3c: Creating a Social Market Economy, 1945-89 Flashcards
What was industrial output in 1947 compared to 1938?
It had only reached 33% of 1938 level.
What was Marshall Aid?
Money given from the US in 1947 to help rebuild infrastructure. totalled $1.5 billion given to Germany 1948-52
What was the value of surviving buildings in the Western zones in 1945?
RM 62 billion compared to RM51 billion in 1936 (potential growth in right circumstances).
How many calories were most people surviving on post war?
1,500 calories
Which factors led to economic growth?
Currency reform, Marshall Aid, abolition of price controls, still had economically valuable infrastructure.
When was the Deutshmark introduced?
20th June 1948, in much smaller quantities (monetary supply contracted by 90%)
What were wages converted as?
RM1 for DM1
What rate were savings exchanged at?
RM 100 for DM 6.5 (so savings were lost)
How much did industrial output increase by following the currency reform?
50%, as a result of willingness to invest in and produce goods.
What was the effect of abolition of price controls in June 1948?
Ended barter economy, products were put up foe sale again in shops and the black market ended overnight.
How much did taxes decrease by and why?
In 1950, those with average income of DM 2,400’s tax fell from 85% in 1948 to 18% (meant that workers had more money to spend). Tax remained the same for incomes above DM 6,000.
How much did absenteeism decrease by after the economic reforms 1948 and why?
Fell from average of 9.5 hours to less than 2, as people didn’t have to spend time bartering or queuing. This resulted in a greater industrial output.
How much did salaries rise by 1949-55?
80%
What was the unemployment rate in 1950 and then 1960?
11% in 1950 to 1.3% in 1960
What was the social market economy?
Businesses were allowed to develop independently and set their own prices, whilst the state provided welfare intervention.
Which factors characterised the sustained economic growth of the 1950s?
- Unemployment reduced to 1.3% in 1960
- Rising exports
- Rising real incomes after 1952
- Growing investment
- New industrial centres eg the VW plant at Wolfsburg
What was the Investment Aid Law of 1952?
Provided a government subsidy of DM3.2 billion to facilitate industrial investment.
What are some examples of government policies of intervention?
- Work creation schemes
- Rapid rebuilding programme of infrastructure
- Reducing protective tariffs with the emergence of the ECSC and EEC
- 1957 anti-trust law to prevent cartels
Which factors other than government intervention also had an impact on economic recovery?
- Growing world economy, able to export
- Limited defence spending
- Economic foundations eg good sea ports
- The Korean War 1950-53: produced armaments, increasing exports
- Economic integration
What was the policy of co-determination?
Allowed workers to elect representatives to participate in the management of businesses. Maintained good relationship between workers and owners so wage demands were modest. The Confederation of Trade Unions developed idea of social partnership. Led to low levels of strikes and high industrial output.
Where did the German economy rank globally by the 1960s?
Third largest globally
When was the ‘economic miracle’?
1955-66, with an average economic growth rate of 8% in the period.
When was full employment achieved?
1960s
How many East Germans had fled to the FRG?
2 million, who also found employment
How much of coal and iron production and electricity generating plants were owned or controlled by the government by the 1950s?
40% of coal and iron
66% of electricity generating plants
When did the economic miracle grind to a halt?
1960s as a recession hit and growth slowed, leading to a shock wave among the citizens who were used to continued growth and prosperity.
What was unemployment in 1966 and 1968?
3.2%, which fell to 0.8%. Although, despite being minor, the recession had a profound psychological impact.
When did the economy go through a recession?
1965-69
