Source: New Interventions, Volume 10, no 1, Summer 2000. Prepared for the Marxist Internet Archive by Paul Flewers.
I: The Effects of German Reunification: A Balance Sheet of a Decade
The final destruction of ‘actually existing socialism’ from East Berlin to Vladivostok began in the autumn of 1989. Today, the drawing up of a balance sheet of developments, of successes and failures, of official promises and real achievements, of popular hopes and disappointments is both desirable and feasible. The countries of the former Soviet bloc share several common traits, but some factors are specific to the German Democratic Republic, now the five new states of the Federal Republic of Germany. Here facts and figures are more complete and therefore more enlightening about the process of transformation from an over-centralised planned economy without capitalist ‘entrepreneurs’ into a capitalist — ‘market’ — economy, presumably concomitant with real democracy.
The GDR was part of the Eastern economic bloc, the Comecon, its markets largely the economies of that bloc. Together with Czechoslovakia, the GDR had the most advanced industrial potential, the highest living standards, high employment and a comprehensive system of social security. (We do not ignore the particular form of social inequality — the privileges in kind enjoyed by the upper bureaucracy; but this topic is not relevant to the issue discussed here.) By the way, the privileges never reached and never aspired to the ‘normal’ level of socio-economic inequality in the FRG.) The self-induced breakdown of the GDR was one aspect of the avalanche that ruined the Eastern Bloc.
The GDR’s leadership rejected the chance of implementing socio-economic reform in 1985; in 1987, the leadership showed its undisturbed self-confidence. In the summer of 1989, it ignored the early warnings — the mass exodus of its citizens via Prague and Budapest. A few days after celebrating 40 years of the GDR, the breakdown was complete, and the self-assured ‘leading force of the working class’ surrendered the country to the other, capitalist, Germany, without any resistance.
The capitalist leaders of Western Germany had promised their ‘oppressed brothers and sisters’ in the GDR the promised land of a market economy and democracy. Chancellor Helmut Kohl offered to create ‘flowering landscapes’ in what he asserted was an economic desert. The costs of the new economic miracle would be met from the petty cash. Everybody would enjoy a better life, nobody would pay higher taxes. The lag in living standard of the GDR’s citizens would be levelled out in a short while. True, the majority of the GDR’s population believed these entirely mendacious slogans. This proves both the political bankruptcy of the GDR’s leadership, and the credulity and naivety of its citizens. But what was achieved during this decade? Who won — and who paid the price?
Let us first state the positive economic results. Substantial investments have improved the infrastructure (railways, roads, highways, telecommunications, sewerage systems). The choice in the shops is wider; most Western goods are available. Procurement of tropical fruit and vegetables, coffee and tea is more flexible and regular. Housing has been modernised, arrears in inner-city repair have been partially overcome.
But taking the GDR as one economic region (ignoring small variations in the region itself), the promises mentioned above have not materialised at all. The level of production is much lower, unemployment has risen to double that of West Germany (16.9 per cent against 8.3 per cent in November 1999). If we include hidden unemployment, the level is almost 30 per cent. The number of employed people has declined radically from 9.75 million in 1989 to 6.06 million in 1998, that is, by almost two-fifths (38 per cent). In manufacturing industry, the number employed has declined from 3.4 million to less than one million. Production declined from 1989, in 1990 by 17.9 per cent, in 1991 by a further 22.9 per cent. Taking into account all the minor increases during the following years, industrial output in 1999 was just half of that of 1989. The statisticians now use the neat trick of taking 1991 as the base year for growth rates. Unemployment is particularly heavy among women and youth.
This trend of development is only partly due to the breakdown of the economies of Eastern Europe and Russia, the foremost markets of the GDR, but rather to a very large extent due to the transfer of industrial enterprises to West German firms. Their priority was not to maintain a high level of production; they wanted to destroy an economic rival and to conquer its knowledge and markets, to take over the assets (factory sites in cities have a high value). This transfer — both privatisation and colonisation — was implemented by a special agency, the Trustee Institute in Berlin, and it was linked to large-scale corruption and huge subsidies, special financial support for the Western ‘entrepreneurs’, who supposedly had to be compensated for modernising the factories they acquired, sometimes for a symbolical price. Thus, assets with a value of about 600 billion West Deutschmarks were transferred to a small number of West German (and French) enterprises. Despite the heavy destruction of the Second World War and the dismantling of many factories by the occupying powers, East Germany reached its prewar level of industrial production within five years, by 1950. Ten years after ‘reunification’ and the immediate introduction of the most efficient capitalist system, industrial production was about 50 per cent of that of 1989.
The lack of employment opportunities has resulted in a continued exodus of young people of working age, an east-west migration either for permanent settlement in the West, if housing was available, or as regular commuters, returning home for the weekend. A declining birth-rate and migration has led to a steady decline of the population. Immediately after 1989, the open and hungry market of about 15 million people offered an opportunity for Western goods and a short extra boom for certain enterprises, particularly for the supermarket chains. This boom lasted about five years. The destruction of industrial capacity was particularly heavy in high-tech enterprises (for example, Zeiss in Jena), engineering, the docks and chemicals. Even compared with its eastern neighbours (Poland, the Czech Republic, Hungary, Slovenia), East German performance, its industrial growth rate, is the lowest.
Summing up, we might call the economics of ‘reunification’ a hostile merger or take-over on a very large scale, which has led to large-scale deindustrialisation. The total take-over was accelerated by the initial acceptance by the Eastern population, with its illusions about the potential of capitalist development. The social democratic leadership offered no development alternative, it only wanted to accelerate the process of economic and political ‘Anschluss’ (‘integration’).
A similar development can be observed in research and higher academic education. There was a ‘cleaning up’ in academic research activities both in universities and other institutions and in applied research directly connected with producing enterprises. In 1989, there were 32 000 research personnel in scientific academies and 14 000 in universities; the figures for 1994 were 12 000 and 10 000 respectively.
According to statistics, prior to 1989 inflation was slow; accordingly wages and salaries rose very slowly, and wage differentiation was quite limited. The whole system of prices (very low rent, cheap basic food) and remuneration was entirely different from West Germany, and therefore hardly comparable. After 1989, wages have increased substantially: average monthly net income in 1991 was 1370DM; in 1998 it was 2420DM, an increase of 77 per cent, in current prices. The increase was larger than in the West (from 2504 to 2820DM, up 12 per cent). But with the same price-level of most commodities and most services, a gap of 16 per cent remains. And the average wage is earned during a shorter working period in the West.
The situation in the farming sector is different from that in the industrial sector. Both the size of farm enterprises, their equipment and productivity (of labour and land) had reached a high level before 1989. Collectivisation — in spite of its early awkward effects — had produced the basis for competitive production. And farmers had finally accepted the new institutional form and recognised its advantages in their daily life and work — specialisation, regular working hours and holidays, safe employment and income, and social security. Thus, in spite of the attempts by the government to dissolve the collective farms, most members wanted and continue to want to maintain their status; very few felt encouraged to start private farming again. But there were and there remain the former landlords, expropriated by the agrarian reform of 1945-49. Contrary to the agreement of 1989-90 between the GDR and FRG, West German institutions started a incremental destruction of the effects of that reform. Thereby they responded to the repeated campaigns of the heirs of the former landlords, and supported their final objective of a return to the status of 1945 — before the agrarian reform. Without organised resistance, the collective farmers will finally be dispossessed.
Full dominance of the goals of West German capitalism has deprived the East German economy of all power of decision; it has become entirely dependent upon the economic cycles of the FRG. Massive long-term unemployment destroys many people’s perspectives. Dissatisfaction is widespread, and the rejection or absence of an attractive socialist alternative produces a young generation without hope and perspective, and therefore prone to racism, right-wing extremism, and hatred and violence against foreigners and German leftists in the new economic deserts. This mood is promoted by a sophisticated social demagoguery, high-tech methods of organisation and mobilisation, and financial support from proto-fascist sources in West Germany.
The disappointment over the last decade has resulted in an electoral protest favouring the Party of Democratic Socialism, and weakening almost all other parties in Eastern constituencies. The electoral successes of the PDS, for which an early death was predicted only two years ago, has provoked revealing reactions among Western politicians. Leading Christian Democrats were very angry about the ingratitude of their former brothers and sisters, and have threatened to punish them by stopping the financial transfers if they continue to vote for the PDS and not for the ‘genuine democratic parties’ from the West. That is the new method of democratic education, meted out to whole nations, as with the Cubans, the Yugoslavs and others.
The hatred of the German ruling class for any socialist experiment on the holy capitalist soil finds different expressions. The Palace of the Republic, a modern building for the erstwhile East German parliament (the Volkskammer) is to be demolished. The leaders of the GDR’s government, honoured by their Western counterparts while in power, were sentenced like criminals. Egon Krenz, last secretary general of the SED, got a six-and-a-half years prison sentence, his associates Gunter Schabowski and Günther Kleiber got three years each. It was the usual victory elation of the German bourgeoisie after its ‘final victories’ which mostly proved to be quite short-lived and disastrous.
Mikhail Gorbachev protested against this ‘victors’ justice’. But instead of responding to Gorbachev’s signal of solidarity, which is vital after the left’s common defeat, several ‘communists’ in East and West Germany still continue to blame Gorbachev for their own surrender without resistance. They need him as a scapegoat, and they see ‘Gorbachevism’ as their ‘enemy’. Some old communists are too old to learn the lesson from their self-inflicted setbacks.
The transformation of the economies and societies of Eastern Europe and Russia to ‘market economy and democracy’ was no real success anywhere. The breakdown of 1989-91 led to a dangerous Siegesrausch (victory frenzy) of the capitalist powers. The degree of socio-economic failure and decline differs between these countries. Probably the ‘average’ living standard in East Germany is higher than in the rest; but so it was before. Bourgeois sociologists speak of a two-thirds society, where two-thirds of the population are said to live in good conditions, whilst only one third live below the norm. This is a disingenuous approach, as it ignores the wide variations and differentiation in the ‘upper’ two-thirds. In East Germany, the actual situation might be the contrary: a two-fifths society, where two-fifths enjoy a normal living standard, while the majority — three-fifths — live below this standard.
The negative effects of the last decade — high unemployment, the destruction of economic foundations, and the attitude of supremacy and attempts at ‘re-education’ by the political class of West Germany — have deepened the social divide in Germany and elsewhere. On the occasion of the tenth anniversary of the fall of the Berlin Wall, the Süddeutsche Zeitung wrote on 1 November 1999:
The economic catastrophe [following the breakdown of 1989-90] was unimaginable. Who would have thought that it would overwhelm the population of the superpower of the Soviet Union and its satellites? Today, the socio-economic decline of Russia is more extreme than in Germany at the time of the great global crisis of the 1930s.
The same is valid to a large extent for the GDR. The rift has deepened in all respects between the disparate parts of ‘reunified’ Germany, and estrangement is mutual. The increased economic and political power of German capitalism and the decline of Russia under Boris Yeltsin have destroyed the fragile balance of forces in Europe. This solution of the ‘German Question’ is definitely not the best one possible. The double-edged threat of right-wing radicalism in the country and capitalist expansion abroad has to be countered by a new socialist alternative, uniting the working class in both parts of Germany.
II: Christian Democratic Corruption
The great corruption scandal dominating German politics since the turn of the last decade not only unmasks the authors, it also strips the veil from the real channels of political decision-making and shows some basic traits of bourgeois democracy under highly developed, really-existing capitalism. This system claims to be both the best one for humanity and the final destiny of history. Since capitalists enjoy an almost total monopoly of the media, they are successful in inculcating our minds with the old-new religion of eternal capitalist rule. The scandal in Germany has several aspects, and has clear international ramifications — globalisation even in large-scale corruption. A few examples must be reported.
Helmut Kohl, the German chancellor for 16 years, has received many millions of marks from ‘honest people’ whose names he will not disclose. He gave up his honorary presidency of the Christian Democratic Union, and all celebrations of his seventieth birthday have been cancelled. For decades the CDU had, as it still has, large illegal accounts in Swiss banks and in Liechtenstein; although neither the party boss, nor any of his secretaries-general knew anything about their existence. In 1989-90, Kohl promised his ‘brothers and sisters’ in Eastern Germany that he would create ‘flowering landscapes’. Then his government sold the huge petro-chemical plant Leuna and the Minol chain of petrol stations to the French Elf-Aquitaine. It is unclear whether the CDU received 85 or 100 million marks. The files about the deal are missing from Kohl’s chancery. The arms dealer Karlheinz Schreiber from Bavaria, who has made hundreds of millions of marks, has shared part of it with the Christian Social Union and the CDU, and also with Wolfgang Schäuble, Kohl’s successor as party chairman. But Schäuble had difficulties remembering anything about it.
Brigitte Baumeister, the CDU treasurer, was at the same time a well-paid lobbyist for Thyssen’s, and she intervened frequently on behalf of Thyssen’s large-scale armament exports, which were forbidden by law, but were then promoted by Kohl. Mrs Hürland-Bünig, deputy ‘defence’ minister until December 1990, simultaneously worked for Thyssen. She received eight million marks for her lobbying. When she left office, she became an advisor to Thyssen, and was not forgotten by Elf-Aquitaine. Kohl’s minister of the interior, Manfred Kanther, a man of law and order who toughened up several laws, organised illegal accounts for the CDU in Switzerland, where he stored around 25 million marks of illegal donations from industrialists who had evaded taxation.
The Hamburg entrepreneur family of Kai and Ingrid Ehlerding donated 3.3 million marks to the CDU, and bought 31 000 railway workers’ apartments that had been privatised by the state railways.
During 1989-98, the CDU received altogether 662 million marks in donations from big companies and lobbying firms for such concerns, all of which were reported to the Berlin parliament. The secret donations and small personal transfers, which remained unreported — ‘black money’ — will never be known. Suitcases filled with money were given to leading CDU officials.
The procedure is now quite clear. The big arms manufacturers circumvented all laws and regulations. Their profits are so great that huge bribes are paid throughout the ruling parties and government departments. Leading CDU figures helped these and other large firms to avoid paying tax, to privatise public property — and to fill the coffers of their party. These additional sources of ‘black money’ were also useful in winning democratic elections. The large firms had established a special organisation, the Staatsbürgerliche Vereinigung, which mainly financed the CDU and CSU and the Free Democratic Party, and openly influenced the nomination of candidates for chancellor and for national elections, and anyone who deviated from the official line did not receive any finance.
Originally, this organisation aimed to exclude the Social Democratic Party (SPD) from government. Meanwhile, the SPD has proved its trustworthiness in all fields. It has ‘modernised’ its policies, it started the war against Yugoslavia; it now plans to relieve the large banks and investment agencies from having to pay between 30 and 40 billion marks in taxes. It has ‘reformed’ the social security system by cutting allowances. It has closed the borders to immigrants from poor countries. In fact, the relationship today between the ‘red-green’ government in Berlin and the spokesmen of industry and banking is excellent. The only trouble-maker, Oskar Lafontaine, was kicked out one year ago upon ‘advice’ from the leading industrialists.
It is good that all these examples of betrayal of the electorate, tax-evasion, law-breaking, corruption, etc, have finally been made public — although it was only by fortune that they came to light. The courts have to deal with the cases. Thus, the advocates of bourgeois democracy speak about the self-healing forces of the system. However, there were previously two similar developments under Helmut Kohl’s chancellorship. No fewer than 1800 cases were brought to court. But none of the accused was sentenced to jail, and only a very few were fined. And now we hear that the public prosecutor in Augsburg who handled the case will be moved to another post. Here we face a political, structural disease, one which cannot be cured by the judiciary.
One of the dogmas of capitalist thought has been that the ‘social market economy’ — we would say ‘capitalism’ — and democracy are connected. But the connection is very different to how they describe it. The reality is that the concentration of economic power undermines bourgeois parliamentary democracy. The influence of the economically powerful does not vanish with Schröder replacing Kohl as chancellor. The clear nod of the leading capitalist managers has more weight even for this government in economic, social, fiscal and foreign policies than the desires and needs of millions of workers or the eight million trade union members who voted for the SPD because they wanted a change in policies.
The really important decisions are not taken in parliament, but in the lobbies and over meals. Here the working class cannot compete and has no influence. So we have to use our own instruments and forms of pressure.
The red-green government can count on the goodwill of German capitalism, clearly expressed by its leading spokesmen, Hans-Olof Henkel, the head of the German CBI, Günther Stihl, the head of the employers’ association, and Henning Schulte-Noelle, the spokesman for banking, insurance and investment companies. The same is true regarding the ‘popular parties’; the powerful sponsors have vowed to continue their donation practices: ‘The party system continues to deserve our support.’
Another important political issue has recently come to light. In 1974-75, the Portuguese and Spanish peoples threw off the yoke of fascist dictatorship. Chancellor Helmut Schmidt of the SPD feared the strong influence of the communist parties: ‘There were fears of a communist take-over in Mediterranean Europe… Helmut Schmidt called a meeting of the treasurers of West Germany’s main parties to ask for their help in getting money to the underfunded democrats of Spain and Portugal.’ Our social democrat was even-handed, and money was poured into various bourgeois parties in Germany, Spain and Portugal. When the benefiting German parties had no partner abroad, the money flew back into their own coffers.
No socialist party existed in Portugal when the ‘Carnation Revolution’ began in 1974. Young officers had become tired of the colonial wars of their dictator Marcelo Caetano, and understood that their country was too weak to rule an empire. So they overthrew the fascist dictatorship with the broad support of the working class in a bloodless revolution. The farm-workers in the Alentejo, the region of feudal landlordism, expropriated their exploiters and established almost 500 cooperative farms on the estates. This was achieved without any government pressure or support from the Communist Party. The cooperatives were successful in respect of both production and social measures. The new minister of agriculture, Lopez-Cardoso, who had just returned from exile, was favouring the farm-workers’ cooperatives, as these also gave employment or support to thousands of unemployed farm-workers. The German money now started to work. The Socialist Party was founded in a German hostel belonging to the Friedrich Ebert Foundation, an SPD affiliate, and Mario Soares, the Socialist Party leader, was financed by the SPD. So he won the elections and kicked out the revolutionaries of 1974, including Lopez-Cardoso. The new ‘socialist’ government systematically restored to the former landlords their land rights and titles, and step by step destroyed the farm-workers’ cooperatives. In such a way ‘democracy’ was fortified and the farm-workers were deprived of the fruits of their illegal underground resistance and their revolution.
Kohl continued Schmidt’s counter-revolutionary strategy. In the 1980s, in tandem with the USA, the German government financed the Polish ‘workers’ leader’ Lech Walesa. It financed the election campaigns of ‘our reliable friend’ Boris Yeltsin with several million marks, and provided election advisors, printing material for propaganda, etc. This cooperation was real, while Kohl’s friendship with Mikhail Gorbachev was a fraud. The leading Western capitalist powers were aware of the economic weakness of the USSR, and blackmailed the Soviet leader after 1986 — though with a diplomatic smile and bear-hugs. The same occurred with Nemeth, the ‘socialist’ who in 1989 chaired the Hungarian government; he and Helmut Kohl had a secret meeting in the summer of 1989. There he promised to open the border with Austria in the autumn. How much did these Hungarian ‘socialists’ receive? German governments supported Pinochet in Chile and Suharto in Indonesia. And who else? Armaments and equipment for the production of high-technology mass-destruction weaponry were delivered to Turkey, Iraq, Iran, Libya and similar regimes, tanks were provided for Chile, submarines for Indonesia, police vans for South Korea. Production and export of arms is booming; and the capitalists do not forget their Christian Democratic supporters, the CDU-CSU, whether ruling or in opposition.
Foundations supposedly for political education clearly act as extensions of counter-revolutionary German foreign policy initiatives, and interfere politically in foreign countries. Now the Greens in Berlin organise and sponsor the opposition to the Belgrade government. But this opposition seems to brag too much; in the summer of 1999, they were forecasting the fall of the Yugoslav government by the autumn. Apparently, German money alone does not suffice.
The SPD now rightly complains that in 1999 the spring elections in Hesse were won by the CDU with ‘black money’, and has asked for a re-run, owing to the results being a product of illegally-financed propaganda. The same, however, was true for the nation-wide elections in the autumn of 1990, following German unification, which the CDU also financed with ‘black money’.
How arrogant were the politicians in Bonn and Berlin to talk of the Federal Republic as the ‘Rechtsstaat’, the country of law par excellence, while condemning the GDR as the ‘Unrechtsstaat’, a place without law.
German capitalism exports both arms and counter-revolution while mouthing phrases about democracy, human rights, moral values, etc. Socialists need to counterpose to this counter-revolutionary internationalism our own new proletarian internationalism. While extending solidarity, we have to avoid the abuses that went on in its name under Stalin, Brezhnev, et al, but also reject cooperation with movements secretly sponsored by capitalist governments and their institutions. We need to oppose both arms exports and military interventions. Counter-revolution in all its forms must be opposed. Interference in the internal affairs of other countries should likewise be opposed, whatever the pretext.
Sending politicians found guilty of corruption ‘to spend more time with their families’ is no solution. Few will suffer, as most will be looked after. The new, unrestrained global capitalism breeds corruption and social decay, and only a renewed socialist movement can offer an alternative. Socialists will have to defend democracy from capitalism. The alternative is apathy, depoliticisation and then fascist demagoguery. We see figures like Haider, Le Pen and Blocher in Switzerland waiting in the wings. This requires the destruction of the economic power and influence of the capitalists — there is no ‘third way’!