The Rise and Fall of a Socialist Welfare State

Advances in social policy were often related to processes of nation-building, like the introduction of social insurance by Chancellor Bismarck during the years 1883–1889 which contributed to the social integration of the new German Empire. The Empire had been created through the unification of the numerous German states in 1871. Critical periods in a country’s history that went along with a renewal of the national spirit also propelled social reform, like the New Deal during the Great Depression in the 1930s and the creation of the British “welfare state” in the immediate aftermath of World War II. Today, the golden age of the welfare state, the decades after WW II, has passed. Domestic problems combine with the impact of globalisation. Some authors assume that globalisation makes nation states increasingly irrelevant. What, then, is a history of a national welfare state as presented in this book series good for in the contemporary debate?

German reunification in 1990 has markedly changed the character of the Federal Republic of Germany, and especially that of its welfare state. Since its introduction in the 1880s, the modern German welfare state has been characterized by an astounding degree of continuity. Despite the radicality of the political ruptures of 1918/19, 1933, 1945 and again 1989/90, and despite the enormous expansion in the number of persons as well as types and scope of benefits covered, it has not fundamentally changed its norms, institutions, actors or method of financing. This pronounced path dependency, even by European standards, has hitherto constituted its strength. However, the transformation of the employment sphere, the globalization of financial and exchange markets, population aging, and the specific challenges brought by German unification have made reforms ineluctable. In this context, the rigidity of the German welfare state could prove to be a hindrance to its necessary adaptation to new conditions. This chapter investigates the impact of German reunification on German social policy during the years 1989/94, linked to an analysis of the international, economic, financial and constitutional issues which emerged in the course of reunification. The primary goal is to depict and analyze the significance of the extraordinarily complex process of German unification on the basis of both existing sources and interviews with political and administrative actors.