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Karin Roth
After eleven years in government, the German Social Democrats are now having to cope with their greatest electoral defeat in the post-war period. On election evening, it was not only party members, but also many supporters who could hardly believe what was happening. How was it possible for the Social Democrats to be so humiliated after their time in office in coalition with the Green party and their time in coalition with the CDU/CSU? What had they done wrong? Or, to put it another way: why did they not pick up on the negative signals from the voters? Was it just a matter or ignoring these signals, or the result of a political process of orientation beginning with the Schröder-Blair paper ten years ago, which set the party on the wrong course, and affected the whole of Europe?
"Social democrats are in government in almost all the countries of the Union. Social democracy has found new acceptance - but only because, while retaining its traditional values, it has begun in a credible way to renew its ideas and modernise its programmes", Gerhard Schröder and Tony Blair commented in June 1999 . Ten years on, Europe's political constellation has changed. Only a few Social-Democratic governments can now be found on the map of Europe. And this at a time where the financial and economic crisis would seem to cry out for Social-Democratic alternatives. Within a short period of time, the European Social Democrats have also gambled their credibility away, as demonstrated by the disastrous results of the 2009 European elections.
Why are people no longer voting for Social Democrats, though they stand for sustainable growth and social equity? Or have Social Democrats failed with their blueprints for the future to produce the necessary "security in change" for millions? What remains of the fundamental values of solidarity and equity in government policy?
The demise of the
welfare state
After the fall of the Berlin Wall, economic and social conditions changed
rapidly across the world, not only in Germany. Over the past decades, the
dynamic forces of growth in all post-communist countries, in particular
China and Russia, were fuelled so strongly that globalisation reached new
heights with regard to the international division of labour and to trade.
Precisely during this phase, all forms of regulation, everything organised
by the state became discredited and relativised - amongst other things due
to the economic and social legacy of "really existing state socialism" Calls
for regulation of globalisation fell on deaf ears. Indeed, quite the opposite
occurred - denationalisation and deregulation found their way into the programmes
of many parties, including those of Social Democrats. The neo-liberal Zeitgeist
of free (unregulated) market economics took hold across the world. The consensus
on the need for social (i.e. regulated) market economics was eroded.
Despite Willy Brandt's warnings that "only the wealthy can afford a weak welfare state" , the modernisation theories of the Social Democrats' Third Way were aimed at denationalisation in all fields. The Schröder-Blair paper comments: "Public expenditure as a proportion of national income has more or less reached the limits of acceptability. Constraints on 'tax and spend' force radical modernisation of the public sector and reform of public services to achieve better value for money." The state was reduced to its sovereign tasks. Significantly, its role was thus gradually rolled back in the public's perception. The public sector share of GDP, regarded as excessive, became a synonym for collective waste at the expense of individual freedom.
Regrettably, the SPD-Green tax reforms took up this idea and, along with corporate tax, they reduced in particular the top rate of income tax. In 1998, cuts in the top rate of tax were introduced, with a step-by-step reduction from 53 per cent to 42 per cent in 2005. The initial rate of tax dropped from 23.9 per cent to 15 per cent. There is no doubt that the public sector needed to improve its level of customer service and that red tape needed to be eliminated. Yet the signal sent by this approach was that the state was a necessary evil and the levying of taxes unacceptable theft from the pockets of the public. This shift in attitudes is expressed in the provocative words of the philosopher Peter Sloterdiijk, when he talks of state "kleptocracy", and describes a modern finance minister as a "Robin Hood" who has sworn an oath to the constitution" .
Sloterdijk expresses the belief that the present is stealing from the future and reaches the conclusion that compulsory taxation should be abolished and voluntary support from the rich relied on instead. These sentiments reflect a notion popular in all sections of society in Germany and undoubtedly in other countries: that taxes should be cut in order to give individuals more, with no questions asked about the consequences within society for equality of opportunity and justice. Certainly, the mantra of tax cuts was what drove people into the arms of the FDP and CDU/CSU in the 2009 elections. After all, the SPD lost 520,000 voters to the FDP and 870,000 to the CDU/CSU. Although the SPD did point out that huge debts were being incurred at the expense of future generations, the voters were persuaded by the neo-liberal ideology according to which tax cuts were just and would boost the economy.
Even reminders of the necessity of tax revenue to finance education, research, innovation and infrastructure were ignored in favour of the needs of individuals. This creates the conditions for the irresponsibility of the individual towards society as a whole and towards the state. The motto being: if everybody thinks of themselves, nobody will be forgotten. So what needs to happen? The decisive question is whether European Social Democrats will be successful in persuading people of the necessity of state benefits and investments in the interests of equality of opportunity and social justice. Erhard Eppler pointed out early on that the privatisation of the state's monopoly on the use of force presents a threat to the fundamental rights of freedom and justice. He has stressed that the progressive income tax which shaped Europe for 100 years is now being abolished by neoliberals. In his view, the planned introduction of a system of bands in the German income tax system will lead to the end of social equity in Germany and, ultimately, this model will be emulated across Europe. He has highlighted the fact that these plans represent a departure for the CDU/CSU from a long-held position. "A man like Ludwig Erhard never had even the slightest of doubts regarding a progressive system of income tax. Under Konrad Adenauer, the top rate of tax was 53 per cent" . The consensus within society that "those with the broadest shoulders should bear a greater share of the burden" is to be abandoned in the 21st Century, with drastic changes. Thus, solidarity must be newly defined by the European Social Democrats using practical political examples.
The advent of the
indebted state
The international financial and economic crisis in autumn 2008 led overnight
to a renaissance of the state. Without the decisive action of governments
in taking on state loans and guarantees, the financial markets in their
entirety would have collapsed. Those who generally call for the rolling
back of the state made an about-turn and called for a state able to assume
the risks and to take action, with all the implied consequences for tax
payers. States set up rescue programmes for the banks and the economy; they
organised economic recovery programmes to avert a comprehensive global recession.
The G20 states, particularly the USA, China and the European Union acted
in concert. The debts incurred as a result of the economic crisis are, rightly,
intended to help boost the economy and thus safeguard jobs. And regulation
of the financial markets - both at international and European level - also
seems to be on track, though further close observation of this process regarding
the binding nature of transparency and monitoring will continue to be necessary.
So far, so good. Yet, if additional tax cuts for higher earners are now
introduced in Germany, this will lead to an enormous weakening of the state
and to further privatisation. As has already been the case, the high levels
of debt will be used in future as an excuse to further privatise the necessary
investments by the state, along with services of general interest and social
security systems. Higher state debt, incurred as a result of unjustifiable
tax cuts, will exacerbate conflicts over the distribution of resources between
rich and poor, bringing about the abolition of social benefits, or creating
a situation in which the loss of these benefits can only be compensated
for by those able to do so through private financing.
In this way, the "fiscal state", which finances itself through income-dependent taxes, is gradually being replaced by a "fee state" without social criteria. One example of this is the introduction of the university tuition fee
. Social Democrats are thus well advised to combat these developments before it is too late. Tax policy is a central political instrument for social justice and equality of opportunity in our society. The resolution passed at the 2009 SPD Party Conference in favour of a wealth tax is a positive signal in this context. Yet this alone will not be sufficient. We need a discussion, including at European level, on a socially just and sustainable tax system (e.g. on a stock exchange transaction tax).
The end of the nation-state
Deregulation and privatisation have systematically restricted the ability
of the European nation-states to take action; this has been exacerbated
by the decisions of the European Commission. Rivalry and competition have
been transposed into national law through the rules laid down by the European
Commission. In many areas, national competences and rules have even been
replaced by European ones (the Services Directive, for example). And there
are also international agreements which have to be implemented.
Individual citizens view the nation-state as having been reduced to merely implementing European regulations (Brussels bureaucracy) or as unable to take action itself. On the global labour market in particular, individuals are seeing the limitations of national laws. This creeping loss of powers by the European nation-states does not increase the willingness of individuals to finance these individual states. Thus, the challenge for all European Social Democrats in this century will be to find answers to market globalisation with proposals for international and European regulation, as called for in the SPD's Hamburg Programme; since: "Where the nation state is no longer able to provide the markets with social and ecological frameworks the European Union has to take over" . "The federal nation state is not necessarily weakened by each conferrence of decision-making power to the EU. This also applies to taxation policy. Minimum rates for corporation taxes, decided by the EU, would even strengthen it" .
In this context, Jon Cruddas and Andrea Nahles write "There is an urgent need for a coordinated Europe-wide fiscal stimulus. [...] We need to introduce European-wide reforms in financial and economic governance."
Willy Brandt stressed that every time demands its own answers. Thus, the Social Democrats in Europe must give priority to clarifying the relationship between the nation-states and the European Union, in order to avoid the Social Europe being weakened from within. European integration must be deepened through a new form of democratic statehood, in order to safeguard the primacy of politics over economics, ensure cultural diversity and allow citizens to realise their full potential.
The new SPD chairman, Sigmar Gabriel, said at the party conference in Dresden "If we take international policy seriously, then a European and a worldwide Left is also needed, which provides clear answers from a Social-Democratic perspective, rather than varied ones. To me, these are important questions of direction which we must ask, and on which we strive to assert our interpretation".
Those who wish to live freely and in self-determination must not forget that they rely on support from the public institutions. They therefore need the state, which creates the conditions for solidarity, i.e. for equality of opportunity and for social cohesion. In order to make this possible, however, the Social Democrats must be successful in anchoring in people's minds their ideas of freedom, justice and solidarity in such a way that these ideas do not seem distant from people's everyday experiences, concerns and expectations.
We need a new process of understanding between the citizen and the state, in which the citizens accept that they have responsibility in civil society as elements of the state. Policymakers - particularly European Social Democrats - are therefore called on to shape and organise this identity process.
Karin Roth is Member of the German Bundestag for the constituency of Esslingen. She is a member of the Committee on Economic Cooperation and Development, and a substitute member of the Committee on Affairs on The European Union. From 2005 to 2009 she was Parliamentary State Secretary at the Federal Ministry of Transport, Building and Urban Affairs
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