The Moral Consequences of Economic Growth by Benjamin M. Friedman

Author:Benjamin M. Friedman [Friedman, Benjamin M.]
Language: eng
Format: epub
ISBN: 978-0-307-77345-6
Publisher: Knopf Doubleday Publishing Group
Published: 2010-11-03T04:00:00+00:00

Eighteen seventy-five marked a change in the current of economic affairs in Germany (although the first warning was a financial crisis in the summer of 1873). Per capita income declined in seven of the next eight years, and despite a modest recovery after 1882, by 1884 the average living standard stood below what it had been at the peak ten years before.61 It was not until the end of the decade that backward-looking comparisons once again showed any noticeable progress for the average citizen.

With the onset of economic stagnation, the political stance of the newly unified Germany changed as well. In what is often called the “second founding” (or the “conservative refounding”) of the German empire, at the end of the 1870s, Bismarck abandoned his alliance with the National Liberals and instead began to govern primarily with the support of the Catholic Center Party. The result was a distinct shift in policy.

One immediate change was a turn from free trade to protectionism. As late as 1877, Germany was still abolishing the last of the customs duties inherited from the old Zollverein (literally, “toll union”). But in 1879 Bismarck introduced a new tariff on iron and grain—meant to gain support from the Rhine industrialists and East Prussian Junkers, respectively—together with indirect taxes on tobacco, salt, and coffee. The new tariff rates were low, but what is significant in the prevailing climate of free trade is that Germany adopted them at all. New tariffs were, in effect, a symbolic rejection of the economics of liberalization of the 1870s.62

The National Liberals opposed the measure and broke into two separate groups over the issue. But the Center Party supported the tariff in exchange for Bismarck’s agreeing that the federal government would share the proceeds with the states. The result was not only to make Germany a protectionist country once again but also to strengthen the more conservative forces in the state governments. At the same time, Bismarck ended the “Kulturkampf” campaign aimed at weakening the position of the Catholic Church in Germany.

Another sign of the new times was Bismarck’s exploitation of two assassination attempts on the kaiser in 1878 to outlaw the Social Democratic Party. Although there was no evidence of the party’s involvement in either incident, Bismarck proclaimed a “social peril” and immediately called for new elections. The Social Democrats, the National Liberals, and the Progressives all lost seats, while most of the conservative parties gained. Bismarck then got the new Reichstag to approve legislation that declared the Social Democratic Party illegal, shut down its press, forbade its meetings, and authorized the government to expel presumed agitators from their homes.63 The party as an organization virtually closed down, and its newspapers now had to be smuggled into the country from Switzerland. By 1890 some 1,500 people had been imprisoned and another 900 expelled from their homes under the 1878 law, for such violations as holding meetings, distributing newspapers, and otherwise “subverting the social order” by promoting the party’s views.64

Another turn toward social and

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