The Schulz factor

Charles Lees assesses the prospects for Europe’s oldest social democratic party in the forthcoming election and beyond

As we approach this September’s federal elections, the SPD’s prospects of unseating Angela Merkel’s grip on the Federal Chancellor’s office look increasingly bleak. After an initial surge of enthusiasm at the start of the year for the SPD and its newly installed Chancellor candidate Martin Schulz, Merkel has reasserted herself on the German political scene. Schulz’s candidature was intended to add a degree of populist passion to the SPD’s electoral offer and counter Merkel’s centrist electoral pitch, described by the German political scientist Manfred Schmidt as a strategy of ‘asymmetric demobilisation’.

Social democracy under pressure

The global financial crisis of 2007 and 2008 and its aftermath exposed to many the growing and intractable tension between the assumptions that underpin modern democracy and the increasingly decisive and potentially destructive demands of the markets. Social democratic parties were particularly exposed by this failure of democratic control and have been punished by voters across Europe. Voters are clearly angered by the increasingly explicit hollowing out of the democratic process that is indicative of what political economist Wolfgang Streeck has described as the ‘delayed crisis of capitalism’. The SPD were no different in this regard.

At the heart of this crisis is the stagnation or even decline of wages as a share of GDP over the last the 40 years and the political response to it. This decline coincided with, and further accelerated a shift away from, the post-war ‘tax state’, in which buoyant general tax revenues funded the provision of public goods and stimulated demand, to the ‘debt state’, in which the rising living standards and economic growth that voters had come to expect in the post-war period were more and more funded by public debt. For Streeck, the global financial crisis marked the moment when the ‘debt state’ ran out of road. Western states spent hand over fist to bail out the financial sector and stabilise the economy; a gesture for which they received no thanks from the markets. And faced with a choice between representing and defending the interests of their citizens and maintaining credibility with the very financial markets they had bailed out, these states chose the latter course of action. Democratic control over the economy was revealed to be a chimera.

The apparently non-negotiable nature of austerity and the willingness of governments and financial institutions to override the wishes of their citizens has been most obvious in the Eurozone countries’ and European Central Bank’s responses to the Euro-crisis. As governments across Europe capitulated to the markets, a particular loathing developed amongst voters for those parties whose purpose in politics was ostensibly to not capitulate to capitalism but rather harness and modify its dynamism for the benefit of all the people. So throughout Europe voters have punished social democratic parties.

In the south of Europe – in Greece where PASOK was eliminated by Syriza or in Spain where the PSOE has been shaken by the rise of Podemos – voters have often transferred their loyalties to more populist or radical competitors on the left. More alarmingly for European social democrats, voters in the northern member states switched in significant numbers to the populist right and far right. As the Dutch social scientist Rene Cuperus observed ‘European social democracy faces an existential crisis for one reason: the electorate is of the opinion that social democracy is betraying the good society it once promised and stood for – the good society of equal citizenship, solidarity, social mobility, trust and strong community. The electorate thinks that this good society has been undermined and destroyed by an elitist, pseudocosmopolitan concept of the good society, built around neo-liberal globalisation, European unification, permanent welfare state reform, ill-managed mass migration, the rise of individualism and a knowledge-based meritocracy’. The electorate had fallen out of love with social democracy.

Compared to some other countries, Germany’s experience of the financial crisis was sharp in severity but relatively short-lived in duration. This may go some way to explain why the SPD has avoided the kind of electoral meltdown suffered by PASOK in Greece or even the PS in France. Nevertheless, over the period since 2007 the party’s only realistic chance of government at the federal level has been as a junior partner to the CDU/CSU in a grand coalition: first from 2005 to 2009 and, subsequently, since the 2013 federal election. The last decade has not been an easy one for Europe’s oldest social democratic party.

By the winter of 2016–17, with less than a year to go before the federal election, it was clear that the SPD needed to change course if it was to break the cycle of electoral stagnation in which it appeared to be locked. Monthly polls over the period since October 2013 have seen support for the SPD decline steadily from around 26 per cent after the 2013 federal election to just 21 per cent by January 2017. The party appeared to lack the ability to garner any of the credit for the country’s relative economic success and increasingly dominant role in Europe. Indeed, as is often the case with junior coalition partners, the SPD seemed to get disproportionately punished for its participation in government with the CDU/CSU.

To counter this ‘junior coalition partner effect’, the SPD needed to distance itself from the CDU/CSU. As part of this strategy, the party looked outside the federal government to Martin Schulz, the charismatic president of the European Parliament. Schulz replaced Sigmar Gabriel as SPD Chair and Chancellor candidate in January 2017. Schulz’s arrival in Berlin had an immediate impact on the SPD’s fortunes, with popular support rising to 32 per cent by March 2017. However, this surge was short-lived and at no point did the SPD reach the levels of support enjoyed by the CDU. By June 2017, support for the SPD had fallen back to 25 per cent.

The rise and subsequent decline in Schulz’s own popularity with the German public was even more pronounced. Schulz benefited from an initial surge of support, opening up an 11-point lead (49 to 38 per cent) over Merkel, before dropping back as the year progressed. At the start of his candidature, the press and public alike warmed to Schulz’s biography: born into modest family circumstances in the Rhineland, leaving school without much in the way of qualifications, descending into alcoholism and attempting suicide before his recovery and rise through municipal politics, on to Brussels, and eventually to Berlin. Schulz was a more populist and demotic figure than the technocratic and relatively right wing Gabriel, whom he replaced, and he immediately created a degree of political distance between the SPD and the CDU/CSU. However, as Chancellor candidate, Schulz has struggled to craft a political narrative that resonated beyond the SPD’s electoral core and, as the gilt wore off his candidature, a series of electoral reversals at the State level – including in the SPD’s heartland of North Rhine-Westphalia – exposed a certain brittleness and rigidity of approach. This contrasted badly with the obvious gravitas and resilience of the incumbent and, by June 2017, Merkel had opened up a 27 per cent gap over Schulz.

The experience of the last 18 months, including the result of the EU referendum in the UK and the election of Donald Trump in the US presidential election, was a timely reminder to political analysts of the perils of prediction. In our newly chastened state it is tempting to hedge our bets, but I am prepared to stick my neck out a little. I predict that, all things being equal, Merkel will be returned to power as Federal Chancellor after the election. The more intriguing question, therefore, is not whether Merkel is returned to power but rather what kind of government will she lead? The SPD has been junior partner in Merkel’s governments for eight of the last 12 years and, with little hope of toppling Merkel, many senior SPD figures regard a renewal of the grand coalition as their best hope of government.

However there are a number of reasons why this might not, or even should not, happen. First, although he is a strong pro-European in the orthodox German mould, Martin Schulz is a more abrasive figure than Sigmar Gabriel and the political distance created with the CDU/CSU during the election campaign will be harder to bridge than it might have been under Schulz’s more centrist and emollient predecessors.

Second, Merkel may have a number of potential coalition partners, possibly including the Greens and certainly the newly resurgent liberal FDP, which the CDU/CSU has considered its default option in the past.

Which brings us to the third reason: the increasing unpopularity of the grand coalition option with the German public. Polling shows that for most of period from January 2014 to June 2017, the incumbent grand coalition was by far the most popular coalition option with German voters. However, as 2017 has progressed, voters have grown increasingly unhappy with it and open to other options, particularly a return to the CDU/CSU-FDP coalition option.

The fourth reason is that it might not be in the best interests of the SPD to return to government as a junior partner of the CDU/CSU. I have already discussed the ‘junior partner effect’, in which junior partners tend to absorb the negative costs of coalition government (think of the plight of the Liberal Democrats in the UK). The longer a party stays in government under those circumstances, the more costly it can become.

This brings us to the final reason for resisting the siren call of government – the opportunity for using a period in opposition for a root and branch renewal of the SPD’s mission and electoral offer to the German public. The choice of Schulz over Gabriel was recognition that the SPD’s hitherto centrist and technocratic message no longer resonated with German voters. At the same time, Schulz does not represent a real break with the past – he is very much a creature of the European political establishment, albeit with populist overtones, and offers little change from the political-economic status quo beyond a stronger focus on social justice. Yet the lesson of Jeremy Corbyn’s Labour party in the UK is that it is possible to break with the neo-liberal consensus and craft a positive offer that has considerable electoral appeal. It is true that the social and political conditions in Germany are very different from those of the UK, which is undergoing something analogous to a social and political breakdown. This means that the SPD cannot simply view the Corbyn playbook as an off-the-peg solution to its electoral problems.

What the Corbyn example does demonstrate, however, is that it is possible to break the cycle of electoral decline that has affected social democratic parties. If there was the political will within the party elite and across the membership, four years in opposition would give the SPD the opportunity to craft a uniquely German response to the crisis of European social democracy and make themselves truly relevant again for the first time in 20 years.