German Political Economy Research Articles

Wrestling with unevenness: Sino-American rivalry, state strategy and the reformation of German capitalism

This article focuses on the case of Germany to demonstrate how the lens of ‘uneven and combined development’ (U&CD) can help critical scholars of Global Political Economy (GPE) make sense of a worldwide but nationally specific movement towards an augmented role for the state in the regulation of capitalism. The first section finds that the prevailing comparative-institutional literature suffers from a narrow conception of the international environment in which the German political economy is drifting in the direction of its main organisational rival – US-style neoliberalism. By contrast, the second section shows that the alternative lens of U&CD provides a richer picture of the systemic forces experienced by German state actors: they flow from a technologically leading US as well as a leapfrogging China, they increase competition but also present commercial opportunities, and they do not point towards freer markets but rather novel forms of state intervention that are best explored as a creative, if contested, process of ‘re-combination’. The third section details the structural, strategic and institutional reasons for why the German state cannot emulate either the US or China. It concludes that – in lieu of strong support from capital and labour and independent state capacities like the Chinese party apparatus or the US military-industry complex – German attempts to expand the remit of the state follow a substitutive process of ‘bricolage’ that patches together foreign and domestic techniques and a motley of special interests.

(Re)coordinating the German Political Economy: E-mobility and the Verkehrswende

ABSTRACT Germany has long been admired for its coordinated state-business relations, aligning domestic industry, particularly the automobile sector, with political and economic objectives. This article finds, however, that in the case of the automobile sector’s transition to electric vehicles, there is little evidence of coordination. Informed by 31 interviews and a document analysis, the data shows instead that the Diesel Scandal proved to be a pivotal moment in German politics, as the state has looked to distance itself from the automobile industry. To reflect the data, I adjust Meckling and Nahm’s analytical heuristic to argue that against the backdrop of e-mobility, auto-state-business relations have become un-coordinated. I subsequently contend that the consequences of un-coordination stand to have profound implications for Germany, as it cedes ground to Tesla and China in the global automobile market. As a result, a decline in the automobile industry threatens the export and fiscal surpluses exhibited in recent years and thus the German model. I conclude that (re)coordinating auto-state-business relations, and the German political economy more broadly, will require developing the Verkehrswende.

Carl Menger’s Smithian contributions to German political economy

In this paper we contextualize Carl Menger’s work in relation to the transformations of German political economy from the 1860s to the 1890s. We demonstrate that his Grundsätze (1871) was a culmination of the German subjectivist tradition which had started in the early nineteenth century. Menger’s synthesis of this tradition is comparable to Adam Smith’s synthesis of earlier knowledge in the Wealth of Nations (1776). Menger’s contribution was continuous with the intellectual project of leading German economists, such as Wilhelm Roscher, to whom Menger had dedicated his book. Roscher, however, also promoted a historical turn, that was combined with a progressive policy agenda by a new generation of German economists after they founded the Verein für Socialpolitik in 1872. These divergent Roscherian legacies clashed vehemently in the Methodenstreit. During this debate Menger elaborated in his Untersuchungen (1883) an evolutionary and spontaneous theory of institutional change, in line with the legacy of the Scottish Enlightenment and in contrast to a more rationalist and constructivist theory of institutional change expounded by Gustav Schmoller and other Verein economists. The new policy-oriented direction of German political economy carried the day, also due the fundamental socio-economic transformations in the German and Austro-Hungarian Empires, and prompted Menger to restate in 1891 the social policy agenda of the classical political economists, most prominently Smith. Menger’s recurrent proximities to Smithian political economy – in the synthetic contribution of 1871, the theoretical innovation of 1883, and the policy agenda of 1891 – suggest that his arguments are best understood as a defense of what Boettke has called the “mainline” in economics.

Social Protection, Capitalist Production: The Bismarckian Welfare State in the German Political Economy, 1880–2015. By Philip Manow. Oxford: Oxford University Press, 2020. 192p. $80.00 cloth. - Imbalance: Germany’s Political Economy after the Social Democratic Century. Edited by Tobias Schulze-Cleven and Sidney A. Rothstein. New York: Routledge, 2021. 274p, $160.00 cloth.

Social Protection, Capitalist Production: The Bismarckian Welfare State in the German Political Economy, 1880–2015. By Philip Manow. Oxford: Oxford University Press, 2020. 192p. $80.00 cloth. - Imbalance: Germany’s Political Economy after the Social Democratic Century. Edited by Tobias Schulze-Cleven and Sidney A. Rothstein. New York: Routledge, 2021. 274p, $160.00 cloth. - Volume 20 Issue 1

The return of the local state? Failing neoliberalism, remunicipalisation, and the role of the state in advanced capitalism

Picking up on the manifestation of state intervention following the 2008 financial crisis, we argue that the recent trend towards remunicipalisation underlines but also problematises the thesis of new state capitalism. Remunicipalisation refers to a process whereby towns, cities and sub-national regions take previously privatised services and infrastructures back into public ownership. Remunicipalisation has led to the emergence of regionally- and municipally-owned state enterprises across a wide range of sectors including water, energy, waste, transport, education, (tele)communications, and health and social care. Engaging with the nature of the ‘new’ state capitalism, and particularly challenging its theoretically restrictive understanding of the state as ‘market enabler’, we highlight that remunicipalisations have often emerged in response to the failed promise of neoliberal capitalism to improve the quality and efficiency of public services through the (supposed) competitiveness of the free market. Like neoliberalism, remunicipalisations take spatially diverse and variegated forms as market-driven logics interact with other political and economic determinations. As such, remunicipalisations often encompass critiques of neoliberal governance and market volatility, and instead focus on the potential of regional wealth creation as well as stabilising local market dynamics through diversifying ownership forms. Drawing upon our ongoing empirical work on German remunicipalisation, we aim to foreground how multiple determinations at work in the German political economy at different spatial scales shape its particular trajectory out of neoliberal mutation. We show how the remunicipalisation of energy provider TEAG has enabled the local state to intervene and diversify the uneven economic geographies in the state of Thuringia.

Platform work in a Coordinated Market Economy

AbstractTo investigate whether platform work can grow even in political economies with an adverse institutional environment, we examine Germany as a least likely case. We assess what constrains the growth of platform work in Germany as well as whether existing economic and social institutions adapt to it. We find that platform work is being accommodated in the German political economy, but in a very limited space. The most important institution constraining platform work is social insurance, especially by increasing pressure to rein in bogus self‐employment. Government has so far not seen a need to intervene with new regulation. Within the space that has been carved out for platform work, the traditional institutions of German social partnership are adapting to accommodate and monitor it. Overall, the main actors in the German political economy have a watchful eye on platform work but deal with the phenomenon in a characteristically consensual way.

Beyond the Sonderweg: defining political economy in 19th-century Germany

The comprehension of German political economy in the 19th century has been influenced by the so called Sonderweg thesis, which emphasises German “exceptionalism”. This interpretation points to the presence of an alleged derogatory influence of the Historical School, intertwined with an advocacy of statism and economic nationalism. Here, we show that the literature has questioned this sort of interpretation and collaborate to this renewed perspective. We examine definitions of political economy presented in German textbooks during the 19th century, to consubstantiate the claim that there was a coexistence of perspectives in German political economy, rather than a unanimous “exceptional” approach.

Skill-Biased Liberalization: Germany’s Transition to the Knowledge Economy

This article conceptualizes the evolution of the German political economy as the codevelopment of technological and institutional change. The notion of skill-biased liberalization is introduced to capture this process and contrasted with the two dominant theoretical frameworks employed in contemporary comparative political economy scholarship—dualization and liberalization. Integrating theories from labor economics, the article argues that the increasing centrality of high skills complementary in production to information and communications technology has weakened the traditional complementarity among specific skills, regulated industrial relations, and generous social protection in core sectors. The liberalization of industrial relations and social protection is shown in fact to be instrumental for high-end exporting firms to concentrate wages and benefits on increasingly important high-skilled workers. Strong evidence based on descriptive statistics, union and industry documents, and twenty-one elite interviews is found in support of the article’s alternative perspective.

Debating Lessons from Germany After the Social Democratic Century

This article seeks to stimulate a debate about the propositions that this special issue advances on German political economy by presenting responses from two experts who were not otherwise involved. Both scholars independently engage with the volume’s characterisations of empirical developments and arguments for conceptual innovation. Their comments highlight three themes in particular: the malleability of ‘conflictual partnership’ in industrial relations, the growing political prominence of consumer interests, and the revitalisation of social movements. In a rejoinder, the editors spell out how the proposed shift in the scholarly lens on Germany from stability to imbalance helps address these themes. The rejoinder closes with an invitation for scholars and practitioners to draw on the volume as they interpret, manoeuvre within, and try to positively shape what will undoubtedly be a challenging future.

Varieties of economization in competition policy: institutional change in German and American antitrust, 1960–2000

This paper explains the different trajectories of German and American competition policy and its permissiveness toward economic concentration in the last few decades. While the German political economy had moved to a stronger antitrust regime after 1945 and stuck to it even after the economic governance shifts of the 1980s, the traditional antitrust champion, the United States, has shed considerable parts of its basic governance toolkit against anticompetitive conduct since the 1960s. Drawing on theories of institutional change driven by bureaucratic and professional elites, the paper claims that different pathways of professional ideas in competition policy can account for the cross-country differences. In the 1960s and early 1970s, movements to strengthen competition policy enforcement emerged in both countries. While German as well as American professionals reacted to the seemingly increasing encroachment of societal concerns into antitrust with economized notions of the policies’ goals, they did so in fundamentally different ways. Whereas US professionals proposed an effect-based approach in which consumer welfare and gains in efficiency may justify less competition, the more strongly law-based profession in Germany to a degree strengthened a form-based approach aiming at the preservation of competitive market structures. Such extrapolitical pathways of ideas, we argue, provide important guidelines for the implementation of competition policy by administrations and courts, whose decisions can have a far-reaching impact on industries and political economies as a whole.

Small change, big impact? Organisational membership rules and the exit of employers' associations from multiemployer bargaining in Germany

AbstractGerman employers' associations first introduced a so‐called “bargaining‐free” membership (BFM) category in 1990, giving companies the option to join and access services while avoiding the obligations arising to regular members from industry‐level collective agreements with unions. To explain how this phenomenon contributes to change in the German political economy, we investigate why some associations offer their members BFM status whereas others have refused to introduce this option. Controlling for influences such as size and industry, our multivariate analysis of survey data shows that four sets of influences are positively associated with BFM: the role of courts' judicial decisions as “door openers,” structural characteristics of diverging business environments, the evaluation of multiemployer bargaining by the leadership of the association, and the strategic choices of associations.

Methods for Understanding Economic Change: Socio-Economics and German Political Economy, 1896–1938

Notwithstanding the plurality of meanings and connotations in time and space, Socio-Economics clearly was a theoretical endeavor, unlike the common myths about the anti- or -theoretical nature of the Historical School’s research program. In a world of quantitative growth and qualitative transformation of economy and society, many of the economists of the time wondered whether there were any stable social-scientific categories that one could use to analyze the modern market economy as it presented itself to them. Or, to put the same question differently: If historical institutional evolution is so encompassing, how are we to understand a universalist social science? Such questions came to the fore in Germany and its neighboring countries during the 19th century in part because Germany was late to industrialization, and late to form a modern state. But once industrialization set in and the Empire was formed, the country, compared to other dynamic nations, experienced one of the most pronounced growth explosions during the late 19th and early 20th centuries (Broadberry and Burhop 2010, 404–415). This growth coincided with qualitative transformations within society and the political order, while the role of the bourgeoisie, the working class and newly emerging institutions like political parties and trade unions were in constant motion (Wegner 2020, 4–9). In that sense German socio-economists were deeply aware of the depth and revolutionary potential of historical change, as opposed to British economists who prided themselves in the gradual evolution of their history. The methodological debates so formative for German Socio-Economics in the late 19th and early 20th centuries, above all the Methodenstreit and the Werturteilsstreit (Glaeser 2014), reflect precisely this deep uncertainty of an ever-changing, “moving target”-like object of inquiry – such as the capitalism of their age. This led to the constant struggle to revisit one’s toolbox, to identify the best methods for capturing socio-economic dynamics, and to clarify the admissible role of the scholar amid such dynamics in the wide spectrum between purely descriptive analysis and propagandist demagoguery.

Changing Theories and Fixed Truths in the Field of State and Social Sciences and Contemporary German Political Economy

Translated by Mark McAdam, Stefan Kolev, and Erwin Dekker.

Die Zukunft der europäischen Wirtschaftsintegration

After more than seven years of fiscal austerity and neoliberal structural reforms, the fundamental imbalances that led to the Eurozone crisis have remained unresolved and the project of European integration as such appears to be in the deepest crisis it has experienced so far. This has prompted the dominant forces in the EU to at least partially reconsider their present crisis management strategies, envisioning deeper integration towards a “Genuine Economic and Monetary Union” and outlining different future scenarios for the EU. While especially the Five President’s Report does acknowledge fundamental construction problems and crisis tendencies of the Economic and Monetary Union, the strategies to address them either fall tremendously short of this diagnosis or lack assertiveness. We argue that this inability to confront these crisis tendencies results from the growing economic and political asymmetry in the axis between France and Germany as the principal mechanism of compromise which undergirded previous cycles of European economic integration. At the bottom of this paralysis lies a gradual shift in the dominant internationalization patterns of the German political economy within the European division of labor: away from Southern Europe and France and towards Eastern Europe and the Emerging Markets.

Normalising corporate counterinsurgency: Engineering consent, managing resistance and greening destruction around the Hambach coal mine and beyond

The German Rhineland is home to the world's largest opencast lignite coal mine and human-made hole – the Hambach mine. Over the last seven years, RWE, the mine operator, has faced an increase in militant resistance, culminating in the occupation of the Hambacher Forest and acts of civil disobedience and sabotage. The mine provides a European case study to examine the repressive techniques deployed by RWE to legitimise coal mining in the face of a determined opposition. Drawing on political ecology literature and work on corporate counter-movements, this paper peers into extractive industries and their corporate social responsibility (CSR) engagements through the lens of corporate counterinsurgency. We first provide some background to the mine and RWE's unique position in the German political economy. After explaining the rise of resistance, the paper then discusses counterinsurgency in relation to CSR by outlining the different techniques used to win the ‘hearts’ and ‘minds’ of people around the mine. This includes securing the support of political leaders, lobbying, involvement in social events, infrastructure projects, astroturf groups and ecological restoration/offsetting work, which combine with overtly repressive techniques by public and private security forces that together attempt to legitimise the mine and stigmatise, intimidate and criminalise activists. This paper contents that counterinsurgency techniques are becoming normalised into the everyday operations of RWE, naturalising its image as ‘good corporate citizen’ and legitimising and invisibilising the violence towards (non)human nature inherent in the corporate-state-mining-complex, as mining is becoming part of the ‘green economy’ and made ‘sustainable’.

No Way to Escape Imbalances in the Eurozone? Three Sources for Germany’s Export Dependency: Industrial Relations, Social Insurance and Fiscal Federalism

Over the last two decades, the German political economy has increasingly relied on export specialisation as a strategy for economic recovery. This export-led development strategy turned out to be a mixed blessing. While, on the one hand, specialisation in high-quality manufactured goods has preserved Germany’s competitive edge vis-à-vis many other industrialised countries, it has, on the other hand, led to an increasing dependency on exports as the engine for growth. There has been no equally strong evolution of a domestic service economy beyond manufacturing-related services. The issue of export dependency becomes increasingly important in light of the financial crisis and global imbalances, vis-à-vis Greece and the Eurozone but also globally. Weak aggregate demand depresses both domestic employment and endangers the still fragile construction of the Eurozone. The paper argues that Germany finds itself in an export-dependency trap due to imbalances between domestic services and export-driven manufacturing. It analyses three sources for the over-reliance on export-oriented manufacturing and weak employment in domestic services: firstly, the industrial relations system, secondly, the social insurance financing of the welfare state and thirdly, fiscal federalism. All three are fundamental pillars of the German political economy and locked into political coalitions that are not easily changed.

Putting ‘merchants of debt’ in their place: the political economy of retail banking and credit-based financialisation in Germany

ABSTRACTWhy did household debt in Germany not increase after the year 2000? This article offers a supply-side explanation for this deviant debt trajectory by tracing the historical evolution of retail banking in the German political economy. It argues that at the end of the 1990s and in the light of European Monetary Union, profitability issues and banking fragmentation became severe enough to interrupt the path towards credit-based financialisation as prevalent among other capitalist economies. These factors interacted with a traditional lack of tools and incentives for rapid credit expansion, even though they were renegotiated in the processes of financial liberalisation, internationalisation and innovation. By employing historical-qualitative as well as statistical evidence for the argument, the paper’s contribution becomes twofold. First, it introduces and conceptualises retail banking as a focal point in the analysis of national financial systems and their transformation. Second, it complicates the standard accounts of German non-financialisation and reveals the ‘contested’ character of financial reform.

Book Review: The National Origins of Policy Ideas: Knowledge Regimes in the United States, France, Germany, and Denmark by John L. Campbell and Ove K. Pedersen

John L. Campbell and Ove K. Pedersen The National Origins of Policy Ideas: Knowledge Regimes in the United States, France, Germany, and Denmark, Princeton University Press, New Jersey, 2014; 401 pp: 978069116116-7 (pbk) $29.95 Within the closely related fields of international relations (IR) and international political economy (IPE), a hallmark of the last two decades has been the rise to prominence of constructivism as a key theoretical tradition. This has established itself more strongly in IR, where constructivism as a research programme is now taken to be one of the three mainstream traditions, along with realism and liberalism. Indeed, a consequence of this has been more recent attempts to re-emphasise the critical-theoretical foundations of constructivism, more in line with the classic philosophy of the social science approach of (for example) Berger and Luckmann than the widespread dilution that has occurred via debates with realists and liberals. In IPE, the rise of constructivism came later, and is also more weakly established as a research programme. This has meant that thorough, philosophically reflective, constructivist IPE accounts are virtually non-existent. Instead, we have had a number of well-known and well-written studies which nevertheless retreat significantly from the classic premises of constructivism to a considerably narrower focus on the importance of ideas in and of themselves, i.e. independent of other factors and processes. This has led to a significant bias in constructivist IPE towards an account of policy paradigms in national and international arenas, rather than the socially constructed and artificial nature of social and political life per se (for example, see Blyth 2013; Broome & Seabrooke 2014; Chwieroth 2010). As such, The National Origins of Policy Ideas is to be welcomed, for it provides a far more comprehensive approach than is usually the case, and in this sense it is closer in spirit to economic sociology and organisation studies than IPE. Campbell and Pedersen thus offer a much needed challenge to literatures in IPE and also in comparative political economy, and they point out early in the book that 'those who have shown that ideas are important have paid remarkably little attention to how these ideas are produced and disseminated in the first place' (p. 2; original emphases). As such, they focus 'on how policy research organizations like think tanks, government research units, political party foundations, and others that produce and disseminate policy ideas are organized, operate, and have changed during the past 30 years or so' (p. 3). Hence the term 'knowledge regime' rather than 'policy paradigm', for a study of the latter presupposes a critical understanding of the former. Campbell and Pedersen use this approach to achieve two main, more concrete goals. First, to provide an in-depth account of the evolution of knowledge regimes in four countries--the USA, France, Germany and Denmark--in lengthy and multifaceted chapters. Second, to reflect on these case studies in order to comment in two further chapters, on the limits to convergence in the contemporary, globalising period due to the nationally specific nature of the knowledge regimes, and on the degrees to which knowledge regimes are influential in different societies. On the first goal, my main interest was in the chapter on Germany. Many accounts of change in the German political economy have either viewed ideas/knowledge as mere instruments of broader strategic interactions between political actors or in narrow, policy-specific terms--both of which miss the bigger picture. It is thus often difficult to find analyses that combine detailed discussion of knowledge regimes with a political economy approach. Here, Campbell and Pedersen fall short of a fully satisfactory analysis (see below for more), but this is not for want of trying, and ultimately their thick descriptions of different modes of knowledge production and dissemination--for instance, party foundations and advocacy organisations--take them well beyond much of the literatures we have to date on the German knowledge regime. …

Germany’s industrial family firms: Prospering islands of social capital in a financialized world?

The international expansion and employment growth of many German family firms has made family enterprise a component of the German political economy that can no longer be ignored. A theory of ‘social capital enterprises’ is developed to explain the competitive advantages of many family firms over ‘capital market enterprises’, i.e., publicly traded, ‘financialized’ large companies. The theory takes account of multiple contingencies: (1) not all sectors are propitious for family firms; (2) not all family firms base their competitive advantage on social capital; (3) not all owning families are able to maintain effective family control when the firm grows large, albeit the number that do is surprising. For this reason, we focus on the industrial Mittelstand of Germany as having an especially high concentration of family firms that meet all three of these contingencies. Family firm ownership appears to be especially advantageous in capital goods segments where accumulated social capital forms an important competitive asset.

“Self-Interest Ennobled”: The Family in German Political Economy

This article examines conceptions of the family, and the relationships within it, as checks to individual self-interest in German economic thought over the nineteenth century. Across various discourses, marriage and the family emerged as symbols of commitment to the common good and set important terms for a simultaneous criticism and valorization of Smithian economic ideas by the historical economists after 1848. Hildebrand, Schmoller, and others drew on understandings of sex and gender roles shaped by moral and legal philosophy, biology, and anthropology, as well within an expansive, liberal public sphere, in order to argue for the central role of the family in containing the “egoism” of individual male economic actors and to link its moral status with the protection of private property. Rather than the reorganization of society proposed by their socialist competitors, the historical economists urged a revived attention to the common good through social policy sponsored by the state and reform activities taken up in gender-appropriate ways by civil-societal actors.