Abstract
Abstract The currency and economic reform of West Germany in 1948 created institutional conditions that permitted a rapid postwar recovery. The reforms were based on the idea of privilege-free competition as a means towards a functioning economic order which is acceptable to participants. The crisis-management policies in the EMU after 2009 go in the opposite direction. Based on technocratic arguments, European institutions have granted privileges in form of bailouts. Indirectly, the ECB has granted further privileges through its ultra-loose monetary policy. The expected consequences are less competition, higher concentration of economic and political power, “zombification” of firms and banks as well as lower productivity and output growth. The lesson from West Germany’s reform for the EMU is the importance of privilege-free competition for economic development.
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