Figure 1.--This is a VEB Kinderferienlager (Children's Vacation Camp) about 1960. The name of the VEB is in the sign, but we can't read it. Perhaps our German reades can make it out. The various East German VEBs sponsored varioys social favilities, including day care centers, summer camps, and sports teams. Notice the rather patriotic activity which some left-wing Americans might critize. It is interesting to note the number of conventions in Communist countries that American and European Socialists criticize in their own countries.

The German economy was structured around Volkseigener Betrieb (People-owned Enterprise--VEB). An hororific name was usually added to the firm's actual name. The VEB was comparable to Western industrial corporations, although owned by the state rather than private investors. The VEB was principal legal form of industrial production in the DDR. About 80 percent of the East German work force was employed by the VCBs. This was a much larger proprtion than employed by large corprations in the West. They were formed after mass nationalisation between (1945-1960). The Soviet Union handed back 33 enterprises previously taken as reparations (1954). East Germany was the least industrialized area of Germany and much of the industry that existed was destroyed in the war. The managing director of a VEB was known as the plant or works manager (Werkleiter, Werkdirektor or Betriebdirektor). He was assisted by the first secretary of the factory Sozialistische Einheitspartei Deutschlands (SED) party organisation (Betriebsparteiorganisation) and the chairman of the factory trade union (Betriebsgewerkschaftsleitung). Other important officers were the Chief Accountant and Technical Director. This mean that there wwere important destinctions between Western corporations and VEBs. The primary differences was that the Werkleiter was not an independent director, but subject to priorities sent by Government central planners. And the SED Party played a major role in the direction of each VEB. This mant that political loyalty rather than technical competence was often a factor in personnel decesions. The Betriebsgewerkschaftsleitung was not a free trade union, but also subject to the dictates of the SED Party. The difference are imporant to consider because although the East German VDBs were the most productive in the Soviet Empire, the pailed in compaison to the efficency and productiveness of West German corporations. The East Germans tried hard to make Communism work. No one dared, however, to suggest market reform like China eventually implemented. The VEBs were at first vertically integrated into units labeled Vereinigung Volkseigener Betriebe (Associations of Publicly Owned Operations--VVBs). VVBs were set up in most of the major industries. The idea was to achievce efficencies by streamlining production and reducing waste. The VVBs eventually replaced with the VEB Kombinate, or VEB Group (1979). This was designed to integrated the VEBs more closely than the mostly administrtice structure of the VVBs. Popular usage in East Germany was to drop the Kombinate' and just use 'VEB' meaning the group and not the individual factory. The State Planning Commission was the responsible for the organisation of all the VEBs. In essence the Werkleiter could not make majpr changes without government approval. It also meant that startups by highly talented young inovators that led to companies like Appel, Facebook, Google, Microsoft, Oracle, ect. were impossible in the DDR. Research and development was in the habds of the large, established VEBs. The VEBs also played important social roles. The VEBs sponsored day care facilities for workers' families as well as Pioneer summer camps for the children. There would also factory sports teams. The VEBs thus played an important role in the DDR's impressive sports program. After the fall of Communism and German reunification, some 8,000 state-owned VEBs were turned over to the Treuhand, a trust given the responsibility of oversseing the privatisation of the VEBs (1990). It was quickly found, however, that very few VEBs could compete in the the market economy (1990).

Structure

The German economy was structured around Volkseigener Betrieb (People-owned Enterprise--VEB). An hororific name was usually added to the firm's actual name. The VEB was comparable to Western industrial corporations, although owned by the state rather than private investors. The VEB was principal legal form of industrial production in the DDR.

Organization

The managing director of a VEB was known as the plant or works manager (Werkleiter, Werkdirektor or Betriebdirektor). He was assisted by the first secretary of the factory Sozialistische Einheitspartei Deutschlands (SED) party organisation (Betriebsparteiorganisation) and the chairman of the factory trade union (Betriebsgewerkschaftsleitung). Other important officers were the Chief Accountant and Technical Director. This mean that there were important destinctions between Western corporations and VEBs. The primary differences was that the Werkleiter was not an independent director, but subject to priorities sent by Government central planners. And the SED Party played a major role in the direction of each VEB. This meant that political loyalty rather than technical competence was often a factor in personnel decesions. The Betriebsgewerkschaftsleitung was not a free trade union, but also subject to the dictates of the SED Party.

Importance

About 80 percent of the East German work force was employed by the VCBs. This was a much larger proprtion than employed by large corprations in the West. In the Westr, small business was more importabt.

Chronology

The East German VCNs were formed after mass nationalisation between (1945-1960). The Soviet Union handed back 33 enterprises previously taken as reparations (1954). East Germany was the least industrialized area of Germany and much of the industry that existed was destroyed in the war.

Productivity

The sucess of any economic system depends on productivity. Authors can debate values and ieology abd write long texts. Marx's Das Capital cerainly outweighs Smith's Wealth of Nations. But the iron laws of ecomomics are actually very simple. Neither capitalists or Communists can get around this. Productivity is the measures of economic efficiency. It is assessed by calculating the ratio of output to inputs in a production process, often expressed as output per unit of input. Countries and companies that produce producrs that are worth more than the value of inputs (capital, labor, and rawmaterial) prosper and the higher the ratio the greater the prosperity and the higher the living standards. As basic this calculation was, it was not something that Marx wrote about or was a concern to managers in East Germany or any where else in the Communist world. Communist thinking was dominated by the labor thinking of value. Increasing national productivity raisees living standards because productive concerns can afford to increase wages and wokers receiving higher wages can purchase more goods and services, enjoy leisure, improve housing and education and aford to pay the taxes need to suppprt social and environmental programs. Poor productivity limits living standards and a states ability to support welfare and envionmental problems. The problem for the Communists was not only was prouctivity poor, but often it was negative, meaning the cost of raw material and other inputs often exceeded the value of the manufacutured goods produced. The result was that very early on in the Cold War, the wages and living standards in East and West Germany as well as East and West Germny began to diverge. Especially shocking for the Communists is that it was the workers themselves, theoretically the base of support for a Communust country, were the first to reject Communism. The first rising against Communism came from the workers of East Berlin soon joned by students another group blieved to be at the vanguard of the Communist Revolution (1953). Interestingly the East German VDBs were the most productive in the Soviet Empire, ibcluding the Soviet Union. Even so, the VDBs achieved efficencies and productiveness only a fraction of those achieved by West German corporations.

Navigate the Children in History Website:
[Introduction] [Biographies] [Chronology] [Climatology] [Clothing] [Disease and Health] [Economics] [Geography] [History] [Human Nature] [Law]
[Nationalism] [Presidents] [Religion] [Royalty] [Science] [Social Class]
[Bibliographies] [Contributions] [FAQs] [Glossaries] [Images] [Links] [Registration] [Tools]
[Children in History Home]

Created: 10:42 AM 7/4/2014
Last updated: 10:42 AM 7/4/2014