Changing Ideas: Organised Capitalism and the German Left

Abstract

What determines party positions on issues of economic governance? Most previous research has pointed either to the presumed material interests of the parties' clienteles, or to the political institutions that shape electoral competition. Both approaches do well in explaining cross-national variation, but neither can adequately account for changes over time. This article documents German Social Democrats' policy preferences and the underlying discourse on organised capitalism from 1880 onward to highlight the crucial role of historical context. The interests reflected in party positions cannot simply be read off the material environment. Instead, as suggested by constructivist work on preference formation, they depend on theories regarding the causal effect of alterative policy measures. Following Peter Hall, we treat the evolution of such theories as a ‘process structured in space and time’, by illustrating how ‘context factors’ affect the relative salience of the multiple considerations pertaining to organised capital.

Notes

 1. Our use of the term organised capitalism refers exclusively to organisation on the capital side, at the intersection of competition policy and corporate governance. The term was first used by Rudolf Hilferding (1927/1982: 218), who defined organised capitalism as an economic system in which the principle of capitalist competition was replaced by the principle of planned production, mainly through cartelisation and the power of banks (cf. also Hilferding 1909/2006). Note that by using the term we do not refer to organisation on the labour side (trade unions, employees' co-determination, etc.) or the welfare state.

 2. In the Varieties of Capitalism literature, the German brand of non-liberal capitalism is labelled as coordinated, to highlight the degree to which institutions support strategic coordination between firms (see Hall and Soskice 2001). By using the label ‘organised’, we highlight a different dimension to the competition-restricting structural features of non-liberal capitalism, namely the status of firms in society, i.e. the extent to which collective interests beyond the firm level interfere with firm-level maximisation strategies (see Höpner 2007b).

 3. We have used English translations of books and documents wherever available. Where German sources are quoted, the translations are our own.

 4. The Federation of German Trade Unions (Deutscher Gewerkschaftsbund) voiced similar demands at its founding conference in Munich (Leminsky and Otto 1974: 248; regarding the SPD: Huster 1978: 189–71).

 5. The Christian Social Union (Christlich-Soziale Union, CSU) is the Bavarian sister of the CDU.

 6. A spokesman for the peak industrialists' federation (Bundesverband der Deutschen Industrie) saw the law as turning Germany ‘from a social market economy to a socialist Marx economy’ (quoted in Spiegel, 2 November 1977: 58).

 7. Hans-Martin Bury, SPD, in the parliamentary debate on 3 May 1998.

 8. Minutes of a debate in the Reichstag on 3 May 1908; quoted is Dr Mayer (Zentrum), who introduced the resolution.

 9. After the end of the Founders' Crisis, Marx had only four years to observe the process of capital organisation from his London exile.

10. For example, Engels wrote of the cartels that they represented ‘the second and third degree of stock companies’ (Engels in Marx 1894/1974: 437).

11. From the beginning, the German joint-stock company sought to limit the influence of its shareholders, granting only weak control rights to the shareholders, by contrast to those granted to the board of directors.

12. Whereas the debate had hitherto centred on cartels, Hilferding described the interconnected aspects of capitalist organisation, including the joint-stock company, the cartel system, and the banks.

13. The Marxist Left within the SPD acquiesced (Könke 1987: 110–12), though Soviet critics such as Leontiev (1929) and Bucharin (see Smaldone 2000: 145) continued to advance the orthodox view.

14. Specifically, Schmalenbach (1928) argued that a rise in fixed costs relative to marginal costs due to increasing capital intensity meant that a decrease in the volume of production was no longer the appropriate response to a decline in productivity, because it would not result in significant cost savings.

15. State-brokered arbitration and its universally binding nature had been introduced via the demobilisation regulations of January 1919 and entered into the arbitration code of 1923.