The fading out of the German social market economy

The German social market economy (Alfred Müller-Armack, Ludwig Erhard) is based on the premise that the economically strong show solidarity with the economically weak and disadvantaged. The social market economy is thus based on a social contract that guarantees social peace in our democracy and constitutional state. This model worked very well in the post-WWII decades, as Germany’s reconstruction was, above all, a joint effort, supported by the promise of prosperity for all. Wealth was based on the fundamental assumption of the development of the common good in an open, pluralistic society.

This model is challenged by an increasingly hyper-individualistic society that puts personal comfort and inherited privilege first.

The successful decoupling from democracy

With the rise of neoliberalism, this consensus was broken. The new underlying assumption was that the market should and could regulate everything. The accumulation of wealth after the development phase should also benefit the socially and economically disadvantaged classes through ‘trickle-down economics’. Solidarity with the disadvantaged classes can finally be terminated without disadvantages for one’s own group. Why send one’s children to disintegrating public schools when one can afford private schools and elite universities? Why do we need statutory health insurance if we can enjoy the benefits and privileges of private insurance?

The wind has changed and conservative politicians are saying: ‘The non-working population is lazy and we no longer want to pay for lazy people’. Thomas Piketty’s analyses are interesting in this context, especially the decoupling of the stock market from the real economy, which enables the non-working rich to demonstrate moral superiority over the non-working poor, according to the motto ‘Look, we are the high performers and achievers. We are the real victims as we pay for the lazy poor. The poor and middle class are just jealous of our wealth. If you don’t offer us the most favorable conditions, we’ll get on our private jets and move to the next best tax haven.‘

The big question: Who finances the state?

The counter-question is: What do the super-rich cost us as a society? The fact is that the economic elites have long since canceled the social contract and the eroding middle class rightfully feels cheated:

(I) Firstly, by the federal government, which is holding back urgently needed investments in infrastructure and ecological transformation, shying away from substantial investments in future technologies and leapfrog innovations, as well as by the German federal states, which are standing idly by and watching a decaying education system – all prerequisites for a solid middle class. (II) Secondly, the tax injustice described above, in particular, the refusal of politicians to introduce inheritance taxes (especially on industrial assets), wealth taxes, and capital transaction taxation. (III) Thirdly, the unresolved problem of pensions and civil servants’ pensions, which make up the largest part of the federal budget: The pension or retirement life model is becoming unaffordable. The budgets for unemployment and citizens’ benefits are negligible in comparison but are being disproportionately emotionalized and inflated to distract attention from the real problems, such as the demographic development of the German workforce in the coming decades.

Wealth as ideology

The ideologisation of the idea of wealth for the common good takes place in two steps. The first step is the desolidarisation described above, the creeping termination of the social contract. The second step consists of securing privileges at all costs.

The ecological turnaround is too expensive. Outdated technologies such as diesel or oil heating should continue to be used. Russian natural gas is to be rehabilitated. This also includes holding on to the cherished SUV, cheap meat or skilfully circumventing the Supply Chain Act, which serves to guarantee decent social end ecological standards across global supply chains. We don’t want to be reminded of the social, ecological, and political costs of our prosperity.

Eyes wide shut

Anyone who dares to suggest that society renounces, moderates, or restricts itself is criminalized. The new definition of ideologized prosperity is as follows: ‘The preservation of earned prosperity has top priority. The defense of privileges may cost democracy, on which we are no longer dependent in a plutocracy anyway. Democracy today is a threat to prosperity for the wealthy and super-rich because it means the participation of the poorer classes.’

As with all ideologies, this requires an extraordinary denial of reality. The fact that this works excellently in social media is demonstrated by the approval of around 20 percent of all Germans for a right-wing populist party that dreams of the classic nation-state, discrimination against other cultures, the exclusion and even annihilation of minorities, and a ‘Germany First’ policy. Nation-state-based oligarchies and plutocracies appear on the horizon as acceptable alternatives to a participative democracy: what has already happened in the USA could soon happen to us in the same way. The digital dictatorship in China has taken prosperity as an ideology to the extreme. In exchange for the state’s promise of prosperity, the population there is selling off its civil and human rights, which are subsumed under a social credit system.

When we talk about wealth, we must therefore clarify which interpretation of prosperity underlies the respective discourses, and which interpretation we make our own.