What does it mean to say we are in a ‘polycrisis’? Under an increasingly undemocratic capitalism, the countries of the rich world all confront a similar bundle of crises that have sprung up more or less unnoticed. Underlying them is a long-simmering fiscal crisis of the state that is now finally coming to the fore, where the growing demands placed on society by the evolution of contemporary capitalism are clashing with the declining ability of democratic politics to secure the resources needed to meet them. One of the consequences is the notably parallel rise, across all the countries concerned, of new-model opposition parties, critical of the existing order, which threaten to oust the ageing postwar ruling parties from power.

The details vary from country to country, though not by much. As far as Germany is concerned, every government regardless of who leads it faces roughly the following problems, which are as acute as they are intractable, at least in the short term. All are caused by a latent policy of austerity, resulting in a failure to invest in public goods. These are, in no particular order: stagnant growth, under which any structural change takes on a zero-sum character; the deterioration of public infrastructure, including railways, bridges and roads; a growing housing shortage and rising urban rents; the failure to adapt both cities and rural areas to the consequences of climate change; the lack of an immigration policy to counterbalance an ageing population alongside a sharp decline in birth rates; the decay of the education system, particularly primary schools; the indebtedness of local authorities and their diminishing ability to make necessary investments and provide essential services; growing inequality in income and wealth, with low-income families – particularly those headed by single mothers – chronically the worst hit; and, last but not least, widespread anxiety about the future, driven in part by fear of cuts to state-provided essential services that are becoming increasingly hard to finance.

These crises – in Germany as elsewhere – have two things in common: first, they arise at a time when the states that are supposed to wrestle with them are already deep in debt; and second, that leaders’ promises to solve them are impossible to keep – at least before the next election. There is of course nothing new in the notion that public finances could become the Achilles’ heel of democratically governed capitalism. Since the 1970s, a widening gap has appeared between the overhead costs of capitalism and what capitalist firms are willing – or can be compelled – to contribute towards covering them. These costs arise from the necessary preconditions for capitalist production, as well as its aftermaths – from R&D and the construction of ‘human capital’ to cleaning up the environmental damage – but also from the need to secure legitimacy for a mode of production in which the generated surpluses end up in the hands of a small class of capital owners.

All forms of social wage – that is, state supplements to the market-wage of workers, such as social security and health insurance – serve to buttress this legitimacy. As capitalist development (or ‘modernization’) progresses, and as new needs arise among workers and their families, these expenditures increase, as with nursery schools or care for the elderly. At the same time, the ability to tax both the working classes and the classes that profit from them is reaching its limit: in the former case, because further tax increases jeopardize the work ethic necessary for capitalism and the patriotism necessary for democracy; and in the latter, because increasing globalization and financialization have dramatically expanded capital’s ability to vanish when the tax authorities come calling.

As early as the 1950s, John Kenneth Galbraith described the resulting discrepancy between private affluence and public squalor. What he witnessed, however, was only the start. In the 1980s and 90s, in order to bridge the growing gap between the demands placed on the state and the resources at its disposal – or, more concretely, to subsidize the capitalist mode of production in such a way that both the capitalists driving it and the non-capitalists they employed would stay on board – the advanced-capitalist states came up with the idea of borrowing from the deregulated financial sector – cumulatively, rather than in a cyclical Keynesian manner – to satisfy the demands of both classes, in accordance with their relative bargaining power.

This could not continue indefinitely however. The last three decades saw a series of tax cuts for businesses and ‘high earners’, which led to further wealth accumulation among the asset-rich, as well as the rising costs of supporting an ageing population reliant on migrant labour. The result has been soaring debt levels. In Germany, this predicament was avoided for a long time partly by failing to maintain infrastructure dating from the 1960s. But with the Merz government’s so-called ‘special funds’ – to debt-finance infrastructure above the constitutional debt limits – and open-ended defence budget, the debt is reaching a point where lenders become nervous. Normally, capital owners can live quite contentedly – indeed, very contentedly – with government debt. When the state needs to borrow, sooner or later it turns to those who can lend capital that they might otherwise have had to pay as tax. If instead they now pass it on to the state, this is only on a temporary basis; not only does it remain their private property, but the state holds it safely on their behalf and pays them a competitive interest rate on it; and when they pass away, they can bequeath both the capital and the interest to their children, ensuring their wealth remains not only within their class but also within the family.

Who would get nervous about that? The critical point has been reached, however, where the level of debt is so high that, in the assessment of the ‘markets’, the state is at risk of losing its ‘creditworthiness’, meaning there are doubts as to whether it can still service its interest payments from current revenue – and the interest itself has to be borrowed. As a result, interest rates on further debt rise because of the risk of insolvency or a so-called ‘haircut’, democratically mandated by the second sovereign, the electorate. The same follows when interest rates go up for other reasons, such as to curb inflation. This point has already been reached, or is close to being reached, in an increasing number of countries – including the US, where the central government’s current interest burden is now higher than its staggering defence budget, itself the largest in the country’s history, including during the Second World War.

States in danger of losing their creditworthiness – as decreed by the markets’ inscrutable judgement – must now persuade their citizens to accept overt rather than latent austerity. This is precisely what is happening around the world today, with the exception of the US, which as owner of the world’s reserve currency can print dollars at will, at least until the inevitable crash. At present, the policymakers of the large and small countries of still-democratic capitalism are grappling with the question of how to break the news to their populations. In Germany, this is playing out through the so-called ‘reform debate’ – including cutbacks to pensions, sick leave and labour protections – conducted under the watchful eye of the ‘markets’, while the debt tap is simultaneously opened to placate the Western allies and the arms industry – and perhaps as a last-ditch attempt to slow de-industrialization.

Since they have no hope in the foreseeable future of bringing the no-longer slow-moving fiscal crisis under control, nor its accompanying infrastructural and welfare crises – and especially now that the debt ceiling has been reached – the parties of the traditional centre have abandoned their traditional approach of spreading good cheer and optimism (‘We can do it’). It doesn’t go down as well as it did under Angela Merkel. The same applies to the customary democratic refrain that if one is dissatisfied with the government’s policies one can simply vote for a different party at the next election; the risk that this would benefit the new anti-systemic opposition appears too great. This paves the way for the formation of a party cartel in which the main parties avoid conflict with each other. In Germany, this scenario is particularly plausible: after all, the CDU and SPD were in government almost continuously during the long years of ‘shadow austerity’, and mostly in coalition.

United in this way, a secondary theatre of crisis can be opened up. The problem is no longer simply rising rents and ruinous living costs, shrinking public services, or the fact that ever-larger tranches of the population are reliant on food banks – the sector with the highest growth rate in Germany – but ‘populism’, the AfD and neo-fascism. This makes it necessary for ‘we democrats’ to close ranks once more. Instead of fighting against the growing power of the markets over the people, we are called upon to fight against the right, to take a final stand for ‘our democracy’ – for whose sake we are asked to please set aside our petty squabbles over who should be hit first by the overt austerity demanded by the subsidized capital markets, and who should be saved for later.

At first glance – from the perspective of the ruling political class – this certainly has an appeal. Demonstrations by all right-thinking people against the AfD are preferable to demonstrations against the rising cost of living; ‘firewalls’ cost far less than insulating the walls of old apartments; reports from the Office for the Protection of the Constitution are vastly cheaper than nurseries and schools in which all children can be welcomed and brought up together. Moreover, playing with the idea – in the name of ‘militant democracy’ – of a Constitutional Court ban on a party supported by a third of the electorate at least ensures there is something exciting to report on the evening news about the daily labours of those who run the state.

But this won’t work, either now or in the long run. The ‘fight against the right’ does not even solve the AfD problem. Neither mass demonstrations, party-conference boycotts, firewalls, assessments by the Office for the Protection of the Constitution (‘confirmed as right-wing extremist’) nor the threat of a party ban have done anything to halt the AfD’s rise to the top spot in the latest opinion polls – or their victory in the recent Saxony-Anhalt election – because they do nothing to solve the real issues that the political class would like to conceal behind the AfD problem. Even if the party were banned, the trains still wouldn’t run on schedule, the number of heat-related deaths wouldn’t fall, cities would not become more liveable, rents would not be lower and pensions and jobs would not be more secure. The same would apply, incidentally, if the AfD were to enter government rather than end up in prison, politically or physically. However, prevailing political wisdom fears giving the AfD a chance to fail in the face of the polycrisis, just as all the others have.

‘Democrats’ would do well to remember something that Einstein very likely never said, though he should have done: ‘Insanity is doing the same thing over and over, while expecting different results’. The AfD will not diminish in size with the next demonstration or the next display of partisan TV reporting; quite the opposite. As long as the forces of state and democracy exhaust themselves on the secondary battlefield of ‘democracy versus populism’ – in an effort to distract from the crises over which they have presided – the AfD will have an easy time of it. This also applies to the latest iteration of ‘militant democracy’: supplementing the internal enemy with an external (Russian) one, while conflating the two as far as possible through conspiracy theories. Yet the transformation of a welfare state into a garrison state – inspired by the Zeitenwende and branding the AfD as ‘the Kremlin’s fifth column’ – raises the question of how a debt-ridden government intends to finance the associated rise in defence spending to at least 5 per cent of GDP. Will it resort to even more austerity – or even more debt – at the risk of a final falling-out with either the local populace or the global financial markets, or both at the same time?

What should those on the side of ‘democracy’ do? A first step would be to admit that, after all these years of ‘credit-pump capitalism’, as Ralf Dahrendorf called it, there can no longer be a magic formula; and a second would be to stop making promises that everyone knows are hollow: that we will ‘kickstart the economy’, as if it were a stalled 1960s VW engine; that we can balance the budget whilst at the same time spending 5 per cent of the gross national product – borrowed, no less – on armaments; or that the school system will be brought up to Scandinavian standards whilst the current pupils are still at school, if we carry on ‘making savings’ and ‘working harder’.

Above all, questions must be asked – particularly by the left – in front of an audience who, contrary to the advice of PR ‘experts’, we must still regard as capable of reason if democracy is to continue to exist. How do we get capital to foot the bill for the costs it imposes on society and nature? How do we prevent tax avoidance and tax evasion? How do we protect companies that provide good-quality work for the people in our country from a global trade system that shows no regard for working people? How can we halt the decline in our population, through immigration as well as through better family policies? How do we relieve our local administrations of their debt burdens, to allow them to provide the public services that are indispensable for a good life for all in a society in transition such as ours? And how must ‘our democracy’ be restructured so that it can be a democracy for all and give its citizens the opportunity to take control of their own lives, rather than having to beg for help from a state whose coffers are empty and will remain so for a long time to come? The time for playing games is over; the situation is serious, and there is an urgent need to grow up.

An earlier version of this article was published in the German edition of Jacobin.

Read on: Wolfgang Streeck, ‘The Crises of Democratic Capitalism’, NLR 71.