Bythe end of this year, unemployment is expected to go as high as 4 million (out of 9 million). As a proportion of the population (16 million) this is higher than the 6 million jobless that helped bring Hitler to power in 1933. Similar strikes and protests elsewhere are being reported almost daily as workers realise the scale of the economic disaster that threatens them. GUS FAGAN reports from Berlin A recent article on east- created a boom reminiscent ern Germany in Die of the sixties. But this has Zeit was titled: "The happened at the expense of End of an Illusion'. A the productive capacity and of the workers in the eastern study of east German territories. To understand opinion published on 22 this, one has to look at how February showed that the political rationale of 81.3 per cent of the east unification related to German electorate economic rationality, to the were 'disillusioned' "logic of capital'. with the promises made Planning dismantled by West German leaders. Where state-planning The Wickert Institute in mechanisms are being disTübingen described this as a mantled in favour of market 'quantum leap in public liberalisation and private inattitudes'. A similar survey vestment certain adtwo months previously had vantages must usually exist shown 62.4 per cent to attract the private inves'satisfied', with only 37.6 tor - closeness to markets, per cent 'not satisfied'. lower costs, state subsidies.
This 'quantum leap' con In order to soften the blow tinued into March with tens of liberalisation, bodies like of thousands demonstrating the IMF usually recomagainst unemployment in mend currency devaluation. Leipzig, the cradle of the The discussion of German revolution' in 1989. What unification in 1989 also enhas happened, and why? visaged such a gradual The confidence in an prOCess. 'economic miracle' was not But Kohl and the West limited to the citizens of the German Christian ex-GDR. Numerous com- Democrats (CDU) decided, mentators, even those who for political reasons, on were pessimistic about the rapid unification. The prospects for Poland or debate on transitional Hungary, thought that west already underGerman capital would bring way in the east, was marthe east up to western levels ginalised by the all-German of efficiency and living electoral battle between the standards. After all, Ger- CDU and the Social many is waiting to step into Democrats (SPD). the shoes of the USA as the The first move by the world's leading capitalist chancellor, popular in the economy. east, was the currency unification of July 1990. To Economic boost own western currency and Unification has indeed buy western commodities been a boost to the west was an attractive prospect German economy: in- for the average east Gercreased growth, employ- man. This currency unificament and a capacity utilisa- tion, about which there were tion of over 90 per cent have serious misgivings among Germany's economic experts, was the decisive step. The CDU now saw no political advantage in a drawn-out unification process.
The political rationale behind Kohl's policy was clear. The economic consequences were by no means made obvious, although plenty of experts pointed them out, including the • president of the Deutsche Bank.
Huge revaluation The currency union was equivalent to an upward revaluation of east Germany's currency of 300 per cent. By contrast, the currency reform in West Germany in 1948 involved a devaluation of the D-Mark for over two decades, boosting exports and keeping out competition on the domestic market.
This currency union in 1990, combined with the rapid introduction of radical market liberalisation meant that east German firms couldn't cope with the competition. On 1 July 1990 the economic wall which had protected east German industry from all western competition disappeared. There is no comparable example where a national Empty promises - Chancellor Kohl economy has been exposed to such a shock.
Now the negative consequences of rapid unification have even been admitted by Bundesbank president, Karl Otto Pohl.
In the words of one economic critic: 'It was sheer adventurism, precisely in the new east German territory, to want to start a laissez-faire experiment. After all, the laissez-faire period was already at an end at the beginning of this century. The belief that the market can solve everything is not only naive, it is also irresponsible, especially when the conditions of competition on the market are extremely unequal."
Raise wages
At the same time, the consequent (political) need to rapidly raise wages to west German levels eliminated the incentive of lower production costs for western capital. In the words of Lutz. Hoffmann, president of the German Institute for Economic research (GIER) in Berlin:
'One didn't need a theory of system transformation to foresee the consequences of this. Industrial production [in the east] fell by 50 per cent in the first two months Angry German workers march through Leipzig - once the centre of the revolution that led to unification after currency union and unemployment increased rapidly.
The west German boom is a result of the fact that west German industry has acquired 16 million consumers. East Germans, with their new western currency, bought 800,000 cars in west Germany in 1990 - a flow of 7 billion marks from east to west.
Meanwhile Wartburg, the east German car producer, is on the verge of collapse. It closed at the end of March with a loss of 6,800 jobs (plus 30,000 jobs in the regional support industry). For west German commodity producers, commercial chains, car manufacturers and insurance companies, east Germany is the jackpot. For the east German economy, however, and for the workers in the five new Länder (states), the result has been disastrous.
In the third quarter of 1990, industrial production declined in the east by 48.1 per cent. In others it was between 60 and 64 per cent. Even in branches where high-quality products were once sold worldwide, in electrotechnology, the decline was 42.1 per cent.
For those who believed that the east Germans would be better off than the other east Europeans during this "transition phase', it is interWomen strikers esting to compare the decline in production in all of eastern Europe during 1990. As can be seen from Table 1, the decline has been far more drastic in east Germany.
According to the economist Harry Maier (one-time member of the GDR Academy of Sciences):
'What is happening is a generalised destruction of productive capacity which Table 1 Eastern Europe: Decline i EAST G POLAN ROMAI BULGA YUGOS HUNGA CZECH will lead to levels of mass unemployment previously unthinkable' Maier thinks that a sig nificant part of east German productive capacity could be modernised and integrated and is already of a relatively high quality. In the old GDR, 2.8 per cent (1989) of the value of gross social product went into research, similar to the West German figure of 2.7 per cent. The proportion of skilled labour in the GDR was 62.5 per cent (1988), in
rsprechen ein! cont! Socialist Outlook April 9th 1991 Page 5 Getting rid of Gorbachev the easy way?
Hier wird GESTREKT
Helmut Löse Deine