The Social Democracy of Crisis: German Stability and European Problems, 1966 – 2024

Date of Award

Spring 1-1-2024

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

History

First Advisor

Moyn, Samuel

Abstract

“The Social Democracy of Crisis: German Stability and European Problems, 1966 – 2024” traces the evolution of economic reformism in the latter half of the twentieth century. Under the influence of Keynesian macroeconomists like the future Minister of Economics Karl Schiller, the Social Democratic Party of Germany (SPD) framed reformism – the attempt to procedurally change capitalism into a better, more just economic order – as a project of crisis management. Through careful tinkering with macroeconomic indicators, the party argued that their new economic policies could make crisis a thing of the past. Technocratic means were to be safeguarded by democratic input and flanked by bold visions of a future defined by “realistic utopias” and “mature societies.” First developed as a national policy toolkit, the SPD hoped to scale up its reinvigorated reformism to the emerging institutions of an integrating Europe.As Bretton Woods crumbled, oil prices skyrocketed, and inflation lingered, the SPD quickly invented reasons to scale down its plans. By the mid-1970s, the project of crisis management became a purely negative and national one. The SPD came to epitomize what this dissertation calls the social democracy of crisis, a political formation whose obsession with warding off the worst prevents it from articulating electorally or intellectually compelling visions for international efforts in the name of better, more egalitarian futures. This development has subverted social democracy’s promise to constrain capitalist excess by means of democratic oversight. By revisiting SPD policies and ideas, this dissertation complicates and complements literatures focussed on the rise of neoliberalism and the relationship between capitalism and democracy. The SPD sold out reformist ambitions both domestically and internationally, its anxious obsession with crisis prevention hindering the formulation of alternatives to neoliberalism. This has emaciated the reformist imagination and continues to undermine social democratic parties today. Chapter One details the rise of macroeconomic thinking in the SPD from the mid-1950s to West Germany’s first recession in 1966, which provided the SPD with the intellectual and political fuel to indict the governing Christian Democrats (CDU) by politicizing the issue of economic crisis management. This enabled the party to enter federal government for the first time in the postwar period, forming a “Grand Coalition” with the CDU. Chapter Two then traces the economic policies implemented by the Grand Coalition, epitomized by Karl Schiller’s “Law for the Promotion of Stability and Growth.” Enshrining key elements of Keynesian steering, the law helped overcome the recession and brought the SPD much political success. In 1969, Willy Brandt became the first postwar SPD Chancellor. But just as the party was gaining political momentum, its economic toolkit started to break down. International currency strife, coupled with domestic disputes over profits and wages, highlighted shortcomings in the SPD project of crisis management. In response, Schiller and the SPD turned their attention to European currency relations. As Chapter Three demonstrates, SPD politicians initially imagined a Europe in which economic policy might be broadly coordinated. These ambitions did not stand the test of time. As Bretton Woods exploded, the SPD under Schiller and then Helmut Schmidt moved to secure German growth by means of European stability, prioritizing an anti-inflationary monetary union over economic coordination. Such reduced ambitions were part and parcel of larger political and intellectual developments in the Federal Republic. As Chapter Four shows, the SPD under Helmut Schmidt increasingly abandoned the idea that economic policy had anything to say about better futures. Crisis management became a matter of simply stabilizing the present. Reformism became slowly severed from the democratic futures that had once justified its technocratic interventions. In 1982 the party was expelled from government, returning in 1998 under the neoliberal guidance of Gerhard Schröder. Chapter Five demonstrates that the SPD failed to find a new path forward in this period. To this day, the party continues to believe itself the most capable manager of economic crisis, but seems incapable articulating politically compelling visions of a future that voters might believe in.

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