Civil Society And The Economy Specific Reference To East Germany Essay
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Civil Society and The Economy
Introduction
Linz and Stepan list and describe a set of five elements that determine a consolidated democracy. Civil society, political society, rule of law, usable state of bureaucracy, and an institution of economic society all interact in complex ways to bring about democratic consolidation in countries. This paper focuses and emphasizes the interactions between the “development of a free and lively civil society . . . [and] an institutionalized economic society . . . [which] must be present, or be crafted, in order for a democracy to be consolidated” (Linz and Stepan pg. 17).
Two former communist countries, East Germany and Poland, will be analyzed and critiqued about the prospects for sustainable democracy. Specifically, an analysis of the civil societies in the countries and how they react to their current economic situations will be used as a determinant for their chances of sustaining democracy.
Both East Germany and Poland are considered success stories. Both countries have undergone free elections that have brought about new leaders in the country that have represented the citizens needs and wants, but the transition for these countries hasn’t been easy. Many citizens in both of the former Soviet bloc countries feel that their votes aren’t changing the social and economic conditions, and are rejecting the system with this ‘learned helplessness’. An increasing number of citizens in both countries are turning to right wing policies as a result of the new and challenging social and economic order. Where before workers were guaranteed jobs, allowances, and other provisions from the state, now they face the cutthroat competition that defines capitalism.
The economic societies in the countries have been approached from very different angles. Whereas East Germany was immediately incorporated into the strong economic and social conditions of West Germany, Poland was forced to handle the transition alone. While in East Germany labor and initiative collapsed and flowed West, Poland had no where to go, and the capitalist West flowed into their economy in the form of investments. The result has been very positive for Poland, which is now one of the fastest growing economies in Europe, but very negative for East Germany which is dawdling in high unemployment and low foreign investment.
In societies where the party aspired to control all aspects of life, including persecution for unauthorized association, social life was very weak. Martial law and danger of persecution for unauthorized activities encouraged citizens in both countries to restrict their social ties to kin and very close friends. The result of this phenomenon has had a profound effect on the quality of civil societies in these countries. Susanne Spulbeck describes the state of East Germany: “In the course of my fieldwork, I came to realize that communication in the public sphere was characterized by much mutual fear . . . the deep – seated feeling of insecurity that had been instilled by the experience of fifty years of unpredictable state surveillance . . . [and a]ccordingly there is a tendency to avoid the public sphere altogether, rather than actively occupying it and claiming it as one’s own . . . [the p]ublic sphere [is] characterized by a fear of the other, where the surveillance system of a once all powerful state is still widely thought to be at work, the concept of the citizen as an active and politically responsible person is difficult to realize.”
The Economies: From Socialism to Capitalism
East Germany
To get a full picture of what the economy in East Germany is doing, one must look at situations that occurred around the time of the reunification in 1990. West Germany’s Chancellor, Kohl, made a very rash decision. To assure the East German votes for reunification, Kohl agreed to exchange one duetschmark for the almost worthless East German currency. The money supply was immediately flooded, and interest rates rose. Higher interest rates discourage entrepreneurs from taking loans and entering the market, and discourage older businesses to expand, and thus high unemployment quickly followed.
In addition, if Germany were unified, Kohl promised East Germans the same benefits West German citizens receive including social services (retirement benefits, welfare, etc.) and a $100 billion annual subsidy to promote economic growth. East Germany immediately began to rely heavily on the annual payments. West Germany was still not done. To prevent the flow of skilled laborers from East Germany to a higher wage paying West Germany, East German wages had to be raised, which further discouraged economic expansion. The GDR had poor pollution regulations, and many areas are still laced with toxic substances. The pollution will take billions of deutschmarks to clean. The outlook for East Germany looked weak, but West Germany was persistent on making the former inefficient communist state into an economic asset.
The German government has installed over 2800 miles of new railroad tracks, and over 5000 miles of highways. In addition, to make up for the poor investment opportunities in East Germany, the government also offers business subsidies and tax breaks to companies willing to invest in the east. Since 1990, companies have taken advantage of such incentives, and invested over $625 billion dollars in East Germany. Deutsche Telekom completed from scratch a highly advanced fiber optic and digital telephone network. With the West German subsidiaries, real estate investment also rose. Huge office buildings and hotels are appearing throughout cities. The economy isn’t strong enough to make use of such structures, leaving them unoccupied, as the cities become extremely overbuilt. With such major renewals, it is no wonder that 17percent of the East German work force are employed in the construction industry.
Even with all the stimulation and money pouring in from all sides, unemployment in East Germany is soaring at 17percent and 9.1percent in West Germany. Four million Germans (10.6percent of the workforce) are unemployed. Such a figure hasn’t been seen in Germany since post-WWII in 1945, and the citizens are displeased. There are several causes for the unemployment. As mentioned above, the high interest rates make business investments in East Germany look unattractive. In addition, with an average wage rate of $16 per hour, Germany has higher wage rates than the US, and one of the highest rates in the world. The German workforce enjoys many more holidays than the American workforce, and receives a 13th month salary bonus at Christmas. Companies increasingly invest in neighboring countries like Czech republic, Hungary, and Poland where wage rates are dramatically lower. Strong stubborn labor unions aid in decreasing the flexibility of changing the wage rates. With 2.7 million autoworkers as members, IG Metall is resistant to any wage cuts, and is actually currently seeking a 6.5percent pay increase.
East German citizens claim that finding jobs in the communist GDR was much easier than finding a job presently. The unification brought the closing of thousands of GDR’s unprofitable factories. Newly privitized companies could not afford to hire as many workers, and do not provide as many benefits to the worker as in the old communist regime. The free market system has increased competition for jobs, and left many unskilled laborers behind. The Rostock shipyard for example employs half the workers than the GDR employed. (Lynch) Most of the investments in East Germany have led to highly automated factories, which supply minimal jobs. For instance, the city of Schkopad is currently receiving $7 billion in aid from the government to tear down a Dow Chemical power plant and replace it with a state of the art system. In the old communist regime, the plant employed 18,000 people. Directly after the fall of the Berlin wall, the plant employed 4000 people. After the renovations to the plant are finished, the plant will employ 2200 workers. This is not the only instance of technological advancement interfering with the economy. A prescription drug company, Salutas Phatma Gmblt, built a $200 million dollar factory in 1997. Robots measure the dose, place the dose in the mold, and package the pills. The factory employs a total of 320 workers. The Opel unit of General Motors has one of the most advanced auto assembly plants in the world.
Experts claim that East Germany will have the most modern economy and infrastructure in fifteen or twenty years. West German citizens are growing impatient. While a large majority of West Germans were willing to bear the burden of rebuilding Eastern Germany in 1990, they are increasingly becoming tired of supporting the weak East Germany. The East German output per person is half what it is in West Germany, and had an output in 1996 of only $230 billion. The 7.5percent solidarity tax Germans pay to support East Germany doesn’t seem to be doing anything, and leave West Germans to question its role. It is doubtful that West Germany will stop aiding the weak economy, though, since it has invested so intensively in it since 1990. The dye is cast.
Chancellor Schroeder is working to create jobs throughout Germany. “Alliance for Jobs” has already had its first meeting. To increase employment, Schroeder proposes lower labor costs (even though it may be political suicide), reform the welfare system, create more flexible workplaces, allow Germany to be accessed more easily by small companies, and lower retirement age (which is currently at 65).
The economic gap is not the only burden that separates East from West Germany. DeMaiziere, the first freely elected leader of East Germany in the short time after the fall of communism, claims that “the psychology of everything done in East Germany is all wrong.” He claims West Germany is trying to undue what they think to be the “bad communist ways,” without realizing that 2.4 million of 11.5 million East Germans were members of the old communist party in the GDR. These citizens have pride of what they accomplished in the communist regime and feel like West Germans are rapidly revising what took them a lifetime to create. It’s as if what was accomplished under the communist regime didn’t amount to anything.
This factor accounts for a lot of dissent felt by East Germans toward West Germany. East Germans complain of being able to find jobs in the GDR, are discontent with the ill economy, and the 20percent average higher salary that West Germans have. Former Chancellor Kohl, the “reunification Chancellor,” is routinely booed when he visits East Germany. DeMaiziere relates what is happening in East Germany to the parable in the bible when Moses was leading the slaves out of Egypt. The slaves wanted to return to Egypt where they had a roof under their head, and something to eat and drink. Moses went to pray and ask God why they were reacting like this and how he could improve their condition, and God answered that only when the last slave dies will the condition change. East Germans are having a difficult time adapting from a system where...
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