GDR- Economic stabilisation after 1961

What effect did the end of mass emigration have on the economy?

Regime could rely on skilled people who had no choice but to comply, more job stability. Retention of technically skilled workers meant GDR could carry out developments in industry, science and technology.

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What word is often used to describe the period following the building of the Berlin Wall until the late 1970s, and why?

Normalisation- the period when people wanted to get on with their lives and make the best of the situation. Labour force was reliable and there was very little opposition

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What is an argument that challenges the idea of 'normalisation'?

That the GDR survived due to its fortified border and repressive measures such as the Stasi, thus citizens may not have always complied out of choice

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What is evidence to suggest that the workforce was not always compliant?

Localised unofficial strikes usually because of poor conditions, raising of work norms, poor quality equipment, health and safety issues and poor rates of pay

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How did the authorities rationalise worker unrest?

The workers were politically motivated, esp those with contacts within the FRG.

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What happened to three workers at the VEB Waggonbau Goerlitz who were judged to be drunk at work?

They were arrested because they were found to have connections in West Berlin and thus were seen to be guilty of sabotage

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How did forms of protest often appear?

Petty. E.g, posters of SED leaders defaced, mass whistling drowned out leaders' speeches on the radio, women workers wrapping scarves around their ears to avoid listening to political speeches in the workplace.

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What are some examples of more serious worker defiance?

Cutting cables and emptying fuel tanks in SED leaders' cars, overconsumption of alcohol

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Why were many reluctant to strike?

Because of the possible consequences, the events of June 1953 were recent enough to be dissuasive

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Why was the New Economic System introduced in 1963?

Economic growth rates were falling, calls for more initiative and enterprise with incentives to produce more quality goods, make production more efficient. A trial run for Khrushchev to see if it would work in USSR?

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What did the NES aim to do?

Improve economic efficiency by developing procedures in which managers would be driven by initiative/technology over communist ideology

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What were the main features of the NES?

Level of central planning reduced so planners could concentrate on bigger picture. planners retained control over targets, resources and prices. SED still in control but producers left to get on with their jobs without bureaucratic interference.

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What did USSR economist Evsie Liebermann believe should be the yardstick for measuring economic success and why?

Profitability, he wanted to see an end to shoddy articles nobody wanted to buy or that were unusable

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What was the role of the Associations of National Enterprises or V VBs?

They were set up to facilitate improvements in economic performance providing links between central bodies and enterprises to plan tasks. Each V VB was responsible for the development of its particular industry

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What was the goal of the V VBs?

profit: no longer would plans be based on how much they produced on paper but how much profit they made in reality.

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Which sectors of the economy was the NES initially applied to and why?

chemicals, electrical, engineering, machine building and transport followed by building, construction, agriculture and trade. In order to improve infrastructure and reform most valuable sectors of economy to compete with west (emphasis=science/tech)

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What was the result of the upholding of fundamental communist structures?

No effective price mechanism to determine supply and demand (still centrally controlled). Three stages of price rises 1964-67 for raw materials and semi-finished/finished products to enterprises, consumer prices remained same- hard to make profit

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Why were many party functionaries opposed to NES?

they feared it would weaken central control and the ideological underpinning of economic development. Concern that incentives and bonuses were creating 'socialist millionaires' out of researchers

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What were the successes of the NES?

Developments in chemical, optics, electronics industries. Unis and industries more closely linked to improve production, financial bonuses + higher quality goods = better standard of living

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What were the 2 main weaknesses of the NES?

Many people did not have skills to work in a new way+breaking past practises, lacked technical skills, prices set by central planners tended to be too low in goods the planners promoted e.g non essential luxury items=less profit or fewer goods.

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What were some other weaknesses of the NES?

Producers struggled to make a profit, wage differentials unnecessary when there was a lack of consumer goods, opposition to system and some skilled workers found themselves overqualified

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When was the Economic System of Socialism introduced?

1968

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What was the main aim of the ESS?

To create closer ties between scientific and technology researchers and industrialists to facilitate industrial development

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What were the successes of the ESS?

National income rose from 100 in 1950 to 310 in 1965 and 410 by 1970, gross production in industry rose from 392-535 in same period, growth in chemical, metallurgy and building materials, no. owning consumer goods rose, private consumption rose 24%

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What were the weaknesses of the ESS?

GDR could not match west in terms of research and development, no real improvement in GDR's international competitiveness, demand exceeded supply, centralisation meant reforms to promote initiative undermined, shortages of goods- esp consumer

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When did the GDR join COMECON?

September 1950

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What was the original intention of COMECON and how did this become subverted?

For countries to work together to increase economic performance through planning and co-operation, however it was dominated by USSR with whom the other members were major trading partners.

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How did the GDR's trading relationship with USSR become problematic?

In theory the GDR supplied USSR with manufactured goods while USSR offered raw materials. GDR became dependent on these raw materials so any problems with supply damaged GDR's ability to provide manufactured goods for USSR.

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What percent of GDR's oil was supplied by ussr?

87%

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How else did the USSR exploit COMECON?

They recruited economic experts from member countries. 'Sofia principle' of 1949 allowed all members access to tech of others at little cost. USSR pillaged better educated experts in GDR for example throughout the period of its existence

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How did COMECON widen its remit in 1954 and what effect did this have on the GDR?

countries specialised- countries concentrated on producing a limited range of goods to trade for others. GDR=heavy plant machinery and motor vehicles then 1957 mining of brown coal which=huge environmental problems

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By early 1980s what percentage of GDR trade did USSR and COMECON account for, and what percent of USSRs machinery imports did GDR provide?

65-75% and 25%

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Why was COMECON a drain on GDR's economy?

Dependence on USSR- as USSR's economy failed so did GDR's. Systematic shortages of consumer goods and difficulties in supply, massive foreign debts

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What was Barm's policy of 'overtaking without catching up' and what effect did it have?

as GDR couldn't catch up with FRG, GDR should pioneer new technologies and innovative ideas. neglected consumer goods production

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What was the priority for the GDR's economy in the 1970s?

improve living standards by creating more modern goods e.g consumer good which were more expensive and complex to produce

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How did GDR plan to create more modern goods in 1970s?

expand larger enterprises into larger units=KOMBINATE whose role was to manage and co-ordinate the whole producti

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Where was it hoped that productive responsibility would lie in the 1970?

With middle managers who knew best what they were doing. The economy remained centrally controlled.

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How did the number of collective farms change in the 1970?

It became larger. the total number of farms declined by two thirds between 1960 and 1980- they had been merged into collectives

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What statistic illustrates the growth rates in private consumption?

Growth rate of 4.8% between 1970 and 1975, and 4% in the years thereafter

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What growth rate did the 5YP of 1976-80 claim?

annual growth rate of 4.1%

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By 1975 what percent of the labour force was employed in industry?

38%

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How did the percent of university graduates change from 1971-1975?

rose from 4.3 to 5.5 percent

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In the period 1971-1975, how did the number of skilled workers change?

Percentage of skilled workers rose from 44.9% to 53%- biggest rise was in young people- 80% of 25-30 year olds were classed as skilled

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Which statistics illustrate the over-qualification of skilled workers?

At least 20% of skilled workers were doing jobs incommensurate with their skills

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What were some early indicators that the GDR's economy was in trouble?

Winters in the 1960s were harsh and followed by hot, dry summers. Long term underinvestment in water, transport and energy caused problems during this time

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What effect did the 1973 oil crisis have on the GDR's economy?

Price rises in oil had negative effects despite USSR subsidies- Honecker claimed that the 1980 prices paid for soviet oil were only 50% of world market levels but GDR struggled to maintain their payments even at this level

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How did the price of GDR imports change after the oil crisis and what effect did this have?

The price of GDR imports rose by 34% and its exports by 17%. This contributed to the growing trade deficit which undermined the economy in the 1980s

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GDR- Economic stabilisation after 1961

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