Page 102 - The Making of the German Post-war Economy

THE SOCIAL DEMOCRATIC PARTY 75

retorting that his party agreed wholeheartedly with the principle of
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liberalising prices in a sound economy, but not in one of scarcity.
According to the SPD leadership and the trade unions, a transition to
normal economic conditions was only possible via systematic economic
planning – a perception they understandably believed was shared by the
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public. Thus, the SPD vehemently opposed Erhard’s approach and
ideology as appearing too utopian for the needs of the population at that
time. Yet, the opposition in the Economic Council could not offer an
alternative concept and tried not to be pushed into identification with
controlled economy:

[We] once more want to destroy the consistently appearing
misconception [...] the Social Democrats have been advocates of the
existing controlled economy. The Social Democracy detests what we
have come to know as controlled economy as a legacy of National
Socialism in Germany [...] as much as anybody else in this hall. We
just have a different opinion regarding the means and the timing to
get away from this controlled economy.
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The Social Democrats’ dilemma was intensified by their shared interest
in the success of the currency reform to be initiated by the Guiding
Principle Law under discussion. While the delegates of the SPD in the
Economic Council widely agreed with Miksch’s and Erhard’s bill, which
granted the Administration for Economics more room for manoeuvre,
they refused to assign the director of the administration ‘dictatorial
authority’. Thus, the SPD parliamentary group submitted a counterdraft
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suggesting an independent consultative board of trustees. After the
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original draft law was modified accordingly, the so-called ‘Leitsätze-Gesetz’
was eventually passed by 50 votes to 37 in the eighteenth plenary session
of the Economic Council on Friday 18 June 1948.
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In view of the fact that the Guiding Principle Law – enabled not least
by the disunity of the Social Democrats, their members in the Economic
Council opposing it, but their delegates in the Länderrat unanimously
approving it (21 June) – assigned decisive legislative competence across
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the range of economic and price policy to the Director of the
Administration for Economics, Ludwig Erhard, it constituted a turning
point in favour of economic liberalisation, and so came to be perceived as
‘the most significant parliamentary decision of post-war German
history.’ In spite of such importance, the Leitsätze-Gesetz thereafter
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received relatively little attention in both political and public debate; the
latter instead focused on the imminent currency reform.