At the beginning of the 1960s the socialization process of the economy led to the almost total abolition of private property in agriculture and the introduction of the cooperative form. In the 1970s, 81.1% of agricultural production came from cooperatives while state-owned enterprises provided 79.6% of industrial production, 93% of transport and communications and 54.9% of construction.. The other two forms of productive organization, semi-state and private enterprises, contribute minimally to the formation of the national product (the maximum contribution of semi-state enterprises is 11.4% in the industrial sector and that of private enterprises of 8.6% in the construction sector). Economic units, regardless of their organizational form, they have management flexibility only within the objectives and the distribution of resources set by the general economic plan. Starting from the 1960s, difficulties in drafting the economic plan increase because the reached level of economic development provokes the requests for greater and better consumption by more sophisticated consumers than those of the 1950s and for wage improvements by better qualified workers. than in the 1950s. Under these pressures, greater attention is paid to the calculation of costs and returns on investments and the system of price fixing and management of economic units is reformed in the sense of strengthening the incentives for the efficient use of resources and creating incentives. to technical progress and specialization.
Political Economics. – 1963 is the year in which the greatest efforts are made to increase economic efficiency through the relaxation of administrative controls (which, however, will be strengthened again in 1965, indicating the intention not to give autonomy to regional and local authorities) and the launch of a real export expansion campaign. In 1964, the impetus given to international trade led to the establishment of the Bank for International Economic Cooperation which made it possible to get out of the bilateral nature of international trade as it made possible credit and clearing operations between states. The economic plans of the 1960s therefore aim to increase the national product through international trade. The 1971 plan aims at “the These increases were transmitted to the Comecon area through the decisions of January 1975, January 1976 and January 1977, to increase the prices of petroleum products by 130%, 8% and 20% respectively. The average increase in prices in the area was 20% in 1975 and more moderate in the following years. The terms of trade of the GDR consequently deteriorated and its trade balance became negative vis-à-vis these countries, especially the USSR. In the western area, in particular the CEE, the trade exchanges of the GDR have suffered, on the one hand, the positive influence of the evolution of the trade policies of these countries towards greater openness to the countries of the east, but on the other, the negative one of the increases in the prices of raw materials and of the qualitative competition of Western products. Since 1972 the trade balance has been in deficit also vis-à-vis the West (table 4). Unable to reduce the trade deficit by reducing imports in order not to jeopardize economic growth, the GDR has progressively borrowed from the West. As of 1976, its gross debt (ie gross of the currency reserves held in Western banks, the size of which is unknown) amounted to $ 3 billion. The tendency not to increase the debt position with the West means that imports are once again heavily subordinated to exports.
Currency problems. – The Ostmark (eastern mark) is a strictly domestic currency, it cannot be converted into any foreign currency, it is not listed on the international money markets and its movement across borders is prohibited. For international exchanges, the Mark Currency is used which can be expressed in terms of an official parity with gold and convertible into foreign currency according to the exchange rates of 4.2 VM for 1 dollar and 4.667 VM for 1 Soviet ruble. The value of the VM does not coincide with the value of the Ostmark because the domestic currency is subject to the changes in value that entail the objective of price stability set by the plan. Despite the ban on trading Ostmark and due to the contacts between the populations of the GDR and the BRD, there is an unofficial exchange rate of 4 Ostmark for 1 Deutsche Mark. In recent years, having acknowledged the existence of contacts with the BRD (60% of the population has kinship or other ties with the BRD population) and seeing favorably the influx of DM, the ” Intershops “- Geschäften where you can pay with DM. At the same time, in order to obviate the discrimination between owners and non-owners of DM, the ” Exquisit ” – Handels were created which make it possible to purchase the same goods sold in the Intershops with Ostmark but at a fourfold price.
National product and income. – The DDR is the country of the Eastern bloc at the highest level of income per – capita. Gross national product increased in the period 1960-1976 at an average rate of just under 5%, going from a low of 2% in 1961 to a high of 6% in 1974. Since 1974 the rate has been declining thereafter. the lack of success in export development, partly due to the recession in Western economies. The workforce and the population in general have remained unchanged over the past 15 years, so the increase in the national product is derived from the increase in labor productivity and has turned into increase in income per – capita (table 5). Labor productivity increased by 4.7 per cent, over the period 1965-1975 and at 1966 prices, and was accompanied by an almost identical 4.5 per cent, increase in capital intensity. The participation in the national product by the sectors of industry, trade and transport, agriculture, state and services, varies in the period 1960-1975 in favor of industry which passes from 56% to 65% and to the detriment of the other sectors which pass, respectively, from 16% to 15%, from 14% to 10% and again from 14% to 10%. In the destination of the national product between private consumption, investments and public consumption, there was a sharp decrease in the former in favor of investments until the 1970s. Since 1971, following the plan’s goal of raising the standard of material living, consumption tends to remain at a stable level, except for a new moderate decline in correspondence with the 1974 crisis. While in 1960 private consumption absorbed 62% of the national product, investments 20% and public consumption 18%, in 1975 private consumption absorbed 54% of the national product with a drop of 8 percentage points, investments 25% and public consumption the remaining 21% (calculations at 1967 prices). With the growth of the real national product, real wages also grew over the period of time considered. In the 1970s, households’ monetary income increased not only due to the increase in real wages but also due to the increase in transfers of the state in the form of pensions and social benefits. The disbursement of these transfers was aimed at reducing the differentials between the income of households belonging to agricultural cooperatives and state-owned industrial enterprises. In 1976, households’ monetary income increased further as a result of wage increases under the new plan which raised the minimum wage from 350 to 400 marks and wages to between 450 and 500 marks in values between 15 and 40 marks. The plan also provides for an additional expenditure of 6 billion over the five-year period to increase pensions and raise the minimum from 200 to 300 marks, and the introduction of production bonuses in addition to wages. The purchasing power of money was maintained in the sense that the consumer price index remained practically unchanged, but the state had to intervene with subsidies from the budget in the amount of 27 marks for every 100 spent on food by individuals. Expenditure for social and cultural purposes, which includes social security subsidies and subsidies for consumer prices, represent the highest expenditure item in the state budget. Subsidized goods are: food (butter, milk, bread, meat, potatoes, fish), children’s clothing, heating and public transport. State revenues, which condition expenses (Table 6), derive for the most part from the profits of state-owned enterprises while the small non-state sector contributes with the proceeds of existing taxes on the sector’s income.
Overall, the successes achieved in the expansion of income also gave rise to the main economic problems of the GDR in the 1970s because they are accompanied by the growing demand for consumer goods which, being largely imported goods from the western area, imply, for the shortage of exports, growing indebtedness to these countries.