West Germany: where the American dream came true; The Fourth and Richest Reich: How the Germans Conquered the Postwar World, by Edin Hartrich. New York: Macmillan. $12.50.
Hartrich, a journalist whose experience in Germany spans half a century, here tells how after World War II the Germans gave up militarism for economism, and how economic success enabled them to become the dominant power of Europe in the last decade.
Since 1970 Germany has not only developed the most successful economic system in Europe since the beginning of the Industrial Revolution, but with far fewer resources it has consistently outperformed America in its growth of productivity , control of unemployment, increase of GNP, responsiveness to international shortages of energy supplies, and peaceful management-labor relations. It thus provides its citizens with a higher standard of living than American citizens are able to enjoy and a far more predictable climate for business investment.
The result has been achieved by attention to "ecopolitics," the use of politics in service of basic economic matters. In the early postwar period, it had in essence a two-tiered political system, with Adenauer giving attention to international and political affairs. The other tier was economic policy under Prof. Ludwig Erhard, the real architect of postwar Germany. Erhard had a vision of capitalism with a social conscience and became the prime mover in lifting a broken and defeated nation with outdated institutions into one of the most productive, prosperous, and stable societies in the free world.
Erhard, the son of a peasant, before World War II had refused to enroll in a Nazi association of university teachers and thus he won the support of the occupation government. He developed his own economic, independent philosophy, first as economic minister for the state of Bavaria under US military government and later as author of currency reform and then as a full-fledged national economic planner. As early 1948, he boldly overthrew policy directives from the Allied powers and set on a course that was to revive the basic economic structure of postwar Germany.
Dr. Hjalmar Schacht, prewar leader of the Reichsbank, set an industrial policy whereby Germany developed heavy industry and bought consumer goods and agricultural products from Western Europe. His program of foreign aid also helped Germany find overseas markets for its products.
Germany had many historical advantages: The experience of the disaster of the 1920s, when democracy fell apart, made the postwar citizenry readier to cooperate to preserve democracy. The changes after World War II led Germany to give greater attention to labor and to develop an up-to-date labor- management system with priority to labor's wishes. Labor, in turn, had great sympathy with overall management goals and was willing to accept rapid innovation. The close link between banks and companies also enabled companies to be concerned about long-term developments in industry without the demand for showing quarterly profits, as in American firms, at the expense of long-range investment. Government provided leadership but insisted on the discipline of market forces.
To an academic this book seems at times like a collection of repetitious newspaper articles, rather than a tightly intergrated argument. Hartrich does bring a broad historical perspective and the journalist's eye for interesting detail, especially covering the personalities involved. The book does not engage in systematic cross-national comparisons. At times Hartrich talks as if the Germans handled many problems better than anyone else in the world without realizing that the Japanese often profited from German experiences and have even surpassed the Germans in pursuit of ecopolitics as a system which raises the standard of living of the people and ensures a stable and healthy economy.
American help may have played an initial postwar role but the later successes cannot be explained by American assistance. Germany's economy is much more successful than our own, and the reader can get some perspective on what America must do if it is not to continue down the path of very rapid economic decline, right on the heels of England.