Full extent of economic crisis begins to emerge
THE EAST GERMAN ECONOMY is in open crisis. There are many indications that this dramatic situation was, and continues to be, decisive for the development of the political crisis. All those, like us, who said that the East German economy was in "relatively good shape" were wrong, even if the comparison was always with the other Comecon countries. Unless the comparison were limited to Poland, even that assessment was wrong.
WINFRIED WOLF
It is true the entire Comecon economy is in a deep crisis, and the problems in each country are aggravating those in the others (this is especially true of Czechoslovakia, where the crisis threatens to erupt still more violently). It is also true that the real state of these economies, and especially that of the GDR, has been relatively successfully covered up. And Western, especially West German, official agencies have become accomplices with East German institutions in this coverup. • Up until the end of the 1960s, the East German economy went through a period of relatively rapid growth. At that time, a number of its industries were competitive on the world market.
Massive costs of population flight • This growth was achieved to a considerable extent through a lag in consumption, and a corresponding lower living standard. The continuing confrontation with West Germany and the failure to compensate for this situation by other "values" (such as direct democracy, and so on) led to the well known flight from the country (with high general social costs, officially 130 billion East German Marks up until 1961 [when the border was closed]) and, after the building of the Berlin Wall, to rising "consumer expectations." • The Honecker era, starting in the early 1960s, brought a turn, inasmuch as there was an attempt to shut the people up by expanding the consumer fund and raising living standard accordingly, as a substitute for satisfying the need for democracy. Thus, already during the first five-year plan under Honecker, there was a sharp decline in the growth rate of industrial production and investment, going hand in hand with an increase in the production of consumer goods.
The official East German statistics show that while investment in mining, energy and manufacturing doubled between 1960 and 1970 (from 10 billion marks in 1960 to 21 in 1970) and rose by another 50% in the following period to 34 billion Marks in 1980, in recent years it has hardly risen at all (it stood at 36 billion Marks in 1986). Investment in modern means of production threatened • Even under the conditions of holding fast to the rigid super-centralized, undemocratic planned economy, this orientation meant a growth in tendencies toward crisis. Above all, the reproduction of the basic funds for modern means of production in the central industries was threatened.