GDR 1949-1969 : the Economy Unification 1989/90

GDR 1969-1989 : the Economy

The construction of the Berlin Wall in 1961 had ended the massive outflow of GDR citizens (many of those who had left in the past were qualified technicians, medical doctors etc., leaving the GDR with the problem to fill the vacancies). GDR society reached a moderate level of prosperity, the most advanced among the socialist block's economies. The GDR boasted to have topped Great Britain in standard of living. Although this may have been an exaggeration, it had been somewhat successful; the success, however, paled in comparison with the neighbouring FRG.
The Oil Crisis of 1973 hit the GDR hard, as she had neither oil deposits of her own nor pit-coal, only lignite. In order to reduce its (costly) oil consumption, most power stations were based on the burning of lignite, high in sulphur and so pollutant that in some areas the snow had brown colour. The GDR was close to bankrupt, and the FRG's Ostpolitik came just at the right time. While the GDR government continued to have a hostile attitude toward its western neighbour, it was in desperate need of western credits and repeatedly made concessions to the FRG in order to get these.
The GDR leadership, called Concrete Heads because of their loyalty to the Soviet leadership (Brezhnev), had little room to manoeuvre. Most consumer products were heavily subsidized, such as cars and state-provided housing. In order to keep costs under control, production was limited, causing long waiting periods. The shortage was further exacerbated by the GDR's attempt to sell abroad whatever it could, for hard currency.

As visits of relatives from the west became regular, they brought hard currency into the country. In the GDR a second market emerged - shops offering products for West-Mark, at first accessible only to western visitors, later to anybody who had West-Mark. While the shelves of ordinary shops were often empty, or in case they had restocked, long lines were waiting outside, the shelves in Intershops (on West-Mark basis) were always full and waiting lines short or nonexistent.
As housing was state-owned and rents incredibly low, few repairs were made. As a consequence, at the time of unification (1990) many houses and apartments were declared unsafe. Tenants who did want to have their house repaired, at their own expense, when calling the plumber, heard "we're booked until September." If they could add "I have 300 Marks West." "Okay, we come tomorrow."
Ordinary stores frequently were out of many products. So a consumer mentality to hoard items developed; if you had to repair your car you had to ask around who had the spare parts you needed. Connections were of vital importance.

GDR industry saw little investment in improved, more modern, more efficient equipment. As the state guaranteed jobs to everyone, there was little incentive to rationalize. Productivity of GDR industry thus remained stagnant.
Yet GDR citizens longed for an improvement of their living standard - they wanted to own a car (and if it was a 2 cylinder Trabant), have a small garden with garden house (called Datscha, as in Russian) and spent their vacation at the beach or in the mountains, if possible abroad (mostly in Hungary, Czechoslovakia or Bulgaria). Watching west-TV, their desire to consume only rose.

The GDR achieved little based on its own research, but acquired some modern technology by the means of Industrial Espionage, favoured target West Germany's successful industry. At the time of unification, the GDR had her own computer production - always a few years behind western models.

DDR-Alltagskultur, in German
J.R. Zetlin, The Currency of Socialism. Money in the GDR and German Unification, 1971-1989, in : GHI Bulletin
Article : Economy of the GDR, from Wikipedia
Article : East Germany, from Wikipedia
Article : History of Comecon, from Wikipedia
Quantitative Wirtschaftsgeschichte der DDR (Economic History of the GDR in Figures), from Jahrbuch für Wirtschaftsgeschichte, German language bibliography
DOCUMENTS ID Card permitting the holder to shop in Intershops, posted by Stexan
REFERENCE Article : Germany, Democratic Republic (East), in : Statesman's Yearbook 1983-1984 pp. 510-515 (data of 1982-1983) [G]
Article : Germany, Democratic Republic (East), in : Statesman's Yearbook 1985-1986 pp. 511-516 (data of 1984-1985) [G]
Article : Germany, Democratic Republic (East), in : Statesman's Yearbook 1987-1988 pp. 521-526 (data of 1986-1987) [G]
Article : Germany, Democratic Republic (East), in : Statesman's Yearbook 1989-1990 pp. 527-533 (data of 1988-1989) [G]
Article : Germany, Democratic Republic (East), in : Statesman's Yearbook 1990-1991 pp. 526-532 (data of 1989-1990) [G]

This page is part of World History at KMLA
First posted in 2000, last revised on June 26th 2006

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