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The Currency of Socialism
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  • Page extent: 398 pages
  • Size: 228 x 152 mm
  • Weight: 0.73 kg

Library of Congress

  • Dewey number: 332.4/943109045
  • Dewey version: 22
  • LC Classification: HG1010.5 .Z38 2007
  • LC Subject headings:
    • Monetary policy--Germany (East)--History
    • Money--Germany (East)--History
    • Germany (East)--Economic conditions
    • Germany--History--Unification, 1990

Library of Congress Record

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 (ISBN-13: 9780521869560)

  • Also available in Paperback
  • Published March 2007

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$113.00 (C)

The Currency of Socialism


There is perhaps nothing so commonplace and yet so mystifying as money. But to European communists, money was clearly an instrument of economic exploitation and spiritual alienation. In this groundbreaking study, Jonathan R. Zatlin explores the East German attempt to create a perfect society by eliminating money and explains the reasons for its failure. Drawing on a wide range of sources, including unpublished communist reports, secret police files, literature, jokes, letters written by ordinary people, and conversations with key German politicians, this book shows how the communist regime undermined the political authority of socialism and created the material conditions for its demise. By exploring both the economic and the cultural function of money, Zatlin challenges traditional approaches to economic planning by offering a novel explanation for the collapse of communism in East Germany and a highly original interpretation of German unification. Written in an engaging and lucid style, The Currency of Socialism brings to life the scurrilous competition for power among communist officials and the everyday burdens experienced by ordinary East Germans.

Jonathan R. Zatlin is Assistant Professor of History at Boston University. He has published articles in German History, German Politics and Society, Theory and Society, Bulletin of the German Historical Institute, and H-German, among other journals. Zatlin was a co-winner of the Fritz Stern Dissertation Prize awarded by the Friends of the German Historical Institute in 2001.


Edited by Christof Mauch
with the assistance of David Lazar

The German Historical Institute is a center for advanced study and research whose purpose is to provide a permanent basis for scholarly cooperation among historians from the Federal Republic of Germany and the United States. The Institute conducts, promotes, and supports research into both American and German political, social, economic, and cultural history; into transatlantic migration, especially in the nineteenth and twentieth centuries and into the history of international relations, with special emphasis on the roles played by the United States and Germany.

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Roger Chickering, Stig Förster, and Bernd Greiner, editors, A World at Total War: Global Conflict and the Politics of Destruction, 1937–1945
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The Currency of Socialism


Boston University

Washington, D.C.

Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo

Cambridge University Press
32 Avenue of the Americas, New York, NY 10013-2473, USA
Information on this title:

1607 New Hampshire Avenue, N.W., Washington, DC 20009, USA

© Jonathan R. Zatlin 2007

This publication is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without
the written permission of Cambridge University Press.

First published 2007

Printed in the United States of America

A catalog record for this publication is available from the British Library.

Library of Congress Cataloging in Publication Data

Zatlin, Jonathan R., 1963–
The currency of socialism : money and political culture in East Germany / Jonathan R. Zatlin.
p. cm. – (Publications of the German Historical Institute)
Includes bibliographical references and index.
ISBN 0-521-86956-0 (hardback)
1. Monetary policy – Germany (East) – History. 2. Money – Germany (East) – History.
3. Germany (East) – Economic conditions. 4. Germany – History – Unification, 1990.
I. Title. II. Series.
HG1010.5.Z38 2007
332.4′943109045–dc22      2006016305

ISBN 978-0-521-86956-0 hardback

Cambridge University Press has no responsibility for
the persistence or accuracy of URLs for external or
third-party Internet Web sites referred to in this publication
and does not guarantee that any content on such
Web sites is, or will remain, accurate or appropriate.

For Katharina, Leora, and Max
םיחמש ונלכ ,דחיב ונחנאשכ


List of Illustrations page xi
List of Tables xiii
Acknowledgments xv
List of Abbreviations xix
  Introduction 1
1   Making and Unmaking Money: Monetary Theory and Economic Planning in East Germany 21
2   Accounting and Accountability: Financing the Planned Economy under Honecker, 1971–1980 61
3   Parsimony and the Prince: Crisis and Stability, 1980–1985 104
4   The Currency of Decline: The Dis-Integration of the East German Economy, 1986–1989 149
5   The Vehicle of Desire: The Trabant, the Wartburg, and the Discipline of Demand 203
6   Consuming Ideology: The Intershops, Genex, and Retail Trade under Honecker 243
7   Appealing to Authority: The Citizens’ Petitions and the Rhetoric of Decline 286
  Epilogue: Revisiting Reunification 321
Bibliography 349
Index 367

List of Illustrations

1   “Do you still doubt the existence of the GDR?” page 44
2   The “Big House” 57
3   General Secretary Erich Honecker, 1986 79
4   The Prince: Economic Secretary Günter Mittag, 1971 81
5   The regent and his retinue 114
6   SED leader Erich Honecker visiting West German Chancellor Helmut Kohl, 1987 119
7   Honecker’s Politburo, 1977 131
8   Franz Josef Strauß, Erich Honecker, Günter Mittag, and Alexander Schalck-Golodkowski in Leipzig, 1987 141
9   A meat counter in the town of Siedenbolltin, 1985 152
10   Value of the East German mark, against the DM and US $, 1949–1989 169
11   Open inflation in the GDR, 1981–1987, measured in terms of productivity 171
12   Open inflation in the GDR, 1980–1987, measured in terms of purchasing power 171
13   Erich Honecker, Willi Stoph, Mikhail Gorbachev, and Gerhard Schürer at the Eleventh Party Congress, April 1986 192
14   The Trabant 601, 1975 221
15   The Trabant 1.1, 1989 222
16   The Barkas 1000 light van in 1989 223
17   The Wartburg 311 in 1964 224
18   The Wartburg 1.3 in 1988 225
19   Order slip for a Lada 2107, 1987 228
20   “You must have forgotten to roll the windows all the way up last night!” 231
21   Intershop sales and revenue, 1962–1989 254
22   Intershop sales and revenue growth rates, 1971–1989 279
23   West German Chancellor Helmut Kohl and East German Prime Minister Lothar de Maizière, May 1990 337
24   Overtaken but not caught up 345

List of Tables

1   East German Trade Imbalances with the West, 1970–1980 page 70
2   Net and Per Capita Debt: GDR, Poland, and Romania, 1971–1979 76
3   East German Trade Imbalances with the West, 1980–1989 123
4   Comparative Productivity Rates: SED Estimates as of 1989 162
5   Automobile Production in East Germany, 1938–1989 208
6   Intershop Sales and Revenue, 1962–1989 253
7   Political Map of Intershop Trade, 1971–1989 278
8   Written and Oral Petitions Addressed to the Council of State, 1961–1989 300


Soviet-style regimes officially encouraged all sorts of communal endeavors, including the writing of books. In East Germany, however, “collective authorship” rarely translated into real cooperation or intellectual exchange, constricted as the work was by the compulsion to ideological precision, the lingering hierarchies of German academic traditions, and the power relations that pervaded the dictatorship. In contrast, this book is in many ways truly the product of a collective enterprise. I feel fortunate to have benefited from a remarkable combination of institutional and intellectual support during the time that it has taken to write it.

   I am grateful to the many organizations that have supported my research over the years. A Fulbright Research Grant brought me to Germany in 1994, and the Social Science Research Council–Berlin Program for Advanced Studies kept me there for another year. The Institute for the Study of World Politics provided me with the opportunity to conclude my research and begin writing. The University of California at Berkeley furnished me with the financial means to finish writing. During my time at Berkeley, I had the good fortune to enjoy a Chancellor’s Dissertation-Year Fellowship, a Hans Rosenberg Fellowship twice, a John L. Simpson Memorial Research Fellowship, a Reinhard Bendix Memorial Research Fellowship, and a Fellowship at the Doreen B. Townsend Center for the Humanities.

   In 2001, the dissertation out of which this book emerged won the Fritz Stern Prize. I am grateful to James Brophy, Lisa Heinemann, and Jonathan Petropoulos of the Stern Prize Committee and to the German Historical Institute for its continuing and generous support of my work. My thanks to Boston University for granting me a release from teaching to revise the manuscript. German History, the Klartext Verlag, and Zeitschrift für Geschichtswissenschaften have kindly granted me permission to reproduce portions of articles that they previously published (“The Vehicle of Desire: The Trabant, the Wartburg, and the End of the GDR,” in German History 3:15 (1997), pp. 358–80; “Consuming Ideology: Socialist Consumerism and the Intershops, 1970–1989,” in Peter Hübner and Klaus Tenfelde (eds.), Arbeiter in der SBZ-DDR (Essen, 1999), pp. 555–72; “Eingaben und Ausgaben: Das Petitionsrecht und der Untergang der DDR,” in Zeitschrift für Geschichtswissenschaft 45:10 (1997), pp. 902–17).

   I am deeply indebted to the many people who facilitated my research. Agnes Petersen at the Hoover Institution was instrumental in helping me find sources. The archivists and librarians at SAPMO, and especially Solveig Nestler, Carola Aehlich, Frau Müller, and the late Volker Lange, were most generous with their knowledge of the party archives and enlivened many a gloomy Berlin day with their humor. Frau Bossier at the Bundesarchiv in Berlin and Frau Gruenspek in Coswig gave me excellent advice. Kurt Schober at the Gauck-Behörde and Berit Pistora at the Bildarchiv in Koblenz were wonderful to work with. Richard Lindenlaub and Manfred Körber at the Deutsche Bundesbank were kind enough to help me obtain interviews with past central bank presidents. The imperturbable Henryk Skrypzcak helped me gain access to East German politicians and provided me with much-needed encouragement. I am grateful to the late Gerhard Rambow for educating me about Germany and sharing his experiences at the West German Economics Ministry over the years, and to Hans Koschnick for assisting me at the beginning of my career. I would also like to thank the many East and West German officials who spent hours educating me and supplementing the archival record.

   This book has greatly benefited from the encouragement and constructive criticism of many friends and scholars. In Berlin, Wolfram Fischer, Carl-Ludwig Holtfrerich, and Heinrich August Winkler were kind enough to let me sit in on their doctoral seminars and present portions of my work. Hartmut Kaelble took the time to guide me through questions of social history, and Klaus Tenfelde provided me with several opportunities to test my ideas. Wolfgang Seibel’s thoughtful restatements of my central argument made me aware of the importance of this project and gave me the courage to continue with it. I am grateful to Richard Bessel, Warren Breckman, Lord Ralf Dahrendorf, Bernhard Debatin, Christhard Hoffmann, Hans-Hermann Hertle, Wolfram Kaiser, Anthony Kauders, Mary Sarotte, and Patricia Stokes, who took the time to make valuable criticisms of my work. Jonathan Wiesen and Katherine Pence have provided me with insightful analysis and stimulating friendship over the years.

   I am greatly indebted to all of those who have commented on portions of the manuscript, and especially Tom Brady, John Connelly, Barry Eichengreen, Amy Leonard, Carina Johnson, Alf Lüdtke, Elliot Neaman, Heath Pearson, Norma von Ragenfeld-Feldman, James Sheehan, and David Woodruff. Corey Ross’s sophisticated assessment of my use of economic and cultural analysis proved invaluable when it came to reorganizing the book. Jonathan Steinberg’s brilliant observations helped me understand once again what it is that I am attempting. Hans-Helmut Kotz, whom I have known since my days as a journalist in Frankfurt, took the time to comment in great and useful detail on the manuscript. Margaret Anderson, whose unerring sense of style has rescued many a weak paragraph, helped me understand the historiographic contexts in which my arguments matter. Carla Hesse managed to sum up the entire book in one word on the way to lunch one sunny Berkeley day; I only wish I could be as concise. Jason Scott Smith and Monica Rico suffered through various iterations of numerous chapters and helped clarify my arguments. Scott Tang has allowed me to bounce ideas off him, both on and off the squash court.

   My colleagues in the history department at Boston University, especially Barbara Diefendorf, Charles Dellheim, Fred Leventhal, Ezra Mendelsohn, Jon Roberts, and Julian Zelizer, have been exceedingly generous with their advice and help. Lou Ferleger sacrificed the better part of a summer helping me tighten the book, for which I will be eternally grateful. Jeffrey Kopstein and Harold James, who read the manuscript for Cambridge, made suggestions that have greatly improved the book. I would also like to express my thanks to David Lazar of the German Historical Institute for his advice and encouragement and to Lew Bateman at Cambridge for supporting the book in every way. To all my colleagues and friends, who are too numerous to name, my sincere thanks.

   This book has been deeply influenced by two brilliant and generous but very different teachers. I have profited greatly from Martin Jay’s ability to infuse the most static of arguments with life, to uncover the intellectual lineage of the most recondite positions, and to reembed the academic in the private. Working with Marty has greatly expanded the intellectual horizons of my work. My relationship with Gerry Feldman has been a constant source of professional enlightenment and personal joy. His tremendous generosity, intellectual encouragement, sense of humor, keen historical instincts, and even his daunting productivity have made me a better historian.

   There are many others without whom this book would not have been possible. Gerd-Rüdiger Stephan introduced me not only to books and people, but also rescued me many a time from Berlin’s worst weather. I am especially grateful to Catherine Epstein and Andrew Zimmerman for their intellectual rigor as well as their friendship. Peter Blitstein’s analytical precision and steadfast friendship have helped me understand why anyone bothers to write books. Laurie Case and Tim Davis helped me finish this book and enjoy it, too. I want to thank my brother Andrew and my mother Linda for their love and support. My mother, whose love of words is what convinced me to write, spent hours editing this manuscript – a true labor of love for which I am grateful. Finally, I could not have invented better companions with whom to share this journey than my wife Katharina who has made my East her West, and my children Max and Leora, who quite correctly believe books without pictures are uninteresting: They have all become adept at reminding me that the present can never be recovered, not even as the past.

   While I do imagine this book as a collective enterprise, the liberal emphasis on the individual must nevertheless have the last word: Despite the kind assistance of these scholars and friends, I alone am responsible for the views expressed in this book.

List of Abbreviations

AHB Foreign Trade Enterprises (Außenhandelsbetriebe)
BArchB Federal Archives in Berlin (Bundesarchiv Berlin)
BStU Federal Representative for the Materials of the State Security Service of the Former German Democratic Republic (Bundesbeauftragter für die Unterlagen des Staastsicherheitsdienstes der ehemaligen Deutschen Demokratischen Republik)
CDU Christian Democratic Union of Germany (Christlich-Demokratische Union Deutschlands)
CoCom Committee for Coordinating East-West Trade
Comecon Council for Mutual Economic Assistance
DIW German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung)
DM West German mark (Deutsche Mark)
ESS Economic System of Socialism (Ökonomisches System des Sozialismus)
GDR German Democratic Republic
Genex Gift Service and Small Export Company (Geschenkdienst und Kleinexport GmbH)
FDGB Free German Trade Union (Freier Deutscher Gewerkschaftsbund)
FRG Federal Republic of Germany
HA ⅩⅧ Economic desk at the Ministry for State Security (Hauptabteilung ⅩⅧ)
HO Retail Organization (Handelsorganisation)
IFA Industrial Association for Automotive Construction (Industrieverband Fahrzeugbau)
KoKo Commercial Coordination Area (Bereich Kommerzielle Koordinierung)
MEW Marx-Engels Collected Works (Marx-Engels Werke)
MfS Ministry for State Security (Ministerium für Staatssicherheit)
Ministry for ALF Ministry for General Machine, Agricultural Machine, and Automobile Construction (Ministerium für Allgemeinen Maschinen-, Landwirtschaftlichen Maschinen- und Fahrzeugbau)
NATO North Atlantic Treaty Organization
NEP New Economic Policy
NES New Economic System (Neues Ökonomisches System)
OibE Stasi Officer on Special Assignment (Offizier im besonderen Einsatz)
OPEC Organization of Petroleum Exporting Countries
Politburo Political Bureau of the Central Committee (Politisches Büro des Zentralkomitees)
Riko directional coefficient used in calculating the value of the East German to the West German mark (Richtungskoeffizient)
SAPMO-BA Foundation Archive of the Parties and Mass Organizations of the GDR in the Federal Archives (Stiftung Archiv der Parteien und Massenorganisationen der DDR im Bundesarchiv)
SBZ Soviet Zone of Occupation (Sowjetische Besatzungszone)
SED Socialist Unity Party of Germany (Sozialistische Einheitspartei Deutschlands)
SMAD Soviet Military Administration
SPD Social Democratic Party of Germany (Sozialdemokratische Partei Deutschlands)
Stasi Ministry for State Security (Ministerium für Staatssicherheit)
USSR Union of Soviet Socialist Republics
VEB People’s Own Factory (Volkseigener Betrieb)
ZK Central Committee (Zentralkomitee)

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