This article is intended to provide a short overview of the rise and fall of the Berlin Wall, specifically from an economic point of view which supports a market economy as opposed to a centralized economy. The causes and effects of the Berlin Wall are examined. Like most articles, it is by no means exhaustive.

Untold Stories, Unlearned Lessons: The Rise and Fall of the Berlin Wall


As the victorious postwar celebrations of the Allies droned on through the years after WWII, few could predict, or would have wished to predict, the war which would arise in replacement. The Cold War, one of the longest conflicts in American history, would define the state of the world for nearly half a century, polarizing peoples between two political philosophies. West and East, free and enslaved, capitalist and communist—these all converged sharply upon a wall within the city of Berlin in Germany, the dividing line between the Allied and Soviet axes and the dividing line between freedom and oppression. The rise and fall of the Berlin Wall, coupled with its lasting effects, offer the free world sobering lessons about economic freedom and political expediency.


Before the wall, Berlin had a long history of turmoil and foreign deprecation. In its infancy the marsh-town of Berlin was overtaken by the warlike but small nation of Prussia, which drew the simple Berliners into its political conflicts. The Prussian aristocracy tumbled through tumultuous successions of rulers, a process in which the Berliners seesawed from one extreme to another, one generation latching onto the benevolent promises of a new monarch, the next generation straining at the yoke for liberal government. Throughout the Middle Ages and the terrible religiously-motivated wars which tore apart Europe, Berlin was tossed to and fro on the waves of invasion, as one European power after another rose and fell in a destructive undulation. Each change in power brought new misery to the Berliners, who usually suffered the brunt of the foreign victors’ vicious plundering (Taylor 7). The end of the Middle Ages brought some relief to the people of Berlin as the Industrial Revolution swept through Europe and brought middle-class prosperity, turning the once-agricultural Berlin into “a great, darkly glittering world city” (Taylor 17). Prior to the turn of the twentieth century, Germany as a whole had made advances in technology and industry rivaled only by Great Britain and the United States (Taylor 19). Then came the Great War, and the entity of Prussia ceased to exist. Once again, Berlin found itself desolate—hated with the rest of Germany for its instigation of the conflict.

The Beginning

In its dramatic restructuring of Europe, WW1 opened the door to the first socialist and communist elements in Berlin. Idealistic Berliners, intent on rebuilding their beloved city and thoroughly disgusted with the authoritarian governments and the jingoistic right-wing parties which helped to initiate the war, flocked to the beacon of freedom extended by revolutionaries such as Vladimir Lenin (Taylor 24). Politics in Germany followed suit: the influential Social Democratic Party (SPD), with a long history in Berlin, continued its heritage by becoming “the defining mass movement of the quickly expanding German working class” (Taylor 20). Unfortunately, the defeat of the fringe right-wing parties did not last long. The 1929 American stock market crash and the resulting worldwide depression devastated the short-lived hopes of Berliners. Aided by the depression and by the foreign deprecations instituted upon Germans by the victors of WW1, Adolf Hitler’s Nazi party muscled its way into power in Germany (Taylor 28). The resulting war would change the face of Europe forever.

Further Developments

Following WW2, Germany was divided into four sections by the victorious powers: the American section, the British section, the French section, and the Soviet section. The division roughly split Germany east and west, with West Germany under the control of the Allies and East Germany under the control of the Soviet Union (Miller, 4-5). Berlin partook of this division into West Berlin and East Berlin. Determined to secure its spoils from the war, the Soviet Union capitalized upon its status as an anti-Nazi hero in the eyes of the Germans and clamped down upon East Germany forcefully with communist measures. All of Germany’s political parties were merged into the Socialist Unity Party of Germany (SED), which answered only to the all-powerful Soviet Military Administration (Taylor 42-44). In the words of Walter Ulbricht, head of the SED and a fanatic proselyte of Stalin, “It has to look democratic, but we have to hold everything in our hands” (Taylor 36).

Eventually the beginning Cold War tensions between the Allies and the Soviets spilled over into Berlin. Eager to expand communism into its new territories, the Soviet Union proved no different than the past conquerors that had oppressed the Berliners, if not much worse. The Allies, though openly protesting the Soviets’ actions, secretly took no initiative, afraid of replacing the newly-won peace with more conflict. In the eyes of the Allied powers, the single concern of the post-WW2 world was a disunited Germany; unfortunately, this desire overrode concern for the people of Berlin (Buckley 62). Hesitation on the Allies’ part only encouraged the Soviets, who blockaded their sector of the city to prevent supplies from entering West Berlin and to protest Allied policies. Finally the Allies rushed into action, executing the Berlin Airlift to keep the Berliners sustained (Taylor 54). The Berlin Airlift eroded Berliners’ confidence in and fascination with the Soviet administration.


Repressive Soviet measures, coupled with the allure of successful West Germany, sparked mass emigrations from East Germany throughout the 1950s. Most devastating was the drain of professionals, intellectuals, and skilled workers who sought to escape East Germany’s living conditions (Thackeray 188). The flight converged upon Berlin, as it offered the greatest amount of pathways to the free Western sectors of Germany (Buckley 10). Desperate to maintain order and productivity in its sector, the Soviet Union quietly initiated plans for sealing off East Berlin. Their plan went into effect on August 13, 1961. The Berlin Wall was birthed without as much as a whisper from the Allies. US State Department official Foy Kohler summarized the Kennedy administration’s take on the wall: “The East Germans have done us a favor. That refugee flow was becoming embarrassing” (Buckley 62). As the next twenty-eight years would demonstrate, the Berlin Wall would become more than just embarrassing: it would be a powder-keg of conflict between the world’s new axes of power.


The Berlin Wall resulted in negative economic, political, and humane effects. It restricted the flow of trade and of ideas within Germany, leading to a subdued paternalism among the East Germans. Communist economic measures led to mass inflation and economic instability—Frederick Taylor reports that “in 1952 the [East German] budget showed a deficit of 700 million marks. The negative trade balance with other Communist countries was almost 600 million” (79). In the political spectrum, the Berlin Wall sparked tension between the Allies and the Soviets throughout most of the Cold War, due mainly to the human rights abuses by the Soviet Union. The Wall also reflected poorly upon Western political motives, revealing that the ultimate interests of the Allies lay not in protecting Berliners or ensuring freedom but in avoiding conflict. Furthermore, once the Wall was erected, it allowed the Soviet Union to consolidate its power free of Allied influence or interference, even if the Allies had desired to interfere. But the most devastating effects of the Berlin Wall were humane in nature. Families who were together on Saturday, August 12, 1961, were worlds apart on Sunday morning, divided by an impenetrable barrier. Some of those families—in fact, most of those families—would not meet for twenty-eight years, if they ever met again. Others, in their bid for freedom, would die in their attempts to cross the wall. And those who remained in Eastern Germany would suffer asphyxiating isolation from the rest of the world.

The Fall

The Berlin Wall would finally crumble in the first week of November, 1989. Internal dissension and breakup of the Soviet Union caused the communist elements in East Germany to relax their hold on Berlin. WW2-generation regimes in East Germany died out or fell out of power, allowing fresher, more democratic elements led by the newest Soviet Prime Minister Mikhail Gorbachev to flourish. Eventually, faced with the prospect of a broken economy, a bankrupt Moscow, and a populace fed up with Soviet imperialism and the Soviet occupation of Afghanistan, Gorbachev and other leaders of the USSR began calling for a “common European home,” slowly allowing cracks to form in the once-sealed Wall (Buckley 139). On Thursday, November 9, 1989, Gunter Schabowski, a Soviet Politburo member for East Berlin, stated to the press the famous liberating words: “Permanent emigration is henceforth allowed across all border crossing points between East Germany and West Germany and West Berlin” (Buckley 163). Once liberated by law, the people liberated themselves by their own hands—with every possible homemade demolition tool recruited for the cause, the Berlin Wall ceased to function within several weeks.


Though its concrete ramparts no longer overshadow Germany, the Berlin Wall still casts a long shadow over the twentieth century, and the lessons it offers the world cannot be ignored. Primarily, the Berlin Wall demonstrated the failures of communistic, command economy planning: economic conditions in East Germany under Soviet administration sparked the hemorrhage of talent and citizenry which led to the construction of the wall. Had a command economy not prevailed, the Wall likely would not have been necessary. But more intrinsically—and perhaps more tragically—the Berlin Wall dispels stubbornly-held myths in the Western world about politics and national interest. As demonstrated by the shrugged-off reaction of the Allies to the construction of the Berlin Wall, even in the free world the political arena operates by pragmatism, compromise, and ultimately national interests, whether or not those interests align with popularly-believed ideals or morals. Even the most well-known, respected, and beloved Western political leaders have had to subjugate moral purity to national interest, simply in the nature of doing their job.

While Westerners may lionize their leaders for perceived moral triumphs, they must ultimately keep in perspective the nature and role of politics. If the tragedies of the Berlin Wall are to be prevented elsewhere in the world, it is through the action of citizens themselves in protecting and extending the system of market economics for which so many Berliners were willing to risk their lives. For only through the free exchange of ideas—and of the goods and services which result from those ideas—can personal and political freedom truly result. For nearly three decades the Berlin Wall was a microcosm of the Cold War—today and forever, its shattered and scattered remains are both an indictment of a failed economic philosophy and a monument to the courage and perseverance of Berliners, who today can flourish under the same market economies of which their ancestors could only dream.

History Economics Politics

Works Cited

Buckley, William F., Jr. The Fall of the Berlin Wall. Hoboken, New Jersey: John Wiley and Sons, Inc., 2004. Print.

Miller, Roger Gene. To Save a City: The Berlin Airlift, 1948–1949. Texas: Texas A&M University Press, 2000. Print.

Taylor, Frederick. The Berlin Wall: A World Divided, 1961-1989. New York: HarperCollins, 2006. Print.

Thackeray, Frank W. Events that changed Germany. Greenwood Publishing Group, 2004. Print.

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