The struggle for the market economy
However, the market economy came under pressure again – not for the first time and certainly not for the last time – when, despite a huge increase in foreign trade (there was an increase of 300 per cent in the period between 1949 and 1950) there was a trade deficit due to imports being even higher than exports. There were demands everywhere for credit to be expanded. Advocates of the “English full-employment theory”, in particular, demanded a deficit economy in favour of investments and to the disadvantage of monetary stability. Erhard, however, resisted. The stability of the deutschmark, which was still in its infancy, had to be protected at all costs, both at home and abroad. In the course of the crisis in Korea (the war began in June 1950), inflation in Germany moved into top gear. Erhard persevered with his policy and low and behold, from 1951 on, it seemed that the crisis had been overcome and supply and demand achieved a balance. The market economy had survived the crucial test. Germany’s economy experienced an unprecedented boom in 1953 and 1954 when, at long last, people from all walks of life were in a position to afford luxury items such as fridges, washing machines or vacuum cleaners.