Thinking Small (43 page)

A year later, in 1950, Ferdinand Porsche and Ghislaine set off with Ferry’s new model of the 356 for the Paris Auto Show. Porsche’s family was worried about him taking such a long trip, but Ferdinand insisted that he be the one to go. For his part, Ghislaine was happy to have his uncle back, even if he now found himself having to care for the aging man in a whole new way. At that year’s Paris Exhibition—the same one where Porsche and the American Max Hoffman would fortuitously meet, resulting in the Porsche sports car’s United States debut—Ferdinand Porsche and Ghislaine showed Ferry’s 356 with pride, though the decoration of the exhibit itself was sparse: just two cars and a banner overhead that read “1900 Porsche 1950.”

As he and Ghislaine sat there together in the two folding chairs Ghislaine had brought along, perhaps Porsche recalled that day so long ago in 1900 when he’d been just starting out, a young man working for Jacob Lohner and showing his first car in this very same city, his future still uncertain but bright, his energy and ideas overflowing in all directions. Now he was an old man. The world had changed dramatically during his long life, and it was still changing. The rest of the twentieth century would see the realization of the ideas about mobility and speed that Ferdinand Porsche had been so determined to explore as a young man. The elder Porsche would not live to see the mass motorization of Europe in full, but the importance of his car, and his idea, had indeed proven itself: Porsche’s intuition had been the right one. His passion for the automobile had started when he was a young man, in a time when very few people believed that the automobile would one day be the most ubiquitous and essential form of transportation. Porsche’s passion for cars and movement had begun before the turn of the century, and now, as the 1950s were dawning, that passion was about to spread and reach millions.

Perhaps there was something comforting in seeing the automobile on the verge of taking off, especially after having watched its changes and evolutions, that process of growth that ran parallel to his own. Porsche was no longer as quick or as tough as he’d once been, but the importance of the automobile in his life had taken on a potent and tender tone. He had come to the end of his life, but in many ways the Porsche legacy was only just beginning: After all, only now was there a car being sold on the market bearing solely the Porsche name. He could not have known it at the time, but that name would soon grow into one of the most respected and admired automotive companies in the world: Today it’s hard to find a person anywhere who has not heard of a Porsche. And it is even harder to find a person who has not heard of the Volkswagen Bug, a car that may not carry his name, but certainly carries his legacy.

Not all
of Germany had supported Hitler hook, line, and sinker: Throughout the 1930s and 1940s, there were those who had indeed resisted and dared to speak out against him. And, perhaps surprisingly, one of the more vocal anti-Nazi groups was composed of a handful of Germany’s key economists. A man named Walter Eucken, the son of a respected German philosopher and Nobel laureate, was the dean of the University
of Freiburg during Hitler’s reign. Eucken and most of his colleagues resisted the Nazis—some eventually having to flee because of it—and they came to be known as the “Freiburg School.” Men like Franz Boehm, Erich Preiser, and Wilhelm Roepke were all part of this school, and they persisted, even in the midst of a Nazi regime and war, in designing what would eventually become the economic heart of West Germany. It was a system designed not on the
teachings of any German thinker, but rather on those of the Scottish economist Adam Smith.

These German economists, all writing and publishing their papers as early as 1937, were aware of what Heinrich Nordhoff’s professor Georg Schlesinger had been aware of—namely, that a change in labor division would change the economy. In their eyes, to accommodate such fluctuations, an economic system needed to be both responsible and flexible, ordered and yet not restrictive to the natural flow. Around the same time Hitler had been coming into his full
power, the men in Freiburg were creating an economic system they called the
Soziale Marktwirtschaft,
or Social Market Economy.
¹
They wanted their “social market” to be a version of Smith’s “free market”—things would be bought and sold internationally without tariffs and governmental control. However, they also realized that
because humans are imperfect, part of the order meant a certain amount of government or societal action that could prevent unhealthy forms of monopoly and keep taxes fair and flexible as the market changed—but
the regulation
itself
would also have to be balanced and checked.

Needless to say, such ideas were in stark contrast to the Four Year Plan and economic policy of the Nazis, which encouraged excessive cartels and assumed command control. The Social Market Economy was more akin to economic developments that were happening in America around the same time, headed by men like Milton Friedman and the Chicago School. But still, it was not the same. It was a plan of economic liberalism, thus the emphasis was on freedom—but it was also
an economy that was meant to be
observed,
contradicting the idea that economic freedom requires total deregulation.

One young German economist whose face would become synonymous with this new “capitalism with a conscience” theory was Ludwig Erhard. Erhard was a plump man with eyes spread far apart and an avuncular smile that could be mischievous and comforting all at once. He had been influenced by both the unregulated free market ideas of Adam Smith as well as by the more regulated ideas of J. M. Keynes. And while his economic stance was nuanced, his political one was
not: he had
not
become a member of the Nazi Party, and his stance against them had been a public one. He had refused to join the Nazi Association of University Teachers, thus being denied a position at his university, and—so long as the Nazis were in power—kept from advancing in his field. Though he did find a long and lasting job at the Institute for Market Research in Nuremberg, his outspoken dislike of the Nazi Party meant he could not be offered a
management position, even though his skills were above those he worked for. To get around these rules, he eventually began his own research company where he could consult with members of Eucken’s group at the University of Freiburg. With their help, Erhard concluded that the Nazi system would fail, and even in the midst of the Second World War, he began preparing for a time when the Nazi government would be gone and Germany would need a new economic plan.

After the war, in large part because of his prominent anti-Nazi
stance, the Allies trusted Erhard and made him a minister of finance in the southern U.S.-controlled area of Bavaria. This appointment would naturally propel him into a position of economic leadership in the new Germany. Once the Allied mood moved away from the Morgenthau Plan and toward a spirit of desired regeneration for Germany, men like Erhard were consulted as to how to strengthen
the German economy; they stood out as possible leaders in the new
German-led
Germany that would inevitably have to emerge. There was also the simple fact that Erhard was one of the few economists who had a plan, who had been working on that plan for many years, and who had the zeal and confidence to promote and pursue that plan once the Third Reich crumbled. Thus in 1947, after America and Britain joined zones to create the Bizone, Erhard became their director of economic
affairs.

Because his ideas still seemed so new and strange, at different times and in different ways, Erhard worried
everyone—
the Allies
and
his own countrymen were often at odds with him. But the young economist refused to conform, thus becoming a necessary part of Germany’s recovery as he pushed and challenged both sides, something very few others could do at the time. Erhard, despite all that had happened in his country over the past ten years,
had a great deal of faith in the German people. And from the very first day on the job, he was convinced that economic recovery would have to come from them: In his eyes, only by
freely and responsibly
buying and selling their own individual services and goods could they redeem both their confidence and their prosperity. Contradictorily perhaps, and a bit unconsciously, the American and British system that was in place was a system still fraught with Nazi economic policy. As
occupiers, the British and the Americans had not wanted to disturb the country even more than it had already been disturbed, and thus they had left economic controls (controls originating with the Nazi plan for autarky and German self-sufficiency) as they were. Erhard wanted to demolish all those things, to break it all apart and start again. But laissez-faire didn’t
mean being passive so much as it meant actively getting out of the way: Regulation was
needed in the sense that the old ingrained Nazi order had to be uprooted, and the market had to be freed. Erhard wanted government to guide but not direct.

Of all the changes that Erhard was bubbling to make, the most crucial parts of his plan were his belief in the need to eliminate price controls, and the need for a currency reform. In the postwar German economy, there was no longer any relation between objects and money; money had become meaningless and the objects were worth more: There was no medium for exchange. This was a condition that was easy to see, and while all agreed something had to be done, not everyone
was sure that creating a new monetary unit was the best action to take. Erhard and his supporters wanted a whole new kind of money (deutschmarks) to be created to replace the now worthless reichsmark, but others felt it was essential to keep the reichsmark because healing the economy
was
a matter of healing the currency, of bringing it back to a state of health.

To many, including many Allied authorities, the details of Erhard’s theory felt like “economic heresy,”
²
a recipe for total chaos. It was the same struggle that was happening at the VW plant: How much control was too much control? How little control was not enough? Some in Germany at the time, most notably the heads of the Social Democratic
Party (SPD), argued that with Erhard’s currency reform, all the “common people” would lose and big capitalist concerns would win. Erhard’s detractors felt that the German economy was in a very precarious condition and that it needed to be taken care of and protected, that “it must grow in an incubator chamber” and not be required to carry too much weight. But after what he’d witnessed over the past decade of Nazi rule, Erhard was
anything but naïve. He knew that any successful program would have to offer a delicate balance of order, freedom, and competition. Ideally, the economy that Erhard and the economists of the Freiburg School proposed
would require companies and individuals to compete, but the very means of winning would require they also do right by their fellow men.