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List of Publications (1999-2004)
Participating Scholars
Professor Dr. Werner Abelshauser
Research Fellows: Dr. David Gilgen, Dr. Monika Dickhaus (until 1999)
Staff on outside funding: Olaf Breker (DFG), Dr. Linda von Delhaes-Guenther (Volkswagen Foundation), Martin Fiedler (Thyssen), Dr. Alfred Reckendrees (Hans Böckler Foundation), Dr. Harald Wixforth (DFG), Dr. Annika Boentert (Graduate College of History), Martin Münzel (Graduate College of History, Dr. Yong-Il Lee (Hans Böckler Foundation), Dr. Hyeoung-Jin Kwon (Korea), Gunnar Flume (University of Bielefeld, Interdisciplinary Teaching Committee), Andreas Leutzsch (Graduate College, Bielefeld Institute of Global Society Studies, Katja Roeckner, Dr. Eric Lindberg (Socrates), Dr. Roberto Sala (Erasmus), Dr. Christopher Kopper (DAAD), and Niklas Hellmich (Alfried Krupp Foundation)
From New Industry to the New Economy: Business and Society in the 20th Century
History of Economic and Social Policy
Causes and Determinants of Institutional Change
History of European Integration
Business and Society in East Westphalia-Lippe
From New Industry to the New Economy: Business and Society in the 20th Century (Abelshauser and Hellmich)
Drawing on the methodology of institutional economics, two closely coordinated research projects funded by the Krupp Foundation are examining different strategies for the solutions they have offered for tackling the key economic challenges of the past 120 years. During that period, the transition to nonmaterial production and the globalization of the economy, characterized by Douglass North as the second economic revolution, required a fundamental reorientation of the social system of production. A comparison between the production regimes of Germany and the United States reveals the range of possible responses to the issues that confronted both economies in the late 19th century. The studies in the completed parts of these projects have furnished evidence of striking continuity in Germany’s institutional framework (Ableshauser). Taking shape during the long economic slump following the financial crash of May 1873 (the Gründerkrise), that framework arose as a repudiation of the era’s allegedly abortive concepts of liberal economic policy. At the same time, the new structures and incentives it created for economic activity were a response to globalization and changes in the nature of production. Several research projects on the institutions of the German production regime contributed cumulatively to this overall finding. It has also emerged that German-style diversified quality production benefits from long-term patterns of thinking and behavior based on sustainability as well as from practices of industrial codetermination and the dual training system. Comparative institutional cost advantages derive from the central elements of this social system of production. Its core features cannot automatically be complemented by components of other institutional structures, which frequently prove incompatible with the complexity of the system.
The aim in the second part of the project is to trace the evolution of the U.S. economy’s institutional framework (Hellmich) in order to discern the degree of latitude or contingency it has for economic policy responses to similar economic challenges. This research takes account of various historical socialization processes and constellations of the U.S. economy and tracks the system’s developmental path in the 20th century, which clearly diverged from Germany’s at critical junctures. The working hypothesis is that it will be possible to explain points of divergence that surface when these two models are compared for the development of their respective production regimes. The American side of the project is being conducted in cooperation with Professor Louis Galambos of the Institute for Applied Economics and the Study of Business Enterprise at the Johns Hopkins University in Baltimore.
(Abelshauser, Münzel, Flume, Reckendrees, Fiedler, and Wittig)
One of the chair’s priorities is research on corporate history. Several extensive studies using a variety of methodological approaches were conducted in this field during the period under review. Although most of these projects dealt with classical "new" and "old" industries and with banks, the growing significance of nonmaterial (knowledge-based) production became apparent. Another sphere of special interest was the organizational, institutional, and other concomitant changes in production technologies.
The now completed Steel Trust Project, which was funded by the Hans Böckler Foundation, received the annual award of the Gesellschaft für Unternehmensgeschichte. Exploring the creation and development of Vereinigte Stahlwerke (Reckendrees), it was essentially a case study on industrial mergers. But it also took a close look at the reorganization of an entire sector and afforded insights into German industry’s distinct constraints and scope for action during the interwar period. By offering detailed microeconomic analysis of venturesome decision-making processes and linking it with the general conditions of the meso- and macrolevels in which the German steel trust was embedded, this study set standards for research on corporate history.
A project funded by the Krupp Foundation, The Corporate History of Krupp between Armament and Dismantlement, 1933–1951 (Abelshauser), was also concluded. It challenged the classical view of Krupp as the "gunsmith of the nation," illustrating the fundamental need to reevaluate Gustav Krupp’s role in the rise of the Nazi party and the punishment of the firm’s corporate leaders who were made accountable. For example, the Nazi party did not receive donations from Krupp before 1933. On the contrary, Gustav Krupp was associated politically with the parties of the democratic camp supporting the Weimar Republic. In addition to probing this politicobiographical background, the study presented the German arms industry as an example of the microeconomic difficulties of switching production to meet military needs and then progressively reverting to the manufacture of civilian products.
Although the Krupp works did profit from arms contracts after 1934, Krupp was fully aware of the mixed blessing that business was for the firm’s future market orientation. Arms production obstructed a successful path that had been heading away from old heavy industry since the 1920s and toward knowledge-based diversified quality production. More and more entrepreneurial autonomy was forfeited, a loss that began even before the firm’s involvement as a military factory. It eventually stripped Krupp’s operational management of power after the air raids forced the company’s relocation. The attempts spearheaded by Great Britain to break up Krupp by dismantling it, seeking reparations, and punishing its directorate would have made reconversion nearly impossible. According to the study, those efforts ended with the amnesty granted to Alfried Krupp von Bohlen und Halbach and with the simultaneous cessation of the reparations demanded of Krupp.
The period under review was also marked by the completion of a project on one of the most important German chemical companies. The research exemplified the application of institutional economics to research on corporate history. Scientific responsibility and the publication of the results lay with the chair (Abelshauser), who also produced the bulk of the study, an analysis of the corporate development of BASF after it was refounded in 1952. The study’s chief contribution was its documentation of the remarkable continuity of the BASF production system once it was organized. True, this corporate culture restricted latitude for business initiative, but wherever it came into play it proved crucial for economic success. Attempts to penetrate new, downstream markets and to change relations both in the corporate leadership and between labor and management became problematic. By contrast, developments that built on the company’s technical corporate culture (a fully integrated network of production processes) were extraordinarily successful.
The reasons for this difference lay in the production regime’s staying power, which the market supported and which offered little rationale for making fundamental changes in the company’s institutional structure. A corporate culture had emerged that permitted BASF to capitalize on the resulting comparative institutional cost advantages, particularly in matters of customer relations and customer trust, and to turn the company’s technical competence into price leadership. Long-term ties ranked above short-term profit maximization. This hierarchy of values ultimately lowered transaction costs in the company’s production division. The strategy of eliminating the company’s weaknesses by upgrading the emphasis on marketing, for example, was replaced by renewed interest in development of the company’s strengths. The company therefore shed corporate areas with no future within that context—such as tape-recorders, fibers, and pharmaceuticals. In short, the dominant corporate culture was one shaped by technological visions reified in a technical network of closely interlocking plants and processes, a system that made BASF a successful global player.
Over the years, this corporate culture has spread beyond BASF’s operational boundaries. The standards of labor protection and environmental protection declared by the International Labor Organization and the United Nations have been adopted as principles in their own right, and the corporation expects its partners to meet at least minimum standards in these regards. The BASF experience thus manifestly demonstrates the tight mesh represented by the institutional framework of business, the national economy, and global society. BASF’s decisive achievement, besides leveraging its own institutional framework, was not only to have helped launch the transformation of the second economic revolution but also to have increasingly recognized and highlighted the importance of nonmaterial production.
In connection with this project, a BASF-funded conference entitled "From the New Industries to the New Economy: Corporate History and Current Issues" took place at the Wissenschaftszentrum Berlin für Sozialforschung in November 2002.
Two research projects used network analysis to study separate topics—the corporate governance of the German social system of production between World Wars I and II (Fiedler), and the significance of Jewish entrepreneurs within these networks from the 1930s into the postwar years (Münzel).
The first of the two projects, which was funded by the Thyssen Foundation, delineates interlocking personnel networks of major German companies in the 20th century in an attempt to understand the specific ways in which corporate governance functions. Employing sociometric procedures of network analysis, this representative study on the business elite ties into the role of network specialists in the social system of production (especially in the relations between industry and banks) and the capital links of the 350 largest joint-stock corporations of the 1920s and 1930s. Several related subprojects have been finished, including a long-term structural analysis of the 100 largest German joint-stock corporations in the 20th century, which is part of an international comparative study coordinated by Howard Gospel (King’s College London). Another completed investigation addresses mergers and takeovers in German industry between 1898 and 1938.
The project on Jewish entrepreneurs in the 1920s and 1930s included a pilot study providing the first systematic overview of the role played by Jewish members of the managing and supervisory boards of the 300 largest German joint-stock corporations up to 1933, their dismissal from top positions, and the story of their persecution and emigration.
Another subproject concentrated on prominent Jewish members of companies in southwestern Germany from the Weimar Republic to the early Federal Republic. It recounted the history of individual managers, industrial families, and private bankers of Jewish origin, studying their importance within the economy of southwestern Germany up to 1933 and their persecution under National Socialism. The researchers depicted the cases of Salamander AG and Süddeutsche Zucker-AG and concluded with an analysis of the situation after 1945.
Work closely tied to these subprojects has meanwhile been completed. It was noteworthy for its special methodological approach, for observation focused not only on individual companies but also on corporate elites and their interdependence. Methodologically, the project used approaches from New Institutional Economics and sociology. Entrepreneurs considered Jewish were studied for the importance they had in the German economy as members of managing boards or supervisory boards and as network specialists in the social system of production until the early 1930s. The researchers also inquired about the extent to which "rational" economic consolidation pursued by the national socialists worked against their "ideological" motives and may have delayed the exclusion of so-called Jewish entrepreneurs.
For lack of financial, legal, and, above all, personal contacts, exiles did not always have ways to continue conducting business successfully outside Germany. The subjects of compensation and indemnification after 1945 are being studied, as are the reasons for the fact that few of the so-called Jewish business elite who re-immigrated to Germany returned to leading positions.
Work on the biography of Hans Matthöfer (Abelshauser) is looking into the personality and kind of background it takes to be an entrepreneur—a question running through the studies on Krupp and the Jewish business elite in Germany. Matthöfer, pivotal figure in German postwar history, played a host of roles as a labor unionist, a politician, and, for many years, the head of the Holding Company for Union-owned Corporate Participations (Holding gewerkschaftseigener Unternehmensbeteiligungen, GBAG).
Two current research projects on contemporary history deal with the behavior of multinational companies in the globalization process. Globalization Strategies in the Consumer Industry (Wittig) and Mulitnational Companies in Sweden (Flume) center on the analysis of mergers and acquisitions.
The food-processing and food-marketing industry, largely ignored in German economic historiography, is undergoing analysis for the effects of globalization. This work is a case study of microeconomic strategies and organizational changes at Kraft Foods Deutschland GmbH & Co. KG, which went through three radical mergers from 1979 through 1998. General Foods Corp. first took over HAG AG to gain access to the world’s best decaffeination technology and the German market. It was then taken over by Philip Morris, the world’s foremost tobacco company, as part of a global diversification strategy. Philip Morris subsequently also took over Kraft’s headquarters in Chicago, which had had a German branch office since 1927. This move resulted in the merger of the two German branch operations into Kraft GF GmbH. Philip Morris later acquired the Swiss company Jacobs Suchard, a transaction that led in 1993 to the creation of Kraft Jacobs Suchard, which became part of Kraft Foods Deutschland GmbH & Co. KG in 1998. Although all the participating companies belonged to the food industry and were carriers of brand goods, incompatibility between some aspects of their corporate cultures and market strategies posed serious barriers. The research project, which draws on the organization’s extensive archives, offers an excellent opportunity to analyze key concerns entailed by the globalization of companies. It also taps completed comparative analyses of mergers and acquisitions (Fiedler), work that was funded by the Thyssen Foundation.
The study of Swedish multinationals necessarily starts from analysis of their institutional framework. Sweden’s small domestic market forced the country’s economy to face the challenges of globalization early. Since the 1990s, the Swedish model of the welfare state has become mired in a crisis that has amplified the demand for institutional restructuring. Research is being conducted to ascertain which macro- and microeconomic advantages and obstacles are created by the Swedish production regime and which adaptations have been made at both levels in order to survive in a globalizing economy. This project therefore occupies a domain between the main research area on corporate history and the one on causes and determinants of institutional change.
The same is true of a project on the formation and structure of "ethic business codes" from an international perspective (Gilgen). Ethic business codes have acquired a significant role in strategic corporate decision-making, notably among multinationals, many of which are regarded as part of the consumer goods industry. These codes not only structure action but also constitute an indispensable part of a company’s output. They are thus part of companies’ nonmaterial production, which contributes decisively to the success of these organizations. An assumption of the study is that ethic business codes existed even before they were explicitly written down and that they influenced the relation between companies and stakeholders. The research also takes account of this institutional level of informal rules prior to its transposition into formalized institutions. Aside from analysis of the origins of ethic business codes, the work involves the study of their internal and external effects. What are the driving forces behind the inception of these codes? To what degree are ethic business codes the result of public pressure? Which public is the relevant frame of reference? How much do ethic business codes influence industrial relations? Do they help solve agency problems? This comparative study analyzes ethic business codes of American and European companies of the consumer goods industry and the capital-goods industry.
History of Economic and Social Policy
(Abelshauser, Breker, von Delhaes-Guenther, Gilgen, Kwon, Lee, Nishida, and Ptak)
A study on Germany’s job-creation and anticyclical policy during the Great Depression was completed (Kwon). It investigated the role of the German Society for Public Works (Deutsche Gesellschaft für öffentliche Arbeiten AG, Öffa) as an instrument of anticyclical policy from 1930 through 1937. Framing this organization’s structures and initiated projects as an attempt to implement Keynesian economic policy, the analysis showed that approaches to systematic anticyclical policy existed before 1933 but did not have an effect until later. One of the reasons for this lag was the Weimar Republic’s lack of clout, which stemmed not from a dearth of effective concepts but rather from a lack of the legal and political constellations necessary for successfully acting on them.
An extensive description and analysis of economic development in Germany after 1945 was completed (Abelshauser). It explored the German economy’s institutional framework, whose cardinal characteristics had emerged in the late 19th century. A principal difference between the two separate post-1945 economic histories within Germany is that the critical determinants of the system in West Germany continued functioning after initial attempts to reform them. The aim in East Germany, however, was not only to rebuild the economy after the ravages of war and the dismantling program but also create a new institutional structure. The study detailed the economic developments in East Germany, especially those that were sensitive in intra-German relations or that entailed seminal changes whose effects carried over after unification. Emphasizing monetary policy, the study also embedded the development of German economic history in the context of European integration, whose significance is growing for the nation states involved. Lastly, the work inquired into the evolutionary institutions underlying the social system of production and studied the anachronisms of economic policy that impede auspicious development. These vestiges of a once smoothly functioning institutional framework must be distinguished from elements that still reduce transaction costs, mitigate agency problems, and enhance incentives. The study’s results suggest that German economic history after 1950 regressed in some respects and followed an outmoded vision of industrial production but that the basics of the social system of production are still indispensable for successful economic activity by companies, consumers, and other actors.
A separate research project considers the postwar reconstruction of the Japanese economy from 1945 to 1952 (Nishida). The question is to what extent the Japanese economy’s rapid rebound after 1945 resulted from the turning point represented by the postwar U.S. occupation or whether instead organizational and institutional continuity rapidly helped equalize the wartime human and material losses and then launch an unprecedented phase of growth. For the most part, the essentials of Japan’s economic success up to that time had undeniably come from the institutional framework created by the Meiji reforms, the country’s comprehensive response to the overriding economic challenges of the day. What was the relative impact of the reforms intended to democratize the economy, specifically agricultural land reform, the dissolution of the zaibatsu, and labor reform? The period covered by the study is divided into three phrases. The first is a probe into the origins and planning of occupation policy from 1942 to 1945. Building upon that research, the second phase is an analysis of the salient facets of the economic reforms, including the issue of reparations. In the final phase, the study is to clarify how the original American plans for reform were abandoned in the face of the Cold War and the Korean War and how the reforms opened room for institutional continuities in the Japanese economy.
A completed project on the employment of foreigners and technological progress in the Federal Republic of Germany examined the Japanese and the German production systems (Lee). Bringing together elements of institutional economics, economic policy, and social policy, the methodological approach to this study facilitated a comparison between West German recruitment policy from 1955 to 1973 and Japan’s closed labor market policy. This macroeconomic approach was complemented by a comparison of the Volkswagen and Toyota cases at the microeconomic level. Whereas the Federal Republic’s production regime had a tradition that dated back to the second German empire (1871–1918) and shaped the institutions of the production regime, Japan’s system mostly reflected the strategy of developing labor-saving production methods through technological advances. In Germany, the spread of Fordist mass production was what first permitted the extensive use of unskilled labor in industrial production. Because this industry in particular profited from the employment of foreigners, recruitment policy had the effect of subsidizing "classical" industrial production—above all, standardized mass production. It thereby delayed the necessary structural change from material to nonmaterial production in general and reduced incentives for labor-saving technical innovations in specific.
Another study addressing migration was one on Italian "guest workers" from Veneto in Germany (Sala). This transnational study first presented the images and attributions associated with these Italian migrants. The figure of the "guest worker" acquires continuity in a portrayal extending from the recruitment contracts of 1955 back to similar agreements of 1937 and earlier. As freedom of movement gradually increased within the European Economic Community (EEC), Italian migrants came to have a special status. Whereas the German side accepted this circumstance, the Italian government saw it as a chance within the EEC to win preferential treatment of Italian workers over labor from third countries. Germany thereby lost its control over immigration for the first time. However, nothing was done to develop strategies for placing Italian workers effectively on the German labor market or to integrate them into the economy and German society.
A completed research project funded by the Volkswagen Foundation also dealt with West German postwar history: the factors contributing to the success of the West German export industry in the 1950s and 1960s (von Delhaes-Guenther). The institutional framework, the economic and monetary policies, and especially the domestic economic formation of regional clusters were stressed as the basis for the success of the country’s export sector. Adopting the view of Michael Porter, this study presented such clustering as a means to generate synergies that offer competitive advantages to the constituent companies and argues that it is one of the chief reasons for their competitive strength. In addition to observation of these macroeconomic conditions, three case studies were conducted at the microeconomic level to illustrate the importance of vertical integration. Within these systems the companies also stood out because they effectively accommodated the specifications of their individual customers yet still managed to mass-produce articles competitively. This advantage enabled Germany to build up its export sector by specializing primarily in high-quality capital goods, which were in high demand during the reconstruction period.
A study on the shift from ordoliberalism to the social market economy was yet another research project to be completed (Ptak). It was an investigation into the social and academic relations between the members of two schools of thought—the Freiburg ordoliberals and the "social market economists" around Ludwig Erhard and Alfred Müller-Armack—and into the feedback effects that this contact had on their theoretical concepts. The research also asked about the degree to which the legacy of ordoliberal ideas helped shape the concept of the social market economy in the 1950s. It was found that ordoliberalism, as the German manifestation of international neoliberalism, and the concept of the social market economy, as the vision for the West German economic order, merged and formed a single historical path. In this interpretation the social market economy represented three things. In historical and structural terms, it was a German version of the controlled market economy in the era following the experience with the Great Depression. It was also a concept and strategy forged in the political process of debating the creation of a new order. Third, it was the expression of economic and social policy as actually practiced in the Federal Republic of Germany since 1948. A further study on the origins of liberal social theory in the Freiburg School from 1930 through 1950 (Breker) is in progress.
Causes and Determinants of Institutional Change
(Abelshauser, Gilgen, Hellmich, Flume, and Boentert)
Another main research area focuses on the causes and determinants of institutional change. Institutions and property rights are understood to be the social rules shaping the incentive structures within which people and organizations act. In the continuing search for consistent application of New Institutional Economics, this field of inquiry represents an attempt to use the approach for case studies in economic history. The research area also affords opportunity to discuss and develop concepts useful to other projects, particularly those on such preeminent concerns and challenges as globalization, nonmaterial production, or the knowledge society.
Research on the causes and determinants of institutional change is closely linked to work described under the general heading "From New Industry to the New Economy: The Economy and Society in the 20th Century." It consists of projects on the origins of the German and American production systems, the Swedish production system, and the patent system as a means of facilitating technological progress.
In economic history and institutional economics, organs that must implement new structures, laws, and rules are often underestimated, if not forgotten, determinants of institutional change. Whether in government or the business world, the success of an institution hinges on these organs—administration and bureaucracy—for it needs their acceptance as well as that of the people it serves. This assertion was probed in a now completed research project that went beyond the perspectives of institutional economics and took an approach from cultural history to study the implementation of the first German Patent Act of 1877/91 (Gilgen). The work concentrated on the officials entrusted with examining patent applications. These individuals characterized themselves as the leading officials of the German empire. Their office was held to be the preeminent institution for promoting the economic and technological development of the nation. Individual inventors constantly complained about poor treatment at the hands of the patent officials, alleging that industrial patent applicants were favored. The claim of unequal treatment seems to square with the common notion that only industrial inventions were ever adopted, that only they were thus worth protecting, and that individual inventors sought to leverage their sole ownership by patenting their inventions and then reaping excessive profits. The officials evinced a keen sense of due process in their handling of foreign patent applicants and resisted calls—some of them public—to give priority to German patent applicants. For all the domestic criticism of the way these officials worked, they went a long way to creating legal certainty and enhancing the desirability of German patents among companies and inventors both at home and abroad.
A research project on child labor and institutional change in the German empire (Boentert) was completed. It innovatively applied institutional economics to a something more commonly associated with social policy. This research distinguished between levels of institutional formation. The project started with the incipient norm of understanding childhood as a phase for development, growing up, and school education that must be insulated from the world of work. From that point of departure, it then explored the path to social involvement and ultimately to political action, highlighting the ambivalence and competing interests involved. In many cases, the money that children earned was an important contribution to family income. At the same time, both the agricultural and industrial sectors were interested in child labor for their own reasons. The process that led the government to ban the employment of school-aged children therefore advanced slowly. Initially, the number of hours that children were permitted to work was reduced, and the use of children for especially heavy manual labor was banned. In industry, however, written law was repeatedly ignored, and the farming sector had no restrictions at all at first. This project is credited with having included all the stages involved in the formation of institutions and with having directed attention to the discrepancies and temporary diseconomies of rule-based self-commitment.
The formation of institutions in the German empire was also the subject of a study on the influence of the chemical industry on the passage of the German Patent Act (Gilgen). From the chemical industry’s perspective, the foremost feature of German patent law, aside from the vetting of patent applications and the mandating of progressive duties, was that inventions of chemical products were not eligible for patents. However, this ruling was not a disadvantage for that growing industry. On the contrary, it provided the very foundations for the sector’s headlong development. This study drew on Mancur Olson’s theory of collective action to ask what led to this unique legal arrangement, which certainly looked as though it weakened the chemical industry’s property rights. A prominent contributor to this dynamic element of German patent law was Gustav von Brüning, who championed growth over the protection of property rights as a strategy for the German chemical industry and thereby did much to expand it in the 19th century.
Another research project based on New Institutional Economics pursued the origins and impact of the first German Patent Act, 1877–1916 (Gilgen). This topic embraced matters relating to the formation of institutions, to globalization (because the patent office probably had more international contacts and more extensive exchange with them than any agency except the foreign ministry), and to knowledge and its creation in society. The project stood out for the different methodological approaches it combined. The special nature of the Patent Act was studied through the logic of collective action. The way in which it functions was analyzed principally from Douglass C. North’s perspective on institutional economics. This approach tends to underestimate the significance of informal institutions and to root analysis in a foreshortened, ahistorical view of human beings. To neutralize this shortcoming, the work delved into the way the protagonists of the patent system (the civil servants and the inventors) saw themselves and each other. The images and precepts that prevailed on both sides can help explain actions and conflicts apart from a purely economic logic of incentives.
The study also used a flaw in the patent laws to stress how important trust is to the participants in the knowledge society. This concept, which stems from Niklas Luhmann, was broadened to include a game-theory approach that made it possible to formalize an agency problem peculiar to the knowledge-based economy.
Another major contribution has been the comprehensive collection of data on patenting activity. Broken down by industry and region, the information has yielded results that diverge considerably from those of earlier studies, necessitating reappraisals of the German empire’s patenting practices. The widened database has revealed that the most important patent applicant was not the metal-working industry but rather the New Industries, such as electrical engineering and the chemical industry. This work took account not only of the patents applied for and granted but also of their duration, which could range from one to fifteen years. Various patterns of innovation under the German empire were also discerned. Whereas innovation in the north was related mainly to the existence of cities and universities, it was significantly less tied to these determinants in Hessen-Darmstadt, Baden, and Württemberg, where innovation coincided with smaller-scale units.
Lastly, the stance taken by the German patent office during World War I plainly communicated respect even for property belonging to "hostile foreigners," which continued to enjoy the protection of the authorities despite vehement public objections fueled by widespread nationalism. The importance of the patent office and the protection it offered did not wane until 1916, when the military itself began interfering in the vetting and granting of patents.
A study on the importance of trust (Fiedler) in economic relations contributed to the theory of economic history by pairing the sociological concept of trust with ideas based on theories of transaction costs. If one assumes total rationality, then contingencies would be controllable, and economic exchange would have no need of trust. But that assumption is an unrealistic and ahistorical simplification. If one assumes limited rationality, then trust becomes a key determinant of transaction costs. Trust reduces complexity and thereby not only affords maneuvering room but also helps curb the costs of specification, control, and enforcement (i.e., transaction costs). The costs of procuring information and getting results would otherwise often be prohibitively high for many actions. In this sense the concept of trust complements the theory of incomplete contracts in New Institutional Economics. Examples in this project showed that norms of reciprocity and ethical codes within closed social systems bring mutual advantage by reducing the need to monitor each deal concluded with a partner. Social capital (trust) joins human, information, and real capital as a crucial factor of successful economic activity. The theoretical issue of trust clearly demonstrated not only that it depends on legal conditions, cultural precepts, and expectations of all the participants but also that trust as a theoretical concept can serve as a foundation for many different topics of interest in economic history.
History of European Integration
An investigation of the systems providing for old age in Europe (Glootz) was recently completed. Applying dynamic comparative analysis to the period from 1914 to the creation of the European Union, this "longitudinal" study substantiated a convergence of the welfare-state elements that can be regarded as a part of the institutional framework. Methodologically, the work drew particularly on New Institutional Economics and on Esping-Andersen’s typology explained in The Three Worlds of Welfare Capitalism. What were the causes and determinants of institutional change in this process? The existence of migrant workers necessitated the formal international agreements on providing for old age, creating a framework initially administered through bilateral treaties. They were soon complemented by international norm-setting through the International Labor Organization (ILO) and continued at the European level through the European Coal and Steel Community and the Treaties of Rome (1957). Today, efforts to harmonize practices at that level are both a demand of the unions and a way to shape competition within the European Union. The endpoint of the study is the European Community Social Charter (1989), which no longer sees sociopolitical provisions merely as part of an economic objective but rather promotes the building of institutions to address the social dimension of the European single market.
Business and Society in East Westphalia-Lippe
(Abelshauser, Breker, von Delhaes-Guenther, Dickhaus, Fiedler, Sarhage, and Wixforth)
Completion of several research projects on the economic history of the East Westphalia-Lippe region provided a picture of a successful region based on a diversified economic structure that has been forming for decades.
This work included the publication of a basic bibliography on the economic history of the East Westphalia-Lippe region. Its 1,000 titles, which are currently arranged by region and sector, also document the usually elusive "gray literature" and thus reflect the state of the art in research on this topic, making the book an especially valuable resource.
Another publication during the period under review was a collection of readings on the economic history of Minden-Lübbecke, Die etwas andere Industrializierung (Industrialization of a Somewhat Different Kind). It examines alternative paths of development in industrialization, citing 19th- and 20th-century examples from energy management, government administration, agricultural production, infrastructure policy, and labor-management relations. A finding of great interest was that a shift to nonmaterial production had already taken place in the vicinity of Minden at a juncture when a cursory glance at the data on sectorial weighting would still suggest the dominance of the secondary sector. This change overcame the initial backwardness of the Minden-Lübbecke region, paving the way for promising development.
The projects on regional economic history gave rise to a number of other publications about the different aspects of economic activity in the region. The focus was on corporate history relating to the development of the region’s well-established tobacco industry (Arnold Andé Cigars) and of packaging production (Fischer & Krecke). A second pole of interest was a research area in its own right—energy management in Minden-Ravensberg. There were also two extensive studies, one on the Bielefeld trustee savings banks and one on the Herford district savings bank. Research touching more directly on the region’s institutional framework included a study on the Bielefeld chamber of industry and commerce and a DFG-sponsored project on the significance of codetermination in the shaping of venturesome business strategies and decisions in the coal mining industry of the Ruhr District.
The importance of government management was treated in a study on the reasons for the rise and decline of Minden as the administrative hub of the region between 1816 and 1947 (Breker). For example, what effects did the dominance of government administration and the military in Minden have on the town’s economic structure and development? The study revolved around two prominent examples—Minden’s regional executive authorities and the German economic authorities for the British zone. Minden owed its ascendancy partly to Prussian politicomilitary considerations. Their eclipse eventually undermined the advantages of locating administrative authorities in the town. But Minden’s period as a regional nexus did help integrate the population of the East Westphalia region, a side effect that should not be underestimated.
The history of the region’s institutions was the subject of another project as well. It asked about the Minden chamber of commerce (Dickhaus), which in the 83 years of its existence had made a name for itself as the "tobacco specialist of the nation." From 1849 to 1932 the Minden chamber of commerce effectively fostered the region’s economic development. It had a character of its own that unmistakably distinguished it from the chamber of commerce in neighboring Bielefeld. In the long run, however, the Minden corporation, with its single-track specialization in tobacco, lost out to the Bielefeld chamber. The needs of industrial production and cigar manufacturing rarely coincided, so new branches of industry profited little from the chamber’s activities. The difficulties were compounded by the fact that the production method neither pervaded industrial forms of employment on any notable scale nor provided for spill-over effects in other spheres through investment in human capital. Lastly, there was little potential for attracting industries connected with cigar production. Gradual decline in demand was not noticed by the regional producers until the Great Depression exacerbated it so much that both the dominant industry and its closely associated chamber of commerce were in deep trouble. Although the tobacco industry survived thanks to the economic policies of the national socialists (the Nazis), the Minden chamber of commerce lost its independence by merging with the Bielefeld chamber of commerce.
The infrastructural conditions of the region were explored in a study on the development of the electricity supply in East Westphalia-Lippe (Wixforth). Electric power was understood to be essential for a variety of industries created in the wake of the second economic revolution. It permanently altered the economic structure and development of entire national and regional economies. Accordingly, the research drew not only on the ninety-year history of the producer, the Minden-Ravensberg Electric Company (EMR), but also on the social, political, and economic setting in which the business operated. By handling the context of the company an equally warranted key determinant of its planning and action, the study opens a relatively new approach in research on corporate history. Since the oil-price shock of the 1970s, EMR’s corporate strategy has been based on a mix of energy sources. The company scored partial success by turning to the dominant resource, atomic energy. It also benefited by modernizing other power plants, including one powered by gas and steam, and by adding and modernizing power relay facilities. Aside from this core area, another source of red ink for the company was motor traffic, but that domain was acutely important to the region’s infrastructure, development, and environmental policy.
Toward the end of the period under review, in the early 1990s, EMR’s field of business broadened. Spurred by the debate on nuclear energy, the company systematically sought to use environmentally compatible ways to generate electricity. It also expanded services for the disposal of sewage and solid waste and for advising private clients and local authorities on environmental technology. Moreover, the company entered the fields of electrical power trading and telecommunications, metamorphosing from an energy producer into an all-round service provider.
Major sociohistorical research on the largely Protestant town and county of Herford between dictatorship and democracy (1929–1953) (Sarhage) was recently completed.
Lastly, a vast body of information on the economic region of East Westphalia-Lippe is now available through the research and documentation center created for this purpose at the Chair of Economic and Social History at Bielefeld University.
(Abelshauser, Gilgen, Hüsken, Leutzsch, and Roeckner)
A new research area was formed to investigate the interaction of business and science, or what is described as the "marriage of science and business" in the language of the second economic revolution. Although "knowledge" and "science" are only one facet of nonmaterial production, they are crucial for sound economic development. Preliminary studies on interrelated topics of this area are already available from other research projects. For example, a study detailing the corporate history of the Badische Anilin- & Soda-Fabrik (BASF) gave testimony to the increasing significance of nonmaterial production in a company that had always been one of the new industries outstanding for its systematic use of knowledge in the natural sciences. The inquiry into the German social system of production likewise showed how prominent the "marriage of science and business" is in the development of diversified quality production and what forms of scientific knowledge the system readily absorbs.
Preparations are underway for an industrial case study on microlevel creation and use of technical knowledge manifested in patents (Gilgen).
A current research project is looking into the development of the information technology (IT) sector in the socialist planned economy within the Soviet zone of occupation and the German Democratic Republic. In this study, the emphasis is not on the company as the producer and user of knowledge but rather on the state as an organ seeking to exercise centralized control over knowledge (Hüsken). The advent of microprocessors, however, dispelled any lingering doubt that attempts to develop such technology without coupling it to advances on the world market were bound to fail. The IT sector was not the only one in which growthmanship was thwarted. In short, this project is as much about part of former East Germany’s economic history as about the relation between business and science.
The dissertation by Andreas Leutzsch considers the role of the world economy in the works of Eugen Rosenstock-Huessy, Arnold Toynbee, and Fernand Braudel. Conducted through the Graduate College of World Concepts and Global Structural Patterns (Graduiertenkolleg "Weltbegriffe und globale Strukturmuster"), the research seeks out early intellectual signs of incipient globalization and examines these thinkers’ perception and theoretical conceptualization of global society.
A project on ways in which industrial museums deal with deindustrialization (Roeckner) has only just begun. The purpose is to go beyond historiographic analysis and stimulate continued conceptual development of museums of commerce and industry.
