History revision – Economic developments 1948 – 89 (20)
- W Gr economy during decades prior to unification was improving
- 50’s – Economic miracle
- 60’s – Consolidation
- 70’s – Oil shocks, social welfare programmes, rising deficits and loss of control
- 80’s – New domestic policies and more stable environment abroad combined to put W
Gr back on path of sustained growth
CDU era – 1949 – 1969
- Post war leaders saw that the economy was needed to safeguard democracy and
support a stable society
- Economy was vehicle for social harmony as well as economic progress
- Intended to establish economic system that would provide equal opportunity for all and
which would prevent the creation of underprivileged and ‘outsider’ social groups
- Most prominent individual in shaping this vision was Ludwig Erhard
- 20th June 1948 – Currency from the Reichsmark to the Deutschmark
- Abolish many Nazi and Allied rules and regs in order to establish basis of new and
free economy
- Currency reform created a widely accepted and valued legal tender whilst providing
foundations for the W Gr economy and of the W Gr state
Social market economy
- ‘market’ – distinguishes from Nazi model of centralised control
- ‘social’ – W Gr’s wanted an economy that would provide a safety net for the more
vulnerable and less privileged
- Kickstart for Gr economy came from external sources
o Investment funds under the EU Recovery Programme and Allies’ need for
increased W Gr industrial production necessitated by start of Korean War
- Gr readiness to work hard for low wages until productivity had risen was another
important factor
- Revival of confidence caused by Erhard’s reforms and into of new currency
Economic miracle
- W Gr boom was astonishing
- Growth rate of industrial production 25% in 1950 and 18% in 1951
- Growth continued at high rate for most of the 1950’s
- By 1960, industrial production had risen to 2.5 times the level of 1950 and far beyond
any the Nazis had reached during 1930’s
- GDP rose 2/3 during the same decade
- 1950 – 13.8 million employed
- 1960 – 19.8 million employed
- Unemployment fell from 10.3% to 1.2% in the same period
- Economy didn’t grow as fast or as consistently in 60’s
o Such rapid growth couldn’t be sustained
o Supply of fresh labour from E Gr cut off in 1961 by Berlin Wall
o Bundesbank (W Gr central bank) limited the money supply – feared overheating
- Economy experienced minor recession in 1965
- As result of slowdown, Kiesinger’s Grand Coalition modified Erhard’s laissez fair policy
- Schiller (Econ minister) argued for legislation
o Give federal government greater powers to intervene in economic policy
- W Gr economy during decades prior to unification was improving
- 50’s – Economic miracle
- 60’s – Consolidation
- 70’s – Oil shocks, social welfare programmes, rising deficits and loss of control
- 80’s – New domestic policies and more stable environment abroad combined to put W
Gr back on path of sustained growth
CDU era – 1949 – 1969
- Post war leaders saw that the economy was needed to safeguard democracy and
support a stable society
- Economy was vehicle for social harmony as well as economic progress
- Intended to establish economic system that would provide equal opportunity for all and
which would prevent the creation of underprivileged and ‘outsider’ social groups
- Most prominent individual in shaping this vision was Ludwig Erhard
- 20th June 1948 – Currency from the Reichsmark to the Deutschmark
- Abolish many Nazi and Allied rules and regs in order to establish basis of new and
free economy
- Currency reform created a widely accepted and valued legal tender whilst providing
foundations for the W Gr economy and of the W Gr state
Social market economy
- ‘market’ – distinguishes from Nazi model of centralised control
- ‘social’ – W Gr’s wanted an economy that would provide a safety net for the more
vulnerable and less privileged
- Kickstart for Gr economy came from external sources
o Investment funds under the EU Recovery Programme and Allies’ need for
increased W Gr industrial production necessitated by start of Korean War
- Gr readiness to work hard for low wages until productivity had risen was another
important factor
- Revival of confidence caused by Erhard’s reforms and into of new currency
Economic miracle
- W Gr boom was astonishing
- Growth rate of industrial production 25% in 1950 and 18% in 1951
- Growth continued at high rate for most of the 1950’s
- By 1960, industrial production had risen to 2.5 times the level of 1950 and far beyond
any the Nazis had reached during 1930’s
- GDP rose 2/3 during the same decade
- 1950 – 13.8 million employed
- 1960 – 19.8 million employed
- Unemployment fell from 10.3% to 1.2% in the same period
- Economy didn’t grow as fast or as consistently in 60’s
o Such rapid growth couldn’t be sustained
o Supply of fresh labour from E Gr cut off in 1961 by Berlin Wall
o Bundesbank (W Gr central bank) limited the money supply – feared overheating
- Economy experienced minor recession in 1965
- As result of slowdown, Kiesinger’s Grand Coalition modified Erhard’s laissez fair policy
- Schiller (Econ minister) argued for legislation
o Give federal government greater powers to intervene in economic policy
