SOCIAL SECURITY, SOCIAL INEQUALITY 209
in the East.^44 Such a political economy approach emphasizes the shared
problems faced by both systems from the 1970s rather than stressing the
diff erences between them. But a closer examination of the sociopolitical
decision-making processes behind these developments on both sides of
the Wall clearly reveals that the respective paths of the two Germanys
were not necessarily shaped by diff erent responses to globalization, ter-
tiarization, and demographic shifts, but rather a mutual lack of response
to these phenomena for reasons that varied. The fundamentally diff erent
nature of the link between social policy and the political system in the
two Germanys certainly needs be taken into consideration. Although a
strong bond exists between democracy and the welfare state, this link
is quite fl exible. The populations in market-economy democracies can
come to terms with modifi cations in the trajectory of the social state and
cuts in social security benefi ts, as was done in the Federal Republic after
1982 and again after 2003. Welfare state crises and social policy cutbacks
thus tugged away at the political legitimacy of the elected government
in power, but they did not undermine the legitimacy of the social order
as a whole. In East Germany, however, the “real-existing socialism” of
the Honecker era relied even more heavily on social policy as a source
of legitimacy, which meant that the growing gap between the claims of
a more comprehensive welfare system for GDR citizens and the limited
fi nancial means to uphold these promises heightened the sense that the
system as such was failing. Ultimately, the SED state invested a large por-
tion of the resources that it desperately needed to keep afl oat the econ-
omy of “socialism on German soil” in social policy measures that aimed
to solidify its political legitimacy. If consumption is defi ned as one of the
basic needs served by a socialist welfare state, which was the assumption
made by the leaders of the GDR, then the fi nal crisis that hit East Ger-
many can be deemed the result of a deliberate strain put on the welfare
state. From this perspective, the 1970s left a much deeper cleft in social
policy for the GDR than it did for the West German welfare state.
Patterns of Inequality “after the Boom”The expansion of the welfare state in the reform era leveled social in-
equality in the FRG in a variety of ways. Not only those in the lowest
income brackets benefi ted from these policies, but also victims of war
whose pensions were index-linked. Likewise, self-employed individuals
profi ted from being able to pay into the public pension fund under fa-
vorable conditions. In general, there was a basic move to reduce social
diff erences and better sponsor social integration. The introduction of a
legal framework regulating the continued payment of wages in the event