Wolfgang Schäuble, Germany’s Finance Minister is widely seen, as one of the “most consequential European politician of his generation”. Joshua Rahtz’s recent NLR piece is a welcome occasion to revisit this pivotal character.

Rahtz’s essay provides an invaluable English language survey of Schäuble’s thinking. Rahtz’s method is to follow the outline of Schäuble’s career and to read the books that Schäuble has written along the way. It is a simple but highly effective procedure, giving us an overview of Schäuble’s worldview and its development over time, in correlation with his role in German and European politics. The method works because Schäuble is the kind of European politician who regularly publishes books of sufficient heft to warrant close reading. In this sense he has more in common with contemporaries like Joschka Fischer or Oskar Lafontaine than he does with Angela Merkel.

Rahtz, a specialist in the intellectual history of German economics, is particularly good in debunking one of the founding myths of Schäuble’s most recent incarnation: his personal identification with ordoliberalism and the social market economy. Commonly this is traced back to Schäuble’s origins in the South of Germany and his studies in Freiburg, where one might imagine that he mainlined the original wisdom of “ordoliberalism”. But is this obvious? “What was Schäuble’s intellectual formation in these years?”, Rahtz asks. It’s is an excellent question and Rahtz’s answer is illuminating: “With a brief intermission studying economics at Hamburg, he took law at the University of Freiburg. Given his later reputation as a rock of neo-liberalism, it would be a reasonable assumption, one that he has taken care not to dispel, that his convictions were formed by the work of the Freiburg School, often identified with ordo-liberalism as the native German counterpart to the Austrian School of economists headed by Mises and Hayek. In fact, however, of the first generation of ordo-liberal thinkers, none remained at Freiburg by the time Schäuble arrived there.” Freiburg and ordoliberalism were distinct formations. By the 1960s ordoliberalism was widely diffused across the German university system, but it is “open question whether the intellectual climate” at Freiburg was particularly ordoliberal. Schäuble’s supervisor was a legal scholar critical of the lack of empirical heft in ordoliberal research. Its approaches had varied a lot since the late 1930s: there was no one ‘neo-liberal theory of competition’, rather a political outlook of wider social significance, particularly in the early years of the Federal Republic, when the slogan of a Social Market Economy was popularized.

Though Schäuble likes to wrap himself in a cloak of intellectualism and claims that his mother would have been prouder if he had made a career in Freiburg as a law professor rather than as a politician, there is no reason to think that the academic path ever seriously tempted him. As Rahtz remarks, “Schäuble’s own dissertation, on the professional legal status of auditors, bore few signs of much theoretical reflection.” What was clear about Schäuble, even as a young man, was that he was on the make.

Schäuble entered the Bundestag in 1972 at the precocious age of 30 and has remained there ever since becoming the “longest-serving member of parliament in the history of Germany”. He is “now in his twelfth successive legislature, at the age of seventy-four.” In 1976 he joined the clique that pushed Helmut Kohl from Rhineland obscurity to the heart of power in Bonn. “Within a year of Helmut Kohl’s election as Chancellor in 1983, Schäuble was his chief of staff. Promoted to Minister of the Interior in 1989, he managed the swift absorption of the DDR by the Federal Republic in 1990. Rising to leader of the party in the Bundestag on the strength of this success, when Kohl lost his bid for a fifth term, he became chairman of the national CDU in 1998, poised for his elevation to Chancellor when the party regained power. But in 2000, he was caught in the scandal of CDU slush funds, and had to make way for Angela Merkel in the post. With her election as Chancellor in 2005, he became Minister of the Interior once again, and on her re-election in 2009, Minister of Finance. There he remains today.”

For most of his career, Schäuble’s focused on broad issues of domestic policy and questions of social order. This befitted a man, who until his disastrous mishandling of the CDU’s party finance scandal in the late 1990s, was widely tipped as the successor to Kohl as CDU chancellor. Issues of the family, “technology” and social integration were his bread and butter. Schäuble’s positions on these questions are typical of the existentially tinged modernism cultivated by the CDU in the Musterländle of Baden-Württemberg, where the big issues of the 1970s and 1980s were techno-political. Not for nothing this was one of the original stomping grounds of the Green Party – arguably the region’s second great gift to modern politics after neoliberalism. This is the soil out of which grew Habermas’s interest in the politics of technology and Ulrich Beck’s Risk Society. On all of these issues Schäuble’s stance was unambiguous: “It was to this end that a new and more heroic attitude (‘yes to modernity and progress’) should be struck in the field of new technologies, even those that presented clear risks like genetic engineering and nuclear power. Society had to recognize new opportunities amid a changing pattern of work.” The debate about technology in Germany in the age of Heidegger and Heisenberg in the 1940s and 1950s has been brilliantly explored by Cathryn Carson. But there is an interesting history also to be written about Germany’s debates about the question of technology in the 1970s and 1980s. Schäuble’s positions seem typical of the affirmative view of technology developed by conservatives in the wake of the Wirtschaftswunder, in the face of ever more pronounced criticism from the left. .

Harder-edged economic arguments come back to the fore following the 1997 crisis in Asia. As Rahtz puts it: “Turbulence in the Far East made 1998 a ‘fateful year’ for Ordnungspolitik. But rather than registering the dangers of financial contagion under conditions of increasing international economic integration, Schäuble reverted back to a national scale to conceptualize the problem. The newly industrialized economies of East Asia had for a time appeared to outcompete the West by exploiting low labour costs. It could now be seen, however, that ‘the new tigers are by no means the raging wild animals represented for a few years as life-threatening to the Western economies in the jungle of globalization’. They were rather bound for something like the deflated trajectory of Japan in the 1980s. [15] Overheated economies had created unsustainable expectations of accelerating standards of living and expanding social benefits. They would need to learn how to conform to Western models of the market economy. This was not an imperialist sentiment, but knowledge hard-won through experience. At the IMF, Michel Camdessus could hardly have put it better.” In due course, to the horror of Larry Summers and the Rubinite crowd, a non-descript German technocrat would indeed take over as IMF managing director, Horst Köhler (2000-2004), the man who would also pip Schäuble to the ceremonial post of the German Presidency.

Ten years on, when faced with the financial crisis in the US and Europe in 2008, Schäuble returned to these same verities.  At the time he was serving as Interior Minister. Peer Steinbrück of the SPD had the unenviable job as finance minster. Despite the scale of the crisis, Schäuble’s core beliefs were unshaken. It was a crisis not of fundamental order, but of excess and imbalance that ‘should not tempt us to put the social market economy as a system in question’. As Rahtz shows us, for Schäuble, the crisis was part of a grand cycle in which “phases of technical innovation were followed by phases of speculation and then of recession. Just as industrial capitalism had experienced its own first great depression at the end of the 19th century, the significance of 2008 was that it was the first major crisis of a ‘global information society and its economy’. [29] In hindsight, liberalization of financial markets had gone too far. The remedy, however, did not lie in more international regulation of them, but in the teachings of the Freiburg School, which had always insisted the really important rules of economic life were social rather than technical. This was something Schumpeter had understood, too. For a market economy, ‘like democracy, is not in itself a completely regulated and self-reproducing system’ but rather one that requires—Capitalism, Socialism and Democracy had explained—‘extra-capitalist patterns of behaviour’: self-reliant, disciplined, honest conduct.”

The dependence of capitalist modernity on social and cultural conditions that it does not itself reproduce is a theme that runs through German conservative thought. It has been powerfully articulated by legal theorists and constitutional judges such as Ernst-Wolfgang Böckenförde and Paul Kirchhoff. Lines like this from Schäuble are typical: ‘The rationalization of all life leads to unspoken costs in private life, engendering two fateful developments: the ascent of the consumer and the descent of the family. Today we could say: the unfunded consuming precariat increases, the middle class is under pressure, economic momentum is weakening.’ Such arguments have an appeal on the left as well as on the right, as one sees in the arguments in defense of the life-world and against commodification offered by folks as varied as Habermas and Streeck.

To counter such excesses and distortions Schäuble appeals to ‘something higher’. As Rahtz puts it, it is up to “civil society to foster mutual trust and confidence through churches, religious groups and other associations. [32] Germany was a secular society, and would remain so, Schäuble conceded, and he himself was not especially pious. Protestantism did not move in a straight line toward ideals that were partially realized by the late 19th century, without its own dark history. But the Christian faith of the Reformation achieved eventual harmony with the Enlightenment culture of reason. Glimpses of this tolerant Protestantism could be found in the pluralistic religious policy of Frederick the Great, or later in the republican revolts of 1848 in Baden. Noteworthy too was the ‘politically active, liberal Protestantism’ of Leipzig that played such an exemplary role in the fall of the DDR. The Dominican teachings of Bartolomé de las Casas could also serve as inspiration for a politics of human rights, in a Christian understanding of human dignity as a universal value, even and especially in relations with non-believers. [33] Religion in this sense, Schäuble contended, was vital for Western society: Habermas’s notion of ‘constitutional patriotism’ was no substitute. Christianity, so rendered, was less a theology than a functional part of the identity of Europe, where it took the form of a secular state built on the concessions of each religion.”

Who is supplying Schäuble with this narrative? Schäuble is a conventional postwar Christian Democrat. But he is also an avid reader of right-wing SPD historian Heinrich August Winkler, author, as Rahtz aptly puts it, of “leaden hymnal(s) to the West”. This is a theme I harped on in the LRB a while back, in a sketch of the Winkler-Schäuble relationship, which can be read as complementing Rahtz’s far more thorough treatment of Schäuble.

It was when he took Steinbrück’s position as German Finance Minister following the defeat of the SPD in the September 2009 election, that Schäuble catapulted to Europe-wide attention as a key figure in the Eurozone crisis. As a Kohl-era CDU-man, Schäuble is widely seen as the key exponent of Eurofederalism in modern Germany. Any flickering of his interest in wider federal solutions, or their opposite causes tremors in the world’s media. But what exactly does Schäuble’s Europeanism entail? On the one hand it is directly tied to his advocacy of “the West” as a basic cultural, political and geopolitical unit. More specifically, however, Schäuble has a vision of the EU.

As Rahtz argues, Schäuble’s “most pregnant single statement of his political career was a CDU position paper he co-authored with Karl Lamers in 1994. Blandly entitled ‘Reflections on European policy’, its thesis was far from anodyne, at the time or since. Germany’s new geo-political …. required a clear-sighted path to a stronger Europe. Deepening must come before widening. This could only be based on close coordination of monetary, budgetary and socio-economic policies in the ‘core’ of the European Union that consisted of ‘five or six’ countries, briskly reduced to just five: Germany, France and the Benelux trio—Italy pointedly excluded. Within this set, there was ‘the core of the core’—naturally Germany and France. These two powers were the motor of European integration, and agreement between them should precede any Union-wide or extra-Union initiatives. France would have to overcome its unrealistic nostalgia for a national sovereignty that had become an empty shell, and EU institutions must be updated in a new constitutional settlement that made sure the core—so too, the core of the core—was not impeded from moving ahead to greater inner unity by vetoes from other members of the Union.”

The question is how much of this has been realized. How influential has it been? At meeting after meeting of the Eurozone crisis, Schäuble was the dominant figure. But has he been able to impose himself on the Eurozone crisis? Rahtz is surely right to say that “Schäuble … was actually more lucid than his fellow Eurocrats in dealing with” the Greek crisis. But lucid is hardly how one would describe the course of Eurozone crisis management. So does this imply that Schäuble has actually been frustrated? One wishes that Rahtz had had room to expand his illuminating discussion. But driven by his focus on Schäuble’s book-length publications Rahtz focuses our attention on the joint interview with French finance Minister Michel Sapin, published as Anders Gemeinsam. Here is Rahtz’s compressed version:

“… as early as 2011, against furious and ultimately successful American opposition, Schäuble was willing to inflict a haircut on bondholders. [38] Not only that, he urged Athens to take a temporary ‘time-out’ from the single currency, to allow for a devaluation to restore its external balances; this suggestion was rejected by the corpulent PASOK boss Venizelos, and also in 2015, when Tsipras had taken over. Then it was France, not Germany, Sapin and not Schäuble, who insisted on keeping Greece shackled to the euro, with the eager compliance of Tsipras, on the grounds that to allow a time-out could fatally encourage Portugal, Spain and Italy, with their own sky-high debts, to follow suit, undermining the credibility of the Eurozone. Merkel, determined there should be no conflict between Berlin and Paris, overruled Schäuble, allowing Tsipras to return to Athens announcing the calvary to which it was now consigned as a liberation. [39] In their reminiscences of the crisis, the real difference between the two Finance Ministers emerges starkly: not one of ideology or conviction, where scarcely anything separates them, but character—Sapin enthusing over Tsipras’s genius in using the very referendum that rejected surrender to the Troika to give him the authority to accept it, Schäuble expressing his contempt for such double-dealing with voters, against which he warned Tsipras on the very first occasion he met him.”

This is very effective shorthand. But it begs further elaboration. To call Schäuble more lucid only makes sense if one shares the view that debt restructuring was always the key to the Greek situation, that Greece was insolvent from the start. This is the basis on which Schäuble can find common ground with Varoufakis but also such Anglophone critics as Eichengreen, Wypolsz and Martin Sandbu at the FT. It certainly is the best place from which to start a consideration of the Eurozone crisis.

If anything, Rahtz understates Schäuble’s radicalism, by suggesting that the preference for restructuring emerged only in 2011. In fact along with several other German spokesmen, it was pretty evident that Schäuble preferred a restructuring as early as the spring of 2010. This would have been the effect of his European Monetary Fund proposal that would have provided for IMF-style restructuring of all debts beyond a certain pre-agreed percentage. But this proposal was blocked by the coalition that Rahtz correctly identifies i.e. the US and France, plus Merkel. The French – one might have added Trichet at the ECB to the mix – were worried about their banks. So much is obvious. But when one asks why the resistance of the US Treasury was as fierce as it was, one reaches the limits of Schäuble’s lucidity. What would have been needed to contain the risks of a Greek debt restructuring were three things: immediate ECB intervention in bond markets to stop contagion; the creation of a bond purchasing fund collectively backed by Europe’s governments; and aggressive bank restructuring with some element of the costs being pooled (to avoid an Irish-style bank-sovereign doom loop). Without those flanking measures, pushing for PSI, as at Deauville in October 2010 was not so much practical politics, as a strategy of tension. Whether this escalation of market pressure on the weakest Eurozone members was calculated or not, is an open question. The doubts in Washington about the coherence of the German strategy were important in pushing Geithner et al to prefer extend and pretend.

This is the opportunity for leadership that Germany and Schäuble, in particular, allowed to go begging. This was the moment when Berlin lost its grip on the Eurozone crisis. France was not in a position to strike a tough bargain. Sarkozy proved only too willing to go along with Berlin. Schäuble could have had his core European axis. But despite his Euro-federalist leanings, Schäuble is far too conventional a thinker to push for anything like the comprehensive package that would have ben necessary to solve Europe’s financial crisis. Despite his clear recognition that PSI is key he continues to hammer on fiscal rectitude as the ultimate issue in the crisis. Merkel wanted to put off the political cost and did not want to move beyond the confines of the Lisbon Treaty, with which she had rescued Europe from the constitutional debacle of 2005. The Bundesbank, which can mobilize a groundswell of resentful DM-patriotismus on the least provocation, opposed bond-buying by the ECB. Schäuble’s clarity about debt restructuring thus lacked the necessary flanking measures that would have made it a reasonable policy and it is Berlin’s agonizingly slow recognition of this fact that has set the pace of the crisis. In effect, Germany became a veto player rather than a leader. It could afford to adopt this negative position, secure in the relative comfort afforded to it by global demand for its exports. For the rest of Europe it was a disaster of historic proportions.

Merkel is a key part of the problem. But Schäuble’s limitations are also defined by the final passage in Rahtz’s paragraph on the question of leadership in democracy. Sapin applauded Tsipras’s nerve in refusing to see the Greek referendum as a mandate for Grexit. Tspiras struck the best debt deal he could get whilst remaining in the Euro and then went to the electorate for a mandate to continue in office. Whatever one thinks of his strategy, his tactics were remarkable. He was returned to office with the left-wing of Syriza marginalized. By contrast, Schäuble and Merkel have led from behind, pandering to a zero-sum vision of the Euro crisis. Merkel steers by the seat of her pants. In Schäuble’s case his articulation of the presumed state of German opinion drives his relentless insistence on a Europe-wide fiscal discipline along the lines of the “debt brake” that Merkel’s first grand coalition wrote into the German constitution in 2009. Without the promise that everyone will do their “homework” he refuses to ask German voters to back large-scale acts of fiscal collectivism. This, of course, ignores the fiscal wiggle room that Germany itself made full use of in the early 2000s and the advantages that Germany would gain as an exporter from more rapid growth on the European periphery. It also ignores the possibility that with the right leadership German voters might actually be won to a more constructive, less zero-sum vision of Europe. The crisis has made Schäuble popular. It has not shown him to be a leader capable of winning public opinion over to even a modest European vision.

Rahtz concludes his survey of Schäuble’s writing in ringing terms: “Not an original thinker, if an assiduous reader and competent middling writer, Schäuble’s outlook is a compound of socio-economic ideas of a generically ordo-liberal background, and political tropes of essentially Cold War vintage, … But by force of character he has given these an energy and consistency that none of his generation of Union politicians can match. In the land of Euro-mummies, a self-declared cripple is king.”

Much as one may appreciate Rahtz’s subtle reading of Schäuble’s books, is this a convincing judgement on his political position? Certainly the gallery of political personalities in Europe is unimpressive, but if one surveys the course of events since 2009 is it plausible to claim that Schäuble is king?

The policy of extend and pretend embarked on in 2010 was not his. He favored Grexit in 2012 that is not what he got. Instead the Eurozone was held together by an activist push by Italy, Spain and France, backed by the US, and the sudden emergence of Draghi and the ECB as the joker in the pack. Meanwhile, Schäuble the devout Atlanticist found himself fighting a running battle with the Obama administration. In 2015 once again, Merkel overrode him both on Greece and on the Syrian refugees. For a moment it seemed that the refugee crisis might unseat Merkel and allow Schäuble belatedly to fulfill his dream of the Chancellorship. But she recovered. Brexit was a profound shock to his European vision. And where is Atlanticism to go in the age of Trump?

Schäuble remains an influential figure, the most popular politician in Germany no less. On the right-wing of the CDU his popularity is useful in tamping down the fires of the AfD. He sits atop his coveted budget surplus, the “schwarze Null”. He will no doubt claim credit for Europe’s swelling current account surplus and the improving situation in Ireland, Spain, Portugal etc. But in fact the severe austerity imposed on the Eurozone between 2011 and 2013 was a disaster, the full consequences of which were only contained by the preemptive action of the central banks, first the Fed and then the ECB, which Schäuble has repeatedly disowned. After Brexit, sensing the general mood of resentment across much of the EU, he has pulled back from the call for “more Europe”. In response to Trump’s erratic attacks on Europe it has been Merkel who has led the way. Schäuble for his part seems bent mainly on playing American criticism of the German current account surplus back against the ECB, which he demands should  take responsibility for the undervalued euro. Once more Schäuble reveals himself as a street-fighter, competing in an election year for votes on the right-wing of German politics, angling for position against Draghi. Schäuble is certainly no Euro-mummy. But he is no king either. Europe’s Prince, if there is one, rules in Frankfurt not Berlin.