Article: From Reconstruction to People’s Property

The economic problems and achievements of the anti-fascist-democratic transformation in East Germany (1945–1949)

Phil­ipp Kissel

14 Octo­ber 2024

View from a cooling tower of a blast furnace, Eisen­hüt­ten­kom­bi­nat (near the border with Poland), 1954. (Bundesarchiv_Bild_183-26067–0009)

Table of contents 

Introduction

The economy of the DDR is often portrayed as grey, ossi­fied and inef­fec­tive. This accu­sa­tion is gene­rally level­led at the plan­ned economy. It is inten­ded to under­pin the narra­tive that “there is no alter­na­tive” to capi­ta­lism. The plan­ning system of the DDR is portrayed as a dicta­tor­ship of bureau­crats in order to conceal any impres­sion that a society can orga­nise its economy consciously and for ratio­nal purpo­ses. West Germany’s own actions – from sabo­tage and embargo to sepa­ra­tism and revan­chism – are either igno­red or reinterpreted.

An honest exami­na­tion of the DDR’s economy reve­als that it defied odds and became much stron­ger than the initial condi­ti­ons would have suggested. This would not have been possi­ble without the active parti­ci­pa­tion of citi­zens setting out to build a new society with aware­ness and initia­tive. They had to over­come nume­rous problems posed by the histo­ri­cal situa­tion, the struc­ture of the economy, and inter­na­tio­nal pressure.

The aim of this article is to better under­stand these condi­ti­ons and chal­lenges and to unco­ver how the party, trade unions, and broa­der masses dealt with them. Many discus­sions around the ques­ti­ons of market and plan, the law of value and profit (which unfolded later in the 1950s and 1960s) seem to me to be more compre­hen­si­ble when the concrete problems and condi­ti­ons are analy­sed. The central prere­qui­site for the cons­truc­tion of the new society was that the working class held state power. But this power had to be main­tai­ned in alli­ance — with the peasants and with anti-fascist forces. And concrete work was requi­red to mobi­lise the masses. This was the most diffi­cult task. The help and support of the Soviet Union when deal­ing with poli­ti­cal issues and mate­rial needs was also of exis­ten­tial importance.

This text will roughly outline the condi­ti­ons of the economy of the Soviet Occu­pa­tion Zone (SOZ): What start­ing condi­ti­ons and tasks shaped its deve­lo­p­ment? The second aspect to be exami­ned is the role of workers’ initia­tive and the estab­lish­ment of demo­cra­tic state struc­tures in imple­men­ting this process, as well as the hurd­les the labour move­ment had to over­come. The condi­ti­ons of the inter­na­tio­nal conflict and the pres­sure under which the anti-fascist-demo­cra­tic trans­for­ma­tion took place will also be mentioned.

The period from 1945 to 1949 is charac­te­ri­sed by a special dyna­mic that can be unders­tood as a tran­si­tion. After the Second World War, a new situa­tion emer­ged, the exact form of which was not clear from the outset. It is inte­res­t­ing to note that even in this early and compli­ca­ted phase, strong forms of the orga­nised labour move­ment deve­lo­ped, which proved capa­ble of taking control of the situa­tion. At the same time, the struc­tu­ral problems of the economy that the DDR would later have to wrestle with became apparent.

Starting conditions in Eastern Germany

In order to under­stand the deve­lo­p­ment of the economy and society in the SOZ and the DDR, it is neces­sary to consider the initial condi­ti­ons. At the end of the war, indus­try in the terri­tory of what would later become the DDR was charac­te­ri­sed by the fascist war and arma­ments economy. Over­all, it was a deve­lo­ped indus­try with bran­ches that were rele­vant for tech­ni­cal progress, albeit with vary­ing degrees of mecha­ni­sa­tion and rela­tively low produc­ti­vity compared to other capi­ta­list econo­mies. The working class was very well educa­ted and alre­ady had a lot of expe­ri­ence in indus­trial work proces­ses. In eastern Germany, there were regi­ons with larger compa­nies (Saxony-Anhalt) and regi­ons with many small and medium-sized compa­nies (Thurin­gia, Saxony); there were hardly any corpo­rate headquarters.[1] Compared to the Eastern Euro­pean count­ries that had follo­wed the people’s demo­cra­tic path and the deve­lo­p­ment of socia­lism, such as Roma­nia, Bulga­ria, Poland, or Hungary, the propor­tion of indus­try in the SOZ was signi­fi­cantly higher. Only Czechos­lo­va­kia had a simi­larly high level of indus­tria­li­sa­tion in the Soviet-aligned camp.[2]

The histo­ri­cally deve­lo­ped indus­trial struc­ture in Germany consis­ted of rela­tively closed regi­ons with inter­wo­ven bran­ches of indus­try and loca­ti­ons where specia­li­sed produc­tion was concen­tra­ted. The economy on the terri­tory of the SOZ had no heavy indus­try (i.e., iron and steel produc­tion, smel­ting of ores and proces­sing of metals). Most of these were loca­ted in the Ruhr area in western Germany. Light indus­try (i.e., consu­mer goods produc­tion, inclu­ding texti­les and chemi­cal produc­tion) predo­mi­na­ted in the SOZ. This meant that there was no struc­ture for proces­sing raw mate­ri­als and produ­cing basic mate­ri­als for the cons­truc­tion of machi­nes — and ther­e­fore no basis for an indus­trial produc­tion circuit. There were also only small depo­sits of coal, the main source of energy at the time. Most depo­sits were loca­ted in the West. In 1933, 15.8 million tonnes of coal were consu­med in the area of the SOZ, but only 3 million tonnes were mined there. The annual output of the three coal­fields in Saxony was produ­ced by the plants in the West German Ruhr area in just one month. All West German coal­fields toge­ther produ­ced over 158 million tonnes of coal in 1936.[3] Although incre­asing the output of the Saxon coal­fields was an important task, the larger lignite (“brown coal”) depo­sits also had to be exploi­ted. Lignite was a less effi­ci­ent source of energy, and its use was parti­cu­larly harmful to health and the environment.

This meant that the SOZ economy did not have a closed repro­duc­tion process and was depen­dent on supplies from the West and was not able to survive inde­pendently in this form. Occu­py­ing only 30.4% of Germany’s post-war terri­tory and with a share of 17.9% of Germany’s indus­trial produc­tion in 1936, the SOZ was thus below the indus­tria­li­sa­tion level of the western zones.[4] 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.[5] To make matters worse, these short­co­mings could not be compen­sa­ted for by the increase in foreign trade, as trade with the then socia­list count­ries was only 16.1% for imports and 15.8% for exports.[6]

Source: Poli­keit: “Die sog. DDR”, p. 21 [7]

In addi­tion, the destruc­tion in the east was signi­fi­cantly grea­ter because the Wehr­macht had fought fier­cely until the end to prevent the Red Army from gaining ground, while in the west there were more frequent surren­ders without a fight. In addi­tion, some machi­nes and plants were relo­ca­ted to the west by private compa­nies before the end of the war. Indus­trial produc­tion was 10–15% of its pre-war level.[8] Germany was to pay 10 billion dollars in repa­ra­ti­ons to the Soviet Union — a small sum in view of the 485 billion dollars in war damage. Howe­ver, the majo­rity was paid by the SOZ, even though it was the smal­ler area. The West had stop­ped paying repa­ra­ti­ons in 1946 for poli­ti­cal reasons. Dismant­ling facto­ries as a form of repa­ra­tion quickly proved to be of little use, as the facto­ries often could not be easily rebuilt in the USSR. The last dismant­ling took place in 1947.

“The econo­mic situa­tion in autumn 1945 was extre­mely diffi­cult. Even in the last summer months, indus­trial produc­tion was still at rock bottom. The destruc­tion of many facto­ries, the begin­ning of dismant­ling, the shortage of raw mate­ri­als and semi-finis­hed products, the chaos in the inter­re­la­ti­onships between the facto­ries, the complete standstill in trans­port, the sudden depar­ture of hundreds of thou­sands of ‘foreign labou­rers’ that Hitler’s Germany had taken from other count­ries (and a large propor­tion of the workers were still prisoners of war) — all this made solving the neces­sary tasks appear extre­mely diffi­cult, if not impos­si­ble. In gene­ral, lethargy and apathy prevai­led. Many workers did not believe that things could move forward again. The first task was ther­e­fore to get the economy up and running. It was important to encou­rage people so that they would start working again.”

Over­all, the start­ing condi­ti­ons were signi­fi­cantly worse than in the West. The area was home to 18 out of 65 million inha­bi­tants in Germany. The 4.4 million workers (1946) made up 60% of the labour force. In addi­tion, there were 1 million sala­ried employees.[9] The Soviet Union and the Socia­list Unity Party of Germany (SED), which was formed by a merger of commu­nists and social demo­crats in April 1946, set the objec­tive of a unified, neutral, and demo­cra­tic Germany, not yet a socia­list Germany. This policy was pursued honestly and trans­par­ently and was expres­sed in nume­rous propo­sals for resol­ving the “German ques­tion” after the war.[10] The West, on the other hand, focu­sed on asser­ting its inte­rests and used the western occu­pa­tion zones and later the sepa­ra­tist state of West Germany as a front­line state against the socia­list camp. The West’s policy of divi­sion quickly led to econo­mic ties being severed. Indus­try in the SOZ repre­sen­ted the torso of a histo­ri­cally grown, highly inter­na­tio­nally inter­lin­ked natio­nal industry.[11]

Source: Poli­keit: “Die sog. DDR”, p. 20

Reconstruction

Initi­ally, the war damage had to be repai­red, produc­tion had to be restar­ted, and econo­mic life had to be normalised.[12] The produc­tion orders of the Soviet Mili­tary Admi­nis­tra­tion in Germany (SMAD), which defi­ned a produc­tion programme and adopted a short-term plan for the fourth quar­ter of 1945, served this purpose. Reser­ves of raw mate­ri­als had to be recor­ded and brought to proces­sing plants; labour also had to be recor­ded and deployed.

This binding treaty, which was signed by the four Allied powers (USSR, USA, UK, and France), stipu­la­ted that Germany should be demi­li­ta­ri­sed, dena­zi­fied, decen­tra­li­zed, and demo­cra­tised in order to prevent it from start­ing another war.

 

The econo­mic prin­ci­ples of the Pots­dam Agree­ment set out what econo­mic level Germany should have in the future. The basic state­ment was that the average stan­dard of living in Germany should not exceed that of other Euro­pean count­ries. To this end, it was deter­mi­ned that the German people would have to be left with suffi­ci­ent resour­ces after the payment of repa­ra­ti­ons to enable them to exist without exter­nal assis­tance. Produc­tion capa­ci­ties that could be conside­red dispensable in indus­try were ther­e­fore either to be with­drawn or destroyed. The econo­mic prin­ci­ples were concre­ti­sed in March 1946 in a Repa­ra­ti­ons and Indus­trial Plan (gene­rally refer­red to in the lite­ra­ture as the Indus­trial Plan), which the victo­rious powers had agreed on. The indus­trial plan speci­fied the indus­trial objects to be dismant­led and the appro­xi­mate produc­tion volume of German indus­try and its indi­vi­dual branches.

 

From Mühl­frie­del: “SAG-Betriebe – Schu­len des Sozialismus”

 

The recon­s­truc­tion of the economy was also closely linked to the elimi­na­tion of the econo­mic roots of fascism and war. This task was ther­e­fore only possi­ble through the efforts of acti­vists, through an anti-fascist-demo­cra­tic move­ment. The SMAD promo­ted this move­ment and allo­wed demo­cra­tic parties and orga­ni­sa­ti­ons and trans­fer­red state powers to emer­ging demo­cra­tic state bodies, inclu­ding the German Central Admi­nis­tra­tion for Fuel, Indus­try, Trade and Supply.

The revi­ta­li­sa­tion succee­ded quickly. The grea­test succes­ses were achie­ved in the energy and fuel indus­tries, power plants were made opera­tio­nal and networks were resto­red. Accor­ding to one esti­mate, indus­trial produc­tion in the first few months after the libe­ra­tion from fascism was 10 to 20 per cent of the 1936 level and 25 per cent by the end of 1945.[13]

The disempowerment of the corporations

The Pots­dam Agree­ment stipu­la­ted the dena­zi­fi­ca­tion and decen­tra­liza­tion as well as the de-mono­po­liza­tion of German indus­try in order to prevent Germany from beco­ming the start­ing point of another world war in the future. It was proven that the war was wanted and orga­nised by the large corpo­ra­ti­ons and that they had trans­fer­red power to the fascists. Compa­nies from the coal and steel indus­try, such as Thys­sen and Krupp, as well as from the chemi­cal indus­try, such as the trust IG Farben, in which BASF, Bayer and Hoechst were united, had wanted to conquer and secure raw mate­ri­als and sales markets abroad. The major banks, such as Deut­sche Bank, played a central role in the poli­ti­cal reali­sa­tion and finan­cing of these plans. The Pots­dam Treaty, which was binding under inter­na­tio­nal law, was imple­men­ted in the SOZ, while it was deli­bera­tely suspen­ded in the western occu­pa­tion zones in order to restore the power of the large mono­po­lies and old elites.

The idea of popu­lar or people’s control emer­ged paral­lel to workers’ control. It drew from expe­ri­en­ces in the Weimar Repu­blic, where, in 1923, Popu­lar Control Commit­tees were formed to ward off racke­teers and specu­la­tors, but were quickly suppres­sed by the state. After 1945, people’s control became an effec­tive instru­ment for comba­ting all forms of the black market. The factory groups of the People’s Control were inten­ded to prevent factory mana­gers from selling part of their produc­tion on the black market. After the black market had been effec­tively comba­ted, other issues took center stage, above all the iden­ti­fi­ca­tion of econo­mic risk factors, such as, plan­ning errors, negli­gence, sabo­tage, and a poor work ethic in produc­tion and admi­nis­tra­tion. Even­tually, a state system of econo­mic control was estab­lished as the Central Control Commis­sion was set up, into which the People’s Commit­tees were inte­gra­ted. In Octo­ber 1949, there were 3,782 Commit­tees with 26,000 members.

 

From Roes­ler: “Aufsicht und Kontrolle in den volks­ei­ge­nen Betrieben”

The situa­tion for the labour move­ment after the end of the war was both diffi­cult and charac­te­ri­sed by new begin­nings. Of the 300,000 members of the Commu­nist Party of Germany (KPD) in 1933, half had been perse­cu­ted by the fascist terror system, tens of thou­sands had been murde­red and many had only been able to save them­sel­ves by flee­ing. The orga­ni­sa­ti­ons of the labour move­ment as a whole first had to regroup and reori­ent themselves.[14] A group of commu­nists around Walter Ulbricht who had retur­ned from exile began their poli­ti­cal work even before the Wehr­macht capi­tu­la­ted and formed a broad network of anti-fascists.[15] The estab­lish­ment of new trade union struc­tures also began immediately.[16]

Lignite (brown coal) mining in Thurin­gia, 1949. (Bundes­ar­chi­v_­Bil­d_183-R84428)

Indus­trial compa­nies repre­sen­ted centres of the orga­nised working-class move­ment. Here, commu­nists and social demo­crats had alre­ady gained important expe­ri­ence in trade unions and works coun­cils during the Weimar era (1919–1933). Many agreed that the causes of fascism and war now had to be elimi­na­ted and the working class had to be reuni­ted.  Yet, in light of the struggle between commu­nists and social demo­crats, which dated back to the 1918 Novem­ber Revo­lu­tion, distrust contin­ued to prevail in sections of the KPD and the Social Demo­cra­tic Party (SPD). Commu­nists such as Wilhelm Pieck and Walter Ulbricht and social demo­cra­tic leaders such as Otto Grote­wohl and Max Fech­ner campai­gned ardently for unity of action between their parties, for they belie­ved that only a reuni­ted working class could successfully neutra­lize German militarism.[17]

The class-conscious workers, who were often orga­nised in work­place coun­cils and the trade unions, provi­ded strong impe­tus for the revi­val and increase in produc­tion and for the anti-fascist-demo­cra­tic uphe­aval in indus­try. They remo­ved fascists and incri­mi­na­ted indi­vi­du­als from the factory manage­ment. Thou­sands of members of the corpo­rate bureau­cracy were remo­ved. Facto­ries were detached from corpo­rate struc­tures and a new manage­ment was put in place, which mostly consis­ted of workers. Work­place coun­cils began to imple­ment the right of co-deter­mi­na­tion and to estab­lish workers’ control in signi­fi­cant parts of the economy.[18] Initi­ally, commit­tees of SPD and KPD members were formed on the basis of the KPD’s “Guide­lines for the Acti­vi­ties of Local Popu­lar Commit­tees in the Econo­mic Sphere”, which directly estab­lished workers’ commit­tees, many of which took over the manage­ment of compa­nies. These commit­tees thus alre­ady took on a diffe­rent charac­ter to the limi­ted form of co-deter­mi­na­tion that was estab­lished in the capi­ta­list Weimar era. Unified company trade union orga­ni­sa­ti­ons were then crea­ted in 1948.[19] In line with the gene­ral stra­tegy, the SED consis­t­ently empha­si­zed that these new forms of workers’ control should not to be applied in an exag­ge­ra­ted manner. They were first and fore­most to be direc­ted against the large corpo­ra­ti­ons, not small- and medium-sized busi­nesses, which were encou­ra­ged to conti­nue opera­ting in the SOZ.

When the workers began to restart produc­tion in the first few months after the total defeat of Hitler’s Germany, they did so without waiting for instruc­tions from the previous manage­ment, most of whom had fled or with­drew. Inevi­ta­bly, new manage­ment struc­tures emer­ged from the day-to-day tasks along­side the exis­ting remnants of the old ones. The previous manage­ment was often placed under workers’ control. The instru­ment of this control was initi­ally the spon­ta­neously adopted form of the Betriebs­rat (“work­place coun­cil”). The SED empha­si­zed, howe­ver, that the aim was not to simply re-estab­lish the old, limi­ted forms of worker repre­sen­ta­tion in private busi­nesses that had emer­ged in the Weimar era (1919–1933).

 

As early as Novem­ber 1945, the Econo­mics Minis­ter of Saxony, the most indus­tri­ally deve­lo­ped region in eastern Germany, was able to state: “In mining, the manage­ment, direc­to­ra­tes and super­vi­sory boards can no longer do anything without the work­place coun­cils and trade union organisations.”

 

From Roes­ler: “Aufsicht und Kontrolle in den volks­ei­ge­nen Betrieben”

The corpo­ra­ti­ons did not relin­quish their power volun­t­a­rily. They were loca­ted in West Berlin, but also had ille­gally opera­ting busi­ness orga­ni­sa­ti­ons in the SOZ. They tried to use the offices of bour­geois parties in East Berlin as orga­ni­sa­tio­nal cells. Their plan was to wage an econo­mic war against the demo­cra­tic trans­for­ma­tion by keeping produc­tion as low as possi­ble and slowing the pace of recon­s­truc­tion. They used methods such as misma­nage­ment, disre­gard of tech­no­lo­gi­cal prin­ci­ples, the theft of tech­ni­cal docu­ments, the theft and removal of produc­tion equip­ment, and the poaching of specia­li­sed person­nel. They also tried to mislead the labou­rers by demago­gi­cally blaming the diffi­cul­ties on the govern­ment and not on the post-war mate­rial condi­ti­ons. New capi­ta­lists’ asso­cia­ti­ons were also foun­ded, inclu­ding the Reichs­in­dus­trie­gruppe.[20]

The corpo­ra­ti­ons exer­cised their econo­mic power prima­rily through the banks and thus the control of the economy’s finan­cial resour­ces. The decis­ion of the Soviet city comman­der in July 1945 to ban the acti­vi­ties of all capi­ta­list finan­cial insti­tu­ti­ons and banks and to close the major banks and insu­rance compa­nies was ther­e­fore an important measure for imple­men­ting the Pots­dam Agree­ment. All credit opera­ti­ons were prohi­bi­ted, and bank depo­sits were initi­ally frozen. This was also inten­ded to prevent war profi­te­ers from cashing their cheques. In addi­tion, all Reich asso­cia­ti­ons, Reich socie­ties and the Reich Cham­ber of Entre­pre­neurs were prohibited.[21]

“It would be an illu­sion to believe that the unifi­ca­tion of the two working-class parties [KPD and SPD] was straight­for­ward, simple, and problem-free. The oppo­site was the case. And it could not have been other­wise. Although almost ever­yone invol­ved had the best will, every comrade and the entire party had to undergo a profound process of reflec­tion. This did not happen solely and prima­rily through discus­sions, but above all through joint efforts to solve the prac­ti­cal chal­lenges during the revo­lu­tio­nary trans­for­ma­tion process. I remem­ber that in Elbin­ge­rode, during an ideo­lo­gi­cal discus­sion, the spea­ker, a former social demo­cra­tic comrade, said: “Well, we have fami­lia­ri­sed oursel­ves with Marxism, but please keep Leni­nism to your­sel­ves.” And for that he recei­ved spon­ta­neous applause from the comra­des from the former SPD. The same comra­des, howe­ver, spared neither energy, time nor effort to actively solve the revo­lu­tio­nary tasks and act in the spirit of Leninism.”

This process of uphe­aval was also initia­ted by the workers them­sel­ves. Moti­va­ted by the party leader­ship of the KPD, many of the workers who had rebuilt their facto­ries them­sel­ves declared that their compa­nies should be detached from corpo­rate struc­tures and admi­nis­te­red by the public autho­ri­ties. The state govern­ments, which were now run by anti-fascists, confis­ca­ted the property of war and Nazi crimi­nals. In Thurin­gia, the state presi­dent orde­red the confis­ca­tion of the Eisen­ach plant belon­ging to Bayri­sche-Moto­ren-Werke AG on 7 Septem­ber 1945. In Saxony, the Flick corpo­ra­tion was not only confis­ca­ted but also expro­pria­ted without compen­sa­tion follo­wing demands by the workers.

The Sequester Commissions

In autumn 1945, it became clear that the Western Allies would not imple­ment any measu­res against the exces­sive concen­tra­tion of the German economy; all nego­tia­ti­ons in the Allied Control Coun­cil on concrete measu­res against econo­mic concen­tra­tion ended incon­clu­si­vely due to obstruc­tion by the Western Allies.[22] At the same time, corpo­rate head­quar­ters step­ped up their sabo­tage activities.

The imme­diate task in SOZ was not aimed at the expro­pria­tion of all capi­ta­list compa­nies, but only those whose owners were war and Nazi crimi­nals. It was neces­sary to inspect each company and decide whether expro­pria­tion was justi­fied. This was only possi­ble with the active coope­ra­tion of workers and employees. The SMAD issued Order 124, which orde­red the confis­ca­tion of the assets of the German state, the heads of the NSDAP offices, leading members of the party, the mili­tary autho­ri­ties, and the banned socie­ties, clubs, etc. This also included aban­do­ned compa­nies whose leaders had often fled to the West.

The SMAD trans­fer­red the imple­men­ta­tion of these orders to the demo­cra­tic state organs. They conside­red how the largest possi­ble sections of society could be invol­ved and conse­quently set up commis­si­ons consis­ting of admi­nis­tra­tive staff, repre­sen­ta­ti­ves of the poli­ti­cal parties, demo­cra­tic mass orga­ni­sa­ti­ons and unions, and workers from the facto­ries. These Seques­ter Commis­si­ons were tasked with exami­ning which proper­ties should be placed under sequestra­tion (i.e., safe­kee­ping) due to the role their owners had played during the fascist era.[23] This meant that they were to remain under state cust­ody until the exami­na­tion was comple­ted and a decis­ion on expro­pria­tion was reached.

The workers of the compa­nies under inves­ti­ga­tion were empowered to examine their management’s busi­ness records, inter­view employees, and give the accu­sed busi­ness­men the oppor­tu­nity to defend them­sel­ves. After this thorough exami­na­tion, the members of the Commis­si­ons usually came to a joint decis­ion on whether or not the owner should be depri­ved of his property.[24] The work of the Commis­si­ons provi­ded workers with insights into the inner connec­tion between capi­ta­lism and fascism and mili­ta­rism, while also offe­ring an over­view of company assets.

“Expro­priate the compa­nies of the war and nazi crimi­nals – for a popu­lar refe­ren­dum to protect our house, farm, cattle, and harvest!”

The Commis­si­ons ulti­m­ately propo­sed that the SMAD confis­cate 19,932 proper­ties, 43 per cent of which were in Thurin­gia, 21 per cent in Saxony and Saxony-Anhalt respec­tively, 10 per cent in Bran­den­burg and 5 per cent in Meck­len­burg-Western Pome­ra­nia. Of the proper­ties under sequestra­tion, 34 per cent were then expro­pria­ted by the SMAD, while 66 per cent were retur­ned to their private owners. The owners of the retur­ned busi­nesses had not proven to be war and Nazi crimi­nals, or their produc­tion faci­li­ties had only minor importance. Compa­nies whose future the USSR govern­ment reser­ved the right to decide on were recor­ded on a sepa­rate list.[25]

The assets of expro­pria­ted compa­nies were trans­fer­red to the German admi­nis­tra­ti­ons. The SMAD thus entrus­ted the expro­pria­tion and redis­tri­bu­tion of Nazi war crimi­nals’ assets in the hands of the anti-fascist-demo­cra­tic forces — in contrast to the Western powers.[26]  The SMAD also orde­red that 202 of the seques­te­red facto­ries should not be dismant­led to pay repa­ra­ti­ons, as origi­nally plan­ned. Instead, these facto­ries were to stay in Germany and be conver­ted into Soviet property so that their produc­tion could pay the repa­ra­ti­ons. This gave rise to the so-called Soviet Joint-Stock Compa­nies (SAGs), which later played an important role in the crea­tion of public property and the plan­ning of the economy.

Model Saxony

The state of Saxony was the indus­trial heart­land of the SOZ, although small and medium-sized compa­nies predo­mi­na­ted. The Autho­ri­ties for Company Reor­ga­ni­sa­tion were the nuclei of the future orga­ni­sa­tion of the economy. They ensu­red better utili­sa­tion of capa­ci­ties and raw mate­ri­als and orga­nised the distri­bu­tion of machi­nes across compa­nies. They inter­vened in the exis­ting orga­ni­sa­tio­nal struc­ture of the compa­nies to increase produc­tion and make produc­tion more effec­tive, while some­ti­mes merging previously inde­pen­dent companies.[27]

These efforts also invol­ved the active parti­ci­pa­tion and initia­tive of the workers. In Saxony, the workers deman­ded that all factors in the coal sector should be brought toge­ther under uniform manage­ment, regard­less of their form of owner­ship. The Säch­si­sche Stein­koh­len­werke GmbH was crea­ted. This estab­lished the basic prin­ci­ple for the orga­ni­sa­tion of state-owned enter­pri­ses, which were grou­ped toge­ther in indus­trial admi­nis­tra­ti­ons. In addi­tion to the terri­to­rial prin­ci­ple, which was initi­ally neces­sary — i.e. the orga­ni­sa­tion of the compa­nies accor­ding to their geogra­phi­cal loca­ti­ons — the produc­tion prin­ci­ple was intro­du­ced. The orga­ni­sa­tion of compa­nies accor­ding to bran­ches of indus­try is histo­ri­cally the most wide­spread form of plan­ned economy. The Central Commit­tee of the SED analy­sed this process from the outset and attempted to gene­ra­lise such progres­sive forms of orga­ni­sa­tion and manage­ment. The struc­ture prac­ti­sed in Saxony was set out in a guide­line as a model for all states in the SOZ.[28]

The referendum in Saxony

In April 1946, the KPD and SPD united to form the SED. This was a histo­ric step that sought to rectify the divi­sion of the working-class move­ment, which had proven fatal in the struggle against fascism. It was also an important prere­qui­site for the conso­li­da­tion of the new order because only a reuni­ted and deter­mi­ned labour move­ment could defend the gains achie­ved during the anti-fascist-demo­cra­tic transformation.

A poster to mobi­lise for the refe­ren­dum in Saxony. 

The SED tasked the Saxony state admi­nis­tra­tion to hold a refe­ren­dum on the law to trans­fer the property of war and Nazi crimi­nals to the people. At the time, the SED had around 3,000 work­place groups and almost 2,000 neigh­bour­hood bran­ches. The party orga­ni­sa­ti­ons held rallies and company meetings to inform and discuss the upco­ming refe­ren­dum. They succee­ded in winning over broad social forces, inclu­ding the church, which endor­sed the vote. In June 1946, more than 2.6 million Saxons voted “Yes” to the ques­tion “Do you agree with the law to hando­ver the compa­nies of war and Nazi crimi­nals to people’s property?”. That was 82.42 per cent of the valid votes and 77.62 per cent of the votes cast, with a high voter turn­out of 93.71 per cent. This poli­ti­cal success had reper­cus­sions throug­hout Germany. Simi­lar decis­i­ons follo­wed in all the states of the SOZ. In Berlin a reso­lu­tion was subse­quently passed by the city coun­cil to “trans­fer corpo­ra­ti­ons and other econo­mic enter­pri­ses into public ownership”.[29]

The road to public ownership

From a legal point of view, the compa­nies and means of produc­tion were not yet owned by the people, but were held in trust by the state govern­ments. A new form of owner­ship had to be crea­ted. The compa­nies were often only partly owned by the state in the form of share­hol­dings. The right of dispo­sal over state property lay with the state parlia­ments. The state consti­tu­ti­ons did not rule out the repri­va­tis­a­tion of property.

In 1948, the German Econo­mic Commis­sion propo­sed comple­ting the sequestra­tion process and crea­ting a zonal orga­ni­sa­tion of social owner­ship of the means of indus­trial produc­tion. This was inten­ded to conclude the phase of scru­ti­ni­s­ing private capi­ta­list busi­ness­men and allow those who had not been expro­pria­ted to concen­trate fully on deve­lo­ping their busi­nesses. In April 1948, the SMAD declared that state, commu­nal, and coope­ra­tive property resul­ting from the expro­pria­tion of war and Nazi crimi­nals was to be trea­ted as natio­nal property that could neither be sold nor trans­fer­red to private indi­vi­du­als or orga­ni­sa­ti­ons. The legal cate­gory of “people’s property” (natio­na­li­zed owner­ship) was now reco­gni­zed along­side the property of indi­vi­du­als and legal entities.[30] The Volks­ei­ge­ner Betrieb (VEB, “people’s own company”) became a fixed legal form in the economy.

This step repre­sen­ted a reform of the law to keep a pace with the poli­ti­cal work of the party and trade unions. The new form of owner­ship had to be linked with the acti­vity of the workers, with their rela­ti­onship to the means of production.

The beginning of the “Cold War”

The USA had alre­ady begun to change course in 1946 and refu­sed to imple­ment the Pots­dam Agree­ment, as US Secre­tary of State Byrnes explai­ned. In March, the British Prime Minis­ter had alre­ady called for a British-Ameri­can mili­tary alli­ance against the Soviet Union in his infa­mous “Iron Curtain Speech” in Fulton, USA.[31] It became appa­rent that the western zones were to be made into a sepa­ra­tist state. To this end, they were initi­ally merged from three to two zones, and a joint econo­mic coun­cil was formed between them. This move remo­ved the western zones from Germany’s common econo­mic area. The capi­ta­list powers secretly began prepa­ring a currency reform for their zones to cement this step.[32]

The goal of a neutral, unified Germany remained a stra­te­gic orien­ta­tion for the SED even after the foun­ding of the West German sepa­ra­tist state (the FRG) in May 1949. The poster reads: “We all lack heating and light. In our apart­ments and facto­ries, for our daily life and for recon­s­truc­tion, we need coal – this includes coal from the Ruhr area [in West Germany]. Only a unified Germany can be a viable and inde­pen­dent state. We must unite Germany!

The currency reform, which was one-sidedly imple­men­ted in June 1948, also faci­li­ta­ted the pumping of billi­ons of US dollars into West German compa­nies through the so-called Marshall Plan. The western occu­pa­tion zones were then also inte­gra­ted into the Orga­ni­sa­tion for Euro­pean Econo­mic Coope­ra­tion (OEEC), the forerun­ner of the OECD. The intro­duc­tion of the new currency was a clear viola­tion of the Pots­dam Agree­ment, for it sepa­ra­ted the economy of the Western zones from the eastern zone and ther­eby under­mi­ned the clause stipu­la­ting that Germany should remain “a single econo­mic entity”.[33] At the same time, the Western powers impo­sed a complete blockade of the SOZ, which led to severe shorta­ges of some goods and raw mate­ri­als. The intro­duc­tion of the Deutsch­mark in West Berlin also led to the divi­sion of the city into two econo­mic areas and exer­ted strong econo­mic pres­sure on the SOZ, as many goods produ­ced in the east were “absor­bed” by the stron­ger currency area. The aim of the capi­ta­list states was to “roll back” socia­lism; the anti-fascist-demo­cra­tic trans­for­ma­tion in the SOZ was their front­line target.

The situa­tion in 1948 had chan­ged signi­fi­cantly compared to 1945. Inter­na­tio­nally, the West’s policy of confron­ta­tion came to a head. The USA began to form a sepa­ra­tist state out of the western zones as a spear­head against the socia­list camp. The divi­sion of Germany had not been writ­ten in stone in 1945, but it quickly became a reality by 1948. The estab­lish­ment of an anti-fascist-demo­cra­tic order was in line with the Pots­dam Agree­ment. The estab­lish­ment of an inde­pen­dent indus­try and economy was neces­sary to secure and advance this new order. The autho­ri­ties in the SOZ were faced with two choice: either surren­der and restore the condi­ti­ons that had led to the war or streng­then the anti-fascist forces in the east, which would ulti­m­ately streng­then the posi­tion of anti-fascists in the western occu­pa­tion zones too.

The SED deci­ded on a number of measu­res in 1948, inclu­ding the crea­tion of a two-year plan to rebuild the economy. The party also endea­vou­red to train person­nel who were capa­ble of maste­ring the new tasks. The goal was not yet the estab­lish­ment of socia­lism, but the safe­guar­ding of the anti-fascist-demo­cra­tic order. The SED and the USSR contin­ued to strive for a unified, neutral Germany and under­took nume­rous initia­ti­ves to coun­ter the Western attempts at divi­sion, inclu­ding the People’s Congress move­ment, which called for a central German govern­ment and a refe­ren­dum on German unity and mani­fes­ted itself in three People’s Congres­ses with over 2,000 dele­ga­tes from all occu­pa­tion zones. This move­ment was banned in the western occu­pa­tion zones.

Buil­ding up the economy was not easy and took place under perma­nent sabo­tage, embargo, and mili­tary threat from the West. The supply situa­tion was still very poor in those years. One of the most important tasks of the state organs and compa­nies was to increase produc­tion and supply the popu­la­tion with food and other important goods. In 1946, the food supply in Saxony was only 39% of the calo­rie consump­tion per capita per day compared to 1934–38, in 1947 it was 41.5% and in 1948 54.1%.[34] Nevert­hel­ess, by 1948 the economy had been successfully restar­ted and the chaos of the imme­diate post-war period had been eliminated.

The two-year plan

In 1948, the SED presen­ted a draft of the two-year plan (2YP) for discus­sion and thus moved to longer-term econo­mic plan­ning. [35] The 2YP was later follo­wed by 5‑year plans. In the plan­ned economy of the Soviet Union and other socia­list count­ries, perspec­tive plans emer­ged as longer-term plan­ning with a dura­tion of five years, while annual plans were drawn up for the more concrete manage­ment of the economy. This was later supple­men­ted by the so-called gene­ral perspec­tive, which was used to plan over­ar­ching deve­lo­p­ments, for exam­ple in the tech­ni­cal field.

Propa­ganda poster of the SED: “From war destuc­tion to an economy of peace – through the two-year plan of the SED. Produce more, live better!”

The 2YP of 1948 aimed to increase produc­tion and labour produc­ti­vity. The focus was on the state-owned sector, which was to be expan­ded. There was still a signi­fi­cant capi­ta­list sector at this time. In 1950, at the end of the 2YP phase, there were still 17,500 capi­ta­list compa­nies in indus­try (=74.4% of all indus­trial compa­nies) with 548,000 workers and employees (24.3% of all employees), which produ­ced 23.5% of the gross indus­trial product. The propor­tion was parti­cu­larly high in light indus­try and food production.[36] The 2JP aimed to bring about a predo­mi­nance of the state-owned sector, but also to use private initia­tive to increase produc­tion and restore the economy.

The capitalist companies

During these years, the SED did not focus on anti-capi­ta­list natio­na­li­sa­ti­ons, but rather on using private initia­tive to get the economy moving again. Key sectors in the economy — energy, heavy indus­try, and finance — were under state control. The capi­ta­list compa­nies were both inte­gra­ted into the control system and had limits placed on their capi­tal utili­sa­tion. This was because the condi­ti­ons for capi­ta­list repro­duc­tion had not been abolished, which is why entre­pre­neurs strove for expan­sion and the highest possi­ble rate of profit.

The private capi­ta­list enter­pri­ses were smal­ler and less mecha­nised than the state-owned indus­try. On average, 31.2 workers and employees worked in a private capi­ta­list enter­prise and produ­ced a gross product worth 312,432 Mark. In an average VEB, there were 486 workers who produ­ced a gross product of 5,014,600 M. Yet the machi­nes in use were mostly outdated.[37]

The inte­gra­tion and limi­ta­tion of capi­ta­list busi­nesses did not proceed without conflict. In 1948, product range speci­fi­ca­ti­ons were intro­du­ced in addi­tion to the previous quan­tity speci­fi­ca­ti­ons. This was inten­ded to prevent the capi­ta­list compa­nies from produ­cing poor-quality goods to meet state supply quotas (which recei­ved low prices) and then selling the better-quality goods at higher prices on the black market. There were other means by which the capi­ta­list compa­nies attempted to under­mine the anti-fascist demo­cra­tic order, inclu­ding the viola­tion of price regu­la­ti­ons and the with­hol­ding of taxes. Busi­ness­men were often discon­tent with poli­ti­cal deve­lo­p­ments and began setting up busi­ness asso­cia­ti­ons to orga­nize them­sel­ves. Asses­sing these deve­lo­p­ments, the SED sought to calm fears by intro­du­cing commer­cial rela­ti­ons between state-owned and capi­ta­list compa­nies, which were now to be based on fixed contracts rather than simple produc­tion orders.[38]

The private capi­ta­list compa­nies had made a contri­bu­tion to the anti-fascist-demo­cra­tic deve­lo­p­ment and played an important role in produ­cing exports. In line with the aim of the 2YP, their share of gross indus­trial produc­tion fell from 43.7% in 1947 to 31.5% in 1949.[39]

A nationally-owned industrial circuit

A ring of craftsmen’s busi­nesses was to be formed around the VEBs to act as suppli­ers or carry out repairs. Focus was first and fore­most on resus­ci­ta­ting inac­tive heavy indus­try rather than buil­ding new facto­ries. The aim was to create a closed econo­mic repro­duc­tion process in the SOZ, without which there would have been stagna­tion, disrup­ti­ons, and further dispro­por­ti­ons in the economy. The diffi­cul­ties were – there were frequent down­ti­mes due to outda­ted tech­no­logy and a lack of spare parts due to the Western embargo.

The enter­pri­ses of state-owned indus­try had to estab­lish rela­ti­onships with each other, which requi­red the crea­tion of a finan­cial circuit. In addi­tion, balance sheets were drawn up to acquire a complete over­view of the indus­trial assets in the hands of the people. The basic proce­dure was as follows: the compa­nies trans­fer­red their profits and amor­ti­sa­tion to the German Econo­mic Commis­sion and recei­ved expen­dit­ure for invest­ments from it. The state autho­ri­ties had to draw up new produc­tion statis­tics, a price cata­lo­gue, and compa­ra­tive value plan­ning, consump­tion stan­dards and wage quotas, and a consump­tion analy­sis. The Academy of Admi­nis­tra­tion was foun­ded to train specia­lists in econo­mic planning.[40]

Planning committees

Plan­ning commit­tees and commis­si­ons were formed in order to discuss the plan as widely as possi­ble. In 1948, there were 1111 plan­ning commis­si­ons with 4599 members in Saxony alone. In large compa­nies, there were plan­ning offices with full-time members. The commit­tees were suppo­sed to trans­late the larger plans onto the company level and actively orga­nise and direct the company’s work­flow accor­din­gly. Addi­tio­nal plans were to be drawn up in the facto­ries in order to exploit raw mate­ri­als, energy sources, labour and finan­cial resour­ces. In 1949, this approach led to the form of the so-called “coun­ter-plan”, which was a “response” or supple­ment to the central plan that the compa­nies them­sel­ves had drawn up. These coun­ter-plans were inten­ded to define the company’s contri­bu­tion more precis­ely. The company plan­ning commit­tee became a subs­truc­ture of the plan­ning apparatus.[41]

The expe­ri­en­ces of the Soviet Union and the role of the SAG in the SOZ played an important role in the deve­lo­p­ment of planning.[42] SAG direc­tors were expe­ri­en­ced and trai­ned German mana­gers. The SAGs plan­ned more flexi­bly, gave the direc­tors more room for mano­eu­vre, and intro­du­ced important produc­tion controls. For exam­ple, dispatchers in the coal indus­try repor­ted hourly data on the produc­tion process in mining. The reason for the higher produc­ti­vity of the SAG was that expe­ri­ence from the Soviet Union was applied. One-man manage­ment was an important factor. With tigh­ter leader­ship, which paid atten­tion to econo­mic issues such as ratio­na­lity, saving raw mate­ri­als, and incre­asing morale, faster and more effec­tive decis­i­ons could be made, whereas in the initial phase of the anti-fascist-demo­cra­tic order, grass­roots demo­cra­tic ideas prevai­led in some cases and commit­tees of three were set up to manage the compa­nies, but these worked less effectively.[43]

Negative accumulation

In 1946, there was a sharp decline in indus­trial produc­tion and the trans­port system came to a standstill, partly due to severe frost. The supply situa­tion dete­rio­ra­ted. Workers’ perfor­mance fell to between 20% and 30% of normal levels. Labour disci­pline decli­ned shar­ply. There were seve­ral problems that needed to be solved, inclu­ding the low capa­city utili­sa­tion and the distor­ted tech­ni­cal compo­si­tion of the produc­tion appa­ra­tus: unsui­ta­ble machi­nes were used to manu­fac­ture products, often wasting a lot of energy and incre­asing wear and tear on the machi­nes. There were also high repair costs and poor-quality work equip­ment. These were the conse­quen­ces of the dispro­por­ti­ons crea­ted by the war economy and the West’s sepa­ra­tist policy.[44]

The amount of living labour requi­red to produce the given quan­tity of use values increased consider­a­bly in 1947. One factor contri­bu­ting to this was the incre­asing dete­rio­ra­tion in labour disci­pline, which was reflec­ted in the fact that a considera­ble propor­tion of the work­force stayed away from the work­place and there was a gene­ral reluc­tance to work: Workers did not fully contri­bute their expe­ri­ence and skills to the labour process. Added to this was the lack of quali­fi­ca­ti­ons of many workers who were new to the process. The produc­tion time for a product was longer than the tech­no­lo­gi­cally neces­sary time because the poor quality forced rework.[45]

Produc­tion stan­dards (“norms”) were deve­lo­ped to deter­mine how much should be produ­ced in a given period of time.

 

Natu­rally, an increase in produc­ti­vity would lead to an increase in stan­dards, as more could now be produ­ced in less time. It proved diffi­cult to commu­ni­cate to the work­force that an increase in output did not lead to lower wages and redun­dan­cies, as it does in capi­ta­lism, but to a better life for ever­yone. Espe­ci­ally as long as there were still capi­ta­list compa­nies and as long as the effect of the impro­ve­ment could not be felt imme­dia­tely (as heavy indus­try had to be built up first), this point was diffi­cult to get across.

 

Oppon­ents of poli­ti­cal deve­lo­p­ments in the East exploi­ted these contra­dic­tions and tried to incite people against the govern­ment, as was shown by the instru­men­ta­li­sa­tion of the 1953 riots, which were trig­ge­red by an increase in produc­tion standards.

Produc­ti­vity was too low. In 1948, the start­ing year of the 2YP, there was still “nega­tive accu­mu­la­tion”, i.e. more was consu­med than was produ­ced or repla­ced and newly crea­ted. The ratio of produc­tion to consump­tion in 1948 was 17.2 to 18.3 billion marks. This problem had to be tack­led both tech­ni­cally and through conscious action on the part of produ­cers. The war damage and the lack of raw mate­rial supplies due to the blockade policy of the West requi­red massive invest­ments, which could only be made thanks to support and co-opera­tion with the Soviet Union and an increase in production.[46]

The activist movement

Ulti­m­ately, the perfor­mance of the work­force had to be increased. To this end, the incen­tive system was expan­ded to include piece­work wages (calcu­la­ted on the basis of the quan­tity produ­ced or the number of pieces per hour). One problem was the deter­mi­na­tion of labour stan­dards (“norms”), i.e. how much was to be produ­ced in a given time. Until then, norms had been based on cate­go­ries adopted from capi­ta­lism or were based on esti­ma­tes, i.e. they did not yet have a scien­ti­fic and truly adequate basis. From 1948, a more syste­ma­tic approach called tech­ni­cally based nroms (TAN) were adopted. [47]

The workers’ own initia­tive in the form of a “acti­vist move­ment” had not yet become a mass move­ment, and many workers clung to their old norms. At its Second Party Congress in 1947, the SED adopted the slogan “Produce more, distri­bute fairly, live better!” and called for initia­tive to solve the econo­mic problems of the workers. There were many problems in the coal mining indus­try, above all the poor tech­ni­cal equip­ment, the diffi­cult geolo­gi­cal condi­ti­ons, and the asso­cia­ted working condi­ti­ons, but above all the drop in morale caused in part by the high fluctuation.[48] The SMAD coun­ter­ac­ted this by signi­fi­cantly impro­ving living condi­ti­ons for the miners, rene­wing the wage system, raising wages, exten­ding holi­days, and incre­asing hard­ship allo­wan­ces. Through conti­nuous work, the SED succee­ded in poli­ti­cally acti­vat­ing more miners, which was evident in the increased voter turn­out in the trade union and works coun­cil elec­tions. At the same time, the acti­vity of poli­ti­cal oppon­ents increased, sabo­tage became more frequent, as did thefts, which were easier due to the high turno­ver of workers. Recruit­ment increased and the mood dete­rio­ra­ted. In this situa­tion, the expe­ri­en­ced workers, who were alre­ady fami­liar with the hard work and had orga­ni­sa­tio­nal expe­ri­ence, were central. They formed the seeds of what became the acti­vist movement.[49]

Young acti­vists from the Kaiser­roda potash mine in conver­sa­tion with Werner Egge­rath, Minis­ter Presi­dent of Thurin­gia, 1949. (Bundes­ar­chi­v_­Bil­d_183-R89617)

In the first half of 1948, the SED, along­side the trade union fede­ra­tion (FDGB) and the youth move­ment (FDJ) conve­ned nume­rous acti­vist confe­ren­ces and orga­nised compe­ti­ti­ons between the facto­ries to increase produc­ti­vity. The number of acti­vists was increased, albeit still at a low level. An important turn­around was achie­ved with the adop­tion of the draft 2YP. As a result, the longer-term purpose of work was clea­rer. The party orga­ni­sa­ti­ons in the facto­ries were able to increase their acti­vi­ties. The plan­ning discus­sion also drew in and mobi­li­sed large sections of the workforce.[50]

The role model Adolf Hennecke

The miner Adolf Henne­cke provi­ded an important impe­tus for the popu­la­rity of the acti­vist move­ment. He alre­ady had twenty years of profes­sio­nal expe­ri­ence, had a record of strong work ethic, and was a member of the SPD and later the SED. The most active party members had agreed to work in the most diffi­cult places. Henne­cke was appoin­ted as a labour instruc­tor in his company and was suppo­sed to orga­nise the local work­forces to achieve higher perfor­mance. He guided the less expe­ri­en­ced workers, gaining valuable mana­ging and guidance expe­ri­ence himself.[51]

Henne­cke obser­ved the company’s stagna­ting perfor­mance. He suggested better work prepa­ra­tion, the appli­ca­tion of advan­ced working methods and more precise use of the geolo­gi­cal condi­ti­ons, as well as more effec­tive use of tech­no­logy. In autumn 1948, he was able to exceed his company’s norms by 387 percent.[52] What enab­led Hennecke’s achie­ve­ment was not simply a grea­ter physi­cal effort, but his under­stan­ding of the entire work process and all its condi­ti­ons. Through his expe­ri­ence as an instruc­tor, he reco­g­nised that better work orga­ni­sa­tion, more ratio­nal utili­sa­tion of the means of produc­tion and more careful treat­ment of the work equip­ment as well as new working methods and, last but not least, the poli­ti­cal atti­tude of the worker were neces­sary to increase produc­ti­vity. Henne­cke discus­sed the shift sche­dule with the plant mana­ger and his colle­agues before begin­ning his shift and plan­ned all of his work steps in advance. Brin­ging the hois­ting equip­ment as close as possi­ble to the coal face in order to save shovel work, and using the hammer more effec­tively were key to his success and Henne­cke was able to gene­ra­lize these expe­ri­en­ces for his coll­ec­tive. [53]

Adolf Henne­cke at work as a labour instructor.

Hennecke’s moti­va­tion to increase produc­tion corre­spon­ded to the reso­lu­ti­ons of his party, which had analy­sed the problem in terms of society as a whole. His shift was thus not a spon­ta­neous indi­vi­dual endea­vour, but part of a poli­ti­cal move­ment. Henne­cke applied the gene­ral findings to the speci­fic work steps.[54] The story was publi­cised on the radio and in the press. The SED, FDGB and FDJ discus­sed it in the facto­ries and many work­place groups took initia­ti­ves to follow in Hennecke’s foot­s­teps. This was initi­ally met with resis­tance in many compa­nies. Some workers conside­red Henne­cke a norm-brea­ker, a label that was inci­ted through a smear campaign by the western broadcasters.

With the forma­tion of people’s property, the objec­tive condi­ti­ons were crea­ted for a new atti­tude to work and for new rela­ti­onships between the workers. Incre­asing produc­tion now bene­fit­ted both the indi­vi­dual and the whole society. This notion was promo­ted by the trade union move­ment and through acti­vist confe­ren­ces, which were important spaces to exch­ange experiences.[55] The move­ment spread from Hennecke’s plant on to the other coal­fields. Youn­ger workers, who brought more vigour and staun­cher oppo­si­tion to the fascist mili­ta­rists, played a decisive role in spre­a­ding the movement.[56]

Indi­vi­dual mate­rial incen­ti­ves also accom­pa­nied the acti­vist move­ment. Bene­fits in kind or vouch­ers for purcha­ses in the state-owned retail trade were handed out as rewards. For many miners, this was a way to improve their indi­vi­dual living condi­ti­ons. Over time, the reali­sa­tion that life could only be impro­ved through increased produc­ti­vity became grounded.

The increase in output was an important step forward. Howe­ver, excee­ding norms led to an increase in wages without produc­ti­vity rising to the same extent. The most poli­ti­cally aware workers, most of whom were orga­nised in the party and trade union, thus began to raise their norms volun­t­a­rily. This meant that they worked more in the same amount of time — without their wages rising. This step expres­sed the neces­sary conscious­ness that made a new rela­ti­onship to labour possible.[57]

At a confe­rence of acti­vists from the coal mines at the end of June 1949 of the Zwickau-Oels­nitz mining district, the miner Alfred Baumann explai­ned that he had raised the norm to which he had previously worked on his own initia­tive. He called on other acti­vists to follow suit. Since the summer months of 1949, this prac­tice spread to various other indus­tries. Many workers concluded contracts with the manage­ment which set out the condi­ti­ons for the volun­t­ary norms increase.[58]

Quality and competition

Many forms of mass initia­tive were adopted from the Soviet Union, where they had alre­ady been successfully prac­ti­sed. The poor quality of the products led to neces­sary repairs and unsa­leable faulty products. This was a parti­cu­lar problem for exports. Compli­ance with tech­ni­cal regu­la­ti­ons was key to impro­ving the quality of the products. Expe­ri­en­ced workers helped those who did not yet have the same skills. The facto­ries also began to act as coll­ec­ti­ves. They held weekly produc­tion consul­ta­ti­ons and in-house compe­ti­ti­ons and formed quality briga­des model­led on those in the Soviet Union, which were made up of the best workers, the factory mana­ger, and the factory trade union leader­ship and which inspec­ted and moni­to­red produc­tion. They helped the workers with diffi­cul­ties, drew up work regu­la­ti­ons and set limits for quality grades.[59]

“I racked my brains as to how I could contri­bute to impro­ving quality with my own resour­ces. An article from a brochure on working methods from the Soviet Union attrac­ted my inte­rest. It discus­sed how to improve quality in textile produc­tion. Our plant mana­ger called for the forma­tion of a quality brigade at some point. We deci­ded that all members would instruct their colle­agues from their work­place and discuss errors with them. We were thus able to improve quality.

 

But it was a tough battle. My presen­ta­ti­ons at meetings were often criti­cised and some people were provo­ca­tive. But I did not allow myself to be inti­mi­da­ted. Some also took offence at the fact that I was a woman talking about impro­ving the work. The women usually reac­ted much more posi­tively, were more approacha­ble and very thirsty for know­ledge. It was a time in which the fight for equal rights for women occur­red not in theory, not on paper, but in the facto­ries, in day-to-day prac­ti­cal work.”

 

From Luise Ermisch in “Die ersten Jahre”, pg. 134 ff.

1948 also saw the emer­gence of the “compe­ti­tion move­ment”. It orga­nised the compe­ti­tion for better produc­tion results between the work­forces of diffe­rent compa­nies and between members of the work­force. They became a regu­lar part of company life. The decisive factor was that the workers and engi­neers consciously desi­gned the work process and impro­ved the work­place orga­ni­sa­tion them­sel­ves. This was linked to the fact that more workers were able to pene­trate the opera­tio­nal and social condi­ti­ons and thus orga­nise the use of mate­ri­als and energy consump­tion more effi­ci­ently. The aim was to increase capa­city utili­sa­tion and improve quality and profi­ta­bi­lity. [60]

Thanks to the intro­duc­tion of the so-called Luise-Ermisch method and a change in produc­tion tech­no­logy, colle­agues at VEB Garment Factory Greiz produ­ced almost 30 thousand Marks worth of surplus clot­hing within two months, 1955. (Bundesarchiv_Bild_183-31239–0002)

The estab­lish­ment of a new culture of joint labour played a major role in all forms of mass initia­tive. Coll­ec­ti­vity, mutual help, and comra­de­ship were prere­qui­si­tes for the deve­lo­p­ment of the workers’ crea­ti­vity. The confron­ta­tion with indi­vi­dua­lism, egoism, and igno­rance had to be conduc­ted without rejec­ting the pursuit of a better stan­dard of living.

The acti­vist and compe­ti­tive move­ments led to an increase in per capita produc­ti­vity — in mecha­ni­cal engi­nee­ring by 45% and in texti­les and leather goods by 88%. Over­all produc­ti­vity increased gradu­ally from autumn 1947, rose more stron­gly in 1949 and reached 85% of the 1936 level. At the end of 1950 it reached 111% of the 1936 level — instead of the 81% envi­sa­ged in the plan. The socia­li­sed economy accoun­ted for 60% of the total social product. The goal of the 2YP had thus been achie­ved and the state-owned sector had become the quan­ti­ta­tively and quali­ta­tively domi­nant sector.[61]

A new generation

Those who took the solu­tion of the problems into their own hands and deve­lo­ped a new form of co-opera­tion shaped a new gene­ra­tion of workers and employees. Voca­tio­nal schools were set up; in 1950, 50% of all appren­ti­ces were trai­ned in state-owned indus­try, 16% in private capi­ta­list indus­try and 33% in the skil­led trades.[62] In contrast to most capi­ta­list enter­pri­ses, the enter­pri­ses of state-owned indus­try were also the more modern, deve­lo­ping enterprises.

It is remar­kable that the forms of new work were alre­ady crea­ted in this early phase. The spirit of a new begin­ning and revo­lu­tio­nary trans­for­ma­tion played a big role here. Recon­s­truc­tion brought with it many diffi­cul­ties, but it also gave rise to a strong dyna­mic. It was no coin­ci­dence that young people were parti­cu­larly recep­tive to the calls of the SED and the trade unions to produce more and help improve the produc­tion proces­ses in order to live better. They were less inhi­bi­ted by old tradi­ti­ons and were ready to build a new society.[63] The workers’ initia­tive was by no means conti­nuous and stable. In some cases, it was trig­ge­red mainly by campaigns and then ebbed away again. Only after a period of deve­lo­p­ment and stabi­li­sa­tion of the new condi­ti­ons could it be made a perma­nent element of social life.

Veterans of the two-year plan and now acti­vists of the five-year plan at Eisen­hüt­ten­kom­bi­nat Ost during a blast furnace trai­ning course, 1952. (Bundesarchiv_Bild_183-13595–0002)

Nevert­hel­ess, the willing­ness of hundreds of thou­sands of people to work and think outside the box played a major role in the deve­lo­p­ment of the economy. This is also reflec­ted in the large number of volun­t­ary labou­rers invol­ved in the cons­truc­tion of major infra­struc­ture projects, such as the water pipe­lines. The volun­t­ary contri­bu­ti­ons of many workers in the coun­try­side also repre­sen­ted an important contri­bu­tion to estab­li­shing the new soli­d­aristic working conditions.

The founding of the GDR

In 1949, the West’s policy of poli­ti­cal confron­ta­tion came to a head. In May 1949, the Fede­ral Repu­blic of Germany (“West Germany”) was foun­ded, thus mani­fest­ing the divi­sion of the coun­try. In Octo­ber 1949, the SOZ reac­ted by foun­ding the German Demo­cra­tic Repu­blic (GDR). Compared with its capi­ta­list neigh­bour to the West, the GDR seemed to have no chance of survi­val: the GDR covered 30.4% of German terri­tory, but only poss­es­sed 17.9% of the country’s pre-war indus­trial produc­tion. Natu­ral resour­ces were miss­ing, there were major dispro­por­ti­ons between the raw mate­rial and metal­wor­king indus­tries, and there was a lack of capa­city for proces­sing raw mate­ri­als. The Western embargo, inter­nal enemies, and sabo­tage by Western agents only exacer­ba­ted these factors.

State func­tions were now handed over to the GDR. New state bodies were formed, inclu­ding the Central Commis­sion for State Control, the Supreme Court and the Supreme Public Prosecutor’s Office as well as the Minis­try of Plan­ning and Indus­try. In addi­tion, the Natio­nal Front was formed, whose commit­tees were elec­ted by resi­dents’ assemblies.

In the follo­wing years, the GDR was able to build up a strong natio­nal economy and inte­grate many workers into this process. This was achie­ved despite an open border with the capi­ta­list West, which crea­ted nume­rous econo­mic problems, such as the poaching of skil­led labou­rers, GDR citi­zens working ille­gally in the West (“cross-border commu­ting”), and the explo­ita­tion of currency diffe­ren­ces and subsi­di­zed foods. The issue of labour produc­ti­vity remained a central chall­enge in the GDR. The initia­tive of the workers, their level of aware­ness, and the work of the SED played an important role in addres­sing this issue.

Despite the succes­ses of the 2YP, many things fell short of the pre-war level. Invest­ment acti­vity was low, and the now larger popu­la­tion (one fifth higher than pre-war levels) led to supply diffi­cul­ties. In 1950, per capita consump­tion of meat and higher-value food­s­tuffs was only 25% of what it would later become in the 1970s. Pota­toes and flour consump­tion, on the other hand, was 25% higher in 1950 than it would be in the 1970s.[64]

The chan­ges in the working class were contra­dic­tory. While socia­list conscious­ness was growing through the VEB, a still high propor­tion was employed in private indus­try, whose conscious­ness was less deve­lo­ped. The process of forming the working class was still in flux.

The foun­ding of the GDR was a histo­ric turning point in German history. The first workers’ and peasants’ state had been foun­ded. It had learnt from the histo­ri­cal fail­ures of capi­ta­lism, war, and fascism. In the years that follo­wed, achie­ve­ments were made that led to the emer­gence of a new economy in the hands of the people. It was able to with­stand attempted coups and constant provo­ca­ti­ons from the West. But the problems remained: Produc­ti­vity had to be constantly increased, compe­ti­tion from the West was fierce. Further publi­ca­ti­ons will explore these and other issues.

Bibliography

Baar, Lothar, Hrsg. Wirt­schafts­ge­schichte : ein Leit­fa­den. Frank­furt am Main: Verl. Marxis­ti­sche Blät­ter, 1979.

 

Badstüb­ner, Rolf. Geschichte der Deut­schen Demo­kra­ti­schen Repu­blik. Berlin: Dt. Verl. der Wiss., 1981.

 

Bart­hel, Horst. Adolf Henne­cke: Beispiel und Vorbild. illus­trierte histo­ri­sche hefte 16. Berlin: VEB Deut­scher Verlag der Wissen­schaf­ten, 1979.

 

Doern­berg, Stefan. Kurze Geschichte der DDR. 3., Über­arb. und erw. Aufl. Berlin: Dietz, 1968.

 

Keller, Diet­mar. Leben­dige Demo­kra­tie : der Über­gang von der anti­fa­schis­ti­schen zur sozia­lis­ti­schen Demo­kra­tie in der volks­ei­ge­nen Indus­trie der DDR 1948 bis 1952. 1.Aufl. Berlin: Verl.Tribüne, 1971.

 

Mühl­frie­del, Wolf­gang. „Der Wirt­schafts­plan 1948“. Jahr­buch für Wirt­schafts­ge­schichte 1985, Nr. 3 (1985).

 

 „Die Indus­trie in der anti­fa­schis­tisch­de­mo­kra­ti­schen Umwäl­zung. Ein Bericht über Stand und Probleme der Forschun­gen zur Indus­trie­ge­schichte“. Jahr­buch für Wirt­schafts­ge­schichte / Econo­mic History Year­book 22, Nr. 1 (Januar 1981). https://doi.org/10.1524/jbwg.1981.22.1.151.

 

„SAG-Betriebe – Schu­len des Sozia­lis­mus“. Jahr­buch für Wirt­schafts­ge­schichte / Econo­mic History Year­book 1980, Nr. IV (1980).

 

Mühl­frie­del, Wolf­gang, und Klaus Wieß­ner. Die Geschichte der Indus­trie der DDR bis 1965. Forschun­gen zur Wirt­schafts­ge­schichte 25. Berlin: Akad.-Verl, 1989.

 

Poli­keit, Georg. Die soge­nannte DDR : Zahlen, Daten, Reali­tä­ten ; eine Landes­kunde über den ande­ren Teil Deutsch­lands. Zentral­bi­blio­thek der Wirt­schafts­wis­sen­schaf­ten in der Bundes­re­pu­blik Deutsch­land, 1966., 1966.

 

Roes­ler, Jörg. „Aufsicht und Kontrolle in den volks­ei­ge­nen Indus­trie­be­trie­ben der DDR 1945 bis Anfang der sech­zi­ger Jahre“. Jahr­buch für Wirt­schafts­ge­schichte / Econo­mic History Year­book 23, Nr. 4 (Januar 1982). https://doi.org/10.1524/jbwg.1982.23.4.9.

 

Die Heraus­bil­dung der sozia­lis­ti­schen Plan­wirt­schaft in der DDR. Forschun­gen zur Wirt­schafts­ge­schichte. Berlin: Akade­mie-Verl., 1978.

 

Schiel, Ilse. Die ersten Jahre : Erin­ne­run­gen an den Beginn der revo­lu­tio­nä­ren Umge­stal­tun­gen, 1985.

 

Stütz­ner, Heinz. Von den Leis­tun­gen der Akti­vis­ten der ersten Stunde bis zur Tat Adolf Henne­ckes. Karl-Marx-Stadt, o. J.

 

Ulbricht, Walter. Geschichte der deut­schen Arbei­ter­be­we­gung : in acht Bänden Von Mai 1945 bis 1949. Heraus­ge­ge­ben von Horst Bartel. Geschichte der deut­schen Arbei­ter­be­we­gung. Bd. Band 6. Berlin: Dietz, 1966.

Footnotes

[1] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 15.

[2] Mühl­frie­del und Wieß­ner, 25.

[3] Stütz­ner, Von den Leis­tun­gen der Akti­vis­ten der ersten Stunde bis zur Tat Adolf Henne­ckes, 7.

[4] Baar, Wirt­schafts­ge­schichte : ein Leit­fa­den, 180.

[5] Baar, 181.

[6] Baar, 181.

[7] Poli­keit, Die soge­nannte DDR : Zahlen, Daten, Reali­tä­ten ; eine Landes­kunde über den ande­ren Teil Deutsch­lands, 21.

[8] Badstüb­ner, Geschichte der Deut­schen Demo­kra­ti­schen Repu­blik, 28.

[9] Badstüb­ner, 30 f.

[10] See, for exam­ple, the KPD’s appeal of June 1945: https://www.1000dokumente.de/index.html?c=dokument_de&dokument=0009_ant&object=translation&st=&l=de

[11] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 70.

[12] Schiel, Die ersten Jahre : Erin­ne­run­gen an den Beginn der revo­lu­tio­nä­ren Umge­stal­tun­gen. The quota­ti­ons in the boxes are taken from this book. The page refe­rence can be found there.

[13] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 36.

[14] Doern­berg, Kurze Geschichte der DDR, 19.

[15] Doern­berg, 22.

[16] Doern­berg, 36.

[17] See https://ifddr.org/arbeiterbewegung-spaltung-deutschlands/

[18] Roes­ler, „Aufsicht und Kontrolle in den volks­ei­ge­nen Indus­trie­be­trie­ben der DDR 1945 bis Anfang der sech­zi­ger Jahre“.

[19] Keller, Leben­dige Demo­kra­tie : der Über­gang von der anti­fa­schis­ti­schen zur sozia­lis­ti­schen Demo­kra­tie in der volks­ei­ge­nen Indus­trie der DDR 1948 bis 1952, 25.

[20] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 38.

[21] Badstüb­ner, Geschichte der Deut­schen Demo­kra­ti­schen Repu­blik, 65.

[22] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 41.

[23] Badstüb­ner, Geschichte der Deut­schen Demo­kra­ti­schen Repu­blik, 65; Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 42 f.

[24] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 42.

[25] Mühl­frie­del und Wieß­ner, 42.

[26] Badstüb­ner, Geschichte der Deut­schen Demo­kra­ti­schen Repu­blik, 65.

[27] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 52.

[28] Mühl­frie­del und Wieß­ner, 53 f.

[29] Badstüb­ner, Geschichte der Deut­schen Demo­kra­ti­schen Repu­blik, 67.

[30] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 50 f.

[31] Ulbricht, Geschichte der deut­schen Arbei­ter­be­we­gung : in acht Bänden Von Mai 1945 bis 1949, Band 6:179.

[32] Ulbricht, Band 6:179 ff.

[33] Ulbricht, Band 6:250.

[34] Roes­ler, Die Heraus­bil­dung der sozia­lis­ti­schen Plan­wirt­schaft in der DDR, 12.

[35] Mühl­frie­del, „Der Wirt­schafts­plan 1948“.

[36] Roes­ler, Die Heraus­bil­dung der sozia­lis­ti­schen Plan­wirt­schaft in der DDR, 7.

[37] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 136.

[38] Mühl­frie­del und Wieß­ner, 142.

[39] Mühl­frie­del und Wieß­ner, 142.

[40] Mühl­frie­del und Wieß­ner, 71. Here also more detailed infor­ma­tion on the finan­cial manage­ment of the VEB.

[41] Mühl­frie­del und Wieß­ner, 67 ff.

[42] Mühl­frie­del, „SAG-Betriebe – Schu­len des Sozialismus“.

[43] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 68.

[44] Mühl­frie­del und Wieß­ner, 74 ff.

[45] Mühl­frie­del und Wieß­ner, 79.

[46] Baar, Wirt­schafts­ge­schichte : ein Leit­fa­den, 187.

[47] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 79.

[48] Stütz­ner, Von den Leis­tun­gen der Akti­vis­ten der ersten Stunde bis zur Tat Adolf Henne­ckes, 14.

[49] Stütz­ner, 19.

[50] Stütz­ner, 26.

[51] Stütz­ner, 29.

[52] Ulbricht, Geschichte der deut­schen Arbei­ter­be­we­gung : in acht Bänden Von Mai 1945 bis 1949, Band 6:279.

[53] Stütz­ner, Von den Leis­tun­gen der Akti­vis­ten der ersten Stunde bis zur Tat Adolf Henne­ckes, 31.

[54] Für eine genauere Beschrei­bung der Arbeit Henne­ckes und der Bewe­gung siehe Bart­hel, Adolf Henne­cke: Beispiel und Vorbild.

[55] Ulbricht, Geschichte der deut­schen Arbei­ter­be­we­gung : in acht Bänden Von Mai 1945 bis 1949, Band 6:281.

[56] Stütz­ner, Von den Leis­tun­gen der Akti­vis­ten der ersten Stunde bis zur Tat Adolf Henne­ckes, 33.

[57] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 87.

[58] Mühl­frie­del, „Die Indus­trie in der anti­fa­schis­tisch­de­mo­kra­ti­schen Umwäl­zung. Ein Bericht über Stand und Probleme der Forschun­gen zur Indus­trie­ge­schichte“, 87.

[59] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 89 f.

[60] Mühl­frie­del und Wieß­ner, 91 f.

[61] Badstüb­ner, Geschichte der Deut­schen Demo­kra­ti­schen Repu­blik, 128 f.

[62] Mühl­frie­del und Wieß­ner, Die Geschichte der Indus­trie der DDR bis 1965, 125.

[63] Baar, Wirt­schafts­ge­schichte : ein Leit­fa­den, 184.

[64] Badstüb­ner, Geschichte der Deut­schen Demo­kra­ti­schen Repu­blik, 129 ff.