Now
The German economy is the context within which management functions. This economic context has been revolutionised since the end of the Second World War, though the revolutionary change itself is already a thing of the past.
West Germany is now a major economic power, and has been for some years. Since the late 1950s West Germany has been the worldâs second largest trading nation.1 West Germany also has the fourth largest gross national product in the world:
Country2 | GNP 1975 (in millions of US $) |
USA | 1,508,680 |
USSR | 665,910 |
Japan | 495,180 |
West Germany | 408,756 |
A few comparisons may be of interest:
Country3 | GNP 1975 (in millions of US $) |
France | 304,600 |
UK | 214,940 |
Canada | 151,730 |
Brazil | 107,870 |
Australia | 76,190 |
The richest countries of the world, using the measure of gross national product per capita, are no longer to be found in either northwest Europe or North America:
Country4 | GNP per capita 1975 (in US $) |
Kuwait | 11,510 |
United Arab Emirates | 10,480 |
Qatar | 8,320 |
Setting aside these anomalies and concentrating on the industrialised countries West Germany is in sixth place:
Country5 | GNP per capita 1975 (in US $) |
Switzerland | 8,050 |
Sweden | 7,880 |
USA | 7,060 |
Denmark | 6,920 |
Canada | 6,650 |
West Germany | 6,610 |
Again some comparisons may be of interest:
Country6 | GNP per capita 1975 (in US $) |
Norway | 6,540 |
Belgium | 6,070 |
Luxembourg | 6,050 |
France | 5,760 |
Australia | 5,640 |
Iceland | 5,620 |
Netherlands | 5,590 |
Finland | 5,100 |
Austria | 4,720 |
New Zealand | 4,680 |
Japan | 4,460 |
East Germany | 4,230 |
UK | 3,840 |
Czechoslovakia | 3,710 |
Israel | 3,580 |
West Germany has for years enjoyed a substantial trade surplus:
Year7 | Imports | Exports (both in millions of DM) |
1969 | 97,320 | 113,353 |
1970 | 109,130 | 125,144 |
1971 | 119,630 | 135,912 |
1972 | 128,146 | 148,915 |
1973 | 144,509 | 178,228 |
1974 | 177,967 | 230,068 |
1975 | 182,521 | 221,206 |
1976 | 220,556 | 256,303 |
It will be noted that West Germany continued to enjoy a favourable trade balance throughout the period of the oil crisis and the world recession, indeed 1974 was a record year with a trade surplus of over DM 50,000 million.
The trade surpluses for 1975 and 1976 were not so impressive, but the first nine months of 1977 showed a 10 per cent improvement over the previous year.
All the wealthy industrialised countries fell victim to inflation after the 1973 oil crisis. There were, however, remarkable differences in degree. If we take the change in consumer price indices over 12 months up to May 1978, well after the worst effects of the oil crisis and ensuing world recession, marked differences are still apparent. West Germany is in second place in a list of 25 countries including the major industrialised countries of the free world:
Country8 | Change in consumer price index over 12 months to May 1978 as a % |
Switzerland | 1.6 |
West Germany | 2.7 |
Luxembourg | 2.9 |
Japan | 3.5 |
Netherlands | 3.5 |
Austria | 3.8 |
Belgium | 4.4 |
Ireland | 6.2 |
USA | 6.6 |
Portugal | 7.5 |
Norway | 7.7 |
UK | 7.7 |
Australia | 8.2 |
Canada | 9.0 |
France | 9.0 |
Denmark | 10.8 |
Sweden | 11.5 |
Italy | 12.2 |
Greece | 13.5 |
Yugoslavia | 14.0 |
New Zealand | 14.7 |
Spain | 22.0 |
Iceland | 42.8 |
Turkey | 52.3 |
Average OECD Total | 8.1 |
Average OECD Europe | 10.3 |
Average EEC | 7.5 |
If one takes the longer term indicator of consumer price indices for 1977 where 1970 = base 100 then West Germany is in first place among the same group of countries. West German, that is, had the smallest rise in consumer prices over this seven year period:
Country9 | Consumer Price Index 1977 (1970 = 100) |
West Germany | 146.3 |
Switzerland | 149.2 |
USA | 156.1 |
Austria | 161.0 |
Canada | 165.4 |
Luxembourg | 166.0 |
Belgium | 174.8 |
Norway | 178.0 |
Sweden | 180.2 |
France | 183.2 |
Denmark | 189.0 |
Japan | 203.6 |
Australia | 207.6 |
New Zealand | 217.5 |
Finland | 224.0 |
Greece | 227.0 |
Italy | 236.6 |
UK | 249.0 |
Ireland | 249.9 |
Spain | 258.9 |
Portugal | 302.4 |
Turkey | 307.3 |
Iceland | 519.0 |
West Germany had, and continues to have, its unemployment difficulties. In comparison with other industrial countries, however, the German record has been quite good. In 1973 Germany was in fourth place on a list of 19 West European countries plus the USA, Canada, and Japan; that is, only three of these countries had lower unemployment figures than West Germany:
Country10 | Unemployed as proportion of civilian working population 1973 |
Luxembourg | 0.0 |
Switzerland | 0.0 |
Denmark | 0.7 |
West Germany | 1.0 |
By 1977 rather more countries could claim lower unemployment figures than West Germany, but Germanyâs position was still not unfavourable seen in an international context:
Country11 | Unemployed as % of civilian working population 1977 |
Switzerland | 0.4 |
Luxembourg | 0.6 |
Norway | 1.5 |
Sweden | 1.8 |
Japan | 2.0 |
West Germany | 4.0 |
Belgium | 4.3 |
France | 4.9 |
UK | 5.8 |
Denmark | 5.9 |
Finland | 6.0 |
Spain | 6.3 |
USA | 6.9 |
Netherlands | 7.0 |
Canada | 8.1 |
Ireland | 9.7 |
West Germany has a better strike record than most countries. For the period 1966â70 Germany had the best record, that is the fewest working days lost through strikes, of 16 West European countries plus the USA, Canada, Australia, New Zealand and Japan.12 For the longer period 1966â75, West Germany was in second place:
Country13 | Annual average working days lost per 1000 persons employed 1966â75 |
Sweden | 49 |
West Germany | 52 |
Norway | 61 |
Netherlands | 62 |
Japan | 247 |
France | 303 |
New Zealand | 355 |
Belgium | 368 |
Denmark | 535 |
UK | 775 |
Finland | 833 |
Ireland | 927 |
Australia | 1,036 |
USA | 1,318 |
Italy | 1,766 |
Canada | 1,849 |
Enough has been said to indicate that West Germany is a rich country, a substantial member of the international economic community, and a country which compares well with most of its neighbours on the evidence of statistics on economic performance and industrial well-being. These facts, other things being equal, give an added interest and salience to the study of German management.
There is an extension to this argument. Not only does German management function in a society that is economically successful now; this same society, only 30 years ago, was just emerging from a period of extreme, if artificial, poverty.
Then
That a country experiences deprivations during wartime is obvious. That Germany, on the losing side in the worldâs worst war, suffered particularly is well recognised. What is perhaps less readily appreciated is that in several respects Germany suffered more in the period 1945â8 than in the period of her successive military failures, that is, between 1942 and 1945.14 With the end of the War, death and destruction in combat and through aerial bombardment ended: they were replaced by homelessness, hunger and death by ânatural causesâ â malnutrition.
It was, in fact, the purely physical destruction of German cities which most impressed those who wrote eye-witness accounts. Here is a young British lieutenantâs account of his entry into Hamburg in an armoured car in May 1945:
If the damage in Harburg had been startling to our eyes the streets and waterfront of Hamburg were a revelation. None of us had ever seen anything to equal this wholesale destruction. It was Caen all over again, only ten times worse because ten times as big an area was affected. In the half light we could not see the damage in detail, but it was apparent that whole rows of houses, whole blocks, were a mere mass of rubble,...