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Prosperous living standards are determined by productivity, both worker productivity and nterorise productivity. As SED productivity was a fraction of that in the BRD, living standards were far below that of the West. This was the case throughout the Communist world and the centrl reason that the Soviet Union lost the Cold War. That said, the SED had the most efficent economy in the Communist world and thus the Communist country wih the highest living standards. East Germany established a state-run social welfare program. The German social welfare organizations were mostly private voluntary entities many Church based. Some of these instititiins dated from the Middle Ages. , Germany implemented a national social policy through an extensive decentralized and pluralistic network of voluntary agencies. The NAZIs sought to centralize this system and had established a state agency to do this--the Nationalsozialistische Volkswohlfahrt (People's Welfare Organization--NSV). NAZI organizations were outlawed after the Allied vicyory in both East and West Germany (1945). The NSV was replaced with different welfare organizations in East and West Germany. The Socialist Unity Party (Sozialistische Einheitspartei Deutschlands--SED) or East German Communist Party achieved a virtual monopoly of over all social and political institutions, including social welfare agencies. The DDR retained separate social insurance plans inherited from before the War. DDR authorities moved to combine these plans. This had laargely been aschieved (1956). The DDR had two compulsory, centrally controlled, and hierarchically organized systems that provided universal flat-rate benefits. Special programs were designed for technical and scientific specialists, civil servants, police, the Nationale Volksarmee (National People's Army--NVA), and other security organizations. All these programs were heavily state subsidized, unlike the West Germany. The the right to work was guaranteed in East Germany. The state assigned jobs to East Germans. There was no as a result, no unemployment insurance. The state also provided housing, child care, and health care.
East Germany established a state-run social welfare program. The German social welfare organizations were mostly private voluntary entities many Church based. Some of these instititiins dated from the Middle Ages. , Germany implemented a national social policy through an extensive decentralized and pluralistic network of voluntary agencies. The NAZIs sought to centralize this system and had established a state agency to do this--the Nationalsozialistische Volkswohlfahrt (People's Welfare Organization--NSV). NAZI organizations were outlawed after the Allied vicyory in both East and West Germany (1945). The NSV was replaced with different welfare organizations in East and West Germany.
The Soviet Union in its the eastern occupation zone set out to create a Communist Germany in its own image. The Soviets found committed Marxists to turn Germany into a Communist state with a planned economy. Thus divided Germany would provide a laortory for the relative merits of Communism and a planned economy on one hand and demoracy and free market capitalism on the other. This began early in the occupation, but the Deutsche Democratische Republic (German Democratic Republic--DDR) was formally established (1949). The Sozialistische Einheitspartei Deutschlands (Socialist Unity Party-SED) or East German Communist Party achieved a virtual monopoly of over all social and political institutions, including social welfare agencies. It was led by the Socialist Unity Party of Germany (SED - Sozialistische Einheitspartei Deutschlands). The SED's founders had pledged to "seek a distinctively German path to socialism". [Turner, p. 47.] In reality, they priceeded to establish a Soviet-style police state despite the 1949 constitution which guaranteed basic civil rights. The SED also set out to establish an expensive social welfare system.
The Economic Miracle that occurred in the West did not occur on the other side of the Iron Cutrain. The Soviets moved to separate the East German ecomomy fom that of the West after the United States decided to enact the currency reform promoted by Bavarian Finance Minister Ludwig Erhard. Stalin refused to accept Marshall Plan aid or allow his Eastern European satallites to participate. The Soviets and East Germa Communist allies moved to create a socialist economy. The Soviet occupation zone that became the DDR (1949) was a largely agrarian part of Germany without the heavy industry that had developed in the Ruhr and other western areas. The primary factor here was raw materials. The heavily developed Ruhr Basin for examle developed around the abundant coal resources there. And the Soviet occupiers initiated a massive program of dismantling factories that survived the War and shipping it east as reparaions. Even after actual reparations ended, the trade agreements negoitiated by the Soiviets through COMECON were heavily in their favor. The East German economy thus stagnated while the West Germany econonomy began a period of explosdive growth. The German Economic Miracle (GEM) underway in West Germany proved an increasing embarassment for East Germany. Rather than a worker's paradise, East German workers increasingly envied the rising living standards in West Germany. The GEM proved to be more than an embarassment. The East Germans could not very well blame the lackluster economic performance on their fratenal socialist ally or the socialist economy they created so they blamed in on the exodus of trained workers and profesionals from the worker's paradise to the capitalst west. A huge dispsarity in living standards developed between East and West. And unlike the situation in Russia, the East Germans could not hide the disparity. East Germans could listen to West Germsn television and radio. Ironically the commercials that plague Western TV viewers and radio listeners were in essence effective proaganda. Aparently the commercials had more impact than the political content. The Berlin Wall and extensions dividing the two Germanies ended the flow (1961). It probably did impair the Germnan economy, but was not the central problem. Even with all the limitations, East Germany became the most producvtive part of the Soviet Empire--COMECON. The East Germans published impressive production statistics. Very little of this production could be excported to the West. It was either consumed in East Germany or traded within COMECON as COMECON barter arragemets. As a result, consumer demand had little impact on production. Nor was any attention given to enviromental concerns. While the DDR produced some of the best indusdtrial product within COMECON, their output was not up to Western standards. Thus when the Berlin Wall came down and Germany was unified, few East German industries could survive in a market economy. The rapid economic improvement in East Germany following the unification of East and West Germany is another important subject. The popular media in the West which tends to focus on problens have taken this second miracle largely for granted.
The SED placed a high priority on economic recovery. Social welfare was given a secondary primority. Here the SED was operating under verty severe restraints. The Soviet occupiers demanded reparations. Germnan factories whichg had survived the bombing were torn up and shipped east. Reparation payments were enormous, although tghere is no way of knowing the full extent. One author wriutes, "The official East German figure for total reparations payments is $4,300 million [while the] American authority puts it at $10,429.12 billion at 1938 prices." [Childs, p. 138.] Stalin did not allow East Germasny and the other satellite countries participate in the Marshall Plan.
Prosperous living standards are determined by productivity, both worker productivity and nterorise productivity. As SED productivity was a fraction of that in the BRD, living standards were far below that of the West. This was the case throughout the Communist world and the centrl reason that the Soviet Union lost the Cold War. That said, the SED had the most efficent economy in the Communist world and thus the Communist country wih the highest living standards. Despite the limitations, the East German economy gradually recovered from World War II. It developed in the words of one economist, "The DDR is a world-ranking industrial economy." The East German economy like the West German economy did emerge from the devestation left by the War. In Communist terms it waas a real success. Compared to the rest of the Estern Bloc Soviet satellite countries, the DDR aschieved a relastively high rate of growth. They even surpassed many Soviet economic achievements, especially living standards. The problen for East Germany, was that most East Germans compared their situation with that in West Germany.
The SED developed a comprehensive social welfare program. We find that today the popular aspects of the program are remembered, and not the mot so alluring aspects. This is important to remember in that so many young people today find socoalism lluring. Salaried workers were covered under a compulsory social insurance program administered by the Freier Deutscher Gewerkschaftsbund (Free German Trade Union Federation -- FDGB). There was a separate program for self-employed persons and members of farm and craft cooperatives. The program included medical treatment, accident and disability benefiies, and social security retirement benefits. The program was financed by worker contributions (10 percent of monthly salaries up to a maximum of 60 marks, a matching amount from the employer), and state subsidies. It provided a basic, but not particularly prosperous life style. The Communist planned economy just did not create the walth needed for prosperity. Health care was free, but not of the same quality as in the West. And notably, the health are susystem in East Germany and the Communist countries in gnral did not generate nw drugs and life saving medical technlogies. This all occured in the capitalist West. The most popular program, commonly sited aftervunification, was free child care. Children were a priority for the SED in ways we would today seen as positive and other ways negative. The lederly were, however, not a priority and elder care was not well funded, This was particularly serious because the cramped apartments and low incomes in the SED meant that few families were able to care for elderly parents.
Childs, David. East Germany (New York: Praeger Publishers, 1969).
Lemke, Christiane and Marilyn Rueschemeyer. The Quality of Life in the German Democratic Republic (New York: M.E. Sharpe, Inc., 1989).
Turner, Henry Ashby Jr. Germany from Partition to Reunification (New Haven: Yale University Press, 1992).
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