Capitalism in Germany evolved in a distinct mode, with the persistence of pre-capitalist forms of social organization and the inclusion of organized social groups in economic and political decision-making, which made it particularly responsive to labour interest at the macro and micro level (Streeck 2011; Allen 2010). In its search for alternative ways of organizing the economy compared to American-style capitalism, post-war Germany was long held up as a best-practice case; the ‘German model’ promised the reconciliation of capitalism with social interests. This model has come under immense pressure for a number of reasons, most of them economic but some also rooted in ideological conflict. With the demise of state socialism in Central and Eastern Europe, the liberal expression of capitalism seemed to have outplayed all other economic systems. Across Europe, welfare states were cut back and took on activating policies (Gilbert 2004). The German welfare state was also weakened by the costly unification, and the collective bargaining system came under threat with the emerging market economy in East Germany even though, ironically, most of the formal institutions of the ‘German model’ were transferred to the East. 1