The‘Koreaboom’in West Germany: fact or fiction?1

Abstract

tI has become something of a cottage industry to provide advice for the troubled economies of eastern Europe by drawing historical lessons out of previous economic transitions. The aftermath of both world wars has been called into play in this endeavour. The horrifying consequences of the First World War have been used to provide pessimistic lessons, while the more benign events following the Second have been examined for more hopeful signs. Dornbusch's account of the monetary consequences of the break-up of the Austro-Hungarian empire provides an example of the former choice.2 He emphasized the length of time-about five years-it took to stabilize the currencies in the former empire once the Austrian crown was no longer the universal currency. The latter choice is illustrated by a set of essays on the European recovery after the Second World War drawing lessons for eastern Europe in chapters both from the story of the international organizations created in the late I940s and from national experiences.3 The general tone of accounts of the reconstruction of Europe after the Second World War is self-congratulatory. Historians typically argue that we learned from the disastrous experience of the interwar years and acted in an enlightened fashion. This Whig interpretation fits with our sense of technological progress. Progress is cumulative; we do not have to reinvent the steam engine in every generation. There are, however, some flies in this Whig ideological ointment. There are examples in which technical knowledge has been lost. The Japanese used gunpowder in the fifteenth century and then, for complex reasons, abandoned it and had lost the ability to use it by the time of Admiral Perry.4 And what is a rarity in technological history unhappily is more common in political history. Even today, policy makers dealing with both eastern and western Europe do not seem to have learned much from the past century of economic turbulence.5 This pessimistic note is echoed in the frequent references to the Korean War in narratives of the reconstruction of West Germany after the Second World War. In many accounts of the postwar German economy, notably those by Abelshauser and Giersch, the West German miracle was in some trouble, perhaps even foundering, in