Theory into Practice: The Struggle over Policy, 1948
Theory into Practice: The Struggle over Policy, 1948
This chapter highlights the concept of the Economics Administration of the Bizone, during 1947–8, which was striving to be a system of improved planning and resource allocation, combined with the long-awaited currency reform. This system did not lead to the liberalization being demanded by neo-liberals such as Walter Eucken or Wilhelm Röpke, even though it was considered to be more flexible and at the same time more consistently applied throughout West Germany. There were differences in opinion over major issues to be resolved such as free market, employment, and the market-splitting scheme. The free-price mechanism was considered to be the real cure for currency reform, only if the Allies played their part by providing credits for imported goods. Kromphardt's market-splitting scheme has been elaborated. The success of the system of rationing proposed by Kromphardt depended on the allocation rights (Bezugsrechte) which would run through the entire economy, from the consumer to the first producer. The Beirat memorandum, dated 18 April 1948 ,stressed that the currency reform, when it came, could make sense only when combined with a fundamental reform of the existing system of economic controls, with the reintroduction of the price mechanism in the economy being the major recommendation of the report.
Keywords: Beirat memorandum, market-splitting scheme, Bizone, 1947–8, currency reform, free-price mechanism, rationing
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