Foreign Correspondence: Germany, A Model Economy?

By Conor McCormack


We can all imagine the scene: an unapologetic Daily Mail reader arguing with a wannabe socialist about the merits of Labour party policy under Jeremy Corbyn’s leadership. “He wants to take away our military and turn us into the Soviet Union or Venezuela!” the Mail reader exclaims. “The Soviet Union wasn’t real socialism and Venezuela’s economy is made up predominately of the private sector” the socialist smugly responds, before asserting that in reality Corbyn’s policies resemble that of Scandinavian social democracy rather than Soviet style socialism. The 2017 Labour manifesto did not talk of widespread abolition of the market or the price mechanism. Instead there were plans to – much like Norway, Finland and Sweden – nationalise what many deem essential industries and increase trade union power. However, since arriving in Germany for study abroad, I have wondered why the British Left does not utilise the economic structures of the German economy in their “Social Democracy” narrative.

Frankly, if either side of the aforementioned debate were able to accurately maintain that Germany more closely resembles their ideals, their position would be a strong one given Germany’s astounding economic history. In contrast to America, whose development into the world’s greatest superpower was indubitably aided by the fact that their geographical position made an invasion practically impossible, Germany had lost two World Wars and was subject to a lengthy partition. Nevertheless, on each occasion its economy was quickly able to re-establish itself among the world’s superpowers and today is the world’s fourth largest economy in terms of nominal GDP. Therefore, it’s pertinent to ask what it is about the German economy that allows it to consistently perform so highly.

Firstly, trade unions. In Britain they are often viewed as tyrannical bodies that single-handedly caused the stagflation of the 1970s, however, in many parts of the world strong unions have actually worked effectively alongside employers and Germany is certainly one example of this. For example, elected union representatives have been known to negotiate wages and working hours for entire sectors of the economy. In terms of railways, British political rhetoric often depicts state-run services as inefficiently operated, however, Germany’s nationalised railway functions perfectly well. Germany’s efficient railways and impressive infrastructure makes the frustrating journey one has to endure when trying to get from one part of Cornwall to another appear absurd, especially when compared to how easily you can get across Germany via rail. Lastly, German university students pay a maximum of £250 per year (a mere 2.7% of the £9250 an Exeter student pays annually). Now, you may be wondering how on earth Germany can afford this. Well, a big contributing factor is that they do not possess any nuclear weapons outside of NATO agreements. It turns out maintaining your own expensive, Cold War style nuclear weapons is not the only way to stop North Koreans from invading.

 

 

So, the next time your grandmother tells you Corbyn is a communist or that there’s no money in the public purse for his policies, you really do not need to dig out your copy of Mark Blyth’s “Austerity: The History of a Bad Idea”. Nor do you need to explain to her that the Soviets can’t have been socialist because there was commodity production. You can restrain your inner Bernie Sanders and instead calmly reel off the virtues of the German economy.

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