Creating a social market economy
Economic recovery 1945-55
- Allies banned war industries and restricted outputs of war-related
industries because they didn’t want Germany to start another war
- Massive refugee problem with constant movement of people — 10 million
Germans came from the east, and so rationing had to be introduced
- Marshall Plan 1948 set o the creation of the Deutschmark which
stabilised the economy and stagnated the Black Market
- Wages increased which stimulated economic recovery
- The Soviet zone set up its own currency which increased tensions
- The Bundestag passed the Equalisation of Burdens Act 1952 which
introduced a tax on all assets to be used to help people who had lost
everything during the war
- Factories and businesses could start trading again but had to train workers
and replace machinery
- Unemployment rose to 1.8 million by 1950, however, soon industry started
to improve and employment rose again
- Some feared that the move from a command economy to a social market
economy would bring about the exploitation of workers and as result,
Erhard faced opposition from unions, the Economic Council and the
Bundestag
- The social market economy had the backing of the USA but not from all
industrialists who had bene tted from cartels and price xing of the
command economy
- Erhard, with the promise that the economy would provide a safety net for
the poorest, convinced enough supporters in the Bundestag to pass his
policies
- Erhard encouraged the setting up of trade unions and in 1951, introduced
the policy of co-determination, allowing for workers representatives on
managerial boards in industry
The economic miracle 1955-66
- The 1950 war in Korea sparked a need for war supplies which the FRG
were big producers of
- Many businesses had recovered su ciently by the mid 1950s to invest in
new, more modern equipment and new factories
- Reputation of German goods improved and exports grew
- Businesses were making more pro t and so could invest more and employ
more workers
- Volkswagen were successful and by 1960, there were 500 VW dealerships
in the USA and half a million had been sold
- During the 1950s, about 3.6 million more workers came to the FRG from
the GDR, many of them skilled professionals and actively seeking work for
low wages
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Economic recovery 1945-55
- Allies banned war industries and restricted outputs of war-related
industries because they didn’t want Germany to start another war
- Massive refugee problem with constant movement of people — 10 million
Germans came from the east, and so rationing had to be introduced
- Marshall Plan 1948 set o the creation of the Deutschmark which
stabilised the economy and stagnated the Black Market
- Wages increased which stimulated economic recovery
- The Soviet zone set up its own currency which increased tensions
- The Bundestag passed the Equalisation of Burdens Act 1952 which
introduced a tax on all assets to be used to help people who had lost
everything during the war
- Factories and businesses could start trading again but had to train workers
and replace machinery
- Unemployment rose to 1.8 million by 1950, however, soon industry started
to improve and employment rose again
- Some feared that the move from a command economy to a social market
economy would bring about the exploitation of workers and as result,
Erhard faced opposition from unions, the Economic Council and the
Bundestag
- The social market economy had the backing of the USA but not from all
industrialists who had bene tted from cartels and price xing of the
command economy
- Erhard, with the promise that the economy would provide a safety net for
the poorest, convinced enough supporters in the Bundestag to pass his
policies
- Erhard encouraged the setting up of trade unions and in 1951, introduced
the policy of co-determination, allowing for workers representatives on
managerial boards in industry
The economic miracle 1955-66
- The 1950 war in Korea sparked a need for war supplies which the FRG
were big producers of
- Many businesses had recovered su ciently by the mid 1950s to invest in
new, more modern equipment and new factories
- Reputation of German goods improved and exports grew
- Businesses were making more pro t and so could invest more and employ
more workers
- Volkswagen were successful and by 1960, there were 500 VW dealerships
in the USA and half a million had been sold
- During the 1950s, about 3.6 million more workers came to the FRG from
the GDR, many of them skilled professionals and actively seeking work for
low wages
ff fi fiffi fi
