European Gründerzeit: When, if not now?

European Gründerzeit: When, if not now?

European School of Governance, position paper # 71 by Louis Klein

Within half a year, between autumn 2016 and spring 2017, the vision of a unified, democratic Europe came a long way and turned from a seemingly lost case into a realistic option. Certainly, a way forward needs courage. However, what is more important is acknowledging diligently and prudent opportunities, risks and dynamics of cultural, economic and political unification processes. There are lessons to learn from the German unification process in the 19th century that can turn the European project into a greater success than we ever thought – now and for everybody.

Gründerzeit is one of these specific German terms which carry such an abundance of precious meaning, like Gemütlichkeit or Weltanschauung, that they do not translate well into English. Literally it means “era of founders”, and calls the epoch of the early years of the unified Germany from 1871 to 1914. In Germany, these years are remembered as an era of innovation and invention, an area of prosperity, abundance and peace. The collective memory of Gründerzeit does probably not stand the test of details, however, it resonates and carries a distinct positive connotation. A substantial number of the better-known, larger German companies like Siemens (1847), Bayer (1863), BASF (1865), Deutsche Bank (1870), Bosch (1886), Allianz (1890), Daimler (1890), ThyssenKrupp (1897/99) were either founded or made their mark in the Gründerzeit. And in terms of lifestyle, those so very much sought after picturesque Altbau quarters, not only in cities like Berlin or Munich, but all over Germany, sprung up in these years. The Gründerzeit were the years of Art Nouveau and Lebensreform of inventions and innovations in science, engineering and society. They were famous years of arts and culture.

Weimarisierung is another German term describing the years following the first world war. It describes societies braking apart. It describes a process of radicalising from the fringes, from the far right and the far left, eating into the centre of societies until they collapse. It describes helplessly failing elites, detached and in denial, until they are rightfully blamed as “elitist”, as cowardly irresponsible. Blame games dominate the political agenda and pave the way for chauvinism disguising triviality and primitivity as relieving simplicity. Weimarisierung primarily addresses the late 1920s and early 1930s. This seemed far away. Yet, theories like Christopher Clark’s “sleepwalkers” countered the contemporary hubris and the complacent narratives of a morally superior presence. And then came Brexit, and we realised that history tends to repeat itself. With the national populists on the rise not only the European project looked as if it was about to disassemble right in front of our eyes. It is our very societies as well that are on a dangerous course with the prospect of falling apart. Cynically spoken, right in time, the Italian philosopher Giorgio Agamben provided in his book “Stasis” the script for the civil war as a political paradigm. We were in for a ride.

The Trump shock, however, came as a final cold and sobering awakening. Thank you, Mr. President! Suddenly, we realised that it was not an option anymore to just wait and see. We realised that in the end nothing would be fine. The crisis showed the risk, reintroduced opportunities and called for action. Civil responsibility was the order of the day. Especially the formerly self-indulging, complacent elites, the business people, the media people, the academics, doctors and lawyers came together, after work in the meeting rooms of companies, agencies and clinics, and the famous “Who if not us, when if not now!” was heard a lot. They wanted to run campaigns, wanted to go out on the street, wanted to found new parties. Most ideas remained talk, however, it was the rebirth of the active citizen. Civil society would not be left to the professional activists anymore. And politics should be reclaimed. It was the rebirth of the zoon politicon as a responsible citizen. And it became visible in movements like the Pulse of Europe which rallied thousands of formerly politically inactive citizens in more than 120 cities in 19 European countries, Sunday by Sunday.

The national populists were kept at bay not in Britain yet then in a row in Austria, the Netherlands and France. And when Emmanuelle Macron walked up to his first speech as president-elect that night in the Louvre to the tunes of Ludwig van Beethoven’s European anthem something has veered substantially towards new hope not only for France but for Europe. The European dream seemed to be very much alive that night, strong and dedicated. It was probably the night Ulrike Guérot’s idea of the European Republic turned from political utopia into a concrete vision.

Pushed finally by Donald Trump’s infamous appearance at the G7 summit in Italy European politics followed. Further European integration, a deepening of the union was lifted back onto the top of the agenda, with public approval and tailwind from civil society. It feels right, but what comes next? Euro bonds were hastily ruled out while acknowledging that something similar was needed. The fall-out of the economic crisis, the austerity regimen, the enormous youth unemployment and the Euro crisis are prevailing. The refugee crisis will be back in summer with the weather permitting saver passages over the Mediterranean Sea.

The heads again turn to Germany and Angela Merkel for leadership. The hegemon shall live up to its responsibility and duty. However, can Germany do what is due to be done? Do the Germans know what the expectations are? And to what extend are they capable and willing? It is a major task, and certainly, Germany cannot and should not do it alone. However, the British historian and recipient of this year’s International Charlemagne Prize, Timothy Garton Ash, tends to point at Germany as being in the unification business, not only due to the well-remembered fall of the Berlin Wall in 1989 but for its eventually successful strive for democracy and unification throughout most of the 19th century.

After the Napoleon liberation wars and the infamous overruling Congress of Vienna, at a time when Germany was not Germany but a loosely-coupled plenitude of states, most of them small or tiny, German students who fought in the liberation wars called for a German democracy and unification. It was a civil society movement that first peaked 1832 with the Hambach Festival when the movement rallied thousands of supporters at a castle in the Palatinate region in south-west Germany. The economy always eager to promote free trade pushed for a customs union. 1834 they got it which created a peculiar landscape where Prussia, Bavaria and south-west Germany were in the customs union, not however Austria and the north of Germany, while in the other loosely connected, political alliance, the German Confederation, Australia and the north of Germany were in, not however the eastern parts of Prussia. If this reminds us of the confusion of European Union, Schengen Area and Eurozone, we got the picture.

Following the 1848’s revolution the first German parliament came together as a constitutional assembly in Frankfurt’s St. Paul’s church. They debated for two years and did not seize the opportunity to claim executional power. And again, a parliament entangled in fertile discussions with no executional authority very much resembles the picture of today’s European Parliament in Strasbourg. By 1849 the various German states put an end to the democratic grassroot movement by disassembling this first German debating club as the parliament was mocked at the time. The small states prevailed and the frustrated citizens retreated into privacy.

The German unification, however, seemed to be inevitable, culturally, economically and politically. And by 1871, after years in which Prussia grew into the role of the German hegemon, the Prussian chancellor, Otto von Bismarck, orchestrated the German unification based on an economic union, a currency union, a fiscal union and a social union. And although the various German rulers were not in favour of being just a regional kingdom in a unified empire, they quickly made peace with it when they and their subjects experienced what followed: the Gründerzeit. While in the years 1867 to 1870 only 88 incorporated companies where founded in the German states, in the following years 1871 to 1873 the figure rocketed up to 928 which calculates as a remarkable 1054% growth. This swiped away a lot of the former concerns not only because the Germans were too busy with the new opportunities, they were just better off.

The mechanics of the German unification not only ended the German Question and the confusion of inclusion and exclusion into the different alliances, areas, zones and customs unions. Especially the focus on the fiscal and social union provided a good answer to the prevailing social question. The rapid industrialisation of the 19th century had taken its toll. Large parts of the population were driven into the new factories, the steel mills and coal mines. Already 1848 with the Communist Manifesto and 1867 with his book “Das Kapital”, Karl Marx tried to voice and push for a worker’s revolution to end the inhuman working and living conditions of the new industrial class. The industrialisation-losers, as we may call them today, struggled and were on the verge of uprising. The social union of the new, unified Germany came with a general accident insurance, an unemployment insurance and pension schemes for workers and their families. Politics provided a reliable frame and the economy gratefully followed the invitation to lived up to the expectation of becoming a responsible partner. Life in the Gründerzeit improved in all corners of society. Solidarity and entrepreneurship were both built into the political order.

Now, is the 1871 German unification a blueprint for the unification of Europe? Is a European Gründerzeit which takes on the not only economic challenges of youth unemployment, the Euro crisis, the refugee crisis and the new social question of globalisation-losers a possibility? Could it be a vision for the way forward? – Well, it is the best we have and it seems convincingly suitable. If history tends to repeat itself it may occasionally do so in a good way.

For a European unification project there are in essence three major lessons learnt from the German unification process of the 19th century. First, unification needs a coherent approach and not incremental steps. Second, managing the economic benefit wisely is the greater challenge, not the cost, which comes rather as a highly yielding investment. Third, the hegemon decides, and success entirely depends on the hegemon’s courage to do so. These three lessons are worth having a closer look, since they could serve as the critical success factors for any coherent cultural, economic and political unification process.

First, the European unification project needs a coherent approach. A union is not a confederation. A union provides a unified framework for all subjects. And following the unique European traditions it is universal political equality reflected in the political institutions of a republic that provide this. The insight that a currency union without a fiscal union and an economic union without a social union malfunctions is just a commonplace. It is mechanics of political institutions that can and should be fixed.

Second, the European unification project is a high yielding investment. The TAXE 2 special committee’s report to the European Parliament stated that “the scale of tax evasion and avoidance is estimated by the Commission to be up to EUR 1 trillion a year”. This is what the inner European tax competition between the single nations costs yearly. There is gold, tonnes of gold! Let us assume only 25% percent of this money, i.e. EUR 250 billion a year, could be captured jointly for infrastructure, education, public security and health services, it sounded like a very attractive benefit case. And this is only the public perspective. Especially small and medium-sized businesses would be relieved to focus on their business development instead of getting strangled by the plenitude of diverse small-minded national bureaucracies.

Third, the European unification project needs to be mandated by the hegemon. Prior to the 27 to agree is the hegemon to mandate the European unification, to mandate, not to lead. It is Germany that lost the least and gained the most especially out of the economic and financial crises of the last decade. If Germany does not want to move, it is a de facto veto. And on the other hand, if Germany is willing to share and move on there will be immediate allies, not only thinking of France, that would happily join in and shoulder its part. Successful unification is not lead by a single player. It is a co-creation. But the mandate needs to come from the hegemon.

Bismarck knew this when he pushed for the German unification and King Wilhelm of Prussia knew this when he resisted until the last minute. Wilhelm knew that the character of Prussia and his kingdom would change profoundly. He would not be a sovereign king anymore. He would be a mere representative serving a democratic union according to the peoples will. Yet, Bismarck was right, the people were better off in this democratic union than ever before. It is up to the ruling national elites in Germany to decide for a better future, a truly democratic union based on universal political equality and for a European Gründerzeit. – When, if not now?