GDR Economy 1961-85

What were Ulbricht’s two economic policies after 1961?

New Economic System (NES) and Economic System of Socialism (ESS)

When was the NES announced?

January 1963 (6th SED Congress)

Give three reasons why the NES was introduced.

Improve long-term planning without fear of mass exodus; deal with economic crisis by improving efficiency

How was the NES influenced by the USSR?

Based on Libermann’s suggested reforms in the USSR.

What were the three key features of the NES?

Limited decentralisation; limited free market; scientific leadership.

Give one example of decentralisation under the NES.

80 Associations of National Enterprises (VVBs) were responsible for industries and had some decision-making powers; factories and managers had some autonomy.

Give one example of continued centralisation under the NES.

State Planning Commission still controlled overall planning — setting targets

Give three examples of greater free market under the NES.

Some fully or partially private companies; incentives for workers (e.g. higher wages); success measured by profit rather than output; some flexible prices.

Give two examples of better scientific leadership under the NES.

Promotion opportunities for youth; ‘technical intelligentsia’ (technocrats and experts rather than SED ideologues); better links between industry and universities.

Give one success of the NES.

Industrial production rose 43% (1958–65); some better-quality goods; higher wages; loans for advanced industries.

Give three failures of the NES.

Failed to meet expectations; continued shortages of consumer goods; falling Soviet supplies; ideological opposition; managers lacked financial skills.

Give two reasons many SED members opposed the NES.

Feared loss of SED control; thought it compromised socialism or ties with USSR.

When was the NES effectively and officially abandoned?

Effectively ended December 1965 (after Apel’s suicide); officially 1967/8 (start of ESS).

When was the ESS announced?

April 1967.

True or false: the ESS was a completely new policy.

False — it was a modified version of the NES.

What were the aims of the ESS?

Make the NES more socialist; compete with FRG (‘overtake without catching up’); make GDR more self-sufficient.

Give two key features of the ESS.

Greater state control and focus on high-tech industries

Give two ways the ESS promoted technology.

Subsidies for key industries and higher production quotas; closer ties between researchers and industrialists.

Give three areas of science and technology that were focused on.

Electronics/computers; chemicals; plastics.

Give three successes of the ESS.

Economy grew 5.7% a year (1968–71); incomes rose; increased production and consumption of consumer goods; progress rebuilding cities.

Give three failures of the ESS.

Failed to meet expectations; consumer goods lower quality than FRG; continued shortages; Comecon favoured USSR; political opposition.

How and when did the ESS end?

Honecker ended it September 1970; officially ended with Ulbricht’s resignation (1971).

What was Honecker’s economic policy called?

Unity of Social and Economic Policy.

Give two key features of Honecker’s policy.

Focus on living standards and centralisation/nationalisation.

What were the aims of Honecker’s economic policy?

Economy serves the people and political aims — greater control and content workforce; strengthen ties to USSR.

What were the two ways this policy aimed to improve living standards?

Consumer socialism (goods) and welfare (health

What were workers expected to do in exchange for better living standards?

Accept SED control.

What did Honecker do in 1972?

Nationalised all remaining businesses.

What did he do in 1976 and why?

Reversed nationalisation as industrial production had fallen 11%.

Give two successes of Honecker’s policy.

Industrial production rose 5% a year; by 1980 most households had TVs

Give two failures of Honecker’s policy.

Long-term inefficiencies

How did agriculture change under Honecker?

Larger

When did the GDR join Comecon?

1950.

Give two ways Comecon shaped the GDR economy.

Encouraged specialisation and trade within the Eastern bloc; made GDR dependent on Soviet economic interests.

Give two pieces of evidence of economic links with the USSR.

USSR supplied 70% of raw materials; 45% of trade with USSR (main trading partner from 1970).

Give three reasons Soviet links weakened the GDR economy.

Exports sold below market value; ‘Sofia Principle’ drained expertise; dependence on USSR made it vulnerable.

Give three examples of economic links with the FRG.

Loans (2 billion DM 1983–84); trade and currency exchanges; ransoms and family reunification payments.