The welfare state: under the wheels of market-liberal populism

Citizen’s income reform

By Ulrich Thielemann

[This article posted on July 1, 2025 is translated from the German on the Internet, https://makroskop.eu/24-2025/wie-der-sozialstaat-unter-die-rader-des-marktlibertaren-populismus-gerat/.]

### CDU Secretary General Carsten Linnemann wants a “major citizen’s income reform” that goes “to the heart of the matter” – more precisely, to the foundations of the welfare state.

A study commissioned by the association Sanktionsfrei (Sanction-Free) has revealed, among other things, that 54 percent of parents who receive citizen’s income say they go without food so that their children have enough to eat.

When asked about this during a press conference recorded by Phoenix TV, CDU Secretary General Carsten Linnemann responded by saying that he did not want to comment on individual benefit rates – and therefore also not on the situation of those affected by poverty. Instead, he wanted to emphasize that he was striving for a “major citizen’s income reform,” one that, as he had said a few days earlier, would “get to the heart of the matter.”.

Apparently even more so than today. As Linnemann had previously stated, it should also be possible to completely eliminate citizen’s income. However, this has so far failed due to the Basic Law, or at least the interpretation of Article 20 of the Basic Law by the Federal Constitutional Court, which defines the Federal Republic of Germany as a “social federal state.”

### First- and second-order solidarity

This reform is based on a peculiar interpretation of the concept of “solidarity” across society as a whole. On the one hand, solidarity with those “who, for whatever reason, cannot work.” On the other hand, solidarity between those affected by poverty and those currently in employment, whose tax contributions make the citizen’s income system possible in the first place.

Linnemann fails to mention the implied “solidarity” with those who earn capital income, who – with increased capital or, depending on the case, skimming rates – are hardly called upon to finance the welfare state anyway, and are thus spared, and this is intentional. This seems to be a matter of course to him. And to name it could raise uncomfortable questions.

This second dimension of solidarity – i.e., that at the bottom with those at the top and in the middle, which at least relativizes, if not completely neutralizes, the first, original dimension of solidarity – means that citizen’s income must be based on the principle that “those who can work must also go to work.” No matter what the conditions. At least under the conditions that the market currently offers.

Linnemann does not say this, of course, but he must mean it. And these conditions are not to be tampered with in any way. Linnemann’s CDU rejects an increase in the minimum wage, for example. And it also rejects a move away from exportism, which implies wage moderation, in favor of strengthening domestic demand, which would require the opposite.

Linnemann believes that he can rely on “millions of Germans” who do not consider the current system of basic social security to be ‘fair’ – because it is (still) too generous or perhaps fundamentally flawed – for his solidarity coup, which is ultimately intended to eliminate genuine solidarity. Admittedly, “a few million Germans” may only be a small minority among 72 million citizens. But in fact, this is how many of those who “have to go to work” – under the conditions they were able to secure – feel.

A survey conducted by MDR in 2023 found that 62 percent of respondents from Saxony, Saxony-Anhalt, and Thuringia considered a proposed increase in basic income at the time to be too high. Moreover, 73 percent wanted “tougher sanctions.” One respondent said that an increase in basic income (or basic income itself?) was “a slap in the face for those who work for little money.”

### Identifiable and unidentifiable authorities

Those who “have to go to work” (Linnemann) under the current conditions because they would otherwise have no income, and (as Linnemann points out) because the welfare state would not provide them with dignified support but would instead treat them in a degrading manner if they lost their source of income, which further increases the pressure, only address “the welfare state,” not the market. For only the latter is tangible as a nameable entity: there are politicians, parties, and political commentators who vote for or against the establishment of a dignified welfare state, which, depending on the majority, leads to its expansion or dismantling.

They do not address the conditions that force them to accept their jobs—in some cases for “little money.” Nor do they address the market conditions that have turned those affected into welfare recipients. For in the competitive market, these conditions are ultimately not personally identifiable as “masterless slavery” (Max Weber).

There are the many unknown buyers who are no longer buying or will soon be unable to buy (latent competition). There are the known competitors, or those who appear out of nowhere, previously unknown, from the same industry or from completely different industries (if the industry as a whole is shrinking), to whom customers are migrating. Without knowing who “the competitors” actually are. Their management, their employees, their frequently changing investors? Their suppliers, who deliver inexpensive and high-quality intermediate products, and then these three groups again. All this in a highly complex field of long, difficult-to-overview supply chains?

The lack of authority and addressees in the market nexus, which is created by the “invisible” (Smith) or “hidden hand” (Bhagwati) of competition, means that responsibility (for falling or lost income, or even for the stress of preventing this) is converted into “personal responsibility.” And many people think: “Nobody helps me either. Why are these lazy bums getting help? It’s unfair.” When they feel anger about the prevailing economic conditions, it is “anger without a target.”[1] Or, of course, anger at scapegoats they think they have identified: foreigners, woke people.

It wasn’t always the case that people like Linnemann could get away with his refusal to show solidarity disguised as solidarity. Until recently, I believe there was still solidarity among those in active employment with those who had fallen out of the system. This included high earners as well as those at the lower end of the wage scale. (This is confirmed by the Politbarometer, which recorded a rejection rate of 66 percent for cuts in basic social security in 2010, compared to an approval rate of 64 percent in 2023.)

And perhaps there was also a basic understanding that an adequate “reservation wage” provided by social security networks has a positive influence on the wage share and reduces income disparities. And that a falling reservation wage has the opposite effect, because the fear of falling increases and bargaining power decreases. This is generally welcomed by neoclassical economists because it prevents “the risk of unemployment from losing much of its terror.”[2] This must be avoided so that the pressure to increase “efficiency” (for whom?) does not let up.

### Education for market obedience

However, the market nexus apparently acts relentlessly as an educational institution, something that market libertarians such as Hayek and his followers have always celebrated. It educates people to be “market-obedient” (Nell-Breuning) and, above all, to interpret the market as an expression of “freedom” and the democratic, egalitarian constitutional state as a force that undermines freedom. In its socio-political dimension, which aims to dampen market pressure – in an inevitably particularistic manner, incidentally – it appears to the new market populists, who see their heroes in the Linnemanns, Musks, Thiels, and Mileis of this world, as nothing more than a discriminatory, i.e., injustice-producing force.

In this way, the new market populism ensures that we will never be able to escape the “steel shell” (Max Weber) of the continued economization of all aspects of life – “until the last hundredweight of fossil fuel has burned up,” as Max Weber noted over a hundred years ago. And so many petty bourgeois, succumbing to the apparently irresistible appeal of market populism, are contributing to the “shutdown” of the “redistributive-protectionist” “social democracy”[3] that is, after all, primarily intended for them.

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###### [1] See Sauer, D., et al. (2018) Rechtspopulismus und Gewerkschaften. Eine arbeitsweltliche Spurensuche (Right-wing populism and trade unions. A search for clues in the world of work), Hamburg, p. 13 f., 89 ff.

###### [2] Blanchard, O./Illing, G.: Makroökonomie (Macroeconomics), 6th edition, Munich 2014, p. 235.

###### [3] Streeck, W.: Zwischen Globalismus und Demokratie. Politische Ökonomie im ausgehenden Neoliberalismus (Between Globalism and Democracy: Political Economy in the Twilight of Neoliberalism), Frankfurt am Main 2021, p. 27, 31f., 38-41.

Ulrich Thielemann, economist and business ethicist, is director of MeM – Think Tank for Business Ethics (Berlin), founded in 2010. He has been a private lecturer at the University of St. Gallen since 2010. From 2001 to 2010, he was deputy director of the Institute for Business Ethics at the University of St. Gallen.

Competition as a concept of justice.

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Poor against poorer
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By the editorial team

[This editorial posted on July 3, 2025 is translated from the German on the Internet, https://makroskop.eu/24-2025/arm-gegen-armer/.]

Dear readers

The divide between rich and poor has been growing for years. While in 2021 there were still a good 34,000 millionaires with an average income of three million euros in Germany, according to our author Werner Vontobel there are now around 40,000. In terms of income, there are 135 poor people for every one of them.

Paradoxically, current discussions hardly address this social imbalance. Leading politicians are more known for turning the tables, as is CDU Secretary General Carsten Linnemann. He calls for solidarity between those affected by poverty and the workers whose tax contributions make the citizen’s income system possible in the first place.

This idea is not only factually incorrect in a currency-issuing state, where citizens must first receive the currency in order to pay taxes. It also undermines the “original dimension” of solidarity, according to economic ethicist Ulrich Thielemann, which – one might add – is directed from the top down and not the other way around.

If solidarity with the “hard-working population” is important to Linnemann and Co., one would think that a poverty-proof minimum wage would be an important concern for them. Although the CDU/CSU and SPD still stated in their coalition agreement that “the minimum wage commission would be guided by both wage developments and 60 percent of the gross median wage of full-time employees,” making a “minimum wage of 15 euros in 2026” achievable, the government is falling short of this goal. From 2026, the minimum wage will be only 13.90 euros.

This continues a pattern of past failures. As MAKROSKOP editor Lukas Poths notes, based on calculations by the Economic and Social Science Institute (WSI), the minimum wage has always been below the 60 percent threshold required not only by the coalition agreement but also by the EU directive on adequate minimum wages. Furthermore, the minimum wage fell behind the development of collectively agreed wages until 2022.

The government is therefore already practicing breaking promises at an early stage, backed by an ideology that pits the poor against the even poorer. The SPD’s precarious poll ratings come as no surprise. What has become of the social democratic conscience to which its members of parliament are committed?