Corporate Ethics in Germany: A Republican View and Its Practical Consequences

Germany’s economic order, the so-called Soziale Marktwirtschaft (social market economy), was introduced in 1949. Its founding fathers, the ORDO-liberalists, stressed from the very beginning not only the advantages of the market (as compared to centrally planned economies) for an efficient allocation of resources, for prosperity and growth of the economy, but also underscored at the same time the necessity of embedding the economic system and its (normative) institutions into a broader political order with social justice as one of its important objectives. They regarded it primarily as (one important) task of the (democratic) state to find and implement an acceptable balance between economic prerequisites for efficiency and social demands, and to readjust this balance, if necessary, to new conditions. As a consequence highly sophisticated regulations emerged over the last 50 years or so, aimed at protecting different stakeholders of the corporation. “Labor law” and an equally significant and complicated “social law” are but two important results of this development, each with its own jurisdiction, and with institutional arrangements never really understood or accepted by other capitalist countries, like codetermination of workers on the shop floor (“Betriebsrat” or workers’ council) and within the “Aufsichtsrat” (board of directors) as the institution which controls the “Vorstand” (top management). It is this