The state, banks, and economic governance in Germany

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Abstract
In this article the author challenges the organised capitalism model of the German economy which suggests that the large commercial banks use their substantial influence over the industry to monitor corporate management and selectively intervene in order to steer firm and sectoral developments. An examination of the sources of bank influence reveals relatively declining bank power, primarily as a result of intensifying competition among banks. The result is that the institutional capacity of the private sector for collective management and crisis resolution is weakened. Despite neo‐liberal pretensions, an increasing burden of managing industrial crisis and adaptation is falling on the state. The initial experience in transforming the eastern German economy appears to validate the shifting responsibility for economic governance from the private to public sector.