Abstract

Economic theory lessons from the 1990 German economic and monetary union - not only an historical case

Because of the paradigms of economic theory, lessons ought to be drawn from Germany’s economic and monetary union which are of relevance for economic and monetary unions elsewhere and for other transformation tasks in East and West. The German case shows the great importance that is to be attached to observing theoretical interrelationships. This contribution initially analyzes and criticizes the fact that system-theory knowledge developed over a number of decades have not been observed by most economists and by most politicians. Moreover, the optimum monetary-area theorem was passed over lightly in this process of transformation; the previously possible solutions no longer stand a chance of being realized. The consequence is large-scale “classical” unemployment in the East as a result of lacking means of production and lacking flexibility. The enormous capital transfers caused thereby are used for satisfying increasing demand in the Keynesian sense. The demand focuses on Western-made products for the most part - a sisyphean syndrome.