West German Economy Research Articles

New Data Frontiers in German Economic History

New Data Frontiers in German Economic History

‘It Is Said That at Least 300,000 rt of Capital are Required for a Raft Trade’

Although the Dutch timber trade from the seventeenth to the nineteenth century has been the subject of many historical studies, the development of the capital-intensive timber wholesale trade has remained rather underexposed by economic historians with regard to the actors involved. This is surprising since a capital of up to 600,000 Reichstaler had to be raised for the Dutch timber trade; amounts that were hardly invested in any other commercial enterprise in Germany at the time. The article therefore focuses on the timber wholesalers of the eighteenth century and analyzes in detail, based on our own archival research and previous research results, how the timber wholesalers organized their business (business strategies, business practices, etc.) and what significance their income had for the economic development of the participating economic regions of West and South-West Germany in the long term. It appears that around 1750 the German timber wholesaler and the timber companies from the Black Forest had long since driven out their Dutch competitors and acquired large fortunes. With the Dutch timber trade, capitalist practices (creation and management of companies, accounting, new methods of credit financing, etc.) also spread, which also formed an important building block for the further development of the South-West and West German economy. However, the most important thing was undoubtedly the emergence of a risk-loving entrepreneurial class with a sufficient capital base and business knowledge, which had long since broken away from 'artisan' self-reliance. Because the timber wholesalers often also invested their capital acquired in the Dutch timber trade in other industries, and these often formed a crystallization point for the West and South-West German industrialization after 1815, it can be said that the timber trade with the Netherlands not only generated an enormous volume in the eighteenth century and supported West German economic growth from 1740 onwards, but in the long term also contributed to the economic and social structural changes of the nineteenth century.

Considerações sobre a reforma monetária na Alemanha após a II Guerra Mundial

ABSTRACT This article is theoretical and presents the currency reform of June 20, 1948, which laid the basis for the reconstruction and rebirth of the West German economy after World War II. The authors analyze the conditions related to the need to carry out the reform, emphasizing the role and interests of the United States in this undertaking. It is widely believed that the reform gave rise to impressive economic growth, the so-called “economic miracle” that no one could have predicted before. A closer analysis, however, shows that the initial aim was not to pave the way for an economic miracle, but it was rather a meticulously prepared plan of action by the American superpower to strengthen its position in the world and limit the influence of the socialist idea. Therefore, this paper seeks to explore the hypothesis that the currency reform in post-WWII Germany was primarily aimed at securing American dominance and limiting Soviet influence.

Being World Power and Economic Utility: The Economic History of Germany’s African Colonies

As a late colonial power, Germany was seeking to conquer territories in Africa and Oceania in the last third of the 19th century. The two major purposes for founding colonies were 1) to reduce the immigration of Germans to America; and 2) to represent the young German nation state as a mature power, which can compete with the United Kingdom (called simply England in the historical sources) and with the despised Western neighbour France. The most important lobby and pressure group of German colonial aims was the German Colonial Society (Deutsche Kolonialgesellschaft), a group of widely respected intellectuals, influential businessmen and politicians. After the accession on the throne of Emperor Wilhelm II, the colonial lobby became more influential, and the process of colonial expansion was accelerated. Nevertheless, there was an Achilles’ heel in this policy: gaining territories did not seem to be profitable in the short term. Thus, theorists and propagandists of colonization, such as Paul Rohrbach, published papers about possible measures that could have made the colonies financially fruitful territories. This thought remained vivid in the National Socialist era as well: Germany’s right to have colonies was explained on the base of the need for raw materials and the overpopulation of the German fatherland. This study has been written for the purpose to summarize the colonial economic policy of the German Kaiserreich and to briefly explain the economic plans of National Socialist German state regarding Germany’s former colonies in Africa.

Germany’s Economic Growth In 1950–60 and the Problem of the Country’s Balance of Payments Sustainability

The 1950s in Germany, especially the period 1953–1958, were later recognised as the ‘golden years of the post-war period’. By the end of this period, most of the war damage had been removed and the economy was in a state of dynamic growth. In the period 1949–59, the average real GDP growth rate was about 7.4% with an average investment rate of 24.2% (in current prices). In the years (1950–53), a massive housing construction programme was carried out that was financed almost in half from public funds. Germany’s economic growth in 1950–60 mainly influenced by investment activities and the growth of exports. During this period, state expenditure did not play a major role in the growth of the West German economy (its share in national income steadily declined during the period in question). A the same time, the share of exports in national income was very high and showed a continuously increasing trend. A long-term growth of exports — affecting constantly the expansion of demand — became an important factor stimulating investment activity, which is the main lever of economic growth. At the same time, unusually strong export activity improved the balance of payments, which showed systematic surpluses. It should also be stressed that private consumption was not a factor driving economic prosperity in West Germany in this period. The share of consumption in Germany’s national income showed a declining trend in favour of investment.

„Wer befehlen soll, muß im Befehlen Seligkeit empfinden.“

Abstract On the whole, the question as to the historical possibility of entrepreneurship has not been posed. Entrepreneurship has since Schumpeter simply been assumed; translated into a kind of mechanics of leadership in modern management literature in which individual characteristics rescind behind the role expectations for managers. This is logical insofar as a theory of the entrepreneur can at best only exist in a trivial form, such as in the sense of a theory of right or wrong decisions, while the entrepreneur as an individual eludes a theoretical approach in categorical terms. So while these theoretical restrictions make a theory of the entrepreneur unattainable, typological statements can still be made about the historical phenomenon of “entrepreneurship and entrepreneurial behaviour”. This is the starting point of the following article. Characteristics, behavioural patterns and lifestyle details are extracted from entrepreneurial careers of undisputed relevance in German economic and business history between roughly 1850 and 1930: these are then brought together and generalised into an “ideal type” entrepreneur. It will become apparent that entrepreneurship is ultimately based on circumstances, preconditions and attributes which economic or decision theories can only insufficiently grasp: in fact, specific aspects of each individual personality – some of which only fully develop in the course of entrepreneurial practice – determine behaviour and these are themselves again very individual. In a certain sense, entrepreneurship represents a kind of “doer type”, a quality which calls for a whole breadth of influences which in turn cannot be deduced in economic terms.

The takeover battle Volkswagen/Porsche: the Piëch-Porsche clan–family clan acquires a majority holding in Volkswagen

Apparently, Porsche planned to take over Volkswagen (VW) — in fact, Volkswagen took over Porsche. What appeared to be a takeover, was in fact a battle for influence of the families Piech and Porsche over Volkswagen, the biggest German enterprise. While the High Court’s decision is still pending, the takeover evolves into a thriller with a range, thus far unknown to German economic history after World War II, costing investors almost €10 billion. In spite of initial hesitation, Stuttgart’s Regional Court will initiate criminal proceedings within the next month. Evidence suggests that Porsche has planned to take over 75 per cent of VW-shares as early as 2005 which, if found to be true, would constitute an information-based market manipulation. Civil claims for damages have failed thus far. However, the chances of success will increase at the next instance.

Introduction: a new perspective on modern German history

Heinrich Winkler’s two volume history of Germany in the nineteenth and twentieth century is titled Der lange Weg nach Westen. For him, ‘nach Westen’ means becoming a Western democracy, like England, France and the US. How did they do it? Douglass North, John Wallis, and Barry Weingast, in their book Violence and Social Orders: a Framework for Interpreting Recorded Human History (2009), take up the question of how countries make such a transition. The framework is that of limited and open access orders (LAO/OAO), as explained in Steven Webb’s article in this issue. Although they intend the framework for universal application, most of the North, Wallis, and Weingast book focuses on the economic and political history of England, the US, and France from early modern times up to the end of the nineteenth century—the times when these three countries became Western capitalist democracies as we think of them today. Violence and Social Orders does not discuss the twentieth and twenty-first centuries or the cases of Germany and Russia, the other big players in modern European history. The articles here apply the limited and OAO framework to the history of Germany in the nineteenth and twentieth centuries, for two purposes. First, they shed new light on the German political and economic history by looking through a comparative lens. Was Germany’s evolution so unique—a Sonderweg—or was it a later variant on similar themes? Second, the articles show how the framework needs augmenting to take account of an important case like that of Germany. For instance, in the late nineteenth and early twentieth century, while it was still a limited access order, the German economy was able to grow as fast or faster than the main OAO economies of the time and to surpass them on many technological frontiers, which is contrary to the prediction implicit in Violence and Social Orders. Also, the

German Ordoliberalism as Agenda Setter for the Euro Crisis: Myth Trumps Reality

German political leaders have extolled the advantages of the rule-based ordoliberal doctrine as a panacea for the Eurozone countries to regain competitiveness. This legalistic doctrine has been used by the German Bundesbank as an important agenda setter to prevent alternative ideas from challenging the austerity discourse in the Eurozone. A closer look across German economic history tells a different story. At no time did perfect market competition work in practice as the ordoliberal doctrine postulates. In fact, it was the London Debt Agreement of 1953 with the Marshall Plan, and the combination of Ordnungspolitik with a more ethical and publicly provided social policy (what has become known as the Soziale Marktwirtschaft) which account for the German Wirtschaftswunder. But rather than rejecting Ordnungspolitik on the grounds that it is ‘a dangerous idea’, we should focus on institutional reforms based on an ethical and socially oriented economic model for the European Union (EU). In fact, this is what Germany has done since the 1950s, with the scales tipping sometimes in the direction of strengthening the ordoliberal side of competition policy, and at others shifting to more inclusive social measures. The question is whether Germany's ‘real’ economic history can provide a more realistic model for a sustainable social EU.

Business in the Age of Extremes: Essays in Modern German and Austrian Economic History. Edited by Hartmut Berghoff, Jürgen Kocka and Dieter Ziegler. New York: Cambridge University Press. 2013. Pp. ix, 249. $90.00, cloth.

Business in the Age of Extremes: Essays in Modern German and Austrian Economic History. Edited by Hartmut Berghoff, Jürgen Kocka and Dieter Ziegler. New York: Cambridge University Press. 2013. Pp. ix, 249. $90.00, cloth.

Business in the Age of Extremes: Essays in Modern German and Austrian Economic History

Business in the Age of Extremes: Essays in Modern German and Austrian Economic History

KONRAD ADENAUER DAN PEMODENAN SEMULA JERMAN BARAT, 1949-1963

The Second World War had brought destruction to Germany as a political entity. More significantly the Germans lost everything including their sovereignty. The emergence of Konrad Adenauer in 1949 as the first Chancellor of West Germany(1949-1963), reinforced under the authority of the Allies, particularly the United States had opened the path towards modernization and the revival of West Germany after the division of Germany into two entities. Thus, this paper discusses the role of Adenauer in the revival of Germany and his contribution that led him to be regarded as the father of modern Germany. Among Adenauer’s contribution are firstly, strengthening democracy as a new ideology of post-war West German society through the implementation of Basic Law; secondly, formulating domestic policy by strengthening West German economy through Marshall Plan and the introduction of the Market Economy to achieve what was to be said as the economic miracle. Further, status-quo during the Cold War era had enabled West Germany to be associated with European economic and military cooperation through ECSC, EEC and NATO that reflected the recognition for the sovereignty and integrity of Germany from the West as one of the powers of Western Europe.

Introduction

Introduction

Understanding West German economic growth in the 1950s

We evaluate explanations for why Germany grew so quickly in the 1950s. The recent literature has emphasized convergence, structural change and institutional shake-up while minimizing the importance of the postwar shock. We show that this shock and its consequences were more important than neoclassical convergence and structural change in explaining the rapid growth of the West German economy in the 1950s. We find little support for the hypothesis of institutional shakeup. This suggests a different interpretation of post-World War II German economic growth than features in much of the literature.

'Marginal Employment' and the Demand for Heterogenous Labour: Empirical Evidence from a Multi-Factor Labour Demand Model for Germany

We develop a structural multi-factor labour demand model which distinguishes between eight labour categories including non-standard types of employment such as marginal employment. The model is estimated for both the number of workers and total working hours using a new panel data set. For unskilled and skilled workers in full-time employment, we find labour demand elasticities similar to previous estimates for the west German economy. Our new estimates of own-wage elasticities for marginal employment range between -.4 (number of male workers in west Germany) to -1 (working hours for women). We illustrate the implications of these estimates by simulating the likely labour demand effects of the recent increase of employers' social security contributions (SSC) on marginal employment in Germany.

Lending to Small and Medium-Sized Firms: Is There an East-West Gap in Germany?

The financing of small and medium-sized firms is important for the catching-up of the East German to the West German economy since reunification. We explore whether it is restricted by unfavorable bank loan terms, using bank-survey data on lending decisions to small and medium-sized firms. A comparison of the terms of lending between the former East German and West German states yields a lending gap given by higher loan prices and collateral requirements in East Germany. This gap can be explained by differences in credit risks and lending strategies of banks.

Special Issue on German Cliometrics: Editors' Foreword

The articles published in this special issue of the European Review of Economic History were originally presented at the First German Cliometrics Conference held at the Centre for International Studies, University of Toronto, 23–26 September 1999. The conference was organised by Scott Eddie, John Komlos and Jorg Baten. The essay by Richard Tilly on German Economic History and Cliometrics serves as an introduction.

German economic history and Cliometrics: A selective survey of recent tendencies

This article discusses recent cliometric contributions by German and non-German economic historians to the field of German economic history. After a brief attempt to describe the field in Germany I survey recent work in four specific topical areas – which thus serve as rough indices of the spread and development of econometric and quantitative techniques in the field. I conclude that a German ‘cliometric revolution’ has not yet taken place, but that promising beginnings have been made.

Neues von der NAIRU? / News from the NAIRU?

Zusammenfassung Der Beitrag enthält eine Neuschätzung der inflationsstabilen Arbeitslosenquote (NAIRU) für Westdeutschland 1980 bis 1998. Nach einer Darstellung des konzeptionellen Rahmens der NAIRU einschließlich verschiedener Varianten, welche beispielsweise exogenen Schocks und dem Hysterese-Phänomen Rechnung tragen, erfolgt eine Diskussion verschiedener methodischer Probleme. Erstmalig werden für Westdeutschland dann eine zeitvariable NAIRU mit Hilfe des Kaiman-Verfahrens sowie dazugehörige Konfidenzbänder unter Verwendung der residualbasierten Bootstrap-Methode geschätzt. Demnach liegt die westdeutsche NAIRU Ende des Jahres 1998 im Intervall zwischen 7.9 und 8.5 v. H. Zahlreiche methodische Vorbehalte sprechen indes dafür, diese und andere NAIRU Schätzungen mit Vorsicht zu interpretieren.

Quasi-Monte Carlo methods in stochastic simulations: An application to policy simulations using a disequilibrium model of the West German economy 1960-1994

Different stochastic simulation methods are used in order to check the robustness of the outcome of policy simulations. The application of a macroeconometric disequilibrium model of the West German economy to a fiscal policy simulation is taken as an example. Due to nonlinearities arising from regime specific reactions inside the model, confidence intervals for the simulation results have to be obtained by means of stochastic simulations. The robustness of the results is assessed using different methodologies. In particular, different methods for the generation of uniform error terms and their conversion to normal variates are applied. These methods include standard approaches as well as quasi-Monte Carlo methods.