Germany – Capitalism is in crisis and fascism is on the rise

Report at General Meeting 26-28 January

Economic stagnation in Germany, traditionally the locomotive of the western European economy, has given rise in recent months to social discontent and a surge in support for the far-right Alternative für Deutschland (AfD) party as well as the reemergence of explicitly Nazi factions. The weekend of 20-21 January saw mass mobilizations against the far right in many German cities after it was revealed that the AfD and its allies had met to discuss proposals to deport millions of migrants and citizens of non-German heritage. For the most part, demonstrators rallied behind the banner of “defend democracy”. Yet, as was the case in the 1930s, this new fascism is the direct product of capitalism in crisis and the political decisions taken by mainstream democratic parties to contain it.

Germany’s economic performance has undergone a long period of relative decline. Growth in GDP has not fully recovered from the economic shocks of the pandemic, weak demand for its exports in other countries, disruptions to supply chains, inflation, high interest rates and the war in Ukraine. According to first calculations of the Federal Statistical Office (Destatis), the price-adjusted gross domestic product (GDP) was 0.3% lower in 2023 than in the previous year.

This weak economic performance has created turmoil within the federal government, which is led by the Social Democratic Party (SPD) and supported by the Green Party and the economically conservative liberal party, the Free Democrats (FDP): the so-called Ampelkoalition (traffic-light coalition) of red, green and yellow. After weeks of wrangling between these parties about where the axe should fall on public expenditure, on 18 January the parliamentary budget committee approved a federal budget of €476.8 billion with new loans totalling around €39 billion.

The government is constrained by the Schuldenbremse (debt brake), which has been in force since 2009 (introduced by Angela Merkel’s Grand Coalition government). The Schuldenbremse limits new annual government debt to 0.35% of gross domestic product under Articles 109 and 115 of the German Constitution. It obliges the federal government to balance budgets without new borrowing and to reduce debt in the medium term. It was originally introduced to deal with the global financial crisis of 2008 and to keep Germany within the rules of the Eurozone, and may only be suspended in exceptional situations, which was recently the case during the coronavirus pandemic. Its authors did not envisage such prolonged periods of low growth.

To get round the restrictions, the coalition attempted to reallocate €60 billion euros from unused coronavirus funds to the Climate and Transformation Fund. However in November 2023, the Federal Constitutional Court in Karlsruhe ruled that this reallocation of funds was unconstitutional, and the €60 billion was removed from the budget.

After several years of exceptions, the Schuldenbremse is thus to take full effect again. Although factions of the coalition have spoken of suspending it again under certain circumstances, in the meantime swingeing cuts have been imposed and many government contractors have gone unpaid. The draft budget is being debated by the two houses of the German parliament for the final enactment in February.

Planned measures that will hit workers include higher prices for petrol and heating, a ticket tax on passenger flights, and tougher wage restraint in publicly funded services such as the rail network. The government also proposes cutting the federal subsidy to the pension insurance scheme by €600 million euros per year from 2024 to 2027.

But the measure that has provoked the most vocal opposition to date is the planned gradual abolition of tax relief on agricultural diesel fuel. Thousands of farmers and farm workers have taken to blocking city centres in tractors. The traffic light coalition has not backed down from its plans to cut the subsidies, and although it has made some other concessions, these have failed to appease farmers’ leaders, who have promised even bigger protests. Rising costs of fuel and imported animal feeds, fertilizers etc. have put small-scale farmers in financial jeopardy.

Meanwhile, inflationary pressures, though now easing, have further eroded the spending power and living standards of the German working class. Food inflation reached a high of 21.2% in March of 2023 and still stands at 4.6%. Young people are especially hard hit through rising rent prices. In the second quarter of 2023, rent for flats in Berlin averaged around €13.23 per square metre per month. At the same time last year, rents were still €11.02 per square metre. This corresponds to an increase of around 20%. Over the past decade, rents in Berlin have more than doubled.

If the Schuldenbremse is indeed suspended, this will bring little relief to the German working class: it will probably only happen in order to provide further finance for the war in Ukraine, which has already cost Germany in excess of €22 billion in terms of subsidies and weapons supplies. SPD budget minister Dennis Rohde recently Stated, “I believe that the Ukrainian fight for freedom must not ultimately fail because of a conservative view of debt rules.” German capitalism sees massive future opportunities for economic development in a Ukraine prised away from Russian influence. However, the immediate impact of cutting off Russian gas and disruption to food supplies has imposed a cost estimated last year by the Association of German Chambers of Commerce and Industry (DIHK) at between €100 and €160 billion, amounting to around €2,000 per inhabitant.

Rail workers lead the resistance

In this new round of austerity, rail workers are leading the resistance to mounting pressure on workers to do more for less. After two 24-hour warning strikes in November and December, the GDL train drivers’ union held a ballot that resulted in a 97% vote in favour of an indefinite strike. However, the GDL leadership has thus far refused to carry out the wishes of its members. A three-day strike was called in early January and a further six-day strike commencing Wednesday, 24 January.

Deutsche Bahn has offered an 11% pay increase over 32 months, which works out at 3.7% per year, well below the current rate of inflation, and therefore a reduction in spending power. However, the strike is not primarily about pay, but working conditions. Under-investment has left the German rail network in disarray, and it is the drivers who are paying the heaviest price, with long working hours, changes of shift at short notice, and no recognition of the mental stress and damage to family life this causes. The drivers want a reduction in standard working time to 35 hours with full pay compensation – a longstanding demand on which there has been no progress.

On 5 January the employer, Deutsche Bahn (DB), made an “offer” whereby the drivers would be forced to finance the reduction in working hours themselves – effectively a 2.6% pay cut for every one hour reduction in working hours. DB is State-owned, and the government has set a fixed budget for the railway for this round of collective bargaining as part of its savage cuts on public expenditure. The proposed deal was (of course) dishonestly reported in the media, provoking further anger among drivers.

One sector is booming

Despite the economic downturn, one sector is booming: armaments. In 2023, the traffic light coalition (which includes the once pacifist Green Party) approved arms exports worth €12.2 billion, a 40% increase on 2022. German arms deliveries to Ukraine almost doubled in 2023 and accounted for the majority of exports in the second year of the war at €4.44 billion, according to figures released by the Federal Ministry of Economics.

Other major export markets include Norway (€1.2 billion), Hungary (€1.03 billion euros), the United Kingdom (€654.9 million), the United States (€545.4 million) and Poland (€327.9 million). Germany also has imperialist interests in the Far East. For some time now, South Korea has been the largest export market for German arms manufacturers outside NATO, accounting for €256.4 million in sales in 2023. In December, Berlin and Seoul signed agreements to improve their intelligence and military-industrial cooperation.

Germany has also contributed massively to Israel’s war in Gaza, with a tenfold increase in the value of its exports to €323.2 million. Germany is one of Israel’s most steadfast allies and German armaments manufacturers such as Rheinmetall are among the largest beneficiaries. The company’s share price rose by around 15 per cent within just five days of the start of the Gaza conflict and it is currently working with Israeli partners Elbit Systems to develop a new 155-millimetre wheeled howitzer, as well as advanced combat drones. Not that it is all one-way traffic: in 2024 Germany will spend €25 million on the delivery of state-of-the art PULS (Precise and Universal Launching System) multiple launch rocket systems from Elbit.

Indeed, Germany’s own military budget is a notable exception to the spending cuts, climbing by €1.7 billion to a record €51.8 billion. Russia’s invasion of Ukraine provided the rationale for an increase in the military share of the budget, with a €100 billion fund set up to modernize the German armed forces. Germany has committed to meeting the NATO target of dedicating 2% of GDP to military expenditure or, as the bourgeoisie prefers us to call it, “defense”. In reality, the rise in spending points to Germany taking a more aggressive stance on the international stage.

The rise of the far right

Economic pressures, combined with the revival of German militarism, have driven a surge in support for far right populism in general and the AfD in particular, which, as in other countries, claims that there is a conspiracy between the “political establishment” and immigrants against the “indigenous” German population. It has sought to exploit the farmers’ protests with rhetoric that echoes the “Blood and Soil” propaganda with which the Nazis appealed to rural communities following the economic catastrophe of 1929.

The AfD was initially founded (in 2013) by conservative economists and academics who had opposed the introduction of the Euro and closer political integration in Europe. But its policies and leadership changed after the arrival of a million refugees from the Middle East in 2015, welcomed by Angela Merkel as an answer to a profound demographic challenge to Germany: the rapidly ageing population and low birth rates. Today, many leaders of the AfD blame not only these recent immigrants but anyone of non-German heritage for every social and economic problem – and this amounts to one-fifth of the total population. High prices? Blame foreigners. High rents? Too many foreigners. Poor healthcare? Foreigners. Etc.

However, the AfD has also gained traction as the only major political party opposing the war in Ukraine. Not that it is doing so for any benign reason; it wants to keep the weapons at home for use by Germany’s own armed forces rather than export.

The slogan of the German far right has now moved on from stopping or slowing immigration to “Remigration”. High-ranking representatives of the far-right AfD met conspiratorially with other right-wing actors and business executives at Lehnitzsee, north of Potsdam, in November 2023 to discuss plans to expel people with foreign roots living in Germany. Two members of Germany’s centre-right Christian Democratic Party (CDU) also attended, both part of their party’s “Values Union” association (WerteUnion).

Martin Sellner, a leading Austrian figure in the “Identitarian Movement”, presented plans to urge or if necessary force people who do not fit into a völkisch (Aryan) definition of German society to leave the country. This includes people who are German citizens but who are “not assimilated”. In echoes of the infamous Wannsee Conference of 1942, there were only objections about the feasibility of mass expulsions, but no doubts were raised at the event as to the desirability of such plans. Ideas put forward included discriminatory laws subjecting migrants to “high pressure to conform” and making it easier to revoke their German passports and citizenship.

News of the conspiratorial meeting was first revealed by Correctiv, a pro-democracy media collective, on January 10, one of whose undercover reporters checked into the Lehnitzsee  hotel and infiltrated the event.

German antifascism

The news sparked a series of demonstrations, with around 250,000 taking to the streets in Berlin, Hamburg, Frankfurt, Hanover, Stuttgart, Munich and other German cities on Saturday, 20 January. They were, however, dominated by moralistic positions on tolerance and diversity that have no substance and little resonance for workers who are bearing the brunt of capital’s attacks. Typical was the speech of the SPD’s Mike Josef, Lord Mayor of Frankfurt, and a former organizer in the DGB trade union confederation: “As democrats, we are standing up together against the enemies of humanity in this country, here in Frankfurt and in Germany. We do this together, we do it with determination – no matter where we come from and what we believe in.”

The analysis of the antifascist “left” in Germany is, if anything, even worse. For them the problem is not that the mainstream parties such as the SPD defend capitalist democracy, the preferred political system of the bourgeoisie, but that they are not democratic enough. For example, the Trotskyist Socialist Equality Party writes that “When Scholz and Co. try to present themselves as a ‘democratic’ alternative and opponent of the AfD, it is pure hypocrisy.” For the Left Party (Die Linke) the answer is “unity” across the class divide behind the slogan “Together against the right” through an amalgam of classless social media identity groupings such as “Grannies against the Right”.

For us in the ICP, by contrast, there is no fight against fascism without a fight against the capitalist system that engenders it. Workers cannot choose between fascism and democracy; far from being opposites, the one flows from the other. (Indeed, the democratic Federal Republic already has constitutional powers to deny or withdraw citizenship from individuals it regards as undesirable or not “assimilated” or otherwise make their lives intolerable, as it has done with the infamous Berufsverbot, the ban on people it regards as extremists from entering certain professions.)

National unity or class struggle

As early as 1924 we wrote in our Report on Fascism, “From a social point of view fascism does not represent a major change; it does not represent the historical negation of the old bourgeois methods of government, it merely represents the completely logical and dialectical continuation of the preceding stage of so-called democratic and liberal bourgeois government.” Democracy will resort to fascistic methods, and even put fascists in power, according to the needs of the epoch. And conversely, fascism will use democratic slogans such as “the will of the people” and democratic instruments such as plebiscites. There is even a German word, which first emerged in the First World War, that expresses this perfectly: the Volksgemeinschaft is rooted in the notion of uniting people across class divides to achieve a national purpose.

The only way to fight fascism and militarism is through class struggle. So long as key sections of the working class such as the train drivers (many of whom are themselves of “non-Aryan” heritage!) are ready and able to stand up and fight it will be impossible for the bourgeoisie to divide and rule us at will, or to pursue imperialist objectives through military means. It is therefore up to the working class to fight not fascism alone, but capitalism itself, in Germany and internationally!

The proletariat is the only force that can stop the bourgeois war.