Matthew Read
Economic problems and debates during the period of socialist construction in the German Democratic Republic (1950–1963)
Table of contents
1. Introduction
“[…] the state that we have founded is not a resting place for us to relax. It was not born of cheap triumph, but of the hard work that was required on the path to democratically shape our society. […] The republic was born in struggle, it stands today in struggle, and it will have to unfold its life in struggle.”
– Prime Minister Otto Grotewohl at the 3rd Party Congress of the Socialist Unity Party of Germany (SED) on 23 July 1950.1
When the German Democratic Republic (DDR) was founded in October 1949, all odds were stacked against the young state. Its territory and population were far smaller than its West German counterpart, the Federal Republic of Germany (FRG). Cut off from the historical heartland of German industries and natural resources in the West, the heavily war-torn DDR faced the task of constructing large-scale industries from scratch. The means of investment for this endeavour had to be accumulated internally, for East Germany possessed neither overseas colonies nor foreign benefactors as the FRG did with the Marshall Plan. DDR citizens alone were paying off Germany’s 10-billion-dollar reparations to Soviet Union after the West suspended their payments and imposed export sanctions on the East. This was the precarious starting point from which socialist construction began in East Germany during the early 1950s. By the end of a turbulent decade, millions of workers and farmers had erected hundreds of new industrial enterprises, democratized agriculture through cooperative structures, and secured unparalleled social and cultural rights for their fellow citizens.
The following article revisits this period of DDR history and focuses on the economic problems and debates during the transition from capitalism to socialism. It builds off a previous article published in 2024, which explored the economic policies of the “anti-fascist, democratic transformation” (1945–1949) in the then Soviet Occupation Zone (SOZ) of Germany. That period had been characterized by the post-war process of the denazification, democratization, and decartelization of the economy. The Socialist Unity Party of Germany (SED) – formed in the SOZ in April 1946 as a merger of the Communist Party of Germany (KPD) and the Social Democratic Party of Germany (SPD) – understood that that objective and (especially) subjective conditions in Germany were not yet ripe for socialism and focused on campaigning against the partition of country into two states. The SED worked with the Soviet Military Administration to prioritize the tasks of overcoming war damage, returning living standards to pre-war levels, and fostering an anti-fascist, democratic consciousness. Through mass initiatives such as sequester and land reform commissions, property relations were gradually transformed to eliminate the economic roots of fascism. The new legal category of Volkseigentum (people’s property) was created to establish a socialized industrial sector that would operate alongside the large private sector. By 1948, the Western powers had unilaterally imposed an economic partition of Germany through a currency reform, and the SED began to introduce elements of indicative economic planning. The Two-Year Plan of 1948 sought to ensure that economic development in the SOZ would not fall further behind the Western zones.
The subsequent decade was retrospectively labelled as the “period of socialist construction” in the DDR (1950–1962). The planning system shifted from market-oriented indicative mechanisms to a democratic centralist model similar to the Soviet system. The economy was now coordinated according to specific production targets laid out in five-year and annual plans, which were drafted in a long, tiered process of scientific analysis and popular deliberation. Internal accumulation was prioritized in order to finance the construction of heavy industries. Private companies continued to play a significant role in the provision of goods and services, and they were gradually drawn into the planning system over the course of the decade. As remarked in the above quote by the first Prime Minister, Otto Grotewohl, these efforts were greatly influenced and limited by the political struggles of the time. The 1950s were the formative years of the socialist bloc in Eastern Europe. They were marked by both rapid economic advances and eruptive political crises. The middle of the decade witnessed a pivotal dispute between the Leninist model of democratic centralism and the Titoist conception of “self-governing socialism”, with the former ultimately prevailing in the Comecon states.
In the late 1940s, as the USSR shifted to a peace-time economy and the people’s democracies in Eastern Europe began with socialist construction, there was also a revival of debates around the political economy of socialism. Major questions centred on accumulation, efficiency, the objectivity of economic laws, and the appropriate degree of company-level autonomy. Economists grappled with the innerworkings of the economy as it transitioned away from markets towards conscious planning. Significant dissension revolved around the extent to which categories and mechanisms inherited from capitalism (e.g., commodity production, the law of value, profitability, etc.) remained relevant under socialism. One of the most vexing practical and theoretical challenges was the question of prices: What is the function of money under socialism? Upon what basis should monetary prices be formed? Should they merely serve a calculation function, or should they actively influence the production process? Finally, how can prices be made to accurately reflect socially necessary labour time in a non-market economy? The Bolsheviks had already realized in the 1920s that price policy was the crux of economic planning:
“The problem of prices intersects with all the fundamental economic and, consequently, political problems of the Soviet state. Establishing the right balance between the peasantry and the working class, ensuring the coordinated and interdependent development of agriculture and industry …, securing real wages, stabilizing the chervonets [Soviet currency] … all these issues are linked to the problem of prices.“2
This article examines in greater depth how the price debate unfolded during the DDR’s first decade. Existing accounts of these discussions often isolate debates from both their political context and the practical policy side of planning.3 As such, this article attempts to contextualize theoretical arguments and explore how planning specialists developed solutions to the contradictions uncovered by theorists. Particular attention is paid to the culmination of the disputes during the second half of the 1950s, when several prominent economists called for wider ranging market-oriented reforms in the DDR. It is only against the background of these early debates that the motivations and rationale for the major economic reforms of the 1960s (e.g., the DDR’s “New Economic System”, the Soviet “Kosygin Reforms”, the Czech “New Economic Model”, and the Hungarian “New Economic Mechanism”, etc.) can be properly understood.
The article is structured chronologically. Section 2 begins with the inception of the DDR’s planning system and new forms of socialist democracy during the first Five-Year Plan. Section 3 then traces out the revival of debates on political economy during these early years and the first attempts to reform the pricing system and company-level autonomy in 1952/1953. Section 4 turns to the political crisis that erupted in the spring of 1953 and how this led to the first major reform to “simplify the plan” in 1954/1955. Section 5 focuses on the great debates around the law of value and “market socialism” that broke out in 1956 and lasted until 1958. Section 6 summarizes the last years of the decade, when the government initiated a renewed political offensive to complete the transition from capitalism to socialism. The conclusion in Section 7 offers some reflections on the economics of socialist construction in the DDR.
As always, we welcome critique or suggestions: kontakt@ifddr.org The extent and complexity of this topic necessitates collective engagement, and this article can only reflect an interim result.
2. Heavy industrialization and the introduction of the democratic centralist planning system (1950–1953)
The first Five-Year Plan was a product of the division of Germany, which had been cemented by the Western powers in May 1949 with the creation of a separatist West German state, the FRG. Confronted with this reality, the Communist Party of the Soviet Union (CPSU) and the SED sought to consolidate the gains of the “anti-fascist, democratic transformation” in East Germany (1945–1949) and establish the DDR as a viable alternative to monopoly capitalism. The DDR was to serve as a base for those continuing the campaign for German unity and adherence to the Potsdam Agreement. This meant it was necessary to build a robust national economy in East Germany that would meet the interests of not only all workers, but also farmers, the intelligentsia, and “certain sections of the bourgeoisie”, as the SED affirmed in July 1950.4
Constitution of the DDR (1949)
Art. 19. The organisation of economic life must be in accordance with the principles of social justice; it must ensure a dignified existence for all.
The economy must serve the welfare of the entire population and meet its needs; it must ensure that everyone receives a share of the fruits of production commensurate with their contribution. Within the framework of these tasks and objectives, the economic freedom of the individual is guaranteed.
[…]
Art. 21. In order to secure the foundations of life and increase the prosperity of its citizens, the state shall draw up a public economic plan through its legislative bodies, with the direct participation of its citizens. Monitoring its implementation shall be the task of the people’s representatives.
Shortly after the founding of the DDR in October 1949, Prime Minister Otto Grotewohl initiated preparations for a long-term economic plan to build off the Two-Year Plan (1948–50). The primary objective of the Five-Year Plan was to overcome the economic disproportions brought about by the partition of country and reduce dependency on West Germany. This required a massive concentration of investments in extractive and metallurgy industries. To ensure living standards would rise above pre-war levels, the Plan sought to double industrial output compared to 1936 levels. This necessarily entailed a further strengthening of the Volkseigene Betriebe (VEBs, “enterprises owned by the people”), yet all sectors of the economy were to be utilized in this endavour. Production in the private sector, for instance, was also set to increase by 156.5 percent by 1955.5 Capitalist companies were largely concentrated in the consumer goods industries or operated as suppliers to the larger VEBs. While the introduction of five-year planning represented a significant step away from capitalism and towards socialism, the SED as yet refrained from explicitly launching socialist construction in the DDR.
The planning process introduced in 1950 set basic precedents for the DDR’s future planning system, although it would be refined and further democratized in the decades that followed. Under the leadership of the Ministry of Planning (later the State Planning Commission), each ministerial department was tasked with producing calculations, analyses, and balance sheets on the economic sectors and enterprises under their jurisdiction.6 The task was to create a scientifically grounded long-term plan based on both the real capabilities of the economy as well as the broader political, economic, and social objectives of the republic. Two kinds of indicators were utilized to calculate production targets: physical indicators (quantity and range of products, etc.), which dominated in the early years of planning, and monetary indicators (cost price, income and expenditure, etc.), which would become increasingly important towards the end of the decade. Qualitative targets (e.g., increased labour productivity, reduced production costs, improved production quality, maximal utilisation of production capacity, etc.) were derived by combining physical and value indicators.
After seven months of data collection and analysis for the first Five-Year Plan, a draft with production targets for each economic sector was presented to the SED’s Third Party Congress in July 1950, where party delegates then debated and approved the draft. The SED passed this draft along to the parliament, where the Christian Democratic Union (CDU) and Liberal Democratic Party of Germany (LDPD) submitted their own amendments.7 In October 1950, the parliament passed an “Ordinance on the Preparation of the Five-Year Plan”, whereafter a broad public discussion of the draft was organized throughout the country.8 Company directors were required to work with trade union leadership and SED company branches to facilitate a debate amongst all workers. Groups of workers were encouraged study the general objectives and production targets in the draft and submit their own amendments. The Peasant Mutual Aid Associations organized this process in the countryside amongst farmers. Outside the workplace, political parties and mass organisations hosted meetings in neighbourhoods and districts so that various social groups could participate in the discussion. State-level governments then set up special offices entitled “Proposals from the Population for the Five-Year Plan” to collect and process the results before passing them onto the State Planning Commission. After working in amendments from all levels of society, the Five-Year Plan was officially ratified by parliament in October 1951 as a binding policy for all state and economic bodies to follow.
With the Five-Year Plan at hand, more detailed annual “national economic plans” were developed over the course of 11 months to define the specific quantitative and qualitative targets for year ahead (see Figure 1). This was then broken down at the company-level to create annual and quarterly plans in each VEB. Production targets were progressively disaggregated at each level of the planning hierarchy: during the early 1950s, the State Planning Commission specified around 400 “individual and collective targets”, the ministries then set around 2,500 targets in “key lists” for the VEBs within their jurisdiction, and the VEBs themselves developed their own “project plans” that set around 40,000 targets for individual products.9
At this time, the SED did not explicitly characterize the Five-Year Plan as the initiation of socialist construction in the DDR. The policies surrounding the plan nevertheless purposefully deepened the revolutionary process in East Germany and – like the Two-Year-Plan (1948–1950) – contained many socialist elements.11 The plan required the management of industry according to democratic centralist principles. The central state economic bodies were reorganized in 1949/1950 to ensure the planning process was efficiently organized. A chain of communication was established to facilitate the aggregation and disaggregation of complex economic data: from the VEBs, up through the administrative departments of industrial branches, to the ministries, and finally to the State Planning Commission.12 At the same time, the participation of the working people in the management of the economy was greatly expanded. At the beginning of 1951, company collective agreements (BKV) were negotiated in roughly 5,000 VEBs between the factory management and the workers, who were represented by the company union leadership. In contrast to collective agreements under capitalism, BKVs were based on the fact that the socialized property relations meant that the interests of the state, the factory management, and the workforce fundamentally coincided and were no longer antagonistic. The BKVs specifically stipulated how employees were to be involved in company management, how plan implementation was to be monitored, and how working, cultural, and social conditions were to be improved over time. This new form of socialist democracy and the role of the unions within this process was discussed extensively in workplace conferences and then codified into the Labour Law of 1950. In the years that followed, numerous new mechanisms of workplace democracy were tested and adopted, including women’s company councils to encourage women’s political participation and professional development.
Labour Law
19 April 1950
I. The right to work
§ 1. Every citizen of the German Democratic Republic has the right to work. They must be provided with a job that is appropriate to their abilities and reasonable. […] (4) State organs are obliged to create the necessary conditions to enable women to exercise their right to work to a greater extent in all branches of the national economy.
§ 3. All workers shall be paid equal wages for equal work, regardless of gender and age. […]
II. The right of workers and employees to participate in decision-making
§ 4. In our new democratic order, in which key enterprises belong to the people, the right of workers and employees to participate in decision-making, as the decisive force in the state, is realized in the management of the economy by the democratic state organs.
§ 7. (1) In state-owned enterprises, the mutual obligations of the workforce and management arising from the VEB plan shall be laid down annually in the company contract. […] (3) The workers and employees of state-owned enterprises exercise their right of joint decision-making by discussing the VEB plans at workers’ meetings and in production consultations; they make appropriate proposals that serve the development of the national economy of the German Democratic Republic. […]
§ 9. Private industrial, agricultural, commercial, and transport companies are obliged to negotiate with union shop stewards to reach company agreements that regulate the implementation of joint decision-making rights and to provide information on issues relating to production and management. […]
VI. Training of young professionals and professionally qualified women
[…] § 32. In socialized enterprises, the training of women for all activities must be organized on a comprehensive basis. Training should be carried out in stages, from simple to complex tasks, and supported by work instruction and technical courses. Skilled workers are obliged to pass on their expertise to women and young people.
Dependent on the import of raw materials and hit with new Western sanctions in February 1950, the DDR had to pivot its economy to Eastern Europe during the Five-Year Plan.13 It joined the Council for Mutual Economic Assistance (Comecon) in September 1950 and increased its share of foreign trade with the socialist bloc from 55 percent in 1949 to over 76 percent by 1951. To help improve living standards in the DDR, Soviet leadership cut Germany’s outstanding reparation payments (6.34 billion USD) in half in 1950.14 This provided much needed slack in the Five-Year Plan’s investment structure. The DDR began importing iron ore and coke from the USSR and Poland to construct large-scale ironworks and coking plants from scratch. DDR specialists also developed new scientific methods to process the low-grade ores and brown coal indigenous to East Germany.
In line with Marx’s theory of expanded reproduction15, the SED concentrated investments in the industries producing the means of production (“Department 1”), for it was upon this material and technical basis that the industries producing consumer goods (“Department 2”) could also grow. 80 percent of all industrial investments between 1950 and 1955 went into the extractive and metallurgy industries.16 Figure 2 shows how the relative share of Department 1 was gradually raised over the course of 1950s.
A major challenge facing the DDR was the shortage of labour power. Over the course of the anti-fascist, democratic transformation, the state had been able to mobilize an additional 1 million workers, bringing their number from 3 million in 1945 to 4.1 million in 1950. However, to meet the targets set out in the Five-Year Plan, a further 890,000 workers were required.18 This was one of the factors that contributed to the decision in July 1952 to transition away from individual small-scale farming towards more capital-intensive agricultural production cooperatives (LPGs).19
To bleed the DDR dry, the FRG actively encouraged East German professionals and workers to migrate westward. West Berlin acted as an outpost for the capitalist powers deep inside DDR territory. Until 1961, the inner-city border remained open, so Western intelligence agencies and corporations had easy access for subversive activities. The FRG refused to recognize the DDR as a sovereign state and promised all westward migrants that they would be provided with West German passports if they abandoned the DDR. Those coming from critical professions were also promised employment, higher salaries, and other privileges. The poaching of working-age individuals trained and educated in the DDR became an increasingly burdensome drain on the public budget throughout the 1950s.
3. From mass output to efficiency: early debates on commercial accounting, the pricing system, and company-level autonomy (1950–1953)
The late 1940s and early 1950s also witnessed a revival of the political economy of socialism. The USSR was rapidly recovering from the war damage and Soviet economists now deliberated on the next steps of socialist development. The main points of contention revolved around the objectivity of economic laws (did objective laws still operate under socialism or was the state able to subjectively change the laws regulating the economy?), the nature of production under socialism (to what extent did Soviet products retain the commodity form?), and the role of the law of value20 in the planned economy (did it still operate in certain sectors of the socialist economy and was this inherently problematic?). Some economists were openly questioning why Soviet planners still utilized categories inherited from capitalism, such as money, wages, profitability, and credit. The relevance of these questions was no longer limited to the Soviet context, for the people’s democracies across Eastern Europe were now beginning their own transition from capitalism to socialism. There was as yet no generalized theory of socialist planning and it remained unclear the extent to which the Soviet path could function as a model for others. To follow these debates, social scientists in East Germany worked with the Soviet Administration to establish new journals such as the Neue Welt (New World) and the Sowjetwissenschaften (Soviet Sciences) in 1946 and 1948 respectively. They also founded their own journals – such as Einheit (Unity), Deutsche Finanzwirtschaft (German Finance Economy), Wirtschaftswissenschaft (Economic Science) – to provide a platform for German economists and officials to participate in these debates.
Of particular urgency in the socialist bloc at this time was the question of accumulation. Under capitalism, accumulation had been achieved through intensified exploitation of both the domestic working class and overseas colonies. After 1945, Western European states could accumulate capital through their colonial possessions abroad, increased exploitation at home, or foreign aid, such as the Marshall Plan. The people’s democracies, on the other hand, were compelled to accumulate means of investment through their own resources and efforts, as the Soviets had done in the previous decades. The period of immediate post-war reconstruction (ca. 1945–1950) had been characterized by “mass output no matter cost” and the planning system operated accordingly: if a state-owned enterprise spent more on production materials or wages than originally envisaged, the planning ministry’s departments would simply allocate additional funds to ensure targets were met. The production process was almost exclusively oriented around quantitative targets, regardless of whether expenses exceeded income. While this approach helped to swiftly overcome post-war scarcity, it was not conducive to accumulation, which was needed for long-term industrial investment. This was particularly pressing in the DDR, for East Germany had the lowest accumulation rate (circa 8 percent) in all of Eastern Europe at the beginning of the 1950s.21
Socialist economists agreed that long-term industrialization required higher rates of accumulation. This meant prioritizing thrift and the maximal utilization of available capacities (i.e., reducing production costs and increasing labour productivity).22 Stalin emphasized this point in 1952: “The profitability of individual enterprises and branches of production […] is the ABC of our economic activity at the present stage of development.”23 The production process had to be organized in such a way that would tap into new sources of accumulation while also progressively improving living standards. If the expenditure of social labour during production could be lowered, the price of consumer goods could be lowered over time. As one popular slogan in the DDR put it: “How we work today is how we will live tomorrow”. The SED set out to foster this new socialist consciousness while also developing new practical planning mechanisms to increase efficiency. In the summer of 1951, the SED announced plans to rely more heavily on monetary categories in the planning process. A Financial Policy Conference was organized in September 1951 to clarify the role of finance, credit, and money in socialist planning:
“Our economic officials – as well as the leaders and members of our social organisations, the leaders and members of trade unions, political parties, and the entire population – must understand the role our money plays in the implementation of our national economic plan. Every sum of money entitles us to a certain amount of machinery, building materials, clothing, food, and other items needed by the population, i.e. the results of our labour. […] With our money, we control production, the distribution of the goods produced, and investment. That is why intensive, continuous, and tenacious educational work must be carried out concerning the role that money plays in our society. Economic officials in particular must develop a real respect for the mark [DDR currency], for every penny.”24
This sentiment reflected the dominant view amongst socialist economists that socially necessary labour had to be measured and expressed indirectly in monetary terms at this stage of development because calculation based on direct units of time – as envisaged by Marx in 187525 – was not yet possible in the USSR and the people’s democracies. With the exception of a small number of economists who were optimistic about the waning significance of money in the Soviet Union (see, e.g., Lola Zahn26), the majority argued that the “major remnants of capitalism” (e.g., the differences between simple and complex labour; between intellectual and manual labour; between public, cooperative, and private ownership relations; and between the technical level of industrial companies) meant that it was still impossible to measure different kinds of labour in one universal unit of time. Instead, “the social calculation of labour performance must still adopt the category of value that dominates in capitalism and apply it in a modified form”.27
Based on this premise, the head of the State Planning Commission, Heinrich Rau, announced plans in June 1951 to “introduce new forms of company management” oriented around company-level accounting and profitability.28 This reform was inspired by the Soviet principle of Khozraschet (commercial accounting), which had been inaugurated during the Bolshevik’s New Economic Policy in 1921 and cemented as a core principle of Soviet industrial planning in 1929.29 The idea can be summarized as “Control Through Money”: the efficiency of state-owned companies was to be calculated and monitored by “recording as many material processes and results of economic activity as possible using value categories [Wertkategorien], to evaluate them in monetary terms, to compare them with each other, and to use them to stimulate economic interests.”30 Commercial accounting sought to explicitly utilize “value categories” such as price and profitability in an attempt to precisely calculate production costs so that violations of efficiency targets could be caught early on and corrected in good time. As Finance Minister Willy Rumpf put it:
“By using money as a measure of value, we can calculate the expenditure of social labour. This makes it possible to see the success of a company’s economic management in terms of its profit or loss. A company’s profit or loss, its profitability, is the result and indicator of whether production was carried out with the planned expenditure of social labour or not. The realisation of profits is an indication of whether socially necessary labour has been expended, i.e. whether goods have been produced for which there is a demand in terms of quantity, quality, and range. The production of goods for which there is no demand is reflected in excess stocks. The realisation of goods in money is therefore a very important and, in our case, very acute indicator of the work of companies.”31
While it intuitively made sense to utilize money’s function as a measure of value when planning the economy, it remained unclear how prices could be made to reflect magnitudes of value within the system of socialist planning. As elucidated by Marx in Das Kapital, value is a property of commodities, and the law of value is a law of commodity production. As an objective economic law, it asserts itself spontaneously behind the backs of the producers after they bring their commodities to the market: through the mechanism of competition, individual producers are forced to set their prices close to a uniform market price. The selling price of a commodity thus (approximately) reflects the relative social labour expended in its production.
In the DDR’s socialized and planned industries, these conditions no longer existed: goods produced by VEBs for other VEBs were not exchanged between private owners on a free market. They were delivered and supplied according to a plan at prices fixed by the state, with money merely playing a formal calculation role. As such, the propagated notion of “consciously utilizing the law of value” appeared to be an oxymoron: how can a law spawned from the spontaneous dynamics of the market be utilized by a state that is actively restricting and replacing market mechanisms with the conscious, planned activity of the producers? Furthermore, if planning officials were steering the production process by deliberately setting prices above or below the value of certain goods, as they claimed to be doing, did they not first have to know the exact magnitude of value in those products?
These questions were partially addressed by the CPSU politburo in 1952, when it published a series of Stalin’s letters addressed to economists. In this pamphlet entitled “Economic Problems of Socialism in the USSR”, Stalin argued that commodity production continued in the Soviet Union and attributed this primarily to the different ownership relations in industry and agriculture. While industry had been fully socialized, the means of production in agriculture largely remained under cooperative ownership and, as such, trade between the two sectors took the form of commodity exchange. The law of value thus continued to operate in the Soviet Union, albeit in a limited and modified form. The aim was to study the law of value, utilize it, and ultimately overcome it by fully socializing the means of production in the future. At this time, the law of value was accordingly understood as a necessary evil or, as DDR Industries Minister Fritz Selbmann put it, a “ferocious beast” (reißende Bestie) to be tamed and utilized for socialist planning.32 Stalin’s understanding of ownership relations as the source of commodity production and the law of value in socialism set the standard for political economy during the early 1950s, but this view would later be repudiated by Soviet economists (see Section 5).
Leading DDR economist Alfred Lemmnitz sought to apply the CPSU’s analysis to the national context in East Germany, where the transition from capitalism to socialism was still in its early stages. Lemmnitz argued that while consumer and export goods in the DDR were commodities in the true sense, goods produced by VEBs for other VEBs were commodities “in form only, not in essence”.33 The means of production within the socialized industries “are no longer commodities, yet they have retained the outer shell of commodities”.34 In other words, value categories were being utilized merely for calculation and accounting purposes in the socialized industries. Hence, the law of value had taken on a fundamentally different character under socialism:
“The category of value is an antagonistic category in capitalism because it contains the contradiction between private and social labour. This contradiction is eliminated in socialism. In socialism, there is no contradiction between private and social labour because all labour is social labour from the outset, albeit at different stages of development. In socialism, value expresses the planned average labour and socially necessary labour time.“35
With this theoretical understanding of value in socialism as an expression of “planned average labour”, planning specialists set out to find a practical policy solution to the question of how prices can accurately reflect value, as this was a precondition for the successful utilization of accounting principles in VEBs. The industrial pricing system had hitherto been based on capitalist calculation prices from 1944 and modified according to each VEB’s individual production costs. That is, prices were oriented primarily around an individual company’s performance, not current socially necessary labour time. In February 1953, planning officials thus began developing a universal and scientific method for establishing Planfestpreise (“planned fixed prices”) across specific industrial branches.36 The objective was to orient prices around the average cost price of each product in their respective industrial branches, a method pioneered by the USSR in 1936.
Figure 3 illustrates how DDR economists translated Marxist economic theory into planning praxis: “complex technical norms” were created to measure the inputs (material consumption, labour cost, and depreciation) required in each branch so that the planned average labour embodied in products could be expressed in monetary terms (as accurately as possible). Calculating these norms was a complicated process, but it promised to provide planners with a scientific means of comparing production developments across different VEBs. A VEB’s profit generation could then reflect the company’s cost reductions and/or production increases. A uniform Reineinkommen (net income) was calculated for each individual industrial branch and added on top of the average cost price to represent the surplus labour that could be accumulated and reinvested for extended reproduction. To influence production and consumption patterns, the pricing agency set prices for certain goods at a specified deviation from value. The final prices were then fixed for a predetermined period.
The formula for planned fixed prices:
p = c + v + g
p = price (by product group)
c = material consumed plus depreciation
v = wage costs
g = Reineinkommen (net income)
Because of its complex nature, the price reform initiated in February 1953 ultimately took over a decade to fully implement. Many economists considered the “fixed prices” solution to be unsatisfactory. It was only able to deliver an approximate measurement of socially necessary labour time and there was no consensus amongst economists around how the net income rate (g) should be derived. Inevitably, the price question would again be at the centre of economic debates during the late 1950s and early 1960s (see Section 5).
For the system of company-level management itself, the practical consequence of the commercial accounting reforms was a devolution of operational responsibility: to record economic activity in monetary units, it was necessary to simulate commercial practices between VEBs. As in the USSR, state-owned enterprises were to be given “appropriate” financial autonomy and legal personality within the framework of fixed prices. In March 1952, the DDR government thus converting VEBs into legally independent and individually taxable companies with their own fixed and circulating capital assets.38 Superintendence by trust directors (who oversaw multiple VEBs) was gradually dismantled and, by 1953, VEBs were officially responsible for managing many of their own expenses. Rather than having their entire income syphoned off to the state budget and having the state allocate funds for company repairs and investments, VEBs now had to cover some of their own expenses through the sale of goods at fixed prices (a concept known as Eigenerwirtschaftung der Mittel: self-financing). Again, these goods were to be treated as commodities “in form only, not in essence”. If a VEB failed to meet its various targets (output, operating costs, profit, and investments), the company would receive fewer state subsidies for its “director fund” (out of which workers’ bonuses were paid and the company’s social and cultural facilities were financed).39 Hence, not only the individual worker, but the entire company was now materially incentivized to produce more efficiently. As legally autonomous entities, VEBs were also required to sign bilateral contracts with other VEBs and be materially responsible for their fulfilment. Directors thereby had more autonomy to negotiate about the quality of goods and deadlines for delivery.40 To receive loans, companies had to sign contracts with the state bank, which was to act as “financial control body” to monitor any signals suggesting production plans might be awry.41 The new financial targets were meant to complement existing quantitative targets.
Within the democratic centralist framework, these reforms were explicitly designed to increase the rate of accumulation by utilizing economic factors (“the economic levers of money and credit”) as opposed to “administrative measures”, which the SED now described as “only appropriate for the immediate post-war period”.42 Similar to the price reform, it took the government many years to fully implement company-level commercial accounting reforms and, as will be shown, the economic troubles of the subsequent period would often be attributed to this slow progress. Nonetheless, by the end of 1951, the basic orientation for the state-owned industries had been set in the DDR: “It is up to the enterprise to decide how it fulfils its plan”.43
4. Political crisis, the “New Course”, and the “simplification of the plan” (1953–1954)
International tensions escalated greatly during the first years of the DDR’s Five-Year Plan. The real meaning behind the Truman Doctrine’s “containment strategy” was revealed by the USA’s genocidal attack on Korea in the early 1950s.44 In Europe, the USSR’s last attempt to secure a non-aligned, demilitarized German republic (the so-called “Stalin Note” of March 1952) was rebuffed by the West. The capitalist powers were intent on integrating the FRG into their military bloc; the signing of the Bonn–Paris conventions in May 1952 signaled the explicit remilitarization of West Germany. The SED and CPSU thus reassessed their situation in mid-1952 and decided two major policies for Germany: firstly, the DDR had to establish its own national defense force, and, secondly, the relations of production in agriculture had to catch up with those in industry, i.e., the time had come to begin forming production cooperatives in the countryside.
The SED convened an extraordinary Second Party Conference in July 1952 and passed a resolution to “systematically lay the foundations of socialism in all areas of society”. While the international situation undoubtedly influenced the decision to officially put socialist construction on the agenda, the objective and subjective conditions in East Germany had undergone a fundamental transformation since 1945. The class character of the political order had been decided in favour of the working class and peasantry with the founding of the DDR and the ratification of the constitution in 1949. The socialized sector had been expanded and now dominated the economy. The size and consciousness of the working class had grown accordingly. Finally, the DDR had established comprehensive economic and political ties with the countries of the socialist bloc in Eastern Europe and Asia.
The immediate consequences of the Conference affected agriculture, not industry, where socialist relations had already become dominant. The targets set out in the Five-Year Plan were maintained and the SED emphasized the need to advance company-level reforms from 1951. However, new state subsidies for agricultural cooperatives, plus the quadrupling of defense spending, now put enormous strain on the DDR’s state budget. At the same time, wages had increased faster than expected in the early 1950s since renumeration was still not regulated by the universal “technically based norm system” in most companies.45 Attempts to compensate for the increase in spending by raising taxes on private businesses and eliminating subsidies for the self-employed failed to relieve the state budget. In February 1953, the SED thus introduced a new “Campaign for Rigorous Cost-Saving”, which – in contrast to previous measures – directly affected the working class. Subsidies for certain consumer goods were eliminated at the same time as a general 10 percent norm increase was administratively implemented. The result was a de facto wage cut for all workers. To make matters worse, armaments for the new national defense force were to be acquired from the USSR in return for heavy industrial goods, necessitating further cuts to investments in the consumer goods industries. Aware of the growing tensions in the DDR, the Western powers intensified their agitation to enflame discontent in the DDR. In early 1953, the new US Secretary of State, John Foster Dulles, announced plans to “roll back” socialism in Europe, as the USA had tried in Korea.46
Recognizing the acute dangers of the situation and under the influence of the new Soviet leadership following the death of Stalin in March 1953, the SED politburo published a statement in early June 1953 admitting faults and announcing the withdrawal of certain austerity measures. A “New Course” was launched to increase the supply of consumer goods by markedly reducing investment in heavy industry. Relief measures were also announced for the heavily taxed middle classes. Oddly, however, the SED’s communique did not announce the reversal of the norm increase for the working class. Feeling betrayed, construction workers on a large building site in Berlin began a spontaneous protest, which then triggered nationwide unrest on 17 June 1953. After the protests turned violent, with looting and lynchings, the Soviet military was deployed to put an end to the violence.47
Following this crisis and a self-critical assessment of their policies, the SED expanded the “New Course” programme from 1953 to 1955. Norm increases for workers were finally reduced, the formation of LPGs was slowed down, limitations on private businesses were relaxed, and subsidies were reintroduced to lower prices for consumer goods. Under the influence of the new CPSU leadership, the SED reversed their prioritization of Department 1 in 1954 and 1955, as can be seen in Figure 1.48 The USSR also began providing new credits to the DDR and cancelled all outstanding reparation payments owed by Germany. The Soviet Joint Stock Companies (SAGs) – which were managed by the USSR to generate reparation funds and included many large chemical and electrical plants – were transferred to the DDR and converted into VEBs on 1 January 1954. These companies were worth some 2.7 billion DDR mark at the time.
It was against this background that the SED assessed and generalized the experiences of the first Five-Year Plan. The socialized sector now accounted for roughly 70 percent of the gross national output.49 Total industrial production had increased by 190 percent since 1950, with production in the metallurgy industries growing by 245 percent.50 A quarter of the workforce continued to be employed in the capitalist sector, which consisted of 15,000 privately owned companies and 27,000 small farmsteads. Significant improvements were made in the provision of education, childcare, and recreational facilities. However, SED First Secretary Walter Ulbricht pointed out that while quantitative production targets had been exceeded (by 104.4 percent), efficiency targets had not been met.51 The Five-Year Plan had aimed to reduce production costs in VEBs by 26 percent, yet only 19.3 percent had been achieved. In 1954, roughly 700 companies (27 percent of all VEBs) were still operating at a loss and relied on state subsidies to operate. Alarmingly, the rate of cost reductions in VEBs had also been slowing year to year (see Figure 4). A low point was reached in 1954, after VEBs had already exhausted the year’s state support fund by the third quarter. The economy accordingly fell short of the planned accumulation target by half a billion DDR-mark.
At the 21st Plenum of the Central Committee in November 1954, Ulbricht concluded that the financial side of planning had still not been mastered. The accounting principles introduced in 1952 had not been effectively implemented and too many control bodies failed to follow the idea of “Control Through Money”. VEBs were not being penalized when they violated their contractual obligations to banks and other VEBs. The Central Committee thus passed several significant resolutions to address these issues. Company profitability was now declared the “primary objective of economic policy”, and the use of material incentives was to be expanded. In 1957, the VEBs’ director fund (see Section 3) was split into a “company premium fund” and a “cultural and social fund”, both of which would be financed by the VEB’s own profits.53 Through the “company premium fund”, workers were to be rewarded with bonuses according to collective and individual performance: the greater their output exceeded the target, the higher the bonus. Yet this increased utilization of material incentives inadvertently spurred on the problem of “soft plans” (weiche Pläne), a phenomenon in which VEBs actively sought to keep targets and norms as low as possible so that they could easily exceeded them and receive bonuses. This distorted the planning system, as planners could not accurately assess the real productive capacities in the VEBs. The original premium fund reform had thus brought company interests into tension with societal interests by sowing the seeds for greater “company egoism”. The SED sought to address the problem of “soft plans” in 1964 (during the early phase of the NÖSPL reforms) by introducing a tiered premium system that was more forgiving towards failure to meet targets.54
New forms of socialist democracy were also developed in the mid-1950s to address efficiency concerns. Starting in 1955, “Economic Conferences” were organized amongst workers in large companies to analyze the production process and come up with suggestions for reducing costs and increasing productivity. At “Production Consultations”, company directors and accountants were required to deliver accountability reports for workers to scrutinize. By the end of that year, 4,000 Conferences and 600,000 Consultations had been held across the country. The results of these initiatives were quickly felt: the national accumulation fund increased by approximately 300 million DDR-mark in 1955 (see Figure 4).55
While mass campaigns based on workers’ elan were successful, they could not be relied on indefinitely. The SED wanted concrete planning mechanisms to be more geared towards efficiency. Some officials began questioning whether the prevailing planning methodology was in fact contradicting the principles of economic accounting.56 The sheer multitude of precisely calculated targets presented by the State Planning Commission to VEBs meant that companies’ annual plans often had to undergo dozens of revisions due to unforeseen issues, such as delayed deliveries or material shortages. This caused a knock-on effect in the nexus of company plans, tying up administrators and directors in endless recalculations.57 In the most extreme cases, VEBs were forced to revise their production plans over 40 times as year. The urgency of this problem grew as the division of labour in the economy continued to develop. Ever more manufactured products were being used as new inputs in further production or raw material extraction (e.g., textiles in automobile production or steel supports in mining, etc.). This meant that production targets were increasingly interwoven with one another – plans were becoming progressively more complex.
At the end of 1953, the SED thus tasked a working group led by Heinrich Rau and Erich Apel to explore ways of improving planning methods.58 After investigating several case studies, the group concluded that centrally determined target setting had been excessive in many industries. Rather than setting a VEB’s production outputs for each individual component of the final product, the group suggested giving companies more room to manoeuvre as they sought to meet primary targets. For example, rather than having the State Planning Commission set indicators for individual components of an electric motor, it was sufficient to merely set how many electric motors were to be produced in the end. The lower levels in the planning hierarchy should independently figure out how to produce or acquire the components they needed. This methodology, it was argued, better corresponded to conditions in the DDR, where the economy was developing from extensive to intensive growth and the division of labour was becoming more specialized. The idea was also inspired by the former SAGs, which had been given only a few key targets to meet and otherwise “had significantly greater freedom of movement within the framework of the plan”.59
Based on these conclusions, the government adopted a resolution in December 1954 to “simplify planning in the socialized industries”. Only the most important products for the national economy were to be centrally fixed. It would be up to the VEBs themselves to draw up detailed plans necessary for reaching these targets. VEBs’ operating plans, which were structured according to a uniform scheme, no longer required separate confirmation by the respective central administration. The number of centrally fixed targets thereafter fell by more than 50 percent (see Figure 5). The reductions generally affected advanced industries (e.g., precision mechanics and consumer goods) more than basic industries (e.g., metalworking). The reform also greatly cut down the administrative workload in the companies: the number of forms companies had to submit to higher planning authorities fell from 31 to 15 in 1956.60
The “simplification of the plan” was not unique to the DDR. Similar policies were implemented across Eastern Europe during the second half of the 1950s. Even in the USSR, the number of centrally fixed targets in industry was cut in half from 1957 to 1958.62 According to Roesler, the DDR implemented the most rapid reduction of targets, while the CSSR, Hungary, and Romania gradually reduced targets all the way into the early 1960s. As explored in the next section, the DDR and USSR abruptly stopped further reductions in 1958 after concluding that the reform had “gone too far” in certain branches. Notably, however, the DDR did not reverse these reforms entirely. Only in the sectors of “mechanical engineering” and “castings and forgings” were the number of production targets raised above pre-reform levels.63 In 1958, the total number of targets for industrial production remained 68 percent lower than in 1956.
5. The great debate: the law of value, “self-management”, and the road to “socialist commodity producers” (1955–1958)
As the government introduced these reforms in late 1954, the SED also sought to encourage greater criticism and self-criticism in all areas of society. This included an explicit call for economists to return to unsettled problems around the law of value and “the shortcomings of our work regarding price policy”.64) At an academic conference in March 1955 entitled “The Transition Period from Capitalism to Socialism in the DDR”, economist and politburo member Fred Oelßner emphasized the political duty of academics:
“That is precisely what we so urgently need: a truly free exchange of scientific views. Because we will not make progress in our development if we limit ourselves in discussions to repeating what has already been printed somewhere or what an authority has already said.”65
This conference marked the starting point of a debate that would soon escalate into a bitter political confrontation between “revisionists” and “anti-revisionists” in the SED. Catalyst for the escalation was the CPSU’s sudden policy shifts in 1955/56 (summarized below in Section 5.3). Initially, prominent DDR economists and officials had entered the debate by arguing that the price system (and the law of value) should have greater influence in economic decision making. Soon, however, their articles were calling for fundamental changes in the DDR’s property relations and a revision of the Marxist understanding of commodity production. The debate no longer revolved around the degree of centralised target setting; it challenged the very essence of the DDR’s political and economic system. Several of the so-called “value-economists” went so far as to advocate for the idea of “market socialism” and Titoist-style “economic self-governance”. After almost two years of debate, the SED’s politburo intervened in early 1957 to launch a campaign against revisionism within the Party. The background context to this intervention was the political destabilization across Eastern Europe and the imperialist invasion of Egypt at the end of 1956 (see Section 5.3). The debate ended in 1958, with Ulbricht successfully defending democratic centralism as the guiding principle of planning in the DDR. The field of political economy was, however, lastingly influenced by the views of the value-economists.
The value debate in the DDR was ignited by Polish economist Włodzimierz Brus – who later became a central advocate for “market socialism” alongside his colleague Oskar Lange – at the aforementioned conference. Brus argued in his lecture that the centralised price setting mechanism in the socialist states was failing to adequately respect the law of value and thus distorting incentive mechanisms in the planned economy.66 Inefficiency was attributed to the state violating the law of value. Brus’ thesis was then taken up by prominent DDR economists such as Gunther Kohlmey, Fritz Behrens, and Arne Benary in a series of articles in the journal Wirtschaftswissenschaft (WiWi) between 1955 and 1957. Although their arguments differed from one another, they can be grouped into two general categories: the argument to allow prices to (partially) form freely through the law of value and, as a necessary precondition for this, the argument to cut back the planning system to facilitate far greater VEB autonomy.
5.1 The free formation of prices through the law of value
“We must free ourselves from the false notion that the law of value is a necessary evil whose scope of action must be severely curtailed.”67
This argument was first advanced in March 1956 by Gunther Kohlmey (then director of the DDR’s Institute for Economics). Kohlmey thereby broke with the dominant view amongst Marxists that the law of value must be progressively overcome under socialism. He believed that the administrative manipulation of “value categories” (money, price, cost, wages, credit, finance, etc.) was the source of inefficiency and the inadequate supply of consumer goods. The state was hindering its own efforts to implement the commercial accounting principles introduced in 1951/1952:
“The main problem currently facing economic accounting in the DDR seems to be (1) not to unnecessarily restrict or even destroy its scope of action by issuing too many planning instructions, and (2) to make the entire mechanism for exploiting value forms in the management of socialist state-owned enterprises more flexible than before […].”68
Logically, this required Kohlmey to also revise the very nature of the socialist economy, which he did that same year:
“Socialism is likewise a (national and international) market economy; it is a market economy that operates according to plan and is based on social ownership of the means of production.”69
Fritz Behrens (then deputy chair of the State Planning Commission and head of the Central Administration for Statistics) similarly relied on the assertion that the law of value operates independently under socialism to argue in favour of the “exploitation of the law of supply and demand to create an – economically sound – price system”.70 He argued that prices in Department 2 (the production of consumer goods) had to be more “elastic” because centralized planners were incapable of adequately understanding consumers preferences – specifically the timing, range, and quality demanded by consumers.71 According to Behrens, “central planning must be limited to fundamental matters”. He proposed to replace fixed prices with a system of “variable prices” in which VEBs producing for Department 2 could set their own prices within certain limits defined by the State Planning Commission. The system of “free price formation” within “clearly defined limits” would foster “controlled market competition”.
Behrens attributed existing problems in the DDR economy (he specifically named: interruptions in production, excess inventory, and excess purchasing power) to violations of the law of value. The Party had too long acted as if the state can simply replace “objective economic laws” with “legal laws”. This was, according to Behrens, a fatal error:
Because the state “cannot replace economic processes with regulations and instructions, it cannot replace the law of value either. Allowing the law of value to take effect means flexible pricing policies and variable prices instead of rigid pricing policies and fixed prices.”72
Notably, similar arguments were being advanced in the USSR at this time too. In December 1956, at the so-called “1st Soviet value debate”73, Soviet economists sought to address a contradiction in the official political economy of socialism: how could the effect of the law of value (as an objectively existing law) be discovered when the state itself is fixing so many prices? In other words, how could the state seek to influence economic behavior by setting prices at a “planned deviation from value”, if the value within the product is not known in the first place?74 For the value-economists, the way out of this contradiction was through the revision of Marxist theory itself: socialist production was in fact commodity production. DDR economists such as Herbert Wolf (an assistant to Behrens) and Soviet specialists such as J. A. Kronrod rejected Stalin’s conclusion that the continued existence of commodity production in socialism is attributed to the persistence of non-socialist property relations. Whereas the consensus had hitherto been that commodity production was mostly limited to the consumer industries and to agriculture, the value-economists argued that the products of the socialist industries were themselves commodities, albeit of “a special kind”. This was due to the “social dissimilarity of labour”: the differences between “mental and physical labour, skilled and unskilled labour, complicated and simple work, heavy and light work”.75 Because of these differences, VEBs were still relatively independent entities; labour in one VEB had to be organized separately from labour in other VEBs. This de facto independence in the production process was more important than the de jure title of unified state ownership. The goods produced by these “fragmented” VEBs were effectively produced for exchange and thus commodities. Hence, the law of value also shaped inter-VEB relations.
The novelty of this argument should not be missed. While there had always been Marxist proponents of relying on the market to advance towards socialism (e.g., Bukharin in the 1920s), they had never argued that the law of value would be an inherent feature of socialist production. The value-economists were not advocating for a temporary retreat to market mechanisms (à la the Bolsheviks’ New Economic Policy). They were in fact arguing that the law of value was immanent in socialist production itself. The role of the law of value had to be “developed further” as socialism advanced to higher stages.
Some DDR economists such as Eva Altmann and Alfred Lemmnitz initially pushed back against this idea and defended the original position, the so-called “commodity-shell thesis”: products of the socialist industries were commodities in form only, not in essence because they did not change hands. The “social dissimilarity of labour” did not change this fact.76 “Socialist commodity production” was still limited only to the sphere of consumer and export goods.77 Nonetheless, by the conclusion of the “2nd Soviet value debate” in June 1958, the “commodity theorists” gained the majority over the “commodity-shell theorists”.78 Influential Soviet economists such as Lev Gatovsky, and Stanislav Strumilin now adopted the thesis that the law of value was immanent in socialist production itself. Konstantin Ostrovityanov argued that the “effectiveness of the law of value” had to be “strengthened” under socialism in order to facilitate the eventual withering away of “money-commodity relations” in the higher stage of communism.79 Later that year, CPSU General Secretary Nikita Khrushchev also advanced this position at a central committee meeting.80 These significant shifts in Soviet and DDR political economy set the stage for the thesis of the “planned economy of socialist commodity producers” in the 1960s.
5.2 “Self-management” as the precondition for free price formation
Logically, “flexible pricing policies and variable prices” would require significant changes in the DDR’s economic structure as well. The value-economists were compelled to illustrate how their model of utilizing “market laws” could be realized under socialism. Kohlmey focused on the financial system itself and advocated for a more “flexible and rational” state bank by granting it an autonomous role in the economy.81 Behrens and Benary went further and proposed the comprehensive “self-management of the economy”. They argued that conditions in the DDR no longer justified centralised planning:
“Centralisation, even in its most extreme form, is a necessity in periods when profound changes must be implemented rapidly, the foundations of capitalism destroyed, and those of the socialist economy established through centralised directives, especially when military necessities must be taken into account. But just as centralisation is not a mandatory form of government in a socialist state, centralised directives are not a mandatory form of management in a socialist economy.
As the economic laws of socialist production begin to take effect, i.e. as socialist production relations become established, centralised management must give way, otherwise it will become an obstacle to further development. The growing productive forces and the economic system of socialism then come into conflict with centralised management. It is therefore essential to move from centralised management to economic management, i.e. to management with a minimum of centralised directives and a maximum of initiative and independence “from below”, based on the exploitation of economic laws, in particular the law of value, as soon as this contradiction begins to emerge.”82
Behrens here departs from the Leninist conception of the dialectical unity between centralism and democracy, arguing instead that centralism is the antithesis of democracy. In the name of “decentralisation”, Behrens claims that the state must already begin to “wither away”, even if the transition to socialism is incomplete. Behrens presents his argument as a return to the true principles of Marxism-Leninism:
“The notion that the state can do whatever it wants and that every matter, even the most private ones, must be managed and controlled by the state is not socialist, but rather “Prussian”, i.e. aristocratic and monopolistic. Socialist, i.e. Marxist-Leninist, is the view that the state will wither away as socialist relations of production become established and the capitalist threat becomes ineffective. But this means that the self-administration of the working masses in politics must be complemented by the self-administration of the economy. Socialism requires self-administration of the economy by the working people, because the socialisation of the means of production requires its complement in the socialisation of administration. Just as private ownership of the means of production is characterised by the administration of the economy by a bureaucracy alienated from the working people, so socialist ownership of the means of production is characterised by the administration of the economy by the working people themselves.”83
Arne Benary, one of Behrens’ former students, proposed a similar schema, describing two stages in the transition from capitalism to socialism:
“While in the first stage of the transition period the state apparatus has an independent economic function because the administrative method of management is objectively necessary, in the second stage it must gradually lose this independent economic function. In the first stage, the state apparatus is the main instrument of the proletarian dictatorship in the economic and organisational sphere. In the second stage, however, the state apparatus loses this significance […]. In the first stage of the transition period, the socialisation of ownership of the means of production – and thus the socialisation of the power of disposal over them – initially takes the form of the centralised state apparatus exercising this power of disposal and administering the means of production and production. In the second stage, the socialisation of the administration of the means of production and production must also take place as a further step. The self-administration of the economy can and must now replace the administration of the economy by the centralised state apparatus.”84
Although advanced in the name of “decentralisation”, these proposals went far beyond the government’s reforms to “simplify the plan” (1955–1957). The latter had merely adjusted the degree to which the central planning organs were directly regulating the production process in the VEBs. Behrens and Benary were arguing for a complete overhaul of the planning system and a de facto conversion of VEBs into self-run cooperatives.
5.3 The defense of democratic centralism and fixed prices
Between the spring of 1955 and the summer of 1956, fundamental debates like these were unfolding throughout the people’s democracies in Eastern Europe. They were significantly influenced by a series of policy shifts in the CPSU, which left other communist parties disoriented and without a common platform for discussion. The first major change came in June 1955, when Khrushchev signed the Belgrade Declaration with Yugoslav President Josip Broz Tito and endorsed the latter’s pluralist conception of “national communisms”.85 Tito’s influence is clearly reflected in Behrens’ and Benary’s writings, who echoed the political programme of the Communist Party of Yugoslavia (CPY) when they called for the “decentralisation of economic management” and the “withering away of the state and the party”. The CPY’s economic reforms – which began in July 1950 and converted state-owned industries into self-managed workers’ collectives with the power to set their own prices and determine their own production assortment – also clearly inspired Behrens and Benary’s idea of “self-administration”.86
The next major shift came in February 1956 at the CPSU’s 20th Party Congress, when Khrushchev denounced Stalin and called for changes “in the spheres of history, philosophy, economy and of other sciences”, for these fields had been distorted by “the widely spread erroneous views connected with the cult of the individual”.87 This sweeping declaration, while seeming to offer a breath of fresh air, essentially called all findings in Soviet science into question. Finally, at this pivotal moment, the CPSU dissolved the Cominform, which had been founded in 1947 as an informal attempt to revive multilateral coordination amongst European communist parties after the dissolution of the Comintern in 1943. The people’s democracies were thus left without a platform to discuss these fundamental questions.
Reeling from these abrupt shifts, the SED convened a Third (extraordinary) Party Conference in March 1956 to discuss the implications of the CPSU’s 20th Congress. The Party announced it would continue the campaign against “dogmatism” (which had begun in 1955) and encourage greater criticism and self-criticism in society. Yet the first signs of political destabilization struck in June 1956, when Poland and Hungary were shaken by violent unrest. The SED’s growing uncertainty regarding the CPSU’s positions was reflected in resolution passed by the Central Committee a month later under the title “The Next Ideological Tasks of the Party”. While the Central Committee commended the work of Kohlmey and Behrens as “independent, creative achievements from the standpoint of Marxism-Leninism”, it also defended the universality of scientific socialism: the SED “cannot accept the abandonment of the fundamental ideas of Marxism-Leninism under the banner of ‘freedom of criticism’ and scientific debate”.88 This was also a tacit critique of leading figures in Poland and Hungary who had embraced Tito’s approach and begun dismantling central planning.
A tipping point was reached in October, when Hungary was engulfed in violence and the anti-imperialist government in Egypt was attacked by Britain, France, and Israel. In light of what appeared to be imperialist “roll back” in action, the SED leadership opted to play a more active role in “resisting the influence of bourgeois ideology” in the DDR. At the 30th Plenum of the Central Committee in January 1957, Ulbricht recognized the merits of the CPSU’s 20th Party Congress in helping to overcome “mistakes” and “simplifications” for which “Comrade Stalin was responsible,” but he insisted that the SED would continue to “respect and learn” from Stalin’s “Marxist works”. He rejected the attempts to interpret the Congress as a “call for liberalization and for adopting [standards of] bourgeois democracy” in the socialist bloc.89 In a similar vein, economist Robert Naumann commended the “much appreciated discussion on issues of political economy” for it had brought forth “justified criticism of shortcomings and weaknesses in our economic policy”.90 At the same time, the positions advanced by some of his colleagues – he named Behrens and Benary – went too far, for they had questioned the very “foundations of Marxism-Leninism” and thus threatened to “disarm the working class” by “weakening its most important instrument: the state”. On behalf of the politburo, Erich Honecker announced that a struggle had to be waged against revisionism within the Party.91 In the field of economy, this meant that Behrens and Benary’s latest book (which was due to contain the articles cited above) would not be published without critical commentary by other economists.
At the same plenum, Bruno Leuschner (chair of the State Planning Commission and thus Behrens’ senior at the time), argued that the cutting back of centrally fixed targets (started in 1954) could not continue, citing concerns that the planned economy might dissolve altogether:
“When it comes to planning, we’ve cut the number of state-planned positions to 440. That’s the absolute minimum. We can’t go any lower for now. The government needs to maintain control of these targets, which include items such as electrical energy, lignite, briquettes, rolled steel, important basic chemicals, and so on.”92
Shortly after the plenum, Behrens and Benary’s articles were published in a special issue of the Wirtschaftswissenschaft alongside critiques by four economists. Karl Kampfert (head of the Trade Unions Department in the Central Committee) accused Behrens of making the law of value “the decisive [economic] law of the transitionary period” and thus neglecting the importance of the law of planned, proportional development in socialist construction.93 Herbert Luck (economics professor at the University of Rostock) argued that Behrens and Benary failed to admit the logical consequence of their proposals:
“If the law of value is given greater scope for development in production, then one must also reckon with the possible consequence that the law of value will become the regulator of production itself.”94
As Fred Oelßner pointed out, once the law of value becomes the regulator of production, the labour force and production materials will be distributed according to what is profitable, not according to the needs of proportional development.95 Those sectors that require greater investment during the phase of socialist construction (e.g., coal and energy) will not grow at the necessary rate. In other words, the planning system will be undermined from within.
Similarly, Luck agreed with the value-economists that decentralisation was in principle necessary but argued that this had to be understood as a devolution of operational responsibility, not as a fragmentation of the planning system into self-run economic units. The Yugoslav model was the abandonment of planning, not its further development.
Regarding the price system, Helmut Richter (economic assistant to the Central Committee) agreed that there were many issues in the DDR’s price policies and admitted that planning officials too often “underappreciated” the role of the law of value. Nevertheless, the model advanced by Behrens would encourage VEBs to “artificially maintain high prices”, as capitalist companies do. Such a reform thus risked to “bring the group interests of the enterprise into contradiction with the overall interests of society”.96
Lemmnitz argued that the inefficiencies identified by Behrens stemmed from the fact that the fixed price system had not yet been implemented in all VEBs.97 Many goods were still sold at prices set by the individual enterprises, and these prices thus reflected company-specific expended labour rather than socially necessary labour. This, according to Lemmnitz, was the real violation of the law of value. If prices in the socialized industries properly reflected socially necessary labour, this would compel less efficient VEBs to lower their expended labour. It was thus a matter of more effectively “exploiting the law of value” in this way, not giving the law more room to unfold freely. Lemmnitz criticized Behrens for misunderstanding the function and application of value in socialism. The solution was better planning, not less planning:
“The law of value therefore no longer acts as an unrecognized external force on commodity producers, no longer dominates them by forcing them to produce and sell their commodities in accordance with the socially necessary labor required. The law of value can and must now be controlled and exploited for the planned development of the national economy […]. The socialist state can exploit the law of value by setting uniform prices for each product, since, as the representative of the working class, it owns all enterprises. The socialist state must exploit the law of value by setting uniform prices, otherwise it violates the law of planned (proportional) development of the national economy, the basic economic law of socialism, and thus the interests of the working class and the working peasantry associated with it.“98
The politburo outright rejected Behrens’ claim that the state should begin “withering away” during the transition period. In 1955, just one year prior to Behrens’ writing on the topic, West Germany had been integrated into anti-Soviet NATO bloc. With the border to West Berlin still open, economic sabotage was an almost daily occurrence, and Western propaganda could be felt everywhere. A significant capitalist sector also continued to operate in the DDR itself. Under such conditions, it was impossible to talk of “the capitalist threat becoming void” (Behrens). Oelßner dismissed Behrens’ and Tito’s thesis, arguing that the role of the state could not be minimized during “the worldwide class struggle between socialism and capitalism”.99
Underlying many of these disagreements was an old point of contention within the communist movement: what is the relationship between spontaneity and consciousness during socialist construction? The value-economists pushed for a more laissez-faire approach in which the state would simply ensure that the objective economic laws of socialism could operate unhindered. Their critics, on the other hand, argued that planners had to study and actively exploit economic laws in order to progressively expand the conscious nature of planning:
“Marxism holds the view that we can master economic laws and thus exploit them for our own ends. It is simply a matter of correctly recognizing these laws and their effects. The state exploits these laws by making them serve our goal of socialist construction through legal statutes, orders, and directives! Comrade Behrens, on the other hand, believes that exploitation means allowing these laws to take effect, that is, giving them free rein. That is why he also says that it is the task of the central state power to create conditions that enable the laws to take effect.”100
In response, Behrens, Benary, and Kohlmey eventually published articles in 1958 distancing themselves from the idea of “economic self-management” and of the state “withering away” during the transitionary period. Their critics had successfully parried the attack on democratic centralism. Behrens – although demoted from the State Planning Commission in 1958 – continued to publish as an economist and went on to influence the DDR’s NÖSPL reforms with his 1961 book Ware, Wert und Wertgesetzt (“Commodity, Value, and the Law of Value”). His economic arguments – although not his political conclusions – were partially vindicated at the “2nd Soviet value debate” in June 1958 (see Section 5.1).
Soviet economists nevertheless rejected the idea of free price formation. The system of centrally fixed prices was retained in both the DDR and USSR, so economic discussions naturally returned to the problems involved in the fixed price formula (see Section 3). Several economists instigated a debate around the “measurability of value” in the early 1960s, with figures such as Ottmar Lendle and Johannes Rudolph arguing that the contradictions could only be overcome by developing models to calculate expended labour directly through units of time (hours).101 The economists that rejected this approach as “still not yet possible” focused instead on the most effective way to derive the Reineinkommen (the net income) when setting prices so as to stimulate economic development.102 This latter dispute continued well into the late 1960s.
6. “Plan together – work together – govern together!” – concluding the transition period to socialism (1958–1963)
The period of uncertainty that had begun with the “New Course” in 1953 was ended by the 30th Plenum of the Central Committee in January 1957. In the years that followed, the SED pushed ahead with socialist construction, consolidating state structures (e.g., new laws passed in January 1957 to expand the legislature and ensure greater participation of workers and the new class of cooperative farmers) and reorganizing the planning hierarchy (e.g., new laws passed in February 1958 to directly subordinate the State Planning Commission to the Council of Ministers and reinstitute intermediate management of VEBs).103 These measures were designed to strengthen democratic centralist principles by encouraging broader participation, removing bureaucratic hurdles, and refining the planning hierarchy. In October 1957, the Party also announced more elastic policies in the countryside to convince more farmers to join cooperatives (LPGs).104 Following the SED’s 5th Party Congress in July 1958, which set the objective of “essentially concluding the transition period from capitalism to socialism”, the “Socialist Springtime” movement (1958–1960) was launched to conclude the restructuring of agriculture into LPGs.
An important innovation in economic policy during the second half of the 1950s was the creation of the legal category Betriebe staatlicher Beteiligung (BSB, “companies with public shares”). In early 1956, some 13,000 private firms still operated in the DDR and employed a quarter of all workers. Rather than simply nationalizing these companies and antagonizing businessowners, the SED worked with the Conservative Democratic Union (CDU) party to develop new methods for integrating them into the planning system and gradually winning petit bourgeois forces over to socialism. Through asset investments, the state acquired ownership shares in around half of the DDR’s private companies by 1960 and was thereby able to influence the management while also sharing in the profits. Businessowners were able to remain co-owners of the companies and retain their role as directors, but had limits placed on their autonomy. The SED described this policy as “a creative application of state capitalism” according to the national conditions in the DDR.105 In this context, state capitalism was understood as “an economic form for the transition period – a capitalism that is permitted to operate by the socialist state with the aim of utilizing it for socialist construction”. While this policy expanded the scope of the planning system, it was not designed to eradicate private capital entirely. In 1960, BSBs accounted for 7.5 percent of industrial production and private firms still accounted for 3.8 percent.106 Just prior to being fully nationalized in 1972, over 5,000 private firms continued to operate and employ just over 14 percent of the industrial workforce in the DDR.107
The SED’s 5th Party Congress in 1958 put forth a comprehensive social concept for the conclusion of the transition period: the idea of socialism was not reduced to the establishment of formal property relations but understood as the construction of a wholly new culture, new consciousness, and higher forms of democracy. As such, the Party introduced new political initiatives such as the “Brigades of Socialist Labour”, the “Movement of Literary Workers”, the “10 Commandments of Socialist Morality”, and the ten-year polytechnic secondary school system. A new organ was also introduced in VEBs: the Ständige Produktionsberatungen (continuous production consultations), which operated as a committee of workers elected by their colleagues to discuss problems in the enterprise and collaborate with the director to improve company-level planning.
The other political parties took an active role in this process too, with the Third Congress of the National Front inaugurating the slogan Plane mit – arbeite mit – regiere mit! (“Plan together – work together – govern together!”) in September 1958.108 The CDU secured special economic training programmes for the directors of the new BSB, the LDPD created plans for drawing rural manufacturers such as blacksmiths into the LPGs, and the NDPD played an important role in encouraging urban manufacturers to join Produktionsgenossenschaften des Handwerks (production cooperatives in the skilled trades), the number of which grew from 300 (1957) to 4,000 (1960).109 The Gesetzbuch der Arbeit (Labour Code) was also overhauled to include additional rights and responsibilities that reflected the new stage of societal development. Local committees of workers and mass organizations submitted more than 23,000 amendment proposals to the Law before it was passed in 1960.110 Millions of DDR citizens thus actively joined in the effort to conclude the transition period and help build new forms of socialist culture, making the end of the 1950s one of the high points of democratic development in the DDR.111
One of the last major changes to the planning system during the transition period was the introduction in 1961 of a new centrally-set target indicator entitled “commodity production”.112 After planning specialists continued to criticize the system’s bias for quantitative output (which officials disparagingly referred to as Tonnenideologie or “tonnage ideology” at the end of the 1950s), the SED designed the indicator “commodity production” to be calculated not by the quantity of goods produced, but by the monetary revenue generated when a VEB sold its goods at fixed prices. By emphasizing monetary-based revenue targets, the planning system was now to reward VEBs for greater compliance with quality and product range expectations. Similar changes were adopted in the CSSR, Hungary, and Poland at this time. The DDR also added a further indicator called “technical-scientific targets”, which aimed to measure and better coordinate the proportion of intermediate goods going into final products. The rationale behind these changes was again the DDR’s transition from extensive to intensive production and the associated increase in the division of labour.
The SED’s underlying objective to increase the rate of accumulation was finally achieved during these final years of the transition period. In 1950, the DDR had only been able to set aside 12.6 percent of its national income for gross investments, with the rest going towards consumption. This was the lowest rate of accumulation amongst all people’s democracies in Eastern Europe at the time. By 1955, in the throes of the “New Course”, the rate of investment had increased to just 13.1 percent.113 With the renewed offensive launched in 1957, the accumulation rate finally increased more rapidly, reaching 19.2 percent in 1958 and thereafter remaining above 20 percent for the rest of the DDR’s history. Growth rates were also impressive during the concluding period of transition, with the national income growing by annual rates of 7 to 9 percent between 1957 and 1960.114 A major factor contributing to these successes was the increased economic integration in Comecon during the late 1950s. For the first time, the industrial development indicators set out in the second Five-Year Plan were coordinated with the economic plans in other Comecon states.115 The Comecon meeting in May 1958 specifically focused on advancing a socialist international division of labour in machine manufacturing.116 The free flow of credits, knowledge, and technology greatly enhanced the mobilization of available resources.
While the final push to complete the transition to socialism was marked by significant advances, the SED leadership also found itself making promises that it could not keep. At the 5th Party Congress in July 1958, Ulbricht declared that the “main economic task” was to develop the economy so that “within a few years” the “per capita consumption of our working population meets and surpasses the per capita consumption of all basic foodstuffs and consumer products in West Germany”.117 When a new Seven-Year Plan (1959–1965) was inaugurated in September 1959, Ulbricht even promised that this goal would be achieved by the end of 1961. The already ambitious targets set for 1959 and 1960 were accordingly increased even further. This objective was largely forced upon the DDR due to the Cold War pressures to stay apace with West Germany. Westward emigration of working-age citizens – which had been as high as 270,000 in 1956 and 1957 – declined to 152,000 (1958) and 99,000 (1959) following the SED’s promises.118 At the same time, the SED was evidently influenced by the CPSU’s grand proclamations of rapidly increasing Soviet consumerism at the end of the 1950s. Nevertheless, by adopting capitalist consumerist standards as the DDR’s “main economic task”, the SED began chasing a phantom that it could not – and arguably should not – emulate. As Marxist philosopher Hans Heinz Holz reflected in 1995, socialism entailed not just economic growth, but also a sovereign societal conception and a qualitatively new level of consciousness and culture:
“It was a fundamental error in the developmental concept of the CPSU’s 20th Party Congress to proclaim as an economic and social goal that the USA’s standard of living should be caught up with, in whatever time frame at all. This goal entailed submission to the mechanism of constantly increasing commodity production and thus the abandonment of communist values in favor of a petit-bourgeois ideology of commercialized consumption. The programme of a communist society includes the abolition of the alienation of people from commodity fetishism and the development of values of human self-realization—a self-realization that is expressed in the culture of life and not solely in consumption standards.
It is precisely technological progress, which increasingly relieves people of oppressive work and frees up more and more time that is not needed for the immediate reproduction of their lives, that enables the expansion of human abilities and activities, the differentiation of human interests, and the development of new meanings in life. The transition to a new human culture with universally educated people is the opportunity of an era in which the productive forces have reached a level that could guarantee the satisfaction of the material needs of all humanity.”119
Following the adoption of these standards, real improvements to living conditions in the DDR were not necessarily celebrated as such, but instead perceived as “still not good enough”. This was evident in the fact that, while workers’ and employees’ earnings grew on average by 15 percent between 1957 and 1959120, westward emigration began to rise again sharply again after the SED’s overly ambitious targets for 1960 and 1961 could not be met.
In the context of an acute threat of war, the border in Berlin was finally closed in August 1961.121 The SED saw this as a prerequisite for the continuation of socialist construction “without the economic and political interference of imperialism”. With the conclusion of the LPG movement in the countryside, the “victory of socialist relations of production” was announced in 1963.122 That same year, the SED inaugurated NÖSPL as a comprehensive economic reform programme for the DDR.
7. Reflections on the economics of socialist construction in the DDR
The 1950s were perhaps the most decisive decade for the socialist camp in Eastern Europe. In struggle against both Western subversion and conceptions of “self-governing socialism”, leading communist parties built the architecture for both practical planning policy and the field of political economy, which would shape the decades ahead. These parties had to chart unknown territory in economics while simultaneously defending themselves from the West’s explicit effort to “roll back” and overthrow socialism in Europe. The violent political crises of June 1953 and the autumn of 1956 revealed the consequences of any missteps and miscalculations. In an endeavour that inherently required experimentation, there was in reality little room for error.
This economic architecture consisted of three main pillars: a democratic centralist national planning hierarchy led by the State Planning Commission, a system of planned fixed prices designed to approximate labour time calculation in monetary terms, and the policy of company-level commercial accounting and self-financing. In retrospect, it is striking that socialist construction in Eastern Europe began at a time when there was a marked lack of theoretical clarity in the political economy of socialism. Prior to the Second World War, the Soviets were still grappling with the rapid economic changes initiated by the “Great Turn” (1928/29). Soviet economists had begun discussing the relevance of value categories and the function of money under socialism, but these debates were soon overshadowed by the fascist threat. After the end of the War, these questions returned with renewed urgency.
In alliance with the CPSU and in antagonism with the CP Yugoslavia, the leading parties in Eastern Europe inevitably relied heavily on the Soviet Union’s experience and planning model when constructing their own systems. While it was logical that certain general features would be common across socialist planned economies (e.g., a fixed price system), it was also necessary to consider national conditions and accordingly adapt planning methods and development strategies in each state. In this regard, the DDR’s adoption of Soviet commercial accounting principles (Khozraschet or wirtschaftliche Rechnungsführung in German) raises many questions. DDR literature and SED directives from 1951/1952 barely questioned how and why this system had been developed in the USSR and whether its rationale was sound and appropriate for the DDR.
The principle of Khozraschet was born out of the Bolsheviks’ New Economic Policy (NEP), introduced in 1921. It acted as a guideline for People’s Commissariats (Soviet ministries) to manage their state-owned enterprises in a system of state capitalism. Enterprises were made into legally independent entities that (partially) funded their own operations. In 1929/30, in the wake of the “Great Turn”, the CPSU preserved and adapted Khozraschet to the needs of the first Five-Year Plan, describing it as “the decentralisation of operative functions and the simultaneous centralisation of planning and management in fundamental matters”.123 The idea of “Control Through Money” was meant to facilitate both economic calculation and increased company-level efficiency. Critics of Khozraschet – most notably Che Guevara – labelled this management system as “socialism with capitalist elements” or a “hybrid of planning and markets” because it relied on capitalist categories such as profit, credit, and value in planning.124 This charge was, however, rather misleading, for markets presuppose private owners exchanging commodities and Khozraschet did not (in itself) alter property relations. In fact, the socialist states were implementing commercial accounting principles while making rapid advances in the socialization of the economy. Khozraschet did not embody a market reform – it merely sought to simulate commercial activity between state-owned enterprises. Hence the “commodity-shell” thesis that goods produced in the socialized industries were commodities “in form only, not in essence”.
Nonetheless, the CPSU undoubtedly caused great confusion by transposing capitalist categories onto socialist planning. Credit, money, finance, profit – economists took these categories up, but qualified them as being “fundamentally different” from their counterparts in capitalism. The law of value was said to be operating in a “modified form” and commodity production was apparently of “a special kind”. Yet if, as Lemmnitz contended, the law of value under socialism was an expression of planned social labour and no longer contained the contradiction between private and social labour, then was it not a different law altogether? Similarly, if products in the socialized industries were commodities “in shell only”, then why use the category “commodity production” at all? Some economists, such as Hans Wemmer, openly questioned this at the time: “Why do we continue to call it commodity relations, or why is it so difficult to introduce a new concept for these effectively new relationships?”125 According to Wemmer, “new concepts are only very rarely developed” in the socialist states because of “conservatism” in both vocabulary and conceptualization (Begriffsbildung).
Taken together, this theoretical “conservatism” and Khozraschet’s simulation of market mechanisms almost naturally sowed the seeds for major misconceptions such as Kohlmey’s idea that “socialism is a market economy”. Without the analytical instruments to grasp the “new relationships” in the planned economy, it was inevitable that economists would advance contrary interpretations of what it meant to “exploit the law of value” (e.g., Lemmnitz’s demand for more precisely calculated fixed prices versus Behrens’ demand for expanded commercial relations). In 1957, at the height of the great debate, the theoretical confusion around the usage of capitalist categories within socialism was so great that some planners simply tuned out:
“This whole discussion, which touches on issues of money, credit, government revenue, etc., has only served to confuse planning specialists. Those who did not want to be confused stayed out of the discussion and made decisions based on practical economic considerations.”126
While this frustration was understandable, the settling for “practical economic considerations” undoubtedly represented a theoretical capitulation. Rather than devising policies according to a scientifically grounded analysis, theory was simply adapted to accommodate the existing policies. The result can be seen in the contradictory and ill-defined postulate of “the planned economy of socialist commodity producers”, which was used from 1958 onwards to justify the further expansion of company-level autonomy.127 Soviet textbooks now claimed that commodity production was immanent in the socialized industries and the categories inherited from capitalism had to be expanded and developed further as socialism advances to higher stages. What this meant in practice for a centrally planned economy with no markets, a fixed price system, and nationalized industries was never comprehensively elaborated. Thus, an incongruity between theory and praxis began to emerge in the DDR, as economist were unable to adequately capture the “new relationships” the planning system had already brought into being.
This theoretical disorientation set the stage for the DDR’s contradictory NÖSPL reforms in the 1960s. Existing accounts of these reforms have too often overlooked the connection with Khozraschet. NÖSPL was built around the very logic of Khozraschet: mimicking the market without changing property relations.128 The SED’s explicit objective with NÖSPL was to allow the “economic substance” of Khozraschet to properly materialize (i.e., company-level autonomy, self-financing principles, and material incentives).129 This was the same demand as that made by Kohlmey and Behrens in 1956, albeit with different methods. Today, sympathizers with NÖSPL often draw parallels to China’s post-1978 strategy, yet this neglects the major characteristic of the “reform and opening up” period: the CP China actually altered property relations and became the architect of a real market in China. The CPC also reoriented itself around the thesis of being in an early “primary stage of socialism”. In the DDR, no such changes occurred. The country retained a centrally planned economy with socialized property relations throughout its 40-year existence. NÖSPL did not change ownership relations and did not create the conditions upon which a market could arise. The SED – still mired in “theoretical conservatism” – held onto the abstruse idea that the law of value had to be developed further as the country advanced to higher stages of socialism. The divergence between praxis and theory was thus only deepened by the NÖSPL reforms.
Although planning problems and disputes have been the focus of this article, it would be wrong to exaggerate their impact. Despite the unresolved questions in the political economy of socialism, the DDR was able to achieve remarkable growth and development over the course of just four decades. By the late 1980s, the country had increased its industrial production more than 12-fold and quintupled its gross domestic product, making it one of the fifteen leading industrialised states in the world at the time. Up against catastrophic starting conditions, sabotage, and post-war reparation obligations, the planning system was able to secure progressive improvements in living standards and unparalleled social rights – not just for workers, but also for farmers who had never known paid holiday leave, free health and childcare, or access to culture and further education. The struggles of this decade laid the foundations for a socialist economy that would continue to grow without cyclical crises or recession until its very last days. Thus, while deficits undoubtedly existed and had detrimental effects on society, they did not prevent the DDR from proving the viability of economic planning. The planning system and the political economy behind it required reassessment and enhancement, not denunciation and abandonment.
Further reading
Author collective unter the leadership of Lothar Baar, Wirtschaftsgeschichte – Ein Leitfaden (Economic History – A Guide), Verlag Die Wirtschaft Berlin, Berlin, 1980.
Author collective unter the leadership of Rolf Badstübner, Geschichte der Deutschen Demokratischen Republik (History of the German Democratic Republic), VEB Deutscher Verlag der Wissenschaften, Berlin, 1981.
Author collective, Graupner, K. and Wittenburg, G. (eds.), Geschichte der politischen Ökonomie des Sozialismus – Umrisse (History of the Political Economy of Socialism – Outlines), Verlag Die Wirtschaft Berlin, Berlin, 1986.
Badstübner, R. and Heitzer, H. (eds), Die DDR in der Übergangsperiode (The GDR in the Transition Period), Akademie Verlag, Berlin, 1982.
Bardmann, M., Die Preistypdebatte, ihre Grundlagen und ihr Einfluss auf die praktische Ausgestaltung des Preissystems der DDR (The Debate on Price Types, its Foundations, and its Influence on the Practical Design of the GDR’s Pricing System), Berlin Verlag Arno Spitz, 1986.
Becker, S. and Dierking, H., Die Herausbildung der Wirtschaftswissenschaften in der Frühphase der DDR (The Development of Economics in the Early Stages of the GDR), Verlag Wissenschaft und Politik, Köln, 1989.
Bombelles, J., Economic Development of Communist Yugoslavia, Hoover Institution Publications, Stanford University, 1968.
Dunkhase, H., Plädoyer für Planwirtschaft (A Plea for Economic Planning) , PapyRossa Verlag, Köln, 2022.
Haffner, F., Das sowjetische Preissystem. Theorie und Praxis. Änderungsvorschläge und Reformmaßnahmen (The Soviet Pricing System. Theory and Practice. Proposed Changes and Reform Measures). Bunker & Humblot, Berlin, 1968.
Kissel, P., From Reconstruction to People’s Property, Internationale Forschungsstelle DDR, 2024.
Knauff, R., Der fondsbezogene Preis in der DDR (The Stock-Related Price in the GDR), Philipps-Universität, Marburg, 1970.
Krause, G., Wirtschaftstheorie in der DDR (Economic Theory in the GDR), Metropolis-Verlag, Marburg, 1998.
Kronrod, J.A., Das Geld in der sozialistischen Gesellschaft (Money in Socialist Society), Akademie Verlag, Berlin, 1963 (originally published in Russian in 1960).
Matho, F., Wie werden Preise gemacht? Gesellschaftlich notwendiger Arbeitsaufwand und Preis (How Are Prices Set? Socially Necessary Labour and Price), Dietz Verlag Berlin, Berlin, 1967.
Mühlfriedel, W. und Wießner, K., Die Geschichte der Industrie der DDR bis 1965 (The History of Industry in the GDR until 1965), Akademie Verlag, Berlin, 1989.
Nick, H., Ökonomiedebatten in der DDR (Economic Debates in the GDR), GNN Verlag, Schkeuditz, 2011.
Protokoll: Finanzpolitischen Konferenz vom 17. bis 19. September 1951, Deutsche Finanzwirtschaft, No. 17/18, Berlin, 1951.
Roesler, J., Die Herausbildung der sozialistischen Planwirtschaft in der DDR (The Formation of the Socialist Planned Economy in the GDR), Akademie Verlag, Berlin, 1978.
Roesler, J., Geschichte der DDR (History of the GDR), PapyRossa Verlag, Köln, 2013.
Yaffe, H., Che Guevara: The Economics of Revolution, Palgrave Macmillan, Hampshire, 2009.
Footnotes
- Grotewohl, a former member of the Social Democratic Party of Germany (SPD), led efforts after the Second World War to merge his party with the Communist Party of Germany (KPD). The Socialist Unity Party of Germany (SED) was subsequently formed in April 1946. Grotewohl became the DDR’s first prime minister in 1949.[↩]
- From a Central Committee Plenum of the Communist Party of the Soviet Union in February 1927. Cited in the Soviet’s 1954 Lehrbuch der politischen Ökonomie (Textbook of Political Economy).[↩]
- See, for example, Becker, S. and Dierking, H., Die Herausbildung der Wirtschaftswissenschaften in der Frühphase der DDR (The Development of Economics in the Early Stages of the GDR), Verlag Wissenschaft und Politik, Köln, 1989; Krause, G., Wirtschaftstheorie in der DDR (Economic Theory in the GDR), Metropolis-Verlag, Marburg, 1998; Nick, H., Ökonomiedebatten in der DDR (Economic Debates in the GDR), GNN Verlag, Schkeuditz, 2011.[↩]
- Doernberg, S., Kurze Geschichte der DDR (Short History oft he GDR), Dietz Verlag Berlin, 1969, pg. 179.[↩]
- Ulbricht, W. Der Fünfjahrplan und die Perspektiven der Volkswirtschaft – Referat und Schlusswort auf dem III. Parteitag der SED (The Five-Year Plan and the Prospects for the National Economy – Speech and Closing Remarks at the Third Party Congress of the SED), 1950, pg. 30.[↩]
- Schultze, R., Die Ausarbeitung des Fünfjahrplanes der DDR 1951 bis 1955. Die Reaktion der Werktätigen und der Klassengegner auf seine Verkündung (The drafting of the GDR’s five-year plan for 1951 to 1955. The reaction of workers and class enemies to its announcement.), Jahrbuch für Wirtschaftsgeschichte, 1980, Akademie Verlag, Berlin, pg. 37.[↩]
- These parties were members of the so-called “Democratic Bloc”, a popular front led by the SED. The CDU’s amendments recommended, among other things, closer cooperation amongst public and private companies through the further expansion of the contract system between VEBs and private businesses, a better supply of materials for smaller companies, improvements in the distribution of labour and the planned training of younger experts. The LPDP proposed a reduction in all taxes and the setting of a maximum rate for income tax on the basis of the planned increase in national income, which would have directly disadvantaged workers in favour of capitalists. The LDPD also opposed the further development of heavy industry for this would supposedly deepen the division of the Germany economy. See Ibid.[↩]
- See: https://www.gvoon.de/gesetzblatt-gbl-ddr-1950/seite-1111–272743.html[↩]
- Roesler, J., Die Herausbildung der sozialistischen Planwirtschaft in der DDR (The Formation of the Socialist Planned Economy in the GDR), Akademie Verlag, Berlin, 1978. pg. 46.[↩]
- Based on Roesler, Die Herausbildung, pg. 44.[↩]
- As Walter Ulbricht noted at the Third Congress of the FDGB: „We do not have a socialist system, but under [the current] democratic conditions we have a publicly owned economy and publicly owned enterprises, which are subject to the same laws.“ Cited in Protokoll: Finanzpolitische Konferenz vom 17. bis 19. September 1951, Deutsche Finanzwirtschaft, No. 17/18, 1951, pg. 219.[↩]
- See: Author collective unter the leadership of Lothar Baar, Wirtschaftsgeschichte – Ein Leitfaden (Economic History – A Guide), Verlag Die Wirtschaft Berlin, Berlin, 1980, pg. 204. And: Author collective, Graupner, K. and Wittenburg, G. (eds.), Geschichte der politischen Ökonomie des Sozialismus – Umrisse (History of the Political Economy of Socialism – Outlines), Verlag Die Wirtschaft Berlin, Berlin, 1986, pg. 199.[↩]
- The West’s separatist policy and sanctions hit the East hard, as can be seen from the trade in goods: in 1936, 79% of all deliveries from the eastern German territories went to western Germany, while only 21% went abroad. As much as 86% of imports came from the western parts of the country and only 14% from abroad. In February 1950, the West German government banned contractually agreed steel deliveries to the DDR as part of the so-called interzonal trade. This embargo was intended to deal a severe blow to reconstruction in East Germany.[↩]
- The Potsdam Agreement stipulated that Germany would pay 10 billion USD in reparations to the USSR (a small sum in view of the 485 billion dollars in war damage). By 1950, Germany had paid approximately 3.67 billion USD – mostly from the SOZ. By cutting the remaining 6.34 billion in half in 1950, the USSR waived 3.15 billion USD owed by Germany. Moscow also extended the deadline so that the DDR could pay smaller instalments over the next 15 years. Aufzeichnung des Gesprächs des Genossen I.V. Stalin mit den Führern der Sozialistischen Einheitspartei Deutschlands Wilhelm Pieck, Otto Grotewohl und Walter Ulbricht 4. Mai 1950: https://www.ifz-muenchen.de/heftarchiv/2003_4_5_bonwetsch.pdf[↩]
- See Das Kapital, Volume 2, Part 3[↩]
- Baar, Wirtschaftsgeschichte, pg. 191.[↩]
- Badstübner, R. and Heitzer, H. (eds), Die DDR in der Übergangsperiode (The GDR in the Transition Period), Akademie Verlag, Berlin, 1982, pg. 206.[↩]
- Ulbricht, W., Der Fünfjahrplan.[↩]
- For more on the formation of agricultural production cooperatives (LPGs), see Studies on the DDR #3.[↩]
- The law of value is an inherent characteristic of commodity producing societies. It is the mechanism by which the principle of an equal exchange between private owners is enforced. As detailed by Marx in Das Kapital, the quantity of “socially necessary labour time” embodied within commodities is (in the final analysis) the basis for their exchange. Under capitalism, market prices are ultimately determined by the law of value. In short, this law dictates that the social product is distributed on the basis of socially necessary labour time.[↩]
- This meant that the DDR was consuming 92 percent of its social product. For comparison, in 1950, Czechoslovakia had an accumulation rate of 17 percent, Poland 21 percent, and Hungary 23 percent. Roesler, Herausbildung, pg. 121–122.[↩]
- Badstübner, pg. 138[↩]
- See: Stalin, J., Ökonomische Probleme des Sozialismus in der UdSSR (Economic Problems of Socialism in the USSR), Dietz Verlag, Berlin, 1952, pg. 57.[↩]
- Protokoll: Finanzpolitische Konferenz, S. 218.[↩]
- See Marx, K., Kritik des Gothaer Programms.[↩]
- See Zahn, L., Die ökonomischen Grundbegriffe der Sowjetplanwirtschaft, Einheit, Jg. 3, Heft 2, 1948.[↩]
- Lemmnitz, A., Das Geld im Sozialismus, Deutsche Finanzwirtschaft, 1948, H. 10/11, pg. 18. See also the argument made by Gordin, A., Preis und Preisbildung in der UdSSR, Neue Welt, 1951.[↩]
- See: Rau, H., Die Erfahrungen bei der Durchführung des Planes I. Quartal 1951, in: Die neuen Wirtschaftsaufgaben zur Verbesserung der Lebenslage des Volkes, Report to the 6th Plenum of the Central Committee of the SED, June 1951.[↩]
- Khozraschet was referred to as wirtschaftliche Rechnungsführung (economic accounting) in the DDR. After the Bolsheviks abandoned “war communism in 1921, they introduced Khozraschet to make state-owned industry more cost-effective. Public companies were granted more autonomy as economic units and freed from the dictates of trust directors (who oversaw multiple state-owned enterprises). Khozraschet was reaffirmed at the beginning of the USSR’s first Five-Year Plan in 1929 as the basis for enterprise management: companies maintained “appropriate” financial autonomy and legal personality. In 1936, Soviet companies were also equipped with their own “director funds” to increase company-level material incentives to produce more efficiently. See Bratusj, S.N., Die Entwicklung des sowjetischen staatlichen Betriebs zur juristischen Person in Sowjetwissenschaft, 1949 and Rau, H., Die neuen Wirschaftsaufgaben, pg. 16.[↩]
- Mühlfriedel, W. und Wießner, K., Die Geschichte der Industrie der DDR bis 1965 (The History of Industry in the GDR until 1965), Akademie Verlag, Berlin, 1989, pg.194.[↩]
- See Willy Rumpf in Protokoll: Finanzpolitische Konferenz, S. 219.[↩]
- Cited in Becker and Dierking, Die Herausbildung, pg. 439.[↩]
- Lemmnitz, A. Charakter und Rolle der Warenproduktion und des Wertgesetzes in der Wirtschaft der Deutschen Demokratischen Republik (Character and Role of Commodity Production and the Law of Value in the Economy of the German Democratic Republic), Einheit, Sonderheft, November 1952, pg. 1239.[↩]
- Ibid.[↩]
- Lemmnitz, A., Das Geld im Sozialismus, Deutsche Finanzwirtschaft, Heft 10/11, 1948, pg. 18. Soviet Economist Konstantin Ostrovityanov – one of the lead authors of the 1954 Soviet textbook “Political Economy” – was influential for DDR economists at this time: “The calculation of social labour in monetary terms is the main function of the law of value in the socialist economy. Monetary calculation, together with technical norms, forms the basis for determining the cost price and profitability of production in socialist state-owned enterprises. The Soviet state uses monetary accounting as a means of controlling production by comparing planned and actual production costs.” Ostrowitjanow, K., Die sozialistische Planung und das Wertgesetz, in: Sowjetwissenschaften, 1948, Heft 2, pg. 18. Ostrovityanov would later become one of the first Soviet economists to challenge Stalin’s thesis and argue that production within the socialized industries was in fact commodity production (see Section 5).[↩]
- For more on the industrial price reform in the DDR and USSR, see: Mühlfriedel und Wießner, Die Geschichte, pg. 203; Roesler, Die Herausbildung, pg. 70; Gordin, A., Preis und Preisbildung in der UdSSR; M. Bardmann, Die Preistypdebatte.[↩]
- Based on Matho, F. Wie werden Preise gemacht? Gesellschaftlich notwendiger Arbeitsaufwand und Preis, Dietz Verlag Berlin, Berlin, 1967.[↩]
- Brar, Wirtschaftsgeschichte, pg. 203 and Mühlfriedel und Wießner, Die Geschichte, pg.199.[↩]
- Roesler, Die Herausbildung, pg. 71 and Mühlfriedel und Wießner, Die Geschichte, pg. 197. The Direktorfonds (“director funds”) were modeled after their equivalents in the USSR, which were introduced in 1936. Over the course of the first Five-Year Plan in the DDR, the director funds grew significantly and became a central instrument for materially incentivizing greater performance. In 1957, this principle was expanded even further and two funds now replaced the director funds: the “company premium funds” (which covered workers’ bonuses) and the “cultural and social fonds”.[↩]
- Mühlfriedel und Wießner, Die Geschichte, pg. 199.[↩]
- Ulbricht, W. Der Fünfjahrplan, pg. 78.[↩]
- Protokoll: Finanzpolitische Konferenz, pg. 219 and Roeseler, Die Herausbildung, pg. 29.[↩]
- Protokoll: Finanzpolitische Konferenz, pg. 220[↩]
- The US dropped 635,000 tonnes of bombs and 32,557 tonnes of napalm on Korea. US General Curtis LeMay stated: “We… burned down every town in North Korea… we killed off – what – twenty percent of the population”. Western estimates show that between 1.5 and 2.5 million Koreans from the Democratic People’s Republic of Korea (DPRK) were killed – 15.6% to 26.0% of their pre-war population. For more, see The 80th Anniversary of the Victory in the World Anti-Fascist War.[↩]
- For more on the technically based norm system, see Kissel. For the increasing wage rate, see Roesler, Geschichte der DDR, pg. 33.[↩]
- There were many attempts to exploit the uncertainties and gaps in the political leaderships of the socialist countries, especially following the death of Joseph Stalin in March 1953. The violent political crises that erupted in, among others, the DDR in 1953, Poland in 1956, and Hungary that same year, can be understood in this context.[↩]
- For more on the events around 17 June 1953 in the DDR, see the dossier: What happened on 17 June 1953 in the GDR? https://ifddr.org/17-juni-1953/ An analysis of what the 17 June unrest meant for agricultural policies is also covered in Studies #3.[↩]
- After becoming Soviet premier in March 1953, Malenkov implemented a “New Course” policy to prioritize Department 2 in the USSR. In both the DDR and USSR, a debate subsequently erupted around the Marxist theory of expanded reproduction and the relation between accumulation and consumption in socialist planning. See Becker & Dierking, Die Herausbildung, pg. 365.[↩]
- Badstübner, Die Geschichte, pg. 167.[↩]
- Brar, Wirtschaftsgeschichte, pg. 194.[↩]
- Ulbricht, W., Fragen der politischen Ökonomie in der Deutschen Demokratischen Republic – 21. Tagung des Zentralkomitees der SED 12. bis 14. November 1954 (Questions of Political Economy in the German Democratic Republic – 21st Meeting of the Central Committee of the SED, November 12–14, 1954).[↩]
- Roesler, Herausbildung, pg. 80 & 250.[↩]
- Roesler, Die Herausbildung, pg. 228.[↩]
- The original “company premium fund” reform of 1957 had introduced a hard cut: if output did not meet 100 percent of the target, bonuses were drastically reduced. This meant that a hard-working VEB could be penalized for conditions outside of its control (e.g., material shortages temporarily interrupting production). The new system in 1964 gradually lowered bonuses according to the extent to which targets were not reached. Output that fell short of the target by just 5 percent was not penalized as severely as output that fell short by 25 percent. See: Roesler, Die Herausbildung, pg. 228.[↩]
- Badstübner, Die Geschichte, pg.162/163 and Mühlfriedel und Wießner, Die Geschichte, pg. 204.[↩]
- Mühlfriedel und Wießner, Die Geschichte, pg. 204.[↩]
- See: Rau, H., Im Machinenbau – mehr und bessere Waren herstellen, Report to the 4th Party Congress of the SED, April 1954.[↩]
- Erich Apel would go on to head the State Planning Commission during the introduction of the NÖSPL in 1963. For more on the working group, see Roesler, J., Der Beitrag der Betriebe sowjetischen bzw. gemischten Eigentums bei der Herausbildung und Festigung der sozialistischen Planwirtschaft in der volksdemokratischen Revolution, Die Große sozialistische Oktoberrevolution und der revolutionäre Weltprozess, Berlin, 1978.[↩]
- The working group led by Rau (then minister for mechanical engineering) and Apel concluded that the SAGs planning system was “fundamentally simpler and more elastic” than those in VEBs because they had fewer centrally-fixed targets to meet. See Roesler, Beitrag der SAG.[↩]
- Roesler, Die Herausbildung, pg. 155.[↩]
- Ibid, pg. 158.[↩]
- Ibid, pg. 156.[↩]
- Ibid, pg. 158.[↩]
- 25th Plenum of the Central Committee of the SED, October 1955, cited in Lemmnitz, Die marxistische Lehre vom Preis und die Preispolitik der Deutschen Demokratischen Republik, Wirtschaftswissenschaft (WiWi), 1956, S.91. In the Party’s theoretical organ, Einheit, SED politicians Peter Hess also wrote in December 1954: “Die ‘Wirtschaftswissenschaft‘ [Zeitschrift] muss ein Forum des wissenschaftlichen Meinungskampfes werden!“ (Einheit, No.12, 1954[↩]
- Oelßner, F., Zu einigen ökonomischen Problemen der Übergangsperiode vom Kapitalismus zum Sozialismus (Some Economic Problems of the Transition Period from Capitalism to Socialism), WiWi, Heft 3, 1955, pg. 299.[↩]
- Brus, W., Zu einigen Problemen der Einwirkung des Wertgesetzes auf die sozialistische Produktion (Some Problems of the Impact of the Law of Value on Socialist Production), WiWi, Heft 4, 1955.[↩]
- Kohlmey, G., Einige Fragen der planmäßigen Ausnutzung der Wertformen und des Wertgesetzes in der Periode des Übergangs zum Sozialismus, WiWi, Heft 3, 1956, pg. 447.[↩]
- Kohlmey, WiWi, Heft 3, 1956, pg. 455.[↩]
- Cited in Krause, Wirtschaftstheorie, pg. 127. The original German: „Auch der Sozialismus ist (nationale und internationale) Marktwirtschaft, er ist planmäßig verlaufende, auf dem gesellschaftlichen Eigentum an den Produktionsmitteln beruhende Marktwirtschaft.“[↩]
- Behrens, F., Zum Problem der Ausnutzung ökonomischer Gesetze in der Übergangsperiode (On the Oroblem of Exploiting Economic Laws During the Transition Period), WiWi, Heft 1, 1957, pg. 139.[↩]
- Behrens, Zum Problem der Ausnutzung, pg. 138.[↩]
- Ibid.[↩]
- See: Diskussion über Wertgesetz und Preisbildung im Sozialismus (Discussion on the Law of Value and Price Formation in Socialism), Sowjetwissenschaft, Gesellschaftswissenschaftliche Beiträge, Heft 8, 1957.[↩]
- The 1954 Soviet political economy textbook states the following on prices and value in the socialist sector: “The socialist state takes the law of value into account when planning prices. In a socialist economy, the price is the planned monetary expression of the value of the commodity. When planning prices for the means of production produced in the state sector, the value form is only used to record the social labor expended on production in monetary terms. When setting prices, the state takes as its starting point the social costs of production, which represent the value of these goods in the branches that produce them.”[↩]
- Kronrod, J.A., Das Geld in der sozialistischen Gesellschaft (Money in Socialist Society), Akademie Verlag, Berlin, 1963 (originally published in Russian in 1960), pg. 127.[↩]
- Altmann, E., Warenproduktion und Wert in der Übergangsperiode vom Kapitalismus zum Sozialismus, WiWi, Heft 8, 1957, pg. 1203/1204: “There are no relationships between commodity producers in state-owned socialist enterprises; together they form the sphere of state-owned socialist property with a single owner of the means of production and products. Work in individual enterprises is not realized through exchange between state-owned enterprises as direct national work, but directly in production. This is not changed by the different productivity of labor in the various enterprises or by possible deficiencies in the quality of work or in the range of products. These phenomena also exist within one and the same enterprise; there are differences in the concrete nature of the work, but these do not give rise to any commodity relations. In the delivery of products from one state-owned enterprise to another, whether directly on the basis of the state plan or only in fulfillment of a contractual obligation, social relations between commodity producers are not realized, i.e., no exchange of commodities takes place. Here, the distribution of the means of production among state-owned enterprises takes place only in the form of an exchange of commodities, without being an exchange of commodities in economic terms. The means of production that circulate between state-owned enterprises are therefore not commodities in this movement.”[↩]
- Lemmnitz, Die marxistische Lehre vom Preis, pg. 95.[↩]
- Note: This debate took place just a few months after Soviet leadership sold state-owned Machine-Tractor-Stations to the cooperative Kolkhoz farms and thus directly contradicted Stalin’s theses in “Economic Problems of Socialism in the USSR”.[↩]
- Cited in Eggers, W., Die Rolle des ‚Wertgesetzes‘ im sowjetischen Wirtschaftssystem (The Role of the ‘Law of Value’ in the Soviet Economic System), Osteuropa Wirtschaft, 1960, Heft 1, S. 34–45.[↩]
- Cited in Dunkhase, H., Plädoyer für Planwirtschaft (A Plea for Economic Planning), PapyRossa Verlag, Köln, 2022, pg. 17.[↩]
- Cited in Krause, Wirtschaftstheorie in der DDR, pg. 128.[↩]
- Behrens, Zum Problem der Ausnutzung, pg. 117/118.[↩]
- Ibid., pg. 125/126.[↩]
- Benary, A., Zur Funktion des Wertgesetzes im System der ökonomischen Gesetze des Sozialismus, WiWi, Heft 1, 1957, S. 89.[↩]
- The Belgrade Declaration stated that “the differences […] regarding the concrete forms of development of socialism are exclusively a matter for the peoples of the countries concerned”. The Soviet-aligned communist parties had always recognized that socialism would develop “according to specific national conditions” in each country, but had maintained that there were certain general characteristics all socialist states would share. This was a cornerstone of scientific socialism. The Belgrade Declaration departed from this position and adopted a pluralist understanding of socialism. Eventually, after witnessing the ramifications of this political shift in 1956, the CPSU retracted this position and returned to sharply criticizing Tito’s policies during the discussions around the new party programme in Yugoslavia in 1958.[↩]
- See J. Bombelles, Economic Development of Communist Yugoslavia, Hoover Institution Publications, Stanford University, 1968, pg. 49.[↩]
- See the “secret speech”: https://www.marxists.org/archive/khrushchev/1956/02/24.htm[↩]
- See: Neues Deutschland, 31 Juli 1956.[↩]
- See: BArch DY 30/40698 (German Federal Archives), pg. 86 & 90.[↩]
- See: BArch DY 30/40696 (German Federal Archives), pg. 182.[↩]
- BArch DY 30/40696 (German Federal Archives).[↩]
- Cited in Roesler, Die Herausbildung, pg. 158.[↩]
- Kampfert, K., Gegen das Aufkommen revisionistischer Auffassungen in der Wirtschaftswissenschaft, WiWi, Sonderheft 3, 1957, pg. 13.[↩]
- Luck, H., Bemerkungen zum Artikel von Behrens, WiWi, Sonderheft 3, 1957, pg. 103.[↩]
- Cited in Becker and Dierking, Die Herausbildung, pg. 456.[↩]
- Richter, Wirtschaftswissenschaft, Heft 1, 1957.[↩]
- Lemmnitz, Die marxistische Lehre, pg. 92.[↩]
- Ibid, pg. 97.[↩]
- Cited in Becker and Dierking, Die Herausbildung, pg. 457.[↩]
- Oelßner, cited in Becker and Dierking, Die Herausbildung, pg. 455.[↩]
- For more on this debate, see Dunkhase.[↩]
- There were generally three tendencies amongst DDR and Soviet economists regarding this question: those who sought to fix the net income as a rate of labour expended (Der Wertpreis), those who advocated for net income to represent a rate of the total cost price (Der kostenbezogene Preis), and finally, those who proposed a “markup” which would correspond to the average profit rate based on the capital invested (Der fondsbezogene Preis). This latter Fondbezognener Preis played a central role in the price reforms initiated in 1964 and 1967 as part of the DDR’s NÖSPL. For more, see: Autorenkollektiv, Geschichte der politischen Ökonomie – Umrisse, Verlag Die Wirtschaft Berlin, 1986, pg. 185 and Bardmann, Die Preistypdebatte.[↩]
- Badstübner, Geschichte, pg. 188.[↩]
- The so-called Mittelbauer (farmers with mid-size holdings) had hitherto been encouraged to join Type 3 LPGs, which prescribed a higher degree of socialization of the means of production. Now, the SED encouraged Mittelbauer to join Type 1 LPGs, which represented a lower degree of socialization. See Badstübner, Geschichte, pg. 192, and Studies on the DDR #3.[↩]
- Author collective under the leadership of Kalbe, E., Geschichte der sozialistischen Gemeinschaft, VEB Deutscher verlag der Wissenschaften, Berlin, 1981 pg. 217.[↩]
- Roesler, Geschichte der DDR, pg. 47.[↩]
- Roesler, Geschichte der DDR, pg. 71.)
Founded in 1950 as a private business with 18 employees, the plastics processing company Plastolit in Dresden was the first manufacturer of children’s plastic balls for domestic sale in the GDR. In 1960, the company became a BSB and was thereafter able to introduce high-frequency welding of PVC-based plastics. As a BSB, Plastolit workforce grew to 200 employees and the company began producing for export. Here, the company’s founder Horst Meyer is pictured with leading employees in 1966. (Bundesarchiv, Bild 183-E1006-0301–003) 
Figure 6 ((Source: Geschichte der SED, pg. 439[↩] - Kalbe, Geschichte, pg. 226.[↩]
- Roesler, Geschichte der DDR, pg. 46.[↩]
- Badstübner, Geschichte, pg. 206.[↩]
- Roesler, Geschichte der DDR, pg. 44.[↩]
- Roesler, Die Herausbildung, pg. 161.[↩]
- Heske, G., Volkswirtschaftliche Gesamtrechnung DDR 1950–1989: Daten, Methoden, Vergleiche, 2009, https://www.ssoar.info/ssoar/handle/document/28587.[↩]
- Roesler, Geschichte der DDR, pg. 47.[↩]
- Mühlfriedel und Wießner, pg. 151[↩]
- Author collective, Geschichte der SED – Abriss, Dietz Verlag, Berlin, 1978 pg. 378.[↩]
- Cited Badstübner, Geschichte, pg. 200.[↩]
- Roesler, Geschichte der DDR, pg. 52.[↩]
- Hans Heinz Holz, Kommunisten heute, Neue Impulse Verlag, pg. 96.[↩]
- Roesler, 2013, pg. 52.[↩]
- As John F. Kennedy remarked shortly after the closing of the border in Berlin: “Why would Khrushchev put up a wall if he really intended to seize West Berlin? […] There wouldn’t be any need of a wall if he planned to occupy the whole city. This is his way out of his predicament. It’s not a very nice solution, but a wall is a hell of a lot better than a war.” https://www.thehistoryreader.com/world-history/president-kennedy-berlin-wall/[↩]
- Geschichte der SED, pg. 420.[↩]
- See the CPSU’s 16th Party Congress in 1930.[↩]
- See Helen Yaffe: Che Guevara: The Economics of Revolution.[↩]
- Hans Wemmer, Zu einigen ökonomischen Kategorien der Warenproduktion (On Some Economic Categories of Commodity Production), WiWi, Heft 2, 1957, pg. 238.[↩]
- Hans Wemmer, WiWi, Heft 2, 1957, pg. 237.[↩]
- After 1958, “socialist commodity production” no longer referred to the idea that commodity production will still take place in various economic sectors under socialism (this was not disputed, as it was seen as an inevitable feature of the transition away from capitalism), but instead to the idea that production within socialist industry itself was commodity production and that the means of production in state-owned industries were commodities.[↩]
- The political economy textbook published during the NÖSPL era states that the “planned economy of socialist commodity producers corresponds to the wirtschaftliche Rechnungsführung of socialist economic units”. The textbook also states that wirtschaftliche Rechnungsführung is “an objective category of the socialist mode of production”. See: Politische Ökonomie des Sozialismus und ihre Anwendung in der DDR, Dietz Verlag Berlin, 1969, pg. 280.[↩]
- Politische Ökonomie des Sozialismus und ihre Anwendung in der DDR, Dietz Verlag Berlin, 1969, pg. 191.[↩]
Fuentes: