2
Abstract
A great deal of scholarship in the past decade suggests that the “German Model” –
and by implication other coordinated market economies (CME) – can no longer withstand
the pressures of globalization, a market-driven European Union, and – in the German
case – the lingering and substantial costs of German unification. More broadly, critics of
organized capitalism have resurrected theoretical arguments that these kinds of
institutional coordination are no match for the supposedly more mobile and more flexible
liberal market economies (LME). This paper inquires whether such a view
misunderstands the logic that generated and sustained the CME model in Germany and
elsewhere in continental Europe in both the late 19
th
and mid 20
th
centuries. In doing so,
the paper goes beyond those studies that focus only on the decline of this model to focus
on the logic of the ideas and institutions that generated these models in the first place. To
adequately ascertain whether CME economies can adapt themselves to the 21
st
century,
we need to understand how earlier incarnations of these models emerged as well as
declined. One of three outcomes is possible: 1) a failure to renew this institutional and
ideational model and a full turn to neoliberalism in the CME countries; 2) an odd hybrid
of market/organized capitalist models in the CME countries in which no one path is
hegemonic; or 3) a 21
st
century renewal of an organized model using a logic of adaptive
and transformative institutions and ideas. In doing so it would follow a pattern based
more on the spirit rather than the letter of these earlier institutional models. Based upon
an analysis of the earlier two periods, the paper uses path dependence and historical
institutionalism to determine what the rise and fall of the two earlier versions of the
models can tell us about institutional adaptation in early 21
st
century capitalism.
Convention