Addendum to the essay "The Hybrid and the Machine" of May 2026.
In May, in “The Hybrid and the Machine”, we answered Gabor Steingart’s advice that Germany should “dare more capitalism”. Our finding: it was not the state that ruined the German market economy. It dried up its own source, through concentration on a few large corporations in whose shadow the Mittelstand and the independent inventors disappeared. Less state would not refill that source.
In October 2026 the two other recipes are now on the table. The economist Tom Krebs calls in his book Kapital und Krise for a “planned market economy”. The FAZ’s China correspondent, Gustav Theile, replies that China’s success rests not on the plan but on “merciless” competition. Market, plan, tournament: the three usual answers are now together.
The Recipe of the Plan
Krebs makes three demands. First, a strategic industrial policy that decides in which sectors Germany and Europe want to be strong. Second, price controls for energy, housing, mobility and basic food. Third, public ownership of infrastructure and public services, and “probably also parts of the large industrial corporations”; he names BASF, Thyssenkrupp and Volkswagen as examples.
His diagnosis is often right. Politics has handed decisions to markets and to commissions and then sells the result as having no alternative. By his figures, the 2022 gas price brake bypassed industry: 15 to 17 billion euros for households, less than one billion for the entire economy. And where a network is a monopoly anyway, for electricity as for water, there is no competition that would justify double-digit returns.
The Recipe of the Tournament
Theile describes China as a contest between provinces. Party secretaries are judged by how much growth they deliver; whoever delivers is promoted. But he concedes himself that Beijing sets the rules, awards the points and chooses the industries. That is competition within a plan, not instead of one. And he concedes what comes of it: provinces outbidding each other with subsidies, too many factories, overcapacity that the rest of the world feels as a flood of exports.
Where All Three Miss the Point
First, the source. Steingart relies on a private substance that no longer exists in that form. Krebs would bury it for good. Whoever nationalises the large corporations rescues precisely the parts of the machine that crowded out the Mittelstand and the independent inventors, and makes them permanent. Neither the Mittelstand nor the independent inventor appears in his programme. Theile’s tournament, for its part, rewards what is measured, which is growth, not the new.
Second, feedback. Steingart trusts the market, Krebs the planner, Theile the tournament. None of them answers the question of who reports a failure and who then has to act. In Krebs’s case this is the exposed flank. Asked by the audience how a state, after decades of cuts, regains the capacity to plan all this, he pointed to good staff in the ministries; all it needed was a different political leadership.
Our answer to that has stood since February in “Germany — A State That Knows Nothing and Can Do Nothing”. On the cause, we are close to Krebs there: the privatisation dogma took from the state not only tasks but the knowledge needed to understand them. That is exactly why his recipe does not hold. A state whose competence has been amputated cannot run steelworks and housing corporations merely because it owns them. We wrote then that more money was like placing a suitcase full of cash in the lap of a patient without arms. Nationalisation adds the corporations to the pile. Competence has to grow back first, and that takes a generation.
Add to this what we have found since. In “The In-Between Realm” we showed that funding programmes are checked for correct accounting, not for whether they achieved anything. In “A Condition Without a Deadline”, that a missed target is not abandoned but rebooked. In “The Untested Half”, that things are measured without the measurement forcing anyone to act.
China has feedback: cadres are judged by results and rotate every few years. But it measures the wrong quantity, and censorship cuts off the reports it would need. A ranking is only as good as its criteria. Whoever measures growth gets growth, even where no one needs it.
What Follows
The question is not market or plan. It is: does a failure reach someone who has to act, and before it becomes expensive? Whoever wants more state must first rebuild competence and build in the feedback: a termination condition declared in advance for every programme, a sunset clause, reviewers who are not the same people as the applicants, terms of office with an end. Whoever wants more market needs the same for the corporations he protects.
Krebs has described the control variables, but not the controller. Without a controller, every control variable, whether price, plan or tournament, will sooner or later be operated by those who hold it.
Sources. Tom Krebs, Kapital und Krise, oekom, Munich 2026; book presentation with the magazine Surplus, October 2026 (recording). · Jörn Boewe, “Tom Krebs will den Kapitalismus neu ordnen”, der Freitag, 2026. · Gustav Theile, “Chinas erbarmungsloser Kapitalismus”, Frankfurter Allgemeine Zeitung, 23 October 2026. · Gabor Steingart, “Deutschland: Geschlechtsumwandlung einer Marktwirtschaft”, The Pioneer, 20 May 2026.
To the essay: The Hybrid and the Machine. A reply to Gabor Steingart.