ABSTRACT
Over a period of fifteen years, a new governance emerged in the German Federal Republic. It included increased political (but not administrative) centralisation in the chancellorship, a demand for scientific ‘objectivity’, and a growing role for independent agencies like the European Coal and Steel Community and the Council of Economic Experts. These new institutions enabled greater political leverage, which allowed German state leadership to foster a national policy consensus promoting low inflation and export-led growth. Two episodes tested these institutions and policies: the 1951 Korean War balance of payments crisis and the 1955–57 boom. The most fruitful strategies for responding to these crises turned out to be embracing an incipient consumer culture, and highlighting the direct benefits of the social market package to working families. That package included increased buying power that resulted from linking stable, or even declining, prices (notably thanks to cheap imports) with steady, even modest pay rises.
