Examining the political and economic history of Germany

Germany has undergone a number of political and economic changes during the 20th century, which have combined to have a significant impact on the country’s development during this period. This paper has therefore been written to research and examine the political, social and economic history of Germany during the 20th century, and to identify the major events, which have had an impact on the country’s development, along with an examination of the current socio-economic and political situation in the country. In order to achieve these aims a considerable amount of research has been conducted into this subject and this information will be referenced accordingly throughout the paper in order to support the arguments that will be presented. This paper will therefore attempt to examine the political and economic history of Germany, while it will also seek to review the current economic system that is in place in the country.

Furthermore, this paper will also attempt to determine the extent to which the economic system that is in place in Germany is an overall reflection of the country’s unique history and culture over the last century, which has seen Germany develop in a variety of positive ways. Finally a balanced conclusion will be drawn which will present the most important challenges facing Germany in 21st century Europe and as part of the global community.

An examination of the history of Germany during the 20th century must begin with the first major event that helped to shape the modern country of Germany that is in existence today. Detwiler comments that during the month of June 1914 “the heir to the Habsburg throne was assassinated by a pro-Serbian fanatic, the Austrians, with strong German support, attacked Serbia, unleashing a general war” (Detwiler, 1999, p. 149) on Europe. This conflict is known as the First World War and it took place between 1914 and 1918. The war was contested between the Allied powers of Britain, France and the United States, which fought the Central Powers of the German, Austro-Hungarian and Ottoman Empires. The devastation and loss of life that was caused by the war, ended with the defeat of the Central Powers, which weakened Germany and saw it subjected to the terms of the Treaty of Versailles. The treaty subjected Germany to a number of economic and military restrictions, while it also saw the territories of Alsace and Lorraine annexed back to France in November 1918.

Germany recovered economically and socially from the devastation of losing the war during the subsequent decades. Indeed by the 1930’s Germany was “in the hands of a dynamic leader with unquestioning faith in himself and the ability to generate fervent loyalty in others, a man who promised to lead Germany once more to an era of prosperity, stability, strength, and respect” (Detwiler, 1999, p. 185) in the eyes of the other major world powers. Germany, under the leadership of Adolf Hitler, engaged in a number of military and economic rebuilding programs after he took control of the country in 1933. These public works initiatives reduced unemployment while covertly developing the country’s military for the next major event in the history of 20th century Germany. The Second World War was caused by the Nazi invasion of Poland, and subsequent attack on other European nations in September 1939.

This conflict also resulted in defeat for Germany, and subjected the country to even greater devastation and loss than the previous war. The Allies constantly bombed Germany’s industrial areas during the latter years of the war, and as such the country had to be rebuilt economically, politically and socially after the end of hostilities in 1945.

After the defeat of Hitler and the Nazis, Germany was divided between the Allies in the West and the Soviet Union in the East and as the Cold War developed between the United States and the Soviet Union, Germany became the center for a direct conflict between the two ideologies and economic systems. In West Germany and West Berlin, capitalism was the prevailing economic system that was developed under economic stimulus packages such as the Marshall Plan. In Eastern Europe under Soviet control, Communism was forced onto the populations of East Germany, Poland, Czechoslovakia, Hungary, Romania, Yugoslavia, Albania and Bulgaria, which saw state control over socio-economic matters. Turk asserts that “each became a symbol of one of the competing political and economic systems—the free enterprise, democratic system of Western Europe, and the centrally planned Communist Party regimes of Eastern Europe” (Turk, 1999) which lasted in Eastern Europe for the next four decades.

The end of the Second World War created a political crisis in Europe during the Cold War that lasted until the collapse of Communism in 1989. After the collapse of Soviet control in East Germany the country was reunified in March 1994, and adopted the West German system of political and economic control under the Berlin/Bonn Act. Weber notes that “the merging of the GDR with the Federal Republic set aside the borders drawn up in the wake of the Second World War, while the opening of the ‘Iron Curtain’ marked the end of the Cold War in Europe” (Weber, 2004, p. 266) ensuring a new period of economic prosperity for Germany. These events led to the current economic system of capitalism being adopted right across the reunified Germany, and the current economic system in Germany is a capitalist free market economy. Indeed, Turk notes that “after the founding of the Federal Republic in West Germany in 1949, a three-power civilian High Commission replaced the military occupation government and retained considerable control” (Turk, 1999) over the economy until the eventual reunification of Germany in 1994. However, according to Weber “as early as 1991, it could no longer be overlooked that the union of the two states in reality represented only a first step in a fundamentally more complicated economic and social process of unification” (Weber, 2004, p. 268) which lasted for three more years until the communist system was abandoned completely in all of the remaining Communist Eastern European countries.

The capitalist system that is in place in Germany today reflects the history and culture of the country especially over the last century and a half. Germany has developed politically and economically since the era of empires and dictators and Ludwig Erhard was responsible for building the modern economic success, which Germany has enjoyed over the latter half of the 20th century. Ludwig Erhard the German Chancellor from 1963-1966 “insisted on a laissez-faire policy toward business and industry, a free and competitive marketplace without cartels or government regulations” (Turk, 1999, p. 148) which allowed post-war Germany to flourish. In addition to the adoption of a laissez-faire economic policy, social welfare programs were also introduced. Turk comments that “the government guaranteed the stability of the currency and provided for the security and welfare of the workers and those who were unable to work” (Turk, 1999, p. 148) which helped to strengthen Germany socially, politically and economically during the decades after the end of the war. In addition to these political initiatives to increase economic prosperity “West Germany produced industrial, consumer, and export goods that helped satisfy European demands long postponed by the war” (Turk, 1999, p. 149) ensuring that German consumer products became highly desirable in the capitalist free market economy.

Therefore, in conclusion Germany has developed into a global political and economic leader, after a century in which it suffered two heavy military defeats and had to undergo periods of rebuilding socially and politically, on numerous occasions. The most important challenges for Germany in the future as a part of the global community are that extremist governments should not be allowed to take control as Hitler did previously, and the economic success which Germany enjoys must also be maintained. In addition to these challenges Germany must also attempt to become a world leader in the development and implementation of sustainable and green technologies, which have the future of the planet in mind not just Europe.
Detwiler, D. S. (1999). Germany: A Short History (3rd ed.). Carbondale, IL: Southern Illinois
University Press.
Turk, E. L. (1999). The History of Germany. Westport, CT: Greenwood Press.
Weber, J. (2004). Germany, 1945-1990: A Parallel History. Budapest: Central European
University Press.