Tuesday, May 02, 2006

Germany and Free Markets

I think Germany has long had a bit of a problem with free markets, mostly because they seem to have a deep-seated cultural problem with uncertainty.  I think it goes all the way back to the Protestant Work Ethic, which seemed to require that there be an objective measure of the value produced by an individual.  When you introduce innovation in to the equation, then the problem is that assigning value to any given measure of work becomes a probabilistic endeavour (which means anything I invent today may end up having little tangible value, if for instance someone were to come up with a better solution).

So Germany's post-war success seemed to require a central planning authority (in their case, the German banking system) to ensure that the value produced had very little chance of being lost due to real competition.  And it seems to work for them, though I would call it a somewhat hesistant free-market mechanism.

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