The Free Market Did Not Bring Down the Berlin Wall

The United States has misinterpreted the end of Communism for a quarter of a century. It's time to set the record straight.

Gerard Malie
Gerard Malie

On Nov. 9, 1989, Gunter Schabowski, an East German regime spokesperson, fumbled through a press conference and changed history.

Although Schabowski was a member of the Politburo, he had not attended its meeting earlier in the day when the committee decided on the Communist Party’s new travel regulations. He hadn’t even read them over when he stood before the room full of reporters.

For months, East Germans had been fleeing to West Germany, either through Hungary or Czechoslovakia. The regime was deeply embarrassed, and it was shaken even more by the growing turmoil in its cities. Demonstrators had been gathering peacefully in Leipzig, week after week for several months, attracting ever-larger crowds. Spurred by church groups, environmentalists, and non-governmental organizations seeking peace and disarmament, East Germans marched in the streets, clamoring for change but also fearing repression.

In her new book The Collapse, historian Mary Sarotte details the roles of ordinary individuals and the accidents that led to the fall of the Berlin Wall: Party leaders knew they had to draft new travel rules to defuse the crisis at home and deflect growing pressure from their comrades in Prague, Budapest, and Moscow. But they did not want to throw open the borders. They did not intend to allow East Germans to leave without seeking permission.

For the most part, journalists sat bored at the one-hour press conference. Schabowski gave rambling, convoluted answers to a variety of questions. As 7 p.m. approached, he was asked about the new travel rules. Shuffling his papers, he again spoke aimlessly, then said that "as far as I know … it will be possible for every citizen to emigrate." Journalists fired questions at him, but he could not clarify the new regulations. Distracted by the commotion his words had just caused, eager to leave, and clearly ill-informed, he cryptically noted that the new rules would go into effect "right away" — even in Berlin. 

Television journalists instantly reported that the borders had been opened. East Berliners flocked to checkpoints along the wall that had divided their city since 1961. Facing chaos, the guards didn’t know what to do. Should they shoot? Should they try to explain that the travel restrictions had not, in fact, been relaxed? The crowds kept growing. Fearing violence and not knowing what to do, the guards opened the gates. Joyous citizens sundered the Wall and then tore it down.

This weekend marks a quarter century since the Wall came down. Germans will commemorate it at the Brandenburg Gate with a celebratory speech from Chancellor Angela Merkel, a concert by Peter Gabriel, and a show of 8,000 glowing lanters. Governments around the world will issue statements of remembrance and homage. But what precisely should the world be celebrating? How should future generations think about this event? What lessons might be drawn? 

We Americans like to think that the dismantling of the Wall confirmed the redemptive role of United States, the correctness of containment, the efficacy of the arms buildup initiated by President Ronald Reagan, and the universal appeal of freedom. The Wall’s fall reified Americans’ exceptionalist view of themselves. This triumphalism was shared by a group as diverse as George H. W. Bush, the Clintons, Donald Rumsfeld and Dick Cheney, Paul Wolfowitz and Douglas Feith.

But the triumphalism wasn’t immediate. When President Bush first heard news of developments in Berlin, he was cautious. He welcomed the growing freedom of East Germans, but he was determined to avoid rhetoric that might precipitate a Soviet crackdown. "Some have wanted me to jump on top of the Berlin Wall," he told journalists at the time. "Well, I never heard such a stupid idea." The president remembered events in Budapest in 1956 and Prague in 1968, and could not ignore the recent violent crackdown by the Chinese communist regime at Tiananmen Square.

Yet when Germany re-unified, the Cold War ended, and the Soviet Union dissolved, the president could not resist taking credit for events: "We brought about the fall of the Iron Curtain and the death of imperial communism," he told supporters at a rally in Ohio in May 1992. A few months later, the Republican Party’s official electoral platform went further: "The fall of the Berlin Wall marks an epochal change in the way people live…. We Republicans saw clearly the dangers of collectivism, not only the military threat, but the deeper threat to the soul of people bound in dependence." Appearing at the 1992 Republican convention for his last public speech before Alzheimer’s took its toll, Reagan assured his listeners that this was true: "We Americans should never forget that we were the moral force that defeated communism."

Democrats, too, misread the fall of the Berlin Wall. They agreed that the collapse of communism in Eastern Europe and the Soviet Union discredited the role of government and demonstrated the superiority of free markets. They embraced open trade and globalization, the North American Free Trade Act and the World Trade Organization.

They repealed the Depression-era firewall between commercial and investment banking and failed to regulate the expanding sectors of the financial economy, like derivative trading and the securitization of mortgages. They forced other governments to deregulate financial controls as a condition for free trade pacts or for securing financial assistance during the Asian financial crisis. "The trend toward democracy and free markets throughout the world," Bill Clinton said, "advances American interests." The end of the Wall, the collapse of the Russian economy, and the dissolution of the Soviet Union finalized the embrace of neoliberal economic policies by both sides of American politics.

After 9/11, memories of the Berlin Wall continued to beguile and inspire U.S. government officials. On Nov. 9, 2001, President George W. Bush declared "World Freedom Day." He said, "Like the fall of the Berlin Wall and the defeat of totalitarianism in Central and Eastern Europe, freedom will triumph in this war against terrorism."

Such thinking prompted the language — indeed the hubris — that informed the National Security Strategy Statement of 2002: "The great struggles of the 20th century between liberty and totalitarianism ended with a decisive victory for the forces of freedom and a single sustainable model for national success: freedom, democracy, and free enterprise." It’s not difficult to draw a line from the post-Cold War triumphalism to the 2003 invasion of Iraq: Observing videos of the toppling of Saddam’s statue, Secretary of Defense Donald Rumsfeld ruminated at a Pentagon press conference: "Watching [Iraqis] … one cannot help but think of the fall of the Berlin Wall and the collapse of the Iron Curtain."

These extrapolations are not just misguided, they are wrong. With what we now know about the history of the Wall coming down — the contingency of the event and the agency of ordinary people — we should draw different lessons, ones that are not about the universal appeal of freedom or the munificence of free markets or the efficacy of strength, power, and containment.

We need, first, to acknowledge the role of the human rights revolution and the agency of non-governmental organizations (NGOs), like Helsinki Watch, the Workers Defense Committee (KOR) in Poland, and Charter 77 in Czechoslovakia, and many others. These groups, though diverse in ideology and tactics, all clamored for change, openness, free expression, individual opportunity, religious liberty, and human dignity. 

Historians are now coming to appreciate the energy and agency of these NGOs in the fall of communism. These groups championed the Helsinki Agreements of 1975, the accords signed by 35 European countries — communist, non-communist, and neutral, as well as the United States and Canada — that outlined the principles to guide East-West relations, including economic, scientific, cultural, and technological cooperation. They inscribed the obligation of all the signatories to respect fundamental rights such as freedom of thought, religion, and conscience. 

NGOs arose throughout Europe, east and west, to champion the right to travel, to promote cultural exchanges, to support family reunification, and, most of all, to hold governments accountable for imprisoning dissenters, discriminating against minorities, stifling civil society, thwarting the rights of workers to organize, or infringing on the freedom of religion or the press. These NGOs worked tirelessly to shame transgressors. They nurtured transnational contacts, and their mutual support sustained dissidents throughout Eastern Europe and the Soviet Union. As much as anything, this led to the downfall of the repressive communist regimes.       

When we think about the collapse of communism, we should emphasize and celebrate the attractiveness of a social market economy — not free enterprise. Indeed, it was the principles of the social market, regulated competition and a commitment to social equality and a safety net, that were incorporated into the law establishing the economic and monetary union of West and East Germany. In the ideological competition between free enterprise and communism, the social market won the Cold War. Notwithstanding the Reagan-Thatcher assault on government and regulation, social safety nets did not erode in the 1980s, not even in the United States and Great Britain. And throughout the European Union, social protection as a percentage of GDP actually reached its peak in 1993.

The ability to reconcile peace with prosperity made the west so appealing to citizens behind the Iron Curtain. And in this respect, when we recall the downfall of the Wall, we should also celebrate the efficacy of supranational institutions and European economic integration. The Berlin Wall came down because of Franco-German reconciliation, because of the success of the European Coal and Steel Community and the Common Market, and because of the hopes inspired in the late 1980s by the prospective European Union. The Berlin Wall came down because of the resilience of western economies and the appeal of the culture of mass consumption. When East Germans flocked to West Germany, they were not going there to herald the arrival of the recently deployed Pershing II missiles.

Nonetheless, we must realize that the economic reconstruction and integration of Western Europe would not have occurred without U.S. troops stationed in Europe after World War II and the establishment of NATO. U.S. military strength and strategic commitments were essential backdrops for Franco-German reconciliation and the modernization of western European economies.

Yet wise leaders realized that military strength alone would not win the Cold War.

Reagan grasped that negotiating from strength meant negotiating, reaching out, and understanding the adversary. Bush recognized that prudence and self-restraint were critical. He knew that he must not overreact, that he must not provoke a crackdown from inside East Germany or from the Kremlin. West German Chancellor Helmut Kohl understood that a united Germany had to be embedded within supranational institutions, like NATO and the EU. French President Francois Mitterand pressed ahead with the 1992 Monetary Union that was prerequisite to coopting prospective German power and reassuring Germany’s neighbors.

Non-governmental institutions, monetary unions, and botched press conferences might not make for the dramatic, triumphalist narratives that make Americans feel good about themselves and their government. But we must reject simple explanations of events. A history that misconstrues what happened leads to ideological hubris and wrongheaded lessons for the future, from disastrous financial de-regulation to overconfidence in the capacity of American military power to transform other societies.   

But even as we acknowledge limits and complexity, we should be able to agree on the 25th anniversary of the dismantling of the Wall that there remains much to celebrate. In an editorial on Nov. 11, 1989, the New York Times put events in proper perspective: "Crowds of young Germans danced on top of the hated Berlin Wall Thursday night. They danced for joy; they danced for history. They danced because the tragic cycle of catastrophe that first convulsed Europe 75 years ago, embracing two world wars, a holocaust, and a cold war, seemed at long last to be nearing an end."

We, too, can still rejoice, even as we know that turmoil, conflict, and suffering never really end.                               

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