SOCIAL SECURITY, SOCIAL INEQUALITY 205
families would be able to take care of their elderly members. Second,
changes in global trade fl ows and the transition to a postindustrial econ-
omy led to a crisis in industrial employment that hit old industrial sectors,
such as the steel and textile industries, particularly hard. Rising long-term
unemployment also put pressure on social policy to deal directly with the
roots of this problem. It also increased the dissonance between necessary
social security expenditures that had been determined by long-term ben-
efi t schemes (which were not easy to retract within the German system
of social insurance once they had been granted) and the amounts being
paid into the social security system that were not growing as quickly as
had been predicted. Consequently, almost all the branches of the social
security system were running on a fi nancial defi cit as of the mid-1970s.
At the same time, the globalization of the products and fi nance markets
loosened the ties that bound the possibilities for capital appropriation
to national economies. The costs of social security therefore became an
important element in the international competition between countries.
All together, these developments had a deep impact on the structural
conditions of West German social policy. In a sense, the sociopolitical
institutions suddenly seemed to have “aged” because they had to deal
with conditions for which they had not been intended.^33
The social security system was still expanded to a limited extent (es-
pecially in terms of family policy in the 1980s), but as of the mid-1970s, a
“social policy of the second order” had taken over the political agenda.^34
The goal was not to tackle new social problems, but rather to adapt the
growth of the social security system to the changed circumstances in
order to ensure stability.^35 The priority for both the SPD-led and CDU-led
governments in intervening in the system, however, was to consolidate
the budget rather than stabilize social security contributions. Many of the
reforms thus addressed separate aspects of larger problems or diff erent
subsystems within the social security system rather than the interdepen-
dencies between these subsystems. It is diffi cult to sum up the long-term
eff ects of these policy reforms. At a macroeconomic level, this consol-
idation was at least partially successful. After 1975, the ratio between
national income and social benefi ts expenditures in the Federal Republic,
for example, tended to stagnate or drop slightly. It reached its highest
point (prior to German reunifi cation) in 1975, topping out at 33.4 percent
of the GDP; by 1989, it had sunk to 30.2 percent, despite slower economic
growth. Although the trend toward growth in social expenditures was not
completely reversed, it was once again coupled more tightly to the devel-
opment of the country’s economic strength. This dampening eff ect was
quite striking in a European comparison as it set in earlier in West Ger-
many than in neighboring states. Yet, it should not be forgotten that these