Austria's Capitalist System: A Comprehensive Overview

Austria is a democratic republic with a federal semi-presidential system. The country has a mixed economic system, blending private freedom with centralised economic planning and government regulation. Austria's economy is one of the highest in Europe, and the country is a member of the European Union.

Austria's mixed economic system

Austria has a mixed economic system, which includes a variety of private freedoms, combined with centralized economic planning and government regulation.

The country's well-developed social market economy has resulted in a low unemployment rate compared to other EU countries and the rest of the world. In 2023, the average unemployment rate was 5.1%, with Vienna experiencing a higher rate of 9.6%.

Austria's economic success can also be attributed to its participation in the European Union. Austria joined the EU in 1995, and a significant portion of its foreign trade is with fellow member states. Exports have tripled since joining, and 13,000 new jobs are created each year.

Overall, Austria's mixed economic system has contributed to its economic growth and stability, making it one of the top-performing economies in Europe.

The Austrian People's Party (ÖVP)

The ÖVP was founded in 1945 as an unofficial successor to the Christian Social Party of the late 19th and early 20th centuries. It has been one of the two traditional major parties in Austria, alongside the Social Democratic Party of Austria (SPÖ). The ÖVP was the most popular party until 1970 and has traditionally governed in a grand coalition with the SPÖ. The party underwent a change in image after Sebastian Kurz became chairman, adopting the colour turquoise and the alternate name, The New People's Party.

In terms of its ideology and platform, the ÖVP is described as Christian-democratic, conservative, and liberal-conservative. It has also been characterised as a catch-all party of the centre-right. The party has explicitly defined itself as Catholic and anti-socialist for most of its existence, with the ideals of subsidiarity as defined by the encyclical Quadragesimo anno and decentralisation.

In the first election after World War II, the ÖVP presented itself as the Austrian Party, was anti-Marxist, and regarded itself as the Party of the centre. The ÖVP consistently held power—either alone or in coalition with the SPÖ—until 1970. The party's economic policies during this era generally upheld a social market economy.

Under the leadership of Sebastian Kurz, the ÖVP's campaign for the 2017 legislative election shifted rightward, including a promised crackdown on illegal immigration and a fight against political Islam. This shift brought the ÖVP's policies closer to those of the Freedom Party of Austria (FPÖ), with whom they formed a coalition government in 2017. However, this coalition collapsed in 2019 due to the Ibiza affair, leading to a snap election. After the election, the ÖVP formed a new coalition with The Greens.

The Social Democratic Party of Austria (SPÖ)

The SDAPÖ was the strongest party in parliament at the start of World War I, and its leader, Karl Renner, became chancellor of the First Republic when the war ended in 1918. The party lost power in 1920 but retained a strong base of support in the capital, Vienna. The SDAPÖ played an important role in the establishment of the First Republic, advocating for a political union with Germany and calling the new Austrian republic "German-Austria". However, the Treaty of St. Germain forbade any unification between Austria and Germany.

In the interwar period, the SDAPÖ was almost hegemonic among the working class, with about 15% of Austrians being members of an association linked to the party in the 1920s. The party developed an ambitious policy programme for "Red Vienna", including a vast construction project of workers' housing, the introduction of free medical care, and income and luxury taxes. This socialist experiment inspired violent disgust in conservative circles, and the press readily described it as a "Jewish creation" in the hands of "Bolshevism".

The SDAPÖ was banned in 1934 following the Austrian Civil War, and was suppressed throughout the Austrofascist dictatorship and the Nazi period. Many of its members initially welcomed the Anschluss of Austria into Germany in 1938, hoping for more work and equality for workers, as well as further socialist reforms and political stability. However, the party was reconstituted as the Socialist Party of Austria (SPÖ) in 1945 and entered the government of the Second Republic as part of a grand coalition with the Austrian People's Party (ÖVP) until 1966.

From 1971 to 1983, the SPÖ, under Bruno Kreisky, was the sole governing party. For the following three years, it ruled in coalition with the Freedom Party of Austria (FPÖ), and then again with the ÖVP up to 2000. During this period, the grand coalition combined with the "Proporz" system, which distributed important government posts between the two main parties, evoked rising discontent and contributed to the growing popularity of the FPÖ.

In 1991, the party reverted to including "Democratic" in its name, becoming the Social Democratic Party of Austria. In the 1999 Austrian legislative election, the SPÖ lost votes but remained the strongest party, while the FPÖ came in second. The following year, the FPÖ and ÖVP formed a right-wing coalition, displacing the SPÖ from the government.

In the 2019 Austrian legislative election, the SPÖ lost 12 seats and shrunk to 21.2% of the vote. As of June 2023, the party is led by Andreas Babler and is the second-largest of five parties in the National Council, with 40 out of 183 seats. It holds seats in the legislatures of all nine states and is the largest party in three: Burgenland, Carinthia, and Vienna.

The Freedom Party of Austria (FPÖ)

Initially, the FPÖ presented itself as a centrist party, with its first leader, Reinthaller, coming from the liberal wing of the party. Under the leadership of Norbert Steger in the early 1980s, the party sought to style itself as a moderate centrist liberal party, focusing on free-market and anti-statist policies. However, in 1986, Jörg Haider became the leader of the party, and the FPÖ began an ideological shift towards right-wing populism. This resulted in a surge of electoral support but also led to the Social Democratic Party of Austria (SPÖ) breaking ties.

Under Haider's leadership, the party's focus shifted to immigration and criticism of the political establishment and the EU. Haider's controversial rhetoric and policies, such as his support for a referendum on immigration restrictions and his positive remarks about the Third Reich's employment policy, caused internal tensions and led to the splintering of the Liberal Forum in 1993. Despite these controversies, the FPÖ continued to gain support, and in the 1999 election, it became the second-most popular party, winning 26.9% of the vote.

In 2000, the FPÖ formed a coalition government with the Austrian People's Party (ÖVP), but this was short-lived due to intense international criticism of the FPÖ's participation. The party struggled with its shift from an anti-establishment stance to being part of the government, which led to internal instability and a loss of electoral support. In 2005, Haider and a significant portion of the party leadership left the FPÖ to form the Alliance for the Future of Austria (BZÖ).

In recent years, the FPÖ has continued to move further to the right, with its current leader, Herbert Kickl, embracing the white nationalist identitarian movement. The party has called for the "remigration" of non-ethnic Europeans from Austria and the establishment of the country as a white ethnostate. The FPÖ's support increased in the 2024 Austrian legislative elections, marking the first time a far-right or ethnonationalist party won the most seats in a legislative election in Austria since World War II.

The FPÖ's success has contributed to a shift in Austrian politics, with the country's traditional conservative party, the ÖVP, adopting more of its stances on migration. The FPÖ's normalization and increasing influence highlight a broader trend of far-right parties gaining traction in Europe, causing concern among those who fear the legitimization and encouragement of extremist ideologies.

The Austrian Greens

Austria is a federal semi-presidential republic with a mixed economic system. While the country is capitalist in the sense that it has a variety of private freedoms, it also has elements of central economic planning and government regulation.

The basic values of the Austrian Greens, according to their 2001 charter, are: "direct democracy, nonviolence, ecology, solidarity, feminism and self-determination". The party campaigns for ecological issues such as environmental protection, is Pro-European, and advocates for the rights of minorities and a socio-ecological tax reform.

In the 2019 snap legislative election, the Austrian Greens returned to the National Council with their best-ever result in a legislative election, scoring 13.9% and electing 26 MPs. This strong showing made them a possible coalition partner for the Austrian People's Party, which had won the largest number of votes and seats of all parties. Following two months of intense negotiations, the two parties announced a coalition agreement on New Year's Day 2020, marking the first time the Austrian Greens had gained power.

The current President of Austria, Alexander Van der Bellen, is from the Green Party.

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