Unemployment and Flexibility: the German Federal Republic and Chile in the face of the transformations of capitalism (1970s and 1980s)

Abstract

This paper analyzes Chile’s and the Federal Republic of Germany’s responses to the 1970s and 1982 economic crises. These crises affected these two countries differently, given their positions in the world economy and their distinct political regimes. In both countries, political debates focused on unemployment and the changing character of work. In this context, in Chile, the global economic crisis was the context for the military’s violent reaction to the “Chilean road to socialism.” The military alliance with big business and neoliberal economists facilitated the development of neoliberal policies. The Federal Republic of Germany responded to the end of the post-war "economic miracle" with gradualist policies that preserved the welfare state. The Federal Republic of Germany’s coordinated market economy and the trade unions’ influence within the two major political parties delayed the implementation of neoliberal policies until the 2000s. This comparison demonstrates the importance of each country’s political configurations for explaining their economic and social policies in the context of a changing global economy. In this regard, politics is the key field for the development of diverse responses to global capitalist processes.