During the Cold War, the economy of West Berlin had a rough go of it. Ironically, its economic disadvantages mirrored those of East Germany (though on a smaller scale): It was an "artificial" city, cut off from its natural economic hinterland. It was separated by a Wall and by the force of geopolitics from its usual markets of supply and demand. When the Wall was built, it lost a significant portion of its workforce, and the security of its lines of transit and communication was endangered. But it was not hopeless.

West Berlin was, of course, never fully "walled in." That would have been a death sentence for the city in the longer term. Even though Allied airpower proved during the Berlin Blockade of 1948-49 that the city could, in the short-term, be adequately provisioned from the air, such an arrangement over decades would have been as unsustainable for the people of West Berlin as for anyone else involved. Luckily, after 1949, no further attempt was made by the Soviets or East Germans to block access to and egress from the Western sectors of the city. Until the fall of the Wall in 1989, West Berlin maintained active transit links with the Federal Republic by air (three civilian "air corridors" connected West Berlin's airports to West Germany), rail, road, and inland waters (on the Elbe River and the Mittellandkanal). Access via land or water of course required the cooperation of the East German government's customs and State Security apparatuses, and large border-crossing control stations (Grenzübergangsstellen) were established at the crossing points, like the massive facility at Marienborn that controlled border-crossing traffic on the Autobahn between Hannover and Berlin. For that reason, it was dangerous for people threatened by the East German government (e.g., refugees from the GDR) to use land transit out of the city. But for the vast majority of transiters, including industrial concerns "importing" or "exporting" goods to/from West Berlin, land transit remained an option throughout the Cold War.

Mere access is not necessary incentive, though, and West Berlin suffered for the attenuation of its connections to the rest of global capitalism. In economic terms, the rest of the capitalist world did not need West Berlin nearly so much as West Berlin needed it. It also suffered from the political instability of its position: Though we know in retrospect that no serious threat to West Berlin would be made by the Eastern Bloc after 1949, this was not obvious at the time, and many people left the city not just for the economic attractions of West Germany, but also because living in what has occasionally been described as "the most dangerous place on earth" was not an attractive prospect. The same goes for investing in such a city. Unsurprisingly, the city slowly depopulated during these decades.

West Berlin remained, however, the largest city in West Germany (it was, in fact, the largest city in either of the Germanies). And just as East Berlin was the "showcase" of the Eastern Bloc, intended to broadcast the achievements of socialism to the non-socialist world, the survival and success of West Berlin was a political imperative for the public image of the West. The city simply could not be seen to fail. Consequently, West Berlin was heavily subsidized by the West German government throughout the Cold War. Various allowances (sometimes called Zittergeld, or "tremble-money") were given to people willing to stay in or move to West Berlin. Workers in West Berlin received a Zitterprämie ("tremble-premium"; roughly equivalent to the English-language term "hazard pay") on top of their normal wages. Lower income taxes and lower turnover taxes were supplemented with marriage allowances, child allowances, transit subsidies, settlement grants, and other cash bonuses. Beginning in 1950, the West German government codified these advantages (and more) in a series of laws called the Berlinförderungsgesetz ("Law for the Support of Berlin"). The level of financial support reached gargantuan proportions after the building of the Berlin Wall in 1961. The Federal Republic dedicated a half-billion DM for West Berlin in one moment, funding vital economic activity like investment credits and building subsidies.

Over the entire period of division, the number is even more staggering: In one form or another, the West German government paid nearly 200 billion DM to keep West Berlin alive and capitalist until reunification in 1990.

The Federal government also moved a significant number of its offices to West Berlin. This - along with the permanent presence of thousands of Allied occupation troops and a steady flow of tourists - contributed consumers and their cash to West Berlin's economy. Aside from working for the Federal government or occupational forces, West Berliners might be employed in the city's machine-building, electronics, or clothing manufacture industries. Economic relationships with the GDR were obviously disrupted by the Cold War and the Wall, but "Berlin-West," as the East called it, also remained an important export market for East German agricultural goods, and the GDR was willing to engage in more-or-less any economic activity (up to, for example, landfilling West Berlin's trash) that could net them valuable West German currency.

West Berlin had other, odder attractions, as well, which ensured that at least some "fresh blood" would continue to flow into the city. The legal complexities of its existence - simultaneously a part of the Federal Republic, but also under Allied occupation and control - meant that certain laws of the Federal Republic did not apply in West Berlin. Most notable was conscription. A young man seeking to avoid being drafted into the Bundeswehr had simply to move to West Berlin to do so. This had a profound affect on the culture of a city whose population - due to the outflux of workers - was aging at a much faster rate than the rest of the Federal Republic. Elderly West Berliners were suddenly confronted with the Federal Republic's most impactful cultural export: A youthful, sometimes anarchistic, always anti-authoritarian counter-culture that deeply influenced the development of West Berlin neighborhoods like Kreuzberg and had an equally profound effect on the city's politics, turning it into fertile ground for left-wing, anti-capitalist, and anti-imperialist protest.

SOURCES:

Arnold, Karl, "Nach Abschottung die Zitterprämie" (2001).

Taylor, Frederick, "The Berlin Wall" (2006).

Tusa, Anna, "The Last Division: Berlin, the Wall, and the Cold War" (1997).