By Winfried Wolf
Growth having fallen for three successive quarters, it was announced on February 18 that Germany was officially in recession. The hope had been that Germany could play a role of locomotive and bring the recession to an end first in the EEC and that the stabilisation in Europe would then send positive signals to North America and Japan. This has turned out to be wishful thinking.
The boom in Germany ended in summer 1991. Since then the German economy has in reality been in decline. To be sure, the West German GNP for the second quarter of 1991 was 4.8% up on the previous year and 2.5% up in the third. However, the reference is deceptive because of the high growth rate in the second half of 1990 and the start of 1991. If the comparison is made with the immediately preceding quarter, then the GNP and industrial production have been falling since the second quarter of 1991.
In the second quarter it fell by 0.5% compared with the first and by something similar in the third quarter compared to the second. Almost everything suggests that this is not some short-term setback on the lines of 1986-7, but the beginning of a crisis.
It is not out of habit that I have written West Germany. The Federal Republic's statisticians permits themselves the trick of only giving the figures for the economic development of the former West Germany; for East Germany there are only estimates. Thus there are no all-German figures.
This way of presenting things amounts to falsification, since a significant part of West German economic growth is at the expense of East Germany. On the one hand, because the destruction of the economy of the former GDR means the creation of a big new market for the West Germany economy. On the other, West German economic growth is indebted to East German in a very direct sense: every month, some 10,000 people move from East to West Germany, where most of them find work.
Each working day, there are half a million East Germans working in West Germany. They either commute daily or are transported to West Germany at the start of the working week before being taken back to the East on Friday afternoon.
'Annexation — profit'
If we recall that in 1990 and 1991 the former East German economy experienced a drop of about a third compared to 1989, we can get
some idea of the size of the "annexation — profit" reaped by the West German economy. This, and this alone, explains the relatively stable situation of that economy until 1991.
Another advantage for the West should be added: If West Germany had swallowed up Austria and run riot there in the same fashion, this also would have been a plus for West German business. But the advantages would have been more relative since a significant part of the Austrian economy is already under the control of German capital, so that for firms such as Siemens, Daimler and BMW such a policy would have been partly cannibalistic.
But this would be a zero sum game for the West. In so far as the German economy grew at the expense of the Austrian, the Austrian economy would slip down the ladder of the Western world market.
The ex-GDR is quite another matter. This economy was almost completely turned towards the East. In this sphere it was at once the economy with the highest level of productive forces and the site of a series of key industries. The loss of East Germany was thus one of the decisive blows, if not the decisive one, against the Soviet economy.
The "divided conjuncture" is most apparent in the social sector. The number of those officially out of work in West Germany fell from 2.2 million at the start of 1990 to 1.62 million in November 1991. Simultaneously, unemployment in the East rose from an estimated 200,000 at the start of 1990 to 1.03 million in November 1991. The number of those on short-time was 204,000 in the West at the end of 1991 when in the newly obtained regions it had already passed the million mark.
Since most of those on short time in the East should be considered as concealed unemployed (often with a reduction in the working week of 90%), and since there were at the same time in the East more than 300,000 people being kept above water by so-called work creation schemes, it is quite reasonable to calculate unemployment there by adding those without work to those on short time,to arrive at a figure for 2.1 million in November 1991.
Thus, by the end of 1991, all-German unemployment was around four million — 1.65 in the West, 1.03 million in the East plus 1.1 million in the East on short time plus some of the 200,000 on short time in the West.
These figures imply high costs. All manner of social benefits must be paid for the unemployed and those on short time. If a gold label is stuck on a part of the misery under capitalism, this does not mean that all poverty is thus "decorated". In the case of the former GDR, this is especially crass. Bonn has until now published the unemployment figures for East
and West but the employment figures for the West only. So what is the jobs situation in the East? This figure has been spirited away.
Loss of 5 million jobs
The reason for this is no mystery: since the start of 1991, over 5 million jobs have been lost in the former GDR. The discrepancy between the 1 million officially recorded unemployed in the East (and the 1.1 million on short time) and the over 5 million lost jobs is explained by the classical methods for concealing unemployment: hundreds of thousands have taken "early retirement", some 300,000 are on schemes that provide pseudo-employment, and, above all, some 1.5 million women have lost their jobs without being recorded as unemployed or on short time.
Since October 1991 the number of jobless and above all of those on short time has been rising in West Germany. At the end of 1991 and the start of this year at least a further 500,000 jobs are to go in East Germany. The trend towards crisis in West Germany is unmistakable. "A new tide of redundancies threatens Nordrhein-Westfalen ... In the coal mining regions, more than 30,000 jobs are set to go in the next few years, while leading steel producers Thyssen will shed 2,000 workers this year", according to the Wirtschaftswoche.
Just as in the USA, the Bonn government's possibilities for counteracting a crisis are limited. According to existing financial plans, the German budget deficit is set to rise from 1000 billion D-marks in 1989 to at least 1700 billion by 1995 if all the different headings which conceal this debt are added together.
This is so high relative to GNP that in 1995 Germany will not meet the criteria for membership of the European Currency Union if the decisions agreed on at Maastricht are adhered to.
An additional factor reduces Bonn's room for financial manoeuvre: the collapse of the USSR and the cessation of interest and principal repayments by Moscow will lose the West German economy some 40 billion D-marks and Bonn some 30 billion.
Germany's social security system cannot maintain its existing standards in the face of 4 or 5 million unemployed.
The German federal bank at its meeting on December 5 declared its intention to reaffirm "the tight monetary line". This means in the first place the "blocking of inflation". In this respect the bank is out of synch with the rest: in the USA and Japan the national banks have set record lows for discount rates, while in Germany these rates are at a record
high. This means credit for entrepreneurs is more expensive, construction is being suffocated and private consumption cut. And this is a course tending towards an acceleration of the crisis.
[Abridged from International Viewpoint.]