The Road to “Socialist Commodity Production”

Econo­mic problems and deba­tes during the period of socia­list cons­truc­tion in the German Demo­cra­tic Repu­blic (1950–1963)

Matthew Read
3 March 2026

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The Warne­münde shipy­ard was confis­ca­ted by the Soviet Mili­tary Admi­nis­tra­tion after the libe­ra­tion from fascism in 1945, as its owners were among the war crimi­nals who had profi­ted from forced labour. In July 1946, dock­wor­kers voted over­whel­mingly at a company meeting to expro­priate the busi­ness, and their shipy­ard was conver­ted into “peop­le’s property”. Here, ship­buil­ders from the “Red Banner” youth brigade discuss during a consul­ta­tion at the VEB Warnow­werft shipy­ard in 1960. (Fede­ral Archi­ves, image 183–72483-0001 / Pommerening)

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.

Steel­wor­kers during a produc­tion consul­ta­tion in August 1952. (Image: Bundes­ar­chiv, Bild 183–15937-0006)

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

Figure 1: The itera­tive process for drawing up annual produc­tion plans in the socia­li­sed indus­tries (for the years 1951–1957). 10

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.

The iron­works “Eisen­hüt­ten­kom­bi­nat Ost” was built from scratch and repre­sen­ted the largest invest­ment object of the Five-Year Plan. The foun­da­tion stone was laid in Janu­ary 1951 to mark the begin­ning of the Plan. Here, workers cele­brate the produc­tion of the first pig iron smel­ted from Soviet ore using Polish coal in Septem­ber 1951. (Image: Bundes­ar­chiv, Bild 183–11918-0004)

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.

Figure 2 17

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.

In 1950, Profes­sor Eva Altmann was entrus­ted with the task of crea­ting an insti­tute for the trai­ning of plan­ning specia­lists. She was named as the first rector of the Hoch­schule für Plan­öko­no­mie (College of Econo­mic Plan­ning), which was offi­ci­ally foun­ded on 4 Octo­ber 1950. Along­side the trai­ning of young working-class students, the college was to operate as a rese­arch centre for the theo­re­ti­cal problems of plan­ning in the DDR. (Photo: Eckard Grieshammer)

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?

An Insti­tute for Econo­mics was foun­ded in July 1954 as part of the DDR’s Academy of Scien­ces. The Insti­tute included depart­ments and working groups specia­li­zing in “Money and Credit”, “Labor Produc­ti­vity and Profi­ta­bi­lity”, “The History of Poli­ti­cal Economy”, “State Mono­poly Capi­ta­lism”, and “Deve­lo­ping Count­ries Rese­arch”. (Bundes­ar­chiv, Bild 183–13492-0006)

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)

Figure 3: The DDR’s fixed price system, as deri­ved from Marx’s labour theory of value. 37

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.

Figure 4: Cost reduc­tion in the centrally plan­ned VEBs during the 1950s 52

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

Brigade members discuss work proces­ses at the VEB Furni­ture Plant in Frank­furt (Oder), March 1956. (Bundes­ar­chiv Bild 183–36968-0001)

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

Figure 5: Number of products set by the State Plan­ning Commission’s annual plan 61

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.61 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”.63) 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.”64

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.65 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.”66

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 […].”67

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.”68

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”.69 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.70 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.”34

Prof. Fritz Behrens with students at the Insti­tute for Poli­ti­cal Economy at Karl Marx Univer­sity, Leip­zig (1953). (Bundes­ar­chiv, Bild 183–21474-0016)

Nota­bly, simi­lar argu­ments were being advan­ced in the USSR at this time too. In Decem­ber 1956, at the so-called “1st Soviet value debate”71, 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?72 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”.73 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.74 “Socia­list commo­dity produc­tion” was still limi­ted only to the sphere of consu­mer and export goods.75 None­thel­ess, by the conclu­sion of the “2nd Soviet value debate” in June 1958, the “commo­dity theo­rists” gained the majo­rity over the “commo­dity-shell theo­rists”.76 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.77 Later that year, CPSU Gene­ral Secre­tary Nikita Khrush­chev also advan­ced this posi­tion at a central commit­tee meeting.78 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.79 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.”80

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.”81

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.”82

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”.83 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”.84

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”.85 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”.86 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.87 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”.88 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.89 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.”90

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.91 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.”92

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.93 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.

A workers’ brigade at the VEB Steel and Rolling Mill in Saxony calcu­la­tes their daily produc­tion at the end of their shift and records the results on their produc­tion board. (Bundes­ar­chiv, Bild 183–72693-0001 / Siegert)

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”.94

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.95 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.“96

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”.97

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.”98

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).99 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.100 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).101 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).102 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.103 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.104 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.105

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 1958.106 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).107 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 1960.108 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.109

A workers‘ brigade at the VEB Elek­tro­ke­ra­mik in Berlin discuss problems with their work proces­ses and current poli­ti­cal issues, May 1960. (Bundes­ar­chiv, Bild 183–72833-0001 / Brügg­mann, Eva)

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”.110 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.111 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 1960.104 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.112 The Come­con meeting in May 1958 speci­fi­cally focu­sed on advan­cing a socia­list inter­na­tio­nal divi­sion of labour in machine manu­fac­tu­ring.113 The free flow of credits, know­ledge, and tech­no­logy greatly enhan­ced the mobi­liza­tion of available resources.

June 1960: “Grab your pen, mate!” – under this slogan, the SED encou­ra­ged workers to culti­vate cultu­ral talents amongst them­sel­ves. Writers and artists were also encou­ra­ged to live amongst the workers and create art that reflec­ted new rela­ti­ons and contra­dic­tions in socia­list society. Here, author Hasso Grab­ner speaks with workers from the Brigade “Geschwis­ter Scholl”, named after the anti-fascist White Rose group. (Bundes­ar­chiv, Bild 183–73766-0081 / Gahl­beck, Friedrich)

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”.114 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.115 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.”116

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 1959117, 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 1961.118 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 1963.119 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.

The massive Combine “Schwar­zer Pumpe” (black pump) was the largest invest­ment object of the second Five-Year Plan and a key element of infra­struc­ture that helped the DDR move towards energy sove­reig­nty. The Combine was desi­gned to utilize and refine lignite (brown coal), which was the only native energy source available in East Germany. Here, cons­truc­tion workers look on as the first briquet­tes are produ­ced in 1959. (Bundes­ar­chiv, Bild 183–63853-0002)

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”.120 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.121 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?”122 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.”123

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.124 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.125 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).126 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

  1. 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.[↩]
  2. 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).[↩]
  3. 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.[↩]
  4. Doern­berg, S., Kurze Geschichte der DDR (Short History oft he GDR), Dietz Verlag Berlin, 1969, pg. 179.[↩]
  5. 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.[↩]
  6. 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.[↩]
  7. 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.[↩]
  8. See: https://www.gvoon.de/gesetzblatt-gbl-ddr-1950/seite-1111–272743.html[↩]
  9. 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.[↩]
  10. Based on Roes­ler, Die Heraus­bil­dung, pg. 44.[↩]
  11. 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.[↩]
  12. 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.[↩]
  13. 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.[↩]
  14. 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[↩]
  15. See Das Kapi­tal, Volume 2, Part 3[↩]
  16. Baar, Wirt­schafts­ge­schichte, pg. 191.[↩]
  17. Badstüb­ner, R. and Heit­zer, H. (eds), Die DDR in der Über­gangs­pe­ri­ode (The GDR in the Tran­si­tion Period), Akade­mie Verlag, Berlin, 1982, pg. 206.[↩]
  18. Ulbricht, W., Der Fünf­jahr­plan.[↩]
  19. For more on the forma­tion of agri­cul­tu­ral produc­tion coope­ra­ti­ves (LPGs), see Studies on the DDR #3.[↩]
  20. 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.[↩]
  21. 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.[↩]
  22. Badstüb­ner, pg. 138[↩]
  23. See: Stalin, J., Ökono­mi­sche Probleme des Sozia­lis­mus in der UdSSR (Econo­mic Problems of Socia­lism in the USSR), Dietz Verlag, Berlin, 1952, pg. 57.[↩]
  24. Proto­koll: Finanz­po­li­ti­sche Konfe­renz, S. 218.[↩]
  25. See Marx, K., Kritik des Gothaer Programms.[↩]
  26. See Zahn, L., Die ökono­mi­schen Grund­be­griffe der Sowjet­plan­wirt­schaft, Einheit, Jg. 3, Heft 2, 1948.[↩]
  27. 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.[↩]
  28. 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.[↩]
  29. 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.[↩]
  30. 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.[↩]
  31. See Willy Rumpf in Proto­koll: Finanz­po­li­ti­sche Konfe­renz, S. 219.[↩]
  32. Cited in Becker and Dier­king, Die Heraus­bil­dung, pg. 439.[↩]
  33. 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.[↩]
  34. Ibid.[↩][↩]
  35. 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).[↩]
  36. 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.[↩]
  37. Based on Matho, F. Wie werden Preise gemacht? Gesell­schaft­lich notwen­di­ger Arbeits­auf­wand und Preis, Dietz Verlag Berlin, Berlin, 1967.[↩]
  38. Brar, Wirt­schafts­ge­schichte, pg. 203 and Mühl­frie­del und Wieß­ner, Die Geschichte, pg.199.[↩]
  39. 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”.[↩]
  40. Mühl­frie­del und Wieß­ner, Die Geschichte, pg. 199.[↩]
  41. Ulbricht, W. Der Fünf­jahr­plan, pg. 78.[↩]
  42. Proto­koll: Finanz­po­li­ti­sche Konfe­renz, pg. 219 and Roese­ler, Die Heraus­bil­dung, pg. 29.[↩]
  43. Proto­koll: Finanz­po­li­ti­sche Konfe­renz, pg. 220[↩]
  44. 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.[↩]
  45. For more on the tech­ni­cally based norm system, see Kissel. For the incre­asing wage rate, see Roes­ler, Geschichte der DDR, pg. 33.[↩]
  46. 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.[↩]
  47. 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.[↩]
  48. 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.[↩]
  49. Badstüb­ner, Die Geschichte, pg. 167.[↩]
  50. Brar, Wirt­schafts­ge­schichte, pg. 194.[↩]
  51. 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).[↩]
  52. Roes­ler, Heraus­bil­dung, pg. 80 & 250.[↩]
  53. Roes­ler, Die Heraus­bil­dung, pg. 228.[↩]
  54. 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.[↩]
  55. Badstüb­ner, Die Geschichte, pg.162/163 and Mühl­frie­del und Wieß­ner, Die Geschichte, pg. 204.[↩]
  56. Mühl­frie­del und Wieß­ner, Die Geschichte, pg. 204.[↩]
  57. See: Rau, H., Im Machi­nen­bau – mehr und bessere Waren herstel­len, Report to the 4th Party Congress of the SED, April 1954.[↩]
  58. 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.[↩]
  59. 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.[↩]
  60. Roes­ler, Die Heraus­bil­dung, pg. 155.[↩]
  61. Ibid, pg. 158.[↩][↩]
  62. Ibid, pg. 156.[↩]
  63. 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[↩]
  64. 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.[↩]
  65. 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.[↩]
  66. 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.[↩]
  67. Kohl­mey, WiWi, Heft 3, 1956, pg. 455.[↩]
  68. 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.“[↩]
  69. 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.[↩]
  70. Behrens, Zum Problem der Ausnut­zung, pg. 138.[↩]
  71. 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.[↩]
  72. 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.”[↩]
  73. 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.[↩]
  74. 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.”[↩]
  75. Lemm­nitz, Die marxis­ti­sche Lehre vom Preis, pg. 95.[↩]
  76. 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”.[↩]
  77. 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.[↩]
  78. Cited in Dunk­hase, H., Plädoyer für Plan­wirt­schaft (A Plea for Econo­mic Plan­ning), Papy­Rossa Verlag, Köln, 2022, pg. 17.[↩]
  79. Cited in Krause, Wirt­schafts­theo­rie in der DDR, pg. 128.[↩]
  80. Behrens, Zum Problem der Ausnut­zung, pg. 117/118.[↩]
  81. Ibid., pg. 125/126.[↩]
  82. Benary, A., Zur Funk­tion des Wert­ge­set­zes im System der ökono­mi­schen Gesetze des Sozia­lis­mus, WiWi, Heft 1, 1957, S. 89.[↩]
  83. 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.[↩]
  84. See J. Bombel­les, Econo­mic Deve­lo­p­ment of Commu­nist Yugo­sla­via, Hoover Insti­tu­tion Publi­ca­ti­ons, Stan­ford Univer­sity, 1968, pg. 49.[↩]
  85. See the “secret speech”: https://www.marxists.org/archive/khrushchev/1956/02/24.htm[↩]
  86. See: Neues Deutsch­land, 31 Juli 1956.[↩]
  87. See: BArch DY 30/40698 (German Fede­ral Archi­ves), pg. 86 & 90.[↩]
  88. See: BArch DY 30/40696 (German Fede­ral Archi­ves), pg. 182.[↩]
  89. BArch DY 30/40696 (German Fede­ral Archi­ves).[↩]
  90. Cited in Roes­ler, Die Heraus­bil­dung, pg. 158.[↩]
  91. Kamp­fert, K., Gegen das Aufkom­men revi­sio­nis­ti­scher Auffas­sun­gen in der Wirt­schafts­wis­sen­schaft, WiWi, Sonder­heft 3, 1957, pg. 13.[↩]
  92. Luck, H., Bemer­kun­gen zum Arti­kel von Behrens, WiWi, Sonder­heft 3, 1957, pg. 103.[↩]
  93. Cited in Becker and Dier­king, Die Heraus­bil­dung, pg. 456.[↩]
  94. Rich­ter, Wirt­schafts­wis­sen­schaft, Heft 1, 1957.[↩]
  95. Lemm­nitz, Die marxis­ti­sche Lehre, pg. 92.[↩]
  96. Ibid, pg. 97.[↩]
  97. Cited in Becker and Dier­king, Die Heraus­bil­dung, pg. 457.[↩]
  98. Oelß­ner, cited in Becker and Dier­king, Die Heraus­bil­dung, pg. 455.[↩]
  99. For more on this debate, see Dunk­hase.[↩]
  100. 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.[↩]
  101. Badstüb­ner, Geschichte, pg. 188.[↩]
  102. 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.[↩]
  103. Author coll­ec­tive under the leader­ship of Kalbe, E., Geschichte der sozia­lis­ti­schen Gemein­schaft, VEB Deut­scher verlag der Wissen­schaf­ten, Berlin, 1981 pg. 217.[↩]
  104. Roes­ler, Geschichte der DDR, pg. 47.[↩][↩]
  105. 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[↩]
  106. Kalbe, Geschichte, pg. 226.[↩]
  107. Roes­ler, Geschichte der DDR, pg. 46.[↩]
  108. Badstüb­ner, Geschichte, pg. 206.[↩]
  109. Roes­ler, Geschichte der DDR, pg. 44.[↩]
  110. Roes­ler, Die Heraus­bil­dung, pg. 161.[↩]
  111. Heske, G., Volks­wirt­schaft­li­che Gesamt­rech­nung DDR 1950–1989: Daten, Metho­den, Verglei­che, 2009, https://www.ssoar.info/ssoar/handle/document/28587.[↩]
  112. Mühl­frie­del und Wieß­ner, pg. 151[↩]
  113. Author coll­ec­tive, Geschichte der SED – Abriss, Dietz Verlag, Berlin, 1978 pg. 378.[↩]
  114. Cited Badstüb­ner, Geschichte, pg. 200.[↩]
  115. Roes­ler, Geschichte der DDR, pg. 52.[↩]
  116. Hans Heinz Holz, Kommu­nis­ten heute, Neue Impulse Verlag, pg. 96.[↩]
  117. Roes­ler, 2013, pg. 52.[↩]
  118. 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/[↩]
  119. Geschichte der SED, pg. 420.[↩]
  120. See the CPSU’s 16th Party Congress in 1930.[↩]
  121. See Helen Yaffe: Che Guevara: The Econo­mics of Revo­lu­tion.[↩]
  122. Hans Wemmer, Zu eini­gen ökono­mi­schen Kate­go­rien der Waren­pro­duk­tion (On Some Econo­mic Cate­go­ries of Commo­dity Produc­tion), WiWi, Heft 2, 1957, pg. 238.[↩]
  123. Hans Wemmer, WiWi, Heft 2, 1957, pg. 237.[↩]
  124. 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.[↩]
  125. 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.[↩]
  126. Poli­ti­sche Ökono­mie des Sozia­lis­mus und ihre Anwen­dung in der DDR, Dietz Verlag Berlin, 1969, pg. 191.[↩]