Ludwig Erhard (18971977) was in charge of economic policy as economics director for the British and American occupation zones and was Adenauer's long-time economics minister. Erhard's decision to lift many price controls in 1948 (despite opposition from both the social democratic opposition and Allied authorities), plus his advocacy of free markets, helped set the Federal Republic on its strong growth from wartime devastation. Norbert Walter, a former chief economist at Deutsche Bank, argues that "Germany owes its rapid economic advance after World War II to the system of the Social Market Economy, established by Ludwig Erhard." Erhard was politically less successful when he served as the CDU Chancellor from 1963 until 1966. Erhard followed the concept of a social market economy, and was in close touch with professional economists. Erhard viewed the market itself as social and supported only a minimum of welfare legislation. However, Erhard suffered a series of decisive defeats in his effort to create a free, competitive economy in 1957; he had to compromise on such key issues as the anti-cartel legislation. Thereafter, the West German economy evolved into a conventional west European welfare state.
Meanwhile, in adopting the Godesberg Program in 1959, the Social Democratic Party of Germany (SPD) largely abandoned Marxism ideas and embraced the concept of the market economy and the welfare state. Instead it now sought to move beyond its old working class base to appeal the full spectrum of potential voters, including the middle class and professionals. Labor unions cooperated increasingly with industry, achieving labor representation on corporate boards and increases in wages and benefits.
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