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The paradox of liberalization – understanding dualism and the recovery of the German political economy

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  • Hassel, Anke
Abstract
What do the recent trends in German economic development convey about the trajectory of change? Has liberalization prepared the German economy to deal with new challenges? What effects will liberalization have on the coordinating capacities of economic institutions? This paper argues that coordination and liberalization are two sides of the same coin in the process of corporate restructuring in the face of economic shocks. Firms seek labour cooperation in the face of tighter competitive pressures and exploit institutional advantages of coordination. However, tighter cooperation with core workers sharpened insider-outsider divisions and were built upon service sector cost cutting through liberalization. The combination of plantlevel restructuring and social policy change forms a trajectory of institutional adjustment of forming complementary economic segments which work under different rules. The process is driven by producer coalitions of export-oriented firms and core workers’ representatives rather than by firms per se.

Suggested Citation

  • Hassel, Anke, 2011. "The paradox of liberalization – understanding dualism and the recovery of the German political economy," LSE Research Online Documents on Economics 53212, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:53212
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    File URL: http://eprints.lse.ac.uk/53212/
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    References listed on IDEAS

    as
    1. Anke Hassel, 2007. "The Curse of Institutional Security - The Erosion of German Trade Unionism," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 14(2), pages 176-191.
    2. Culpepper,Pepper D., 2011. "Quiet Politics and Business Power," Cambridge Books, Cambridge University Press, number 9780521118590, September.
    3. Eichhorst, Werner & Marx, Paul, 2009. "Reforming German Labor Market Institutions: A Dual Path to Flexibility," IZA Discussion Papers 4100, Institute of Labor Economics (IZA).
    4. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    5. Herwig Immervoll, 2007. "Minimum Wages, Minimum Labour Costs and the Tax Treatment of Low-Wage Employment," OECD Social, Employment and Migration Working Papers 46, OECD Publishing.
    6. Herrigel, Gary, 2010. "Manufacturing Possibilities: Creative Action and Industrial Recomposition in the United States, Germany, and Japan," OUP Catalogue, Oxford University Press, number 9780199557738.
    7. Streeck, Wolfgang, 2010. "Re-Forming Capitalism: Institutional Change in the German Political Economy," OUP Catalogue, Oxford University Press, number 9780199573981.
    8. Eichhorst, Werner & Marx, Paul, 2010. "Whatever Works: Dualisation and the Service Economy in Bismarckian Welfare States," IZA Discussion Papers 5035, Institute of Labor Economics (IZA).
    9. Hans‐Werner Sinn, 2006. "The Pathological Export Boom and the Bazaar Effect: How to Solve the German Puzzle," The World Economy, Wiley Blackwell, vol. 29(9), pages 1157-1175, September.
    10. Streeck, Wolfgang, 2010. "E pluribus unum? Varieties and commonalities of capitalism," MPIfG Discussion Paper 10/12, Max Planck Institute for the Study of Societies.
    11. Culpepper,Pepper D., 2011. "Quiet Politics and Business Power," Cambridge Books, Cambridge University Press, number 9780521134132, September.
    12. ,, 2009. "Economics of Monetary Union," OUP Catalogue, Oxford University Press, edition 8, number 9780199563234.
    13. Hassel, Anke & Rehder, Britta, 2001. "Institutional change in the German wage bargaining system: The role of big companies," MPIfG Working Paper 01/9, Max Planck Institute for the Study of Societies.
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    Cited by:

    1. Laura Chies, 2013. "Riforme del mercato del lavoro e distribuzione del reddito in Germania," ECONOMIA E SOCIET? REGIONALE, FrancoAngeli Editore, vol. 0(2), pages 42-64.
    2. Anke Hassel, 2014. "Adjustments in the Eurozone: Varieties of Capitalism and the Crisis in Southern Europe," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 6, London School of Economics / European Institute.
    3. Storm, Servaas & Naastepad, C.W.M., 2015. "Crisis and recovery in the German economy: The real lessons," Structural Change and Economic Dynamics, Elsevier, vol. 32(C), pages 11-24.
    4. Olivier Giraud & Arnaud Lechevalier, 2018. "The grey zone and labour market dynamics in Germany," Transfer: European Review of Labour and Research, , vol. 24(3), pages 317-336, August.
    5. Werner Eichhorst, 2015. "The Unexpected Appearance of a New German Model," British Journal of Industrial Relations, London School of Economics, vol. 53(1), pages 49-69, March.
    6. Gary Herrigel, 2015. "Globalization and the German industrial production model [Globalisierung und das deutsche Modell der Industrieproduktion]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 48(2), pages 133-149, August.
    7. Servaas Storm & C.W.M. Naastepad, 2015. "Crisis and Recovery in the German Economy: The Real Lessons," Working Papers Series 10, Institute for New Economic Thinking.
    8. Anke Hassel, 2014. "Adjustments in the Eurozone: Varieties of Capitalism and the Crisis in Southern Europe," LEQS – LSE 'Europe in Question' Discussion Paper Series 76, European Institute, LSE.

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