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  • The Currency of Socialism: Money and Political Culture in East Germany
  • Donna Harsch
The Currency of Socialism: Money and Political Culture in East Germany. By Jonathan R. Zatlin. (Washington, D.C.: German Historical Institute, and Cambridge, UK: Cambridge University Press, 2007. xx plus 377 pp.).

Jonathan Zatlin has written an innovative book that combines economic theory and data with political, cultural, and social history to construct a compelling interpretation of the demise of East Germany. Zatlin agrees with scholars who [End Page 491] emphasize the economic causes of the GDR’s decline and fall. He, however, deepens and broadens the dominant theoretical explanation of the East German economic failure. Most analyses of the downfall of the GDR and other Communist planned economies point to their faulty and distorted pricing mechanism as the cause of scarcity. Zatlin too sees problems with pricing as significant. He argues, though, that this explanation identifies a secondary, not a primary, cause of economic failure. Fundamental was Communist hostility to money, an antagonism which was “both logically anterior to price control and more basic to the socialist project” (14).

Rooted in pre-Marxian socialism or even in a pre-capitalist popular mentality, Communist denigration of the legitimate and critical economic role of a stable, internationally exchangeable currency motivated myriad practices that generated scarcity of both productivity gains and of consumer goods. At the production level, it undergirded reliance on an inefficient, backward system of semi-barter and resource-hoarding. At the consumption level, it led to the substitution of GDR money with time, barter, and hard-currencies. The ironic consequence was that the socialist economy became gradually more dependent on financial infusions from hard-currency loans from West Germany (FRG). East Germans, meanwhile, came to rate their soft-currency as worthless relative to the Deutsche Mark (DM) and, indeed, to fetishize the DM as almost magically powerful. The egalitarian promise of socialism was gutted as people observed the spread of Intershops where only East Germans who had access to Western currencies could shop.

This argument is doubly original. It shifts the economic locus of socialist scarcity from price-formation to the bedrock of the means of exchange. It elegantly unites a materialist explanation of state-socialism’s crisis with a symbolic analysis of the gutting of socialism as an ideological “currency.” Zatlin’s interpretation of the crisis of socialism is, thus, parsimonious and intellectually satisfying.

The Currency of Socialism develops this interpretation from several methodological angles and supports it with a wide range of evidence. Most basically, Zatlin offers an economic history of the German Democratic Republic (GDR) from the rise to power of Erich Honecker in1970/71 to the phased implosion of the GDR from mid-1989 to autumn 1990. He makes a complex story intelligible and interesting, even intriguing, to the non-economist reader. He also discusses the political side of economic developments. The book shows that, despite Honecker’s iron grip on political power, his hold on financial and production policy was considerably less than total. Zatlin details the behind-the-scenes maneuvering of Günter Mittag, the Central Committee’s secretary for economic affairs, as he worked to stem the effects of Honecker’s economic profligacy, while always presenting himself as completely loyal to the leader of the ruling Socialist Unity party (SED). Mittag and other SED officials typically are portrayed as colorless men who stand out only as dreary authoritarians. Zatlin brings them to life as backroom schemers, as public power-mongers, as serious, if seriously flawed, economic planners, and as dedicated, if increasingly perplexed, ideological Communists. [End Page 492]

Zatlin vetted a very wide array of archival documents from SED and GDR collections, including official materials from four ministries and other state agencies and from the Politburo and its central offices, as well as hundreds of the petitions written by ordinary East Germans about all manner of economic issues. He gathered and analyzed reams of statistical data. He conducted an amazing set of interviews with people who were key players during the Honecker era. He read numerous newspapers and periodicals published in the GDR and the Federal Republic. The book incorporates the findings and insights of the GDR...


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