• Ludwig Erhard, economy minister of West GermanyLudwig Erhard, economy minister of West Germany
  • The economic differences led to a national uprising in the GDR in 1953The economic differences led to a national uprising in the GDR in 1953
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Economical systems

Apart from political estrangement the two German states differed noticeably in their economical systems. While the West had been integrated into the ECCcustomThe European Economic Community (EEC) was founded in 1957 and introduced social market economy the socialistic East was forced into introducing planned economy by the Soviet Union. Especially in the 1950s the economic consequences and differences became apparent.

Market economy vs. planned economy

The social market economycustomThe social market economy is a form of market capitalism combined with a social policy favoring social insurance was supposed to protect citizens of the federal republic from governmental influence. Ludwig ErhardcustomLudwig Erhard is often famed for leading German postwar economic reforms and economic recovery, in his role as Minister of Economics under Chancellor Konrad Adenauer in 1949, the Business Secretary aimed to appreciate free pricing and thereby create fair competition. Furthermore the state committed itself to supporting those who were economically disadvantaged. Thus social market economy was a compromise between capitalism and socialism. In the GRD on the other hand a controlled economy was installed. According to the Marxist-Leninist tenets private property was abolished in order to overcome social differences within society. The main aim of the planned economy was to adept pricing to social criteria and restrict resources to basic requirements1.

Consequences

The rebuilding in the GRD took place under considerably worse conditions than in the West. The federal republic possessed a relatively balanced industry with the heavy industry at the Ruhr. Konrad Adenauer’s policy of integrating Germany into the West lead to an economic boom in the 1950s. The GDR lacked natural resources and industries; furthermore they did not receive reconstruction aids, while the German Federal Republic was supported by the American Marshall plancustomMarshall plan was the American support to help rebuild European economies after the end of World War II in order to prevent the spread of Soviet Communism, this lead to reparations and dismantling of fabrics in the East. In addition to this the citizens had to suffer supply bottlenecks and rising prices. These conditions led to a national uprising in the GDR in 1953 which illustrated the economic differences in the two states2.






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