Re: Streeck on German Codetermination

[Dennis R Redmond <dredmond@xxxxxxxxxxxxxxxxxx>]

On Tue, 2 Jun 1998, Zhiyuan Cui cross-posted from the FT:

> >>>>>>>                But Mr Streeck makes a strong case for
> >>>>>>>                Mitbestimmung, not least because he has
> >>>>>>>                overcome his own reservations. "I am more
> >>>>>>>                than ever convinced the German system
> >>>>>>>                provides a competitive advantage for
> >>>>>>>                companies that implement it properly," he
> >>>>>>>                says.
> >>>>>>>
> >>>>>>>                He argues that Mitbestimmung has helped
> >>>>>>>                Germany's export-oriented manufacturers
> >>>>>>>                stay competitive by fostering a culture
> >>>>>>>                of co-operation in which companies have
> >>>>>>>                developed human capital as well as
> >>>>>>>                invested in plant and equipment.

Yes, Streeck and a number of German industrial sociologists have long
noted that the Central European accumulation regime is really one of the
fairest, most effective and most efficient in the world (with the partial
exception of Japan, which has more state programming of its economy, but
also had weaker trade unions and much higher working hours). This is an
important point about the EU: its industrial core really does play by very
different rules than those obtaining, say, in the USA. It's not just
Mitbestimmung, it's also a tremendously efficient banking system,
characterized by long-term equity tie-ups, keiretsu banking structures,
and state-level community banks, which fund local entrepreneurs and the
notorious Mittelstand or medium-size firms. Fascinatingly, despite all the
hoopla over Deutsche Bank, the German banking system remains one of the
most decentralized in the world: far more so than the UK or US.
Finally, powerful unions have consistently fought for real wages
increases, which has reduced the possibility of speculative bubbles
developing -- capital markets are geared towards industrial finance, not
real estate or stock bubbles.

Some of this may be changing, now that Germany is becoming the
creditor-in-chief of the entire Eastern European economy, but there are
powerful lessons here for the entire European Left, and indeed for
progressive economists: strong unions and regulated credit markets are the
crucial to mass prosperity and world-class industrial achievement.

At the very least, it raises the interesting question of whether the
Rheinland model might offer a useful alternative for the Visegrad
countries. Certainly countries like Slovenia seem to be well on the way to
West German-style export success.

-- Dennis