Читать книгу From Empire to Europe: The Decline and Revival of British Industry Since the Second World War - Geoffrey Owen - Страница 14

For the first three years after the war, the German economy was in a chaotic state, and living conditions were worse than they had been at any time during the war. The Nazi system of economic management, including price controls and food rationing, was still in place, but there was no central authority to administer it. The country was divided into four occupied zones, and, until the merger of the British and American zones in 1947, there was little co-ordination between them. Normal market incentives were not functioning, and the currency, the Reichsmark, had lost most of its value; firms and households relied extensively on barter and the black market. The slow pace of recovery was due as much to the policies of the occupying powers as to the effects of the war. The victors insisted that Germany must be made to pay for the destruction it had caused. This was to involve reparations, in the form of plant and equipment which would be dismantled and exported to the victorious nations, and restrictions on German industrial production. The main target was heavy industry, especially coal and steel, which was to be cut back in favour of light industry and agriculture. Although extreme ideas about the ‘pastoralisation’ of the German economy were quickly dropped, these measures contributed to a general state of demoralisation in the country.

The turning-point came in 1947, when the Truman administration in the US recognised that punitive policies towards Germany were damaging the interests of the West; a prosperous and united Europe could not be achieved with a permanently weakened Germany. With the announcement of the Marshall Plan and the subsequent merger of the three Western zones, the stage was set for the creation of the Federal Republic of Germany as an independent state, firmly tied to the Western alliance.

How this state should be organised, and how relations between West Germany and its neighbours should be regulated, were far from clear at the time of the Marshall Plan. The French government was determined to prevent the resurgence of a powerful neighbour that might again threaten France’s security as it had done three times in the previous eighty years. A particular concern was the coal and steel complex in the Ruhr, which, the French argued, should be either drastically reduced in size or placed under international control. These fears were not easily reconciled with the American view that the revival of German industry was vital for the rest of Europe; unless Germany resumed its former role as the main supplier of capital goods to its Continental neighbours, Europe would be dependent for an indefinite period on American equipment and American money.

The Americans wanted to mould West Germany, and Western Europe as a whole, in their own image – an efficient, competitive, capitalist economy tempered by the reforms of Franklin Roosevelt’s New Deal.⁶ But they did not try to impose a detailed blueprint on a cowed West German population. It was for the Germans themselves, subject to Allied approval on key points, to design their own institutions. The outcome was a blend of Americanisation and home-grown ideas.

The Social Democratic Party (SPD), whose prestige was high because of its opposition to the Nazis, believed that capitalism had failed and that it should be replaced by planning, public ownership and ‘economic democracy’; the last had been a long-standing party objective since the 1920s – an equal share for employees and trade unions in the running of the economy and in the management of companies. The Christian Democrats, a new party which united several of the centre-right parties of the Weimar period, were opposed to socialism, but a strong faction within the party had doubts about the free market as the principal regulator of economic activity. The party’s 1947 programme, known as the Ahlen programme, declared that ‘the capitalist economic system has failed to do justice to the vital political and social interests of the German people’, and called for the public ownership of major enterprises.⁷ Even the Free Democrats, a union of pre-war liberal parties, took a cautious line on the restoration of free markets.

The most coherent analysis of Germany’s past history and current situation came, not from the political parties, but from a group of academics who had been pondering the flaws in the country’s political and economic system since the 1920s. One of the leading figures was Walter Eucken, who was appointed Professor of Economics at the University of Freiburg in 1927 and continued in that post throughout the war. Others such as Wilhelm Röpke and Alexander Rüstow went into exile after Hitler’s rise to power, but they remained in contact with one another during the war.

The principal lesson which this group drew from the collapse of the Weimar Republic and the disasters that followed was that a third way had to be found between unbridled laissez-faire and the collectivism that had failed so abysmally under the Nazis. At the heart of their philosophy, sometimes called Ordo-liberalism, was the need for strict safeguards against the concentration of power, whether in the hands of government or of organised interest groups. The government’s influence over the economy must be limited in scope and governed by clear rules, so that the temptation to intervene for short-term political reasons would be eliminated. An independent central bank, with a remit to resist inflation and maintain the value of the currency, was part of this rules-based framework. The conduct of fiscal and monetary policy must be consistent and predictable, with anti-cyclical measures kept to a minimum. The highest priority must be given to the promotion of competition; the prevalence of cartels and tariffs was seen as one of the principal causes of the malfunctioning of the German economy under the Weimar Republic. But the Ordo-liberals did not envisage a passive, nightwatchman state. The government had to be strong enough to ensure that the rules of the market economy were enforced. It also had responsibilities in the social field, at least to the extent of providing a safety net for the disadvantaged. The approach was nearer to classical liberalism than to the Keynesianism which became fashionable in Britain and in the US after the war. It was an attempt to redefine liberalism in a form suitable for a modern society.⁸

These ideas were actively promoted by Eucken and others after the war, but at that time the tide of opinion was running in favour of a planned economy in which the price mechanism would play only a limited role. When the American and British authorities set up a Bizonal Economic Administration in 1947, most of the senior posts were held by Social Democrats and trade-unionists. A mild form of socialism, as favoured by the British, seemed a likely outcome when the Germans resumed control of their affairs. But an advisory committee was established on which pro-market economists, including Eucken, were represented, and they had an important influence on the debate which preceded the currency reform in June 1948. The reform itself, which involved the introduction of a new currency, the Deutschmark, to replace the Reichsmark, was the responsibility of the occupation authorities, but the other changes which were made at the same time – above all, the removal of almost all controls over prices and wages – reflected the victory of the liberals over the dirigistes within the Economic Administration. The man who was responsible for implementing the reforms, and had a large part in shaping them, was Ludwig Erhard.

The son of a shopkeeper in Fürth, northern Bavaria, Erhard was trained as an economist at the Nuremberg School of Commerce and worked for a market research organisation from 1928 until 1942. He then set up his own research institute and from this base he developed ideas about the post-war economy which, though not directly influenced by Eucken and his colleagues, placed the same emphasis on competition and sound money.⁹ In 1944 he circulated a memorandum to bankers and industrialists which included proposals for a currency reform and the phased removal of government controls. Erhard was not an active opponent of the Nazis, but he had kept his distance from them, and when Fürth was liberated by the Americans in April 1945, he was asked to take charge of economic administration in the area. Later in 1945 he was appointed to the post of economics minister in the new Bavarian government. Although Erhard fell out with other members of the administration and resigned in January 1947, he continued to propagate his views, and in September of that year he was invited to head a committee on currency reform within the Bizonal Economic Administration. A few months later the director of the Administration, Johannes Semler, was removed from office after making critical remarks about the policies of the occupying powers, and Erhard was appointed to take his place.

The 1948 reforms were spectacularly successful. ‘On the morning after the introduction of the Deutschmark, people accepted money in exchange for goods and labour services, the shop windows were full of goods which had previously been unavailable – at least legally – and black and grey markets were reduced to an almost negligible role.’¹⁰ This was the first step towards the revival of the German economy, but several crises had to be overcome before Erhard’s policies were firmly in place. A wave of price increases in the autumn of 1948 prompted demands for the reimposition of price controls. Despite a one-day general strike Erhard stood firm, the new central bank¹¹ tightened monetary policy and the threatened upsurge in inflation was brought under control.

Erhard’s growing reputation as the architect of economic recovery made him a valuable asset to whichever political party secured his support; he himself had no political ties, although his sympathies were with the Free Democrats. Konrad Adenauer, leader of the Christian Democrats, saw in Erhard a powerful weapon with which to defeat the Social Democrats in the first Federal elections, to be held in August 1949. The Ahlen programme was dropped and the Christian Democrats adopted a pragmatic version of the Ordo-liberal doctrine. The conversion of the principal conservative party to liberalism was an important event in post-war Germany; before the war the parties of the right, influenced by vested interests in industry and agriculture, had put more weight on nationalism and autarky than on the virtues of competition.¹²

Although the Christian Democrat share of the vote in the elections was not much higher than that of the Social Democrats – 31 per cent to 29 per cent – the support of smaller parties, including the Free Democrats, was sufficient to give the non-socialist parties a clear majority, and Erhard was installed as economics minister in the new Federal government. Less than a year later another crisis threatened to derail his policies. The outbreak of the Korean War led to a worldwide shortage of raw materials and semifinished goods as the Americans and their allies scrambled to re-equip their armed forces. A combination of higher prices and rising imports put the German balance of payments into deficit, and Erhard came under pressure to reimpose controls on the allocation of raw materials. Adenauer’s confidence in his economics minister was shaken, and there was a risk that Erhard would resign or be dismissed. But although import liberalisation was briefly suspended, the market economy proved to be more flexible than Erhard’s critics had expected, and by the spring of 1951 the ‘economic miracle’ was back on course.

The impressive performance of the German economy under Erhard’s stewardship made the alternative prescriptions offered by the Social Democrats increasingly irrelevant. Heavy defeats in the 1953 and 1958 elections prompted a reformist group within the SPD to rethink the party’s commitment to planning and nationalisation. The anti-capitalist element was out of touch with events, and the party’s conversion to the principles of the market economy was formalised at the Bad Godesberg conference in 1959; the rhetoric of the class struggle was abandoned. The slogan on which the Social Democrats united – ‘as much competition as possible, as much planning as necessary’ – did not eliminate differences with the Christian Democrats on aspects of economic policy, but there was a broad consensus in both parties about the priority that should be given to competition and free markets.

The opposition to Erhard’s insistence on competition came more from cartel-minded businessmen than politicians. The anti-cartel law which he introduced in 1952 met strong resistance, and when it was finally passed in 1957 it was weaker than Erhard would have preferred. The rules on monopolies were mild, and there were too many loopholes and escape clauses. But the law established the principle that cartels and other restrictive practices were unacceptable, and helped to wean German industry away from the anti-competitive practices which had been widespread before the war.

In pressing for action against cartels Erhard could count on support from the Americans, who regarded the introduction of US-style antitrust policies as a way of injecting dynamism into the German economy. The other aspect of competition policy to which the US attached great importance – the break-up of dominant firms – was more contentious. Two of the principal targets for the American trust-busters were IG Farben and Vestag; other large companies, including Siemens and Bosch, were briefly considered as candidates for break-up, but no action was taken against them. Erhard agreed with the Americans on the need to prevent monopoly, but had no objection to bigness if it could be justified on economic grounds. He was concerned that an over-drastic approach to deconcentration would weaken the ability of German companies to compete in world markets. IG Farben was broken up, but the three main successor companies – Bayer, Hoechst and Badische Anilin und Soda Fabrik (BASF) – were large enough to hold their own against the world leaders in the chemical industry, such as Du Pont in the US and ICI in Britain. In steel, the ties between steel-making and coal-mining were partially broken, but deconcentration was milder than the more enthusiastic American trust-busters had hoped for. The outcome was an industrial structure nearer to the American model of competitive oligopoly than to German practice in the 1920s and 1930s.¹³

The strongest safeguard against a return to cartels was not domestic competition policy, but the openness of the German economy to imports.¹⁴ Erhard was an enthusiastic proponent of free trade, and Germany was the pace-setter in European trade liberalisation; the average level of tariff protection was reduced from 19.6 per cent to 10.6 per cent during the 1950s. Imports of manufactured goods, principally from neighbouring European countries, increased rapidly, adding to the competitive pressure on German industry.¹⁵ Erhard favoured the widest possible free trade area and the minimum amount of government intervention in regulating exports and imports. When the French foreign minister, Robert Schuman, put forward the idea of a European Coal and Steel Community (ECSC) in 1950, Erhard was not enthusiastic. He disliked the idea of a supranational authority to control European trade in steel, suspecting that it might be a vehicle through which the German and French steel-makers could recreate their pre-war cartels. But there were great political attractions in the scheme for West Germany. It offered the prospect of defusing French anxieties over the future of the Ruhr, bringing to an end Allied controls over German steel production, and confirming the status of the Federal Republic as an acceptable partner in European affairs. These were the issues which mattered most to Adenauer, and the Coal and Steel Community proved to be a decisive step towards European political integration.¹⁶

On this larger issue, too, Erhard did not see eye to eye with his Chancellor. He was concerned that the proposed European Economic Community – first put forward by the Dutch foreign minister, Johan Willem Beyen, in 1953 – would be pushed by France in an illiberal direction. A better alternative, in Erhard’s view, was a free trade area covering Western Europe as a whole, including Britain. But Adenauer was more interested in the political than the economic aspects of the Common Market, seeing it as a means of binding West Germany into the Western alliance and strengthening the Federal Republic’s ties with France. The row between the two men simmered on after the Common Market had come into operation in 1958, and Erhard was disappointed, as were other liberals within the German government, when General de Gaulle vetoed Britain’s application to join the EEC in 1963. However, although the creation of the Common Market had a distorting effect on the pattern of trade – most notoriously in the field of agriculture – it had the offsetting advantage for West Germany of opening up the two most protected European markets, France and Italy. The process of tariff reduction within the EEC was almost certainly faster than it would have been in a looser free trade area, and in that sense the creation of ‘Little Europe’ had a positive effect on the growth of West German exports.¹⁷

Membership of the Common Market did not alter the fundamentally liberal thrust of German economic policy. But there were other reforms which had to be made if the social market economy was to function effectively. Conflict-prone labour relations had contributed to the instability of the Weimar Republic, and the collusion of many employers with the Nazis made the trade union movement even more determined to reassert itself after 1945. The unions were in a strong political position because of their opposition to fascism, and their demands for public ownership and ‘economic democracy’ were regarded sympathetically by the Labour government in Britain. But nationalisation faded from the political agenda after the defeat of the Social Democrats in the 1949 election, and the unions concentrated their efforts on the issue of codetermination – the sharing of power between employee representatives and shareholders in the management of companies.

The unions had made a significant advance on this front in 1947, when the British authorities in the Ruhr agreed that the reconstituted steel companies should assign half the seats on their supervisory boards to employee representatives.¹⁸ But this was only an interim arrangement. Final decisions had to await the establishment of the Federal Republic, and by that time the employers, some of whom regarded codetermination as socialism by the back door, had recovered their self-confidence. It was only through the patient diplomacy of Konrad Adenauer that a compromise was reached in 1951, confirming the arrangements that had been made in the Ruhr in 1947, but imposing a more limited form of codetermination in other industries. This was at best a partial victory for the unions, and it was followed by the Works Constitution Act of 1952, which was widely regarded as a defeat. All companies with more than fifty employees were obliged to have a works council, but council members were appointed by the workforce as a whole, not by the trade unions, and there were strict limitations on what the councils could do. They could not, for example, initiate a strike; their role was to act as mediators between management and workforce.

The strengths of the new system were that it entrenched the rights of employees in a legal framework which was designed to encourage cooperation between the two sides, without seriously impeding managerial freedom. Day-to-day issues in the factory, which were the domain of the works council, were separated from bargaining over wages, which took place at a regional or industry level. The two-tier arrangement was facilitated by the reorganisation of the trade union movement into a small number of industrial unions, each of which bargained on behalf of all blue-collar employees in its industry. Although relations between unions and employers remained uneasy for several years after the new laws had been passed, the bitterness of the Weimar years gradually faded. Even hard-line employers who had barely reconciled themselves to the existence of trade unions recognised that a fresh start had to be made.

The labour relations reforms, like other parts of the new order which took shape in West Germany in the late 1940s and early 1950s, combined a determination to learn from past mistakes with elements of continuity. Most of the interest groups which helped to build the new order – political parties, trade unions and employers’ organisations – had existed in much the same form under Weimar.¹⁹ But the reforms corrected weaknesses that had prevented the Weimar Republic from functioning effectively. The other crucial difference from the Weimar days was an exceptionally favourable economic environment, for which the US was largely responsible. The importance of the Marshall Plan lay not so much in its financial contribution to the modernisation of German industry as in opening the way towards free trade in Europe and creating the conditions for West Germany’s reintegration into the world economy.²⁰