Germany is today’s ‘sick man’ of Europe as capitalist crisis deepens

By Terry Evans
December 2, 2024

For years the rulers in Germany have used their domination of the European Union to enrich themselves on the backs of working people, especially by squeezing their weaker rivals in Greece, Italy and the rest of southern Europe. But today the German economy itself is mired in stagnation and debt, leading the bosses to push harder against workers’ wages and conditions at the same time that the rulers confront an increasingly unstable world.

To compound their problems, Germany’s capitalist class now has a minority government after Chancellor Olaf Scholz’s coalition fell apart Nov. 6. Its collapse was prompted by Scholz firing the finance minister in a dispute over whether to ignore laws that aim to prevent the government from increasing its levels of debt. New elections will take place Feb. 23.

The continent’s second-most powerful ruling class, in France, also has a weakened minority government. Both Berlin and Paris confront sharpening competition for markets and resources against their rivals, including the rulers in the U.S. and China.  At the same time they face Moscow’s murderous moves to conquer Ukraine and to extend the clout of Russian President Vladimir Putin’s expansionist regime in Europe.

Germany’s faltering capitalist economy — for decades the strongest on the continent — is now the new “‘sick man’ of Europe,” the Financial Times wrote July 16. Since 2019 Germany’s gross domestic product has risen only 0.2%. In sharp contrast, over the same period U.S. GDP is up by 10.7%. Over the last year industrial production in Germany has slumped 4.6%.

For years the German rulers profited by unequal trade relations with southern European countries, like Portugal, Italy, Greece and Spain. But today the economic malaise wracking the German bosses is deepening the crisis of capitalism across all of Europe.

Bosses turn the source of this crisis on its head when they attempt to blame the working class for their declining fortunes. The Nov. 1 Financial Times quoted an anonymous company executive who scolded “work-shy” young Germans for undercutting the country’s “competitiveness.” Mercedes-Benz CEO Ola Kallenius blamed autoworkers for taking too many sick days. The fact is they’re gearing up for more attacks on workers’ wages and conditions.

Working people in Germany and across Europe are being made to bear the brunt of a crisis not of their making, and are increasingly determined to defend themselves from the employers’ attacks.

Sky-high prices and layoffs

Inflation in Germany soared to a 50-year high in 2022. Food prices alone rose by 12.4% in 2023. At the same time, 64,000 autoworkers in Germany have been thrown out of work since 2018. Auto giant Volkswagen announced Oct. 28 it will shutter three plants, its first-ever factory closures at home, with a 10% wage cut for the remaining workers. Despite the closure threat, workers at the company’s Osnabrueck plant, members of the IG Metall union, went on strike Nov. 6 demanding higher pay.

In late October, 71,000 IG Metall members walked out at auto companies Porsche AG, BMW and Mercedes. They said no to a 3.6% raise over 27 months, demanding 7% instead. Their actions follow a wave of strikes earlier this year by workers at airports, banks, railways and elsewhere.

“You notice the solidarity has become stronger,” Christoph Leonardt, a striking worker at a scrap metal plant near Leipzig, told the New York Times in March. The strike ended in May after 180 days, the longest in Germany’s postwar history.

A slump in production at key automotive, chemical and engineering industries was exacerbated by a sharp rise in natural gas prices that followed Moscow’s invasion of Ukraine.

For years the German rulers had one of the most decrepit capitalist armies in Europe, relying on playing Washington and Moscow against each other for defense. After Putin’s invasion of Ukraine they scurried to rebuild their armed forces.

Today, Berlin is the second-biggest supplier of arms to Ukraine. But unlike the governments of the U.S., France and the U.K., Germany’s rulers have refused Ukraine’s requests for more powerful and long-range missiles. Scholz says Berlin’s strategy is “Russia must not win and Ukraine must not lose” the war.

Earlier this year Defense Minister Boris Pistorius warned that Berlin faced decades of confrontation with Moscow and argued for a more rapid German military buildup than Scholz was undertaking.

Deepening crisis across EU

Prospects for the rulers of France, Europe’s second-strongest imperialist power, are no better. For decades they utilized their economic and military ties to regimes in former French colonies to try to offset their decline. But these connections are being ruptured in the course of the conflicts shaking West Africa. Paris has been forced to withdraw its forces from Burkina Faso, Mali and Niger. Now it plans to further reduce troops deployed in Chad, Gabon, Ivory Coast and Senegal.

At home, French Prime Minister Michel Barnier announced his 2025 budget last month. It would delay increases in state pensions for 14 million retired workers, from next January until July, and increase vehicle sales taxes. If the proposals are rejected by the National Assembly, Barnier says he will use special governmental powers to enact them anyway. The last two French budgets have been “adopted” this way.

Germany’s capitalist rulers account for a quarter of the European Union’s GDP, ensuring that the capitalist crisis in Germany will intensify the challenges facing all of Europe’s ruling families and that of the EU as a whole.

In the 20 countries that use the euro currency, economic output grew at zero percent in the last quarter of 2023 and has stagnated since.

Today there are 27 governments in the EU. The political bloc was created with a storybook myth that it would lead to a convergence of Europe’s competing ruling classes, and a lessening of class and regional differences. In fact, it was a way for the rulers in Germany and France to take advantage of their edge over the rulers in the southern European countries to prosper and better compete with Washington.

Today the gap between the capitalist economies in Europe and the U.S. is widening.