How a Professor's Economic Dream Spawned a Hard-Right Monster

Thanks to Mummy Merkel's Grand Coalition with the Social Democrats, the AfD are now Germany's official opposition. They don't like Islam, they're anti-EU, pro-Russia: in short, they're fully-paid-up hard-right 2018 populists.

So it's strange to recall that just five years ago, this emergent force were dubbed "The Professors' Party" by the German press, and were best known for the rigid application of a dusty, technocratic, economics-based worldview rarely ever discussed outside Germany.

Bernd Lucke founded the AfD. Bernd is a professor of economics, and a highly technocratic one at that. His original insight in inventing the party was to bring back to the frontline of German politics the ideology many credit with the West German "economic miracle" of the 1950s.

That ideology is "ordoliberalism", which was designed in the 1930s as a challenge to the two great problems of the age: the pure capitalist economics that had caused the Great Crash, and the authoritarian economics of communism and fascism that sought to take advantage of the social despair after the Crash.

The Nazis tried to crush its leaders, imprisoning many of them. In the 1944 Plot To Kill Hitler, ordoliberalism's chief architect – Walter Eucken – was a conspirator. Had the plot succeeded, his ideas would have formed the economics of the new regime.

Mainstream economics divides itself squarely into two camps, the neoliberals and the Keynesians – who substitute for the right and the left. Ordoliberalism tries to square that circle.

In brief, it says that markets work (which is not Keynesian), but they are always imperfect (which is not neoliberal). The "ordo" of the title comes from the same Latin root as "order". In a highly Germanic turn of events, the ordos are obsessed with the rules. The rules are the rules are the rules, they argue, and the job of government is simply to make sure the rules are fair, then get out of the way.

Ordoliberalism comes with a curiously moral dimension baked-in; there's something of the stern hand-wringing Lutheran pastor. The Germans, after all, are the last G8 nation to balance their budgets. Not for nothing are the German words for "debt" and "sin" the same – schuld. Ordos are obsessed with something called Haftung – the German word for "liability". Having proper Haftung means you are correctly incentivised. In the 2008 crash, for instance, there was no Haftung for bankers. The Haftung should have been the collapse of every major bank who’d bought bad loans. And maybe jail time too.

But Bernd Lucke's dream of the Professors' Party ended badly. He left the AfD just before the 2015 migrant crisis – a fact he's keen to point out when I speak to him: "Certain positions of the AfD had changed, and I could not identify with them anymore… there was also widespread Islamophobia in the base, which contradicted my belief in freedom of worship."

Lucke is nothing if not a rationalist. In many ways, his laser-like focus on rationalism is touching – a belief that we can all get along wonderfully if we just apply the proper maths. He talks me punctiliously through the ordoliberal view of the Euro crisis, interjecting regularly to footnote my facts, to overrule my word choices.

And it appears the rationalism didn't know what to do when it came into contact with passions – with something cultural; anti-rational, even. "We said we wanted to have an immigration law contingent on the qualifications of the immigrants. We did not want unqualified immigrants who would have to be sustained by our welfare state."

In other words, an attempt to return German migration policy to something designed to benefit the existing population; a Singapore-style policy of taking in high-earners. It would be an easy way to effectively defuse the tension of competition among bottom-earners, and win all the GDP-effect economic arguments.

Lucke is very suspicious, though, of being tagged as something he is not. His press agent was equally suspicious: "Mr Lucke does not like to talk about the AfD," I was warned. I should definitely mention his new party, I was warned. I’m getting to that bit…

"You must also understand the difference between a refugee and a migrant," Lucke suggests. "We have to distinguish between asylum seekers – who have engaged in some activity that their government individually disapproves of. Numerically, there are very few of them. Refugees [which] tend to be much more numerous are the victims of some force majeure, and there is therefore an expectation that they can return home after a certain amount of time. We were in favour of asylum seekers, but recognised that any society must logically have upper limits on the quantity of refugees it can accept."

The paradox between a welfare state and low-wage mass-migration is the tension that is fuelling the populist rise all across Europe. The Swedes, with their capacious welfare system, spend more on housing and clothing their 2015 influx than they do on defence. But it doesn’t appear that Lucke was ever terribly interested in the issue. As he describes it, it was merely one part of a broader portfolio of policies. The Euro crisis – what happened to Greece and who should pay for it – was at the front of his mind. It was the Eurozone Crisis that first sent the AfD up to 10 percent in the polls.

Almost all mainstream opinion in Germany was mobilised into defending the institution of the Euro. Ordoliberals like Lucke, though, argued it was fundamentally unnatural to Frankenstein together very different economies through a currency. The exchange rate between currencies could no longer reflect differences in each country’s rate of productivity – which is exactly what had happened in Greece. Low productivity plus low borrowing-costs meant they never had to tighten their belts. A bubble ensued. Then burst.

An economic problem for Germany was effectively a political problem for the EU, so Merkel shifted the rules. "You can debate whether the rules were good enough, but in principle the responsibility was there for governments to aim for a balanced budget in normal times, but these rules were broken," says Lucke. "That broke Article 125 of the Maastricht treaty – no big bailouts."

But while Lucke was mobilising hard-edged rationalism, his own demographic base was changing. Attracted, perhaps, by the distorted echo that they thought they heard: sod the Greeks, no more migrants. The Islam-skeptic element he had opposed became more numerous. Economic nationalism was being confused with political nationalism. He suddenly found himself out of step with the membership.

"Probably a majority of the AfD was sympathetic to Russia, whereas my part of the party was basically Trans-Atlantic," he says. "We wanted to uphold the Western orientation of Germany, be a member of NATO and the EU. There were also major forces within the party that wanted Germany to leave the EU, and that was not my view. So we split – and 6,000 people left along with me."

In 2015, he lost that leadership election to Frauke Petry, by 60 percent to 40 percent. Petry immediately began talking about turning the AfD into an anti-Islam, Pegida party. It was a classic base-versus-management split. Of their seven MEPs, five sided with Lucke. Along with them, Lucke went off to form something called the Liberal-Conservative Reformers, while Petry formed an alliance with Austria's hard-right Freedom Party. With the migrant crisis in full swing, they made hay, claiming a quarter of the vote in the Saxony-Anhalt state. The party has drifted a long way from its origins: it now believes in conscription at 18, wants to reclaim German nationalism, opposes the climate change consensus and is against gay marriage.

Lightning hasn’t struck twice for Bernd Lucke, and it's very likely that at the 2019 European elections his new party – basically a rump of old AfD seats – will be wiped out.

"We have not yet had any significant success," he admits. "We have had very little media coverage. This is disappointing. The encouraging side is that we sense there is a great deal of displeasure with Mrs Merkel's government among German voters. Certainly, on the CDU side, but part of them shy away from voting for the AfD. Many still vote for the CDU, but they would like an alternative."

And despite its success in the 2017 election, AfD is not without its own mounting troubles. Lucke's replacement, Petry, ended up sitting as an independent in the Bundestag because she too had lost control and was alarmed at the rise of extremist factions.

An alternative to Alternatif fur Deutschland? Would be nice.

@gavhaynes