Perspectives on Modern German Economic History and Policy.

• Author: Fisher, Douglas

This book contains a collection of essays written originally in German from 1961 through 1984; most were published collectively (in German) in 1982. Only the prominent position of Knut Borchardt in the debate over modern German economic development could justify such a time lag. In fact, these papers are interesting, but they also show their age at times.

Borchardt's essays are essentially on the macroeconomy and, while largely unstated as such, there is a theme. This is that modern German macroeconomic history is best understood on a continuum from 1850 to 1980, with the events from 1914 to 1948 treated as exceptions dictated more by political than economic factors. This is convincing, although the evidence is neither complete nor up-to-date.

Beginning about the middle of the book is a series of essays on German growth and cycles covering roughly a hundred year period. In his discussion of changes in the nature of the business cycle over this period, Borchardt is influenced mostly by descriptive "models" of the cycle, as in the so-called "growth cycle." He argues that growth cycles are not new and predominate in the pre-1914 period and that they are not currently milder. The "demonstrations" are undoubtedly correct as far as the data take one, but the absence of any economic theory (e.g., real business cycle theory) mars this discussion. We seldom talk of growth cycles anymore, either. This paper also analyzes price indices, share prices, the investment ratio, interest rates, and unemployment, in a loose collection of indicators that gives one an idea of the data that are available.

Borchardt's essay on trends, cycles, and random events in 20th century Germany has an even broader theme. This essay is directed to a lay audience, apparently, and offers merely a statistical theory that focuses on regularities. His point is to emphasize that cyclical episodes (e.g., the Weimar cycle) ought to be imbedded in long-term trends (and long-standing cyclical data) rather than studied in isolation, as is the fashion in much of the German literature. This seems correct. He does propose a "structural break" hypothesis, with the major breaks in 1914 and 1945-48. This brings in politics, of course. Incidentally here Borchardt makes the interesting point that the abnormal profits of capitalists during the early Nazi years are typical of economic recoveries from depression and not some capitalist bias of National Socialism.

In his study of the growth of the...