How does the economy affect history?

Long ways of German unity

Even if the GDR was not bankrupt in 1989: for years it had lived beyond its own means. In addition, economic policy was determined by three incompatible goals. The economic collapse was thus in sight.

Welzow open-cast lignite mine near Senftenberg. (& copy picture-alliance / dpa, dpa-Zentralbild, Paul Glaser)


The economic history of the GDR can be roughly divided into three phases (Wehler 2008): The first phase begins in 1945 and ends in 1961 with the decisive break when the Wall was built. The subsequent second phase, which lasts until 1971, brought partial reforms and is marked in its end by the dismissal of Walter Ulbricht. The third phase, the period 1971-1989 / 90, largely coincides with the reign of Erich Honecker (cf. also Steiner 2007). Some historians see the change in power from Ulbricht to Honecker in 1971 as the beginning of the end of GDR economic history, as changes in economic policy were connected with it, which later turned out to be fatal. In the following, the presentation will be limited to the last phase of the GDR's economic history, because it had a direct impact on the transformation period after German unification.

The unity of economic and social policy as a guideline after 1971

The central guideline of the then new economic policy was the so-called "unity of economic and social policy". The standard of living and the supply of the population should be improved without first achieving productivity gains. Instead, a more efficient economy should emerge precisely thanks to those incentives that would arise from better living conditions. According to today's historians, this is to be assessed as a very risky and ultimately uncovered "change to the future" (Steiner 1999; Wehler 2007). The development of the GDR economy in the 1970s and 1980s can be illustrated using a few selected economic figures.


Import deficits in the GDR economy

From 1971-80 there was a cumulative import deficit in the GDR of 38 billion DM.
The deficit was twice as large as the total exports of the GDR in 1980 to western countries and was mainly used for consumption.

Source. Steiner (1999, p. 165), Statistical Yearbook of the GDR 1990, p. 32f.

Changes in the economic policy framework in the 1970s

Emissions of individual pollutants in 1988 ( Graphic for download) License: cc by-nc-nd / 3.0 / de /
The two oil crises of the 1970s can be viewed as particularly serious cuts. This changed the general conditions of the GDR economy massively. In contrast to the Federal Republic, the GDR was unable to cope with the new scarcity of raw materials. Originally, a long-term modernization of the GDR energy supply based on oil and natural gas was planned for the 1970s. This planning had no basis since the mid-1970s at the latest. The rise in energy prices forced the state to increasingly use lignite as the sole domestic source of energy and raw materials. As a result, systems from the 1920s and 1930s were still used, which had actually already been written off and long since worn out. In 1985, 30 percent of world lignite production was mined in the GDR, with increasing expenditure and growing environmental pollution. After the Second Oil Crisis in 1979, the price differences between the higher world market prices and the lower purchase prices of Soviet oil were used by the GDR to generate urgently needed foreign currency by exporting oil products. This indirect and unplanned subsidization of the GDR by the Soviet Union came to an abrupt end in the early 1980s when oil deliveries were cut and purchase prices were brought into line with the world market. From then on, the GDR had to pay thirteen times the oil price in 1970 (Wehler 2008) and was therefore even more dependent on the use of its own lignite.

Economic-political target conflicts and their "solution" in the GDR

The GDR economic policy after 1971 was characterized on the expenditure side by an insoluble competition of three goals:
  • Maintaining or improving the standard of living of the population,
  • Debt servicing in particular to foreign creditors and
  • Investing in your own economy.
The first two goals were becoming increasingly important in economic policy. On the one hand, cuts in consumption or cuts in the standard of living were out of the question because the population was feared that the system would be destabilized. Instead, the support for the basic needs of the population from funds from the state budget has been expanded ever more. On the other hand, international solvency was considered indispensable for national independence. In order to guarantee this under all circumstances, exaggerated figures on the level of indebtedness were distributed even among members of the Politburo. Despite growing budget problems, economic policy leeway should still be kept open (Steiner 1999). In the view of the GDR economic politicians, the only realistic possibility for savings was to postpone investments, for example in the energy industry or in infrastructure. However, this had negative effects on labor productivity, for example.

In addition, those responsible made a serious mistake when distributing the scarce investment funds: With a delay, an independent microelectronic system was to be set up, but it was never competitive. Instead, billions were wasted with no positive effects. Marketing would have presupposed the continued existence of the socialist state system, "where the GDR could sell its top-quality products - according to local standards. With the increasing world market orientation of the other countries of the socialist economic system (Council for Mutual Economic Aid, Comecon), the" strategic basis was withdrawn " (Steiner 2007, p. 210).

Despite all this, the GDR was not bankrupt in 1989/90. It did not go under because of the desperate economy, but because a deep legitimation crisis broke out in the political system and because the international framework conditions changed. "However, one had lived beyond one's own means for years, which was documented in the internal and external indebtedness as well as the decline of the capital stock [ie the gross fixed assets of the economy]. In this respect, the economic collapse was foreseeable without any radical change in the economic system conditions" (Steiner 1999) .


Kusch, G. et al., Final balance - GDR. Conclusion of a failed economic and social policy, Berlin 1991.

Ritschl, A., Rise and Fall of the GDR Economy. A number picture 1945-1989, in: Jahrbuch für Wirtschaftsgeschichte 2/1995, pp. 11-46.

Steiner, A., Between the Promise of Consumption and the Impulse to Innovate. On the economic decline of the GDR, in: Jarausch, K.H./Sabrow, M. (Ed.), Weg in den Untergang. The internal disintegration of the GDR, Göttingen 1999, pp. 153-192.

Steiner, A., From Plan to Plan. An economic history of the GDR, Bonn 2007.

Wehler, H.-U., German history of society. Fifth volume. Federal Republic and GDR 1949-1990, Munich 2008.

Economic Atlas of the New Federal States, Gotha 1994.