Leaving Socialism Behind: A Lesson From Germany

Thursday, October 1, 2020
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Editor’s note: This is an excerpt from a fuller essay by Professor Berman, “Leaving Socialism Behind: A Lesson From German History,” that is published by the Hoover Institution as part of a new initiative, Socialism and Free-Market Capitalism: The Human Prosperity Project.

The images of East Germans eagerly pouring into West Berlin on the night of November 9, 1989, have become symbols of the beginning of the end of the Cold War and, more specifically, evidence of the failure of communist rule in the German Democratic Republic (GDR, or East Germany) and its socialist economic system. Yet that historic moment was only the final dramatic high point in the long history of dissatisfaction with living conditions in the eastern territory of Germany, first occupied by the Red Army during the defeat of Nazi Germany in 1945 and, four years later, established as the GDR when, in Winston Churchill’s words, the Iron Curtain fell across the continent.

Between the formal political division of Germany in 1949 and the final hardening of the border with the construction of the Berlin Wall in 1961, a constant population flow from east to west took place, a movement away from Soviet-style socialism and toward Western capitalism. East Germans stopped voting with their feet only when the construction of the Wall in Berlin made it impossible to leave; outside the capital, prohibitive barriers already had stretched across the whole country. Nonetheless, many continued to try to escape, and hundreds lost their lives, shot by border guards in brave attempts to “flee the republic,” as the crime was cynically designated.

To state the obvious: there are no similar accounts of throngs of westerners clamoring to enter East Germany. Between 1950 and 1989, the GDR’s population decreased from 18.4 million to 16.4 million, while that of West Germany (the Federal Republic of Germany, or FRG) grew from 50 million to 62 million.This tally is an indisputable judgment on the failure of socialism. The GDR system was unable to persuade its population to remain willingly. Only the Wall and the rifles of the border guards prevented East Germans from departing.

Several distinct, if interrelated, factors contributed to the economic limitations of the GDR. As noted, it emerged from the Soviet Occupation Zone, and the Soviet Union’s treatment of its defeated wartime adversary was harsh. Extensive manufacturing capacity was systematically dismantled and moved to the Soviet Union, further undermining an industrial base already reduced through wartime destruction, although this phenomenon declined by the early 1950s. In contrast, West Germany was benefiting from the very different American occupation and the positive effects of the Marshall Plan. While the West German economy profited from access to the world economy, East German trade remained largely constrained to the Soviet bloc. In addition, from 1949 to 1961, the population flight to the west disproportionately involved middle-class and relatively wealthy East Germans, who took their skills and amplified capital flight. Each of these elements arguably put East German economic performance at a disadvantage.

Yet the primary difference between East German underperformance and the West German “economic miracle” involved the antithetical organization of the countries’ economic systems and the philosophical assumptions underpinning them. Jaap Sleifer writes:

The difference between the two systems may be characterized by the structure of ownership and the degree of centralization in decision-making. West Germany, as a capitalist country, mainly relies on private and individual ownership and control of the business enterprise, whereas in East Germany, as a socialist country, state enterprises were predominant. Regarding the degree of centralization, capitalism provides wide areas of discretion for freedom of individual choice, which leads to decentralization of economic decisions, whereas socialism shows a more centralized approach towards economic decisions.2

The comparative performance of the East and West German economies therefore provides a nearly textbook case of the difference between socialist and capitalist economic paradigms. To be sure, other factors played a role, such as the countries’ differing treatments by occupation forces and the ongoing migration from east to west. Yet each of these two potentially mitigating circumstances was also simultaneously symptomatic of the opposed economic systems: the East German economy was disadvantaged precisely because the Soviet Union imposed its model of socialist planning, while the brain drain (and capital drain) to the west was a function of and response to the effects of the socialist model. In contrast to the imposition of the Soviet model—a derivative of the Marxist ideological legacy—in the GDR, West Germany benefited from the free market vision of thinkers such as Walter Eucken and Ludwig Erhard, who steered it toward its successful model of a social market economy: i.e., a capitalist economy tempered by a social safety net and restrictions on monopolies.

As a result, the contrast between East and West German economic performance became a set piece in representations of the Cold War. In 1960, Bellikoth Raghunath Shenoy, a prominent classical economist from India, provided a journalistic account of his visit to Berlin, not yet divided by the Wall, which included these trenchant observations:

The main thoroughfares of West Berlin are nearly jammed with prosperous-looking automobile traffic, the German make of cars, big and small, being much in evidence. Buses and trams dominate the thoroughfares in East Berlin; other automobiles, generally old and small cars, are in much smaller numbers than in West Berlin. One notices cars parked in front of workers’ quarters in West Berlin. The phenomenon of workers owning cars, which West Berlin shares with the USA and many parts of Europe, is unknown in East Berlin. In contrast with what one sees in West Berlin, the buildings here are generally grey from neglect, the furnishings lack in brightness and quality, and the roads and pavements are shabby, somewhat as in our [Indian] cities.3

He goes beyond economic observations to remark on the culture he sees:

Visiting East Berlin gives the impression of visiting a prison camp. The people do not seem to feel free. In striking contrast with the cordiality of West Berliners, they show an unwillingness to talk to strangers, generally taking shelter behind the plea that they do not understand English. At frequent intervals one comes across on the pavements uniformed police and military strutting along. Apart from the white armed traffic police and the police in the routine patrol cars, uniformed men are rarely seen on West Berlin roads.4

Evidently more is at stake than contrasting consumer cultures or access to privately owned cars. East Berlin is, in Shenoy’s view, symptomatic of a repressive society in which the inhabitants fear authority and shy away from contact with outsiders lest they draw attention to themselves:

The main explanation lies in the divergent political systems. The people being the same, there is no difference in talent, technological skill, and aspirations of the residents of the two parts of the city. In West Berlin efforts are spontaneous and self-directed by free men, under the urge to go ahead. In East Berlin effort is centrally directed by Communist planners. . . . The contrast in prosperity is convincing proof of the superiority of the forces of freedom over centralized planning.

The Perils of Selective Memory

Today it is especially important to remember both objective economic differences between the two Germanies and these subjective experiences: i.e., the dynamic excitement Shenoy felt in the west as opposed to the timidity of the east. Preserving these insights is vital because of current attempts to idealize socialism retrospectively by pointing to allegedly positive aspects of the East German performance.

While socialist-era statistics are notoriously unreliable, it is likely that East German standards of living were in fact consistently the highest in the Eastern bloc: i.e., better than in the other satellite states and certainly superior to the Soviet Union. Yet that hardly proves the success of GDR socialism; Germany long had been wealthier than its eastern neighbors. GDR standards of living also reflected the political pressure on East German leadership to attempt to keep up with the standard of living in the west, of which the East German population was well aware. This constant comparison with the Federal Republic is one unique feature of East German socialism; Poland never had to compete with a West Poland, or Hungary with a West Hungary. Yet artificially propping up the standard of living in East Germany contributed to the indebtedness of the state and its ultimate fragility, and, in any case, the GDR’s living standards never came close to matching what West Germans grew to expect. East Germany’s per-capita GDP has been measured at only 56 percent of GDP in the west.5

Nonetheless, one can hear apologists for the GDR and its socialist system argue that the East German state provided social goods such as extensive child care, correlating to a relatively higher degree of participation by women in the workforce. In post-unification debates, such features are sometimes taken as evidence of the accomplishments of the GDR. Yet in fact they represent instances of making a virtue out of necessity: in light of migration to the west and the dwindling population, raising labor force participation through the inclusion of women became unavoidable.

Such retrospective considerations arise from rosy false memories in the context of post-unification reality. The past may look attractive to those who do not have to relive it. Yet there is in fact no evidence of any significant interest on the part of former GDR citizens in returning to the socialist regime. One can observe some dissatisfaction in the former East Germany with the character of the unification process for various reasons, including a perceived condescension on the part of West Germany. East Germans at times experience the western critique of the GDR as offensively triumphalist, and, worse, they believe that the western critique of the socialist system simultaneously belittles their own lives within the system. This dynamic can generate defensiveness on an individual level, but it rarely turns into a reactive identification with the former regime.

The abrupt transformation of life through the unification of 1990, the economic disruption as East German enterprises collapsed, and the GDR’s sudden integration into a West German and, more broadly, cosmopolitan world has produced the phenomenon of Ostalgie, a nostalgia for the east. Sometimes it is expressed merely as a yearning for the (few) consumer products of one’s childhood, and sometimes it is a more complex psychological orientation toward a remembered youth in an allegedly simpler past. In Ostalgie discourse, the repressive aspects—the role of the Stasi, the secret police, the extensive surveillance network, the lack of a free press—are minimized or absent. The psychological appeal of Ostalgie—of succumbing to the glow of a wrongly remembered past—can be used by left-of-center politicians to conjure the illusion of a better past in order to advocate for statist policies in the present.

The failure of East German socialism to establish its legitimacy by maintaining the loyalty of its population—who, given the chance, evidently would have largely decamped to the west—was a matter of economics, but not only of economics. At stake was instead the broad infringement on human freedom that made life in the GDR undesirable. It is not only in terms of material prosperity that socialism fails.

“We Are the People”

Two pieces of literary and historical evidence testify to the indigenous flaws in the mindset of the East European satellite countries and especially the GDR, where patterns of subordination, obsequiousness, and obedience worked against the disruptive capacities of individuality, creativity, and spontaneity that drive change and growth. The “really existing socialism,” as it was labeled, held a systemic bias against the recognition of any signals that might allow for autocorrection. Infallibility and determinism, hallmarks of socialist thought, systematically eliminate opportunities to undertake modifications on the basis of experience.

The first piece of evidence is the poem “Song of the Party” (Lied der Partei), which became the anthem of the ruling Communist Party of the East Germany. It was written by German-Czech Communist poet Louis Fürnberg in 1949, and remembered particularly for its repeated line that conveys the core message “the Party is always right.”

The Party, the Party, it is always right!

And Comrades, may it stay that way;

For whoever fights for the right

Is always in the right.6

It conveys an unironic insistence on absolute obedience to the organization, which in turn is regarded as all-defining for the existence of its members. Worse, the song propagates a radical consequentialism: if one is fighting for the right, one is necessarily in the right—the end justifies the means. No room remains for any ethical limitation on the instruments one uses to reach a goal. As a document of the psychology and values of GDR socialism, “Song of the Party” helps explain the widespread suppression of individuality. Fürnberg’s ethos also displays the desiccation of political life that radical revolutionary writer Rosa Luxemburg foresaw years earlier as a result of the essence of the Bolshevik program and the socialist enterprise.7

The second piece of literary evidence comes in the summer of 1953, after spontaneous worker protests erupt across East Germany, reaching a high point on June 17 with strikes in all major industrial areas. The Soviet occupation forces suppress the uprising quickly, as protestors are shot and executions follow. Poet and playwright Bertolt Brecht responded to the suppression with a poem that has been repeatedly cited to show the mismatch between statist governance and democratic legitimation. In “The Solution” (Die Lösung), he describes the head of the Communist writers’ organization handing out flyers criticizing the workers for disappointing the government. Brecht’s laconic suggestion: the government should “dissolve the people and elect another.”8

The poem captures the distortion of political life inherent in East Germany, corroborating the prediction in Luxemburg’s critique of the Bolsheviks: that the hollowing-out of democracy and the elimination of rights, consistent with Karl Marx and Friedrich Engels’s animosity to “civil society” and merely bourgeois liberty, produces dictatorship as the defining feature of socialism.

Such was Communist culture in the early years of the GDR. Later, just before the end of the socialist regime, matters had begun to change. There is evidence that servility and subordination were giving way to different personality types no longer consistent with authoritarian rule. “Sometimes this results in exaggerated anti-authoritarian behavioral patterns,” wrote Walter Friedrich, the director of the Youth Institute, in 1988. There also were expectations of greater freedom in personal lives and in relationships, such as “the demand for freedom in choosing a partner, and surely also the phenomenon of cohabitation and the high divorce rates here,” Friedrich wrote. “The greater demands by women, especially younger ones, for self-determination should also be regarded from this perspective—right up to feminist postulates.”9 He went on to report on how changes in personality characteristics were also leading to greater engagement in organizations such as church groups and the environmental movement. A protest potential was growing.

A year later, the East Germans were pushing their way into West Berlin. Even after the border opened, some continued to harbor illusions that the GDR might remain a separate state. Parts of the East German intelligentsia and cultural elite promoted this idea; after all, they had often benefited from relatively privileged positions. But in the voices of the demonstrators during the fall of 1989, especially in Leipzig, where a series of “Monday demonstrations” unfolded, and then in Berlin, an important transition took place. The crowds expressed aspirations to end not only the dictatorship but also eventually the division of Germany. Before the opening of the Wall, in October and early November, the demonstrators regularly chanted, “Wir sind das Volk” (We are the people), asserting the democratic claim on popular sovereignty against a regime that had never achieved legitimacy through a free election. “We are the people” was, in effect, a call for a realization of the democracy that had been consistently denied by the dictatorial character of GDR socialism, precisely as Luxemburg had predicted would develop out of Lenin’s pattern of suppressing of elections and civil rights. As in Russia, so too in Germany.

On October 3, 1990, East Germany—or, more precisely, the five Länder in the territory of East Germany—joined the Federal Republic, leading to the formation of a single German state and the end of the post–World War II division. Whether this unification was inevitable is a matter of academic speculation at best. What one can say with certainty is that the specifically socialist character of the GDR—its poor economic performance and its constitutively repressive character that precluded political processes of democratic legitimation—made the continuity of an independent state deeply unappealing.

In the end, East Germans chose to abandon socialism to pursue greater prosperity and political freedom through integration into the liberal democracy and social market economy of the Federal Republic. There are few regrets. 


Jaap Sleifer, Planning Ahead and Falling Behind: The East German Economy in Comparison with West Germany, 1936–2002 (Berlin: Akademie Verlag, 2006), 53. 

Sleifer, Planning Ahead, 18.

B. R. Shenoy, “East and West Berlin: A Study in Free vs. Controlled Economy,” Indian Libertarian, August 15, 1960, http://www.libertarianism.org/publications/essays/east-west-berlin-study-free-vs-controlled-economy.

Shenoy, “East and West Berlin.”

Sleifer, Planning Ahead, 52.

“Lied der Partei (English and German lyrics),” YouTube, April 14, 2018, http://www.youtube.com/watch?v=ZI_xm_PuJzM (author’s translation).

Rosa Luxemburg, Die Russische Revolution, in Politische Schriften, vol. 3 (Frankfurt am Main: Europäische Verlagsanstalt, 1968), 106–41, http://www.mlwerke.de/lu/lu3_106.htm.

Bertolt Brecht, “The Solution,” 1953, https://www.poemhunter.com/poem/the-solution.

Walter Friedrich, “The Director of the Youth Institute Comments on the Progressive Alienation of the Youth of the GDR,” German History in Documents and Images, November 21, 1988, http://germanhistorydocs.ghi-dc.org/sub_document.cfm?document_id=1178.