In the wake of the fall of Honecker’s regime, not only the party, but also most other institutions that had been subject to the party, were now free to reform themselves. And so was the entire economics profession. The common expectation among East German economists, in spring 1990, was a reform from within of their profession as of their state (Selbstreform), rather than their end.

In the first faculty meetings at Humboldt University, in January 1990, there was agreement that the local strength, compared to West German departments, lay in the faculty’s diversity, which should remain the focus in future. Despite its specialization in public finance, the faculty hosted business administration, demography, ecological economics, economic history, computer science, and economic pedagogy. The new profile of the faculty also put emphasis on the location of Berlin as an intermediary between East and West. They wanted to meet the “tasks of Berlin as a central European hub for economic integration in the European community.” (Schmerbach and Günter Reference Schmerbach, Günter, Keuper and Puchta2010: 402) Free elections took place, and Johannes Gurtz was replaced as dean by Klaus Kolloch.

Also at the Higher School of Economics, the fall of the old Politburo was seen as a chance of renewal.Footnote ¹ Some wished to provide input into the debates about economic reform at the New Forum, something that the CC Academy for Social Sciences, for example, refused to do. In January 1990, those close to the old Politburo were voted off, most notably Christa Luft, who was replaced by Rudolf Streich as head of the school. Also in January, the institute for security protection (Geheimnisschutz) that had collaborated with the Stasi was closed at the school’s initiative. After further personal cleansing, and the application of early retirement rules, in spring 1990, 120 of around 180 professors had left, a number that showed the closeness of the school to the old party regime. In this process, those who had been oppressed professionally in the preceding years were in part promoted through a committee of “rehabilitation.” However for some, these changes were not radical enough. In summer 1990, some complained that former “Stasi employees, Stalinist leaders, and party officials” kept on working in disguise, preventing “democratically minded and technically competent” colleagues from taking over.Footnote ²

At the Academy of Sciences, there were efforts for self-reform at a round table that met for the first time as late as February 1990.Footnote ³ As they knew of the Western model of provincial rather than national academies, they emphasized the national unity of the Academy of Sciences. The easiest part was to cancel reference to the party in the statutes, even if some natural scientists, notably the biochemist Samuel Mitja Rapoport, were against this. The party organizations, as everywhere, were abandoned. Elections took place in May, and Horst Klinkmann replaced Werner Scheler as president. But apart from these formal procedures, there was little that had been done. Would it be enough to remove references to the party, and go on with science as usual?

Dieter Klein also prepared academically for new times. As a platform for the continuation of the research on modern socialism, and still in his function as a vice-rector, in February 1990 he founded the Institute for Interdisciplinary Civilization Research, which hosted all sorts of social and natural scientists.Footnote ⁴ Klein knew of the difficult conditions for the continued existence of the institute. The media and newspapers were quick to taghim as one of those who belonged to the old regime. In public perception there was little space between “oppressive regime” and “liberated people.”Footnote ⁵ He thus tried to create a politically sustainable profile for the institute by inviting prominent speakers such as Jürgen Habermas and Cornelius Castoriadis, “partly to expose us to their criticism, partly to gain their support.”Footnote ⁶ Their research program developed the idea of a “double transformation” of the West and the East, in contrast to grafting the Western onto the Eastern model of society. The modernization of socialist societies would be an occasion, he argued, for a modernization of capitalism – combining, as it were, the historical lessons of the political economy of capitalism and socialism in a post-socialist era.Footnote ⁷ Most of the former members of the project on modern socialism, such as Brie, Segert, Ettl, and Jünger, took part. Under the new historical conditions, however, they understood that their political self-identity was less coherent than before, when they shared a common point of critique: the old regime of Honecker and then Krenz. Rosemarie Will tended toward social democracy, Rainer Land had already found his own Independent Socialist Party, critiquing Modrow as just another Krenz, and Brie left the board of the party once his proposal of self-dissolution of the party was rejected. Segert, in contrast, was simply exhausted by politics.Footnote ⁸

In this process of self-reform, there were also those who always followed the swings of the party, and now equally showed themselves to be very adaptive to the new conditions. One of them was Erwin Rohde. Still head of the area of international finance until June 1990, he believed that he could contribute to the framing of the new regime, considering his “privileged” knowledge of the West German market. In March 1990, he wrote on the question of ownership of public firms.Footnote ⁹ Anticipating that Western firms might take over many of the assets of East German firms, he argued that publically owned firms could be transformed into stock holdings, which would be distributed among the citizens as well as the workers. Each citizen would become owner of an investment certificate, thus sharing one out of sixteen million shares of the economic capital. Small firms could be bought by GDR citizens rather than sold to West German firms. Their sales revenues should be distributed equally among GDR citizens, which in turn could be used for a “reconstruction fund” for infrastructure projects.

Rohde also took an active position in the debate about the currency reform in spring 1990. In a number of talk, he vigorously argued for an exchange rate of 1:1 for the East German and West German mark.Footnote ¹⁰ He took this position in light of the demand shock for Western products that resulted in a black market exchange rate of 1:20. In spite of the enormous debt of the GDR, such an exchange rate would not cause inflation, he argued. Only a selected number of industries that produced goods in high demand in East Germany (cars, tourism, and electronics) would be affected by monetary integration, while the rest of the economy could go on as usual. He argued for a quick depreciation of the liabilities of East German firms, which could lead to a quick economic boom. He submitted his position to the newspaper Handelsblatt in the form of a fictitious interview with the editor pretending that the newspaper had contacted him as an expert. He tried to convince the editor of the importance of his idea: “My suggestions could be the solution and the Handelsblatt brought them up first” (NR 48, 1). Rohde wished to partake in the public discussion as an expert, but his voice was hardly heard. The article was not published.

The end of the GDR came in a matter of months. At the central round table, the focus was on the illegality and violence exerted by the party regime that was strongly associated with the dismantling of the Ministry for State Security. On January 15, the main Stasi building in Berlin was occupied, which was one of the great reliefs and successes of the civil movement. While people requested access to their personal documents, the ministry managed to destroy several files, notably those of the HV A. It thus changed the history that would and will be written about the GDR. This applies, as we have seen, also to documents that could have been crucial for the preceding narrative. Possibly, we could have learned more about Erwin Rohde, Harry Maier, Dieter Klein, Ernst Strnad, and Arne Benary, and many others mentioned in this book.

In order to quickly fill the absence of power in the society, in January, Modrow agreed with the central round table on early elections in March instead of May. In response to a wave of massive withdrawals from the party, the SED-PDS acknowledged the need for a clearer cut with the past, and changed the name to PDS only. It was also then that public opinion about the future of the GDR changed rapidly, which was shocking to everyone who still believed in its future. Between mid-November and mid-February the belief in a reform of socialism sank from 86 percent to 56 percent, and support for reunification increased from 48 percent to 79 percent, according to opinion polls of the time (Sabrow Reference Sabrow2010: 11). Though the voice of the people was not unified, there was less and less that could convince the population that the anarchic situation could be stabilized by its own institutions or forces – be it the round table, the People’s Chamber that was not yet voted for, or the old party that was in an existential crisis. The class consciousness of the so-called party base dwindled away in a matter of weeks.

In this vacuum of power, the doors were open for international will to act upon the GDR. When Modrow came back from a visit to Gorbachev at the end of January, he changed course toward reunification, and accepted members of the round table into his transitional government. In February, at a conference in Ottawa, the first agreements were made for the so-called 2+4 negotiations between East and West Germany, on the one hand, and the United States, France, Great Britain, and the Soviet Union on the other. On March 18, the political direction was made offical through elections. With a turnout of 93 percent, 40 percent voted for the conservative party of Chancellor Helmut Kohl, 22 percent for the SPD, and 16 percent for the PDS. The “third way” of the PDS was indefinite and vague in terms of content, and considered an “embarrassing utopianism” with respect to the new stability that the West German conservative party promised (Sabrow Reference Sabrow2010: 12). In the city of Berlin, however, the PDS received 30 percent while the CDU received only 18 percent of the votes. Once the conservative Lothar de Maizière was in charge of negotiating internationally the future of East Germany, it was only a question of time before the four superpowers would agree on reunification.

The central round table was active until the local elections early May. In just a few months, they not only dissolved the Stasi but also proposed a new constitution. Some of the ideas of the theory of modern socialism entered into this draft, notably through the presence of Rosemarie Will, who was the only former SED reformer accepted by the civil groups. On April 4, the draft constitution for the GDR was presented to the newly elected People’s Chamber, but it was never discussed, be it in the form of a new GDR constitution or a new all-German constitution. The new conservative government, aligned to the politics of Chancellor Helmut Kohl, was ready to sign the unification treaty without any constitutional consequences for West Germany. The monetary union was decided by May 1990, in July Gorbachev agreed with the conservative’s intention, and in August the reunification agreement was signed, coming into effect in September 1990. The hopes and enthusiasm that informed the attempts at self-reform were squashed.

Once the unification treaty came into effect, the new legislation would dismantle those institutions that were considered “close” to the party state – the profession of economics being one of them.

The Dismantling of East German Economics

The unification treaty defined the criteria for the extraordinary contract termination that was applied until October 1992 to all academics. Those who held public elective offices or special tasks in the party, and those detectably active as Stasi informants, were no longer employed. After the self-reforms had already made many leave, these terminations applied to 10 percent of the staff at Humboldt University, with the number of economists dismissed being below this average.Footnote ¹¹ As most left without being forced, only some tried to get by. Rudolf Mondelaers, for example, made it into the restructuring commission for the new faculty before being identified as an informant of the Stasi.

Aside from individuals, more problematic was the question of what to do with entire institutions and disciplines that were considered to be too close to the party regime. The treaty demanded a so-called winding up (Abwicklung) – that is, they were to be closed with an incremental plan for replacing them, if necessary. For those that were not to be replaced, the change was radical but came relatively quickly. The Higher School of Economics, for example, was wound up without replacement. An evaluation committee set up by the Berlin Senate had proposed this in December 1990 since it was not considered to fit into the science system of the united Germany:

Despite protests from the new rector, who compared the process unhappily with the National Socialist book burning, the Higher School of Economics was dissolved in October 1991. The staff were laid off collectively without individual evaluation, the remaining students were sent to other universities, and the building was used as an external campus of the Applied University for Technology and Economy (Fachhochschule für Technik und Wirtschaft). The former academic staff founded, in fall 1991, the “Karlshorst employment and qualification company” that was to organize qualifications measures to find jobs in the new Berlin. The higher the former qualification, the more difficult it was to find a job.Footnote ¹²

The Academy of Sciences suffered a similar fate.Footnote ¹³ In June 1990, its legal status was suspended and it became a corporation under public law. That is, the elected positions were handed over to public servants. Once the West German mark was introduced, most of the contracted research with Eastern industry broke down. In July, the sixty institutes were evaluated one by one. Six out of fifty-five institutes were closed down, economics being one of them. The remaining large majority were newly founded as part of, or integrated into already existing, Western research institutes such as the Helmholtz Society of German Research Centers, the Fraunhofer Society, and the Max Planck Society. In addition, the Berlin Senate decided that the Academy of Sciences did not represent the tradition of Berlin’s former Academy of Sciences. Thus, in 1992, the academy was formally dissolved. In accordance with the West German model of provincially based Academies of Sciences, the so-called Berlin-Brandenburg Academy of Sciences was founded (Berlin-Brandenburgische Akademie der Wissenschaften). More than a hundred former academy members, instead, felt that this new institution did not represent their tradition and founded the so-called Leibniz Society, a registered association without academic recognition. Observing the dismantling of his former institutions of the Academy of Sciences, as if still personally attacked, Harry Maier protested strongly. He wrote ardent articles in Die Zeit bemoaning the sellout of the Academy of Sciences.Footnote ¹⁴

It was only in the case of the economics faculty at Humboldt University that the winding up was followed by a rebuilding of the institution rather than the closing of it. This is still remembered as a traumatic event. The Berlin Senate drew a precise line between ideology and science at the divisions between disciplines. Philosophy, history, education, law, and economics counted as faculties that were constitutive for the regime and thus had to be replaced, while all other disciplines received a free pass into the Western regime; recall that Marxism-Leninism was the foundation of all sciences in East Germany.Footnote ¹⁵ In the faculty of economics, in January 1991, all previously tenured contracts were converted into temporary contracts. This gave way to the possibility of applying for one’s own post in competition with others. De jure, this showed a willingness to exploit the given potential, but de facto, this decision was equivalent to a layoff, because the requirements made it impossible for most professors to win back their positions. Evidently, publishing in a Western journal for East German economists was by no means encouraged, to say the least. Deterred, many left voluntarily, and took advantage of early retirement. The age limit was continuously reduced, which gave the entire hope generation the opportunity to retire.Footnote ¹⁶

Erwin Rohde retired in this period, too. As an expert on Western finance, he thought until late on that he would play a role in the transition into the new regime of economics (NR 22, 21). He offered a class that aimed to prepare students for jobs in Western finance and that resembled his previous class without the political undertones. But this did not happen. In May 1991, the rector of the university, Heinrich Fink, informed him that an inquiry had been made regarding whether Rohde was active for the Stasi, in which case he would not be allowed to be employed further.Footnote ¹⁷ Considering his role as a vice-rector, in charge of military finance, and then international finance, the anticipated result of such investigation might have made Rohde push for early retirement. He doubted the legality of the investigation since, as he argued, he did not reapply for his own job in public service. “I wish to be retired at the earliest possible occasion and have no intention to hold on my employment relationship,” he wrote in response to Fink on June 19, 1991. Before official retirement, he was on a sick leave because of high blood pressure.Footnote ¹⁸ Having quarrels about payrolls that he believed were unsettled, since July 1992, he received a disability pension, and then in September 1992, aged sixty-five, he officially retired.

Klein’s Institute for Interdisciplinary Civilization Research was not considered suitable for the knowledge landscape of Germany’s new capital. Already before reunification, an honorary commission at the university that evaluated further employability despite party functions or Stasi collaboration declared that Michael Brie, who did not hide his activities as a Stasi informant, was not suitable for further employment.Footnote ¹⁹ This did not help the further existence of the institute, and in June 1991, it was wound up because, as it was argued, it did not have the disciplinary structure of a (West German) political science institute. The chance of a “double transformation” that Klein and the other institute members envisioned for West Germany, Europe, and the entire globe was not seized upon. The system change in the East was a missed opportunity for the West to face its incapacity to solve an ever-increasing global crisis, he argued. The West remained in its old pattern.Footnote ²⁰

According to the reunification laws, Klein, as a former vice-rector and district secretary of the SED, should have left the university. However, Friedhelm Neidhardt, a liberal social democrat, head of the Berlin Social Science Research Center (Wissenschaftszentrum Berlin für Sozialforschung), and chairman of the restructuring commission at the department for social sciences, was well disposed toward Klein. After several positive reference letters from all around the globe, as well as from Egon Bahr in Hamburg, Klein received a so-called excess professorship between 1992 and 1996 for the “economic foundations of politics” at the department for social sciences. Due to a lack of personnel in this transition period, he had to carry out all sorts of administrative jobs as the head of the doctoral committee, the examination committee, and the undergraduate committee. Having contributed to the development of the new curriculum, when the new Western professors were appointed, it was accepted that he would stay. As late as 1997, he retired and continued teaching for another two years until 1999.Footnote ²¹ During these ten years after the fall of the wall, Dieter Klein published an astonishing number of articles and books. It was one of his most prolific periods. He described this period as the “liberating effect of a defeat,” appreciating previously unknown liberty as a writer, as a person, and also as a voter.Footnote ²² However, at the same time, his previous views of capitalism were confirmed.

For the younger generation at Humboldt University, the reunification meant a harsh and humiliating end to their careers. Those who tried to survive in the new economics profession witnessed the most radical cleansing in the history of the faculty, more radical than in 1933 and 1945.Footnote ²³ During the shortest period of time, Western research standards and teaching practices were enforced without considering the local potential of the previous regime. Hardly anyone from the previous regime was believed to fit into Western economics as they did not meet the new imperative of being “internationally competitive.” For the younger generation in their mid-forties, the reform meant a radical rupture in their careers, falling from an elite status to being suspected of being politically inept. Some indeed sat in the lectures of West German visiting professors, to learn about shifting demand and supply curves, in preparation for competing some months later with economists who had received their PhDs in Bonn or Boston. They should have been given years to prove themselves, not a few months, according to one of the junior economic historians of the time (Frank Zschaler, personal communication).

The air became rarefied in the spring of 1991, when it became clear who would run the restructuring commission, and decide who would reobtain their jobs: Wilhelm Krelle. Krelle was a founding father of West German mathematical economics at the University of Bonn, and had brought up an entire generation of economists that held dominant positions in West German faculties.Footnote ²⁴ Krelle, who was clearly against Marxism and a conservative in political terms, was one of those economists for whom method counted more than content, which contrasted starkly with the methodological eclecticism and pragmatic imperative prevailing in East Germany. He is quoted as saying that “no Marxist will put his foot over the threshold of this house as long as I am in charge.”Footnote ²⁵ Any other economist would have been more sensitive to the potential in Berlin. There were indeed several professors in the West who saw in the restructuring of East German universities a reform opportunity for the West German university system, but Krelle did not belong to that group. One spoke of a “clear-cutting” (Kahlschlag), a “human drama.” “All attempts to rescue some of the ideas of the older education system that were worth keeping were futile,” one of the members reported (Kolloch Reference Kolloch and Thießen2001a: 298).

In the midst of this process, Humboldt University as the only East German university sued the city Senate against the law of the wounding up (Abwicklung). In March 1992, the Higher Administrative Court indeed declared it illegal. The law required a closing down of the institution followed by a reopening, in contrast to the practiced restructuring of one and the same institution. The problem of whether epistemic regimes could be reducible to one another, therefore, was also negotiated on a legal level. The restructuring commission was nonetheless allowed to continue working, now under a different title. As a consequence, all of the staff, if they had not already left the section, were reemployed. By then, however, it was already too late for many. In 1993, of all the former scientific staff only the economic historian Lothar Baar and two junior positions were still employed at the faculty.Footnote ²⁶ The new faculty profile was supposed to be “quantitative” – that is, econometric – in contrast to the faculty at the Free University. Once Krelle left, his equally famous colleague from Bonn, Werner Hildenbrand, came as a visiting professor for a semester and, with the help of Wolfgang Härdle, attracted funds from the German Science Foundation, a so-called Sonderforschungsbereich – “Quantification and Simulation of Economic Processes.” After the new faculty was built up, in 1994, Krelle was granted an honorary doctorate.

In 1996, this decision was revised once Krelle’s past during National Socialism became public. Krelle suspected a smear campaign by former professors, though the hunt might have been launched by a former student of the faculty who asked a private detective to investigate, who in turn found a left-wing journalist, Andreas Förster, from the Berliner Zeitung to report about it.Footnote ²⁷ Krelle had been a major in the German army (Wehrmacht) and served under Rommel in Africa. In August 1944, he was removed to the SS division Götz von Berlichingen, which had committed serious war crimes. The Senate appointed a committee and concluded: “SS-fighter yes, SS-member no. Posting to the Armed-SS yes, but not voluntarily. SS-major (Sturmbannführer) yes, but only on paper.”Footnote ²⁸ The humiliation was deep. If the denazification in West Germany had been carried out as strictly as in the East – which was a point of national pride for East Germans – Krelle could not have had an academic career at all. Combined with the personal disappointments of those who lost their jobs and social status from one day to another, Krelle’s unearthed past cast a bad light on the reform at Humboldt University.

While for the young, reunification often meant a fall from the status of social elite to that of social welfare, the entire hope generation could retire jointly with their state. Without existential rupture, their retirement age often shows a remarkable continuity with their previous professional life. One of Rohde’s colleagues, Johannes Gurtz, the last dean of the economics faculty, sought new professional opportunities in the unified Germany. Convinced that the practical skills the economics faculty represented were not limited to the system of the GDR, Gurtz launched his own private school outside the new academic regime, a teaching institution for local administrators called the Local Educational Institute (Kommunales Bildungswerk). With the knowledge of the old system, this was an advanced learning institute for channeling the old provincial administration into the new system. The same people who had previously been taught at the faculty would now be taught at the institute. Rohde and several other former professors of finance would occasionally give classes at this school. They helped each other out.

For Klein as a political economist of capitalism, there was a great deal of continuity between his professional career in East Germany and his retirement age in West Germany. Remaining true to the new party of which he shaped the foundations, the PDS, he took over official tasks. In 1997 and 1998, he was a member of the PDS Board of Executives, and in 1998 a member of the Commission of Principles of the PDS (Grundsatzkommission). He thus remained an important figure in the recreation of the party in a bourgeois parliamentary context. His ideas were still nourished by those developed in the project on modern socialism.Footnote ²⁹ Later on, he became active in the Rosa Luxemburg Stiftung, the think tank of the PDS, later renamed Die Linke. Until 2008, he was the chair of the Future Commission of the Foundation. Klein’s intellectual career thus shows an astonishing, and for him happy, continuity as he never stopped analyzing the current state of capitalism from the socialist point of view. “I was back home again, as it were. Because this was the party [the PDS then Die Linke] which followed my ideal as it did before, and rejected the society which I always believed and still believe does not solve the great problems of humanity” (Klein interview 2021). Though he had been always skeptical of the discursive game of bourgeois parliamentarism, he accepted that he had to play it to some extent. In hindsight he would say that he was never against parliamentarism per se, but against parliamentarism as an element of capitalist power relations:

Instead of reforming socialism, his goal is now, in contrast to a revolution, a long process of transformation. The victory of socialism will be the result of a profound evolutionary change rather than a series of national revolutions. This is clearly no longer the Marx of the Old Communists, but it is still the same tireless reform spirit that was critical for the stability of the GDR. On his 70th birthday, in 2001, Michal Brie wrote in Neues Deutschland, a newspaper that still exists today: “Neither Dieter Klein nor others were able to reform the socialism of the GDR in a way that render it viable, but he did help to keep the idea of a liberal and egalitarian socialism alive.”Footnote ³⁰ After the reform is before the reform.

***

The hopes of building up a socialist state failed. Hardly anyone from this generation, however, fell into melancholia. Some were interested in engaging with the new state, others lived out their retirement in quietude, but hardly anyone changed his or her mind. The two basic sentiments of their early careers, their gratitude toward the liberators, and the faith that socialism is the superior answer to the failure of Nazism, never left them. When speaking to those that are still alive, they show pride in their past, but are also willing to admit errors – both deeply ingrained in their generational being. They are ready to admit that they could have done better, and regret that they did not put the party regime into question earlier when there still was the chance to reform socialism from within.

The careers of the protagonists in this book began in gratitude, a feeling that transformed into loyalty, careerism, reform will, duty, and an unbroken hope for a truly democratic socialism to come. What prevails at the end of their careers, in contrast to the humiliation that the younger generation experienced, was again a feeling of gratitude. They show satisfaction with their careers, grateful for the historical chance they had. As Kolloch, the first elected dean at Humboldt University, said: “I am grateful that my professional activities under socialist relations of production could contribute to comradely cooperation and mutual assistance” (Kolloch Reference Kolloch2009).

Since the new social reality in which the East German population found itself resembled what has been taught about capitalism, many aged with the confidence that one day socialism will prevail. Their socialist beliefs were not shaken but reinforced by the development they witnessed in East Germany, Europe, and the entire globe. As Klein commented, what remained was the “unbroken faith in the possibility of socialism in its original sense. I always had the hope that the GDR would be able to redeem a lot of it; but the GDR itself was not the object of my hope” (Klein interview 2021). When speaking to business leaders today, Klein is encouraged that they are becoming more sensitive and critical to environmental and social issues. But when speaking of actual social change, his point of view is considered naïve, a role that Klein knows well from his life in the GDR. Yet he knows better. Though little changed for a long time in his and his generation’s lives, they learned twice, in 1945 and in 1989, that everything can change from one day to the next.