economic stabilisation after 1961

• Berlin wall


  Extremely successful because it put an end to the mass emigration
• Those who had been in the west were discriminated whilst there was repression of enemies against the regime
• Berlin wall


  • Offered general stability particularly in skilled workers, which could help develop the GDR socially, technically and economically
• The 'normalisation' period after the construction of the wall


  Until the 1970s
• Severe economic problems appeared and the skilled workers made the best of a bad situation and took advantages of the welfare provision in the GDR
• This made the workforce largely reliable and there was little opposition to the regime at the time
• There was still some opposition usually local unofficial strikes usually on the issues of work norms, poor equipment, health and safety and low pay rates
• The protest took the form of defacement of posters, mass whistling, covering their ears and getting drunk, very petty forms of protest
• Many workers feared to protest due to the consequences of it, many remembered the 1953 revolt and the consequences of that
• Whilst some did not see a need to protest because of the living conditions whilst not FRG level they were still better than the rest of Eastern Europe
• Economic failure, the more that was invested the less seemed to return


  Beginning of the 1960s
• SED and Ulbricht knew repression could not continue and had to improve living standards in order to gain support for the regime
• Ulbricht


  Believed in bonuses and incentives and saw that the disregard for quality over quantity which was inefficient and expensive
• NES (New Economic System) given the go ahead at the Sixteenth Party Congress


  January 1963
• NES


  • Aimed to improve efficiency by developing producers, managers would be driven by initiative and technology, not ideology
  • Central planning was reduced so managers could look from a wider perspective, however, managers still had control over targets set, resources and setting prices
  • The SED and State Planning Commission were still in control by deciding what was needed to be produced
• Associations of National Enterprise

  • Provided links from central bodies to plan tasks and tried to improve economic performance
  • The focus was now on profits, not quantities produced
  • Focused on most valuable sectors in society to strengthen the infrastructure of the GDR, with emphasis on science and technology similar to the USSR, to be able to compete with the West
• Many party members opposed the NES as they feared it weakened central control and the communist ideology
• At the Central Planning Plenum, 1964 people feared the bonuses and incentives were making 'socialist millionaires'
• Profit was stifled due to state interference and technical difficulties
• Weaknesses of the NES

  • Took longer than expected to embed itself
  • The labour force was largely unskilled and could not adapt to the new ways of working as they had never had to worry about quality
  • Prices still set centrally and were too low for the quality produced so the lack of profit had to be accepted or produce less
• Khrushchev was kicked out of power, his successor were more hardline and less supportive of the NES

  1964
• Ulbricht continued with the NES, renaming it the ESS (Economic System of Socialism)
• There was a success with growth in production from 392 535 from 1965 to 1970
• Average income for white collar workers rose from 491 to 619 Ostmarks a month
• In 1960 only 3.2% of the GDR population owned a car, by 1970 this had risen to 15.6% which in comparison to other communist countries was favourable
• There were still unexplained shortages and people carried perhaps bags in hope of something unexpected is on sale
• COMECON


  • Countries co-operated to maximise economic performance, dominated by the USSR
  • The GDR provided the USSR with machine tools and the USSR gave the GDR raw materials like oil
  • GDR became so dependent on the USSR for oil it was 87% of all the GDR's oil
  • The USSR could take experts from other countries in COMECON for their own benefit
  • From 1957 the GDR was asked to focus on the development of Lignite or brown coal, which caused huge environmental issues
• By the 1980s 75% of the GDR's trade was with the USSR and COMECON
• Due to USSR faulty economy in the 1970s and 1980s COMECON led to shortages of consumer goods and difficulties in supply
• Led to the GDRs foreign debts rising
• Overtaking without catching up

  • Goals were unattainable so the idea of overtaking without catching up became the agenda
  • Meaning that the existing technology was not enough to catch up so they had to start afresh with new, innovative ideas and pioneering technologies
• GDR centralised development in chemicals and technology, however, they still were not as efficient as the FRGs
• By the 1970s the GDR saw itself as an advanced socialist economy and its main goal was to improve the standard of living
• Much of the ESS was abandoned for more central control
• To be advanced, it needed to produce more consumer goods but these were complex and expensive to produce
• Whilst the economy is centrally controlled it was hoped that production should lie with middle management like the V VBs
• Collective farms became larger but the total number of collective farms dropped between the 1970s and 1980s
• Private consumption grew 4.8% from 1970-75
• 1976-80 the five-year plan gave an annual growth rate of 4.1%
• From 1971-75 the percentage of skilled workers grew from 44.9% to 53%