Germany: an experiment in planning by the “free” price mechanism

Abstract

The study discusses and severely criticises the economic policy introduced in Western Germany in the middle of 1948 by the monetary reform and the return to a price mechanism. It is contended that the “features of the German position are not the consequences of the special problems confined to that country. They have a general bearing on the question of decontrol in all impoverished countries dependent on trade with an unstable world economic system. On the contrary, the German ‘experiment’ would have resulted in an open vicious inflation and breakdown in, e.g., Britain and the Scandinavian countries because the Trade Unions in those countries would not have accepted this harsh reduction of their standard of life in favour of a tiny minority; and their resistance would have led to a monetary collapse.

JEL: E31, E52, F10