Economic developments, 1949-61 Flashcards
The GDR operated a ___________ system of economic planning based on the ______ model
centralised
Soviet
What was the main organisation responsible for economic planning in the GDR?
The State Planning Commission (SPC) was the central authority in charge of formulating and implementing the national economic plan
The SPC drew up a series of…
Five-Year Plans in which targets were set and labour and resources to meet them
Centralised economic planning
Centralised economic planning is a system in which the government exercises significant control over resource allocation, production decisions, and distribution of goods and services within an economy
What were the advantages to the centralised system of economic planning in the GDR?
- The Government could harness the economy to the perceived needs of the state and desired outcomes - for example a concentration on public transport rather than private cars
- Social rather than personal needs were emphasised — items were produced for the good of the community such as housing rather than consumer goods which may have been unnecessary
What were the disadvantages to the centralised system of economic planning in the GDR?
- Emphasis tended to be on quantity over quality
- Too centralised a system stifled innovation and creativity
- The system was inefficient, it was difficult to plan needs five years hence and often goods were produced which were not required at the expense of those that were
- As all production was planned and resources provided, there was no profit motive. The goods would still be produced whether they were cost effective or not
Economic rules of ______ and ______ were not always considered
supply and demand
Supply and demand
The rule of supply and demand states that the price and quantity of a product or service in a market are determined by the balance (equilibrium) between the availability (supply) and desire (demand) for that product or service
Why were the economic rules of supply and demand were not always considered by the GDR?
The central planning authorities controlled production and distribution according to their own priorities and goals
The aim of the First Five-Year Plan
- To develop heavy industry in key industries such as iron and steel, energy and chemicals
- To increase living standards significantly above pre-war levels
- To overtake the living standards in the FRG to make the GDR more appealing to all German workers
The SED had overestimated the economic capacity of the GDR and their calculations for the First Five-Year Plan had failed to account for…
the development of the armed forces or the continuing reparation payments to the USSR
What is a trade deficit?
A trade deficit occurs when a country or entity imports more goods and services than it exports, resulting in a negative balance of trade
Trade deficit in the GDR — example
The GDR bought goods to the value of 600 million Ostmarks in excess of what it sold to its Eastern European partners
The GDR bought goods to the value of 600 million Ostmarks in excess of what it sold to its Eastern European partners — what does this suggest?
This implies that the GDR had a trade deficit with its Eastern European partners
The GDR bought more goods from its Eastern European partners than it sold to them
This led to a net outflow of Ostmarks from the GDR to the Eastern European countries.
What is a net outflow?
A net outflow refers to the overall movement of money or assets leaving a particular entity or country, exceeding the inflow
What did the GDR do in their attempt to reduce the deficit?
- Cuts in cheap transport — although it was still heavily subsidised (supported financially)
- Cancellation of working mothers’ monthly day off work to catch up on domestic chores
- Price rises in subsidised foodstuffs including jam, bread and confectionary
Further cuts to the welfare budget had been made in order to reduce the deficit — what was the result of these cuts?
The cuts were not enough to reduce the deficit and by 1953 shortages were beginning to appear, not only in agriculture but in industry too
Agricultural collectivisation
Agricultural collectivisation involves the consolidation of individual farms into larger, collectively managed units (often under state control) with the aim of promoting efficiency and productivity in agricultural production
What did Grotewohl announce at the Central Committee in December 1959?
Grotewohl announced that collectives were superior to private farming and initiated a hurried campaign to bring all private farmers into collectives
The Socialist Spring
The process of collectivisation soared between 1959 and 1960, giving rise to the term “The Socialist Spring”
What were the goals of agricultural collectivisation?
- To make the GDR self-sufficient in food production
- To overtake the FRG in terms of agricultural production
What did the process of agricultural collectivisation lead to?
Disruption and resentment — and often farmers leaving for the West
Provide an example showcasing that there was considerable opposition to socialist economics
Many farmers resented collectivisation and left the GDR: by mid-1953 750,000 hectares were unused as landowners fled
What did the removal of the profit motive in industry lead to?
- Disincentives to innovate and take risks
- Many managers did not try very hard to improve production while their workers grumbled and did as little as possible
The New Course
A policy shift implemented by the SED aimed at promoting economic reform, consumer satisfaction, and political stability within the framework of socialism
What effects did the New Course have?
- Discontinuation of the collectivisation process
- Production of more consumer goods
- Withdrawal of the April price rises
- End to discrimination against Christians
The retraction under the New Course was to some extent a…
self-criticism
What was the June 1953 uprising?
The June 1953 uprising refers to a widespread revolt that took place in the GDR in June 1953 against work norms and government demands to increase productivity
What were the main causes of the June 1953 uprising?
- Increased work quotas
- Poor living conditions
- Lack of political freedom
- Discontent with the SED and its Soviet-backed government
How did the June 1953 uprising start?
It began with a strike action by construction workers in East Berlin on 16 June against work quotas during the Sovietization process
They were initially demonstrating against increased work norms but were soon joined by thousands of other workers and citizens
How did the Soviet-backed government respond to the uprising?
The Soviet occupation forces declared martial law and used massive military force to suppress the rioting and support the East German regime — leading to clashes and casualties
What were the various reasons for the ultimate failure of the June 1953 revolt?
- Role of the USSR
- Motives of demonstrators
- Attitude of the West
Role of the USSR
The swift Russian response ended the protests before they got out of hand
(officially this resulted in the deaths of 50 East Germans, although it may have been considerably more)
Motives of demonstrators
- The protesters themselves were disunited: some showed their support for Nazism by displaying swastikas while others simply wanted the work norms reduced
- There was no co-ordinated leadership of blueprint for regime change
Attitude of the West
The West did nothing to support the rebellion
The FRG may have preferred to see a stable GDR to dissuade the growing influx of penniless refugees who might destabilise their own recovery
Historian Mike Dennis on the June 1953 rebellion
Historian Mike Dennis has explained how the Government was ill equipped to deal with protests:
They were reluctant to call out the KVP as they could not be sure of their loyalty; some members of SED organisations such as the FDJ had already joined the protests
It was the Russians who showed firmness
What did the June 1953 uprising highlight?
The dissatisfaction of the East German population and revealed cracks in the Soviet-backed regime
What were the outcomes of the June 1953 uprising?
The government made some concessions (such as reducing work quotas and raising living standards) but also increased repression to prevent further uprisings
What was announced on the 17th of June?
Wage rises
There was a certain amount of ostensible self-criticism following the June 1953 uprising — what quote reflects this?
“If large numbers of workers don’t understand the party’s position, then it is the party which is to blame not the workers.”
What was the long-term significance of the June 1953 uprising?
The uprising had a lasting impact on East German society and politics
It further eroded public trust in the government and contributed to a sense of opposition against the ruling regime
The event also inspired later movements for political change in the GDR
When was the New Course abandoned?
June 1955
What did Walter Ulbricht say about the New Course following the June 1953 uprising?
Ulbricht claimed unequivocally in an SED meeting on 1 June that:
“It was never our intention to choose such a false course and we will never choose it”
What was reorganised following the June 1953 uprising?
The Party and state organisations
Why were the Party and state organisations reorganised following the June 1953 rebellion?
To afford more internal security
The Stasi had one officer per ___ citizens, the Nazi Gestapo had one per ____
320
3500
