The Political Economy of the SPD Reconsidered: Evidence from the Great Recession

Abstract

The transformation of Germany's political economy in the last few decades has strongly been influenced by the SPD. Still, the economic programme of the SPD remains contested since several authors characterise the party's economic platform differently. This paper reconsiders the political economy of the SPD in light of evidence from the Great Recession. It combines quantitative content analysis with process tracing in order to situate the party in research on the moral economy of contemporary Germany. The quantitative content analysis shows that the SPD attempted to shift its position on the welfare state and economic liberalism in response to the crisis, but it remained wedded to orthodox fiscal policies. Based on elite interviews with social democratic politicians and policy-makers, the paper explains this response with the absence of an economic paradigm. Weakened by internal conflict, the SPD made programmatic decisions with reference to electoral calculations and it remained trapped by its pre-crisis support for economic supply-side policies. Therefore, the SPD was unable to oppose the conservative economic discourse in Germany and failed to develop a consistent economic programme in response to the Great Recession.