For much of the past two decades since unification, the literature on the German economy has largely focused on the erosion of the German model of organized capitalism and emphasized institutional decline and the corresponding rise of neoliberalism. The first part of the article analyzes the strains unification placed on German economic performance that caused many observers to call for modification of the model in a more neo-liberal direction. The second part takes a different focus and lays out the main rationale of the paper. It inquires why such a coordinated market economy was created in the first place and whether a renewed form of it might still be useful for Germany, the European Union, and other developed democracies in the early twenty-first century. The third section articulates the origins of the institutional and ideational components of these coordinated market economy models, during both the Bismarckian and Social Market Economy periods. The final portion inquires whether the failure of the contemporary liberal market economy approach in the wake of the worldwide financial crisis and severe recession represents a possible opening for the creation of a third coordinated market economy not only for Germany but for a redesigned European Union.
Since German unification there have been dramatic and highly visible changes in the German financial system and relations between banks and firms in Germany. The traditional Hausbank system has weakened, as securities markets have become more important for both borrowers and savers. The demands of financial investors on how German firms manage themselves have—for better or worse—become increasingly influential in this time. In this article, I advance the thesis that bank-industry relations in Germany became increasingly differentiated, with one set of firms moving into an institutional environment readily characterized as market-based finance. Meanwhile, most German firms remain in a bank-based environment that, while not quite the same as the Hausbank model that prevailed at the time of unification, is still easily recognized as such. These changes in the financial system have had numerous consequences for the German economy, including increased pressure on firms to make greater profits and increased pressure on labor to limit wage gains and make concessions in the interest of corporate competitiveness.
Contrary to what people tend to think and the way current diplomacy still defines the situation, I argue that Taiwan may very well be the first “transnational nation.” Few recognized its international presence, until it became a major exporter to the world economy, a change of status and policy that was really the consequence of its expulsion from the United Nations (following diplomatic recognition of the PRC). Its subsequent attempts to jockey for admission into the United Nations can largely be seen as a strategy to build upon its newly established role as a world economic player. One significant feature of transnational capitalism is reflected in Taiwan’s success, which demonstrates that the official status of nation was not important or relevant to its development in economic and other terms. Thus, in this era of transnational flows, one might say, national identity, cultural consciousness, and territorial boundedness are clearly secondary. In some senses, this seems to be true, but this is overly simplistic. The end of organized capitalism, as advocated by Lash and Urry (1987), has led many to believe that the free flow of transnational capital has broken down national barriers in respect to all other kinds of flows, but in fact, transnational flows of people have been regulated by and subject to other kinds of forces, political as well as cultural in nature, that have disrupted emerging forms of cosmopolitanism and even threaten to expose deeper conservative if not reactionary biases in the constitution of traditional society. 1 In Taiwan, the growing emergence of transnational cosmopolitanism, runs parallel with the increasing rhetorical importance of multiculturalism. However, the latter is the product more precisely of a wave of cultural ‘indigenization.’ At a deeper level, both (cosmopolitan) ‘transnationalism’ and (indigenous) ‘multiculturalism’ are, in my opinion, largely incompatible and mask an imminent future crisis.