The result of German Federal election was almost exactly as the opinion polls predicted. The Social Democrats (SPD) got the largest share of those voting (25.7%), up 5.2% pts from the 2017 disaster. The Christian Democratic and Christian Social Union (CDU-CSU) vote share slumped to 24.1%, its lowest vote share since it was formed. The Greens polled 14.8%, less than previous polls forecast, but still the best result ever for them (up 5.8% pts). The small business, free market Free Democrats (FDP) took 11.5% (up slightly from 2017).
The leftist Die Linke suffered badly, dropping to just 4.9%, down from 9.2% in 2017. It seems that many leftist voters switched to the SPD in order to defeat the CDU-CSU. The anti-immigrant Alternative for Germany (AfD) also lost ground, dropping 2.3% pts, although it held its voter base in the poorer parts of eastern Germany.
The overall turnout was 76.6%, up just 0.4% from 2017. This sounds high compared with elections in the US or the UK, but actually it’s low by German standards even after the annexation of East Germany in 1990, where voting is lower.
As forecast by me, the share of the vote for the two major parties fell below 50% for the first time in the history of the Federal Republic. And given the turnout, it meant that both parties gained less than one-fifth each of the 61m eligible votes – hardly a mandate. German politics has fragmented – not good news for the German capitalists as it has become more difficult to ensure ‘continuity’ for the interests of capital.
No one party has a clear majority in the Bundestag so there will be months of wrangling. SPD leader Olaf Scholz must be favourite to form a governing coalition, but potential partners, the Greens and the FDP, do not agree on economic and social policies, and the ‘free market’ FDP would prefer a coalition with the CDU-CSU. The SPD and the Greens want to form a coalition but the FDP will have to be persuaded by offering them the finance ministry and therefore stopping any rises in taxes or regulation on business and not allowing government debt to rise further i.e a degree of ‘austerity’. The Greens want to accelerate Germany’s move towards reducing carbon emissions, but they don’t have any credible policies to achieve that within the restrictions imposed by German capitalism. Hiking minimum wages and reducing the speed limit on German motorways is about as far as it will go.
Germany is the EU’s most populous state and its economic powerhouse, accounting for over 20% of the bloc’s GDP. Germany has preserved its manufacturing capacity much better than other advanced economies have. Manufacturing still accounts for 23% of the German economy, compared to 12% in the United States and 10% in the United Kingdom. And manufacturing employs 19% of the German workforce, as opposed to 10% in the US and 9% in the UK.
German capitalism’s relative success compared to other major European economies has been based on three factors. The first is that German industry used the expansion of the European Union to relocate its key sectors into cheaper wage areas (first, Spain and Portugal, and later in nearby Eastern Europe). This counteracted the sharp fall in the profitability of capital experienced in the 1970s (as in many other major capitalist economies).
Second, German capitalism benefited most from the setting-up of the single currency zone, placing it in strong competitive position in trade within the Eurozone and keeping capital purchases abroad cheap.
Finally, the so-called Hartz labour reforms introduced under the last SPD government created a dual wage system that kept millions of workers on low pay as part-time temporary employees for German business. This is a modern version of what Marx called a ‘reserve army of labour’. It laid the basis for the sharp rise in the profitability of German capital from the early 2000s up to the global financial crash.
About one quarter of the German workforce now receive a “low income” wage, using a common definition of one that is less than two-thirds of the median, which is a higher proportion than all 17 European countries, except Lithuania. A recent Institute for Employment Research (IAB) study found wage inequality in Germany has increased since the 1990s, particularly at the bottom end of the income spectrum. The number of temporary workers in Germany has almost trebled over the past 10 years to about 822,000, according to the Federal Employment Agency.
So the reduced share of unemployed in the German workforce was achieved at the expense of the real incomes of those in work. Fear of low benefits if you became unemployed, along with the threat of moving businesses abroad into the rest of the Eurozone or Eastern Europe, combined to force German workers to accept very low wage increases, while German capitalists reaped a big profit expansion. German real wages fell during the Eurozone era and are now below the level of 1999, while German real GDP per capita has risen nearly 30%.
Wage growth in Germany % yoy
However, even German capitalism, the most successful advanced capitalist economy in the world, could not escape the downward forces of the Long Depression. Since the global financial crash in 2008-9, German profitability has stagnated and then began to fall from 2017, even before the COVID slump hit in 2020. Profitability is now near the lows of the early 1980s.
German net return on capital (indexed) – AMECO measure
The COVID slump was a disaster for the fortunes of the Merkel government. The COVID death rate may have been lower than in France, Italy or Spain, but it was way higher than in Scandinavia (excepting Sweden). And just as in the UK, right-wing politicians took advantage by investing in private COVID equipment firms to make money. The government then failed to manage the hugely damaging summer floods which affected millions. The Germany economy still has not recovered to pre-pandemic levels.
German quarterly real GDP Ebn
And productivity levels are lower than ten years ago.
Product per employee (indexed)
Germany’s energy-driven manufacturing sector faces serious problems in trying to meet global warming targets. Its main export destination after the US is China; and China is slowing down, while the US is demanding that Europe reduce its trade and investment connections with China. And the European Union is no longer the milch cow for German capital. The next four years for German capitalism is going to be much more difficult than the last four.
Contrary to the general impression, Germany is not an equal society. Regional disparities are large (between west and east) and, although inequality of incomes is not large by international standards, inequality of wealth is among the worst in Europe.
The SPD has won (narrowly) because it gained the votes of many on the left. These voters will expect some changes: more and better public services; taxes on the rich; higher wages. And within the SPD, there is a rising left-wing, particularly in the youth section, that wants action. Scholz is going to find it difficult to meet the demands of his rank and file and stay in a coalition with likes of the FDP.
Michael Roberts Blog 
Good analysis.
Fun times ahead trying to find an effective governing coalition, in those figures you cite.
Talk about a confused electorate; it’s why politicians are increasingly despised…while orthodox economists are the real villains (and the poor despised politicians can’t even see it!) .
No wonder the democracies are shaky….
Germany is pretty easy to understand from outside, because everything in Germany moves at a snail’s pace – except for the cars on the motorways.
A significant factor that determined the election result in Germany was the age groups of the voters.
Among the young voters (18-24 years old) the CDU only got 10%, the SPD 15% of the votes cast. In the over 70s, the CDU reaches 38% and the SPD 35%.
However the young voters make up only around 5% of the eligible voters, the old voters over 20%.
The growing number of retirees form a very conservative stratum within the wage earners. Their livelihood apparently depends on German capitalism continuing to function without a crisis. They largely identify with the state that administers and pays their pensions. The pensioners form a “pension class” next to and below the “rentier capitalists”.
Wal Buchenberg, Hannover Germany
https://marx-forum.de/Forum/index.php?thread/1062-m-roberts-%C3%BCber-das-bundestagswahlergebnis/&postID=5655#post5655
“Scholtz is going to find it difficult” to get rid of the “t” ?
Ah the wayward ‘t’. Thanks for spotting that.
Reblogged this on Socialist Fight and commented:
Very serious analysis as usual from Michael Roberts.
Germany is still an occupied country (chiefly the US). The the privatization of East Germany and Hartz reforms inititated a process of international (mostly US) capital in the form of major equity and captial managing funds like Blackrock and Vantage, etc. buying up or into German industrial, service, real estate and financial organizations . The How much of the German economy is “German”?
About 60% of FDI in Germany is from other EU countries; 19% from North America (mainly US) 11% from Asia.
Please ignore my tired, old computers’ typos: the two extra “the”s and the mispelling of “capital”.
I think this is incorrect. Do you have some examples or data to demonstrate the predominance of US capital in Germany?
German FDI into the US is around 3x the size of US FDI headed to Germany. These are OECD numbers. These are flows. What about US ownership of leading Germany companies? VW is primarily owned by Porsche SE, Lower Saxony, and the Qatar investment fund. Daimler is 15% owned by US institutional and retail investors — and has no major shareholders from the US. Allianz, exception by German standards, has 100% floating shares, of which 15% are held by US investors. BMW has major private equity shareholders, but they are German. These are just some corporates I looked into briefly.
The predominance of German capital in Central and Eastern Europe, and elsewhere is however a very real phenomenon.
KSS, I’ve had problems getting this reply posted.
But want to make clear what I meant in asking the question, “…how much of the German economy is ‘German’?”
What I had in mind was the initiation of neoliberalism (which had to await the demise of the Soviet Union) in Germany via Blackstone’s “small”, 4.5% investment in Deutsche Telekom, which eventuated in its privatization, the Hartz laws, and the German economy as outlined in Roberts’ graphs. Whatever the nationality of the individual investors within the private equity funds that direct the Germany’s neoliberalized economy they are no friends of the German worker (nor of those in colonized Eastern Europe)
In my view, the neoliberal agenda (under the direction of capital’s financial institutions) has been to colonize the working populations within the ex-colonial core states of the imperial system, while recolonizing its periphery. The digitalization of the means of production, distribution, and information is the system’s most powerful weapon in the colonization of labor in the core states because it makes possible, both psychologically and physically, the erasure of the line between its reserve army of labor and those workers precariously employed, more and more so as digitally platformed “independent contractors”.
Robert’s graphs make clear the failure of this (suicidal) project. What’s not clear is how working people in core states like Germany are to recover from its (neoliberalism’s) success…
Nice analysis,thanks.
To add on, latest surge in gas prices and likely gas crisis will challenge German economy further,particularly energy driven manufacturing sector.
There were four not three reasons for the success of German capitalism and the preservation of its industrial base – China. Today 7% of the revenue of Germany corporations are derived from their Chinese subsidiaries vs 8.4% in the USA, but Chinese workers generate more profits than do U.S. workers. Taking trade as a whole China is bigger than the US when imports are included, and more importantly, growth with and within China until recently has been faster that with and within the USA.
This dual dependency represents an acute predicament for German imperialism and with it the EU. The First and Second World Wars were centered in Europe. In WW1 the USA waited for Germany, France and Britain to bleed each other dry. Only when Germany threatened Paris did the US enter the war to redress the balance. Ditto WW2. The US bled Britain dry with Lend Lease. Only when the USSR had beaten Germany and threatened to march as far as Lisbon, did the US invade Europe in 1944, and not summer 1943 as Stalin was promised. In short imperialism has no morality it seeks only advantage.
The Third World War unless prevented by popular uprisings will this time be located in the Pacific. This time Germany can emulate the US. They and the
EU can let the US (with Britain in tow) and China bleed each other white. Thus they are likely to remain even handed, which means they are unlikely to engage with the US’s latest initiative to involve the EU in the technological war with China. It also means that some form of rapprochement with Russia will be needed. The issue of gas (Nordstream 2) shows the USA does not have the interest of the EU to heart.
Increasingly unstable governments and capitalist democracies. The economic structure of the countries is increasingly unequal and puts pressure on the political substructure (parties and government), making it weaker. The European parties, all of them with regressive and anti-working class policies (especially the privatization now of the services of the Welfare State after the privatization of more than 600 public companies since the 1980s) do not respond or satisfy the economic needs of the population and governments become short-lived and in coalition. In Spain governments last less and less time and are only made in coalition. The same should happen in the rest of the countries. In the thesis of the cycle of class struggles there is a precise and forceful political formula of V. Lenin. The formula describes four factors that according to him define a pre-revolutionary situation. One of those factors is UNSTABLE GOVERNMENTS. That is the end of the bipartisanship of the last decades – just a conservative party and a social democratic party as rulers – in most European and other countries. From Spain to Italy through France and Germany the political substructure is going in the same and exact direction of instability. It is not the emergence of right-wing populist parties or internal currents (Afd, Le Pen, B. Jhonson, Bolsonaro, etc.) or the emergence of left-wing populists (Die Linke, Syriza, Podemos) that defines the reactionary period of the cycle. It is instability.
In my point of view and as far as I know based on other arguments and evidence, a socialist revolution is far away in time (20/30 years) but it is certain that it is on the way. Unstable governments are further evidence.
I noticed that you used the term “annexed” when talking about German reunification? I’ve not seen that before. Were the East Germans not happy to reunite with West Germany?
Tony – You are right that annexation is really the wrong word. All Germans wanted re-unification and voted for the East to adopt the West’s constitution and be incorporated into the West’s parliament, probably for a lack of an alternative. So the West simply swallowed up the East with no constitutional changes. https://www.dw.com/en/the-vote-that-set-the-course-for-german-reunification/a-5364284#:~:text=The%20vote%20that%20set%20the%20course%20for%20German,to%20wait%2040%20years%20for%20a%20free%20election