Comparing Germany and France
...as were many European nations at that time. National sentiment was geared towards a system of protectionism of basic cottage industries and trying to leave out the European chaos of industrialization. Without solid political backing as in the case of Germany, changes were not present or feasible. The post war era also continued to show marked differences between the two states. Looking at post war West Germany, with its federal republic system, and a newly put in place democracy, it adopted western capitalism, with less focus on a strong state role in the economy. It only dictated the general direction of the economy. Using banks and working hand in hand with them allowed the government to take a step back and only concentrate on the general planning of economic direction. The banks would be able to have such a strong influence with the aid of a network of small businesses. Having a strong independent central bank also aided its policies, and managed to keep governmental influence in check. These factors enabled Germany to grow at a steady rate, and ultimately achieve the successes of high wage, high skilled economy that it enjoys today. The post war era can be characterized by states observing lessons learnt from history and improving on past systems. Pre-war Germany had been led by the democratic Weimar Republic, which was unstable and failed economically due to the lack of a strong central bank. Learning from these mistakes, and the successes of the west with regards to a more neo-liberal economy providing slow steady growth were the main reasons why such an economic system was adopted. France came out of the war scarred and humiliated. French national pride is something that runs deep in every Frenchman. Losing and being overrun by its German neighbors was something that was hard to swallow. There was a wave of nationalistic sentiment around that period. Learning from history, France realized that the only way to regain a secure autonomy over its territories was to upgrade and reinvent itself, basically to modernize to catch up with the rest of Europe. Being protectionist and having domestic infighting for such a long period in its history allowed its premier position to slip away. Economic power with a government led revolution was a main solution to assure its sovereignty. Indicative planning was the cornerstone of the new government’s economic revitalization package. A system that encompassed information sharing and streamlining economic decision making paved the way for state led modernization, with the government deciding rates of economic growth, sectors for growth and sectors in which to industrialize. France also developed a system of strong state involvement known as dirigiste. Basically a four pronged approach of: state coordinated economic policy planning; motivation of certain sectors by using tools of loans, subsidies and tax subsidies; mergers between smaller firms to lead industrial sectors; and state management of certain sectors. This basically heralded the degree of state involvement in France. Such a system proved most successful in France, with the French managing to play catch up with the rest of Europe and achieve incredible economic growth over the post war period. However, it was not always easy sailing for the French. After a post war boom period, came a period of economic crisis caused by slow reactions to rapid changes in the global economy. The state having such a big say in which direction the economy takes does not allow for the free market to adapt to market changes. Furthermore, the people were not happy about the strong state control over the economy, and to make things worse, the economy was not doing very well either. The next socialist era in French politics failed to appease the people as well, as they radically tried to nationalize industries even more. Their reforms were not totally bad, just that it would not work in a middle sized economy like France’s, and trying to compete in a world economy. Since then, France has moved on towards a greater system of deregulation and liberalization. Placing greater emphasis on free market forces and being less dependent on government intervention and control seems to be the w...