The Currency of Socialism: Money and Political Culture in East Germany (review)

Consistently grounded in the kind of careful archival research that has traditionally been the coin of the realm for historians, Zatlin’s study of the nature and consequences of monetary policy in the German Democratic Republic (gdr) combines a variety of approaches. In this volume, the political historian’s concern for statecraft, policy, and individual leadership meets the social historian’s desire to uncover the experience and agency of ordinary citizens and the cultural historian’s interest in popular values, shared expressive practices, and common meanings. The book evinces an attention to the hard-and-cold realities of economics—institutions, policy, tools, and measures—that, unfashionable as it may be, is essential for an understanding of what happened to state socialism, especially in East Germany. The investigation is unusual in today’s historiographical mainstream for its sensitivity to economic theory and data and its sophistication in combining economic and historical insights. Zatlin manages this blending of techniques and interests skillfully; that the work sustains its analytical coherence throughout is a genuine accomplishment, given the breadth and variety of its subjects.

Set forth clearly and convincingly, the book’s chief findings represent important contributions not just to German history (developments in the Federal Republic receive thoughtful treatment herein, too) but also to the multidisciplinary study of socialism and to economic history more generally. Following an incisive review of Marxist political theory regarding the implications of market exchange, Zatlin shows how the stewards of the East German economy sought, without much success, to establish practices that would reflect their ideologically grounded suspicion of money. Insofar as possible, they hoped to eliminate it, or at least to diminish its importance using the tools of planning and distribution policy, and thereby to subvert the fundamentally conflict-ridden, alienating, “zero sum” logic of capitalist exchange. In its stead, they hoped to offer an alternative that would re-establish the relationship between producers and consumers on a new, nonmonetary basis that promised to advance the political and social ends of Marxism—to be sure, a tall order. The devil was in the details, and Zatlin explains, with prose at once engaging and rigorous, just how bedeviled those details were from the beginning of communist rule in the East, focusing on the period from the ascension of Erich Honecker in 1971 until the collapse and dissolution of the gdr in 1989/90.

The Currency of Socialism makes its case by demonstrating, throughout the two main divisions of the book dealing with money’s role in production and in consumption, what the Ostmark was supposed to accomplish and how it failed. Zatlin shows how the Honecker government, like the previous administration under Walter Ulbricht, struggled to make financial and commercial practice conform to what remained a consistently distrustful vision of money in a socialist society. These efforts rested on a faith in the state’s ability to determine and fulfill the needs of the population. Money was to become “a purely notational device” in facilitating the provision of goods and services, nothing more than “a marker balancing production against consumption” (22). Policy initiatives (and subsequent policy correctives) led to a spiral of complications that could barely be contained. In short order, the disengagement of the East German currency from market signals, from the true costs of production, and from consumers’ actual desires (as opposed to their state-sanctioned “real” needs) resulted in unforeseen, unwanted, and perverse outcomes: unsustainable and irrational spending and investment, large trade imbalances, burdensome debts to the capitalist world, accounting chicanery, looming insolvency, and commercial policies bent on earning hard currency despite serious social costs. Critically, the West German Deutsche Mark was accommodated as an all-too-common alternative currency for use in a variety of transactions for which the “notational” Ostmark was found to lack sufficient value.

Zatlin’s treatment of East German money as an instrument of consumption shows, in rich detail, the painful outcomes of the communists’ theory...