World War I was seen as the main driving force behind strengthening of capitalism since it war economy was seen as the best way to "create a German Gemeinschaft in the service of the national welfare" (Feldman 1981: 164).
However after suiffering defeat in the war, people became rather skeptic of capoitalsm and a need for reconstruction of induytsrial base arose. The traumatic Versailles Treaty further dampened the hopes for a more liberalized economy in Weimar Germany. According to the main proponents of capitalism, this system can survive where political economic stability is present. However this was not the case in Germany, especially not after the World War I though some relative peace was seen from 1924-1928. Still the conditions for prospering of capitalism were not present since the political structure of Weimar Republic was very fragile at the time.
Despite this obvious problem, there was present in Germany, groups that wanted capitalism to exist and supported incorporation of large firms into economic system of the country. Such a step was however against common wisdom but since it was not possible to give up capitalism immediately, Germany continued with the system- much to everyone's surprise. The German Democratic party (DDP) was one such liberal political group. The other problem was the presence of weak Spcialist parties. The Socilaits parties did not have a strong agenda and their principles could be easily altered. Political considerations were thus more powerful than common economic wisdom.
Weimar government was not wise in this sense and while it knew that capitalism could hurt the country, it didn't pay heed to the economic forces that govern economic climate.
Sturmer best describes the political instability in these words:
[T]here were in the Reichstag different kinds of majorities, namely a majority for the conduct of foreign policy, a majority for social policy, and majorities based on agrarian and industrial interests; but these majorities were mostly incompatible with one another. Consequently, with no solid majority in existence in the Reichstag, there was neither consistent government, nor consistent opposition (Strmer 1971: 62).
It is important to understand why Weimar Republic still wanted a capitalist economy. It was not for the same reasons that rest of the Europe had adopted it. When economic situation reached an all time low in 1919 and millions of demoralized soldiers returned to Germany after the defeat, it was important to find a quick solution to the problem. Economic conditions may not have been as worse as they were in other countries but workers were still suffering and economy on the whole was fragile. Thus the corporatist system emerged from a desire to restore order and to regain some of the old prestige: "[T]o a disciplined and methodical nation like the Germans, the most obvious means to recoup its losses seemed to lie in improved organization, which should obviate the wastage of production caused by inefficiency or unnecessary competition" (Scheele 1945: 164). Sticking with the old economic system appeared to be the best solution for recouping losses.
Throughout the period of 1918 to 1933, Weimar Germany's economic system worked on inflationary policies. Even though some revolutionary socialist ideals were introduced, they were quickly taken over by capitalist greed. For example initially Friedrich Ebert's introduction of the