LUDWIO Epiiard * £ GERMAN NEO-IJBEBJUL.ISM
Total Page:16
File Type:pdf, Size:1020Kb
LUDWIO EPIiARD * £ GERMAN NEO-IJBEBJUL.ISM APPROVED! MSioir Professor Minor Professor of trie/ Department of S'eoneraics arr3 Sociology DeJfn "or the C Scxiooi LUDWIG ERIiARB'S GERMAN NED-LIBERALISM THESIS Presented to the Graduate Council of the North Texas State University in Partial Fulfillment of the Requirements For the Degree of MASTER OF ARTS By John P, Walter, 8. S., M. B. A, Den ton, Texa s May, 1965 TABLE OF CONTENTS Page LIST OF TABLES v Chapter I. INTRODUCTION. 1 Statement of the Problem Purpose of Study- Delimitations Assumptions Source of Data Procedure Definition of Terras Significance of Study II. THE NEO-MBiSRAL ECONOMIC THEORY Origins of the Theory Neo-Liberal Thinking Intervention and the Price Mechanism Employment and Monetary Theories Deviations Within the Neo-Liberal School Summary of the Neo-Liberal Theory III. TEE PRECURRL'NCY-RE FORI* PERIOD, May 1945 to June 20, 1948. 33 Allied Military Occupational Influence Monetary and Fiscal Policy Industry and Agriculture Population and Labor Ludwig Erhard's Activities IV. THE CURRENCY KSFORM 66 Inflation after the Reform Tax Reform Adoption of a More Liberal Credit Policy Communir.a ti on 3 and Transportation Credit Ease Korean War BOOTH and Return to a Restrictive Policy Extension of Administrative Credit Controls iii TABLE OP CONTENTS — Continued Page Return to Stability Convertibility and Revaluation 3u:nraary of Monetary Policy General Monetary Policy and Capital Formation V. ATTEMPT AT SESTOBATION OF THIS MARKET MECHANISM. ........... 125 Industry Cartels Labor VI. IMPEDIMENTS TO NEO-LIBSRAL SOCIAL POLICY . 181 Agriculture Energy Rearmament Social Insurance and Security Textiles VII. RECENT GERMAN FOREIGii TRADE AND POLICY . .223 German Trade Revival German Foreign Aid and Policy Adenauer, Erhard's weo-Liberal Ideas, and the Future of Germany Germany s The Future of Europe ;and - the Free World Neo-Liberalism applied to German Foreign Trade VIII. SUMMARY AND RECOMMENDATIONS 265 BIBLIOGRAPHY . 268 iv LIST OF TABLES Table Page I. GNP Per Capita of Various OECD Members 13-14 II, Index of Growth of West Germany's Economy (1936-49) 45 III. Volume of Money in West Germany April 30, 1943. 6 8 IV. index of Total Industrial Production ..... 78 V. Gross National Income, 1936-1955 ....... 79 VI. Index of Growth of the -/est German Economy, 1948 to 1357. ..... 8E-30 VII i Production, Employment, and Tr)ecmes in West Germany (1950-1958) , . 94 vill. International Comparison of Index of Industrial Production, 1.950 1' . 96 IX. German Foreign Trade, 1950-1958. ....... 97 X. Savings and Investments in Germany, 19 50-19 100 XT. increase in Volume of' Bar-;, Credits, 1948-57 ......... ... 112 XII. Percentage Distribution of Met Savings by Economic Sectors, 1948-1957. ..... 114 XIII. Percentage Distribution of Gross Savings by Economic Sectors, 1948-1957, ..... 116 XIV. Di';tribu* ion of in Percentages ...... 117 XV. Percentage Distribution of Total Tax Receipts Anio.ag the Various Lewis of Authorities. 118 LIST OF TABLES — Continued Table Page XVI. Share of Government Owned Enterprises in Total Production by Percentage . .127 XVII. Turnover Froic Industry as a Whole . 130-131 XVIII. Percentage Utilization of Gross national Product. ..... 132 XIX. Index of Industri.nl Production. 133 I-QC. The Ten Largest German Industries in 1960 . 134 XXI. German Shipbuilding 135 XXII. Consumption of Primary Power in Ceriiic.ii/ , ..136 XXIII. Number of Dwellings Completed, 1949-1961 . ' 137 XXIV. International Comparison of Growth of Industrial Production, 1950-1360. .... 138 XXV. Iron and Steel Production in Germany. .... 145 XXVI. Distribution of Funds Under the Investment Aid Law. 146 XXVII. Business * Persons Employed and Turn- over in Handicrafts . 153 XXVIII. capital-Output Ratio, 1.943-1957 154 XXIX, tlew Businesses Opened in the U. S. Zone Before and After Elimination of Licensing 165 XXX. Survey of handicraft Business 167 XXXI. VJorkers Unejusloyect in t.'i« **Qder.**l Republic f 1949-1961 170 VI LIST OF TABLEC — Continued Table Page XXXII. v?ages and Salaries as Percentages of for Three Advanced Industrial Nations. 174 XXXIII. Wages an-:- "..tlaries as Percentages of !v,;t actional Income for Selected tears. 175 XXXIV. ConGiv."; /5..ic• > Expenditures as Per- c^ntaof Gross National Product .......... 176 XXXV. Average Annual and Weekly Income of Gainfully Employed Persons ...... 176 XXXVI. 'dumber of Job Vacancies in the Federal Republic. 177 XXXVII. The Relationship of Animal to Motor Tractive Power. ............. .182 XXXVIII. Food Production in vJest Germany ....... 183 XXXIX. Prewar and Postwar Fertilizer Con- sumption of Bizonal Area, Germany 184 XL. Utilisation of Federal Territory, 1962. ~ 186 XLI. Agricultural Output as a Percentage Of CNP 187 XLII. Percentage Produced in the Federal Area of Total Foodstuffs Consumed 1960-1961 ...... 188 XLIII. Reparcelling of Land. ............ 190 XLIV. Financial Expenditures in Connection with the Green Plan ........... 191 XLV. Agriculture Credits from El'P Counter- part Funds. 192 vxi LIh'P OF ',ivv£LE£ Ccni firmed. Tabids Page XI»vi Consumption t»5 Primary Power in Germany 200-201 XL\ "I. f>h«re Governasent Owned Snter- •jri-'-os in Total Production of 'Percentage 202 XLVIII. Future Total Consumption of Primary Energy. 209 XLIX. Average Price of Current for Classes of Industrial Users 210 L. Federal Subsidies in Billions of DM 216 LI. Propensity t< ;tv<j and the Level of Consumption.. 217 LII. Textiles in the Federal Republic, 1950-1961 222 LII!. The Federal Republic's Foreign Trade 229 LIV. Foreign Trade as a Percentage of World Trade 233-2 34 I.V. Imports of the Federal Republic According to Product and Categories. ........ .237 LVI. Total Arnount of Gold and. Foreign Currency lie Id by the Gar®,an Federal 3ank at the 2nd of Bacn Year 233 LVI I. German Foreign Aid, 1962. 246 LVI 11. Latin America; Jet Plow of Official Capital froiii Jap..n an-*) it.: CD Member Countries 'ixcltviinq the U. f.,, 1960-1962. ...... 247 vi.ti CHAPTER I INTRODUCTION Statement of the Problem This study involved an analysis of Ludwig Erhard1s neo-liberal theories as applied to the reconstruction and revival of Germany since 1945. It has been the ob- ject of this study to determine what neo-liberalism is and how it was applied to Germany. Also, in cases where it was not applied, there is an attempt to show what causes prevented its acceptance. This is done by ex- plaining the mechanics of what happened in Germany, what the neo-liberals proposed, and why or why not Erhard's neo-liberalism was accepted or rejected. 0 Purpose of the Study The purpose of this study was to determine the major causes of German revival as well as reasons for their radical changes from Postwar Socialism to the acceptance of a basically free market economy, and also to determine the effects of neo-liberalism on the rapid recovery. Delimitations This study attempted to analyze the neo-liberal thinking and its application to Western Germany only. France, Italy, and Japan are other areas which have been in part affected by the influence of neo-liberalisnu 'Western Germany is the country in which the influence of neo- liberalism has been the roost complete and, hence, has been the only country selected for detailed analysis. Assumptions In order to make this study, several pertinent as- sumptions were roade: (I) Germany's recovery after the war was an extra-ordinary one? (2) There were certain forces behind thi» recovery; (3) Ludwiq Erhard was Eco- nomic Minister and applied the new economic theory to Germany, new in a sense to Germany; (4) This new theory could have been responsible, at least in part, for the amazing German recovery? (5) Since Ludwig Erhard con- siders himself a German neo-liberal, the available writings of German neo-liberals such as Ropke and Fucken express the views of Erhard as well as the writings of Erhard express the views of the German neo-liberals. Source oc Data Data for this study were obtained from the American Embassy of the Federal Republic of Germany as well as from various agencies of the Federal Republic within Germany. Various amounts of data were also obtained from the German Foreiqn Office as well as the European Coal and Steel Community Inforiaation Service in Luxemburg, Luxemburg, and Washington, D. C. Other information was obtained from Pierre-Anare Kunz in Vavey Vot, Switzer- land as well as readings of available books and articles relevant to the topic. Special anpreciation to Otto bieroyomi is acknowledged for personal advice in locating data. Procedure After having selected the topic, a thorough search of all available data was made. Also, all possible docu- ments pertinent to the topic were acquired. It was necessary to locate the translated and available works of well-known German nao-liberals and analyze these ideas in light of German recovery. In areas which the theory was not accepted, research was done to find the reason for its rejection. Definition of Terms Germany —- Is used in the sense as the Federal Re- public of Germany. Germany and West Germany are used in synonymous terms. East Germany — That part of Germany under the Socialist Democratic Republic which has been severed from the free world. East Germany is always referred to explicitly as East Germany within the text of this work. B P L. — The Bank rleutscber Lander which was the title of the first central hank in Germany's free social market economy. Bundesbank. — ThiB was the name of the Bank deutscher Lander after 1957. European Economic Coagnuni ty. — An association of six European countries! Belgium, France, West Germany, Italy, Luxemburg, and the Netherlands, for the purpose of event- ually abolishing tariff barriers within their borders and establishing common import duties for products originating elsewhere, ^ European Free. Trajde Association. — A trade association to strengthen the economies of its members by providing expansion of economic activity.