This group, composed mainly of thinkers in the fields of economics and political science, included Walter Eucken, and had significant influence on the post-war policies of chancellors Konrad Adenauer and Ludwig Erhard.
The Freiburger Schule emphasized that the dignity and value of human life could be respected only in a society whose government also respected property rights: low rates of taxation and free domestic markets.
Parallel to the Freiburger Schule was another group, the Freiburger Kreis. The membership was to a significant extent overlapping between the two.
The Freiburger Kreis was less engaged in technical economics, and more concerned with a moral and cultural analysis of the situation in the late 1930s and early 1940s. It came to the conclusion that people who considered themselves followers of Jesus had a moral obligation to oppose Hitler’s government.
Both the Freiburger Kreis and the Freiburger Schule had connections with anti-Nazi resistance groups throughout Germany, and with anti-Hitler leaders like Dietrich Bonhoeffer. The Nazis executed members of both groups who’d been complicit in the July 1944 assassination attempt on Hitler.
The groups also had contact with a larger underground network outside of Germany. Scholars like Wilhelm Röpke had been forced to flee Germany when the Nazis took over in 1933.
Yet Röpke remained, by means of published articles, a part of the discussions held by the two groups. Referring to the Freiburger Schule as the ‘German school,’ David Henderson writes:
Among the members of the German school were Wilhelm Röpke and Ludwig Erhard. To clean up the postwar mess, Röpke advocated currency reform, so that the amount of currency could be in line with the amount of goods, and the abolition of price controls. Both were necessary, he thought, to end repressed inflation. The currency reform would end inflation; price decontrol would end repression.
The groups in Freiburg dealt with economic questions: how to revitalize Germany which had been devastated by Nazi monetary policies, by wartime bombing, and by the Allied occupation. They also considered social and political forms: how to increase personal freedom and political liberty, to prevent a repetition of dictatorship’s horrors and enable prosperity. They pondered moral and social questions: the obligation to oppose Hitler was tied to the obligation to respect the dignity of human life, including the obligation to respect property rights.
The last point followed from this line of reasoning: if a person spends time working to earn money, and the government confiscates money, the government is essentially confiscating time. Because life consists of time, the government would be confiscating a person’s life, which would amount to slavery or murder, an accurate description of the Nazi regime.
To control retail prices, or dictate wages, is likewise a violation of a human being. These Freiburg discussions, held before the fall of the Nazi government, constituted a radical resistance, treason against Hitler, and a courageous stand for human dignity:
Ludwig Erhard agreed with Röpke. Erhard himself had written a memorandum during the war laying out his vision of a market economy. His memorandum made clear that he wanted the Nazis to be defeated.
Although several members of the Freiburger Kreis and the Freiburger Schule were murdered by the Nazis, those who lived faced opposition after the war.
As the postwar situation clarified, two large political parties emerged in West Germany, the SPD and the CDU/CSU, alongside several minor parties. Among those minor parties was the FDP. The SPD wanted to keep in place the same economic program which had been in operation since the mid 1930s.
More a scholar than a politician, Ludwig Erhard eventually made his home in the CSU/CDU. He could have easily wound up in the FDP. Both the CDU/CSU and the FDP were friendly, in slightly different ways, to Erhard’s views. David Henderson describes the opposition to the program of the Freiburger Schule.
The Social Democratic Party (SPD), on the other hand, wanted to keep government control. The SPD’s main economic ideologue, Dr. Kreyssig, argued in June 1948 that decontrol of prices and currency reform would be ineffective and instead supported central government direction. Agreeing with the SPD were labor union leaders, the British authorities, most West German manufacturing interests, and some of the American authorities.
Despite this opposition, Adenauer and Erhard were able to implement policies of lower taxation and deregulation. This ushered in the Stunde Null - the ‘Zero Hour.’ This was a pivotal historic reset, a chance to restart after the destruction of the war.
Adenauer became chancellor in September 1949 and held office until 1963. Erhard was chancellor from 1963 until December 1966. During these years, the high tax rates from the Nazi era were reduced, and the price controls and wage controls largely eliminated.
The free market was, at first, a strange experience for ordinary German consumers, who hadn’t experienced such a thing for well over a decade. Ludwig Erhard introduced education programs for shoppers, helping them learn to look for good prices.
As obvious as it may seem to some readers, it was an odd notion for postwar Germans that the same package of coffee could be sold for three different prices in three different stores. They had to learn the skill of comparison shopping.
The effects of deregulation appeared quickly, and in nearly every metric: production rose, unemployment fell, infrastructure was rebuilt, and general economic health appeared. This was the Wirtschaftswunder - the ‘economic miracle’ - which was no miraculous violation of natural laws, but rather the predictable and replicable result of economic principles.
The growth during the years of Adenauer and Erhard formed the foundation for, and provided the momentum of, the German economy in the following decades, when it became not only the most powerful in Europe, but one of the most powerful in the world.
