[Militant International Review, No 43, Spring 1990, p. 14-22]
Lynn Walsh argues that, in the absence of a clear alternative, the collapse of East Germany’s Stalinist regime, combined with the overwhelming impression of prosperity in West Germany, undermined the movement towards the political revolution begun by last years mass demonstrations. What are the prospects now?
On 18 March, the CDU-dominated Conservative Alliance won an overwhelming victory in the East German elections. The scale surprised even the most optimistic capitalist commentators. Forty-eight per cent of voters, including almost two-thirds of workers, voted for Kohl’s allies in the East.
This was a vote for unification, but unification in the form of immediate anschluss, or annexation, by West German capitalism. How could it happen that decisive moves towards counterrevolution, the replacement of the nationalised. planned economy (grotesquely distorted, it is true, by Stalinist bureaucracy ) by the domination of Western banks and monopolies could receive such overwhelming endorsement in free elections?
Only last year, between 9 October and 9 November, mass demonstrations in Leipzig, Dresden, East Berlin and other cities brought down the Honecker regime. The movement was triggered by the opening of the Hungarian-Austrian border, which provided the first ‘opening’ in the Wall, undermining one of the regime’s vital supports. At the same time, Gorbachev disavowed support for Honecker and the old guard leaders of the ruling Communist Party, the SED.
Hundreds of thousands of students, youth, and workers sang the Internationale on the streets. There was a spontaneous demand for the purging of bureaucrats and a radical democratisation of society. The outline of the political revolution could be seen on the streets and in the factories.
Tragically, however, the absence of a conscious Marxist party capable of giving the movement clear aims allowed the movement to be diverted. After the opening of the Wall on 9 November, the call for unification came to the fore. This was not an upsurge of nationalism. Merger with West German Capitalism was seen as the best escape route from the blind alley of Stalinism and the quickest path to the high living standards prevailing in the Federal Republic.
Such a rapid turn of events cannot be understood apart from the international situation
Such a rapid turn of events can not be understood apart from the international situation. There is a general crisis in Stalinism, which has exhausted its ability to develop the planned economy. At the same time, the growth of the world economy since 1981 (a distorted, one-sided boom drawing on the fat accumulated in the long postwar upswing) has boosted the attractive power of the market economy, i.e. capitalism, especially among workers living under the grey austerity of Stalinism.
East Germany, moreover, is a special case among the East European states, Bordering on Europe’s richest capitalist economy, with which until 1945 if formed a single nation state. the GDR inevitably came under the pressure of West German capitalism, which has always harboured a desire to reclaim its territory in the East. The collapse of East German Stalinism and the bankruptcy of the GDR’s reformist parties provided the leaders of German capitalism with an historic opportunity – which was seized by Kohl. From the start, the East German elections became a proxy battle ground for the West German parties. The resulting grand coalition, composed of the CDU, SPD and Free Democrats (the surrogates of the West German parties ) will enable the Bonn government to proceed with the dissolution of the GDR and the integration of the reconstituted Eastern Länder into the Federal Republic on the CDU’s terms.
Monetary Union will be pushed through, probably by the end of the Summer, clearing the way for the beginning of privatisation of state firms and the introduction of the capitalist market. The ‘Four-plus-Two’ talks between the allied powers and the two German states, due to start in May, will pave the way for full unification.
The triumphal mood of the West German capitalists, however, is tempered by caution on the part of serious commentators. Congratulating Kohl on his ‘famous victory’, the Financial Times warned: “The path ahead is unlikely to be strewn with roses.” Election victories do not provide magical solutions for economic and social problems. While a majority have swung to the CDU at the moment, the working class will not passively accept capitalist measures which threaten their interests. Nor will German unification prove to be an unmixed blessing for world capitalism.
* * *
Kohl was pushed into action on reunification much quicker than he or the strategists of capital originally intended. Pöhl, for example, the head of the Bundesbank, envisaged unification over five to eight years. Kohl was forced to act by the mass exodus which threatened to destabilise both the GDR and the Federal Republic.
In 1989, over 300,000 East Germans arrived in West Germany. This was in addition to a further 300.000 from the USSR and Eastern Europe. mainly from Poland. Moreover, the Bonn government estimated that another 2m East Germans were sitting ‘with suitcases packed’. While the initial wave of youthful migrants supplied much needed labour in some sectors of the economy, a flood-tide threatened to produce explosive social tensions and a political backlash for the CDU government. In 1990, East Germans were still leaving at the rate of 2.000 a day. another 100.000 by mid-February.
Western leaders feared that a sudden collapse of the GDR regime could produce another explosion like Romania. In the British parliament, the Tory Minister David Howell warned that an uncontrolled exodus could mean “a vortex of chaos… a black hole which could be full of dangers.” (22 February)
Kohl decided to make a virtue of necessity. In February he put forward a ten-point plan for Germany rapid monetary union and reunification under Article 23 of the FRG’s Basic Law, which allows new Länder (states, like the Saarland in 1957) to join the Federal Republic.
Kohl awakened to the political advantage of presenting himself as the ‘Unity Chancellor’ in next December’s FRG elections. At the same time, the expansionist aims of German capitalism, held in check by the postwar political settlement which denied the FRG the full political fruits of its economic power, began to reassert themselves. Unification, said Karl Hahn, boss of Volkswagen, was “an unimaginable gift of fate.”
At the start of the campaign, it seemed likely that the SPD (East) would emerge as the biggest single party. As it developed, the election became a referendum on the issue of rapid unification — and Kohl was determined to be the highest bidder. At Cottbus, a few days before polling, Kohl announced: “We want savers to know that when the change in the currency comes, it will be at one-to-one for them.” This carefully left open what the ceiling on one-off one conversion would be. But as the West German SPD leader, Lafontaine, said: “They had the impression that if they voted for Kohl, then the money would flow.”
Kohl also reassured East Germans that “The passage to a market economy is no cause for fear, since the market order and social security are inseparable in our way of thinking.” Throughout the campaign, the CDU in the East stressed the social aspect of the market economy. “Even a party of the right contending for East German votes,” commented the Wall Street Journal (13 March), “is not prepared to renounce totally the country’s socialist past.”
Kohl addressed six massive rallies which were bigger than the SPD’s. Even the editor of the Conservative West German newspaper Die Welt was amazed at the remarkable transformation of the ‘sometimes bumbling, often stumbling, forever mumbling’ politician into a popular hero. Kohl may lack charisma, but “He was the leader of a government which had given its citizens one of the highest standards of living in the world.” (Financial Times. 20 March) Given the crumbling of the GDR’s rotten Stalinist regime and the collapse of the economy. a big section of the electorate saw unification as the only road to higher living standards.
“We now realise that the GDR’s economy is really rotten — and everybody deceived us about it,” said a young crane driver (Wall Street Journal, 19 March). He had voted CDU “because it’s the party that will make unification happen as quickly as possible.” “What would you prefer? A long, agonising death, or a quick end? I prefer the latter,” commented a bureaucrat.
At Kohl’s Magdeburg rally, one man said: “We have had 40 years of socialism (i.e. Stalinism). We have had enough. Helmut is our man.” (Sunday Times, 11 March) At the start of the campaign, about 40% of the electorate were undecided. The Conservative Alliance (the CDU plus the German Social Union and the Democratic Awakening) won the support of most of these ‘floating voters’.
In the South especially, in Thuringia, Saxony, Sachsen-Anhalt (SPD strongholds before the Nazi regime), the workers turned out for Kohl. The electoral districts of Dresden, Erfurt, Gera, Suhl and Karl-Marx-Stadt all recorded votes for the Alliance of about 60 per cent, with less than 20 per cent for the SPD and less than 15 per cent for the PDS. According to one survey, 58 per cent of workers throughout the country voted for the Alliance. After four decades of grey, oppressive, bureaucratic ‘socialism’, the workers delivered their verdict on the basis of the system’s dismal practical results. Industrial workers in the South have experienced even worse conditions than in Berlin and the Northern cities.
What happened to the SPD? “No doubt we are the biggest losers in this election,” admitted Markus Meckel, the SPD (East) leader. But the SPD lost, gaining 21.84% of the vote, because its leaders offered no real alternative to the CDU. From its formation last year, the Social Democratic Party (Sozialdemokratische Partei), although trying to distinguish itself from the SPD (Sozialdemokratische Partei Deutschlands), adopted a pro-capitalist position. Rapidly, however, the party in the East became a client of its rich Western patron, changing its name to SPD. They supported unification on a capitalist basis, but advocated a slower route, using Article 146 of the FRG’s Basic Law, which would mean unification under a new constitution. So, while Kohl offered the fast track, the SPD appeared as the party of ‘ifs’ and ‘buts’.
Until very recently, the SPD in the West opposed reunification. Brandt, Schmidt, and other SPD leaders have never called for unification on a socialist basis. On the contrary, over many years the leadership pursued a policy of rapprochement with the Stalinist regime, and SPD leaders established close ties with Honecker and other discredited CP (SED) leaders. The SPD nevertheless drew support from many who feared that unification and the market would undermine the GDR’s social welfare network, though some support appears to have been lost back to the PDS, the renamed Communist Party.
“This was a victory for the bloc parties,” ruefully commented Willy Brandt, the former SPD Chancellor who spoke at big rallies in the East. The CDU (East) had long been a stooge of the SED in the Stalinist ‘coalition’ government. Wolfgang Schnur, leader of the Democratic Awakening, was forced to resign after his links with the Stasi were revealed. When Lothar de Maiziere became head of the CDU last November, he replaced Gerald Götting, who is now awaiting trial on charges of corruption. Yet the sordid past of the Conservative leaders in the East has been like a little speck of effluent swept away by the political tide. Voters overwhelmingly voted on the basis of the parties’ current proposals for the immediate future, not on an assessment of their past record.
Mass revulsion against Stalinism, which has poisoned the popular conception of socialism, meant that the SPD suffered from what Willy Brandt described as “unfair Comparisons between communism (i.e. Stalinism) and social democracy.” (Financial Times, 19 March) The Conservative Alliance played on widespread fears that the SPD might provide a means for the SED leaders to find a way back to power. The CDU took a lion’s share of the estimated DM20 million which was reportedly funnelled into the election campaign. (Wall Street Journal, 19 March) Almost daily, their propaganda machine produced anonymous leaflets alleging that the SPD was dominated by former communists. “A lot of communists threw their Little Red Book away and joined the SPD, hoping to save their privileged position,” a middle-aged man from Bitterfeld said. “I am frightened they will just form a coalition with the communists and it will be the same mess all over again. I am voting Christian Democrat so it doesn’t happen.” (Sunday Times, 11 March)
Alliance 90 (Bündnis 90), the left coalition made up of New Forum, Democracy Now, and Initiative for Peace and Human Rights, received a mere 2.9 per cent of the votes. The New Forum leaders were unceremoniously pushed aside by the surrogates of the main West German parties. While Havel is president in Prague and Kuroń, Minister of Labour in Warsaw, the intellectuals who were projected into the limelight by last year’s mass demonstrations have been dropped back into obscurity.
Jan Peter, editor of Leipzig’s The Other Paper, nostalgically recalled the heady days of the mass demonstrations, “when we thought we could have a separate democratic, but socialist, state here.” (Correspondent, 18 February) The writers, artists, and intellectuals who had in many cases courageously opposed the Honecker regime were incapable of giving direction to the movement. Ludwig Mehlhorn admitted that, “When the communists fell, there was a power vacuum. We were unable to fill it, so the West Germans stepped in.” (Independent, 17 March ) They called for an ‘alternative’ socialist society, but they had no understanding of the character of the bureaucracy, which is a ruling elite, a social strata based on material privilege.
The New Forum called vaguely for democratisation. Some believed that they could replace Stalinism by a ‘user-friendly’ form of socialism without the overthrow of the bureaucracy. Many of the leading supporters of the New Forum, however, while they claimed to defend socialism, actually supported the introduction of the market. Now, the intellectuals blame the workers for the derailing of the revolution. “It’s the triumph of money over ideology,” commented the East German novelist, Thomas Brasch. “The people in East Germany rose up — and went to Woolworth’s” Another, Rainer Pietsch, said: “As soon as the border was open, the revolution was over. People went over to West Germany and were spell-bound. It was no longer ‘We are the people’, but ‘We are one people’. Unification suddenly appeared to be the answer to their dreams.” But the revolution took this direction because of the weakness of the subjective factor, the political consciousness of the working class, and the absence of a party based on Marxism. The leaders of New Forum, while blaming the workers, have confessed their own political bankruptcy. There was no party capable of putting forward the programme of workers’ democracy, of fighting for the perspective of the political revolution, or of raising the call for the socialist unification of Germany.
The political revolution which began in the mass demonstrations last year has therefore suffered a severe setback. The workers and youth rose up against the totalitarian regime of Honecker. The regime was toppled, and through the intervention of the workers from below, the Stasi was disbanded and corruption exposed and rooted out. The workers formed committees in the factories and began to move to take democratic control into their own hands.
But in the absence of a clear alternative, the collapse of the Stalinist regime combined with the overwhelming impression of prosperity in West Germany undermined the movement towards the political revolution. The spontaneous mass initiative on the streets dissipated. With the rapid move towards elections in the East, the movement was diverted to the electoral plane. The majority of workers, desperate to find a way out of the Stalinist blind alley and despite scepticism among some more conscious layers. then began to look towards the West German parties in the hope that they could accelerate progress towards West German levels of prosperity.
The party which ruled over the GDR and defended its ‘socialist’ achievements, the Communist Party. formerly called the Socialist Unity Party (SED) and now renamed the Party of Democratic Socialism. gained a mere 16.33 per cent of the votes. True, this was more than the predicted 12 per cent! Its highest vote was in East Berlin, where it received 29.97 per cent of the votes, coming second to the SPD, which received 34.95 per cent (the CDU and allies received only 21.62 per cent in East Berlin). In Berlin, especially, which is the centre of a massive bureaucratic apparatus, the PDS’s vote reflected the loyalty of a large section of the state and party bureaucracy, as well as continued support from intellectuals whose positions depend on the nationalised economy and government institutions. A small section of workers voted for the PDS. seeing it as the best defence against the privatisation of industry and the dismantling of welfare provision. Nevertheless, such a vote is a monumental condemnation of the Stalinists’ record.
The new leadership under Gysi are now presenting themselves as ready to play the role of a loyal opposition under a capitalist government. But for forty years they lived privileged lives on the backs of the workers. Their bureaucratic methods discredit the idea of socialism. In the last analysis, it was the Stalinist leaders who delivered the East German workers — for the moment — into the hands of the West German parties of capitalism.
* * *
Can unification, in any way, be considered a step forward from the standpoint of the working class? After all, Marx and Engels hailed German unification under Bismarck as an advance. Bismarck acted as a Bonapartist, leaning for support on the reactionary Junker landlords. Nevertheless, his measures demolished many of the feudal remnants, clearing the ground for the development of capitalism. This meant, in turn, the growth of an industrial proletariat, creating more favourable conditions for the struggle for socialism.
Unification under Kohl. however, is a backward step. Marxists support the right to self-determination. But self-determination cannot be separated from the contending class forces involved. By whom is unification being carried out? In whose interests? And what consequences will follow for the working class? Unification is not a transcendental good which allows these questions to be ignored.
Writing in 1939 (with reference to the Ukraine), Leon Trotsky said: “The right of national self-determination is, of course, a democratic and not a Socialist principle. But genuinely democratic principles are supported and realised in our era only by the revolutionary proletariat: it is for this very reason that they are interlaced with socialist tasks.” (Trotsky, Writings 1939-40, p. 45)
Earlier, with regard to the Saar, Trotsky sharply criticised the leaders of the German CP, who initially advocated a ‘yes’ vote over reunification with Germany. After the First World War, this German area was placed under the League of Nations, with France controlling the coal mines as a form of war reparations. Its future was to be decided by a referendum fixed for 1935. By then, however, the Nazis had come to power, and the call for the return of the Saar was a prominent nationalistic plank in Hitler’s demagogic programme.
“To rally to Hitlerite Germany in practice, i.e. through the referendum,” wrote Trotsky, “means, theoretically speaking. to put national mystification above the class interest and psychologically to conduct a really cur-like policy. Naturally, only traitors can demand annexation at present, for that means to sacrifice the most concrete and vital question of the German workers in the Saar territory to the abstract, national factor.” (Writings 1933-34, p. 135)
The present Federal Republic is not, of course, a fascist state like Hitler’s; the working class still possesses democratic rights. Nevertheless, unification under the present circumstances will be through capitalist counter-revolution, even if it takes a democratic form, with parliamentary and trade union rights being spread to the East. It will entail the replacement of the nationalised, planned economy of East Germany by the domination of the big banks and monopolies and the anarchy of the market. This will be an historical regression. The planned economy, despite Stalinism, still represents an advance over capitalism. Planned production, under democratic management, remains the only means by which the proletariat can take control of society into its own hands.
In recent years, the bureaucracy has squandered the gains of the planned economy. The advantages of the plan over the market system, particularly in comparison to West Germany, appear to have been largely cancelled out. An assessment of the current results of planning, that is, the actual economic record of the bureaucracy, is obviously of decisive importance to the workers living under a Stalinist regime. But this is not the same thing as evaluating the historical potential of the underlying property relations and mode of production.
Unification would be progressive only if it extended the planned economy, with the addition of workers democracy to the whole of Germany. This would require a combination of the political revolution in the East and social revolution in the West. In the GDR, the bureaucracy would be replaced by the democratic rule of the working class. In the FRG, a fundamental transformation of property relations would be required, replacing capitalism with a planned economy, under democratic management and control. The combined resources of East and West Germany would then provide the basis for unparalleled social progress. The creative power of the working class would be tapped as never before. Such a transformation, moreover, would not be confined to a unified Germany, but would spill over into both the capitalist West and the Stalinist East.
Therefore, Marxists stand for the socialist unification of Germany by the working class. Unification by the capitalist class, even under the democratic conditions which exist now, will inevitably have reactionary consequences for the proletariat.
Today, the GDR’s planned economy is portrayed as a totally negative phenomenon, not only by capitalist commentators but also by the demoralised Stalinist leaders. The top bureaucrats themselves lost confidence in their ability to run society on the basis of planning. For example, before 18 March, the boss of Mikroelektronik, one of the most modern state firms, said he favoured unification and the market (capitalism) rather than the ‘chaos of uncertainty.’ After the results, the boss of Robotron, the largest electronics combine, welcomed the majority of the CDU. “We (the Robotron management) believe this is the most favourable result the Kombinate could have hoped for.” (Financial Times, 20 March) For the workers, as the Mikroelektronik’s boss admitted, the market would mean “inevitable social hardship.” The bureaucrats, on the other hand, could afford to take a more positive view because many of them had already fixed up jobs for themselves with big West German companies. Reporting on the Leipzig trade fair, the Financial Times (12 March) noticed many “old faces wearing new masks.”
But in spite of the bureaucracy, the plan, for two or three decades, did mean social progress. Up to the early 1970s, the foundations of a modern, industrial economy were laid. Industrial production grew seven-fold between 1950 and 1975 (71% between 1961-70 and 38% between 1971-75). “By the mid-1970s,” writes Martin McCauley, in The GDR since 1945, “the GDR was a modern, industrial society. The dominance of industry. the rise in the level of skill and expertise of the labour force, especially the growth in the number of university and technical college graduates, heralded a future in which more and more could be expected from scientific-technical progress.”
Even with workers’ living standards, which cannot be measured by a single yardstick, there were significant gains. Employment was guaranteed for workers, including the vast majority of women. Rents were low, taking less than five per cent of average income. Comprehensive child care and nursery education were developed, and even the capitalist commentators are forced to acknowledge the quality and scope of the GDR’s welfare services, though they have deteriorated recently.
However, workers’ appreciation of these gains have been offset in recent years by the short supply and especially the poor quality of consumer goods. This was glaringly highlighted by the contrast with the seeming abundance of all the latest consumer goods in West Germany. Material frustrations were sharpened by the lack of progress towards the more egalitarian, democratic society continually promised by the bureaucracy. The greyness, the stultifying conformity, and the hopelessness of ‘real existing socialism’ brought deeper and deeper alienation from the Stalinist system.
Underlying the falling back in the field of consumer goods and services was the slowdown in economic growth. The bureaucracy could take the nationalised economy only so far. It was able to build up heavy industry and mass production units. But it cannot cope with advanced technology and more sophisticated modern processes. Only workers’ democracy — lethal to the bureaucrats — could provide the necessary methods of management and control.
The opening of the Wall on 9 November, which mega-amplified the siren call of the West’s opulent consumer market, coincided with full exposure of the rottenness of the bureaucracy. The economic position was even worse than it had at first appeared. The regime had to some extent put off the crisis by ever increasing foreign loans, which now absorb about half of the GDR’s hard currency export earnings to capitalist countries. Workers were stunned by the depth of the privilege and corruption of the top bureaucrats, previously largely concealed. Top party leaders enjoyed the same exclusive hunting lodges used by top Nazis up to 1944. Others accumulated hard currency fortunes in foreign bank accounts. The grotesque scale of surveillance by the Stasi, used to secure the power and privilege of the bureaucracy, was also revealed. Almost 200,000 people, or more than one in a hundred of the population, were allegedly either full-time Stasi employees or informers on their neighbours or fellow workers.
Events last October-November shattered what remained of the workers’ support for the Stalinist counterfeit of socialism. Moreover, fear of the state evaporated on the streets as the youth and workers increasingly felt their own power. But the absence of a genuine Marxist alternative has allowed a profound swing towards the idea of the ‘market economy’ (in reality, capitalism) as the answer to the workers’ problems. This is undoubtedly based on profound illusions in capitalism. Nevertheless, when illusions hold sway over millions, they become a material factor in the situation. They have gained a hold because of the extreme weakness of the subjective factor, the absence of the genuine ideas of Marxism.
The current illusions in capitalism, however, have their material roots in the present international conjuncture, which is temporary. The slow decay and recent sudden collapse of the Stalinist regimes has coincided with an apparent re-invigoration of capitalism. The post-war economic upswing since 1945 has made the Federal Republic into the most powerful European economy, rivalling Japan and catching up with the United States. The boom since 1981 is still continuing, particularly in the case of West Germany. Growth is now slowing down in the United States and Britain, and the world boom will exhaust itself in the next few years. The West German economy will not be immune to the crisis now being prepared in the world economy. Nevertheless, for the time being, it appears that West German capitalism is thriving. This has had a powerful effect on the consciousness of East German workers.
* * *
Immediate unification through anschluss currently appears to be the quickest route to higher living standards. Underlying fears about unemployment and social welfare have been cast aside for Kohl’s more optimistic promises. But in the coming months and years, the promises of the election campaign will be put to the test.
All serious commentators, West and East alike. agree that millions of jobs will be wiped out. “Unemployment in East Germany — currently estimated at about 70,000 — is likely to rise substantially as the country’s moribund and inefficient companies are exposed to the full force of competition.” (Financial Times, 20 March) Voigt, head of the GDR’s IFA car group, warned that 60 to 70% of its work force could lose their jobs. Joachim Lezock, head of Kombinat Schuhe, the state shoe combine, predicted at the recent Leipzig trade fair that there would 4 to 5 million unemployed during the ‘transition’ to economic union with the FRG. He pointed out that the GDR’s state retail organisations were already switching to West German products, and the Kombinat workers were ‘holding regular demonstrations’. (Financial Times, 14 March)
The conversion of wage rates to DM at one-to-one or even at one-to-two might raise the East German workers’ income levels. But big business wants to invest in the East to exploit the cheap, but relatively skilled labour: and “given the relatively low productivity levels of East Germany, a West German standard of living for some is all too likely to mean unemployment for many others.” (Financial Times, 17 March) High unemployment in the East will be used by the capitalists to hold down pay levels in both the East and the West.
During the election campaign, Kohl promised that the social provisions would be protected after unification. The Federal government has promised subsidies for pensions and unemployment pay. But to what extent, and for how long? Shortly after the elections, Hahn, the boss of Volkswagen, warned against “ambitious East German demands for a social charter protecting socialist ideas for guaranteed work and housing, factory nurseries and canteens.” (Wall Street Journal, 22 March)
The escape route to the West, meanwhile, will be increasingly closed off. Immediately after the East German election results, a number of cities and states began to stop welfare support to migrants from the East. “When the temporary Camps are shut down,” announced the Mayor of Hannover, “it will become clear that re-settlers are to be treated like homeless persons. They have to return to where they came from.” (Wall Street Journal, 21 March) The evangelists of freedom who previously denounced the Berlin Wall, are now quite prepared to use administrative and economic ‘walls’ to force workers back to the East. Bremen is turning East Germans away, while the Saarland has stopped all welfare support. Shamefully, Lafontaine, the SPD leader, has led the chorus demanding measures against East German workers migrating to the West.
When the realities of capitalism hit them, the workers who moved to bring down the Honecker dictatorship will be forced to move into action again to defend their interests. Millions of workers will come to regret their support for capitalist anschluss. Even the Financial Times (10 March) soberly warned: “The likelihood that unemployment, rents, prices and social disruption will all increase in East Germany will make unification increasingly unpopular.”
Already, the Federal government is retreating on Kohl’s promise of one-to-one conversion of East Marks to Deutsche Marks. Within hours of the election results, the Bundesbank president, Pöhl, was warning that 1:1 conversion would be limited to savings of 2,000 East Marks. The FRG Finance Minister, Waigel. bluntly stated that the 1:1 conversion could not apply to wages and pensions. “We must not burden the corporate sector.” he said (Financial Times, 29 March), “with too many difficulties as it tries to make a start in the market economy.”
Signs of a retreat on 1:1 conversion provoked angry mass protests in the East. Over 100,000 turned out in East Berlin and elsewhere in demonstrations called by the trade unions, coinciding with the opening session of the newly elected parliament. In the face of this upsurge, and with protests too from the East German parties, the Bonn government made conciliatory statements. It now seems likely that savings up to at least 4,000 East Marks as well as pensions and wages will be converted at 1:1. Prices will rise rapidly, however, and high unemployment is likely to depress wage levels. Public-sector debts will be converted at 2:1, effectively writing off half the GDR’s domestic debts — thus reducing the cost of privatisation.
Kohl urged the CDU leader in the East, de Maiziere, to form a ‘grand coalition’ including the social democrats. This was “to spread the risks likely to stem from unpopular economic measures, such as cuts in subsidies.” (Financial Times, 20 March) Initially, the SPD leaders refused the poisoned-chalice. After playing hard to get for several days, however, they joined the new government.
But does the success of the CDU mean that the East will now be an assured bastion of support for the Christian Democrats? The pro-unification vote, as the Financial Times commented (19 March), “almost certainly overstates the true level of support in East Germany for the mainstream conservative groupings.” Similarly, the Wall Street Journal said (20 March): “It is quite possible, of course, that the East Germans who voted for the conservatives this time, may later list leftward again.”
Winning the elections is likely to be the easiest step for Kohl. The West German capitalists are far from having ready-made solutions to all the problems now facing them. The underlying uncertainty was shown in the response of financial markets to the election results. The stock exchange rose, reflecting optimism about investment and profits in the East. The bond market, however, which reflects the prospects for government finances, went down, revealing investors’ fears about higher state expenditure and the danger of inflation.
Prior to the elections, the banks and big business were poised for investment in the East. East Germany is seen, not only as a field of investment in its own right, but as a bridge to the market of Eastern Europe (140 million ) and the USSR (280 million) — “a type of mega-market without parallel.” as VW boss, Hahn, put it. (Financial Times, 23 January) Hahn said that the joint development of car production in the East between VW and the state-owned IFA would require DM5 bn investment over the next few years, most of which VW would find from its own cash reserves and profits. A spokesman of the Federation of German Stock Exchanges (Wall Street Journal, 20 February), said that “estimates indicate that amounts of up to DM500 bn (about $300 bn) would flow in to East Germany in a short time.”
But it will take time before big business begins to get a return. It will be five years before new projects, whether joint ventures or direct investments, will start to yield “real extractable profits.” Hahn admitted that current projects were still in the ‘pre-feasibility stage.’ Real businesses would emerge in 1993, “perhaps starting to produce a profit in 1996.” (Financial Times, 15 January)
But what will be the state of the world economy in 1996? If the world boom were to continue, then the capitalists might well reap rich profits. The boom, however, is exhausting itself: all the conditions for a new crisis are being prepared. West Germany, despite its huge trade surplus, will not escape the effects of a world recession. If there is a downturn within the next five years, the West German capitalists may well find they have made enormous investments but are unable to recoup the profits they expect. Instead of prolonging the boom, therefore, West German capitalism’s enormous outlays in the East are likely to rebound on them, further aggravating the crisis.
The leaders of West German capitalism recognise that the absorption of the East will mean enormous costs, particularly to the West German state. According to RWI, an economic institute in Essen, the overall cost to the public purse will be DM35 bn a year for the next few years. The Ministry for Labour in Bonn estimates that the social costs (e.g. underwriting unemployment pay and pensions) will be DM15 bn a year.
There are widely varying estimates of the costs of bringing the East’s infrastructure up to the standards of a modern economy. The telephone system, railways, roads, water and power supplies all need drastic upgrading. Some estimates put the cost as high as DM2,000 bn. The cost of cleaning up the terrible pollution in the GDR is estimated at about DM200 bn.
West German capitalism still has enormous reserves. Last year, the trade surplus was DM135 bn. The net foreign assets of big business in the FRG are about DM500 bn. One indication of the affluence of the past period is that West German citizens spend DM45 billion on holidays abroad. Nevertheless, the question remains: will such expenditure be justified by the returns in the next period? Under favourable economic conditions, the absorption of the East would transform West Germany into the most powerful European economy, rivalling Japan and the United States in the world arena. In the event of a world downturn, on the other hand, West German capitalism could be acquiring an enormous liability — without the certainty of reaping the expected rewards.
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A unified Germany will be sailing into uncharted waters, and there will be storms ahead. The process of integration will be complex, with many unknown factors. The anschluss greeted with enthusiasm by the capitalists today will tomorrow bring unwelcome instability and crisis. During the postwar upswing, West German Capitalism, on the basis of high and rising living standards, enjoyed relative social peace and political stability. Now the FRG will be absorbing a foreign body, a society thrown into turmoil by the degeneration of Stalinism and the inevitable dislocation caused by capitalist restoration. The lives of millions of workers in the East will be turned upside-down. Notwithstanding the mass support for the CDU, workers in the East have a different experience and outlook. When their aroused expectations come into collision with economic reality in a capitalist Eastern zone which will remain much poorer than the rest of Germany, they will move into struggle. The experience of the mass movement in October 1989 will not be forgotten. This is recognised by the serious capitalist commentators: “…a united Germany will be a more polarised, disharmonious and unstable place than the Federal German Republic.” (Financial Times, 10 March)
One potentially inflammatory question is how the claims of former owners to property confiscated, nationalised or collectivised in the GDR will be settled. Such property includes many private homes and small farming plots, as well as more substantial property like factories.
International frictions loom.
In international relations, the emergence of a strengthened German capitalism incorporating a state extracted from the Eastern bloc will inevitably create new tensions and instability. US imperialism has signalled acceptance of unification. But this does not rule out intensified rivalry in the future between Germany and the US, particularly in a period of sharpened conflict on the world arena. Thatcher most clearly reveals the fears of West Germany’s weaker capitalist neighbours. Other European states fear that up to 20% of the cost of unification will be passed on to them through reduced FRG contributions to the European Community budget and increased expenditures on the East when it becomes, in effect, an underdeveloped region of the EC. The EC has hardly begun to resolve the many different problems of integrating East Germany, undoubtedly a rich source of acrimony. There are also fears, already reflected in the Netherlands’ threat to break the link between the Guilder and the DM. that increased state expenditure in the FRG will lead to a higher rate of inflation, which would adversely effect the EMS and other major currencies.
The ruling bureaucracy in the Soviet Union has also accepted unification. Gorbachev now accepts a return to capitalism in Poland and Hungary, and the departure of the GDR from the Eastern bloc. This is a major defeat for the Russian bureaucracy’s longstanding foreign policy aim of maintaining an East European security zone around the USSR. Publicly Shevardnadze has been demanding that a unified Germany should be ‘neutral’, i.e. outside Nato. From US State Department statements, however, it seems likely that the Kremlin has privately agreed that Germany will remain in Nato, provided the Soviet Union is allowed to maintain troops in the Eastern zone — at the expense of the FRG! For the US (and Germany’s other rivals), the presence of Soviet troops in an enlarged Germany will act as a certain check on the freedom of action and ambitions of West German capitalism. For the sake of their immediate objectives, Kohl and company will accept this, but such conditions will soon become irksome for the German ruling class and turn into another bone of contention between the powers.
Germany’s eastern borders with Poland are also a thorny issue. In reality, West German capitalism will have to accept, for the foreseeable future, that the postwar borders will remain unchanged. During the election campaign, however, Kohl would not publicly repudiate the idea of any revision. Clumsily, he tried to link the issue with the FRG’s refusal to make any further reparation payments to Poles. This was to appease ultra-right wing, nationalist opinion, especially strong among German émigrés from the German territories occupied by Poland and the USSR after 1945. While not a major issue at the moment, the Polish borders will be raised again by the ultra-right in a new period of social tension.
The “Two-plus-Four’ talks, between the big powers (the USSR, US, Britain and France) and the two Germanies, will no doubt reach some compromise on the immediate issues raised by reunification. But the relationship of an enlarged Germany to NATO and the Warsaw pact is interlinked with the fundamental economic, political and strategic relations between the super-powers. With the present detente it appears that the powers can resolve their differences through talks and compromise. But the underlying class and national-capitalist antagonisms remain. Detente, with a world economic downturn and revolutionary upheavals, will give way to a new period of tension and struggle between the powers. A united Germany, although apparently a victory for capitalism, will in no way soften the antagonisms.
The restoration of capitalism in East Germany is a big set-back for the proletariat. But the price to be paid by a temporarily triumphant German capitalism will be the incorporation of many volatile, combustible elements into its once so solid foundations. It will not be so long before the complacency of the capitalists is shattered by stormy movements of the German workers. who will forge their own class unity in the struggle to abolish capitalism. They will reconquer the social gains squandered by Stalinism. They will build a planned economy under workers’ democracy which will demonstrate the inestimable advantages of the socialist organisation of society.
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