Capital and Labor in Germany and the United States


The interplay between capital and labor groups illustrates effectively the differences between the German and the American interest group systems. Differences regarding organizational structures, degree of centralization, characteristics of relations to antagonist interest groups and to government described in this section of the site apply in a similar manner to other types of interest groups in both countries. Explanations for variations in the appearance and mechanisms underlying interest group activity can be explored in the sections about "interest group history" and "interest groups today."

Groups of Labor in Germany
  Labor in the United States

Employers' associations were re-established when the Federal Republic of Germany was founded, but they did not gain their position of power until the economic boom of the fifties. There are presently several hundred employers' associations in the Federal Republic, which are grouped into three umbrella organizations (Wörndl, 333). The Bundesvereinigung Deutscher Arbeitgeberverbände (BDA, Confederation of German Employers' Associations) acts as the negotiating counterpart of labor unions in situations of collective bargaining. The Bundesverband der Deutschen Industrie (BDI, Federation of German Industries) concentrates on influencing government economic policy, as does the Deutsche Industrie und Handelstag (DIHT, German Industrial and Trade Conference).

German labor is organized in three major centralized peak associations, the German Federation of Trade Unions (DGB), the German Union of Salaried Workers (DAG), and the German Federation of Civil Servants (DBB).


Although the American economy displays a high degree of concentration -- the 200 biggest corporations in the secondary sector constitute 60% of the economic potential -- interest groups representing the capital side are not organized centrally, but they form a loose net of highly specialized industrial associations. The biggest organizations are the National Association of Manufacturers (NAM) and the US Chamber of Commerce which claims to represent the business community made up of nearly 14,000 companies. Giant private companies, such as General Motors and the Boeing Aircraft Corporation each maintain their own lobby to represent their interests.

American unions present a similar picture..They are loosely organized, structured in a federal and decentralized manner, and display few hierarchical layers.

Large organizations in the economic field dominate the German political landscape, as they possess the channels for influencing political leaders. Although some of these national organizations did not form until after World War II, the basis for their structure had long been present within German society.

The German Federation of Trade Unions was established in 1949 as a peak association of 16, later 17 unions, with the purpose of bundling labor. In the years of the Weimar Republic, until unions were dissolved by the Nazi regime, unions had been fragmented by diverse ideological and religious backgrounds. The federation of unions was conceived as a means to avoid this weakness in the structure of labor, but the unity was not effectively realized. Other occupational groupings formed, such as the German Union of Salaried Workers (DAG), the German Federation of Civil Servants (DBB), and the Christian Federation of Trade Unions (CGB).

In terms of political orientations, the DAG and DGB are traditionally closely affiliated with the Social Democratic Party, while the smaller CGB tends towards the more conservative Christian Democratic Party. Today, the DGB is by far the most prominent federation of workers, binding about 80% of all union-organized workers and employees.


America has never had an organized labor movement on the scale of that in Germany. Historians suggest that socialist ideas fell on stony ground in a country where private property is revered, individual success is the ideal, and where European class distinctions are unknown.

American unions had to face opposition in the country since their early days in the 19th century. Employers exchanged blacklists of union members to prevent them from getting jobs. Strike-breakers and armed guards were employed to crush strikes. Several states passed laws to restrict union activities and strikes, and sent the National Guard to end disputes. The late 19th century saw a series of strikes in which government troops and strike-breakers clashed violently with union members. The unions' image and their power were weakened during this time. Parts of the union base grew dissatisfied with the AFL policy of bargaining for benefits in the existing order instead of trying to change the economic system. This socialist fraction of the union split off the AFL, and founded its own, more ideologically motivated group, the 'Industrial Workers of the World' (IWW). The attempt of replacing capitalism with socialism, however, failed to survive past the end of the 1920s.

In more recent times, scandals over Mafia infiltration have further undermined the American trade unions. In the late 1950s, the Teamsters' Union was one of several expelled from the AFL-CIO after charges of maintaining links with organized crime, corruption, and abuse of funds. Jimmy Hoffa, the leader of America's biggest union, the Teamsters', survived initial purges of other corrupt leaders, but ended up in jail for frauding the union. Eventually, he disappeared in mysterious circumstances and is thought to have been murdered. These scandals left their mark on unions until present times, which is a reason why unions are preoccupied with avoiding bad publicity, often avoiding confrontation with the employer side.

Compared to the US, the organizational degree of German labor is extremely high. About 40% of all dependently employed build the membership base of unions in the Federal Republic.

The most important labor organization in Germany is the Deutsche Gewerkschaftsbund (DGB, German Federation of Trade Unions). It is comprised of 17 individual unions and is, with its approximately 7.8 million members the strongest union. Its influence has shaped the German economic system with achievement such as codetermination at the plant level to union representation on boards of experts (Wörndl, 334). Besides fighting for issues like humanization of job conditions, unions primary functions are collective bargaining for wages and salaries, and engaging in the struggle for codetermination on the plant level.



Today, 18 million members -- only 19 per cent of the American work force -- belong to unions, half the membership of thirty years ago. Most of these are members of the thirteen million strong AFL-CIO -- American Federation of Labor and Congress of Industrial Organizations. AFL-CIO had to cope with the problem of how to reverse its decline and how to change the attitude of the one hundred million non-union American workers, many of whom do not favor organized labor. Furthermore, many Southern states, which have economically outperformed most Northern states during recent years, have laws that restrict union activity. Hence, union policies usually resort to pragmatically bargain for wage increases in order to attract new members rather than attempting to bring about major social changes, like their German counterparts do.

In both countries there has been a tradition of labor movement for over 100 years, although in Germany more workers are members of unions than in the United States (31 vs. 23 percent), and collective bargaining between labor unions and corporations is well institutionalized.


In the US, there is a deep political gap between business and labor which the national government could not bridge. There were intensified business-labor conflicts in the 70s (Vogel, 201) which continued under Reagan and Bush administrations. Labor opposition tended to be less integrated, and more polarized than German labor groups.

Both in US and Germany within the business and the labor sides coalitions form temporal coalitions, in order to achieve public policy goals.These issue-oriented alliances show to be fairly similar in both countries both in terms of system and organization levels (Knoke, 521). Minor differences, however, point at institutional settings. In both nations labor and business groups more often in opposition to each other rather than cooperating. But while German business groups and labor unions occasionally worked together, their American counterparts showed no such inclinations at any time. There is a high degree of polarization between US business and labor, and distrust and animosity between groups.

In Germany, quasi-public authority of both business and labor associations and the higher degree of corporatism leads to more collaboration on specific issues.

The strike rate is comparable comparably low in both countries, but for different reasons. While in Germany there are mechanisms to enforce negotiation between employer organizations and unions, American unions try to avoid strikes mostly for the potentially negative reception by the public. To avoid this publicity, unions usually are willing to compromise with employers in order to win practical gains.


Capital and Labor -- The Case of Germany -- Codetermination -- A Closer Look: Codetermination