2.1 Economic situation after 1961

How and why did the emigration crisis end in 1961?

The Berlin Wall succeeded at preventing mass emigration, it ended travel and the ability to see family in the West 

What were the short term and long term economical impacts of this?

The regime could now rely on individuals who had no choice but to comply. This was significant as before the building of the wall, many didn’t know if colleagues would return the next day.

Skilled engineers might’ve left halfway through a project and doctors’ surgeries abandoned.

The Berlin Wall offered a sense of stability which stimulated a economic reform programme

• A reservoir of skilled people to carry out developments in industry, science and technology were now avaliable

What other consequences were there?

The SED tried to make the East more appealing for those who otherwise would’ve deserted it

There was a wave of repression over perceived opponents and those who had visited the West were discriminated against

What does Mary Fulbrook mean by the period of ‘normalisation’ and why did this happen after the building of the Berlin Wall?

This was the period until the 1970s after the construction of the wall.

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.

Why was the NES created?

The New Economic System, 1963-68 was created as at the beginning of the 1960s, there was an economic failure, the more that was invested the less seemed to return.

What were the main aims of the NES?

They aimed to improve efficiency by developing producers, managers would be driven by initiative and technology, not ideology.

What were the key problems with 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.

When and why was the ESS introduced?

The Economic System of Socialism, 1968-71 was created due to the fact that Khrushchev’s successors were more hardline and less supportive of the NES.

However, Ulbricht continued with it renaming it the ESS.

What were the successes of the ESS?

• 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.

What were the key problems of the ESS?

There were still unexplained shortages and people carried bags in the hopes of something unexpected being on sale.

Why did the SED try to focus on consumer goods after 1971? (‘consumer socialism’)

East German citizens had access to West German television and media, which constantly exposed them to the wider variety, choices, and prosperity available in the West. The SED felt pressured to compete in this "contest of prosperity" to prove the superiority or at least the viability of the socialist system.

SED leadership believed that improving living conditions would lead to higher worker morale and, consequently, better labour productivity and technological progress.

What examples were there of increased consumer goods in the GDR? Give specific statistics

From 1960-1970

The ownership of a television increased from 16.7% to 61.1%

The ownership of a fridge increased from 6.1% to 56.4%

The ownership of a washing machine increased from 6.2% to 53.6%

The ownership of a car increased from 3.2% to 15.6%

What was COMECON and when did the GDR become a member?

COMECON was a Soviet-led economic organization from 1949 to 1991 that promoted trade, resource sharing, and industrial cooperation among the Eastern Bloc countries.

The GDR joined in 1950.

How did this membership effect the GDR’s economic planning?

The GDR provided the USSR with machine tools and the USSR gave the GDR raw materials like 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.

How were the USSR and the GDR dependent on one another in terms of trade? What was the impact of this for the economy of the GDR?

GDR became so dependent on the USSR for oil it was 87% of all the GDR’s oil. This was bad as seen in the Oil Crisis in 1973.