128 RALF AHRENS AND ANDRÉ STEINER
or supposed obstacles to growth.^95 These trends were most apparent in
the fi nance sector, where a series of laws propelled the turn toward the
marketization of fi nancial relations, especially during the stock market
euphoria in the 1990s.^96 During the recession that hit after the reunifi -
cation boom, a debate erupted over Germany’s ability to compete as a
business location; it drew heavily on the criticism that had been launched
against the seemingly obsolete Modell Deutschland (the German model
of co-operative capitalism) in the 1980s. These discussions produced po-
litical results, including the Standortsicherungsgesetz (Business Location
Safeguard Law) of 1993 that reduced the tax burdens on small and mid-
size enterprises. In keeping with the narrow perception of globalization
as a competition over costs, it was quite logical to stylize cost reduction
and fl exibilization as the key challenges for companies and politics.^97 This
was admittedly part of an international trend that coincided in the Ger-
man context with disappointed expectations vis-à-vis reunifi cation.
The combination of the need for private retirement provision and
fl exible employment models that were sometimes quite precarious was
a new experience for all Germans, though the East German population
defi nitely had more adapting to do. The job cuts in the enterprises that
had been successfully privatized by the Treuhand and the layoff s in the
liquidized factories added up to about 60 percent of the jobs that had still
existed in the East in 1990.^98 At the same time, a more dramatic east-
west divide in regional economic performance developed alongside the
old north-south divide that had existed in former West Germany. Thus, it
often took a long while for new industrial and service clusters to emerge
in the eastern federal states after reunifi cation. The deindustrialization
that occurred throughout East Germany can at best be seen as part of
a “catch-up modernization” process.^99 In reality, however, its roots lay
in the SED’s misguided industrial policies and its inability to steer the
country’s limited means of investment and its import of Western capital
goods into the development of competitive capacities and products. The
economic landscape of the late GDR was dotted here and there with mod-
ern “islands” of production surrounded by machinery with an extremely
high amount of wear and tear.^100 This economic decay was often termed
Abbau Ost (Dismantling the East) in order to emphasize the contrast to
the economic reconstruction program known as Aufbau Ost (Developing
the East), which had been put in place over the course of reunifi cation in
order to bring the East German economy up to speed with the West. It
came about in part through the hasty move toward privatization because
potential buyers had little interest in manufacturing companies in the
East given the production capacity surpluses in the West. Not only the
politically mandated time constraints and the lack of capital in East Ger-