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Ludwig Wilhelm Erhard (; 4 February 1897 – 5 May 1977) was a German politician and economist who served as the second chancellor of West Germany from 1963 until 1966. Affiliated with the Christian Democratic Union (CDU), he is known for leading the West German postwar economic reforms and economic recovery ( Wirtschaftswunder, German for "economic miracle") in his role as Minister of Economic Affairs under Chancellor Konrad Adenauer from 1949 to 1963. During that period he promoted the concept of the social market economy ( soziale Marktwirtschaft), on which Germany's economic policy in the 21st century continues to be based." The Social Market Economy" Federal Ministry for Economic Affairs and Energy, Federal Republic of Germany. Retrieved 11 September 2015
In his tenure as Chancellor, however, Erhard lacked support from Adenauer, who remained chairman of the CDU party until 1966. Erhard failed to win the German public's confidence in his handling of a budget deficit and lacked public support for his direction of foreign policy. His popularity waned, and he resigned his chancellorship on 30 November 1966.
Erhard entered primary school in Fürth at the age of six in 1903 and performed poorly. In 1907, he entered Fürth's Royal Bavarian Vocational High School, where his grades were average. He received his secondary school certificate in 1913. In the following years, he was a commercial apprentice at the Georg Eisenbach textile company in Nuremberg until 1916 and worked thereafter as a retail salesman in his father's draper's shop.
Due to his injury he could no longer work as a draper so Erhard started learning economics in late 1919 at a business college in Nuremberg. He passed the school's exit examination on 22 March 1922 and received a degree in business administration. During his time at school, he developed a friendship with the economist and professor Wilhelm Rieger, to whom Erhard owed much of his convictions of economic liberalism. Thanks to Rieger's intervention, Erhard was able to enroll at the Goethe University Frankfurt in the autumn of 1922. He received his PhD from the university on 12 December 1925 for a dissertation finished in the summer of 1924 under Franz Oppenheimer. Oppenheimer's liberal socialist ideology had a heavy influence on Erhard, especially Oppenheimer's opposition to monopolies. In Frankfurt he married Luise Erhard, a fellow economist, on 11 December 1923. They had known each other since childhood.
During World War II he worked on concepts for a postwar peace; however, officially such studies were forbidden by the Nazis, who had declared 'total war'. As a result, Erhard lost his job in 1942, but continued to work on the subject by order of the Reichsgruppe Industrie. He wrote War Finances and Debt Consolidation (orig: Kriegsfinanzierung und Schuldenkonsolidierung) in 1944; in this study he assumed that Germany had already lost the war. He sent his thoughts to Carl Friedrich Goerdeler, a central figure in the German resistance to Nazism, who recommended Erhard to his comrades. Erhard also discussed his concept with Otto Ohlendorf, deputy secretary of state in the Reichsministerium für Wirtschaft. Ohlendorf himself spoke out for "active and courageous entrepreneurship ( aktives und wagemutiges Unternehmertum)", which was intended to replace bureaucratic state planning of the economy after the war.
In April 1948, Erhard was elected director of economics by the Bizonal Economic Council. On 20 June 1948, the Deutsche Mark was introduced. Erhard abolished the price-fixing and production controls that had been enacted by the military administration. This exceeded his authority, but he succeeded with this step. In July 1948, a group of southwest German businessmen attacked the restrictive credit policy of Erhard as Economic Director. While Erhard had designed this policy to assure currency stability and stimulate the economy via consumption, business feared the scarcity of investment capital would hinder economic recovery.
A staunch believer in economic liberalism, Erhard joined the Mont Pelerin Society in 1950, and used this influential body of liberal economic and political thinkers to test his ideas for the reorganization of the West German economy. Some of the society's members were members of the Allied High Commission and Erhard was able to make his case directly to them. The Mont Pélerin Society welcomed Erhard because this gave its members a welcome opportunity to have their ideas tested in real life. Alfred Müller-Armack, the secretary of state of Erhard's ministry, helped him guide German economy with theories until the beginning of 1960s. (2006). 9781139053600, Cambridge University Press. ISBN 9781139053600
Late in the 1950s, Erhard's ministry became involved in the struggle within the society between the European and the Anglo-American factions, and sided with the former. 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 welfare state from the basis that had been already laid in the 1880s by Bismarck. According to Alfred Mierzejewski the generally accepted view is that Germany has a social market economy, that the post-war German economy has evolved since 1948, but the fundamental characteristics of that economic system have not changed, while in his opinion the social market economy had begun to fade in 1957, disappearing entirely by the late 1960s..
Erhard was also deeply critical of a bureaucratic-institutional integration of Europe on the model of the European Coal and Steel Community.
Domestically, a number of progressive reforms were carried out during Erhard's time as chancellor. In the field of social security, Housing Benefit was introduced in 1965.The Federal Republic of Germany: The End of an era edited by Eva Kolinsky
Support for the American role in the Vietnam War proved fatal for Erhard's coalition. Through his endorsement of the American goal of military victory in Vietnam, Erhard sought closer collaboration with Washington and less with Paris. Erhard's policy complicated Allied initiatives toward German unification, a dilemma that the United States placed on the back burner as it focused on Southeast Asia. Erhard failed to understand that American global interests—not Europe's needs—dictated policy in Washington, D.C., and he rejected Adenauer's policy of fostering good relations with both the United States and France in the pursuit of West German national interest. Faced with a dangerous budget deficit in the 1966–1967 recession, Erhard fell from office in part because of concessions that he made during a visit to U.S. President Lyndon B. Johnson.
Erhard's fall suggested that progress on German unification required a broader approach and a more active foreign policy. Chancellor Willy Brandt in the late 1960s abandoned the Hallstein Doctrine of previous chancellors and employed a new Ostpolitik, seeking improved relations with the Soviet Union and Eastern Europe and thereby laying the groundwork for détente and coexistence between East and West. In the 1980s Chancellor Helmut Kohl, however, reverted to Erhard's approach in collaborating with the Reagan administration in its hard-line anti-Soviet policy..
Under Erhard's government the Federal Republic entered into diplomatic relations with Israel in 1965.
Erhard continued his political work by remaining a member of the West German parliament until his death in Bonn from heart failure on 5 May 1977. He was buried in his living place Gmund at the Tegernsee in Upper Bavaria. The Ludwig Erhard-Berufsschule (professional college) in Paderborn, Fürth and Münster are named in his honour.
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