FRG Flashcards
What is a free market economy?
An economy where the gov does not interfere in the policies of businesses to control the economy, including prices and wages.
What is a social market economy?
A free market economy with elements of social support for the poorest. E.g. a ‘socially responsible’ free market economy.
Who was the first economic minister of the FRG?
Ludwig Erhard 1949-63. He believed in the social market economy.
Why was economic recovery held back between 1945-49?
Reparations - the French and Soviets dismantled factories, undermining any chance for econ recovery.
The Reichsmark was almost worthless.
Each Allied zone was run by a military high command and governed very differently.
Economic and physical devastation in Germany meant that some Germans left and never came back.
How was the economic recovery kick-started between 1945-55?
Marshall Plan 1947 - $1.4 million.
The Deutschmark was created in 1948 which helped to stabilise the economy and break up the black market. It also meant that wages were now worth something.
What evidence is there that the West German economy had recovered dramatically?
Rise in exports - 1950, 8,363 (million marks) and in 1970, 125,300.
Unemployment - 1950, 8.1% and in 1965, 0.5%.
Volkswagen - sales of VW expanded. In the 1960s, sales averaged 400,000 a year.
Why did the economy recover so rapidly?
- The Korean War (1950-53) - The war in Korea sparked a need for war supplies. The FRG’s industrial good were in high demand. Joined NATO in 1955 so was allowed to re-arm.
- New investment - many businesses had recovered by the mid-1950s and were able to invest in new, more efficient equipment and factories. Produced high-quality goods which were sold at low prices. Good rep led to more imports.
- Workers - influx of refugees meant that there were a large pool of guest workers for businesses to draw on. During 1950s, 3.6m workers came from East Germany.
What happened during the recession of 1966 and 1967?
Trade reduced and unemployment increased.
The number of guest workers, who were vital to economic growth) decreased from 1.3 million at the start of 1966 to 991,000 by the end of 1967.
Industrial productivity fell.
How did Karl Schiller (economics minister) respond to the recession?
Government planning, intervention and control was increased.
Cartels were introduced to stop prices rising
1967 Economics stabilisation law - allowed gov intervention in times of economic crisis to limit regional spending and introduced Five year plan system for all soending.
What were the oil crises of 1973 and 1978?
The Fourth Arab-Israeli war broke out in 1973 and OPEC (the Organisation of Petroleum Exporting countries) put oil prices up. 1972 - 10.8bn DM for 140m tonnes, 1978 - 49bn DM.
FRG got 40% of its fuel from OPEC.
Unemployment rose sharply - not helped by the post war baby boom. Ban was placed on recruiting guest workers.
How did the FRG overcome economic challenges in the 1970s?
- Exports remained high due to high demand.
- Measures were introduced to reduce oil consumption, car free Sundays, propaganda encouraging people to be eco-friendly, atomic power, gov did not subsidise oil.
- Public spending was cut and income tax raised in 1975.
1973, gov put a stop on hiring guest workers and banned permits for families of workers already in the country.
What evidence is there that the FRG sought to establish closer ties with Europe?
- 1951, joined the Council of Europe.
- 1955, FRG joined NATO, anti-communist.
- 1957, signed the Treaty of Rome to become one of the founding members of the European Economic Community(EEC). 1958-69, imports and exports doubled with countries in the EEC.
How did WW2 affect living standards in West Germany?
- 1/5 of all housing had been bombed.
- influx of refugees led to more pressure on availability of housing. Rationing was required.
What evidence is there that living standards rose between 1949 and 1989?
- 1949, 222,000 new homes built, 1971, 553,000 built.
- By 1971, 96% of new homes had central heating, this was 0% in 1952.
- Incomes rose and wages kept ahead of prices.
- As the economy strengthened, standards of living rose and consumerism rose.
Did everyone experience a similar rise in their standard of living?
No, social inequality deepened. In the 1960s, `1% of all households owned 35% of the wealth in the FRG. This rose to 78% of the wealth in 1973, and dropped to 45% in 1988.
What are the main features of the Basic Law?
- Equal rights to all German citizens, regardless of sex, race, political views, or religion.
- Free speech, the freedom to form unions or other groups, free assembly and no censorship.
- State education for all (although private schooling allowed)
- Article 20, the FRG was a democratic and social federal state. State authority is derived from the people.
- Article 21, political parties must conform to democratic principles. If not they are abolished.
How did the Basic Law overcome problems encountered in the years of the Weimar Republic?
- Parties had to gain at least 5% of votes to gain representation in the Bundestag. Restricted the rise of extremist parties.
- Under Article 21, political parties who were seen to be undermining the democratic nature of the FRG could be abolished.
What similar problems did FRG governments still encounter?
- The need for coalition governments was not avoided.
- First election, CDU/CSU won 31% while the SPD won 29.2% and the FDP/liberal parties won 11.9%.
In what ways did Adenauer bring about greater political stability to West Germany?
- Forceful management of the Bundestag and government meant that he kept FRG coalitions together until 1957, when the CDU/CSU won a majority, remained until 1969.
- 1952, the extreme right-wing Socialist Reich Party was banned and in 1956, the KPD was disbanded.
What was the Hallstein Doctrine?
- The doctrine hardened West Germany’s attitude towards East Germany.
- Refused to recognise the legality of the GDR as a separate.
- Would no longer have any relations with any country which had diplomatic relations with the GDR.
Why did people criticise Adenauer’s approach to governing the FRG?
- SPD and FDP called his leadership ‘Chancellor democracy’ suggesting that he had more power than the Basic Law allowed.
- Appointed weak ministers whom he treated as advisors not equals.
- SPD did not like closer ties with the West. Thought it would hold back German unification.
- Article 21 moves were seen as undemocratic.
- Criticised for his year zero approach. Had he allowed too many ex-Nazis into his government.
Which chancellors succeeded Adenauer?
- Erhard (1963-66)
- Kiesinger (1966-69)
- Brandt (1969-74)
- Schmidt (1974-82)
- Kohl (1982-98)
Why did the CDU become increasingly divided in the 1960s?
Splitting between Atlanticists, who wanted to carry on working with the West, and Gaullists, who wanted to shift the focus to cooperation with East Germany.