How accurate is it to say that following 1945 the economy of the Federal Republic of
Germany was continually successful?
It is accurate to say that following 1945 the economy of the Federal Republic of
Germany was continually successful. This was a result of the implementation of the social
market economy in the early 1950s which enabled the German economy to recover from
the war and experience sustained periods of success. In addition, less than 10 years after
the war people were talking about the German economic miracle and 20 years later the
German economy was envied by most of the world. This was due to the fact that Germans
experienced raising living standards, falling unemployment and a dramatic increase in
exports. In spite of also undergoing periods of economic difficulty between the years 49-89
including the oil crisis’ of 1973 and 79-80 and the challenges of the 1980s, the German
economy was able to recover and overcame these challenges due to affective government
policies and the strong foundations the government had laid over the 1950s and 60s. This
shows how the economy of the FRG managed to remain successful following 1945.
By 1945 and the end of World War II, the German economy lay in shambles. The war,
along with Hitler’s scorched-earth policy had destroyed 20% of all housing. In 1947, food
production per capita was only 51% of its level in 1938 and industrial output was only one
third its 1938 level. Human losses during the war were huge and were mostly working age
men- meaning Germany had a shortage of workers. It was also difficult to get workers when
wage bought hardly anything- high unemployment (1950: 10% - 2m). Furthermore,
reparation payments were to be taken in equipment and machinery from each zone in
Germany. The French and the Soviets dismantled many remaining factories for reparations,
undermining any chance of economic recovery in order to prevent another war. Moreover.
the black market thrived as the Reichsmark was almost worthless, showing the unstable
state of the German economy. Transport and communication links crossed the zones,
further hampering economic recovery. Additionally, there was 10 million returning refugees
which needed housing and feeding, this was first seen as a burden, but the German
government turned it into one of their biggest assets later on, employing pre-trained
workers to aid Germany- saving money as they avoided spending on training their own
people. Throughout the history of the FRG the government consistently overcame economic
problems through creative and often risky economic policy, perhaps because they were
starting from such a disadvantaged position, they were prepared to be inventive and
demanding of the citizenship. These obstacles put in place to prevent Germany from
achieving economic recovery show how effective the economic policies and planning by the
government really were in bringing about economic recovery and overcoming these
challenges, eventually resulting in a continually successful economy following 1945.
There were different factors that led to economic growth, good economic policies
and planning by the government had a major role in developing a continually successful
economy following 1945. One reason for economic growth was how West Germany
inherited the industrially strong Rhineland, this provided a secure economic base on which
to develop. Old factories that had been lost or destroyed during the war were replaced with
modern ones containing the latest technology, this helped Germany increase production.
Another reason for economic growth was the way in which government encouraged
investment. Many businesses had recovered by mid-1950s to be able to invest in more
, efficient equipment, even new factories. They concentrated on producing high-quality
goods and kept prices as low as possible to compete. This resulted in the reputation of
German goods improving and exports growing, businesses could invest more and employ
more. Manufacturers of consumer goods could also buy more raw materials. Erhard had
also managed to remove wage controls, reduce income tax, decentralise major industries
and introduce credit schemes for small industries. Again, we see the leadership of the FRG
boldly gambling by investing in the latest technologies and introducing a broad range of
insightful economic policies that successfully led to economic growth.
The leadership of the FRG made great use the Marshall Plan, ensuring it helped the
German post-war economy recover and stimulate economic growth as it allowed Germany
to purchase essential equipment and expand heavy industry. They were open to the idea of
capitalising on the large pool of skilled labour workers that was available due to the millions
of refugees coming from territories incorporated into Poland and those escaping the Soviet
Zone. Those who actively sought work and wanted to become part of the West German
consumer culture were welcomed because they were seen to aid the economy. This meant
the government saved money that would have been spent on training people in the FRG
and could spend elsewhere. This further provides evidence of the government prioritising
continuous economic recovery above potential political dogma.
Despite the FRG being banned from producing war supplies, the government prioritised its
industrial products particularly of chemical, steel and electrical goods. There was a huge
demand abroad for war supplies following the outbreak of the Korean War and as other
countries competed to supply weaponry, the demand for German exports increased. This
demand for consumer goods increased across other countries as German companies
became global leaders in these sectors. This again reflects the ruthless and bold government
economic strategy. Additionally, Germany had no colonies to maintain and no post-war
rearmament to deal with. Adenauer also played a major role in reintegrating Germany into
Europe (European Coal & Steel Community, EEC) which contributed to economic growth and
recovery in Germany. These factors enabled the economy of the Federal Republic of
Germany to be continually successful following 1945.
Effective government policies were the most important factor in simulating
economic growth and recovery. Ludwig Erhard implemented a social market economy in
Germany- a free market economy with elements of social support for the poorest built in- a
‘socially responsible’ free market economy. Erhard wanted cartels broken up and price fixing
abandoned in favour of competition between industries and so prices would be lowered.
This faced opposition from industrialists, the Economic council, the Bundestag and Britain.
The combination of a capitalist market with a reasonable government that provided a social
safety net for the poorest won Erhard enough supporters in the Bundestag to continue his
policies, allowing business tax concessions and removing wage restrictions, while
encouraging the setting up of trade unions to make sure that workers had adequate
representation in wage negotiations. This included the idea of co-determination, workers
and employers would work together, this helped keep wages low and strikes down, good
industrial relations and social stability allowed for economic growth. This resulted in growth
in industries and exports. By 1955 Volkswagen had made 1 million Volkswagen Beetles and
