Schröder’s Legacy Still Relevant to German Left

Germany’s Social Democrats subordinate social programs to economic growth.

The German Social Democrats’ draft election manifesto released last week revealed two things: they are at once haunted by their past and have learned from it.

Ten years ago, Germany’s Social Democrat chancellor Gerhard Schröder initiated far-reaching economic and social reforms. While there is ongoing academic debate about whether these reforms are solely responsible for the resilient German economy (PDF) and labor market (PDF), there is widespread agreement that they are at least part of the nation’s current success.

This puts the party’s contender for the chancellorship, Peer Steinbrück, in a delicate position, not least since he was one of the strongest supporters of Schröder’s agenda. Incumbent chancellor Angela Merkel’s government is in the comfortable position of continuing to run with a program that was originally designed by the left yet showed in many parts an ideological affinity with the economic right.

Steinbrück and the chairman of his party, Sigmar Gabriel, are trying to find the middle ground between maintaining the inheritance of their successful reforms and the necessity of presenting themselves as an alternative to Merkel’s conservatives.

The new program contains many points that are close to the heart of the European left: higher taxes for the rich, formally implementing a minimum wage, increased funding for daycare, a hands off approach when it comes to the pension system and the promise of more money for education.

These policy proposals are unsurprising. Germany’s efficient system of economic redistribution and the resulting lower social inequality has not put to rest concerns about social justice altogether. The Social Democrats see this as Merkel’s weak spot. Being depicted or perceived as unresponsive to the strive for a more just society weighs heavily in the German political discourse.

Despite its concessions to the left, the Social Democrats’ manifesto does not entirely break with the rest past either. It makes clear that Germany has to remain a major industrial hub in the world and that the core of the economy is the Mittelstand, the German middle class, which still resembles the ideal of German economic thinking: small- to medium-sized companies that excel through innovation in niche areas and play a central role as subcontractors in the thriving machine building industry. Any potential tax increase is therefore designed in a way that it will not hurt the industrial base and core substance of German companies.

In doing so, German socialism shows that it is more far sighted than its French counterpart.

In France, the left still sees itself more or less in competition with markets and industries. The German left’s primary concern is the sustainability of the social market economy, a mix of state regulation and the encouragement of private enterprise.

In a sense, the dilemma of Germany’s Social Democrats and the way in which they seem to handle it is a sign of the good health German democracy is in. There are differences between socialists, conservatives, Greens and liberals but there is an overarching consensus about the nature of the economy as a Soziale Marktwirtschaft.

This is probably good news for the German economy regardless of the election results in the fall. The recognition that Germany’s economic strength has to be maintained and that all social programs have to be subordinated to this goal will ensure the avoidance of radical change in German politics.