Controlling the Economy

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.