17. Final Conclusions

Summing up, we conclude that the German financial system has somewhat changed over the last decades towards a more financialised system. But strong attempts by the German government and lobby groups, as well as policies by the European Commission had only limited effects. Financialisation of the German economy has been less pronounced than in the US or the UK, for example. The German macro-economy has witnessed some of the features of financialised economies, for example rising income inequality, falling wage shares and weakened investment in the capital stock. However, what has distinguished Germany from several other countries was the absence of any debt-financed private demand boom, and a private consumption boom in particular, which prevented private household debt from piling up before the crisis. There are several reasons for this more modest ‘financialisation made in Germany’. Institutional inertia of big parts of the German system seem to be important—for example the relevance of local savings banks and cooperative banks, trade unions and the defence of the stakeholder corporate governance system in parts of the economy, or the reluctance of the German population to adopt a stock market and consumption credit culture. This prevented an even more severe financial crisis and it improved the condition for a rapid recovery from the crisis. However, we hold that unless the German export-led mercantilist regime will not be given up, any such recovery will remain highly fragile, both economically and politically.