The German Model Reconsidered

in German Politics and Society
Author: Hyeong-ki Kwon
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The German model of political economy that had been an enviable

alternative to the liberal market until the late 1980s in the literature of

political economy was under serious structural crisis throughout the

1990s, causing serious doubts about its viability. Many neoliberals

and industrial experts in Germany began to doubt whether Germany

was an attractive place for business activity, initiating the Standort

Deutschland debate. Even German Chancellor Gerhard Schröder conceded

“the end of German model.”1 Many political economists and

journalists expected and recommended imitating the American

model of a liberal market. Prominent German newspapers and magazines

such as the Frankfurter Allgemeine Zeitung, Der Spiegel, and Die

Woche ran articles titled “The Discovery of America” and “Jobwunder

in Amerika.” Wolfgang Streeck, one of the main proponents of the

German model, expected the convergence of the German economy

toward an American-led liberal market economy under globalization

because of “a secular exhaustion of the German model.” Streeck

believed that the postwar German model was based on the politics

between labor and capital within a national boundary, but globalization

represents a fluidity of financial and labor markets that extricates

whatever coordination has been nationally accomplished.