GDR : Economic Developments 1949 - 1961

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  • GDR : Economic Developments 1949 - 1961
    • Economic developments
      • The GDR socialist economy was based on centralised economy planning and the development of heavy industry and the collectivisation of agriculture.
      • The GDR operated a centralised system of economic planning based on the Soviet model. In 1950, a State Planning Commission was created as the supreme planning authority.
      • They drew up a series of Five-Year Plans in which targets were set and labour and resources were allocated to meet them.
      • All production managers had to do was ensure that targets weremet. The advantages were ideological rather than economic;
      • Government could use the economy to meet the desires of the state
      • Social rather than personal needs were met – goods for the community rather than the individual
      • Focused on quantity rather than quality
      • To centralised did not allow creativity
      • Goods were required which were not necessary
      • There was no profit motive – did not follow supply and demand
    • The First Five Year Plan
      • Develop heavy industry
      • Increase living standards
      • Overtake the FRG and make the GDR more appealing to German workers
      • The targets would be decided by Central Planners, they were hugely unrealistic but they felt they had Communism on their side.
      • Increases were made in production ie Steel expanded from 999,000 to 2,508,000 tons however this was at the cost of luxury goods.
      • They could not produceboth and because of the demands of COMECON, the GDR was obliged tocontinue with its own production specialism.
    • Problems with central planning
      • SED overestimated the economic capacity of the GDR. They had not calculated for the armed forces of the reparations they had to pay to the USSR.
      • They planned to save money through cuts to welfare - cancelled working mothers days off to do household chores.
      • The state deficit was 700 billion Ostmarks by 1952
      • Citizens began to complain of the lack the goods such as potatoes, butter and paper they were not bothered that heavy industry had grown by 60% - they wanted food!!!
      • Communism could not be wrong it must be sabotage! Those with wealth (property owners) were blamed and they had their food ration cards withdrawn – affected two million people.
      • They introduced new WORK NORMS- they cut wages, increased targets by 10% (often lacked the tools) and bonuses were withheld. People were getting angry!! People were emigrating, sabotaging machinery and the prison population grew.
    • Agricultural collectivism
      • The idea was that more could be achieved through large farms which could afford more machinery to operate in bigger fields and more animals = achieve more economies of scale.
      • The GDR said it should be voluntary however if it did not take place farms faced heavy taxes.
    • The Socialist Spring
      • Opposition to socialist economics
      • Workers had no motivation and it was made worse bythe fact that there no goods to purchase. Unofficial strikes werecommon.
      • Collectivisation increased = by May 1960 there were 19, 345 collectivised farms.
      • The process led to disruption and resentment, many farmers left for the West.
      • Many farmers fled to the West and fields were left deserted. The removal of profit meant that many mangers did not try very hard to improve production.
      • The aim was to make the GDR self-sufficient in food production. In December 1959 the Central Committee wanted all farms to be collectivised = it was a forced campaign.
    • The New Course
      • Stalin died in 1953. Ulbricht looked to the USSR for guidance but the USSR wanted the GDR to ease into socialism rather than having it forced upon them = this became known as the New Course. The New Course had the following impact;
      • ? Withdrawal of the price rises            ? Restoration of confiscated ration cards  ? End to discrimination against Christians    ? Ending of collectivisation                ? Production of more consumer goods
      • This can be seen as the SED trying to undo some of its mistakes but it was too little too late.
    • June 1953 Revolt
      • First widespread revolt against Communism in the GDR. The SED blamed Western infiltrators. It was initially caused by poor living and working conditions and the work norms.
      • Stalin’s death was a catalyst and many hoped East Germany could break free of USSR control. The strikes called for the Government to resign.
      • In Berlin workers on a residential building project marched to the SED headquarters and demanded to be seen. Protestors joined and numbers grew to 2000. They called for a general strike on 17th June and were joined by 25,000 people. They nowalso wanted free elections
      • The SED were shocked – they believed their own propaganda and thought people were satisfied! The Russains dealt with it = The SMAD declared a state of emergency, banned assemblies of people and sent in the tanks.
      • By evening order was restored. Not before the strikes had spread to the countryside where SED officials were beaten up and members of collectives refused to meet their targets.
      • People did not join the strikes for various reasons; apathy, fear of repression or loyalty to the regime based on their position.
      • The strikes failed because;      ? The strength of the USSR in putting down the revolt      ? There was not political unity amongst the strikers        ? The West did not support the rebellion
      • Ulbricht tightened his control of the SED he got rid of any member who had spoken against him or supported the workers i.e. Minister Max Fisher who called for leniency against the protestors.
      • It did make some changes;      ? They announced wage rise and pension increases.    ? They said the goal of the party was to increase living standards and production of consumer goods.        ? The Government could afford this as they had stopped paying reparations to the USSR in Jan 1954.     ? ALSO RESPONDED HARSHLY – blamed on the West, 1300 people were imprisoned. 18 were executed.
      • The New Course ended and was replaced with; ? Main task to build a socialist society         ? Consumer goods were once again banned        ? The Stasi grew in number and strength

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