Claire Amnesley. Postindustrial Germany: Services, Technological Transformation and Knowledge in Unified Germany. Manchester: Manchester University Press, 2004. 131 pp. £35.00 (cloth), ISBN 978-0-7190-6536-1.
Reviewed by Georg Menz (Goldsmiths College, University of London)
Published on H-German (July, 2006)
"Updating" the German Model: How
In the mid-1990s, an influential strand in international political economy (IPE) literature posited the imminent convergence of various alternative models on capitalism of the mean, lean and liberal Anglo-American variety. Some authors in the renascent comparative political economy (CPE) literature agreed, making gloomy forecasts about the future viability of the complex German "Rhineland" model of capitalism. Meanwhile, empirically observable difficulties experienced by Germany--as it struggled to cope with the exigencies of unification; fend off low-cost high-quality competition from Southeast Asia; and construct a viable and substantial service sector--differed sharply with generally favorable economic climates in Great Britain and the United States. Germany experienced rising unemployment, while the "dot.com" boom and roaring economic growth led to record low levels of unemployment in the United States.
Amnesly's work fits in broadly with recent CPE efforts to contest the inevitable convergence. Such efforts have inevitably pointed to the resilience "coordinated market economies" demonstrate and have questioned whether the macroeconomic performance of such "varieties of capitalism" is necessarily inferior to liberal models.[1] Questioning earlier--often very lazily and poorly specified--claims about convergence, Amnesly sides with authors who insist on multiple equilibria, even in a context of "globalization." Heavily drawing on Herrigel,[2] she argues that although previous studies often regarded Germany as one monolithic entity, the country consists of regions with very distinct trajectories of economic history. In particular, some regions still prosper from a tradition of "decentralized" industrial order, entailing small and highly innovative enterprises that presumably benefited from the Industrial Revolution before other regions (although the claim that they did so shortly after the Thirty Years' War (p. 21) is hard to fathom). By contrast, "autarkic" regions developed large-scale, vertically integrated companies. Many authors characterize Germany as dominated by the latter type of structure and neglect the former type, which can be found in Baden-Württemberg, Franconia and parts of the southern Rhineland. In addition, the author points to a continuing East-West gap, reminding us of the importance of considering serious differences between the two former Germanies in terms of their economic and social structure and labor markets.
Germany is often characterized as having difficulties in embracing "postindustrial" forms of production and in particular in increasing its service sector. Amnesly argues that this state of affairs is partially due to the deplorable refusal to create a low-wage low-skill service sector in the way post-Thatcherite Britain and the United States have done. Somewhat less convincingly, she claims that the German preference for secondary sector employment is partly culturally conditioned. Even less convincingly, she claims that the service sector size varies significantly in size across the Länder. It is true that the city-states of Hamburg, Berlin and Bremen have larger-sized service sectors than the larger states (a relatively intuitive finding) but the data provided does not strongly support her claim of significant variation between East and West or even North and South.
While the first half of the book mainly presents different approaches from sociology, political science and political economy regarding the symptom of "postindustrialism," the second endeavors to chart policy developments, principally those undertaken by the Red-Green coalition government between 1998 and 2005. The Schröder government sought to lower unemployment through a combination of reforming that part of the state bureaucracy charged with administering the labor market and "workfarist" changes to the welfare state, as well as minor changes to labor market policy. Attempts were also made to modify the deeply imbued structure of the German tertiary education sector.
One additional sub-argument worth mentioning is the author's claim that the so-called whole-sale Institutionentransfer has not worked well for the East. This assertion leads her to argue that the East is stuck in an unfortunate position because it can neither emulate a low-wage, low-skill strategy, not can it easily imitate strategies employed in the old West. This argument is not particularly original. Also, it leads the author to misinterpret the phenomenon of individual employers and unions taking matters into their own hands by agreeing to "wildcat" agreements outside of the established framework of industrial relations. This trend needs to be seen as a response to union weakness and an unfavorable economic climate; there is nothing innovative about it. She even seems to imply that unions' claims for wage parity are to blame for the Eastern malaise, a preposterous proposition undermined through her own account of the somewhat bungled Treuhandprivatization policy. It is unclear how the East could have positioned itself as a low-wage region, given a wage gap of 1:10 with Poland. But on this occasion, the author's own liberal bias surfaces rather strongly, when she claims that "there is some evidence [none of which is provided, however; GM] that the more weakly institutionalised institutions [sic] in the east provide a potential capacity there for faster rates for transformation" (p. 109). This trend could be enhanced further, according to another author cited in approval, through "wage restraint ... [and] flexibilising business regulation" (p. 110). Empirically, this claim cannot be sustained. Sixteen years of lower wages have not helped East Germany significantly. Amnesly does not demonstrate how turning the East into some sort of Thatcherite playground will jump-start economic growth there.
This book represents a worthy attempt to chart recent German economic policy, but in many ways it falls short of being compelling. The author's main argument is never entirely clear. Much of her empirical account is synthetic and very superficial; nearly all of it draws on secondary sources and the author has not conducted any substantial fieldwork. Indeed, her use of some of sources is questionable: Making ambitious claims about the need to reform German universities solely on the basis of an op-ed piece in Der Spiegel (cited on p. 95 and 99) is bad policy advocacy--and even worse science.
Amnesly's suggestion that regional variety matters strongly in terms of Germany's economic structure is welcome. But as a whole, the book reads too much like a combination of a literature review and mere policy description. Perhaps the author seeks to argue that the German model is capable of change, but on this count she fails to address claims that recent changes in industrial relations, social and labor market policy and economic policy result in a significantly more liberal variety of capitalism.[3]
Towards the second half of the volume, the author's politics surface and the gloves seem to come off. The account of Red-Green reform is not only completely uncritical, it borders on open endorsement. This is surprising, given how costly and ineffective the "Hartz" reforms in particular have turned out to be. Such lack of critical distance to policies similar in focus to those of Britain's Anthony Blair is problematic because it leads the author to abandon all nuance and even present inaccurate claims. Hence, the abolition of the secondary tier of unemployment compensation (Arbeitslosenhilfe)--a core component of Hartz-inspired policies clearly intended to force recipients into the labor market--is described thus: "This new benefit is a combination of the old unemployment assistance and social assistance. These have been merged to reduce bureaucracy and increase transparency" (p. 58). Someone who describes the single most serious assault to the structure of the German welfare state since 1945 in such terms is either poorly informed or, worse, deliberately misrepresenting the facts.
Indeed, what one might mistake naively as sympathy for the underdogs (women and Easterners) very quickly shows its true colors: The curious brand of feminism discernible here criticizes German society not for its patriarchy per se. Instead, the author is most concerned about pushing as many women as possible into the accumulation process. It is, of course, both accurate and fair to criticize the relatively low level of female labor market participation in Germany. But there is nothing progressive about an economistic obsession with raising productivity levels, which leads the author to applaud the East German system of child care. Again, this applause for the East has nothing to do with a more progressive stance towards gender relations there and everything to do with a Stalinist obsession with production output.
Similarly, it is both accurate and fair to criticize the modalities of the unification process until we realize that the author's preferred option seems to be some sort of deregulated Wild East with minimal wages and even more minimal employee protection. Poland went that way in the early 1990s. Any way one looks at it, the results are not pretty.
Notes
[1]. See Peter Hall and David Soskice, eds., Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (Oxford and New York: Oxford University Press, 2001); Georg Menz, Europeanization and Varieties of Capitalism: National Response Strategies to the Single European Market (Oxford and New York: Oxford University Press, 2005).
[2]. Gary Herrigel, Industrial Construction: The Sources of German Industrial Power (Cambridge and New York: Cambridge University Press, 1995).
[3]. Wolfgang Streeck and Anke Hassel, "The Crumbling Pillars of Social Partnership," in Germany: Beyond the Stable State, ed. Herbert Kitschelt and Wolfgang Streeck (London: Frank Cass, 2004), pp. 101-124.
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Citation:
Georg Menz. Review of Amnesley, Claire, Postindustrial Germany: Services, Technological Transformation and Knowledge in Unified Germany.
H-German, H-Net Reviews.
July, 2006.
URL: http://www.h-net.org/reviews/showrev.php?id=12041
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