Work and Welfare as Strategic Complements in Germany’s Postwar Economic Order

Chapter 4 argues that in the three high-growth postwar decades, the welfare state facilitated corporatist cooperation between labor and capital, specifically in the form of wage coordination, thereby avoiding inflation in periods of (almost) full employment. The period of high growth and full employment allowed, in turn, welfare state expansion which was always supported by a grand coalition of Christian and Social Democrats. The chapter reconstructs in more detail how industrial conflict in the metalworking sector—both in the north of Germany, in the shipyards, and in the south of Germany, in the automobile industry—over social rights instead of wages laid the ground for wage coordination (and moderation) German style. It also explains how the welfare state helped unions and employers’ associations to “police the bargain,” to stabilize an inherently unstable arrangement between capital and labor.