>Whats "Rhenish Capitalism"?
>Bob
The following definition sounds a rather good explanation of the term,
which is quite common over here in the political discourse when
distinguishing German society in juxtaposition to the Anglo-American model:
"The region of "Rhenish capitalism" (West Germany, the Benelux countries,
parts of France and northern Italy) ... can be characterized by a highly
productive, export-oriented and (previously) successful Fordist production
model ("high-quality, high-skill, high-wage production"), whose regulatory
system, especially in the German area, is characterized by corporatist
association structure, a functional connection of industrial and bank
capital, high labor standards, and a high share in the social product of
the welfare state and social security."
There are slightly different definitions, mostly in the "broad" sense of
naming the combination of social market economy and capitalism specific to
(West) Germany within the last five decades [Fn.1]. The above "narrow"
definition is provided by social scientists Juergen Hoffmann and Reiner
Hoffmann in their article "Globalization - risks and opportunities for
labor policy in Europe" [Fn.2]. Supposedly the term was first used by
Michel Albert in 1992, but I couldn't retrieve that specific source [Fn.3].
HK
*** Fn.1:
See for example
http://www2.inter-nationes.de/d/frames/presse/sonder/e/brjahre-e-13.html
*** Fn.2:
For those interested in this stuff: The full article by Hoffmann & Hoffmann
is at http://www.mars.dti.ne.jp/~soken/report/no8/r5.htm as part of the
Rengo Research Institute Report No. 8 (1997)
http://www.mars.dti.ne.jp/~soken/report/no8/contents.htm
Some more paragraphs referring to "Rhenish Capitalism" from that article:
[...]
Behind these challenges lies not only the European single market, but also,
and increasingly, the dominance of international financial markets, which
are forcing companies to utilize short-term, efficiency-oriented reasoning
and arguments in their business policy - and this, in turn, is defining the
social discourse and challenging the traditional, received forms of
regulation. Today's business culture in Western Europe means not only the
traditional "Fordist" approach as a potential model of productivity, but
also - as Michel Albert termed it - "Rhenish capitalism" (Albert 1992),
designed as a cooperative, social system to function in the long term. And
unions are finding themselves in the curious - and to them surely sometimes
uneasy - situation of having to defend this form of capitalism, while at
the same time being obliged to contain it as well as develop it further in
social and environmental terms - in the face of Anglo-American deregulation
which is geared towards a radical form of market-oriented capitalism, which
in the short run is apparently more successful on the world market. It is a
form radical market-oriented capitalism that has gained an increasingly
higher profile as a social prospect for the future, both through the
collapse of "real forms of previously existing socialism" and as a result
of the pressure exerted by the labor markets in the East. Moreover, in its
present form it leaves the trade unions little room for manoeuvre.
[...]
A decisive factor for the emerging dramatic changes in the business culture
in the countries of "Rhenish capitalism" in Europe is the trend for a
growing number of companies, instead of taking out capital loans and using
interest rates, to acquire the capital they need via the stock exchange,
where they are increasingly confronted in their business policy with the
short-term interests and calculations of shareholders.
What is more, this is above all an international, global process, as
reflected in the fact that the ratio to GDP to cross-border trade using
shares and loans to GDP rose from 5.1% in 1975 to 169.6% in 1993. The
rapidly growing, so-called "securitization of debt process" (cf. Guttman,
loc cit, Heine/Herr 1996, p.208 ff.), which from 1980 to 1993 led to a
six-fold increase in lending and is accompanied by the growing importance
of investment funds for the economy, as well as increasingly intense
competition on commodity markets through the deregulation of international
markets, is thus responsible for the transformation of social relations in
companies into a "business management issue" as well as for the dominance
of the short-term approach and variable costs - of which the most variable
are wage costs. In the countries practicing "Rhenish capitalism," this has
led to a - sometimes dramatic - change in corporate cultures, which are
increasingly geared towards the short-term dividend interests of
shareholders - "shareholder-value capitalism" - and which therefore like to
reduce workers (who in the period of postwar prosperity were raised to the
level of "co" -workers) to the level of "production factor costs" that are
to be eliminated as far as possible.
[...]
Trade unions are challenged in national labor markets through
"disembedding" and globalization trends because companies, through the
increased flexibility of large firms on international labor markets and the
high flexibility of capital, take increasing advantage of "exit" options
relative to national investments (cf. on this Hirschman 1970), and thus are
able to evade national regulatory systems and trade union demands. In
reality, therefore, the balance of compromise built into the continental
European political and economic systems between wage labor and capital, and
in particular the institutional fabric between wage labor, capital and the
welfare state characterizing "Rhenish capitalism," is coming under massive
pressure. Capital, whether as money or in the form of multinational
companies having the above-cited possibilities, does not have to play this
"game" any longer; the "cooperative disciplining of capital" (Streeck 1996,
p.19) is disappearing. As a result, through even the threat of relocation,
industrial relations can be destandardized and differentiated according to
the degree of capital's relocation options, and the concept of a wage
policy based on solidarity, the regional wage agreement, and a social
cohesion policy can be evaded.
[...]
There is no such thing as a uniform economic area called the European
Union, even if the single market long ago became reality, or is about to
become one. In the EU, in economic terms we can distinguish four areas of
regulation (hereafter referred to as "regions"), which can be further
differentiated in terms of the various national economic structures and
regulatory systems: Firstly: the Northern European region (Finland, Sweden,
Denmark), characterized economically by high labor productivities in
industry and successful "niche production" on the world market, and
politically still by a social democratic statist political and welfare
state model, and thus distinguished by a high welfare state sector, and
whose industrial relations (to varying degrees) are part of this statist
regulatory model. Secondly: the region of "Rhenish capitalism" (West
Germany, the Benelux countries, parts of France and northern Italy), which
can be characterized by a highly productive, export-oriented and
(previously) successful Fordist production model ("high-quality,
high-skill, high-wage production"), whose regulatory system, especially in
the German area, is characterized by corporatist association structure, a
functional connection of industrial and bank capital, high labor standards,
and a high share in the social product of the welfare state and social
security. Thirdly: the region of "southern enlargement" of the EC
(Portugal, Spain and Greece, though southern Italy also belongs here in
economic terms), i.e. areas with economies that are still strongly agrarian
and which have regionally dominant traditional social structures, also
characterized by high-productivity islands (individual companies or entire
districts centered around large urban centres such as Barcelona), yet which
function more as subcontractors to the productivist core of Europe. And
fourthly we have Great Britain and Ireland, where Great Britain in
particular is characterized by the separation of industrial and financial
capital and the conquest by brute force of a "mature economy" by
Thatcherist radical market policies, which resulted in a drop in the
standard of labor, forced the unions and "collective bargaining" systems
into a corner, and reduced and partially privatized the social security
system and state infrastructure policy (education, science, public health).
[...]
*** Fn.3:
For a more recent article by M. Albert see:
Albert, Michel & Gonenc, Rauf:
The Future of Rhenish Capitalism.
The Political Quarterly - vol 67 no. 3 (Jul 96) p. 184
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