Guide to 'Germany, Inc.'
"Germany Inc., the protective net of cross-shareholdings and government regulations that has long shielded the country from the cruel tide of globalisation, is dead."
Business Week, 21 February 2000
elations between business and politics in Germany has been international news in the last months. This is not only because of the illegal business donations which have brought the Christian Democratic party into a deep crisis, but also the political controversy around the hostile take-over of Mannesmann AG by UK-based Vodaphone and the government rescue plan for the crisis-ridden Holzmann corporation.  The Financial Times describes the hostile take-over of Mannesmann AG (the first of its kind in Germany and much criticised by German trade unions, politicians and media) as "a landmark in Germany's momentous journey towards a different model of capitalism."  Due to economic globalisation and the single currency, "the rules of the post-war German settlement between capital and labour are being radically rewritten from the outside," the newspaper continued, "to the advantage of shareholders."  Wim Duisenberg, president of the European Central Bank, lead the choir criticising the Schröder government's rescue of Holzmann AG (and thousands of jobs) as the last twitching of old-fashioned government interference in the workings of global market forces. Duisenberg even accused Schröder of being co-responsible for the declining rate of the euro as the government intervention "does not enhance the image that we want to have of being an increasingly market-driven economy across the euro area." 
A timely and illuminating guide to "Germany, Inc." and the social and political impacts of its ongoing transformation is Johann-Gunther König's book "Alle Macht den Konzerne -- Das neue Europa im Griff der Lobbyisten" ("All Power to the Corporations -- the New Europe in the Grip of the Lobbyists"), released in April 1999 by the German publisher Rowohlt. While focusing on the recent changes, König's book is far from nostalgic. It starts with an overview of the history of corporate Germany, including the support of German industry (but also US corporations) for the nazi regime.  In his portrait of post-war German industry, König describes the outrageous degree of concentration of economic power in the hands of a small number of corporations and individuals. Major German corporations and banks own large blocks of each others shares and it is common for German industrialists to be in the advisory boards of a number of other, 'competing' corporations. Particularly the powerful role of Deutsche Bank through its ownership of large parts of many of the largest German corporations is astonishing.
Economic globalisation has made the concept of 'German' companies a more and more diffuse one. Companies headquartered in Germany, such as DaimlerChrysler, BASF, Bayer, have grown out to be some of the largest 'global players'.  Production and sales in Germany is becoming less and less important for these corporations, who can shift production from one place to another in search for the most profitable investment climate and access new markets around the world. Ownership is internationalising rapidly too, as particularly US and UK investors buy up shares. The growing power of US and UK investors increases the pressure for higher and higher returns to shareholders.  The pursuit of 'shareholder value', König shows, has made German corporations accelerate downsizing and relocation to lower-cost countries and led to worsened working conditions (longer working hours, increased work pressure, etc.). König strongly warns against the new corporate culture and its ideal of the 'flexible' (but essentially conformist) human being, always ready to adapt to the demands of both the markets and those holding political power (captured well by König in the untranslatable German term "leistungsbewuste mitlaufer").
König describes how the empowerment of the markets has caused a growing social crisis in Germany. Profits and CEO salaries are skyrocketing, while the pressure on wages is downwards.  The employees' share of total income has never been lower in the history of the German federal republic, while capital has increased its share from 24% in 1980 to 40% in 1997. Because of business-friendly tax policies and tax evasion, corporations bring in only 15% of the total tax income, against 25% 20 years ago.
One of the main causes behind the accelerated competition and downwards pressure on corporate taxes, working conditions and social protection in Germany and the rest of the EU, König argues, is the European single market. König describes the increased concentration of economic power in virtually all sectors of the new European economy (supermarkets, tourism, media, banking, computers, etc.). A result of the intense race to attract foreign investments is the emergence of free trade zones (such as New Park near Munich), a phenomena until recently known mainly from Central America and East Asia.
König concludes that corporate political power has reached unprecedented levels, both in Germany and on the European Union level. Almost 1,700 professional lobbyists are registered in the German capital Bonn (now Berlin), but their activities are only the tip of the iceberg of corporate involvement in German politics. One third of all German MPs have side jobs with interest groups and 'revolving doors' between politics and industry is commonplace in Germany.
The ongoing transfer of decision-making to Brussels does not make things better, König argues. He presents numerous examples of how German industry has promoted its interests through the 'bureaucratic-industrial complex' in Brussels, in which the European Commission plays a key role and particularly the extremely industry-friendly Directorate-General III (previously industry, now enterprise). König sees the lack of critical media monitoring Brussels, the absence of a European public debate and the understaffed European Commission as the main reasons for the excessive power of lobbyists in EU decision-making.
While it would not in itself be a problem if the old nation states would disappear, the way it happens is disastrous. Democratic decision-making is increasingly crowded out by market forces and governments face growing problems with regulating corporations. The crucial question, König concludes, is how to re-empower social movements. He calls for a 'second struggle for democracy', this time on the global level, but has most of his hopes set on the revival of the trade union movement on the European level. In light of his sharp critique of corporate power in Germany and Europe, König is surprisingly uncritical of the euro-corporatist European Trade Union Confederation (ETUC) which has failed to confront neoliberal policies of the EU throughout the 90's. König also fails to mention more inspiring new initiatives like the European marches against unemployment and poverty and other international activist solidarity networks. König's book contains a wealth of essential analysis, but a comprehensive agenda for rolling back corporate power is unfortunately lacking.
1. "Auf Wiedersehen, Germany Inc.", Business Week, 21 February 2000. | Back to Text |
2. Bankruptcy seemed unavoidable for the large construction company Holzmann AG, but the Schröder government saved it in November 1999 with a rescue package of DM 2.3 billion. UK-based Vodafone took over the high-tech company Mannesmann AG in order to get its profitable D-2 cell-phone network, while planning to sell off the rest off the company. German newspapers protested that "thousands of jobs are destroyed, just because international investors want to make a short-term profit" (Die Welt, quoted in Wall Street Journal Europe, 22 November 1999). Chancellor Schröder stated that "hostile take-overs are never helpful," but the take-over proceeded (Wall Street Journal Europe, 22 November 1999). | Back to Text |
3. "Whirlwinds of change," February 2000. | Back to Text |
4. Ibid. | Back to Text |
5. Wall Street Journal Europe, 7 December 1999. | Back to Text |
6. "Auf Wiedersehen, Germany Inc.", Business Week, 21 February 2000. "German companies now have to compete in Europe's huge, single capital market," increasing the "pressure to maximise returns." | Back to Text |
7. Ford and General Motors gave financial and technological support to the Nazis and continued producing from factories in Germany during the Second World War. | Back to Text |
8. Siemens is active in over 150 countries and has German-speaking staff in more countries than there are German embassies and consulates. | Back to Text |
9. In the Anglo-Saxon countries, shareholders returns are traditionally substantially higher than in Germany and other European countries. | Back to Text |
10. Whereas corporate profits doubled between 1980 and 1997, the net income of German employees grew only 1.5%. | Back to Text |