Introduction: The German Economy and the German Problem

As the two preceding chapters indicate, economic considerations strongly affected Imperial German policy. The Great Depression led Bismarck to protectionism and a new conservative coalition in the empire, while it hastened the unraveling of his alliance diplomacy in Europe. Fears and hopes for Germany's economic development were an integral part of those broader geopolitical perspectives that guided German policy into the First World War. In short, even if traditional history has often neglected economic factors, their close interprenetration with general domestic and foreign policies is evident.

Some historians carry the point further. A distinguished German school of broad Marxist persuasion, which also owes much to Schumpeter, finds in Germany's economic formation the very key to the German problem. Hans-Ulrich Wehler, for example, argues that Bismarck's opting for state intervention in the economic and social fields made the years from 1879 to 1885, in effect, a second “founding period” for the Reich. As Wehler sees it, Bismarck, to reconcile his authoritarian regime with a reactionary society, an advanced capitalism, and a depression, fixed Germany on a course of imperialist expansionism abroad and reactionary politics at home. Protectionism and imperialism furnished the means both for a countercyclical policy to mitigate the crisis of overproduction and for the continual legitimizing of his authoritarian regime. That regime had behind it a reactionary social coalition. Big agriculture and heavy industry were united to expand Germany abroad and block democracy at home. Wehler is preoccupied with his own country's internal development and not much interested in comparisons with other nations.