E
chapter 2
Economic Crises, Structural Change,
and International Entanglements
Ralf Ahrens and André Steiner
G
erman politicians and the general population on both sides of the Ber-
lin Wall were always well aware that the rivalry between the systems
in East and West w as largely being fought out on the economic battlefi eld.
Economic success or failure—which ordinary people judged directly in
terms of consumption—primarily determined the extent of legitimacy af-
forded each system. At the same time, the two national economies that
emerged out of a single economic area after World War II remained in-
terconnected throughout the era of “divided Germany.” These links ex-
tended well beyond the boundaries of direct foreign economic relations,
although these were of greater importance in the German Democratic
Republic than in the Federal Republic of Germany. Furthermore, both
economies were faced with similar cross-system challenges, but their
options for dealing with these issues were determined by their respec-
tive systems. At times, they even relied on similar instruments to address
such problems. Yet each of these economic systems encompassed a dif-
ferent set of boundaries for political action, and the economic structures
that surrounded them varied between East and West.
After taking a brief look at the initial postwar period, this chapter com-
pares key aspects of economic development in East and West Germany
while analyzing the “asymmetrical” entanglements between the two. A
short sketch of the crisis-ridden macroeconomic changes of the 1970s is
followed by an analysis of the cross-system problems that stemmed from
structural change at an economic level, which were driven by technolog-
ical innovations as well as the integration of both national economies in
the international division of labor and their reciprocal trade relations. Fi-
