No experiments : federal privatisation politics in West Germany, 1949-1989

Abstract

Privatisation has been a key policy in the late 20th century in many countries. In West Germany, the federal government sold most of its corporate industrial shareholdings to private investors between 1949 and 1989. Unlike many other countries, West Germany did not nationalise entire industries after the Second World War. Instead, the portfolio of public enterprises and participations was mainly an inheritance from the Third Reich. The aim of the thesis is to explore the causes of privatisation and the driving and delaying forces in the privatisation process between 1949 and 1989 based on qualitative historical documents. After the sale of participations stemming from the war economy in the early 1950s, the conservative federal government of CDU and CSU and later the conservative-liberal government of CDU, CSU and FDP under the Federal Chancellors Konrad Adenauer (CDU) and Ludwig Erhard (CDU) pursued a larger scale privatisation programme by issuing people's shares between 1959 and 1965. The programme featured social elements and aimed at the property formation of employees and a wide dispersion of shares in the society. In the 1970s, public enterprises expanded under a social-liberal government of SPD and FDP, until a conservative-liberal government of CDU, CSU and FDP under Federal Chancellor Kohl (CDU) sold most of the remaining federal participations in industrial enterprises between 1984 and 1989. The total volume of privatisation as measured by revenues remained modest compared to other West European countries and strong political resistance within the government parties CDU and CSU manifested in the process. Findings indicate a high continuity of thought and policy patterns from the 1950s until the end of the 1980s while the main reasons for privatisation shifted slightly. In the 1950s and 1960s, privatisation was primarily motivated by fiscal reasons - access to equity capital proved to be limited for the growing federal enterprises. Privatisation in the 1980s was caused by re-interpretations of the economic situation due to globally changing conditions and increased international competition. Hence, it can be interpreted as a lagged response to market crisis in the 1970s. Ideological shifts of paradigm did not drive privatisation. Rather, advocates of ordoliberalism focused on other economic reforms in the 1950s and liberal ideas in the 1980s co-developed with privatisation politics. For many decades, public enterprises were not viewed as ineffcient per se as long as they were operating in competitive markets. This perception only began to change slowly in the 1980s.