When Is a Socialist Not a Socialist?

At a recent private gathering of top-ranking American and German businessmen and bankers, a New York economist suggested that their countries join forces, as “the two economic superpowers,” to lead the world economy. The idea was rejected by all the Germans present. Far from being a superpower, they heatedly protested, their country was weak, its economy shaky and entirely dependent on outside forces. This is the selfbelittling mood that prevails in West Germany today under Chancellor Helmut Schmidt.

Like Willy Brandt, who was forced from office last May—officially because one of his close confidants turned out to be an East German spy, but actually because of his failures as a party leader —Schmidt is a Social Democrat. But his policies, so far, have shown little trace of socialist thinking. On the contrary they tend toward free market economics. Schmidt has resisted union demands for substantial wage increases, has tried to cut the budget, and has granted incentives to investors. He has given the fight against recession (“rather 5 per cent inflation than 5 per cent unemployment”) top priority. So far he has succeeded in keeping the rate of inflation in Germany below 7 per cent over the past 12 months—the lowest rate of any industrial nation. Unemployment figures, although they have risen from a previous near-zero, hover at around 5 per cent. Many of the foreign workers who had found jobs in Germany during the general boom have been sent home.

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Norbert Muhlen

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At a recent private gathering of top-ranking American and German businessmen and bankers, a New York economist suggested that their countries join forces, as “the two economic superpowers,” to lead the world economy. The idea was rejected by all the Germans present. Far from being a superpower, they heatedly protested, their country was weak, its economy shaky and entirely dependent on outside forces. This is the selfbelittling mood that prevails in West Germany today under Chancellor Helmut Schmidt.

Like Willy Brandt, who was forced from office last May—officially because one of his close confidants turned out to be an East German spy, but actually because of his failures as a party leader —Schmidt is a Social Democrat. But his policies, so far, have shown little trace of socialist thinking. On the contrary they tend toward free market economics. Schmidt has resisted union demands for substantial wage increases, has tried to cut the budget, and has granted incentives to investors. He has given the fight against recession (“rather 5 per cent inflation than 5 per cent unemployment”) top priority. So far he has succeeded in keeping the rate of inflation in Germany below 7 per cent over the past 12 months—the lowest rate of any industrial nation. Unemployment figures, although they have risen from a previous near-zero, hover at around 5 per cent. Many of the foreign workers who had found jobs in Germany during the general boom have been sent home.