Plate Rolling Mill, Hörder Verein, around 1910. Source: Feuerarbeit. Bilder aus der Dortmunder Hüttenindustrie 1850-1950, edited and commented by Karin Dahm-Zeppenfeld, Essen: Klartext-Verlag, 2nd ed. 2003, p. 187.

From today's vantage point, the United States and Germany appear to represent opposing models of capitalism. In production methods, the "Fordist" model, based on special-purpose machines and unskilled labor, largely retains its hold on American manufacturers, while their German counterparts continue to excel at flexible batch or customized production. In the realm of business culture (Unternehmenskultur) and industrial relations, American business epitomizes a market-based "hire-and-fire" model in which labor unions have become virtually insignificant, while German enterprises are marked by a socially-based, corporatist culture ("Rhenish capitalism") founded on strong unions and labor participation in management (Mitbestimmung). In patterns of corporate governance as well, the contrasts are striking: shareholdings in American corporations are widely dispersed, salaried managers are all-powerful, and the "market for corporate control" is well developed, while a "relationship based" system predominates among German companies, characterized by close relationships with banks, large intercorporate holdings, and significant barriers to takeovers.

	Bookcover, “The Economic Relations between Germany and the United States,” published by Andrew Carnegie, translated by J.M. Grabisch, Berlin: Marquardt, 1907.

Yet, a century ago, what struck knowledgeable observers were the remarkable similarities between the American and German economies. Poised to challenge British industrial power in the early years of the twentieth century, the United States and Germany seemed to be forging very similar paths to modernity. Industrialization in both countries was propelled by the same key industries (railroads, hard coal mining, and iron manufacturing) under very similar world market conditions. Comparatively higher costs for fuel, raw material, and transportation encouraged American and German entrepreneurs to make early, systematic use of new production methods (unlike their British counterparts)that privileged economies of scale and productivity gains. In both, militantly autocratic regimes of labor relations prevailed until the end of the Great War. As what later scholars would term relatively "late industrializers," moreover, the United States and Germany quickly took the lead in the principal industries of the "second industrial revolution": electrical manufacturing, chemicals, and steel. Although German firms were much more deeply involved in export markets, both countries erected high tariffs to protect their domestic markets. At the turn of the century, both witnessed extraordinary rates of economic growth coupled with intensive processes of economic concentration. Indeed, on the eve of the Great War, the two economies had been so thoroughly transformed that a German author wondered which was Das Land der Monopole: Amerika oder Deutschland? In short, viewed from the beginning of the epoch, rather than its end, the United States and Germany appear as "twins" in the development process rather than as the antipodes that they seem to be today.

In an effort to understand to what extent and why the American and German patterns of capitalism diverged over the course of the twentieth century, this essay undertakes a fine-grained, systematic comparison of change along multiple dimensions from 1890 to 1970, that is, from the second industrial revolution of the late nineteenth century to the last post-WWII boom before the troubled 1970s. Although our list must remain tentative at this point, we expect to explore changes in:

• sectoral composition (industry/service, manufacturing/retail),
• production and managerial techniques,
• industrial relations (levels of unionization, co-determination),
• ownership structures (incorporation vs. partnerships/family firms),
• inter-firm relations (trusts vs. cartels), and
• the role of government, both structurally (federalism/separation of powers vs. centralization) and in policy terms (incorporation, competition, tariff, and labor market policies).

It is too early to reach definitive conclusions, but we will seek to identify the turning points in each of these arenas, leaving open the possibility that no single moment of divergence occurred. We anticipate that our historical interrogation of the differences between American and German varieties of capitalism (which tend to be stressed today) will lead us to emphasize the commonalities that have marked them.