If the election is clearly not a victory for political and economic radicalism, it would be equally misleading to interpret it as the triumph of the free market. Throughout the campaign, there was an eerie degree of consensus about the desirability of central features of a distinctly European and more specifically German system of values.
What are those values? A social market economy, rather than unbridled market capitalism; an export economy built on a large and technically innovative manufacturing base; a large network of small and medium sized enterprise, often family-owned, that is open to the global economy; a sense of environmental responsibility; and a suspicion of financially driven Anglo-Saxon style globalization and corporate capitalism.
Indeed the sense that Germany had the opportunity to show off the unique strengths of the “German model” was a key to Merkel’s appeal, and she repeatedly noted what a tough line she had taken against the position of banks.
In coming years, the German government is likely to be more vocal in European and global debates. It is likely to present the German model as something that corresponds more closely to what the world needs in the aftermath of the financial crisis.
Financial activity was concentrated largely in what the Europeans termed “Anglo-Saxon” economies: above all the US and the UK, and a few small countries that tried, disastrously, to replicate a model of free-for-all finance such as Iceland and Ireland. But the emerging markets that drive globalization in the early 21st century have a similar mix of export orientation and a prominent industrial base of small and medium-sized and frequently family-owned enterprises. They have the problem today of trying to reconcile dynamic growth and social cohesion that was the problem of Germany in the past, and to which the German social model was and is held up as the answer.
Merkel’s new coalition will sit neatly alongside the new government of Japanese Prime Minister Yukio Hatoyama, which is also dedicated to finding a new and peculiarly Japanese model of economic growth.
These new national visions of economics in the 21st century are not simply turning in on themselves, or embarking on aggressive campaigns driven by xenophobic and racial nationalism — that was the world of the 20th century. In the world of the 21st century, models of social organization have to persuade rather than conquer. The world looks for local or national solutions to global problems. Merkel won the election because she formulated a clear answer.
Harold James is a professor of history and international affairs at Princeton University.
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