Abstract
Reviewed by: Armin Grünbacher, University of Birmingham, UK
This is a long overdue book in the English language. Vonyó tackles the myth of the West German ‘economic miracle’, which, while by now discredited for some time in German historiography, still lives on in far too much English literature. After a very comprehensive introduction Vonyó makes his case in five chapters. In the first one, he lays out the basic economic situation that the three Western zones of occupation found themselves in in 1945. Following the arguments made by Abelshauser first in 1975, he outlines in great detail that although Germany was devastated in many ways, the country’s production capacity overall had grown. While the big cities had suffered massive depopulation as people had been evacuated or left on their own to escape the bombing war, by 1946 the overall population in the territory of the future West Germany had grown due to the influx of refugees and expellees, although they all suffered badly from malnutrition and disease. Reconstruction at this stage was also hampered by Allied occupation policies.
Chapters 2 (‘The Economic Geography of West German Post-War Dislocation’) and 3 (‘Growth Accounts of West German Industry’) respectively contain the main argument of the book. In a nutshell, Chapter 2 argues that it was the dislocation of the population away from the industrial centres, where housing and food had remained scarce for some time, which prevented early reconstruction; only once the housing shortage had been addressed did workers return to the industrial centres and only then did production begin to increase. In other words, the end of the mismatch between the labour shortage in the industrial centres and the labour surplus in the rural hinterland was the underlying reason for West German economic recovery. In Chapter 3 Vonyó argues the case for a two-tier productivity development. Initially, that is up to the mid-1950s, he suggests that the growing production and output figures were predominantly due to increased input figures, in particular a growing labour force, which was recruited in a large part from amongst the refugees and expellees who were gradually resettled to the urban industrial areas. He also pays tribute to the economic impact the division of Germany had on the Federal Republic, a topic far too often overlooked in scholarly work. The second phase of the productivity development came only from the mid- to late 1950s onward, when actual per-worker productivity increased due to new production methods, mechanization and automatization and not just because of quantitative increases in input factors. So at least for the first post-war decade, increases in output were due to Nazi-era growth in production capacity (114) and not due to Erhard’s economic policies.
In Chapter 4, Vonyó challenges the traditional notion that the German ‘economic miracle’ had been based on an export boom. Here he argues that at least until the creation of the European Economic Community in 1957, West German trade patterns returned to what they had been before the Nazis, in their ‘drive to the East’, had distorted Germany’s traditional trading and export patterns. Then the European customs union altered export streams once more, this time away from the non-European towards European markets.
Finally, Chapter 5 looks at the underlying economic policy and policy decisions. Far too often this is subsumed under the term ‘Social Market Economy’, a term which is in fact far too amorphous and allows too many interpretations to be much more than a glossy label. While Vonyó has the courage to criticize the effects of Ludwig Erhard’s economic policy as usually overblown or at least in terms of the description not matching reality, Chapter 5 is also the one in which some more careful research would have avoided some unnecessary mistakes or historical misinterpretations. These include the origins of the co-determination law (186) where Adenauer needed the support of the trade unions to get the legislation for the European Coal and Steel Community through parliament; the geneses of the Investitionshilfe Gesetz (189), a far too often overlooked aspect of the reconstruction history, which was driven not by the Americans or the OEEC but by desperation on the part of Erhard and heavy industry to prevent the reintroduction of economic controls in the wake of the ‘Korean Crisis’. Thirdly, while the portrayal of Marshall Aid provides some incredibly detailed figures (e.g. 194, one third of all industrial materials delivered to West Germany having been raw cotton) there are significant mistakes and misinterpretations about the use and impact of the Marshall Plan counterpart funds (196 f.) or the purpose and application of social housing policy in the 1950s. In the face of rapidly rising rent prices, which led to very widespread demands to expropriate for-profit housing companies, to claim that there is even today an ‘excess supply’ (210) of affordable urban housing is inexplicable.
Apart from this criticism, Vonyó’s book is a most welcome enrichment to the history of West German economic recovery. Due to its rich and detailed economic knowledge, well displayed in statistical charts and tables, the book helps to explain that there was no ‘miracle’; that Erhard’s reforms had – at least in the short term – significant negative implications; that his form of the ‘Social Market Economy’ was at least incoherent; and that the true origins of the economic recovery were not the currency reform and Leitsätze Gesetz, as Erhard’s (and for that matter, West Germany’s) founding myth has claimed, but were laid well before 1948.