1957: Ludwig Erhard's Annus Terribilis

Abstract

Since its inception in 1948, there has been considerable confusion about the nature of the social market economy built by Ludwig Erhard in West Germany. This article shows that Ludwig Erhard viewed the market itself as social and supported only a minimum of welfare legislation. It shows that Erhard suffered a series of decisive defeats in his effort to create a free, competitive economy in 1957. Thereafter, the West German economy evolved into a conventional welfare state.