Technological change in the GDR and its social consequences

Abstract

Against the background of the peaceful revolution in the GDR in November 1989, the authors develop a projection of the political, economic, technological, and social consequences to be faced. The issue at stake is to replace a strictly centralized, rather conservative system with a democratic, pluralistic order, to dissolve and diversify state-held and collective property, and—during a transitional period of a few years—to establish a competitive, efficient, and socially and ecologically oriented market economy. The state of the society and economy at the outset is scrutinized. A thorough reconstruction of the economy and its technology base is urgently needed, as is a radical rehabilitation of a widely devastated environment. The capital required to achieve competitiveness in an open world economy cannot possibly be raised within the country. The government must meet the challenge of establishing the international capital market's confidence in the viability and reliability of the country's political and economic system. Private initiative is to be encouraged and fostered to become a solid backbone of a highly dynamic market economy. The first steps have been taken by the two German states toward the development of economic and currency union. A speedy and drastic improvement in GDR economic productivity and competitiveness is a crucial prerequisite. Given the present state, adaptation will take a few years of “sweet and tears,” implying very high rates of unemployment, but also emerging social and economic differentiation. Safety-nets must be established to prevent disaster and unrest. No doubt, the former socialist part of a unified Germany will be the poor one for some time. It must not be allowed to be relegated to a poorhouse. For some time to come, the achievements of radical restructing and increased efficiency will be the decisive key factors. The ecological heritage of 45 years of centralist rule constitutes a most severe impediment jeopardizing necessary reforms. Some policy proposals to cope with this heavy burden are discussed.