The German Economic Model : A strategy for Europe

With the burn-out of economic policies based on the stimulation of growth by consumption and debt, growth strategies that are founded on business competitiveness and the control of public accounts now seem to be winning solutions in terms of activity and also unemployment. Although it is not alone in typifying this approach, notably in Europe, Germany is an archetype of this kind of strategy. Although it forms a core policy in emerging from the crisis in the euro zone the German economic model is not very well known however.

The German model comprised an original response to the crisis in the 1930's and to the imperatives of post-war reconstruction. Rejecting state intervention, Keynesian as in the USA and the UK, and Colbertist according to the French model, the most important aspect of the German model is the protection of fair and ordered competition. The economic policy pursues the goal of stability that is designed to moderate levies on the economy as far as the budgetary tool is concerned and to avoid the discretionary change of price formation on the markets or the distortion of burden sharing as far as the monetary tool is concerned. The focus of the German growth model is the company, the lever for economic performance and place of social integration. Comprising a 'community of responsibility' made up of employers, who count on qualified labour and employees, who are aware that the financial strength of the production tool is the safest guarantee against the dangers of unemployment, German businesses focus on long term strategies.

Challenged by the burden of the reunification – 1900 billion € over 20 years – Germany responded with reforms that received the support of the major political groups, so that the model could rise to the challenge of increasing globalisation. At a time when most developed economies are searching to loosen the noose of debt by implementing particularly restrictive policies, Germany stands out thanks to sustained growth and an extremely low unemployment rate.

At a time when most European economies are questioning the balance between economic performance and social protection, Germany is showing that both are part of an effective alchemy in the era of globalisation. If we look carefully we can see that the German model borrows from old European traditions, from the North of Italy to the hanseatic cities. Has Germany succeeded in demonstrating the validity of the European model?