Last year, I have inaugurated a new irregular series on my blog assessing the merits of UK prime ministers (illustrated through the lens of a single board game each). The rating system seemed robust enough to apply it to other countries/leaders (at least if they are more or less democratic). Thus, I’m branching out! After our first US president earlier this year, we now do a German chancellor – Ludwig Erhard, nicknamed “The Father of the Economic Miracle”. After a quick introduction to the rating system and an overview of Erhard’s life, we go straight into the rating. The accompanying game will be Wir sind das Volk! (Richard Sivél/Peer Sylvester, Histogame).
The Rating System
Some caveats ahead: The chancellors will be rated by the knowledge of their time. If they or their contemporaries could not have known about the effects of something, I will not use my hindsight to mark it as a mistake of theirs. The assessment is focused on their conduct as chancellor, but includes their life after holding the office (in which they will still be regarded in the public eye as (ex-)chancellors).
Now, to the system itself: There are three policy field categories (foreign, domestic, and economic policy) and three more general ones (vision, pragmatism, integrity). A chancellor can earn from one to five stars in each category (for a total sum of up to 30). In detail, the chancellor is assessed as follows:
Foreign policy: Did the chancellor increase German influence in the world and the security of Germans at home? Did the chancellor wield German power responsibly and with positive results for the regions affected (the latter counting for a greater deal in times of German power being great)?
Domestic policy: Did the chancellor increase the liberty of Germans to express themselves and to participate in the political process? Did the chancellor promote domestic security and shape the framework for fair justice dealing with offenses?
Economic policy: Did the chancellor facilitate the prosperity and economic security of Germans (including in the mid- and long-term)? Was the chancellor’s economic policy based on mutual benefit of those involved or did it unduly burden one side?
Vision: Did the chancellor have an idea of what Germany and Europe (the latter counting for more in times of German influence being great) should look like beyond the immediate future? Did the chancellor’s policies steer Germany (and, if applicable, Europe) in this direction?
Pragmatism: Did the chancellor succeed in seeing their policy through from inception to completion? How well did the chancellor manage the support from parliament, society, the administration, the media (the latter counting for more in more recent years)?
Integrity: Did the chancellor understand the office as a means to benefit themselves, special interest groups, the entire country, or another community? Did the chancellor respect the boundaries of the office?
Note: If you have read my UK prime minister or US president ratings, you will remember that I rated them on the global impacts of their vision as well. As the rating system is only really applicable to democratic leaders and no democratic German leader ever had the chance to conduct a truly global policy, I only assess their vision on national and European grounds.
Ludwig Erhard was born on February 4, 1897. His parents owned a clothing store in Fürth, a city in the south of Germany. Erhard was initially destined to follow them in the business, but came back from World War I badly wounded and unable to stand for an extended period of time (as we would have had to as a store owner). He thus turned to academia and studied business. After graduating, he managed his parents’ store for a short time before it went bankrupt in 1928. Erhard then succeeded in following his academic aspirations and worked at various institutes and universities. Erhard was no supporter of the Nazi regime which took power in 1933, but conducted advisory research for them. In 1942, he failed in a bid to head his university’s institute for economics (losing to a member of the Nazi party) and was soon after forced out of the institute. He then set up his own one-man think tank, writing on how to re-build Germany’s economy after the war.
These studies – and Erhard’s relative distance from the Nazi regime – recommended him to the post-war authorities. After quick stints on the local and regional level, he was appointed Head of the Special Office for Money and Credit (and soon after Director of Economics) of the Anglo-American occupation zone in Germany. When he was informed by the Allied authorities of their decision to introduce a new currency (the Deutsche Mark) in the three western occupation zones, Erhard went ahead and also announced the lifting of price-fixing and production controls for most goods.
Economically speaking, the monetary reform and abolition of state control over the economy were not an immediate success. Prices shot up (while wages were still fixed) and unemployed quadrupled to 12%, thus, unrest (leading to a general strike) spread in West Germany. However, the abolition of price-fixing all but abolished the previously ubiquitous black markets. Erhard’s reputation thus was stellar, and the newly formed big-tent center-right party CDU (Christlich-Demokratische Union, Christian Democratic Union) invited Erhard to join forces with them. Erhard, who personally was more of a classical liberal than a conservative, joined with the intent of committing a large party to his ideas of free markets, and successfully ran for parliament on the CDU ticket in West Germany’s first national elections in 1949. Erhard then became Minister for the Economy in the new administration, a post he would hold for the next fourteen years.
Early in Erhard’s tenure, economic success blossomed: The outbreak of the Korean War in 1950 re-committed the American economy to war production – and West Germany seized the opportunity to produce the civilian goods not made in America anymore. The West German economy boomed. Unemployment fell. Wages rose. Exports grew manifold. And Erhard, who steadfastly (but not always successfully) defended his liberal economic principles against any attempts to introduce more state intervention, became the lucky charm of the German “economic miracle”.
Erhard’s corresponding popularity made him a natural contender for the succession of West Germany’s first chancellor Konrad Adenauer. When Adenauer finally resigned in 1963 (aged 87), the CDU and its allies in government elected Erhard as the new chancellor. Erhard, never a politician’s politician, refrained from domestic initiatives. His foreign policy was based on the attempt to align West Germany closer with the United States and Great Britain at the expense of the cordial Franco-German relationship his predecessor had built. Erhard won a resounding electoral victory in 1965, but his relationship with his own party remained frail. When a mild recession hit West Germany and the budget was threatened by Erhard’s earlier commitment to payments to the United States and Britain to make up for the spending of their troops stationed in Germany (the “offset arrangement”), his government broke down (1966). Erhard was forced to resign. The new government which was based on the CDU and the long-time oppositional Social Democrats elected Kurt Georg Kiesinger as his successor. Erhard retired to a quiet life, but remained a member of parliament until his death on May 5, 1977.
Erhard’s only field of ambition during his chancellorship – and also the area of his most obvious failure. His pivot away from France damaged the Franco-German relationship and European integration (which he, against his general economic principles, did not seek anyway). On the other hand, Erhard could not make good on his aim to improve German-American relationships – his professed dislike for France took any kind of lever out his hand, and his willingness to accede to American demands (like promising full payment in the offset arrangement) did not result in any favors in return from the United States (the key prize would have been if America had continued to seek a Multilateral Force with nuclear weapons – which would have resulted in Germany’s nuclear sharing).
Erhard did not start any domestic policy initiatives and ignored the growing societal pressures beyond his favorite topic of the economy. In the rare cases that such topics were forced onto him, Erhard, to his credit, deviated from the previous course of German policy which had been to largely ignore the Nazi crimes: When he found out that his Minister for Displaced Persons, Refugees, and War Victims had been an active Nazi party functionary, Erhard forced his resignation (in a striking difference to his predecessor Adenauer, who kept his Chief of Staff for ten years despite the man’s well-known involvement in drafting the Nazis’ laws prosecuting German Jews).
As German law knew a statute of limitation preventing criminal prosecution after twenty years, all Nazi crimes would have gone unpunished from 1965 on. Erhard was in the minority of government members who wanted to extend the period of prosecution. Parliament passed an extension with a mixed-party majority – Erhard, however, had nor been able to convince his own government colleagues and was not instrumental in securing this majority.
Another policy field of Erhard inaction – this time, however, by design. Erhard’s liberal economic credo kept him from intervening in the economy. That was defensible in the narrow view – economic activity in the short term – but defective otherwise: Erhard knew (more than a year before the budgetary crisis of 1966) that the economic downswing lowered public revenue while his promises concerning the offset arrangement would raise expenses. Erhard thus brought the budgetary crisis, over which he’d fall, onto himself. In the longer term, Erhard’s torpedoing of European integration denied the German economy export markets and delayed the innovation stimulus of increased competition.
Erhard’s overarching vision in life was to allow free individuals to pursue their ambitions in a market economy – but when he entered office, he felt the preconditions for that were already achieved (a debatable claim). Thus, his policy mostly consisted of staying the course. He did pitch a foreign policy plan to refuse the Soviet Union loans and then “buy” German reunification when the Soviet economy collapsed, but was met with (justified) bewilderment by both his domestic and foreign interlocutors. Domestically, his only contribution which went beyond the immediate needs was his idea of a “Formed-Up Society” in which both egoism and pluralism would be overcome – an idea that he brought up during the 1965 election campaign and did not return to afterward.
Likely Erhard’s weakest suit. While he did not attempt much, what he attempted usually fell flat because Erhard was unable to secure support for it (or because he wavered and dropped it in the face of resistance). He had lost his own party’s support for his foreign policy within his first year in office. Their support for his domestic activities (or, rather, the lack thereof) withered soon after. Particularly instructive is the aftermath of Erhard’s 1965 electoral victory: Erhard squandered this testament of his popularity with the voters within weeks. He had intended to downsize the cabinet (and thus to get rid of ministers appointed by his predecessor and unfriendly to him) but waited too long to begin that process. In the end, the parliamentary parties of the coalition partners CDU, its Bavarian sister party CSU, and the pro-business FDP prevailed in securing all the posts for ministers they wanted. Erhard was forced to accept a virtually unchanged cabinet. Only one year after his electoral victory, the remainder of his political capital was spent and he resigned.
Erhard came into office planning to abolish his predecessor’s “democracy of favors” which was based on securing the support of powerful interest groups like the churches, the farmers’ associations, the employers’ associations, or the trade unions by passing legislation and channeling government funding in their favor. While Erhard was not above combatting European economic integration (against his liberal credo of open markets and the benefits of competition) to protect the German farmers from their French competitors, he doled out distinctly fewer favors than his predecessor. He also confined himself to the limits the constitution spelled out and did not attempt to shape the state offices to his liking (as Adenauer had done when he tried to move from the chancellorship into the presidency – but, of course, turning the presidency into the more important office). Finally, Erhard’s more collegial government style confirmed that Germany had moved beyond authoritarianism.
Erhard is the rare case of a politician not defined by the highest office he attained: He took the decisive action of his life as Director of Economics for the Bizone. He is best remembered by the public as Minister for the Economy. Looking at his chancellorship, it’s easy to see why: During this short period in office, Erhard did not attempt much, and what he attempted usually failed. His successors were left to respond to pressures resulting from the changing civil society and to repair the damage done to Franco-German relations (only achieved around ten years later). Erhard positions himself on the lower rungs of the leaders rated.
Full ratings so far:
How would you rate Erhard? Let me know in the comments!
For short overview essays on all German chancellors from Bismarck on, see Sternburg, Wilhelm von: Die deutschen Kanzler. Von Bismarck bis Merkel [The German Chancellors. From Bismarck to Merkel], Aufbau-Verlag, Berlin 2006 (in German).
For a recent English-language biography (or, rather, a hagiography), see Mierzejewski, Alfred C.: Ludwig Erhard. A Biography, University of North Carolina press, Chapel Hill, NC 2005.
The standard, primary-source based, scholarly biography (which is a bit vitriolic, but generally sound in its judgment) is Hentschel, Volker: Ludwig Erhard. Ein Politikerleben [Ludwig Erhard. A Politician’s Life], Olzog, Munich 1996 (in German).