Europe and the German Model: Growing Tension or Symbiosis?

Abstract

Recent conflicts between the Commission of the European Communities and the German government suggest a growing tension between structures of the German political economy and the agenda of economic liberalisation fostered by European integration. Will mounting conflict ultimately force Germany to choose between its commitment to the integrity of the social market economy and support for European economic integration? This article considers the cases of Germany's public sector banks and the German postal service. Both entail potential conflict between the public service functions integral to the social market economy and the competition central to Europe's single market. Examination of these cases suggests that, rather than forcing change on a reluctant Germany and jeopardising the core of the social market economy (SME), enforcement of European competition policy from Brussels has taken place in fundamental symbiosis with the SME. Nonetheless, tensions between federal government and Länder indicate that a positive-sum relationship between Europe's single market and Germany's social market economy may be constrained by German federalism.