Dawning of a New Era. On the Need to Construct Social Democracy in Europe ERHARD EPPLER The End of the Neoliberal Age When it came to pass that trust between the major banks was so low that they were unwilling to lend to one another – unless the state guaranteed that they would get their money back – the belief that markets are best left to regulate themselves was not simply refuted, it was rendered ridiculous. When the financial crisis caused the social product of many states to shrink more dramatically than in several previous years they had grown, the promise that one had only to give markets free rein in order that, eventually, inexorably rising prosperity would trickle down to the less well-off died with it. And when it became clear that the pressure exerted by free-marketeers for tax reductions on states which had had to rescue their banks and their economies by laying out almost incon­ceivable sums simply could not be taken seriously, it seemed that the era which, in the uk , had been ushered in by Margaret Thatcher and in Germany had begun with Otto Graf Lambsdorff’s letter to Helmut Schmidt, had truly ended. 1 An era came to an end in which the state – and thereby also pol­itics – was deemed less and less capable, but the market more and more. Obviously the state was not entirely obsolete. Among other things, it was there to establish a framework for markets: a legal framework so that it was clear what is and is not permitted for competing firms; a social framework so that labor did not remain solely a cost factor, but the activity of people who have needs and – as guaranteed by the Con­stitution – dignity; and finally an environmental framework to ensure that one generation does not destroy the natural environment for the next generation and the one after that. 1. The letter of September 9, 1982, to German Chancellor Helmut Schmidt, in which economics minister Otto Graf Lambsdorff( fdp ) presented a plan for overcoming poor growth and to fight unemployment is generally regarded as the turning point which led to the break-up of the social-liberal coalition. ipg 4/2010 Eppler, Dawning of a New Era 23