Physically, the nation was a wreck. Roads, water pipes, sewage pipes, telephone lines, bridges, railroads, and electrical power lines were greatly damaged in some places, and nonexistent in other places.
Economically, the nation had been ravaged by the viciousness of the Nazi government. High rates of taxation burdened the citizens, a centralized bureaucracy dictated the exact price for everything from bread to butter, wages for any job from surgeon to barber were determined by the central government, and large quantities of money had been printed rapidly.
Hitler’s government had inflicted economic atrocities: innocent civilians, in some cases, starved to death.
At war’s end, Germany began to regain its freedom. The Nazi oppressors were gone, and although the western Allies were at first hesitant, they eventually allowed German citizens to obtain the civil rights which they hadn’t had in over a dozen years.
(Sadly, the one eastern Ally - the USSR - kept Nazi policies in place in the eastern sector of Germany.)
As freedom reappeared in West Germany, so did debate. People finally had the liberty to express opinions. One question was about the future of the German economy.
The aftermath of Hitler’s dictatorship left the Germans facing massive inflation - the quick increase of prices, making it difficult for ordinary people to purchase the necessities of daily life.
Historian Thomas Hazlett describes the exciting intellectual discussions of the era:
Meanwhile, an exciting intellectual debate roared in the academic institutions and councils of government, exploding from its previously suppressed condition in an inflationary blast mirroring the flare-up of prices. Out of the haze of viewpoints emerged two predominant schools of thought: the Social Democrats and the “Freiburg School.”
The Social Democrats, whose party was known as the SPD, favored a return to the Nazi’s “national socialism,” with governmental control over prices and wages. The SPD wanted high taxes and government regulation of the marketplace.
The Freiburger Schule wanted to reduce the government’s control, and let ordinary people make decisions about how much they wanted to pay for products, and about which wages they wanted in their places of work.
It would be the Freiburger Schule which eventually won. Konrad Adenauer, Germany’s first postwar chancellor elected in 1949, appointed Ludwig Erhard, a leader of the Freiburg movement.
Quickly, Erhard set about reducing government regulations. The result was the Wirtschaftswunder - the “economic miracle,” which was no miracle at all, but rather the replicable and predictable laws of economics in action.
Soon, Germany’s economy was one of the strongest in Europe, and one of the strongest in the world, thanks to the concept of deregulation and lower taxes. From the horrors of wartime destruction, modern Germany had been reborn.
