The German Model Revisited: From Schmidt to Schroder

Abstract

This article examines the main changes in the German model from the government of the previous Social Democratic Chancellor Helmut Schmidt to that of Gerhard Schroder. It stresses the tensions and conflicts between its two faces - ordo-liberalism and 'managed' capitalism - and its potential to shift its centre of gravity without sacrificing its underlying nature. The key element of accommodation rests on a monetarist co-ordination of collective bargaining, an element that has been put in question by EMU. The Schroder government epitomizes an approach of modernisation by stealth that is well adapted to the contours of the German model. The conclusion points to the attempts to give a technocratic basis of legitimacy to the German model (most recently by the methodology of benchmarking) and seeks to offer a preliminary sketch of a theory of anchoring to explain how well consolidated is the German model. In addition to identifying slipping and weakening anchors, the conclusion emphasises the importance of two key anchors: the consistency of the German model with corporate strategy and with a chancellorship leadership adapted to the consensus principle which remains important in the operation of the political system. In the process the article offers reflections on the leadership role and style of Chancellor Schroder.