ABSTRACT
One little-noticed result of Weimar liberalisation was a massive increase in corporate numbers in post-Versailles Germany, which more than compensated for the transfer of 10% of its corporations to France and Poland. Guinnane et al. (2008) have argued that Germany’s corporate law was already superior, particularly for SMEs, before 1914.2 Both longitudinal and international cross-section comparisons of the numbers of corporations suggest that, on the contrary, law and politics in both the Kaiserreich and the Third Reich were spectacularly unconducive to incorporation, even with the addition of GmbHs to its menu of corporate forms. What was required for the development of Schumpeterian creative destruction and competitive diversity in limited liability companies was a liberal and open economic order, as Weimar Germany briefly-and the later Wirtschaftswunder more sustainably-demonstrated. Germany’s smaller neighbours for long felt no need to copy the GmbH form, because they had open political and economic orders and more flexibility in their basic corporate forms. This analysis supports those who see civil law as no barrier to successful corporate development if accompanied by a liberal order and those who argue for continuity between Weimar and post-1945 Germany.
