GDR Economy
- Policies shaped by communist ideology
- Modern,classless and industrial state
- Pushed policies regardless of opinion
- Central direction class system rid of to make way for marxist-leninist state
- Aim: build a new worker’s paradise to bring about radical transformation of post war EG
GDR had disadvantages and SED actions didnt help:
- Dismantled industrial plants, still demanded heavy reparations, 25% went to USSR, SED could only change economy with ref to USSR
- GDR cut off from Ruhr no coal and steel, limited resources
- Loss of labour to wesr caused drain which continued and grew as change spread
- State planning led to dislocations and difficulties- collectivization
Agriculture
- Moved towards collectivization
- 1945- Land Reforms broke up large land holdings
- 1952 and 1960- two waves of collectivization
- 1952- independent farmers and labourors forced to become members of collectives and borrow equipment- 45% of agriculture
- Low yield detrimental to agriculture
- Lack of food contributed to 1953 troubles
- 1959-60 many fled due to hunger
- 161- rationing introduced
- 1970s EG self sufficient, stable but citizens had restricted diet.
Industry
- 213 SAGs created to produce goods for USSR, reparations
- VEBs peoples enterprises, 76% industry nationalized
- Banking taken into state hands
- Hos curbed independent retailers
- Little heed paid to supply and demand, plans were out of date, targets met by lowering standards
- Shoddy workmanship encouraged through price fixing and encouraging quantity rather than quality
- Targets met by ignoring consumers and keeping wages permanently low
- More fled for economic rather than political reasons
- 1961- Ulbricht forced to build wall= renewed confidence
- 1963- NES more flexible approach
- Decentralization, profit incentives, decision making powers and focus on quality rather than quantity
- NES incompatible with fixed prices
- Prague Spring 1968- system abandoned in favor of increased centralization
- Five Year Plans- soviet model, ambiguous, constantly revised to give impression of progress
- 1950- first 5YP promised double output that of 1936, emphasis on hevay industry, GDR joined COMECON
- 1951- 76% of trade directed to USSR
- 1952-annual conference SED declared, GDR ready for ‘building of socialism’
- Beat capitalism, attempts to raise productivity= June 1953 Uprising
- Stalin’s death= focus on consumer goods
- 1956- second 5YP- fail, quietly abandoned in 1959
- 1959- New Seven Year Plan- ambiguous targets, Ulbricht announced vy 1961, socialist economy would overtake that of the FRG, due to level of production- plan had initial success but targets unrealistic, downturn in 1960= abandoned in 1962
- GDR growing rate of 3% by 1960, seemed poor compared to FRG’s 8% in the 50s.