In from the socialist “cold,” but burned by the capitalist “heat”? The dynamics of political revolution and economic transformation in Eastern Germany after 1990

Abstract

This article examines the crisis-ridden path from planned to market economy in Eastern Germany after the fall of the Berlin Wall in 1989. By analyzing the history of the highly debated Treuhandanstalt—the so-called Trust Agency and the main actor of the economic reconstruction—the discussion sheds light on the political modes of decision making in the East and especially its long-term effects. The focus is on the negotiations carried out at the Central Round Table in early 1990, the first free elections in March 1990, the deliberations between Federal and East German governments in summer 1990, the discrete bargaining strategy of the Treuhand in 1991‒1992, and the massive public debates and scandals connected to the Treuhand in 1993‒1994. The organization is interpreted as an exceptional regime of economic experts that managed the socioeconomic “shock” of economic reconstruction as a kind of “shield of protection” for the political system, but at the same time it was unable to buffer the dramatic sociocultural consequences of closures and mass unemployment: Recent debates and election campaigns in 2019 highlight the fact that the Treuhand is still present as a negative myth or “bad bank” of East German memory culture open for populist campaigning.