Economic stabilisation after 1961 Flashcards
What did the Berlin Wall successfully end?
Mass migration
What did the Berlin Wall offer?
Stability
What kinds of stability did the Berlin Wall offer?
Political Stability
Economic Stability
Security and Order
How did the Berlin Wall offer political stability?
The Berlin Wall allowed the government to maintain control over its population and prevent potential political dissent
How did the Berlin Wall offer economic stability?
The GDR could retain its workforce and prevent a brain drain that could further weaken its economy
The wall also limited the flow of resources and capital from East to West which helped stabilise their economic situation
How did the Berlin Wall offer security and order?
This control over the movement of people helped the GDR maintain social order and prevent potential disruptions or unrest
What stimulated the economic reform programme?
The retention of people with technical understanding and know–how
The period following the building of the Berlin Wall until the late 1970s when severe economic problems emerged is most commonly associated with…
the “normalisation” theories of historians such as Mary Fulbrook
The normalisation thesis
Mary Fulbrook = The GDR survived for so long because many of its citizens accepted it as part of everyday life
Jeanette Madarsaz = The Wall closed off any avenues of escape and people just went on with their everyday lives (routinisation)
Why were many workers reluctant to strike?
because of the possible consequences
What was clear by the 1960s?
(negative)
That the economic performance of the GDR was faltering and growth rates were falling
The economic performance of the GDR was faltering and growth rates were falling by the 1960s — what shows this?
From 1951 – 64 the amount of investment more than doubled
From 1951 – 64 the growth in national income halved
When did Ulbricht announce the NES?
January 1963
What does the NES stand for?
New Economic System of Planning and Management
What did the NES aim to improve?
It aimed to improve economic efficiency
How did the NES aim to improve economic efficiency?
Through developing procedures in which managers would be driven more by initiative and technology than by Marxist–Leninist ideology
What was reduced so that the planners could concentrate on the big picture rather than the minutiae of the planning process?
The level of central planning
The State Planning Commission and SED were still in overall control but having decided what should be produced…
they left the producers (those who best knew how to go about it) to get on with their jobs without unnecessary bureaucratic interference
What was the goal of the Associations of National Enterprises (V VBs)?
Profit (no longer would plans be based on how much they produced on paper but on how much profit they made in reality)
While elements of the NES may have smacked of capitalism, Ulbricht had no intention of…
weakening fundamental communist structures
What was still centrally controlled under the NES?
Supply and demand
Many party functionaries opposed the NES because…
they feared it weakened central control and the ideological underpinning of economic development
In 1963 Ulbricht had originally believed it would take the NED ___ or _____ years to embed itself. He was wrong
two
three
What were the reasons for the weaknesses of the NES?
– Labour force
– Pricing structure
Labour force
Many people did not have the skills to work in a new way and found it difficult breaking past practices – they never had to worry about concentration or quality for example
Many lacker technical expertise
Pricing structure
In centrally planned economies (where prices are determined by the government) there is a tendency for essential non-luxury goods to be priced too low
This happens because the planners want to make these goods affordable for everyone
This creates problems for producers
They either have to accept lower profits (which goes against the purpose of the planned economy) or produce fewer goods – leading to shortages in the market
Between 1968–71 there were periodic and unexplained shortages in household goods from toilet paper to toothbrushes and certain foodstuffs were often in short supply – provide a piece of evidence to substantiate this
East Germans were often seen carrying “perhaps” bags – as they passed a shop it may perhaps have something unexpected on sale
What economic partnership did the GDR join?
COMECON
When did the GDR join COMECON?
September 1950
What was COMECON
An economic organisation formed by socialist countries to promote cooperation and coordination in economic planning and development
What did the GDR supply the Soviet Union as part of COMECON? What did the GDR get in return?
The GDR supplied the Soviet Union with manufactured goods such as machine tools while the Soviet Union offered raw materials
What did the GDR become dependent on?
(COMECON)
The raw materials provided by the Soviet Union under COMECON (particularly oil)
__ per cent of the GDR’s oil was supplied by the USSR
87
What allowed all COMECON members access to the technology of the others at little cost?
The “Sofia Principle”
By the early 1980s the USSR and COMECON accounted for __ to __ per cent of GDR trade
65
75
What did COMECON lead to?
(negative)
Massive foreign debts for the GDR
“overtaking without catching up”
This was a rather torturous idea which meant that as it could not catch up using its present outdated technology and equipping itself with comparable technology would simply maintain the existing gap
1976 – 80 Five–Year Plan annual growth rate
4.1 per cent
From 1971 – 1975 the percentage of skilled workers rose from __ per cent to __ per cent
The biggest rise was in young people:
__ per cent of __ to __ year olds were classed as skilled
44.9
53
80
25
30
Between 1971–85 at least __ per cent of skilled workers were doing jobs ______________ with their skills
20
incommensurate
Historian views on the NES/ESS
Jörg Roesler = it was a “paradigm shift”
Arvid Nelson = the reforms were predicated on “the absolute imperative of control… Liberalism and decentralization were window dressing”
Peter Grieder = “the truth lies somewhere between these two propositions…”
Eli Rubin = “Market mechanisms were introduced” but “without any serious political will to relinquish ultimate authority over the economy”. This led to “confusion and chaos”. “Rather than mixing the best of both systems, the reforms managed mostly to mix the worst of both systems”
Peter Grieder = But whatever the tensions in the NES/ESS they were not severe enough to render it dysfunctional. Nelson’s conclusion that the programme “was doomed from the start” is therefore overly deterministic”
According to a critique of Ulbricht’s economic policy written shortly after his downfall and signer by Honecker…
the former SED First Secretary had wanted to go much further in reducing central planning, even proposing its replacement with a system of “self-regulatory” mechanisms
Ulbricht was also determined to preserve the remaining private and semi-state owned businesses which had proved so productive
Despite Ulbricht’s enthusiasm for the reforms…
he helped create the conditions for their abolition
How did Ulbricht help create the conditions for the abolition of his own economic policies?
His obsession with forcing the pace of the “scientific-technological revolution” led him to overemphasize “structure-determining” areas of the economy at the expense of the consumer industries
Ulbricht’s obsession with forcing the pace of the “scientific-technological revolution” led him to overemphasize “structure-determining” areas of the economy at the expense of the consumer industries - what did this lead to?
Shortages of essential goods appeared in the shops (the situation worsened by the harsh winters of 1968-9 and 1969-70)
Historian’s concluding views on Ulbricht’s economic reforms
Historians have debated whether the reforms represented a “missed opportunity” for the GDR
“To argue that they could have prevented the country’s economic decline in the 1970s and 1980s is to deny the systemic problem of state control” (Peter Grieder)
The reforms “represented an attempt to slow the rate of rotation of the downward spiral, not to tackle the underlying problems” (Corey Ross)