Theo Balderston. Economics and Politics in the Weimar Republic. Cambridge: Cambridge University Press, 2002. 123 S. $35.00 (cloth), ISBN 978-0-521-77760-5; $35.00 (leinen), ISBN 978-0-521-58375-6.
Reviewed by Gerald Feldman (University of California, Berkeley)
Published on H-German (October, 2003)
This book is a "must" for anyone teaching or studying the history of the Weimar Republic, and Theo Balderston has performed a great service in writing it. There is no way to understand the Weimar Republic and its demise without comprehending the basic economic issues that were the constant subject of its politics. And yet, a great many of those who engage themselves with the history of Weimar have only the most elementary understanding of the economic issues involved in the inflation and depression and in the reparations question. Manifestly, these were very damaging phenomena, and a mere glance at any of the volumes containing the protocols of the cabinet meetings of Weimar's governments will make it obvious that those who were politically responsible for the Republic's fate were preoccupied with these problems day and night. Understanding and evaluating their ruminations and policies, however, is quite another matter. For a long time, many historians tended to skip the economic issues by clinging to conveniently available explanations, either those of the Marxist variety or allegedly "Keynesian" ones. The former, which blamed Weimar's demise on capitalism, while never really plausible, have now suffered shipwreck for obvious reasons. The latter, which more or less blamed Bruening for failing to follow an anti-cyclical policy during the Great Depression, were based on a profound underestimation of the international and domestic constraints on Bruening's freedom of action. While a great deal of controversy surrounds the defence of Bruening and his policies by Knut Borchardt in his pioneering work of the 1970s, it is utterly impossible to do an end run around arguments that Weimar was in crisis even before the Depression began, and that Bruening did not have the options he was thought to have had by the postwar generation of historians. More generally, a vast literature has developed dealing with the inflation, depression, and reparations that simply needs to be taken into account if one is to treat the history of the Weimar Republic responsibly.
Naturally, it is possible to pass over these issues just as one passes over the names in Russian novels, without ever trying to pronounce them. But for those who are genuinely perplexed by the meaning and significance of the new work on Weimar economic history, Balderston's short and rich book provides a sensitive guide to the literature and the controversies. Indeed, the text even contains a glossary of terms that appear in bold in the text, creating the possibility of adding the "forward exchange rate of the mark," for example, to one's active vocabulary! Balderston does assume a certain basic understanding of economics, but he does a fine job of defining both economic and historical terms as well as providing an up-to-date bibliography.
The book is divided into five chapters and an epilogue. The first chapter deals with the demobilization and revolution and concentrates on the extent to which Weimar was saddled with a "limping capitalism" (p. 8) because of the conditions under which it was born. Balderston then turns to a masterful discussion of the controversial reparations issue and, while giving his due to the various arguments for and against German good faith with respect to fulfilment, comes to the sensible conclusion that many of the uncertainties and expectations of financial markets were strongly influenced by the "capacity to pay" question which, in turn, depended on assessments of Allied will to enforce the Treaty and German will to comply. The third chapter of the book is devoted to the inflation. Here Balderston provides an illuminating discussion of the various theories of inflation, especially the quantity theory and the balance of payments theory, and explores their plausibility in explaining various aspects of the development of the inflation and also the decisions to stabilize.
The last two chapters of the book are devoted to the 1924-1929 period and the "slump." Few historians today would talk about a period of genuine prosperity in Weimar, and Balderston concentrates on the questions that address the extent to which it was a period of stagnation. A general consensus now prevails that growth was inadequate, profits and investment too low, and wages too high for the economic circumstances. At the same time, however, Balderston makes the important point that Germany was greatly disadvantaged by the loss of technological primacy in important fields, thanks to the surrender of patent rights and more generally due to the outcome of the war and to the inflation. It thus faced an inhospitable international competitive environment that deepened its problems.
Balderston's discussion of the depression centers, as one might expect, on the debate over whether there were alternatives to the Bruening deflation. He rightly argues that no consensus has been reached on the causes of the policy or on the alternatives, since these depend on counterfactual arguments that are difficult if not impossible to demonstrate. Bruening himself was well aware of the reflationary alternative, especially after the banking crisis of July, 1931. Balderston has himself contributed importantly to the discussion in a book which argued that fiscal irresponsibility prior to the depression and the inability to finance the deficit (a chronic Weimar problem because of the political stalemate) undermined confidence in the Reichsmark while promoting fears of state bankruptcy.[1] As he modestly notes, however, this argument does not explain why Bruening did not pursue a policy of exchange controls and devaluation. He also takes note of Borchardt's arguments against the feasibility of a devaluation because of Germany's international obligations under the standstill agreements made following the banking crisis. Balderston reminds the reader in his epilogue that the politics and economics of Germany produced a monumental tragedy, but that a full comprehension of the motives of the actors or of the alternatives will never be possible. Nevertheless, this book is very helpful as an introduction to the complexities of what we have learned and to the matter of what issues deserve further investigation.
Note:
[1]. Theo Balderston, The Origins and Causes of the German Economic Crisis: November 1923 to May 1932 (Berlin, 1993).
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Citation:
Gerald Feldman. Review of Balderston, Theo, Economics and Politics in the Weimar Republic.
H-German, H-Net Reviews.
October, 2003.
URL: http://www.h-net.org/reviews/showrev.php?id=8219
Copyright © 2003 by H-Net, all rights reserved. H-Net permits the redistribution and reprinting of this work for nonprofit, educational purposes, with full and accurate attribution to the author, web location, date of publication, originating list, and H-Net: Humanities & Social Sciences Online. For any other proposed use, contact the Reviews editorial staff at hbooks@mail.h-net.org.