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Pragmatic Measures: The Imperial German Welfare State

Charles W. King

Today the depiction of Germany as a country and a people is inherently conservative. German restraint in foreign policy and the insistence on austerity in the wake of sovereign debt crises in Ireland, Spain, Italy, and Greece have bolstered this reputation, but it goes back much further, before Germany was a unified state. The revolutions of 1848 reached Germany last, the counter-revolutionary push back began in Germany first, and in between the character of the revolutions of 1848 in Germany were never as radical as those in Hungary, Italy, or France. Germany, the United States, and United Kingdom are the three poster children for Max Weber’s Protestant Ethic and the Spirit of Capitalism. How does this square with Germany as one of the standard bearers for the modern welfare state?

While not providing as extensive safety net as the Scandinavian countries, the welfare state in Germany is extensive. While many would be inclined to chalk this up to the prevalence of post-World War Two Social Democratic parties, similar to Sweden, Denmark, Norway, and Finland, this is incorrect. While the revolutions of 1848 may not have been as radical in pre-unification Germany, they did leave their mark. By the time of unification in the wake of the Franco-Prussian War in 1870 industrial capitalism had spread throughout Germany, and support for socialism and anarchism had increased, as had anti-clericalism among the Protestant majority. Similar to the food protests in England in the 1700s described by E. P. Thompson in The Moral Economy of the English Crowd, social unrest increased in Germany as urbanization and industrialization increased, egged on by socialists and anarchists.

Otto von Bismarck was the architect of German unification, an arch-conservative he was concerned with the increasing support for the left and the level of social upheaval in Germany in the wake of the Franco-Prussian War. He correctly discerned that the majority of the popular support for the German left was not because the general population supported or even understood the political objectives of the Communists, Socialists, or Anarchists, but these groups advocated programs like state provided medical care that directly addressed the needs of working and middle class Germans whose economic situations were precarious in the new industrial capitalist economy. Bismarck concluded that if economic precariousness was a source of political instability it was in the interest of the state to provide an economic safety net. This is why the arch-conservative German Empire was the first state to implement what we would recognize as a modern welfare state.

Part of the reason for the political instability that Bismarck and other political leaders across Europe and the United States needed to address during this period is a result of what is known as the “Paradox of Rising Expectations”. As people’s economic situations got better over the course of the 1800s they expected them to continue increasing, as wealth concentrated at the end of the century and growth slowed the increase over time in the standard of living began to slow political unrest increased. However, as Imperial Germany and other European nations demonstrate this does not always lead to revolution or democratization. Policy-makers expecting to see increasing democratization in the People’s Republic of China have recently been surprised by a reassertion of control by Xi Jingping. They would to well to remember that the paradox of rising expectations can be weathered not only with economic growth, but also with the pragmatic implementation of government programs.

Establishing Legitimacy: Elections as Violence

Charles W. King

Vladimir Putin was recently re-elected for another term as President of the Russian Federation. Egypt held a poll in which the erstwhile opponent of Abel Fattah el-Sisi told reporters that seeing el-Sisi’s name on the ballot he could not help but vote for him. The People’s Republic of China has jettisoned its post-Mao restrictions on ten year terms for President, cementing Xi Jinping’s position as the most powerful Chinese ruler since Mao Zedong. While the latter was not technically an election, it did require the accession of the National People’s Congress. All of these recent events speak to the question of states derive legitimacy in the twenty-first century.

For centuries the divine right of kings was the leading theory of legitimacy in Europe. By the dint of the will of God, the royal houses of England, France, Austria, and many more were the legitimate rules of their domains. In a very real sense both Putin’s Russia and the People’s Republic of China since Deng Xiaoping have rested the legitimacy of their governments on economic prosperity. All of these belie what political scientists consider to be the root of sovereignty; a monopoly of violence.

The crowned heads of Europe, before they claimed the divine right of kings, were feudal warlords. Historically it is after establishing a monopoly of violence over a territory that legitimacy is established. A conqueror imposes their will through violence, and over time legitimates their continued rule and the rule of their successors through the sanctioned use of violence by the state as well as other means. For many states this meant transitioning to constitutional and republican systems.

In democracies that derive from the traditions of Locke and Rousseau sovereignty comes from the consent of the governed.Elections are not only a way for the people to select their representation, but also serve to re-legitimize the state. In countries like Russia and Egypt where elections are not free what purpose do they serve? For decades African and Central Asian dictatorships have used sham elections to prove to the outside world that their rule was legitimate. The Soviet Union used similar elections to legitimize the creation of communist satellite states after World War Two. But in most cases these rigged contests are seen for what they, so they must serve another purpose.

An election is a large and complicated process, taking hundreds or thousands of people to organize. Rigging an election takes even more manpower. The ability to mobilize the people required to have the kind of turn out and margin that re-elected Putin is a clear demonstration of the power of the Russian state and Putin’s control of it. The ability to stage rigged elections is a stand in for more obvious and bloody forms of violence, but at its core it is a form of state violence. Rigged elections like those in Russia and Egypt have not only foreign but domestic audiences. They demonstrate to the population that the state is powerful and organized, and that opposition to that system is futile and dangerous. They are relatively cheap in blood and treasure compared to putting down riots in the streets.

Democracies attempt to put as much distance as possible between their legitimacy and the state’s monopoly of legitimate violence through elections and representative government. It is important to recognize that in the late twentieth and early twenty first century elections can serve another purpose, as a relatively bloodless demonstration of the state’s monopoly of violence.

The Value of Debt

Charles W. King

Recent sovereign debt crises in Europe, the Trump Administration’s vociferous objections to trade deficits have, and the growing American national debt have many in Congress and the public increasingly concerned about debt as an instrument of national policy. More and more American states are passing balanced budget amendments forcing them to pass revenue neutral budgets each fiscal year, and some are pushing for the adoption of a federal balanced budget amendment. While this sounds like fiscal responsibility, the issuance of debt by governments is a tremendously important tool of domestic and foreign policy. The former is illustrated by the importance of bond programs to the New Deal and World War 2, the latter is less obvious.

The First Bank of the United States, established by Alexander Hamilton, the first U.S. Secretary of the Treasury, in 1791 was created not only to raise revenue for the new federal government and standardize currency across the new country, but also as an important tool of foreign policy. During the course of the American Revolution the Colonies built up a significant amount of debt to European creditors, France among others. The First Bank of the United States took ownership of these debts, meaning that if the new government failed, those European creditors would never recieve payment. This gave France and other European nations a reason to continue to support the fledgeling United States, and to permit the open trading relationships that the United States needed to prosper in order to service the debt. The nationalization of the colonies war debts made those creditors invested in the success of the United States, an effect that the issuance of government debt continues to have today.

Debt forgiveness is also an important foreign policy tool. After World War Two the United States owned a considerable amount of European debt that the post-war European nations were incapable of paying back. The State Department’s Office of Foreign Building Operations (now the Bureau of Overseas Buildings Operations) convinced Congress to turn the debt over to them. The F.B.O. would write off the foreign debt in exchange for goods and services from the debtor countries. The F.B.O. purchased the historical palaces that are now the U.S. Ambassador’s residences in Paris and Rome with this debt. It filled American embassies all over the world with cutting edge Knoll furniture made in Europe by paying for the furniture with debt write offs. European countries were ecstatic to write off their war debts in this way because it put money into their national economies and industries rather than sending it abroad to the United States. The F.B.O.’s creative use of debt facilitated a blossoming of American diplomacy around the world and helped the European economic recovery.

The United States and other major backers of the Bretton Woods system that includes the World Bank and International Monetary Fund regularly use access to credit, as well as debt forgiveness and restructuring as leverage to get developing nations to implement specific economic or political policies. Japan and China both own large stockpiles of American national debt in the form of Treasury Bonds. These stockpiles make Japan and China investors in American prosperity. While the Chinese owned debt is considered to be a danger, they also provide an early warning system, as China would have to either call those debts in—damaging both the Chinese and American economies—or write them off in a conflict. American and European sanctions regimes against the Russian Federation do not currently include Russian sovereign bonds, but they could and this would be a significant increase in the pressure on the Russian State. National debt is only a millstone when other policies put a nation’s ability to service that debt in danger, the ability to issue debt is an important strategic policy tool for the United States and all national governments.

Friends Like These: American Allies in Europe

Charles W. King

The United States has an extensive history of intervening in allied nations who’s democratic institutions who appear precarious, not only during the Cold War but before World War One as well. Throughout the Cold War the U.S. prized regional stability, continuity, and anti-communism over democracy and liberty throughout the Third World. In the First World it did not resort to the military or covert interventions. However, Operation Gladio trained European right-wings in Italy, France, and others in the tactics of terrorism and resistance in the event Communists won elections in Western Europe. The twentieth century demonstrates how nations have a vested interested in the tenor of the domestic politics of other nations.

An increasingly unstable European political scene is raising the question of how and if the United States should attempt to influence the domestic politics of its allies. Europe in general is turning rightward. Poland, Hungary, and other European countries are increasingly illiberal and eschewing institutions considered to be essential to healthy democracies. The rule of Law and Justice (PiS) in Poland and Viktor Orban’s Fidesz in Hungary are not the only domestic situations which American and European leaders have to consider when deciding how and where to exert influence on their neighbors. The disregard of Mariano Rajoy’s central government in Spain to Catalonia’s grievances led Catalan politicians to believe that their only resort was an unsanctioned independence referendum. The subsequent response by the Spanish government has been roundly criticized as downright fascist, drawing directly historical analogies to Franco’s dictatorship. Unlike Iran, Guatemala, Chile, or Vietnam the United States is not in a position to invade or even arrange a coup in Poland, Hungary, Spain, or any other European ally. This however does not mean that the United States cannot exert influence and should not, either overtly by explicit endorsement and critiques or through subtler measures like trade and foreign aid.

However, these center-right and right-wing governments in Europe are not the only reasons for concern for European stability. The election of President Emanuel Macron has not been the dramatic break with previous French administrations that many had hoped for, but Macron’s France is actively taking on leadership in Europe that had atrophied. However, Macron was counting on a strong ally in Angela Merkel’s Germany, and Merkel and her Christian Democrats (CDU) are currently in the midst of a flailing attempt to form a coalition government after the Social Democratic Party (SPD) their allies of the last eight years left chose not to renew their coalition after a disastrous showing in recent elections. This leaves Merkel with a raft of options that range from unlikely to unthinkable.

The expected ‘Jamaica Coalition’ of the CDU, Greens, and Free Democrats (FDP) fell apart when the FDP abruptly walked away. The parliamentary math says that the CDU could form a majority with the right-wing Alternative for Germany (AfD), but the two parties ran on diametrically opposed platforms. A new election could give AfD even more seats in the Bundestag, a first for a far right party. Europe faces a number of important issues in the coming months, issues like immigration and central banking which Germany has been an important voice in. The world can afford if the likes of Belgium or the Netherlands take months or even years to form coalition governments, it cannot afford Germany to be without a government. The United States invested considerable capital, political, military, and financial, ensuring that Germany would be a member of N.A.T.O., the European Coal and Steel Community, and eventually be reunited, and a strong and stable Germany is key to American interests in Europe. The United States can and should consider how its diplomatic and trade relationship with Germany has led to the current political climate and what it can do to ensure that Germany is the partner in Europe it needs.

A More Defensible Union: European Common Security and Defense Policy

Charles W. King

The European Union recently announced that its member states have decided to utilize Permanent Structured Cooperation (PESCO) for the first time. A feature of the Treaty of Lisbon, the founding document of the European Union, PESCO will enable greater cooperation on security and defense issues. It does not represent a wholesale conglomeration of European militaries, or even the establishment of a rapid response force under a European flag as has been repeated mooted in recent decades. It is an evolution of the existing military-to-military cooperation that has been undertaken by European defense ministries, and important innovations in their future cooperation. The integration of Dutch, Czech, and Romanian battalions into the German Army’s (Deutsches Heer) force structure will only increase, as will bilateral command sharing between Germany, the Netherlands, France, and others. The implementation of PESCO and a Coordinated Annual Review on Defense (CARD) are the most significant steps towards European collective security since the failure of the European Defense Community (EDC) in 1954.

After World War II, Western Europe had to primary defense questions; the Soviet Union and Germany. Initially, the North Atlantic Treaty Organization did not address the German Question. West Germany was not a founding member of NATO, and what a re-armed West Germany would do was an open question. The proposed solution was the European Defense Community, which would integrate the defense policies and militaries of Western Europe, a radical move towards European Federalism decades ahead of the economic union that had just been founded as the European Coal and Steel Community. Ultimately the French legislature, led by Gaullists in the Assembly, balked at ceding so much sovereignty, despite the potential resolution to the German Question. Ultimately it was West German membership in NATO that resolved the German Question and permitted both the establishment of a West German military and the continued presence in West Germany of American, French, and British forces.

While some of the individual measures of the European Union’s PESCO and Common Security and Defense Policy (CSDP) may seem trivial, they represent an effort by defense policy experts to resolve some of the major deficiencies that make it impossible for NATO to function without the United States. The 2011 intervention in Libya demonstrated that even when other nations, in this case France, were the primary conductor of air strikes they could not do so without American logistical support. The United States is the logistical backbone of NATO. It possesses the airlift and sealift capacity, the tanker and AWACS aircraft, and logistical capability and expertise not necessary or present in smaller European militaries. The creation of standardized medical training, a common Staff Officer School for the officers of European militaries, and the integration of European airlift and sealift commands under CSDP are the logistical and institutional foundation upon which future military cooperation, coordination, and integration will be built. These areas represent some of the most serious stumbling blocks to both a European defense policy that credibly projects power without American support and to an effective integrated European military. While the Presidents and Prime Ministers of Europe are a long way from announcing the total integration of European defense policy and military forces, the generals, admirals, and policy officials of Europe’s armed forces have realized their greatest shortcomings and are moving to resolve these deficiencies as effectively as they can in the current political climate.