How did Institutes like the Max Planck Institute become so prominent, when Germany had previously been so famous for the Research University? Did any of the academics who left during/before the war for political reasons return?
Note: there are two type of Uni in Germany, Universität and Fachhochschule. Since this is about research, I only speak about Universitäten unless otherwise stated.
The Max-Planck-Gesellschaft (MPG) is successor to the Kaiser-Wilhelm-Gesellschaft zur Förderung der Wissenschaften, which was founded in 1911.
There is not the MPI, but 83 institutes, 5 of them outside of Germany.
the MPG does fundamental research without teaching, Universitäten (not Fachhochschulen) in Germany do both, fundamental research and teaching. So MPGs can focus purely on research, while the Uni has to teach. A Professor at a Universität usually has to teach 4 courses/lecture per Semester. Time he does not have for research.
Horkheimer and Adorno are prominent scientist who returned to Germany after WW2, there are several other examples like Ernst Bloch, Ossip Flechtheim, E.H. Fischer etc.
There is also the Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e. V. (FhG) with 63 institutes. The FhG focuses on applied science, the main task is to develop things that can be sold, e.g. the MP3 file format.
There also several other research societies in Germany, eg. Helmholtz-Gesellschaft, Leibnitz-Gesellschaft etc. and academies like the Leopoldina, founded in 1652.
The research societies usually strongly cooperate with the local Universität. A doctoral degree can only be given out from a Uni, so they have to cooperate with one.
East Germany tried to widen the participation and introduced special evening schools to bring workers and farmers to new established engineering/farming schools in the 1950/60s. The real Universitäten did not change that much, however, they had to follow the political line and every student was forced to hear Marxism-Leninism. There were also a lot of political factors if you got a place at a uni or not.
The biggest change for the West German Unis came with the 68er movement/hippies. Especially Frankfurt and West Berlin were hot spots for riots, were students also protested against Profs. that worked under the Nazis and the stiff rituals still in place.
This photo became synonymous with the protests: http://www.planet-wissen.de/alltag_gesundheit/lernen/universitaeten/img/intro_uni_revolte_g.jpg
The biggest change to the educational system came in the late 1960s with influence by Ralf Dahrendorf. Engineering schools were changed to Fachhochschulen and now considered to be a university (in the broad english sense, not the German one). They have to focus on teaching and do much less more research than Universitäten. They almost never do fundamental research. They only offer some programmes in engineering and economies, never Medicine, Law or Humanities.
The second biggest change was the Bologna process which dropped the Magister Artium/Diplom and switched over to Bachelor/Master.
If you want to know more, ask me. But be a little more precise with your question ;-)
