Stability & Change in the Emerging Third West German Republic (WPS 9, 1988) Peter J. Katzenstein.

8/4/2019 Stability & Change in the Emerging Third West German Republic (WPS 9, 1988) Peter J. Katzenstein.

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STABIliTY AND CHANGE IN THE EMERGIN11GTIllRD WEST GERMAN REPUBUC I

by Peter KatzensteinDepartment of Political ScienceCornell University

Working Paper Series #9

This paper was presented at the Center for European Studies State and Capitalism since 1800 Seminar in Apri1988. It appears as Chapter 11 of Peter J. Katzenstein, ed., Industry and Politics in West Germany (CornellUniversity Press, 1989).


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Three changes are t ransforming the c01text in which WeG e ~ a n y ' s Third Republic f inds i t s e l f in the 1980s: new curren

Iin i n t e r n a t i o n a l p o l i t i c s , new soc ia l movfements in na t ionpo l i t i c s and new product ion technologies in i ndus t r i a l plan tThis book has sought to character ize these changes and to exami

It h e i r consequences . fo r d i ve r se se c t o r s 10f West Germanyp o l i t i c a l economy. The ana lys is po in ts to a conclusion which

. Iseek to analyze fu r the r in th i s essay. Dif f j ren t sectors of thWest German economy are experimenting with new prac t icesrespond to the new challenges which I.conf ro , t them a t home anabroad. At the same t ime West IGermany's emerg

Iing Third Republ

i s t i ed to i t s predecessors by remarkabl$ i n s t i t u t i o n a l ap o l i t i c a l cont inu i t i e s in nat ional p o l i t i c s . I

This convergence between experimentat i1n and change a t thgrass - roo t s and cont inui ty and s t a b i l i t y a t I the top i s the mos t r ik ing p o l i t i c a l charac te r i s t i c of th e T h i ~ d Republic. The b

Ichange which Chancel lor Kohl and h is new government cal led fo rI1983 has no t occurred . But innumerabl j small changes a

t ransforming West Germany's economy and soc ie ty . I f there i s oItendency which one can recognize in the bewi lder ing ar rayI

change t ha t can be found in West Germany i the 1980s, it i sIt r end toward decen t ra l i za t ion . Because ~ h a n g e i s occurr inI .l a rge ly within exis t ing ins t i tu t ions r a the r ihan outs ide of themIIand because change occurs on a smal l r a the r than on a l a rgIsca le , it i s easy to overlook the cumulative e f f e c t t ha t ma

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sma l l - s ca le changes may have over tLme. But fo r the foreseeablefu ture we must t ake note of the .major empir ical f indings of t h i sbook: the convergence between many smal l changes a t the grass roo ts and the a ~ s e n c e of la rge change in na t iona l p o l i t i c s .

The t i t l e ! o f t h i s book, Toward th e Thi rd Repub l ic ,emphasizes thatl the 1980s i s a decade of t r a ns i t i on fo r theF ede r a l RepublliC. The p a t t e r n 'o f change t h a t t h i s bookLdent'f 'a.es , , an ch ange a t t h e grass - roo t s and1. .1. experJ.mentatl.on, dc o n t i n u i ty and s t a b i l i t y a t th e top , has n o t y e t f u l l yes tab l i shed i t s e l f in po l i t i c s . In 1984-85 the e l i t e s of themajor i n t e r e s t groups and p o l i t i c a l pa r t i e s confronted theposs i b i l i t y of i n s t i t u t ing l a rge- sca le change a t the cos t ofs ubs t a n t i a l domJst ic p o l i t i c a l c on f l i c t and cons iderab le lo s se sIin in te rna t iona l ! compet i t iveness . In the end they chose i ns t eadto s t e e r developments i n t o w e l l - e s t a b l i s h e d i n s t . i t u t i o n a lchannels . It i s Lmportant to po in t out t h a t p o l i t i c a l i n t e re s t sdid n o t succumb to the i n s t i t u t iona l pressures of West Germanp o l i t i c s . Rather they chose not to di s rup t se r ious ly thosei n s t i t u t i o n s . L of t h i s wri t ing , the spr ing of 1988, th es i t u a t i o ~ r e m a i n ~ unchanged. In the absence of compell ing new

1 , '1 I , '1 d d b k d b ho l . t l .ca s t r a t e g l . e s o r ea e rs an ac e y t everyc ons ide ra b l e subcess ,I as t h i s book a t t e s t s of West Germani n s t i t u t i o n s tol respond to a var ie ty of changes , the mostimpor tan t po l i t i ~ a l and soc ia l ac to rs have chosen to cont inuesuppor t ing the ek i s t ing i n s t i t u t iona l arrangements in na t iona lp o l i t i c s . And wkth every pass ing yea r t ha t choice i s becoming

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more unal terable . But only a se l f -conscioul acceptance by th1 , ., 1 t ' 0po l i t i c a l e l i t e s of exis t ing i n s t ~ t u t ~ o n a pat terns ~ ~ e

mult iple changes would securely implant the T ~ i r d Republic. I

1. Industry and ChangeWest Germany in the 1980s i s affected! by three d i f fe ren

. changes . Some of t hese changes f ind t ~ e i r origin in thi n t e r n a t i o n a l system; others l i e in the Isystem of nat ionp o l i t i c s , in p a r t i c u l a r the r i s e of neJ soc ia l movement

I

f ina l ly , a th i rd se t of change can be found ih the new productioIt echnolog ie s and ways of organizing work in West Germany

i ndus t r i a l plants . The chapters in Part I of th i s book descr ibIthese changes and suggest some of t he i r poss ible consequences fo

1 , . 1 h . d id 'West Germany's po ~ t ~ c a economy. T e ~ ustry case s tu ~ e ~ IPar t I I focus on the re la t ionships between thlese three changes ispec i f i c sec tors of the West German economy. I

IThree Changes. In her essay Joanne Gbwa argues tha t thin t e r n a t i o n a I economy i s anchored in la s t ab l e , b ip o l a

I

i n t e rna t iona l system. In contras t to the ~ p r e d i c t a b i l i t i e s othe mult ipolar system of the interwar yearsl the members of thWestern a l l iance form a stable core fo r the t rade , monetary aninvestment r e g ~ e s tha t l ink s ta tes in the 1980s. In cont ras t the 1930s , the an eres s 0 e ma or cap.i.tia ~ s s a t e s at t f th j I. 1 ' tfur..::iamentally compatible; each a l ly has a . 1 major stake in thsecur i ty and welfare of i t s par tners . The ~ l i t a r y a l l i ance , a

I

well as the character of the welfare caplta l ism tha t emerga f t e r 1945, implied t ha t nation s t a t e s WOU1F themselves absorb

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a t l e a s t in par t , ra the r than merely export some of the cos ts ofeconomic adjUs t len t in the 1970s and 1980s. Despite the waxinand waning of \ superpower conf l i c t s in the 1980s t h i s bas ics t ruc tu re of the in te rna t iona l system i s unl ikely to change inth e foreseeable fu ture . I ron ica l ly the continued divis ion ofGermany i s one of the essen t i a l ingredients of t h a t s t a b i l i t y .Since the in te rna t iona l economic order r e s t s l a rge ly on thedi s t r ibu t ion of capab i l i t i e s in the i n t e rna t iona l s ta te system,th e prospec ts fo r West Germany having cont inued access to l i b e r a l. . 1 I k . d .~ n t e r n a t ~ o n a mar e ts r e m a ~ n goo .

But wi th in t ha t s tab le order there remains ample room fo rchange. Two soUrces of change in pa r t i c u l a r stand out . Sinceth e 1960s , t h i\ Uni ted S ta t e s has demanded with increas ingins i s tence t ha t i t s major a l l i e s , inc luding West Germany, abandont h e i r s t ra t eg ies \ of f ree r id ing and ins tead ac t ive ly support thepostwar i n t e r n a t ~ o n a l economy. West Germany remains vulnerableto u.S . pressureJ and i s thus l ike ly to continue to fill the ro leof the "honest bkoker"l mediating conf l ic t s over i s sues such asmacxc eccnomac I ~ c y , t .ra e confl' an Eas - Wlol' d ~ c d t e s t exportcont ro l s . This ro le i s well served by the low pro f i l e which theFedera l Republic has adopted in the 1980s. In cont ras t toJapan ' s . expor t - i r i en ted f i rms, West German corpora t ions werebe t t e r prepared fo r the sharp apprec ia t ion of the Deutschmark in1985-1986. In rksponse to a s imi la r experience in 1978/79 WestGerman f irms ado4ted s t ra t eg ies ( less expansion of market share ,more l i qu id i ty , i o re product innovations) t h a t now permit them,

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wi t hou t undue s t r a i n , to absorb subs tan t i a l l losses fo r severyears . S imi la r ly , the European Monetary I System

!(EMS) whi

Chancel lor Schmidt helped s e t up in the l a t e 1970s a lso providan e f f e c t i ve b u f f e r . I t crea ted q u a s i - f i x ~ d exchange ra tesWeste rn Europe and thus she l te red about two- th i rds of WeGermany's expor t s from extreme currency f luckua t ions . And s inth e EC market was par t ly pro tec ted from f O r ~ i g n compet i t ion, tEMS c o n t r i b u t e d to a dynamic improvementl in West Germanyeconomic pos i t ion in European markets . W,st Germany i s doinothing to d ive r t a t t en t i on from the t rade !conf l ic t between tUnited Sta te s and Japan. Nei ther by tempera+ent , i nc l i na t i on na b i l i t y does Chancel lor Kohl seek to emulate IChancel lor Schmidfo rce fu l l eadersh ip s ty l e ; and thus he r e in f J rces the low pro f i

,

of the Federa l Republ ic in the i n t e r na t i o1a l economy. Forvar ie ty o f reasons , West Ge=an demands f1r pol icy change amore muted than those of th e United Sta te s o r even Japan.

I

Whether t h i s low p o l i t i c a l pro f i l e w i l ~ in f a c t be adequaIin the long- term fo r d ive r t ing the demands lof th e United Sta t

with in a changing i n t e rna t iona l economy temains to be seeI

Robert Gi lp in , fo r one, argues t ha t th e Breltton Woods systemm u l t i l a t e r a l l i be r a l i z a t i on i s being S U P P l ~ t e d by a new syste

I

which mixes mer can t i l i s t compet i t ion , econebmic reg ional i sm aI

sectC"'t'al pro tec t ion 2 While aCknOwledginJ t ha t a low pro f iIhas served West Germany wel l in the 1980s even op t imis t s al i k e l y to concede t h a t d i f f e r e n t i n t e ~ a t i o n a l or domestcircumstances , inc lud ing a pro tec t ion i s t D t o c r a t in the Wh

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House or a SPO-Green coal i t ion government in Bonn, might quicklyforce West G e ~ y in to the h o t s p o t of U.S. po l i t i c a l a t tent ionr e s e r v e d in th e 1980s l a r g e ly fo r Japan and th e NewlyIndust r ia l iz ing Countries (NICs). West Germany i s unl ike ly toremain deaf to r t rong demands t h a t it ac t ive ly maintain as wellas explo i t the ~ r e e - t r a d e system. Should these demands aim, as

Ithey have with a more p l i an t Japan, a t grea te r re l i ance ondomest ic expani ion r a th e r than on West Germany's preferreds t ra tegy of expbr t - led growth, the po l i t i c a l ramif ica t ions fo rnat ional pOli t i1s could be very substant ia l . The con f l i c t withthe United Sta tes over in te r e s t ra tes which preceded the crash of

I .October 1987 se1rves as a useful reminder of how quick ly theF e de ra l R e p u b l i ~ can f ind i t s e l f a t t he cen te r o f a major

Ii n t e rna t iona l cOftroversy.A second siource of change wi th in an overarching s table

bipo la r secur i ty! system derives from the poten t i a l i n s t a b i l i t i e s!of the i n t e rna t iona l f inanc ia l system. The overhang of Third

World debt has ckeated the potent ia l fo r chain react ions of bankfa i lu res . pendihg a change in U.S. pol icy th i s cont inues to be

I .It rue even a f t e r ~ e r i c a n banks have begun in 1987 to follow the

pol icy of West buropean banks of wri t ing off as bad debts aI

subs tan t i a l p r o p ~ r t i o n of t h e i r outstanding loans to Third WorldIs ta te s . This is \ l ike ly to s h i f t ra the r than el iminate the debt

c r i s i s . Tougher feschedUling negot iat ions between pr iva te banks,now l e ss V U l n e r a b ~ e to threa ts of defau l t , and Third World s ta teswi l l ~ r o b a b l y l ea f to more r e s t r i c t ive economic pol ic ies of Third

I

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I

World debtor s t a t e s and thus , i nd i r e c t l y , t o l smal l e r markets fou.s. expor t s . This wi l l prolong th e s u b s t a l t i a l t r ade de f i c iof the United Sta te s as th e l a rge s t debtor cbuntry in the worlIn s ho r t , the f r a g i l i t y of the in te rna t iona l f inanc ia l systeml i k e l y to cont inue as a poss ib le source of change t h a t coua f f e c t drama t i ca l ly West German access to i n ~ e r n a t i o n a l market

I

The rap id sh i f t s in f inanc ia l power W h i C ~ in the 1980s afavoring Japan and, to a l e s s e r ex ten t , W ~ s t Germany makep laus ib le to assume t h a t a reorganiza t ion I f th e i n t e r na t i ondeb t regLme, should it occur , would p r o b a b l ~ 1 1 involve subs tan t iWest German f inanc ia l resources .

IJ o s t Halfmann argues t h a t changes in th e i n s t i t u t i o ns t ruc tures of the Second Republ ic opened up Is ome p o l i t i c a l spa

I

fo r new s oc i a l movements. Although t h e i r s ~ l i e n c e and p o l i t i cimpact are pa r t i c u l a r to th e Federa l Republ ic , the new s oc i

I

movements a re s igns of a normal r a t he r than df a c r i s i s po l i t i cIHalfmann s t res ses th e c ~ n v e r g e n c e of d i f f e r e n t s oc i a l movement

o ld and new, and the e f f e c t they have Ih a d on West GermIpo l i t i c s . "Rights" movements, l i ke th e un.ji.ons, a r t i c u l a t e th

traditional demands o f - s o c i a l e q u a l i t t and c i t i z e n s h i pI"Redis t r ibu t ive" movements with a s t rong e ga l i t a r i a n bend c l u s tI

in the main urban cen te r s . They express the I changing contours i n d u s t r i a l soc ie ty : new pa t te rns of work, Ian i nd iv idua l i za t ioof l i f e - s t y l e s in some s oc i a l s t r a t a and !the growth of posma te r ia l values among se lec ted soc ia l groJps and age cohor t

IThese movements o r movement s e g m ~ t s are typrca l lY opposed to th

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"product iv i ty c \oa l i t ion l tun i t ing business , unions and the majorWest German i n s t i t u t i o n s around th e o b j e c t i v e of e xpor t

Icompeti t iveness "Risk" movements, f ina l ly , focus on the ha:cnfuliconsequences of: technolog ica l changes, such as nuc lear power.These movements aim a t nothing l ess than the i s sue of contro lover decision-making processes in both the public and the pr iva te

Isec to r . They seek to res t ruc tu re the pol icy process and thus toenhance individhal autonomy. The p o l i t i c a l re l a t ions between

Ithese three typrs of soc ia l movements are exceedingly complex.They do not r e p ~ e s e n t mutual ly exclusive types of groups or groupcla ims. Rather \they provide in te rpre t ive lenses through which wecan view the r i s r and fa l l of West Germany's new social movementsand the di f fe renr demands they make.

The new soc ia l movements have had a subs tan t ia l adverseIe f f e c t on the r e l a t ive s t rength of the SPD and thus on the en t i r e

West German POIJ t ica l system. These movements grew in the l a t e. \1970s because th r major pol i t i ca l par t i e s and i n t e r e s t groups no

longer cont rOl ler fu l ly a l l of the p o l i t i c a l space. Economy,society. and po l i t i c s became l ess t igh t ly coupled in the l a t e

\1970s and 1980s than they had been before. Niches fo r mobil iz ingsocial consti tue1cies and for surviving periods of demobilizationexis ted in local'l and reg iona l pol i t i c s . Forty years a f t e r thef a l l of the Third Reich t h i s recons t i tu t ion of West Germany's

s o c ~ e e m o c r a t ~ cc ~ v ~"1 " ty has brough t d " p a r t ~ c ~ p a t ~ o n "" more ~ "1"~ n with democrat ic JheOry than had been t rue fo r the f i r s t two WestGerman r e p u b l ~ c s . 1

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It i s important to note tha t the lJnkS between soc ia. I ..movements and new production technologies typical ly are ind i rec t

I

IAt the fr inges of the West German economy one can f ind iagr icul tu re , the c ra f t s , and in industry S ~ l l firms or g r o u porganized by followers of one of the new sodia l m0vements. B

I

these a l te rna t ive economic forms of organizdt ion ra re ly involvany new production technologies. Instead the ~ o s t importan

Idi r ec t l inks are ideological . They exis t , fo r example, betweesoc ia l movements and the unions. Ecological hnd peace groups an

I

the unions are constant ly skirmishing over JhOI

i s most en t i t l eto press ecological or peace issues . 3 I

More t y p i c a l a re two i n d i r ec t effe1cts l inking soc iamovements to new product ion t e ~ h n O l O g i e s l . f i r s the l inoperates primari ly through the par ty systeml. Social movemenforce new i ssues , such as ecology or n u c ~ e a r power, on th

Ipo l i t i c a l agenda. They have in ~ a c t causedl the emergence ofnew par ty , "the Greens 4 And the Greenib both re f l e c t anf accelerate the process of e lec to ra l realignmeht.

The i n t e r n a t i o n a l sy.stem i s a secohd. l ink . I f WeIGermany's new s o c i a l movements are fore::unners of s imi la

developments elsewhere, the pressures they e l e r t may well creatI

growth market fo r new indust r ia l products , for example in tharea of an t i - p o l lu t i o n t echnologies such as the ca ta ly t ic o n v e r t o r . But i f West Germany' s socl ia l movements a rexcept ional in t he i r po l i t i c a l prominence, they wil l burden WeGerman . p roduce r s with new cos t s thus diminishing t h e i

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i n t e rna t iona l compet i t iveness . The scan t evidence ava i l ab le to. Ida te s ugges t s I t h a t t he t ru th l i e s in the middle. Socia l

movements are fyp ica l of developments in some soc ie t i e s anda typ ica l of deielopments in others (Ki t schel t , 1988b). WestGermany's i ndus t r i a l p ro f i l e may eventual ly d i f f e r somewhat from

.\" h . 1 B h ' d tha t 0 f c o u n t r ~ i s w ~ out soca.a movements. u t t .i.s oes nonecessa r i ly mean t ha t the Federal Republic w i l l be condemned to al os s of i n t e rnaJ iona l c ~ m p e t i t i v e n e s s .

The th i rd i e t of changes are th e new technologies t ha t arebeginningHorst Kern

Ito t ransformIand Michael

the process of inSchumann emphasize

.dus t r i a l product iin t h e i r chapter

on.the

spec i f ic s k i l l Jases of the workforce which are favorable to theintroduct ion of \ new production technologies in West Ge:cnany inthe 1980s. Thesi technologies broaden the spectrum of adjustments t r a t e g i e s of ind iv idua l f i rms, indus t ry segments or i ndus t r i a lsec to rs . The n1ew technologies have impor tan t consequences fo rthe r e l a t i ~ T e POslition of d i f f e r e n t groups of workers , ("winners"vs. " losers") , d ~ f f e r e n t indus t r ies , the deployment of labor andfo r how produc t i and product ion are l inked . New product iont echnolog ies hare complex consequences. Depending on t h e i rcontext , they c in encourage the r e sk i l l i ng of workers and theenhancement on th e power of l a b o r on th e s h c p f Lc c x .A l t e r n a t i v e l y , these new technologies cart also lead to thedesk i l l ing of workers, th e segmentation of the labor force andth e de c l i ne of l abo r ' s power. In e i t h e r case es tab l i sheds t r a t e g i e s of mass produc t ion a re being sac r i f i ced as new

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Itechnologies make human work not l e s s bu t 'moke important to th

I

economic success of individual f irms in most Isectors of the WeGerman economy. Some dec l in ing indus t r i e s , ~ U C h as sh ipbui ld ino r mining, l eave little room for the in t rodudt ion of new ways o

IIorganizing product ion. Here r a t i ona l i z a t i n of ten means thIdes t ruc t ion of i ndus t r i a l capac i ty . But th i s i s not the t yp i ca

d 1 opment ~ West Germany. I d t h '~ era 'f t r a n s ~ t ~ o n" ~ ve n s t e a , 0marked by two t r ends , a shr inking in the qua J t i t y of work and a

ienhancement in . i t s qua l i ty . IThe p o l i t i c a l impl ica t ions of these divehgent t rends are faI

from c lea r . The r e l a t i ve magnitude of the twb t rends i s not on. Itechnolog ica l ly but a lso po l i t i ca l ly d e t e r . m i n ~ d . At th e extreme

,

we can th ink of two p o l i t i c a l models . F i r J t , div i s ions withiIthe labor force might become so deep t ha t thel p o l i t i c a l bas i s fo

c ons t ruc t i ng new s o c i a l a l l i a n c e s b e t w e ~ n r a t i o n a l i z a t i oi"winners" and r a t i ona l i z a t i on " losers" simply would not ex i sI

Al te rna t ive ly , changes in product ion t e C h n o ~ o g i e s might lead tIt he pe r s i s t ence of pro tes t among a r e i n v i g O r ~ t e d labor movemenThis could crea te the p o l i t i c a l bas i s fo r JeoDIls supported bbo th th e l o s e r s and th e winners of ra t iona l i za t ion . T

I

segmentation and the ar t ichoke models a re h ~ o t h e t i c a l cons t ruct h a t def ine the range of p o l i t i c a l p o s s i b i l i ~ i e s . The r e a l i t y oWest GeDIlany's fu ture p o l i t i c a l economy w i ~ l probably be founbetween these two extremes. This a t l e a s t sJems to be the lesso

. Iof the 1980s. The West German labor moyement i s not fu l lp o l i t i c i z e d on ques t ions of new produc1tion t e c hno l og i e s

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Tradi t i ona l uni10n support i s s t ronges t among the " to le ra to r s" o r"lo se r s " of t eFhnologica l change. Yet West German labor hast y p i c a l l y wela:omed r a t i o n a l i z a t i on and moderniza t ion . Thes t r u c t u r a l a m ~ i v a l e n c e of l abo r i s a lso i l l u s t r a t e d by the

Id ive rgen t experiences of d i f f e re n t i ndus t r i e s . For example, onIque s t ions o f hew produc t ion t echno l og i e s unions in te rvenefo rce fu l ly in t J e automobile indus t ry while they play a very low

Ikey ro le in th e i chemical indus t ry . Yet the unions must win thesuppor t o f r a t i dna l i z a t i on "winners" if they want to re t a in t h e i rshopf loor power.

These i n t e rna t iona l , na t iona l and p la n t - l e ve l changes areI

no t r e s t r i c t ed Ito West Germany. Changes with in the l i b e r a lpos twar economy, th e r i s e of new s oc i a l movements and the

Idevelopment o f new product ion t echnologies can be observedt h r o u g h o u t th e advanced i n d u s t r i a l wor ld . The r e l a t i v eimportance of t , e s e changes may d i f f e r from one s t a t e to thenext . And t h e i r e f f e c t s wi l l d i f f e r depending on a s t a t e ' s

. . t . . h I. t . 1 "11 h h fp o s ~ ~ o ~ t e In e r n a t ~ o n a system as we as t e c a ra c t e r 0Ii t s domestic and \ i ndus t r i a l s t ruc tu res . But t he re i s nothing inIthe ana lys i s of \Par t I t h a t sugges ts t h a t we a re dea l ing with

i d iosyncra t i c c h ~ n g e s af fec t ing only the Federa l Republ ic .IFurthermore,\ only the ana lys is of product ion technologies

suggests t h a t t h i 1980s may have brought somethina s ubs t a n t i a l l ynew and different \ . But even in t h i s ins tance the emphasis i s onthe e f f e c t s of the microe lec t ron ic revolu t ion on the increased

Iimpor t ance o f h!uman work ra the r than on the prospects . fo r12


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Iautomation and robo t iza t ion . By way of cont r1s t , th e ana lys i s oa l i b e r a l in te rna t iona l economy embedded in a r e l a t i ve l y s t ab l

I

bipo la r system and of the convergence of r ig!hts , r e d i s t r i bu t ioand r i sk as the ca ta lys t s fo r o ld and new solcial movements botpo i n t t o s u b s t a n t i a l p o l i ti c a l cont inu i t Jes . F ina l ly , anc lose ly r e l a t e d to the ques t ion of c o n t i n U i t ~ are the observablra tes of change. The chapters in Par t I s rgges t a descendinorde r of magnitude as we move from P la n t - I e re l to na t iona l ani n t e rna t iona l sources of change. These pat1erns are summarizein Table 1 .

I

Table 1

West Germany Indus t ry . What has been the pa t t e rn oindus t ry response to the th ree d i f f e r e n t chlnges af fec t ing We

I. IGermany? I these perm at tern ra t In t h it ra tegy .e r thanI

era of t r a ns i t i on change and i t s consequ,nces are no t fu l lunder s tood . Businessmen, workers, i n t e r e ~ t group o f f i c i a l spar ty pol i t i c i ans and s t a t e bureaucrats hJve graf ted recen t lacquired coping raachan.Lsme onto es tab l i shed Ih is to r ica l pr ac t i ceThe term "s t r a t e gy" would d i gn i fy a bJwi lde r ing range o

Iresponses in d i f f e re n t par t s of West Ger.man1's p o l i t i c a l economwi th an i n t e l l e c t ua l order and a degree olf se l f -consc iousnes

I

13


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Table 1: THREE SOURCES OF CHANGE

Sources of ChangeIn te rna t iona l Nat ional Plan t

1. Pa r t i cu l a r tr w. Germany No No No2. Discont inu i ty in Development No No Yes3. Rate of C h a n ~ e Low Medium High

III


16/96


17/96

which simply dies not ex i s t .At the same t ime the pat tern of indus t ry response i s ver

c lear . As GeJd Junne points out in h is chapter , the dis t inc t iobetween sunset indus t r ies such as s tee l and shipbui ld ing, sunr i si n d u s t r i e s such as microe lec t ron ics , telecommunication anbiotechnology, and core manufacturing indus t r i e s i s of l imi teuse in underst ' rnding. the West German economy. West Germans dnot think in trr.ms of sectors r i s ing and fa l l ing . Instead theconce ive of n\ ew technologies which are di f fused throughouindus t ry . S imi lar ly , t yp ica l ly they do not view services such abanking and insbrance as par t of a pos t - indus t r i a l economy, a seof ac t iv i t i e s independent of and separate from manufactur ingRather they see services as an i n t egra l and growing par t ofmcdezn indus t r i r l economy. 5 These views make the s imi l a r i t y ithe response across a broad spectrum of West German indust r iel e ss su rpr i s inJ than one might expect a t f i r s t . West GermaIindus t ry modernizes not through epic s t ruggles between indust r iet h a t r i s e and Idecl ine but through -the quick and quie t d i f fus io

\of core technologies throughout a l l of the major i n d ~ s t r i a\sec to rs . And the i n s t i t u t ions of the Federal Republic appear t

be very we l l su i t ed to d i f fuse new product ion technologiethroughout the manufacturing sec tor . 6 Furthermore the growth on ~ information technologies and other services typ ica l ly i s noa process which rccurs apar t from changes in manufacturing but il inked in t imate ly to it. This i s not to argue t h a t there are ni ndus t r i a l sec t J r s or sec to r segments which are being close

14


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down. In t h e i r chapter Josef Esser and Wolfgang Fach, fo rexample, r e f e r to among others sh ipbui ld ing as a case which i snotewor thy prec i se ly because it d i f f e r s so gr ea t l y from theexperience of a l l of the o ther major sec tors discussed in t h i sbook.

For the purpose of presen ta t ion only the d i scuss ion t hafo l lows w i l l group the th ree core i ndus t r i es (autos , chemicalsand machinery) and compare them with o the r i ndus t r i es (s t e e lsh ipbu i ld ing , semi-conductors , telecommunicat ions, biotechnologand banking) no t as of ten regarded as West Germany's economiccore . The data poin t to widespread experLmentat ion in d i s t i n ci ndus t r i a l s e t t i ngs .

The pa t t e rn of response i s broadly s i mi l a r in each of th eth ree core i ndus t r i e s : a combinat ion of f l ex ib le spec ia l i za t iongra f ted onto th e ex i s t ing pa t te rns of e i t he r mass product ion ( inautos and chemicals) or of t r a d i t i ona l c r a f t s product ion ( inmachinery) . In automobiles t h i s process occurred , as WolfganSt reeck ' s chapter shows very c l ea r l y , in two d i s t i n c t ways. Masproducers l i ke VW moved to high volume, spec ia l ized product ion inth e 1970s to avoid compet i t ion a t th e low end of the market . Ans p e c i a l i s t producers increased t h e i r product ion cons iderab le ad id Daimler-Benz. In chemicals the d i s t i nc t i on between mass andc ra f t s product ion was a lso b lu r r ed , if fo r d i f f e r e n t reasonsBecause of its grea t cap i ta l in tens i ty and th e high r a t e oproduct innovat ion , t h i s indus t ry had, as Chris Allen arguesalways approximated incomple te ly th e model of mass product ion

15


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New developments in "high chem" (new mater ia l s ) and "f ine chemi( p h a r . m a c e u t i c a ~ s ) are moving the i n d u s t ~ fu r the r away from thI

production of bUlk chemicals in to market segments less threateneiby vola t i l e sh i f t s in energy pr ices and worldwide overcapac i t i e s

And th e emerQ1nce o f bio technology promises d ive r s i f i c a t i on anfu ture growth. \ Lacking a t rad i t ion of mass product ion o r sc ienc

I

based innovat iJn the machinery indus t ry , as Gary Herr igel showsi s reaching a new synthesis of t r ad i t i ona l and high- tech c ra fproduct ion. I

IThe i n s t i t u t i o n a l orde r in which th e spread of neproduc t ion tehhnOlOgieS occurs v a r i e s a c ros s t he se t h rei ndus t r i e s . 11 th e automobi le i ndus t ry our a t t e n t ion i s focusea lmos t exc lu s ive ly on West Germany's s t a b l e , coopera t iv

I

indus t r ia l r e l a ~ i o n ~ system. The re la t ion between the unions (II

\Meta l l ) and tlhe works counci ls ins ide the plan t i s subt lsh i f t ing so as to favor the l a t t e r , espec ia l ly on the quest ionwhich a r i s e in , the appl ica t ion of new product ion technologiesBut the ~ e l a t i o J between unions and councils remains symbiotic omany c ruc ia l quJs t ions : a long-term perspect ive geared to succesi n in te rna t iona l markets , support of energet ic measures to t r a iand r e t r a i n a l a l ready high ly sk i l l ed l abor force , andIwil l ingness to 4XPlOit the oppor tuni t ies of t echnologica l changas well as SUffrlx tbr: cos ts t ha t it imposes. In the chemicaindus t ry , s ince the ear ly 19705, re l a t ions between managemenunion o f f i c i a l s hnd works counci ls have been even t i g h t e r than i

I

automobiles; b U ~ 1 the r e l a t ive importance of the works counci l16


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ha s been g re a t e r . Fur thermore , a far-Jt.eaching i n t e r n aI

d e c e n t r a l i z a t i o n of th e th ree dominant 9hemical producersprovides fo r a la rge number of re la t ive ly autonomous centers run

Iby sc ien t i s t s which col labora te with cen t ra l Ilabora tor ies . ThI

f l ex ib i l i t y in research and development and t t e adaptabi l i ty andinnovat ion t ha t th i s form of organizat ion endourages i s matche

. I

in other par t s of the industry because of Fhe exis tence ofl a rge number of spec ia l i zed , medium-sizer fi rms and the ia n c i l l a r y s u b c o n t r a c t o r s . This s y s t e i reproduces thecompeti t iveness t ha t the l a rge firms gain thrrUgh t h e i r i n t e rnadecen t ra l i za t ion . F inal ly , the machinery i n fus t ry fea tures , inGary Herr ige l ' s words, two indus t r ia l orders : I an autarchic ordein which cen t r a l l y admin is te red works hots a re v e r t i c a l l yin tegra ted and remain i so la ted from t h e i r r e g ~ o n a l se t t i ng , and

I .

decen t r a l i zed orde r cons i s t i ng of loose confedera t ions oindependent fi rms which re ly on extensive netJorks of pr iva te an

I

publ ic i n s t i t u t i o n s . Changes in i n t e rna t iona l market anproduction technologies are encouraging f ~ l r concentrat ion ofirms in the autarchic order as well as a decentra l iza t ion within

I

f i rms; and they are leading to extensive s h i f ~ s in subcontract ingI .

in the decent ra l ized order as well as r e a r r ~ g e m e n t s within anamong the supporting priva te and public i n s t i t u t ions tha t provid

Itechnica l information, marketing ass is tance and cap i ta l .West Germany's soc ia l movements have had no not iceable

Ie f f e c t on the machinery indus t ry . And iome of the issueschampioned by the new socia l movements the cons t ruc t ion of a

17 I

I


21/96

extens ive i n t e r s t a t e highway system, th e i s sue of a generaIIlLmi ta t ion of ~ p e e d and the p e r i l to West German f o r ~ s t s stemminfrom automobi l l po l lu t ion - - have had a surpr i s ing ly smal l e f f e c

I,

on th e evolu t ibn of the auto i ndus t ry . The chemical indus t ry oI -the o the r han4 has been a prime t a rge t of th e oppos i t ion o

ecology moveme*ts f i r s t and the Greens l a t e r . In 1985-87 thGreens and thel SPD formed a coa l i t i on government in Hess"e.prominent l e a d ~ r of the Greens became Sta te Mini s t e r fo r th

IEnvironment in \Hesse, a t r a d i t i ona l area of concent ra t ion of th,

i n d u s t r y . -TH.is p o l i t i c a l experiment might have providedI

se r ious t h r e a t Ito es tab l i shed ways in which th e indus t ry govern,

i t s e l f and i n t ~ r a c t s with publ ic o f f i c i a l s . But th e c oa l i t i owas s ho r t - l i ve4 . The primary e f f e c t of the Greens and th

I

ecology . m o v e m e ~ t s thus are l i ke ly to be i n d i r e c t th rough thp o l i t i c a l a g e n d ~ s they s e t fo r the es tab l i shed pa r t i e s o r througt h e i r r e l i ance \ on the cour t s o r popular mobi l iza t ion arounecolog ica l i S s u ~ s such as the massive chemical s p i l l in the Rhinin 1986.

With th e \ except ion of th e decen t ra l i zed orde r in thmachinery indU$try, s t a t e pol icy af fec t ing the se t h ree cori ndus t r i e s p r ~ r i l Y i s i nd i r e c t . Even in tLmes of th e gre a t e sIc r i s i s o f VW, I, West Germany 's l a r g e s t automobi le producer

I

Chancel lor S C ~ d t i n s i s t e d on a pr iva te ~ e c t o r so lu t ion to thgrave problems th e company faced in the mid-1970s. In thchemical i n d u s t ~ the regula tory framework which the s t a t e s e ti s based on t h pr inc ip le of se l f - regu la t ion which i s deepl

18


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en t renched in Germany's p o l i t i c a l h i s to r y . 7 Only in theIdecen t ra l i zed par t of the machinery industty ' can we find a

f . I Igeneral acceptance of s ta te support to a c ~ t a t e the adjustmenof smal l and medium-sized firms to changing market condi t ions

IThe exception i s noteworthy because it generates conf l ic t s abouIthe proper ro le of s ta te in tervent ion. Baden- Wurttemberg'Igovernor, Lothar Spath, favors s ta te in tervent ion to strengthenIthe regional economy of Southwest Germany. But h is ac t iv i s

concep t ion i s shaped by th e French s t a t i s t t r ad i t i o n oIin tervent ion ra the r than the concer tat ion modeil which West Germa

small business favors while seeking support I from a var ie ty oIp ~ b l i c and pr iva te sec to r i n s t i t u t ions . i

At t h e i n t e rn a t i o n a l l e v e l t e c hno l og i c a l change andIi n t e rna t iona l competi t ion in te rac t in such I complex ways t ha

t h e i r ef fec t s cannot be sorted out c lear ly . In a l l three sectorIWest German producers are encountering new competi tors from JapaI

as well as other par ts of Asia, the Mideast Jnd the Third WorldFur thermore , Inew compet i to r s have led fO renewed ef fo r t st h r o u g h o u t th e advanced i n d u s t r i a l s ~ a t e s to enhance

Icompetitiveness . The ro le which a more in tegra ted EuropeanCommunity might play in the future thus i s O!f grea t importance

IFor the automobile indus t ry , a more i n t e g ~ a t e d Europe migh. I

become a poss ible solut ion should Japanese competi t ion ser ious lyIthrea ten the market segment in to which West German producers areInow moving. West German producers could eas i ly endorse the morIpro tec t ion is t stance of French, I t a l i an and I Bri t i sh producers

19

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\The European maxket i s already of overwhelming importance foWest German a u ~ o m o b i l e f i rms. And the his tory of the ca ta ly t iconvertor showsl t ha t West Ger.man producers are very much aware o

Ith e s t r a t eg ic I importance of Western Europe. In the case ochemicals , on ~ h other hand, with i t s enormous investments in

Ithe United States and i t s global out look, c lose r Western EuropeaIin tegra t ion might become a poss ib le problem. While the Europea

market i s impbrtant , ca r te l - l ike arrangements among Europeafi rms are l i k e ~ y to be cos t ly for West German producers who arc on f i de n t tha1i- they can face the compet i t ive pressures oEuropean as wel l as world markets. For the machinery indus t ryf ina l ly , with i ~ highly specia l ized and decent ra l ized productionpro f i l e Europe \ i s ne i the r a poss ib le solut ion nor a poss ibl

Iproblem. R a t h ~ r it i s par t of a global market in which thindus t ry competJs.

c o m p l e m e d t i n g mass p r o d u c t i o n s y s t e m s flexiblespecia l iza t ion, !made poss ible by the emergence of new productiontechnolog ies , h ~ become an important element outs ide of the cormanufacturing i n ~ u s t r i e s . Wolfgang Fach and Josef Esser argue int h e i r c ha p t e r I,that through spe c i a l i z a t i on , divers i f ica t ion

Imergers and oth1er means West German s t e e l producers fo r man

management mistakes in the 1970s, par t i cu l a rly e f fo r t s

years have adopted pol ic ies t ha t have moved them out of crudIs t e e l p r o d u c t i o ~ . In cont ras t in the sh ipbui ld ing Lndus t ryI to competI .fo r too long in l the market for large bulk ca r r i e r s and tanker

produced much r o r e cheaply in South Korea and Japan, hav20


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v i r tua l ly c losed down the indus t ry . The spec ia l i za t ion which i sIoccurr ing now in th e product ion of spec ia l tYi sh ips and in theIfu ture perhaps in th e development of new'marirte technologies a re

occurr ing on a sca le so smal l t ha t th e contizaat; with s t e e l i sI

. overwhelming. West Germany remains today th r l a rge s t and mose f f i c i e n t s t e e l manufacturer in Western EuroPr prec i se ly becauseit a d o p t e d early and f a r - r e a c h i n g p r o g r a m s f a v o r i n gs pec i a l i z a t i on . Gerd Junne shows t ha t in htgh- tech i ndus t r i ess u c h a s e l e c t r o n i c s and t e l e c o m m u n i c ~ t i o n s , f l e x i b l e

I

s pec i a l i z a t i on t akes o the r forms. Nixdorf , ifor example, i s anexce l l en t example of a re l a t ive ly smal l and Idynamic f irm whicsucceeded by f ind ing prof i t ab le market n i p h e ~ , such as the

Iprov i s ion of i n - h o u s e , in teg ra ted computer systems fo r thebanking indus t ry . And the West German g i an l Siemens shows i t s

Iown va r i a n t of f l ex ib le spec ia l i za t ion . Behind some of i t sIJ a p a n e s e , North American and European cpmpet i t o r s in th eI

deve l opmen t o f ha r dw ar e it seeks to s p e c i a l i z e in th eIcons t ruc t ion of in teg ra ted systems t ha t requ i re exper t i se anI

market presence in both e l e c ~ r o n i c s and telepommunicat ions. Int h i s ins tance f l ex ib le spec ia l i za t ion b e n e f ~ t s from l a rge firms i ze . West Germany i s not f i r s t in th e adoption of new cort echnologies bu t it i s a c lose second. !IFor th e quick an

I

e f f i c i e n t di f fus ion of technology th e Federa l Republic r e l i e s oIa h o s t of r a r e ly not iced i n s t i t u t i ons , espe l ia l lY on a reg iona

bas i s" to a s s i s t smal l and medium-sized f i rms . American-s ty lIven t u r e cap i t a l i s t s , sp in -o f f f i rms o r t ~ C h n o l o g y parks areI21


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r e l a t i ve l y unLmportant.I

11 I d t' 1 '11 t t th~ n y, s e r v ~ c e ~ us r ~ e s a so us r a e e convergenco f f l e x i b l e i p e c i a l i z a t i o n , as in bank ing , and with masproduct ion , as l in insurance . But in cont ras t t o manufactur ing

I

Mart in Baethgb and H e rb e r t Oberbeck a r gue , s e r v i c e s a lsoIillustrate wi th p a r t i c u l a r c l a r i t y a p o i n t acknowledgeIexp l i c i t l y by Horst Kern and Michael Schumann in t h e i r chapter

New product ion \ technologies can enhance c e n t r a l con t ro l r a theIthan d e c e n t r a l i z a t i o n . And they can inc rease r a the r thaidecrease s t r e s s f u l work.

Aschraopsed.s var i ab le i n s t i t u t i o n a l mechanismw t e h s ' t s e G e ~ : U n S y ~ s i e s have . plan ts as they were af fec ted by newproduct ion t e c ~ o l o g i e s . The main i n s t i t u t i o n a l innovat ion inth e s t e e l i ndJs t ry

Ihas been a move to reorganize corpora t

Is t r uc t u r e s so as to i so la te as fu l ly as poss ib le the t r a d i t i o n a lunpro f i t ab le s tJel -making operat ions from th e pro f i t a b l e par t s othe bus iness . IThe shr inking scope of the pa r i t y provis ions o

i

the codeterminat . ion l eg i s l a t ion governing coa l , i ron and s t e eIare only one p o l i t i c a l cons idera t ion among a hos t of fLnancial

economic and P O l ~ t i c a l ones t h a t pushed the managers of th e s t e eindus t ry in thiS! d i r ec t i on . 8 While corpora te reorganiza t ion sucas th e se t t ing Jp of smal l , independent, innovat ive f irms funde

Iby i ndus t r i a l g ~ a n t s such as Siemens remains th e except ion inWest Germany, nJw product ion t echnologies have consequences fohow es tab l i shed \ i n s t i t u t iona l mechanisms work. Col labora t iv

I

arrangements in bol l ec t ive problem solving or in the appl i ca t ion

22


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of new technologies bring teams of middle management and ski l ledIIworkers together . And these teams have ambi1quous re la t ions to

both top management and the works counci ls as the t rad i t ionaI

r e p r e s e n t a t i v e s of bus iness and l abor . jFurthermore, whileacknowledging t h a t th e i n d i v i d u a l ' s job Is i tuat ion and job

I

sa t i s fac t ion may well ~ p r o v e , Gerd Junne l i s t s in h is chapter aIwhole range of poss ib ly adverse e f fec t s lof new productionItechnologies on West GeDIlany's system of cofeterminat ion. W

l ack a t presen t adequate empi r ica l evidehce to reach firmi

conclusions. But based on subs tan t ia l emPirtCal data in a widIrange o f se rv i ce i n d u s t r i e s the argumentl recurs in Martin

Baethge 's and Herbert Oberbeck's chapter . Ani it also resonatewith the argument about the t rade -of f between the qual i ty and thequant i ty of work which i s a cen t ra l poin t in the essay by Hors

IKern and Michael Schumann. IIThe importance which West Germany' s s o ~ i a l movements havIhad fo r these indust r ies has var ied a grea t deal . In the s tee

. I

and shipbui lding indus t r ies soc ia l movements have played onlyiminor ro le to date . But since the mid-1980s the Greens inI

par t i cu l a r are at tempting to press ahead with some of the unioIdemands abou t a " n a t i o n a l s o l u t i o n . " I For the Green

na t iona l iza t ion would become par t of a n e economic s t ra tegyor.l.ented more toward domestic than fore.l.gn ~ r k e t s , focused oecologica l ly sound regions, and concentratinF on the re t ra in ingof l abor fo r innovative ecological products .1 Pol i t i ca l ly thesprogrammatic demands have been without pract iba+ consequence. In

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th e two main s tee l -producing reg ions , North-Rhine Westfa l ia anIth e Saar , the t r eens f a i l ed to ge t 5 percen t of the popular votnecessary to J a in represen ta t ion in the s t a t e par l iament . I

I .

h igh- teChnOl01 i ndus t r i e s , on the other hand, the new s oc i amovements a c t ~ o t h as a cons t ra in t in some i n s t ances while a t thsame tLme p r O V ~ d i n 9 poss ib le oppor tun i t i e s for fu ture growth i

Iothers . The n1clear industry, l ike chemicals, has been a centrafocus of th e o ~ p o s i t i on of West G e r m a ~ y l s s oc i a l movements anthe Greens. ~ u in microe lec t ron ics and biotechnology s oc i aIa t t i t ude s a re , o re ambivalent . Clea r - cu t oppos i t ion e x i s t s onlaga ins t th e i n ~ r e a s e d po t en t i a l fo r cont ro l l ing o r manipula t inth e popula t ion , \ as in the case of broadband telecommunicat ions ogenet ic engine1ring. Socia l movement suppor te rs a r e , as GerJunne argues , an important segment of soc ie ty consuming nee l ec t r on i c product s . Often they favor opening up p o s s i b i l i t i efo r more decentkal iZed and l e s s po l lu t ing forms of product ions

,

Furthermore, t h s t rong oppos i t ion of soc ia l movements to o theII

high- r i sk , po l l J t i ng high- technology i ndus t r i e s may i n t e ns i fy thsuppor t fo r miCkOelectronics and biotechnology among members o

Ithe economic azid p o l i t i c a l es tab l i shment . Direc t cons t r a i n t. d I Ulpose on some may l ead to Jond ir e c t oppor tun i t i e s fo r o thehigh- tech i ndus t r i e s . Fina l ly , th e e f f e c t of the new s oc i aImovements on thel se rv ice i ndus t r i es appears to be s l i g h t a t bes t

'ITradi t iona l ly Ctose re la t ions between employees and employerappear to be l01sening in the banking industry; but we simply dno t know th e e x t rn t to which t h i s phenomenon can be a t t r i bu t e d t

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IIIa change in the character of West Gexman society and the r i s e ofIsoc ia l movements. IIThe form of s t a t e pol i cy a lso var ie s ac ross theseIi ndus t r i e s . In s tee l we encounter cases in which a succession ofI .d i f fe ren t forms of s ta te in tervent ion have been t r i ed in order to

ass i s t in the shrinking of overcapacity. c o ~ o r a t i s t models ofIconcentrat ion were t r i ed in the 1970s in t1e Saar and in theI 1980s in the Ruhr s tee l regions. Because lof the deternunedIopposi t ion of individual s ta tes and c o r p o r ~ t i o n s aga ins t any

cen t ra l solut ion the e f fo r t of reorganizing the indus t ry on anat ional bas i s , under the guidance of Westi Germany's banking

Icommunity, fa i led in 1982. Since 1983 gdvernment subsidiesII .to ta l l ing about three bi l l ion deutschmarks I have provided the

c o n t e x t in which each c o r p o r a t i o n h a j t r i e d to adapmodernization programs sui ted bes t to i t s Par t i cu la r s i tua t ionSince 1987 the re have been renewed efforFs by the federagovernment, in cooperation with business and ]abor , to seek againi .a nat ional solut ion. And the experimentatidm 'with corpora t i s

Ic r i s i s management a t loca l and regional l e ~ e l s has continuedIBecause the economic importance of the s h i p b ~ i l d i n g indus t ry wa

smal ler the fa i lu re of corpora t i s t methods ob c r i s i s managemenIa t the regional l eve l , in contras t to s tee l , never led to ef fo r t sI

of developing a nat ional pol i t i ca l sOlution.1 In the high-techindust r ies the s h i f t in pol icy by and l a rge has been from d i rec

Isubsidies to a few la rge f irms l ike Siemens in the 1970s toIi nd i rec t forms of ass i s tance in the 1980s grartted to medium-sized

25


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and smal ler f i aiming a t an accelera t ion in the di f fus ion onew productio!n t echnolog ies . Final ly s t a t e pol icy a f fec tservice i n d u s t ~ i e s l ike bankLng or insurance i nd i rec t ly , througthe regUlatory! framework which it provides. In the domestieconomy governdent overs ight follows a famil ia r German pat te rn ose l f - requ la t ioJ by the indus t ry . In the i n t e rna t iona l economy othe other hand \government pol icy has provided the indus t ry withsubs tan t i a l d e g ~ e e of protec t ion. 9

In te rna t ioha l competi t ion and technological change both arclose ly re l a t ed in shaping an indust ry 's competi t iveness. Thia t l e a s t i s tJ e pat te rn suggested by West Germany's core anhigh- tech induJl t r ies . On the other hand it was pr imar i ly th

Icompet i t ion of l e s s e f f i c i e n t b u t heaVily subsidized WeEuropean producbrs, as in s t e e l , or the competi t ion of low-costgovernment-subs\idized shipyards in Asia , as in shipbui ld ingwhich a c c e l e r a t ~ d the decl ine or demise of these two i ndus t r i e s

I

In sharp con t r Js t , in banking and insurance the primary fac toaffec t ing compebit iveness was technological change ra the r thaI

i n t e rna t iona l cdmpet i t ion.Fina l ly , aJ the in te rna t ional leve l there i s the ro le whic

\ .

Western Europe \playS in the var iable for tunes of West. GermanI

indus t ry . The ~ e s t German s t ee l indus t ry , for example, has beeIseverely hampered by the f a r - r e a c h ~ n g subs idiza t ion of i t s l es

e f f i c i e n t competi tors in Western Europe. But because . of WeGermany's depehdence on open export markets fo r i t s othei n d u s t r i a l prohuc t s , including the exports of manufactur in

26


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I

I

Ipr oduc t s of o t h e r d i v i s i o n s of west Ge:cnany's major s t e eprodu cer s , po l i t i c a l demands fo r protect io1ism have remainedmuted. Indeed, in the s t e e l t rade conf l i c t s brtween th e EuropeanCommunit ies and the United Sta tes , th e West Ger.man government ha

It yp i c a l l y chosen to play t he ro le of broker . fo r reasons of bothIi n t e r e s t and ideology West Gennany can a t bestl ' as in the case oIs t e e l , a c t th e ro le of a "sof t" p ro tec t ion is l t . Europe and the

l a rge r world beyond have been important as a lmarke t fo r bankingand insurance ; bu t to date they have neitheJ! been a pa r t i c u l aproblem nor a poss ib le so lu t ion fo r West Ger.mJn bus iness in these

Itwo se rv ice sec tor s . This , however, i s l ike+y to change as thAmerican pressure for f ree t rade in s e r v i c e ~ i s bound to grow

IIn th e area of high- tech indus t ry , on thle o the r hand, thEuropean "option" i s a valuable way of diminishing West Germany'technolog ica l dependence on cer ta in US p r o d U ~ s . The l ink-up o

ISiemens and Phi l l ips fo r the j o in t product ioni of a megabyte chipi s a good example. And prec i s e ly because weist German producerl i ke Siemens spec ia l i ze in th e product ion of high- tech componentand systems r a the r than ind iv idua l product s l they a re to som

Ie x t e n t s h e l t e r e d , as Gerd Junne arques , from the creepingprotect ionism with which o the r European s t a t j s suppor t t h e i r owna t iona l producers .

IThe message of the s i x s ec t o r s tud ie s i s I c l e a r . West GermaIremarkably wel l .i n d u s t r y has come t h rough th e t u r b u l e nlSuccess was ne i t he r prel! 1970s>rdained and 1980nor i s ii nev i t ab l e . In each of th e cases reasons Ifo r concern e x i s t . No

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t ha t market s ~ a r e i s no longer e a s i l y gained a t the expense oo the r European! producers w i l l West Germany's automobile indus t r

Ibe able to compete aga ins t th e advantages Japanese producers havin design? ~ i l l West Germany's chemical indus t ry succeed imastering the \new research and product development requirementof biotechnology? Can a modern i ndus t r i a l economy succeed in thlong - te rm wi t1hout a w o r l d - c l a s s , compet i t ive semi-conductoindus t ry? I s iwest Germany's ' machinery indus t ry a l e r t enough tavoid a disas t10us repea t of the misjudgment of market t rends ahappened in thJ machine t oo l indus t ry in th e ear ly 1980s? Onlyfew years ago, \ in the ear ly 19 80s, answers to these ques t ionwere of ten pesJ\LmistiC. And even today apparent success s t o r i ein machinery, automobiles and chemicals record some shortcoming

. \of West Germany(s i ndus t r i a l orde r t h a t could prove very damagin1n the fu ture . \

Yet the se s tud ie s a l so show t h a t rap id changes in product iot echnologies , th e r i s e of new s oc i a l movements and v o l a t i l i t y ii n t e rna t iona l c ~ r e n c y markets have done little to undermine thcompara t ive ly s ~ r o n g performance of West Ger.many in the 1970s an1980s. As Tablb 2 demonstra tes , given th e de te r io ra t i on i n thp e r f ormance ofl all ma j o r c a p i t a l i s t economies s ince 1960compared to th l o the r major i ndus t r i a l s t a t e s West Germanypo l icy of a " m i ~ d l e way" has held i t s own .10 This i,:; t r ue i

\p a r t i c u l a r compared to th e United Sta te s which, the Reaga. IRevo I utJ.on to t ~ cont ra ry notwi ths tanding , was r ap id ly los in

g ro u n d i n t e r n l t i o n a l l Y . This i s i n d i c a t e d by a s h a r28


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I

II

de t e r i o r a t i on i n i t s t r ade ba lance , i n f l a t i o ~ and unemploymenIra teS which exceeded corresponding West Gernrn f igures and no

supe r io r growth performance as measured by relal GDP p er cap i ta .Compared to Japan , however, between 1979 and I 1985 West Germany

I

l o s t ground. But the sharp apprecia t ion of ~ Yen s ince 1985and th e pro jec t ed dramat ic dec l ine of new e n ~ r i e s in to th e WesGerman l abor market in the ear ly 1990s, makes l i t l i ke ly tha t theFedera l Republic w i l l do compara t ive ly be t t e r i n th e 1990s.

I

I

TABLE 2 I

IExamining th e recen t p a s t of fe r s no s P ~ c i a l i n s i gh t in to

what may happen in th e fu tu re . When askedI about th e fu tureKeynes i s r epor t ed to have paused fo r a l l ng while and then

I

answered, " the fu tu re w i l l come." While t h i s IboOk i s prospec t iver a t he r than re t ro spec t ive none of th e authors pre tend to have

Imagic fo re s igh t . What they o f f e r i s eVidenice from t he r ecenp a s t t h a t shows convinc ingly t h a t West Germani indus t ry has copedvery wel l with mul t ip le sources of change in th e 1970s and 1980sc e r t a in ly b e t t e r than th e average r eade r of lithe American pressmight suspec t .

Table 3 summarizes th e responses of West German i ndus t ry toth e th ree sources of change. The cen t r a l po in t of t h i s schemat icsummary as wel l as the d i scuss ion which Ipreceded it i s to

I29I


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Table 2: Economic Performance of Major Industrial States, 1960-85

(1) (2) (3 ) (4)Chauge in th e IlnempLoyment; aa % of Change in Real Trade Balance as SumCOUBuDler Price Index Total Labor Force GDP per Capita % of GDP of Co

Rank % RUllk % Rank % Runk % Rank

West GeJ;many1973/74 - 79 1 4. 7 ____2_ - - -3-.5---2--.-5----2.5- - - 1 - - - - - - ~ 4 - - - - - . - 1979/80 - 85 2 4. 2 2 6. 5 2.5 1.4 1 1. 7 21960 - 85 1 3. 9 2 2. 8 3 2. 7 1 2.1 1. 5

Japan19"1''-/74 - 79 3 10.0 1 1.9 2.5 2. 5 2 0. 4 21 9 7 ~ / 8 0 - 851960 - 85 13 3. 66.4 11 2. 41.7 11 3.35. 7 ]2 1. '.0.8 11. 5

United States1973/74 - 79 2 8. 5 5 6. 7 5 1.4 4 -0.4 41979/80 - 85 3 6. 8 3 8. 0 2. 5 1.4 5 -1.6 31960 - 85 2 5. 3 4 6. 0 4 2.1 5 -0.2 3

France1973/74 - 79 4 10.7 4 4. 5 1 2. 6 J -0.2 31979/80 - 85 5 10.2 4 8. 3 5 0. 6 4 -1.1 51960 - 85 4 7.4 n.d. n.d. 2 3. 1 ] 0. 1 n.d.

United Kingdom1973/74 5 15.6 3 4. 2 4 1.5 5 -1.0 51979/80 - 85 4 8. 9 5 9.8 4 1.1 2 1. 5 41960 - 85 5 8. 4 3 4. 2 5 1.9 4 -0.1 4

Source: Organization fo r Economic Co-operation and Economic Development, Ecollornic Outlook: I l i ~ t o r i c a i Stat ist ics/Perspe(Paris: OECD, 1987), pp. 39, 44, 68 , 83 .


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underline the differences in the pattern of resFonse of di f ferentindustr ies . At the plant l eve l d is t inct ive I responses combineestabl ished industry practi.ces with new wayjs of coping withchange. The ins t i tu t iona l mechanisms which arle triggered by theconvergence of mass production with f l ex ib le Jpecia l izat ion varya great deal . At the nat ional l eve l the i m ~ o r t a n c e of socia l

I

movements fo r di f fe ren t indus t r ies also d i f fe , s as does the formof s ta te pol icy . And at the internat ional l e j e l the relat ion ofinternational competition and technological ctil:ange varies acrossindustr ies as does the role of Europe.

TABLE 3

II

No s ing le var iable o r small se t of vJ i ab l eS - - reg ionals e t t i ng , co rpo ra t e cha ra c t e r i s t i c s , s t r e1g th of the labormovement, technological aspects of productiorl, concentration ofindustry , pos i t ion in world markets, Iinf luence in nat ional

1 po l.tl.CS to name bu t a f ew Ld Ipxov i, eSI an d equate dnparsimonious explanation for the pattern suw"arized in Table 2.Instead the cen t ra l poin t of th i s t able ii to emphasize thevariabi l i ty of conditions and patterns of r ~ s p o n s e in spec i f i cindustr ies . Widespread experimentation in meeting change i sv is ib le everywhere. We are watching a f luid ~ y s t e m of industr ia lproduct ion. In myriads of smaller ways WhiC1 do not make f ront

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' j 'ah1e ,3 : I ndus t r y nesponses to Change

f!ftLlt LevelFlexibleSpecial izat ionor/1ass ProductionIns t l tu t ionalf1.::chanism

WtUQfia1 LevelImportance otSocial HomentsForm otState Policy

Inlgrnat ional Levelcompetitivenessaffected primarilyby in ternat ionalcompetition ortechnologialchange

Hole ot Europe

si. t P I l ldg.!;.ge.


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page news. mul t ip le changes are a f f ec t ing W ~ s t Germany in the1 9 8 0 s . I n d i v i d u a l s , i n s t i t u t i o n s andl i n d u s t r i e s a re

IexperLmenting in new ways to respond to these I changes. The Kohgovernment may have fa i l ed to br ing about th e ~ e c i s i v e b ig changein na t iona l po l i t i c s . But smal l - sca le change land exper imenta t ion

I

i s nonethe less pervas ive in the Federa l Republ!ic.2. I n s t i t u t i ons and Change

The convergence of pervas ive change in low p o l i t i c s withi n s t i t u t i ona l con t inu i t i e s in high po l i t i c s i s d i s t i nc t i ve oWest Germany's Third Republ ic . This i s in Sh:arp con t ra s t to the

Ipo l i t i c s of the F i r s t and th e Second . Republi6.I Then as now on. ,could observe dynamic soc ia l and economic change. The 1940s and

I

1950s witnessed, fo r example, the in f lux of ~ o r e than 12 mil l ionI

e thnic German refugees f i r s t from Eastern Europe and l a t e r fromI

the German Democratic Republ ic . In the 195Qs l ike the r e s t oIIthe DECO s t a t e s West Germany lowered i t s t a i r i f f s subs tan t i a l lyand rees tab l i shed f ree c o n v e r t i b i l i t y . A n in th e 1970s inIgrowing numbers West German corpora t ions be lan to move some ot h e i r ope r a t i ons abroad and r a t i o n a l i z e d t h e i r product ion

If a c i l i t i e s a t home. These and o t he r changesj a f fec t ing the verybase of West Germany's economy and soc ie ty ~ e r e accompanied bymajor i n s t i t u t i o n a l changes. This of course was very evident inth e pre lude to th e F i r s t Re pub l i c when, a f t e r 1949, thei n s t i tu t ions of postwar Germany took shape in in tense b a t t l e sfo r example, over th e cha rac t e r of federalismj, codeterminat ion oth e r o l e of th e s o c i a l wel fa re system. But it was a lso

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ch a r a c t e r i s t i1 of the "second founding" of the West GermaRepublic in t h mid-and l a te 19605. Cooperative federal ism, theunivers i t i es , ~ system of labor market administ rat ion and theconsul ta t ion ~ n the major po l i t i c a l and economic actors aboueconomic po l i e t a l l represented important i n s t i ~ u t i o n a l changeIi n i t i a t ed to a d ~ r e s s what was then perceived as a pressing agendof soc ia l refor.k and economic modernization. But in the 1980pervasive c h a n ~ e has not led to ins t i tu t iona l blockages, c r i s i sand change. ID West Germany, pervasive changes in low pol i t i c sprovide ins tead\ an opportuni ty fo r reca l ib ra t ing i n s t i t u t ion

I

piecemeal r a t h e ~ than act ing as a ca ta lys t fo r more fundamenta,i n s t i t u t i ona l c ~ a n g e .

Changes in! the Relat ive Posi t ion of In s t i t u t ions . Changoccurs within ek is t ing ins t i tu t ions ra the r than outs ide of them

III t does so in three di f fe ren t ways. Anew context can pr iv i leg

i n s t i t u t ions w h ~ c h had been l e s s cen t ra l po l i t i c a l l y ; it cadisempower ins \ t i tu t ions t h a t had been cen t r a l ; or it catransform the *ole ins t i tu t ions play in the l a rge r po l i t i c aeconomy. I

IThe change Ifrom the F i r s t to the Second West German Republiin the 1960s l l l u s t r a t e s how a new context can pr iv i legei n s t i t u t ions which had been l e s s cent ra l before . In the 1950the overr iding quest ion for ~ a n y ~ c t o r s in and analys ts of WesGerman pol i t i c s were the s imi l a r i t i e s and di f ferences betweenBonn and Weimar. Attent ion was r ive ted on the formal i n s t itu t ions of West Germany.' s young democracy: Par l iament , the

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execut ive , the Judic iary, federalism and the p ~ r t y system. WouldIthese ins t i tu t ions take hold in an author i ta r ian socie ty defeatedIIIin war, suffer ing through the trauma of nr t ional par t i t i on ,ibloated by a refugee population which a t any m?ment might turn to

an i r r eden t i s t po l i t i c s , and harboring mill!ions who had beenIcommi t t ed Nazis? The "economic miracle" of the 1950s, everyoneIIrecognized , promised an answer too easy ~ o many of theseI

t roubl ing quest ions . Indeed the fear , s t i l i l inger ing in the19705, was t ha t West German democracy might I be no more than af a i r weather democracy. Without the inducemehts of a prosperous

Ieconomy the Germans would probably tu rn , as they had before , toa nondemocratic pol i t i c s . I

The Second West German Republic shi f ted the focus oIa t t en t ion to a second se t of i n s t i t u t ions . TJe peak associat ionso f b u s i n e s s , a c e n t r a l i z e d l a b o r movebent , cen t r a l i zed

Iprofess iona l organ iza t ions and a wide r4mge of parapubl icI

i n s t i tu t ions were viewed as cr i t i ca l ly impo:ttant components o"model Germany." West German democracy was Lo longer feared to

I

be unstable ; ra the r it was cr i t i c ized a t tiimes fo= being tooI

s t a b l e . Neocorporat is t po l i t i c s was v i e w ~ d as centra l ized,sec re t ive and t echnocra t ic . Sui t ing well t ephnica l cr i t e r i a o

Ie f f i c i ency it was viewed uneasi ly as l a c ~ i n g in democraticI

par t i c ipa t ion . As the West German economy ~ u t p e r f o r m e d most oi t s competitors a f te r 1973, pol i t i ca l unease l began to focus onII

the evident l imi ts of a neocorporat is t pol i t i c s to a t t r a c t thep o l i t i c a l l o y a l t i e s of the young and o the r members of

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oppos i t iona l soc ia l movements.IThe coming of the Third West German Republic i s beginning to

I

s h i f t a t t en t ioh once again from the fOl:IIlal i n s t i t u t ions of aI

- l i b e r a l democracy and the peaks of the ins t i tu t iona l ol iga rch ie\I

of West Germany's neocorpora t i s t democracy to other i n s t i t u t ionsI\such as the wQrks counci ls and the vocat ional t ra in ing systemIIdispersed thr04ghout West German socie ty . The acce le ra t ion oitechnolog ica l change, the re invigora t ion of c i v i l soc ie ty throughinew soc ia l mov'ements and the changes imposed from abroad are

prov id ing new oppor tun i t i e s and cons t ra in t s t ha t appear torequi re i n s t i t J t i o n a l l inks between developments a t the grass

IIroo ts and na t idna l - leve l ins t i tu t ions .It i s too ear ly to sa

anything d e f i n i ~ i v e about the range of these i n s t i t u t i o n s . Buthey probably include p o l i t i c a l act ion groups with informal t i e s

Ito es tab l i shed !part ies , soc ia l se l f -he lp groups t ha t are of ten

Il inked to the II s t a t e ' s soc ia l service del ivery agencies , an"a l t e rna t ive" cu l tu re and you-t.h groups of ten re lying on public

I

subs idies . Thesle diverse groups s lgnal some of the changes whicIa f fec t West Gerfany in the 19809. And the i n s t i t u t i o n a l l i nk

t ha t ex i s t between them and the s ta te as wel l as i t s anc i l l a ryI

l a rge pr iva te bUreaucracies are a dis t inc t ive p o l i t i c a l fea tureIof the Third Rep?blic.

IThis sh i f t ing perspect ive on the r e l a t i v ~ Lmportance oId i f f e r e n t West Grrman ins t i tu t ions over t ime poin ts to a dualismin both p o l i t i , a l form and substance t h a t has continued to

\s t ~ u l a t e the Lmagination of p o l i t i c a l analys ts and hi s to r i ans o34


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Germany, France and th e i n t e rna t iona l system , o re genera l ly . Inh is pa thbreaking study Bread and Democracy inl Germany AlexanderGerschenkron, fo r example, d i s t i ngu i shed betw1en th e l a r g e l and h o l d i n g , e x t e n s i v e f a rming and c c n c en dxa t.Lcn of powe

I

charac te r i s t i c of author i ta r ian Pruss ia and! the small plo t s ,in tens ive farming and dispers ion of power 10f the democraticSouth-West of Germany. 11 Simila r ly in a br i l l l i an t little bookEdward Fox dis t inguished between a maritiIrie, outward-looking

IFrance organized around the major por ts and a ~ a n d l o c k e d , inward

Rosecrance. 13

I .

looking France. 12 Since ancient t imes t ha t d i s t inc t ion hasI

dr ive n impor tan t ana lyses of i n t e r n a t i o n ~ l p o l i t i c s , mosIr ecen t ly in the works of Paul Kennedy and RiFhard

Twentieth century his to ry has had an unieven impact on theIanalogous pa t t e rns t ha t we can discern in w e s ~ German po l i t i c s in

the 1970s and 1980s. In the area of "high" pOili t ics , the loss ofIWorld War I I and th e div i s ion of Germany have af fec ted a

fundamental t ransformation in the charac te r of West Germany'scen t ra l i zed p o l i t i c a l order . A democratic, 10rpora t i s t s t y l e ofp o l i t i c s has rep laced its au tho r i t a r i an r and t o t a l i t a r i a nprecursors . The his tory of the f i r s t two Weist German republicsrevea led t he s t r eng th and a d a p t a b i l i t y o f thpse i n s t i t u t i o n s tocope with the changes of the f i r s t three pos t ta r decades. In thearea of "low" po l i t i c s , i l l u s t r a t ed by Gary IHerr igel 's ana lys isas wel l as other reg iona l s tud ies , we f ind Emportant h i s to r i ca

Icont inu i t i e s across the abyss of the 1930s land 1940s. As theIFedera l Republic moves toward i t s Third Republic the ex is tence of

35


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Ith is second ins t i tu t iona l order , i l lus t r a ted here by the "low

Ip o l i t i c s of Fhe voca t iona l t r a i n in g sys tem, prov ides focon t inu i t i es in pol icy and po l i t i c s t ha t have proven to bimpor tant espJcia l lY since not a l l sectors of the po l i t i c a

I

leadership of hhe country have fu l ly embraced the i n s t i t u t i o n aorder in both J igh and low po l i t i c s tha t I have iden t i f ied here .

Over t im l a new p o l i t i c a l c on te x t can a l so l ead toi n s t i t u t i o n a l ~ t r o P h Y , Fringe pol i t i ca l par t i e s are an excel lenexample. . RefJgee par t i e s in the F i r s t Republic were alwaysuspec t as poteh t ia l supporters of an undemocratic po l i t i c s . Thcenter of SUCh! a p o l i t i c a l challenge to West Germany, it wafeared, was a s ~ c c e s s i o n of neo-NaZi par t ies as well as p o l i t i c as p l i n t e r m o v ~ e n t s to the l e f t of the SPO. In the 1950ext remis t par t i1s were outlawed and refugee par t i e s garnered j u sunder 10 p e r c e n ~ of the nat ional vote . During the f i r s t postwarecess ion of 1 9 ~ 6 - 6 7 the votes fo r the neo-Nazi par ty in severa

I

s ta te elec t ions approached 10 percent . And the par ty missed byha i r receiving ~ i v e percent of the nat ional vote in 1969 and thuenter ing the BuAdestag. But the sharp economic downturns of thmid-1970s and eArlY 1980s have not led to a rev iva l of ext remispar t ies . West I ~ e r m a n socie ty has absorbed and ass imi la ted thoverwhelming mabority of fonner refugees. And neo-Nazi anCommunist sp l inJe r p a r t i ~ ~ . received less than 1 percent of thnat ional vote in! the 1980s. The passing of tme, the dynamics oe lec to ra l compeJit ion among the large es tabl ished par t ies ans ta te pol icy a l have helped in bringing about th i s a t rophy o

36


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th e r ad i ca l p o l i t i c a l pa r t i e s of the 1950s and11960S.The f a t e of i n s t i t u t i ona l i z e d pol icy convj rsa t ions among the

po l i t i c a l and economic leadership of West Gjrmany i s a secondexample of i n s t i t u t i ona l at rophy. Convened I by the Economics

. IMinis te r th e It concer ted ac t ion It was a qua r te r ly meeting of th eIl eaders of the major West German i n s t i t u t i ons . I The meetings wereIvoluntary . No votes were taken. And no minutes were kept . TheImain purpose of th e open-ended discuss ion [was a shar ing of

informat ion on th e condi t ion and l i ke ly fu ture of the West Germaneconomy. Rathe r t han c re a t i ng an i ns t i t i u t iona l forum forcoordinat ing cen t ra l decis ions , the concerted ~ c t i o n was designedto avoid o r l i m i t unnecessary d i s t r i bu t iona l Is truggleS based onf au l ty economic pro j ec t i ons . I t s heavi ly technocra t ic and

I Is e c r e t i v e cha r ac t e r d id not withstand thei pressures of theeconomic tu rmoi l of th e 19705. When the Federat ion of Employers

Ichal lenged th e c ons t i t u t i ona l i t y o f an extensilon of th e pr inc ip leof codeterminat ion before t he Cons t i t u t iona l Court , the unionsdecided to withdraw in 1977. Chancel lor 5ihmidt proceeded too r c h e s tra te o t h e r d i s cus s i ons s e r v i ng I s imi la r p o l i t i c a lob jec t ives . In th e Third Republic such meeTings have occurredve ry r a r e ly and they serve l a rge ly th e sYmbolic purpose ofs igna l l ing the exis tence of open l ines of cam1unication between ac e n t e r - r i g h t c o a l i t i o n government and West Germany's t radeunions. Secre t , al l -embracing, top- leve l P ~ l i C Y conversat ionsare not cen t r a l to running the p o l i t i c a l and leconomic a f f a i r s ofthe Third Republic. 37 I


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Third ly , ' " f ina l ly , besides empowering o r disempoweringi n s t i t u t i o n s , a new contex t can a lso a f f e c t th e ro le i n s t i t u t i ons

Iplay in the l a rge r p o l i t i c a l economy by a l t e r ing t h e i r r e l a t i veI

. \pos i t ions . West German federal i sm and reg iona l economic pol icya re cases in \point . In the F i r s t Bonn Republi.c federal ismcen te red l a r g k l Y on th e j u r i s d i c t i o n a l and c ons t i t u t i onas t ruggles betwJen

Ithe federa l and s t a t e governments. Of a l l th

I

i s sues th i s hJd i n f a c t been the most conten t ious which thPar l i amentary dounci l confronted whi le drawing up th e Basic LawWest Germany's cons t i tu t ion , i n 1948-49. The s t a t e s werjealous of t h e i r s t rong pos i t ion and ul t imate ly opposed to anIencroachments by the federa l government. But in the 1960awareness grew l a P i d ~ y t h a t the s t a t e s of ten lacked the resourcenecessary to coke with economic and s o c i a ~ change and to l i ve uto th e c ons t ihu t iona l mandate of assur ing equal s oc i a l aneconomic opporthni t i e s to a l l c i t i zens r i r re spec t ive of t h e iplace of res ideJce .

The i n s t i t h t iona l o v e r h a u ~ a t the ou t s e t of th e SeconRepublic thus i Jc luded provis ions fo r the coopera t ion of fede ra

I. umb f It . k . 1and s t a t e governments an a n e r 0 j o ~ n t ta s s , It a.nc udinI

reg iona l industr!r. pol icy . West Germany's system of "coopera t ivfedera l i sm," it \ was or ig ina l ly thought , would lead to s t rongein f luence and cbntro l of the federa l government. In s tead , innumerous pol icy larenas, inc lud ing reg iona l i ndus t r i a l po l icy ,care fu l ly cal ibJ\ated system of d i s t r i bu t i ve po l i t i c s preva i ledt h a t de f i e d quick ad jus tmen t through c e n t r a l i z e d cont ro l

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,Economic and soc ia l pressure eventual ly shifl ted away from theunderprivi leged, marginal ru ra l areas in 1960f and 1970s towardthe congested urban areas and old manufacturinb regions suf fer ingin the 1980s from a cruc ia l shortage of m O d e r a ~ e l Y priced housingand of ten double-digi t unemployment. Thus s Ja te governments inIthe growing South and in the decl in ing North ;ave expanded t h e i rro le in economic management. Lothar Spath, governor of BadenWurttemberg, b u i l t h is pol i t i c a l reputa t ion on having managedaggress ive ly and success fu l ly a del ibera te policy of regional

Ii ndus t r i a l modernization. 14 In neighboring Bjvar ia , the CSU hasfo l lowed fo r decades a s t r a t e g y o f ' d e c ~ n t r a l i z e d , r u r a!i ndus t r i a l i za t ion , supplemented by the p O l i t ~ c a l e f fo r t s of CSUl eader Strauss of concentra t ing some of t1e major high-techarmament and aerospace manufacturers around IMuniCh .15 Between1979 and 1984 North-Rhine Westfa l ia funded ar ambitious programof reg iona l i ndus t r i a l development thus hoping to revive i t s

I .

dec l in ing cente rs of heavy indus t ry in the i Ruhr va l l ey . AndIfu r the r North the c i ty s t a t e s of West Berl in , j Hamburg and Bremenare t rying to make themselves once again a t f rac t ive especia l lyfo r investments by high-tech indus t r i e s . The upshot of these

Id i f f e r e n t developments has been the same e v e ~ h e r e . Small andImedium-sized f irms in par t i cu la r are re lying increas ingly onIi n s t i t u t iona l support cu.ltu res - -un ive rs ity r f search i n s t i t u t e s ,

t echn ica l unive r s i t i e s , vocat ional schools , , local and regiona'Chambers of Commerce prOViding consul t ing s e ~ i c e s fo r market ingand sa le s , and a var ie ty of technological ass i s tance i n s t i t u t e s -

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t ha t a re designed to help them in the t r ans i t ion from a r t i s i n ato h i gh - t echJ a l O gy p r oduc t i on . In a dd i t i on th e f e de ragovernment is l a s s i s t i n g with sec tora l po l i c i es designed toacce le ra t e thel spread of new' product ion t echnologies . Wes

\

GermanI

s t a t e s I have c l e a r ly become more important ac tors oquest ions of i hdus t r i a l pol icy . Thei r i n i t i a t i v e s r a the r thawhat remains ofl th e c o o p e ~ a t i v e federal i sm of th e Second Republimark the po l i J i c s of the Third Republic . As in many o theins tances , ' the \ s igna ls po in t here to decen t ra l i z ing tendenciewith in po l i t i caQ and economic s t ruc tures t ha t are s tab le a t thna t iona l and in te rna t iona l l eve l .

Three S ta lb i l i z inq F a c to r s . Why does th e wide-spreaexperLmentationland change af fec t ing West German i ndus t ry a t thgrass - roo t s no t ! r e su l t in l a rge-sca le" i n s t i t u t i o n a l hanges in th1980s? Why d O ~ S West Germany's Third Republic appear to be s

I

s table? The Jeason i s t h ree fo ld . It l i e s in th e endurin. i n t e rna t iona l s i ruc tu re which ci rcumscribes West German choicesin th e in s titt t i o n a l con t i n u i t i e s 0 f West Germany's semisovereign s t a t e I and in the t i g h t i n s t i t u t i o n a l l inks betweeexperLmentat ion \a t th e gras s - roo t s and na t iona l - leve l p o l i t i c a

I

i n s t i t u t i o n s . . IWest GermaJy has been the c l e a re s t demarcat ion l i n e in th

b i p o l a r postwa1 wor1-.l order t ha t .rcanne Gowa has analyzedGermany' s d i v i s ~ o n and the p o l i t i c a l re la t ions between the twsuperpowers h a ~ e been pa r t and parce l of th e same bipo la

. s t ruc tu re . o v ~ r tLme in te rna t iona l t ens ions along the I ro40


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C u r t a i n have l e s s e ne d . Ber l in no l ong r r i s a se r iousi n t e rna t iona l t rouble spot as it had been in the 1940s and 1950s.

IIThe Western Alliance i s no longer an abso lu te ly essent ia l par t inI

the se l f -def in i t ion of a l l West Germans. O ~ h e r in te rna t iona lp o l i t i c a l arrangements in Europe have become imaginable. WesternIEurope fo r example might eventual ly emerge as la poten t ia l bufferfo r and suppor te r of West Germany. But majol i n s t i t u t iona l andI p o l i t i c a l change in West Ger.many would probably requi re more thanan i n t ens i f i ca t ion of intra-European r e l a t i o ~ s , A neu t ra l i s tWest Germany o r an i so l a t ion i s t United States are poss ible ,

I

though hardly probable , a l te rna t ive fu tures . IBut shor t of theseIo r some o t h e r dramat ic changes in t he I s t ruc tu re of th e

i n t e r n a t i o n a l s t a t e sys tem, i n s t i t u t i o ~ a l and p o l i t i c a lcont inu i t i e s in West Ger.many are re inforced byl the very slow ra t e

I

of change in the in te rna t iona l system. IA second reason fo r the s t ab i l i t y of + e ins t i tu t ions in

West Germany's Third Republic i s the st rong I,

legacy of a densenetwork of parapubl ic i ns t i tu t ions .16 They briidge the publ ic andp r iv a t e realm and fac i l i t a t e a relat ivelYI i qu ie t process offo rmula t ing and implementing publ ic P O l i 1 . Many of thesei n s t i t u t ions date back to the nine teenth clntury while otherswere created only a f t e r 1945. They include corporate bodies ,Ifoundat ions and ins t i tu te s t ha t typica l ly ajre organized underIpubl ic law. Examples inc lude Chambers of I n ~ u s t r y and Commerce,

IIprofess ional associa t ions , publ ic rad io and t v s t a t ions . TheseI

i n s t i t u t ions express a genera l German p r i n c i ~ l e of organiza t ion:41

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independen t gqvernance of soc ia l sec to rs under the genera lsupervis ion of fhe s t a t e . The p o l i t i c a l i n t e n t i s to marshal the

iexper t i se of t ~ major soc ia l and economic sec tor s under th eauspices of s t ~ t e au thor i ty and thus to make th e exerc ise ofs t a t e power botp

I

t echnical ly more informed and p o l i t i c a l l y l e s sIoppress ive. pJrapubl ic i n s t i t u t i ons a c t l i ke shock-absorbers .They. induce s t ~ i l i ty both di rec t ly and i nd i r e c t l y . po l i t i c a lcontrovers ies ake typ ica l ly l imi ted in the process of pol icy

I ..implementat ion. I And the very presence of these i n s t i t u t ionsl i m i t s th e s c ~ p e o f po l i c y i n i t i a t i v e s . This d i s t i nc t i veIi n s t i t u t i ona l sbruc ture da tes f a r back in Gennan his to ry andcovers most pOlley sec tors s ince 1945. Po l i t i c a l c on f l i c t amongd i f f e r e n t s oc i a l i n t e r e s t s f inds precious little open space in

Ithe Federa l Republic .The r e l a t i ~ e l Y opt imis t ic conclusion of th e case s tud ies

=i t t en by p o l i ~ i c a l sc i e n t i s t s and soc io log i s t s poin ts to ani n t r i g u i n g s u g ~ e . s t i o n . The very condi t ion t h a t economistsespec ia l ly from r0rth America of ten po in t to as ~ most se r iousimpediment to West Germany's economic growth, the se case s tud ie si d e n t i f y as thle ve ry key to West Germany's i n t e rna t iona l

Icompet i t iveness . I West Germany has prospered because of th e verydenseness of i t i n s t i t u t iona l l i f e . This has not led to thei n s t i t u t iona l arF i sce le ros i s brought abou; by fo

Stability & Change in the Emerging Third West German Republic (WPS 9, 1988) Peter J. Katzenstein.

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Transcript of Stability & Change in the Emerging Third West German Republic (WPS 9, 1988) Peter J. Katzenstein.