Behind the wall – economy

For Walter Ulbricht and the SED leadership, the construction of the Berlin Wall was also and above all a concrete economic policy. A planned economy based on the Soviet model would only be successful if people could no longer flee from it. If they had no alternative, they would also work more, so the calculation. Propaganda would do the rest. The mechanism was already apparent three weeks after the construction of the wall. On September 6, 1961, the electrode tower operators at VEB Elektrokohle in Berlin-Lichtenberg called all workers to a “production contingent”. They wanted to “support the measures of August 13 with specific work”.

Even today, it is worth taking a look at the economic policies of the GDR during the 28 years of the construction of the wall. It is a futile and instructive story for all those who still dream of socialism today.

At first, the economic politicians of the SED wanted to continue behind the wall in the old Stalinist style. With “production offers” for example. The word was a euphemism for unpaid overtime and had a long tradition in socialism as a primitive form of increased productivity. Lenin had already invented the “subbotnik” in Russia in 1919, the so-called voluntary work on Saturdays without pay. Then under Stalin there was the miner Alexei Stakhanov, who in 1935 exceeded his standard by 13 times in a Soviet mine. Following his example, Adolf Hennecke succeeded four times the norm in a well in Saxony in 1948. These extreme achievements had a certain propaganda effect, the benefits for the national economy were negligible.

Open detailed view

Work on the wall in August 1961 on Bernauer Strasse. The Berlin Wall stood for 28 years, two months and 26 days.

(Photo: image archive / dpa)

But the old barrel ideology also failed in the walled state. The economy of the GDR has not grown faster and the standard of living of its citizens has not improved. In December 1962, the SED therefore put an end to calls for tenders for production and proclaimed the principle of “material interest”, the return limited to economic reason. As Berlin historian Jörg Roesler writes, there was a group of SED reformers who were now supported by Ulbricht. It includes economic expert Günter Mittag, who was to acquire a dubious reputation as a concrete masterpiece in the final stages of the GDR. But now he was working on the development of a new economic planning and management system (NÖS). It was officially decided at an economic conference in 1963. After that, the GDR remained a centrally planned economy, but nationalized companies were allowed to decide how they wanted to implement the plan. This removed some arbitrariness from the system, but to call NÖS “market socialism” like Roesler is grossly overkill.

What real market socialism is should soon become evident – not in the GDR, but in neighboring Czechoslovakia. The Central Committee of Czech and Slovak Communists decided on April 5, 1968 on a new party program. He envisioned not only comprehensive market economy reforms, but also freedom of speech and assembly and the abolition of censorship.

Real market socialism would have raised the question of power in the Soviet system

The reforms marked the start of the “Prague Spring”, six months during which people enthusiastically wanted “socialism with a human face”. The troops of the Soviet Union and their allies marched on August 21, 1968 and ended the beautiful dream.

Since then, it has been clear: there would be no real market socialism in the Soviet system, because then the question of power would arise automatically. In the GDR, the experiment with the NÖS was also canceled, which was in itself consistent. As companies bypassed demand with no real market, there was no point in doing it a little more efficiently. In May 1971, the conservative Erich Honecker won the power struggle with Ulbricht and was elected leader of the SED party. Honecker put an end to the attempt to make socialism more effective with the doctrine of “the unity of economic and social policy”. Concretely, the formula meant that the standard of living of the citizens of the GDR had to increase, even if the productivity of the economy did not actually allow it. Behind this was the hope that better-cared people would work more productively on their own. It was a “discovered shift towards the future,” as historian Bernd Martens writes. A bizarre side note: after Honecker’s rise to power, “the political economy of socialism” also disappeared from the GDR bookstores, the textbook that laid down the principles of the Lower Austria sector. It was only available in leftist bookstores in the Federal Republic.

As a result, the GDR has been living beyond its means since the 1970s. Economic planners have had to neglect the necessary investments, the GDR has become indebted in the West, including in the Federal Republic. Because of this policy, the citizens of the GDR were deluding themselves about the real economic power of their state. Western experts were also wrong and believed that the GDR actually ranks tenth in the list of industrialized countries, as it is claimed. It was not until the fall of the Berlin Wall on November 9, 1989 that this gradually changed. The GDR was probably not bankrupt in the strict sense, as is often claimed. Without reunification, however, the SED would have had to adapt citizens’ living standards to economic reality with tough austerity measures. This should be thought about from time to time when it comes to the economic problems of East Germany today.

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