Today in History
Travel to Germany
Facts About Germany
Thirty Years' War
German Chocolate Cake
How To in Germany
In the GDR, as in the other new "people's republics," the authorities'
goal of abolishing private property and every trace of capitalism was
to be implemented in several steps. By taking possession of all resources,
as well as of the means of production and distribution, the socialist
state hoped to be able to compete successfully with the capitalist West
and finally demonstrate the superiority of the socialist system.
Patterned on the Soviet model, the East German economy was transformed
into a state-controlled, centrally planned production and distribution
system by 1948. Beginning in 1945, large tracts of real estate and factories
were taken over by the state under reform programs for agriculture and
industry. After the foundation of the GDR, these reforms were pursued
with vigor. In 1949 the new state became a member of the Council for Mutual
Economic Assistance (Comecon), which included all other Soviet satellite
states and had been created in order to coordinate economic planning in
socialist states worldwide.
The concept of multiyear plans was introduced with the First Five-Year
Plan of 1951. It was intended to make up war losses and also make possible
reparations payments to the Soviet Union. For this purpose, heavy industry
was built up on a large scale. Production goals could not be reached,
however, because of a chronic shortage of raw materials. The manufacture
of consumer products was neglected completely.
The Second Five-Year Plan, started in 1956, aimed to complete the nationalization
of all industrial concerns and the collectivization of agricultural enterprises.
By the early 1960s, Kombinate (collective farms) accounted for
about 90 percent of all farm production. Private farmers who resisted
collectivization were arrested.
When production began to decline in the early 1960s, the SED introduced
the so-called New Economic System of decentralized planning, which delegated
some production decisions previously the prerogative of the central planning
authorities to the Association of Publicly Owned Enterprises (Vereinigung
Volkseigener Betriebe--VVB). The VVB was to foster specialized production
within individual branches of industry, including the previously neglected
production of consumer goods. Production declined even further, however,
and it became increasingly evident to many East Germans that their "planned
economy" had lost the economic battle with the capitalist West.
- The Ulbricht Era, 1949-1971
- Consolidation of the New
- Planned Economy
- The Warsaw
Pact and the National People's Army
- The Berlin Wall
- The "Socialist
State of the German Nation"