In Bed with the Banks? Organised Capitalism, Institutional Bricoleurs, and the Role of Agency in German Financial Market Reform

Germany is often portrayed as a country where consensus-oriented governance and close industrial coordination favour incremental policy reform. This article applies an agency lens to argue that organised capitalism provides more room for radical institutional change than is commonly acknowledged. I show how self-interested policymakers can mobilise the political and economic ties embodied in the network of organised capitalism in pursuit of their own electoral agendas to implement radical policy change. The argument is illustrated in a case of sweeping financial market reform in 1999, when the Schröder government unexpectedly repealed a tax that long represented the most significant obstacle to financial liberalisation. Media analysis and semi-structured elite interviews suggest that Schröder offered the tax reform as part of a quid pro quo with large commercial banks in a bid for his own political survival. Until then, reform efforts had been stalled over concerns of hostile takeovers and exuberant shareholder dominance. An agency lens nuances our understanding of organised capitalism (1) as a structural constraint that can drag and delay policy change for years, but also (2) as a source of political capital that entrepreneurial policymakers can mobilise to trigger far-reaching reforms.