, and still after this was strictly regulated. Until 1985, dismissal was possible only under very strict conditions, and part-time employment existed only to an extremely negligible extent.¹⁸

THE DEVELOPMENT OF SOCIAL AND ECONOMIC CITIZENSHIP RIGHTS

The changes in working conditions sketched out above, along with the development of the welfare state, amounted to a fundamental change in class society. In pre-capitalist societies, classes such as patricians and plebeians, or lords and serfs, were based on a clearly defined status hierarchy. Each class possessed its own customs and allocated rights, which in turn divided it from other classes. In modern class society, legal inequality and its privileges gradually disappeared. The Declaration of the Rights of Man and of the Citizen, proclaimed in 1789 in the wake of the French Revolution, marked the birth of modern state citizenship and its corresponding rights. Men were now free and equal before the law, but not yet citizens with equal rights of participation. English sociologist T. H. Marshall described this as the emergence of ‘civil rights’.¹⁹ These rights were not in conflict with capitalist society, being even ‘indispensable to a competitive market economy’.²⁰ Civil or citizenship rights initially included such fundamental liberal rights as freedom of speech, thought and belief, free elections, freedom of contract and the right to property, along with the introduction of a legal system before which all were equal. According to Marshall, civil rights developed in stages, the attainment of one such right providing the basis for the achievement of the next. Thus, civil citizenship rights were followed by political ones, including the right to participate in and influence political power. In particular, their kernel was the introduction of free and secret elections, along with universal suffrage. Marshall called the wider group of rights that arose in the twentieth century with the formation of the social state ‘social citizenship rights’.²¹ As a member of society, every citizen now could claim a basic level of security and participation (for example, through systems of social insurance that provided for sickness, unemployment, poverty and old age, as well as education and health systems) that was ‘not proportionate to the market value of the claimant’.²²

‘Surreptitiously’,²³ Marshall also introduced the idea of ‘industrial citizenship’. This is based less on a general citizenship status than on the collective rights of the employee; it involves a system of ‘secondary industrial citizenship’²⁴ achieved by trade unions. In Germany’s post-war period, this citizenship was expressed through workers’ rights of participation and co-determination, in free collective bargaining and in the institutionalization of works councils.²⁵

With the legal guarantee of collective bargaining, trade unions and employers became contracting parties. While this has led to conflict, it also established norms and achieved such things as the right to health and safety measures in the workplace, protection from arbitrary decisions on the part of management, paid holidays and sick leave,²⁶ as well as a minimum wage and of course the autonomous representation of workers’ interests. Through works councils, workers be...

Table of contents

• Cover Page
• Halftitle Page
• Title Page
• Copyright Page
• Contents
• Introduction
• 1. Social Modernity
• 2. Capitalism (Almost) without Growth
• 3. Regressive Modernization
• 4. Downward Mobility
• 5. Revolt
• Afterword: The Crumbling Pillars of Political Stability
• Notes
• Index