Germany resists neo-liberalism

Chris, London 100423.2040 at
Tue Jun 18 00:22:07 MDT 1996

Could we have a report on Saturday's demonstration in Bonn against
government cuts, and the likely consequences in Germany's complex
coalition type politics?

Although less dramatic perhaps than the French events over the last year,
the confrontation is arguably even more significant, on a global level. What
follows is a crude sketch which I would welcome more informed people correcting: -

German capital has been the most succesful of the European capitalisms
and has led the rise of Western Europe and the European Union. Its success
in accummulation has permitted extensive social democratic concessions to
its working class even under Christian Democrat governments. Both in terms
of the social wage, health and education infrastructure, and concern with
the environment, Germany has been striking.

This peaked in the late 80's with global competition, and the enormous
challenge of assimilating Eastern Germany *at a one for one* exchange rate
parity. Capital investment in the Neue Laende of the order of 150 to 200 billion
DM per year has stretched Germany's capacity also to fund the assimilation
of other eastern European countries, and the European Union's
regional subsidies, essential to the project of a single market with a
single currency. This has required putting the burden on the German
working class, who are now resisting.

During the 80's in the skirmishing about European integration, the British
government, led by Thatcher, (more sincere in practice than Reagan in
implementing neo-liberal economics) extracted concessions from other
European countries that monetary union should be tied to
criteria of a strict neo-liberal kind. The British conservative party
has pursued a strategy of being the low wage back door into the European
Union, and crucially has insisted on the right of British capital not
to pay the social wage represented by the Social Chapter.

Now it has become apparent that not even the German economy is strong
enough to meet the neo-liberal criteria for monetary union without
cutting the living standards of its workers.

Whereas Thatcher planned the attack on union power and the welfare state
cunningly, the French government faced a largely united show-down
last year. Reports of the size of demonstrations in Bonn and the
perceived strength will be most interesting.

What is really significant is that this marks the waves of international
competition, threatening capital accumulation and job security, have
now reached the inner core of European capitalism, Germany. Whether
it and Europe can restabilise without further substantial cuts in the
standard of living of its workers relative to the far east, is
crucial question. Plus whether any attempts at restabilisation are
on radical neo-liberal lines, or on social-interventionist lines.

This is a dramatic historic confrontation, marking a turning point, in
fifty years of German and European reconstruction after the Second World

I hope these comments, either despite, or because, of their simplifications,
will elicit comments, not least from Germany itself.

Chris Burford

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