From the ʻplanning euphoriaʼ to the ʻbitter economic truthʼ: The Transmission of economic ideas into German Labour Market Policies in the 1960s and 2000s

This paper compares interconnections between dominant economic thought and processes of policy-making in the area of labor market reforms in Germany in the late 1960s and the early 2000s. The transition in labor market policies in this period could be described as a change from an active to an activating approach. At the level of economic discourse these policy changes correspond to a paradigm shift from Keynesian to neoclassical/neoliberal economic thought. We investigated these changes by focusing on two distinct reforms of labor market policies and carried out a critical discourse analysis of the relevant public and academic discourse of economists. We find that the paradigm shift in economic thought was accompanied by a shift in economists’ discourses on labor market policy issues. Against this backdrop we conclude that economic terms, concepts and theories associated with the transformation from the ‘Keynesian planning euphoria’ to the ‘neoliberal bitter economic truth’ had a significant impact on LMP reforms in Germany. By focusing not primarily on the concrete practices associated with the different approaches of LMP, but on the more abstract ‘politico-economic rationalities’ behind those practices our paper contributes to the analysis and critique of these reforms and their social implications.