Economic policy in Germany’s young democracy
Prosperity for everyone: that was the target with which to bring war-torn Germany back on course and this could only be achieved through competition. In 1957, it could be put on record that after nine years of social market economy and continual growth, this market policy even belied university professors who up to then had believed that an economy was subject to seven year cycles of boom and bust respectively. The magic word was expansion. Instead of quarrelling about how a small cake was to be shared out, which was advocated in a planned economy, the government took a different route: the cake was to “grow” so that every one could get a large piece. The result was very impressive: in the period from 1950 to 1958 gross national product almost doubled. This was due to a number of factors. One of the keystones of a social market economy is the observing of the democratic basic right of consumer freedom on the one hand and the right of industry to produce what the market demands on the other hand. Compulsory regulations concerning production violate the principles of democracy. Any form of economy dictated purely by the state is thought up by dictators. To be effective, economic policy goes hand in hand with a policy of stable prices.