Basic institutions and political power configurations that contributed to Germany's post-war social and economic success turned from assets into liabilities in the 1990s and beyond. This introduction highlights the emergence and interaction of the critical components of the German political economy. It provides evidence for its declining performance and details a set of causes for it. Collective actors and institutional bargaining modes make it difficult to adapt to new challenges. Nevertheless, the deepening crisis may trigger change initiated by office-seeking party politicians and political-economic actors engaged in local problem-solving which sidesteps rigid mechanisms of national co-ordination.