To what extent was communism an economic failure for the DDR? (not finished) Flashcards
What were the benefits of the DDR economy?
-less war damaged than the FRG
-large areas of agricultural lands->helped with rationing and food shortages
What were the disadvantages of the DDR economy?
-there was a shortage of raw materials usually supplied by West Germany
-provinces and vital coal supplies were lost to Poland
-limitations of industrial development->experts had been taken to the USSR
What were the DDR economy principles?
-Nationalism
-Centralism
-Planning
What was the DDR economy principle Nationalism?
-industry under control of state, not private (government owns all industry)
What was the DDR economy principle Centralism?
-centralised planning which pursued production at high quantities (central government controls what is produced)
What was the DDR economy principle of planning?
-state planned economy that was highly supervised to achieve clear production aims
What is state capitalism?
-the use of capital (state) money to drive the economy
What principles does the DDR follow?
-Soviet/Communist principles
Who had the East Germany relied on resources from before the war? What was a result of this?
-West Germany and it could sell its products in larger Western markets->but post 1945 economic development of East and West Germany became very separated
What measure did the GDR take to integrate within the Eastern Bloc?
-joining Comecon in 1950 (organisation of economy within soviet states)
What key things did the DDR do to help the economy? (3)
-Nationalised industry and developed a series of 5 year plans to increase production rates
-agriculture divided amongst the people and development of state owned farms
-collectivisation->cooperatives (collectivised farms and collective machinery) which pushed to create a socialist society on land->work together on supposedly more productive farms
When did the DDR join Comecon (Council for Mutual Economic Assistance) and what did it lead to?
-1950->led to economic integration into the Eastern Bloc
What was an impact of the DDR becoming the second largest power in Comecon?
-Foreign trade trebled between 1950-1955
When was the Berlin Treaty signed and what was a result of it?
-in 1951 the Berlin Treaty was signed which allowed bartering between the two Germanys->he GDR did not have to pay tariffs and were able to pay in goods rather than currency
What was a negative about the DDR joining Comecon?
-didn’t have the technology to compete with Western markets they became increasingly isolated->due to the disappearance of experts and the dismantling of factories
What was a negative about trade?
-most of the trade was geared to the demands of the USSR
-machinery was exchanged for raw materials but market prices were never paid for these goods so it wasn’t profitable->this continued until the mid-60s when the New Economic System (NES) separated the economies
What was the impact of WW2 and the division of Germany on economy?
Although some progress was made to stabilise the economy and increase trade, the tight grip of the USSR over trade in the DDR and its failure to provide market prices led to a declined pace of economic progress.
What were the negative impacts on the economy due to agriculture?
-all owners of estates more than 100 hectares were dispossessed without compensation
-By 1949, there was limited machinery, fertilisers and seeds put strain on this sector->most of the refugee farmers had limited experience and subsequently by 1948 crop and livestock had fallen dramatically leading to defection (leave) to the FRG or cities
What were the positive impacts on the economy due to agriculture?
-four million had re-settled in the DDR so this confiscated land was divided into small holdings and distributed amongst the refugees
-two-thirds of agricultural land was in the hands of small/medium-sized farmers
-by 1952 voluntary collectivisation was introduced to tackle the food supply issues; agricultural production cooperatives (LPGs) were formed
What was the impact on the DDR’s economy due to agriculture?
Whilst small sized farms benefited from the redistribution of agricultural land, the refugee farmers’ limited experiences made agricultural production unproductive. The lack of machinery and supplies further limited the effectiveness of agriculture.
What were the positives about collectivisation?
-attractive to the small-scale farmer
-farmers were persuaded to join by restricting access to machinery
-by 1970 production was higher than most Eastern European countries
-collectivisation made agriculture more efficient
What were the negatives about collectivisation?
-most large-scale farmers refused to participate
-by 1953 13% of agricultural land was not being farmed
-by 1958 farming was still largely independent
-Farmer refugee numbers peaked in 1961
-food production declined and rationing was reintroduced in 1961
-It was highly subsidised (funded by the government)
Why was collectivisation introduced? When?
1952 collectivisation was introduced to tackle the food supply issues
What was the impact on the DDR’s economy due to collectivisation?
Collectivisation was not widely supported by the DDR farmers. However, it did lead to long term success once Ulbricht had enforced the policy and subsidised improvements in agricultural production.
What were the negatives about ideological inflexibility?
-ideology dominated the DDR’s economy->had to be run under strict controls from Stalin & USSR
-there were limited opportunities for individual initiatives and this caused inefficiency
-Even after the NES reforms there were few attempts to improve the structure of the economy
What were the impacts on the DDR’s economy due to ideological inflexibility?
The fact that Stalin and the USSR had to run the DDR under strict controls shows how ineffective/unpopular it was. This had a negative impact on the economy.
What were the negatives about Brain Drain?
-economic policies did not win over the people of the DDR
-the FRG and DDR economies were constantly being compared
-many left the GDR despite their higher status compared to other Eastern Bloc countries
-the constant stream of refugees, many of whom were young and economically active was a decisive factor in the decision to build the Berlin Wall
What was the FRG seen as?
-‘capitalist heaven’->the economies were continually being compared
What was the impact on the DDR’s economy like due to Brain Drain?
Their policies were so unpopular that many people were leaving the GDR and moved to the ‘capitalist heaven’ even though the GDR had a higher status compared to the other blocks.
What was Brain Drain?
-around 4 million trained and intellectual East German citizens emigrated to the West
What were the negatives for workers?
-the productivity quotas of the plans put pressure on workers and many left for West Germany
-central planning was not supported by the workers who felt controlled by the USSR rather than putting the DDR first
-the later economic plans of 1958-9 focused on the production of consumer goods and so living standards improved but not significantly
-the social improvements were at the cost of transport and infrastructure improvements
-the introduction of the 7 Year Plan to ‘catch up and overtake’ the FRG by 1961 led to unrealistic productivity levels which increased refugees
What were the positives for workers?
-in 1958 ration cards disappeared, cultural centres and polytechnics were set up
-housing and basic goods were set at low prices which led to a slowing down of the rate of refugees to the FRG
What was the DDR’s economy like due to workers?
Even though there were improvements in housing and basic good prices there were other issues which led to increased numbers of people leaving the DDR. For example the issues with production levels would encourage people to leave.
What were the positives of the DDR’s economic plans like the First Five Year Plan 1951-1955?
-by 1950 76% of industrial production was under control of VEBs (people owned) and SAGs (state owned)
-banking and insurance was completely controlled by the state
-by 1955 many targets were over-fulfilled and production had doubled
What was the first economic plan focused on?
heavy industry: iron, steel, fuel, chemicals and building. Objectives were drawn up by the State Planning Commission and were determined to be successful
What were the negatives of the DDR’s economic plans like the First Five Year Plan 1951-1955?
-particularly in iron, cement and sulphuric acid but steel production fell short
-a focus on consumer goods would have led to more compliance from the population and an increase in the domestic market->the economic plans focused on heavy industry
-too much focus was on the USSR over what was actually needed in the DDR
What was the impact on the DDR’s economy due to the economic plans?
They had clear plans but there was too much focus on the USSR rather than what the DDR actually needed.
