Moscow and Economic Reforms in East Germany and Czechoslovakia in the 1960s

Abstract

The article based on documents from the Russian state archive of modern history (RGANI) examines the Soviet leadership's perception of economic reforms in the GDR and Czechoslovakia in the 1960s. The choice of these countries is due to the fact that they were the most industrially developed states of the socialist camp, after the USSR. The economic experiment in East Germany and Czechoslovakia took place and finished in completely different ways. So Moscow reacted differently to economic reforms in these socialist countries. In the GDR, economic reforms were a response to the sharp decline in the country's economic performance in the early 1960s. In January 1963, the “new economic system” was launched, the basis of which was proclaimed the material interest of workers and enterprises, and the main promoters of the reforms were united people's enterprises. Studying the NES Soviet analysts paid close attention to such problems as the formation of pricing and credit policies, planning, quality of products, and scientific and technological progress. The authors conclude that the initial period of reforms in the GDR was perceived positively by the Soviet leadership. As in the GDR, the economic crisis of the early 1960s served as the impetus for the beginning of reforms in the Czechoslovak Republic. In January 1965 the Plenum of the Central Committee of the KSČ announced a new system of planning and management of the economy, using the concepts of the law of value and commodity-money relations. A year later (in April 1966) it was announced that the implementation of economic reforms was accelerated. As in the case of the GDR, the Soviet leadership positively regarded the first steps of the Czechoslovak economic reforms. The situation changed dramatically when economic reforms in the Czechoslovak Republic began to affect the political foundations of socialism during the Prague events of 1968. As a result, the reforms in Czechoslovakia were forcibly stopped, and the GDR leadership decided to gradually collapse the “new economic system” in 1969. At the same time, the authors point out that Moscow did not abandon the need to reform the socialist economies, as exemplified by the reforms in Hungary and Poland in the early 1970s as well as attempts to revise the foundations of socialist integration within the COMECON.