German Elections Bad News for Neoliberals

The consensus in the mainstream press is that Angela Merkel is, in the Age of Trump, the leader of the Western neoliberal world order. Her reelection was a foregone conclusion. Stories in the run up to Sunday's vote usually mentioned -- as an afterthought -- that Germany's far-right party, Alternative for Germany (AfD), would enter parliament, the first ultra-nationalist party to do so since the defeat of the Third Reich, but that it was not much of a concern since its momentum had been zapped by Merkel's shrewd swing to the right on immigration.

Well, that's not how things turned out. Yes, Merkel triumphed, but her Christian Democrats fell significantly short of their performance four years ago, as did their coalition partner Social Democrats; add to this AfD's arrival as the third-largest party in parliament, and what you get is a lot of neoliberal hand-wringing this morning, captured by Stephen Erlanger and Melissa Eddy in "Angela Merkel Makes History in German Vote, but So Does Far Right":

The far-right party, Alternative for Germany, or AfD, got some 13 percent of the vote — nearly three times the 4.7 percent it received in 2013 — a significant showing of voter anger over immigration and inequality as support for the two main parties sagged from four years ago.

Ms. Merkel and her center-right Christian Democrats won, the center held, but it was weakened. The results made clear that far-right populism — and anxieties over security and national identity — were far from dead in Europe.

They also showed that Germany’s mainstream parties were not immune to the same troubles that have afflicted mainstream parties across the Continent, from Italy to France to Britain.

“We expected a better result, that is clear,” Ms. Merkel said Sunday night. “The good thing is that we will definitely lead the next government.” 

[snip]

Ms. Merkel’s conservative bloc won some 32.9 percent of the vote, sharply down from 41.5 percent in 2013, the early results showed.

The Social Democrats slumped to 20.8 percent, a new postwar low, down from 25.7 percent four years ago.

If the Social Democrats hold to their intention to go into opposition, Ms. Merkel will be faced with an unusually difficult task to form a working coalition. Given the numbers, it would seem that she will have to cobble together her own Christian Democrat-Christian Social Union bloc together with two other parties.

The potential new partners inhabit virtually opposite poles on the political spectrum — the pro-business Free Democrats, who won some 10.4 percent of the vote, and the left-leaning pro-environment Greens, who won about 9 percent.

At the Christian Democrat headquarters, Frank Wexler, a Berliner, called the results “a bit depressing.”

Grand coalitions had allowed the small parties to gain ground, he said. “The main parties are getting smaller,” Mr. Wexler said. To counteract the AfD, he said, “We need to address the issue of strengthening the borders.”

But Mr. Wexler said he was most disturbed by the AfD’s hostility to the European Union. “This is what Germany needs to do — be a strong leader in Europe.”

But Hans Kundnani, an expert on Germany with the German Marshall Fund, said that Ms. Merkel might fail to create the three-party coalition, putting the Social Democrats under great pressure to join another coalition rather than forcing new elections.

To Mr. Kundnani, “the big shock is not the AfD,” but the loss of support for Ms. Merkel’s conservatives and the increasing fragmentation of German political life.

Moon of Alabama sees new elections in two years. Merkel has spent too much time hovering in the center and with this election she has been flanked on the right.

In the latest London Review of Books, Thomas Meany has a strong article, "In the Centre of the Centre," on the state of German politics on the eve of the election. While he didn't predict the result, I think he nails the inherent weakness of Merkel's centrism:

Many leftists and Greens, disillusioned with their own party leaders, have been stunned by Merkel’s modernisation of the CDU and her steadfastness in the first months of the refugee crisis. Too stunned, perhaps, to notice that her trick is to avoid the country’s root problems while treating the symptoms more skilfully than any conservative politician before her has ever managed. The media, meanwhile, unwilling to address the difficulties caused by Germany’s position as the reluctant hegemon of the Continent, or the growing sense of lurking inconsistencies in the gospel of Atlanticism, prefer endless celebration of the leader: the intellectual, strong, patient, grounded, wry, compassionate, tough, reality-grasping, scientific, opera-loving, Bismarckian wunder-Kanzlerin on whom nothing is lost. One of the few things the mainstream press holds against her is that she doesn’t campaign in a way that generates copy; others dislike the way she has so thoroughly depoliticised the country.

AfD's hostility to the European Union and the eurozone is an existential threat to Germany's economic hegemony. As Wolfgang Streek made clear in a piece, "Playing Catch Up," published in May --

With monetary union set up as it is, and the path to political union foreclosed not only by member states but also by their peoples, the Merkel government, like previous German governments, has only one suggestion to offer the rest of Europe: that each country catch up with Germany by subjecting itself to its own second round of capitalist transformation – ‘structural reforms’ involving the replacement of traditional forms of social solidarity with market competition and, perhaps at some later date, the embedding of competition in modern institutions of solidarity, like the welfare state and collective bargaining. For this to happen, willing governments must be kept in power, if need be through discreet suspension of democracy, since resistance to the treatment is growing on a broad front. Here, as so often in her long career, Merkel is anything but dogmatic, and certainly isn’t beholden to ordoliberal orthodoxy since what is at stake is Germany’s most precious historical achievement, secure access to foreign markets at a low and stable exchange rate. For several years now, Berlin has allowed the European Central Bank under Draghi and the European Commission under Juncker to invent ever new ways of circumventing the Maastricht treaties, from financing government deficits to subsidising ailing banks. None of this has done anything to resolve the fundamental structural problems of the Eurozone. What it has done is what it was intended to do: buy time, from election to election, for European governments to carry out neoliberal reforms, and for Germany to enjoy yet another year of prosperity.

My preoccupation -- I think about this constantly, and have for years -- is how much longer can this political-economic system stumble forward? So many times it appears on the verge of collapse, yet it always manages somehow to stay upright. Has history truly ended or are we finally witnessing the birth of a new era?