Globalisation and Class Struggle in Germany (page 1 of 5)
By Jerry Harris

Throughout the world globalisation is creating the conditions for class struggle. Nation centric pattern of accumulation are being overturned by a transnational system of production. This process affects each country in a different manner, geared to each nation’s existing political and social structure. This dialectic, between descending forms of national accumulation and the ascending power of globalism, is the dominant contradiction in the world. It is a contested process played out on the political stage and in the economic struggles between capital and labor and between competing groups of capitalists.

These conflicts are present at every level of German society. The German working class enjoys one of the highest living standards and level of social entitlements in the world. These developed out of a strong socialist and trade union tradition and the industrial growth that rebuilt the country after W.W.II. Germany, as a front-line state facing the Warsaw block, also needed to be a positive example for capitalism. This pressured German industrial and finance capitalists to accept many social-democratic demands bringing relative stability to labor/management relations. In turn, the German industrial base became a leading world exporter in autos, chemicals, machine tools and other important products. Even today Germany remains the largest exporter of manufactured goods in the world and contributes one-third of the European GDP. National production provided the strong job base and profits that created the post-war German economic model with its strong social contract and consensus building method of co-determination between capital and labor.

Today the most powerful corporations in Germany are also some of the world’s most transnationalized. The owners and managers of these corporations are part of the transnational capitalist class (TCC) and are the most political influential and economically dominant sector of the German ruling class. This sector of German capital, along with their representatives in the major political parties, are retooling German society to fit the new global mode of accumulation. This entails transforming labor relations, the role of the state, and the social structure that had been built to accommodate a nation-centric economy. These changes have naturally created rifts within German society with those social forces, both in labor and nationally based capital, which are invested in the old system. This challenge, with its alternative forms of organization and labor relations, sets the stage for the major political and economic struggles now taking place.

The Structure of German Globalization

To understand the current stage of development of capitalism in Germany we need to explore the transnational base of Germany’s major corporations. As noted in the Financial Times, ‘More than in other European countries German companies have detached themselves from their home base and projected themselves as European or international concerns.’1

In 2001 Germany accounted for 11 of the world’s top 100 non-financial transnational corporations (TNCs). The following chart shows their world rank by foreign held assets and their transnationality index (TNI) that combines the ratios for foreign held assets to national assets, foreign sales to national sales and foreign employment to national employment.

The above corporations are among the largest in the world and their managers and owners are a key contingent within the TCC in Germany. Compared to TNCs headquartered in other countries Germany ranked behind the US which hosts 28 of the top 100 TNCs, the UK, which hosts 16, and France 12. But overall Germany is headquarters for 8,522 TNCS, the largest number in the world as well as host to 13,826 foreign affiliates doing business inside the German market. Such large-scale presence of both parent TNCs and foreign affiliates reflects their economic dominance and their growing social and political base as well. In comparison the UK hosts 3,132 parent TNCs and 13,828 foreign affiliates while the United States is home to 3,235 TNCs and host to 15, 712 foreign affiliates.3 In 2002 the overall transnationality index for Germany as a country (foreign assets, employment and sales in ratio to their nationally held percents plus the amount of foreign direct investment (FDI) as a percent of gross fixed capital formation) had risen to 18%, the same as the U.K. but greater than France at 11% and the US at 9%.4 Additionally foreigners hold about 40% of all stocks traded on the Frankfurt DAX.

Cross-border merger and acquisitions (M&A) activity is an important indicator of globalization. These activities reveal the level of transnational corporate integration, the growing interconnection of global production chains and the expansion of the post-national economy. The following chart compares the amount of cross-border M&A by sales and purchases of the world’s largest economies from 1998 - 2002. Germany’s position reflects its high level of transnationalization.

Examining the M&A activity of the top 20 TNCs between 1987-2001 we find German corporations involved in the most deals with the second highest value in dollars. While this is a limited number of TNCs we see here the concentration of power that exists in the dominant sector of capital. These 20 TNCs accounted for one-fifth of the total value of cross-border M&A activity. The following chart includes 17 of the top 20 TNCs involved in cross border M&A over 14 years of activity. More >>