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The Political Economy of Germany under Chancellors Kohl and Schroder

The Political Economy of Germany under Chancellors Kohl and Schroder: Decline of the German Model?

Jeremy Leaman
Copyright Date: 2009
Edition: DGO - Digital original, 1
Published by: Berghahn Books
Pages: 246
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  • Book Info
    The Political Economy of Germany under Chancellors Kohl and Schroder
    Book Description:

    While unification has undoubtedly had major effects on Germany's political economy, the pattern of current policy-making preferences was established at an earlier stage, in particular, at the beginning of the 'Kohl-era' in 1982. This essentially neo-liberal pattern can be seen to have dominated the modalities chosen to guide Germany through the process of unifi cation and was mirrored in developments in other OECD countries and in particular within the EU. This book demonstrates that the three policy imperatives (neo-liberal structural reform, European monetary integration, and unification) produced a policy-mix which, together with other structural economic and demographic factors, has had disappointing results in all three areas and hampered Germany's overall economic development.

    eISBN: 978-1-84545-936-9
    Subjects: History, Political Science

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. List of Tables and Figures
    (pp. vii-x)
  4. Introduction
    (pp. xi-xx)
    Jeremy Leaman

    Writing about the German economy, the social arrangements that underpin it and the political management of its structures and processes invariably involves a paradox. On the one hand, this core political economy of greater Europe has maintained its leading status as a highly productive trading nation, exporting more goods in 2007 ($1.36 trillion) than either China ($1.22 trillion) or the United States ($1.12 trillion), which have, respectively, populations sixteen times and three-and-a-half times that of Germany. Without Germany’s massive balance of trade surplus, the European Union’s and the eurozone’s external balances would look much less favourable. Secondly, its engineering products,...

  5. Chapter 1 1982: Crisis and Transition
    (pp. 1-22)

    The removal of Helmut Schmidt as Federal Chancellor in October 1982 by means of the first successful ‘constructive’ vote of no confidence in the history of the German Bundestag is seen to a greater or lesser degree as a turning point in the development of economic policy in Europe’s strongest national economy. There is, of course, always a danger of overstating the significance of the regime change (Borchardt 1990: 32), the replacement of the ‘social–liberal’ coalition (Social Democratic Party of Germany [SPD] and Free Democratic Party [FDP]) with a centre-right coalition (Christian Democratic Union/Christian Social Union [CDU/CSU] and FDP) under...

  6. Chapter 2 The Fall of Helmut Schmidt and the Formation of the Wende Administration
    (pp. 23-42)

    Helmut Schmidt’s fall from power can be seen both as a reflection of the general crisis of social democracy in Europe (Scharpf 1987) and as a result of the very specific circumstances of West German politics. The SPD had taken over the senior partnership in federal government in 1969 after a (relatively successful) Grand Coalition with the CDU under Chancellor Kurt-Georg Kiesinger (1966–69). The new social–liberal coalition, firstly under Willy Brandt (1969–74) and then under Helmut Schmidt (1974–82), included the smaller FDP as junior partner, a role it had served for thirteen of the seventeen years...

  7. Chapter 3 The Kohl Era: CDU Supply-sidism in Practice
    (pp. 43-72)

    Helmut Kohl took office at a cyclically favourable time, i.e., at the very end of the severe recession of 1982 and the beginning of a general European recovery. Industrial orders, in particular in investment goods, began to recover, in particular in the fourth quarter of 1982, along with foreign orders for manufacturing goods (Bundesbank 1983a:6). The improvement in order books for commercial property and equipment can in part be ascribed to the special depreciation allowances and investment grants for commercial building introduced in ‘Operation ‘82’. Domestic orders for investment goods rose markedly from September through to December when they reached...

  8. Chapter 4 Liberalisation and Monetary Accumulation
    (pp. 73-98)

    In the 1980s structural unemployment worsened markedly. Unemployment more than doubled between 1980 (889,000) and 1982 (1,833,000), the year of stagflationary recession, when GDP fell by –1.1 and inflation rose to 5.3 per cent. It continued to rise during the recovery, reaching a peak of 2,304,000 in 1985. While registered unemployment fell by almost 300,000 up until 1989 to 2,037,000, the pattern of incremental rises in the baseline of structural unemployment, begun in the 1970s, continued. The next recession in West Germany (1993) would begin with a far higher initial level than the 1981/82 crisis, notwithstanding the colossal challenge of...

  9. Chapter 5 German Unification and the Unravelling of Neoliberalism
    (pp. 99-136)

    There is no doubt that the unification of Germany was a political triumph for Chancellor Helmut Kohl. It fulfilled Adenauer’s ambition of removing the GDR from the political map and uniting East and West Germans under the constitutional provisions of the Federal Republic’s Basic Law. Economic and social union, which took place on 1 July 1990, thus involved the absorption of the territory and population of the former GDR into the social and economic system of the West; jaundiced eyes regarded it as colonisation (Christ 1991), anAnschluss(Roth 1990) which saw the ‘destruction’ (Nick 1995) or ‘slaughtering’ (Suhr 1990)...

  10. Chapter 6 The Transformation Crisis in the East in an International Context: 1995–2006
    (pp. 137-156)

    By the end of 1994, as envisaged, theTreuhandanstalthad virtually completed its task of disposing of the economic assets of the former East German state. Of the 8,500 enterprises which had passed into the hands of this state holding company on 1 July 1990 – multiplied to 13,781 through separation of parts from whole enterprises – only 140 remained in December 1994 (with some 40,000 employees) to be passed on to its successor institution, the Federal Agency for Special Tasks relating to Unification (Bundesanstalt für vereinigungsbedingte Sonderaufgaben); land suitable for commercial development came under the control of the Land Trust Company...

  11. Chapter 7 Squaring the Circle: Politico-economic Trends in the Schröder Era
    (pp. 157-182)

    The federal election results of September 1998 arguably represented a defeat for Kohl’s second postunification administration, as it did a victory for the resurgent SPD. The CDU/CSU achieved their worst result since 1953 with just 35.2 per cent of the vote. The SPD, with an additional forty–six seats in the Bundestag and 40.9 per cent of the vote, and the PDS with six more seats were the clear beneficiaries of the CDU/CSU’s failure to deliver the promised ‘blossoming landscapes’ in the East and the removal of unification burdens on Western taxpayers. The CDU/CSU retained its strongholds in Bavaria, Baden-Württemberg...

  12. Chapter 8 Coping with Stagnation: the Persistent Contradictions of Economic Orthodoxies in Germany and Europe
    (pp. 183-202)

    On 22 November 2005, two months after Germany’s federal elections, Angela Merkel (CDU) became the first woman chancellor of the Federal Republic at the head of its second Grand Coalition involving the ‘Union-Parties’ of CDU/CSU and Social Democrats. Grand Coalitions have been rare in Germany’s democratic history and often associated with controversy, as in the case of the ill-fated government under Müller that preceded the collapse of the Weimar Republic; the 1966–69 administration under Kiesinger had been a surprisingly successful one in terms of policy but generated parliamentary (and extra-parliamentary) side-effects reflecting the disappearance of an effective democratic opposition....

  13. Postscript
    (pp. 203-208)
    Jeremy Leaman

    The manuscript for this book was completed before the collapse of the global banking system in the autumn of 2008 and the subsequent desperate attempts by state authorities within the developed world to mitigate the effects of this economic ‘tsunami’, as Alan Greenspan and Axel Weber, among many others, have dubbed it. Given the scale of the current crisis and the particular effects it is having on Germany’s political economy, a short postscript is therefore in order.

    In contrast to the real tsunami of December 2004, however, the 2008 crisis of global capitalism was entirely predictable; it was not a...

  14. Bibliography
    (pp. 209-220)
  15. Index
    (pp. 221-226)