German Capitalism

Paper Summary:

This paper examines how German capitalism from the Second World War until the present has been strongly influenced by West Germany's commitment to a social market economy, East Germany's ties to the Soviet Union, and reunification in 1990. It looks at how, as WWII ended, Germany saw itself divided into East and West Germany and how, with the unification of East and West in 1990, the large and powerful German economy has continued to struggle with unemployment and the modernization and integration of the East German economy.

From the Paper:

"In West Germany, the stable and orderly political climate translated into a largely stable and orderly economy. The years from 1948 to 1960 were characterized by generally solid growth in the economy. One problem was a shortage of capital, tackled by the government in three ways: 1) expansionary monetary policy, 2) the creation of tax incentives for saving, and 3) governmental investment planning. A number of income tax reforms took place from 1948 to 1955, while Tax Law Adjustment Acts of 1948 and 1948 were created to bring tax cuts for the creation of capital. In terms of investment planning, the government focused on mining, energy and steel. During the years from 1948 to 1950 foreign trade increased a stunning 84.4% per year."

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