The Dynamics of German Industry: Germany's Path toward the New Economy and the American Challenge (review)

Werner Abelshauser is a professor of economic history at the University of Bielefeld. He has written about Germany's economic history since 1870, with specific studies concerning Krupp between 1933 and 1951, BASF since 1952, and Germany's economic history since World War II. Part of a series devoted to historiography, this volume grew out of the author's lectures in 2002 delivered in Essen in the Pott Lecture Series on Technology, Business, and Culture.

Abelshauser stresses institutional history and different paths to the New Economy, which is based on non-material production, market globalization, and "primacy of scientific methods and theory in production processes" (p. 2). He argues that, based on long-term cultural orientations, Germany turned away from a laissez-faire economy in the 1870s. Since then, Germany has combined banks, industries, and extensive government support for education and training in a "coordinated production regime" (p. 26) that benefits Germany's Rhine Capitalist devotion to "diversified quality production" (p. 3) as opposed to the American liberal market production regime and standardized mass production.

Germany's production regime, based on trust and cooperation not laissez-faire liberalism, made Germany the "first postliberal nation" (p. 30). Nevertheless, some Germans became enamored of the American Fordist approach to mass production and sought to import aspects of that system. Construction of the Volkswagen facilities and attempts to sell VWs worldwide led Germany—at least in automobile manufacturing—in the direction of American Fordist approaches. Since the 1960s, Germany has returned to trends connected to "diversified quality production" (p. 30). The new threat to that industrial program comes from globalization, which American firms are pursuing by gaining independence from local and national institutional constraints. Were Germans to follow that model, they would loose the cooperative system that has provided one way into the service-oriented, post-industrial economy, based on knowledge rather than production.

This is a short but useful introduction to German economic history from a German perspective. Abelshauser provides a view from a national level. He evaluates "institutions that have determined the thinking and acting of economic actors for more than a hundred years" and stresses the "secular processes" involving "globalization of the markets, and production's escalating reliance on science" (p. 12). He does not follow approaches, developed by Frank Tipton or Gary Herrigel, that analyze regional variations. Abelshauser emphasizes the role of self-government but does not explain how local governance worked or works. He does not draw on science and technology studies, which question whether science and technology can be used as stable agents of change appearing exogenously to drive economies. If institutions determine what can be done, agency is not an issue. Kings and academics are well represented in the index. Hegel and Marx each get three references, as does Fritz Todt. Henry Kaiser and Henry Ford seem more important than any German industrialist as may be justified in a cooperative production regime.

The abstract nature of the presentation makes for a short, compact introduction to German economic history and the problems that its coordinated production regime faced and now faces. The author's abstract discussions sometimes make for difficult reading, but this short book is nevertheless a nice introduction to Abelshauser's work and his concerns about the need for change to shore up the best aspects of the German production regime in the face of an American challenge.