The market economy must be protected

Anna McMaster

Will protectionism or a "digitalized Leninism" overrun the economic order in Europe? Participants at the congress "Maschinenbau vorausgeDACHt" have defended the market econonmy concept - but it must be reformed.

What significance does the free and social market economy still have in a world in which economic systems are drifting ever further apart? A world in which some countries seal themselves off behind ever higher protective fences and others define themselves through increased state control? For VDMA President Carl Martin Welcker there is no doubt about this question: "We still have the best economic system with the market economy, but we must protect and reform it," he demanded at the three-country congress "Maschinenbau vorausgeDACHt" in Bregenz, which was organised by the associations VDMA, Die Metalltechnische Industrie and Swissmem as well as the magazine "Produktion". The industry in Germany, Austria and Switzerland has a lot in common - so it is all the more important that these countries also develop joint strategies to survive in the battle of systems.

The lectures and discussions on the first day of the congress clearly showed that the dangers and challenges posed by increasing protectionism on the one hand and China's state industrial policy on the other are for real. Protectionism is not a phenomenon that only came back on the industry agenda with US President Donald Trump, as British economics professor Simon Evenett pointed out. Since 2009, the number of new trade barriers has risen significantly and by far exceeded the number of new liberalisation measures. But the German-speaking countries are among those hardest hit and the dynamics of new trade barriers have been increasing since 2013, explained the trade expert who teaches in St. Gallen. "Customs duties are not the biggest obstacle to foreign trade, but rather state subsidies for local companies," Evenett stressed.

"Reason will prevail again. Trade exchange creates prosperity."

This is another reason why medium-sized mechanical engineers have to deal more and more with the question of whether they should set up production plants in their sales countries. Multivac, the packaging machine specialist based in the Allgäu region of Germany, has significantly increased the number of its foreign locations in recent years, set up local production and procured more components from local suppliers than before, explained Multivac CEO Hans-Joachim Boekstegers. This has contributed to the company's success as well as the strategy of constantly searching for new solutions for customer-specific wishes and thus successfully positioning oneself in more and more niches. "We have significantly increased our depth of value added," Boekstegers stressed.

With such niche strategies,small and mid-sized companies in Europe in particular have many opportunities to assert themselves against China, which is showing its strength more and more," explained Sebastian Heilmann, Trier professor of economics and founding director of the Mercator Institute for China Studies. Heilmann left no doubt that China is on its way to becoming a major economic power. The People's Republic is also striving to become the world leader in future technologies such as artificial intelligence and autonomous driving. But the Chinese system, which Heilmann described as "digitized Leninism", is also moving further and further away from the market-economy order of European coinage, he warned. "But even if the world is in danger of drifting apart at the moment, VDMA President Welcker did not want to be alarmed: "Reason will prevail again. Trade exchange creates prosperity" - even if the development in the coming years will perhaps go in another direction.