Economic Stabilisation After 1961

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  • Economic Developments After 1961
    • Economic Stabilisation after 1961
      • Ulbricht favoured a model which would emphasis profitability and qualityover quantity. The middle managers and producers would have morecontrol. The NEW ECONOMIC SYSTEM (NES) was announced in January 1963.Some felt this was too close to capitalism.
      • The end of mass emigration = after the building of the Wall the regimecould now rely on skilled people who had no choice but to comply. Theretention of skilled employees offered stability and technicalexperience. The NES now had a chance of success.
      • ‘Normalisation’ = with emigration halted people began to make the mostof the situation especially social welfare. The GDR now had theworkforce it needed and the regime faced no immediate threat.
      • Opposition = there were localised unofficial strikes usually relating toworking conditions. Protest included; cutting cables of SED leaderscars, being drunk and using scarfs to block out political messages. Manydid not protest as they were old enough to remember the 1953 uprising.
    • The New Economic System
      • Ulbricht and the SED knew they could not rely on repression forever they needed people to want to stay in the GDR.
      • Ulbricht understood the system was too bureaucratic and that is was not enough just to focus on quantity. Khrushchev agreed the change, as he wanted to see if it would work and he fell from power.
      • The NES aimed to improve economic efficiency by developing procedures in which managers would be driven by initiative and technology. The State Planning Commission and SED were still in control they still covered targets, resources and prices.
      • Associations of National Enterprises = provided links between centralbodies and enterprises to plan tasks. The goal emphasised was profit.The key areas to develop were science and technology to compete with theWest. However, supply and demand was still controlled by the centralplanners so managers could still over produce and make no profit.
    • The Economic system of Socialism, 1968-71
      • The ESS was the rechristened NES. It called for closer ties between scientific and technology researchers and industrialist to facilitate industrial development.
      • Gross production from industry did rise
      • Private consumption rose
      • The numbers owning consumer goods rose
      • There were still unexpected shortages
    • Membership of Comecon
      • Its aim was to work together to increase economic performance through planning and cooperation. However, it was dominated by the USSR. The USSR gave the GDR raw materials to make goods and then it would buy the manufactured goods.
      • Though the GDR became dependent on the USSR for its oil. The USSR used the ‘Sofia principle’ to take the GDR’s technical experts.
      • In 1954 each country was given a specialism, the GDR concentrated on heavy plant machinery. This led to sever shortages of consumer goods.
      • ‘Overtaking without catching up’ = the GDR could not catch up Western technology so it should invent its own new types of technology. It could overtake the FRG without catching up.
    • The economy in the 1970s
      • The ESS policies were abandoned to improve the standard of living. Kombinates were established to oversee the process of making consumer goods. Collective farms also became larger.
      • By 1975 38% of the labour force were employed in industry
      • The percentage of university graduates roe from 4.3% in 1971 to 5.5% by 1975

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