Page 183 - Global Political Economy_Understanding The International Economic Order

CHA PTER S EVEN
ment for private enterprise. Their laws and regulations have success-
fully encouraged a high savings rate, rapid capital accumulation, and
economic growth. Germany has a highly developed system of codified
law that reduces uncertainty and creates a stable business climate; the
American common law tradition guides U.S. business, and the Japa-
nese bureaucracy relies on administrative guidance.
At the core of the German system of political economy is their
central bank, or Bundesbank. The Bundesbank’s crucial role in the
postwar German economy has been compared to that of the German
General Staff in an earlier German domination of the Continent.
Movement toward the European Economic and Monetary Union has
further increased the powerful impact of the Bundesbank. Although
the Bundesbank lacks the formal independence of the American Fed-
eral Reserve, its actual independence and pervasive influence over the
German economy have rested on the belief of the German public that
the Bundesbank is the “defender of the mark” (euro) and the staunch
opponent of dreaded inflation. Indeed, the Bundesbank did create the
stable macroeconomic environment and low interest rates that have
provided vital support to the postwar competitive success of German
industry.
The role of the German state in the microeconomic aspects of the
economy has been modest. The Germans, for example, have not had
an activist industrial policy although, like other advanced industrial
countries, the government has spent heavily on research and develop-
ment. The German government, however, has not intervened signifi-
cantly in the economy to shape its structure except in the support it
has given through subsidies and protection to such dying industries
as coal and shipbuilding and the state-owned businesses such as Luf-
thansa and the Bundespost (mail and telecommunications). However,
since the early 1990s, these sectors have increasingly been privatized.
On the whole, the German economy is closer to the American mar-
ket-oriented system than to the Japanese system of collective capi-
talism.
Corporate Governance and Private Business Practices
The German system of corporate governance and industrial structure
has noteworthy parallels to the Japanese system. As in Japan, power-
ful national organizations such as the Bundesverband der Deutschen
Industrie and the Deutscher Industrie-und Handelstag represent the
interests of business in national affairs, and labor is also well orga-
nized at the national level. IG. Metall, an organization that represents
the auto and metal workers as well as other industries, can speak for
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