Economic policy in the Federal Republic has been dominated by two long-serving Economics Ministers — Professor Ludwig Erhard (Economics Minister 1949–63) and Professor Karl Schiller (Economics Minister 1965–72). Both were economists turned politician, whose political careers ended unhappily, and both believed in a market economy rather than a centrally controlled economy, but they differed as much in their characters as in their contributions to economic policy. Erhard was a Bavarian member of the C.D.U., a man of transparent honesty, more a preacher than an intellectual, with a verbose and rambling style. Schiller was an S.P.D. member from Hamburg, tough, ambitious and hardworking, with a keen mind and an incisive style. Erhard had one big idea — that a market economy would work better than a centrally planned economy — and was able to affect the course of German history by implementing this idea at a time when it was by no means generally accepted. Schiller built on this foundation by introducing more sophisticated techniques, particularly in the fields of (a) short-term anti-cyclical measures (b) medium-term budgetary planning. A brief outline of the development of economic thought on these issues is necessary to explain the policies adopted in the Federal Republic.
KeywordsFederal Republic Social Economy Full Employment Grand Coalition Social Market Economy
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