Page 128 - The Making of the German Post-war Economy

THE CHRISTIAN DEMOCRATIC/ SOCIAL UNION 101

German political parties and officials increasingly not only interfered in
the day-to-day administration, but began to make the fundamental choices
determining the evolving economic and socio-political order. Although
the purpose of the majority of the 131 laws passed in the legislative
Economic Council in Frankfurt between 1947 and 1949 was to administer
and improve the then prevalent scarcity, few aimed at the implementation
of the Social Market Economy as the socio-political and economic model
for post-war Germany; for instance, the so-called ‘Bewirtschaftungsnotgesetz’
and its far-reaching executive orders adopted in parliament on 30 October
1947. Although these legal documents did neither entirely dismiss
planning and control of the economy nor specify any particular economic
system, they assigned the Director of the Administration for Economics
extensive authority and freedom in the application and interpretation of
economic planning and rationing. The so-called ‘Preisgesetz’ passed by the
Economic Council on 10 April 1948 increased this influence on economic
policy even further. Henceforth, the new Director of the Administration
for Economics, Ludwig Erhard, was not only in charge of macroeconomic
policy but also of price policy. Arguably the most significant decision of
the legislative quasi-parliament, however, was the adoption of the so-called
‘Leitsätze-Gesetz’ on Friday 18 June 1948 which eventually enabled Erhard
to initiate economic liberalisation following a currency reform and,
importantly, to communicate the success of these policies later on. All
these legal measures not only increased Erhard’s and thus the conservative
parties’ influence on economic and financial policy, but, at the same time,
they also reduced the political opposition’s possibilities for intervention.
Thus, the Economic Council and the Administration for Economics both
being under the direction of the CDU/CSU throughout proved to be
decisive in the implementation and communication of the Social Market
Economy as the principal socio-political and economic model for the
emerging Federal Republic of Germany. Moreover, many leading Social
Democrats not only misjudged the decision-making powers of the bizonal
administration but also the feasibility of the market-oriented model in
times of prevalent destitution and the initial absence of market
mechanisms.
Regarding the concept of the Social Market Economy, not only the
opposition but also even some Liberal Democrats of the coalition had
second thoughts. For instance the delegate of the FDP in the Economic
Council, Everhard Bungartz, laconically commented on Ludwig Erhard’s
presentation of the Social Market Economy in the Economic Council on
21 April 1948: ‘Die Worte hör’ ich – allein es fehlt der Glaube mir!’ (While I
listen, I do not believe a word of it). The majority of the FDP led by the
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chairman Theodor Heuss and its parliamentary group in the Economic