Germany faces political turmoil after Chancellor Schröder’s shock decision to bring forward national elections. If the social democrats are indeed defeated, this reflects not so much the German public’s hostility to tough reforms, as a lack of confidence in the SPD as a governing party – reflecting Schröder’s failure to win support within the SPD for his vision of the ‘Neue Mitte’ (‘New Centre’).
The promise of a bright new future conceived in the joint Blair-Schröder paper Third Way: Neue Mitte now seems a distant memory. Nowhere is this more apparent than in employment. Among measures advocated were the introduction of targeted programmes for the long-term unemployed, the assessment of all benefit recipients for their potential to earn, and the reform of state employment services to assist those capable of work in finding appropriate jobs.
In 1998, Schröder declared that if he had not reduced unemployment to 3.5 million, the SPD did not deserve re-election. But today, unemployment in Germany stands at nearly five million.
Schröder’s performance should be assessed within its national context. As in France and Italy, coalition government has proved problematic. The SPD is constrained by German federalism: under the constitution, the second chamber has the power to block legislation. Many decisions depend on negotiation and compromise with the trade unions and employer associations, which wield a veto on major policy changes, especially in economic strategy. The churches and unions oppose the opening up of the job-creating retail sector, while employers block market liberalisation measures to spread ownership and encourage new entrepreneurs, shaking up the ossified private sector.
But Schröder has lost momentum since 2002-3 as support for Agenda 2010 has collapsed within the SPD. The traditional left has regained its ascendancy, arguing that the government’s reforms betray working-class interests.
After abandoning state socialism at Bad Godesberg in 1959, the SPD never felt obliged to undertake a further revision of its programme comparable to the policy review process instigated in the Labour party by Neil Kinnock during the late 1980s. Sixteen years of opposition did not deprive the SPD of significant influence within the political system. During these years, it expanded its power-base from four to 13 out of 16 Lander governments. Its electoral failure was less pronounced than the British Labour party’s and consequently ideological renewal could largely be avoided. After 1959, it never instigated a Clause Four moment.
Labour interests have long been suspicious of ‘reform’. Indeed, the very term ‘reform’ has become synonymous with weaker terms and conditions, corporate restructuring, unemployment, and declining social standards. In mythology, it permits the winners to prosper in an age of global economic competition at the expense of the weak. But social democratic parties, including the SPD, have failed to demonstrate that reforms are consistent with traditional commitments to solidarity and equality. To paraphrase R H Tawney and C A R Crosland, means may change, but values are eternal.
Labour in Britain has faced exactly these dilemmas in its public service reforms. Too often, the argument is made that there is no alternative, instead of the principled case for social justice. It is true that intensified international competition, ageing populations, de-industrialisation, changing gender roles in labour markets, and the introduction of new technologies, all pose severe strains to welfare programmes designed for a previous era.
But reforms to reduce unemployment are essential to the left. For example, speeding up registration, increasing temporary work opportunities, boosting tax incentives for self-employment, and encouraging labour mobility all promote social participation, especially for the most vulnerable. They are a basic condition of personal wellbeing and self-respect.
The right to work is arguably the most important social right of all: no one can fulfil the potential that lies uniquely within each of us if such a right is denied. The challenge is to tackle every barrier to employment that prevents men and women from fulfilling their talents, while developing a just and viable model of inter-generational solidarity.
The internal party argument for labour-market reform was never cast in these terms. Inevitably, large sections of the SPD fiercely resist it as a capitulation to neo-liberalism, leaving Schröder increasingly isolated.
Instead, winning consent requires a sharper delineation of the fundamental objectives of reform, ideals such as personal liberty, social welfare, and social equality: a distribution of rewards, status and privileges sufficiently egalitarian to minimise social resentment, to secure justice between individuals, and to equalise opportunities.