How did the German welfare state fare in the 1990s and what are its prospects for the near future? If one were to follow recent accounts of two influential German social scientists there does not seem to be reason for much concern. By looking at a wide range of comparative data, Jens Alber 1 finds that the German welfare state in almost all dimensions is located at or very close to the OECD or EU median. Welfare entitlements are not overly generous in Germany, nor is the welfare state especially expensive when compared with its European counterparts. Nor are social programmes particularly inefficient. According to Alber, it is rather its ‘lack of distinctiveness’ which makes the German welfare state distinctive. Given that the German welfare state appears to be almost a ‘median on all dimensions’, Alber finds no empirical support for the rhetoric of crisis that is so pervasive in the current debates about ‘Standort Deutschland’. 2 In a similar vein, Manfred Schmidt 3 holds that Germany is still following the ‘politics of the middle way’ because a multi-veto point polity prevents extreme swings of both the economic or political pendulum from occurring. While the overall performance of German capitalism may have suffered after unification, Schmidt’s general message is that Germany still performs astoundingly well in economic terms and that its institutional order still reveals a remarkable stability. In fact, since unification has not led to a profound alteration of the way in which the German model functions, for many, unification is both the cause of a temporal crisis and the proof of the basic health of the German model. The economic costs of this dramatic ‘shock to the system’, so the argument goes, only overshadow the still impressive international performance of the German economy and the notable robustness of its political order. Hence, a fundamental critique of the German model is largely unjustified and would – if followed up – cause more harm than good. 4