From the’ sick Man’to the ‘Overhauled Engine’ of Europe? Upheaval in the German Model

For most of the 1960s–80s the Federal Republic of Germany was regarded both at home and abroad as one of the countries that had been particularly successful in combining economic growth and social equality. For many economists and social scientists Germany was the exemplar of ‘Rhenish capitalism’ (Albert, 1992) which, by virtue of the ‘beneficial constraints’ (Streeck, 1997) imposed on German capital by strong labour unions and institutions, fostered long-term corporate strategies and an environment of trust relationships, not only within capital but also between the strong associations representing capital and labour. It was under these conditions that a system of high-quality and export-oriented production was developed, which in turn powered the entire employment system.