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East Germany THE CONSUMER IN THE EAST GERMAN ECONOMY
The East German standard of living has improved greatly since
1949. Most observers, in both East and West, agree that in the
1980s East Germans enjoyed the highest standard of living in
Eastern Europe. Major improvements occurred, especially after
1971, when the Honecker regime announced its commitment to
fulfilling the "principal task" of the economy, which was defined
as the enhancement of the material and cultural well-being of all
citizens. Problems remained, however. In the mid-1980s, light
industry and consumer goods industries were not performing as
well as the economy as a whole, although according to official
statistics the net monetary income of the population and retail
trade turnover were growing at around 4 percent.
Since the inception of the regime, the monthly earned income
of the average East German has increased steadily in terms of
effective purchasing power. According to the 1986 East German
statistical yearbook, the average monthly income for workers in
the socialized sector of the economy increased from 311 GDR marks
in 1950 to 555 GDR marks a decade later, 755 GDR marks in 1970,
and 1,130 GDR marks in 1985. Because most consumer prices had
been stable during this time, the 1985 figure represented a
better than threefold increase over the past thirty-five years.
These figures do not mean very much by themselves, but they
demonstrate that the upward trend has been consistent and
positive. In 1986 at official exchange rates, 1,000 GDR marks
amounted to just over US$500, only enough for a very modest
subsistence in the United States. But in East Germany, the GDR
mark can purchase a great number of basic necessities because the
state subsidizes their production and distribution to the people.
Thus housing, which consumes a considerable portion of the
earnings of an average family in the West, constituted less than
3 percent of the expenditures of a typical worker family in 1984.
Milk, potatoes, bread, and public transportation were also
relatively cheap. Many services, such as medical care and
education, continued to be available without cost to all but a
very few. Even restaurant meals, concerts, and postage stamps
were inexpensive by Western standards. In the early and mid1980s , however, the government began to signal an intention to
reduce somewhat the number of items subsidized by the state,
which suggested that some price increases were in store for East
German consumers.
If one sought "luxury" items, such as stereos, automobiles,
color televisions, and freezers, or even coffee and brandy, 1,000
GDR marks would not go very far, however. In the mid-1980s,
prices for clothing (except for the most basic) and linens were
relatively high. Products with a special claim to quality or
stylishness, sold primarily in so-called Exquisit or Delikat
shops, were also very expensive.
In the mid-1980s, East Germans had no difficulty obtaining
meat, butter, potatoes, bread, clothing, and most other
essentials. Consumers, admittedly, did have to spend considerable
time shopping for these items. Fruits and vegetables were more
difficult to obtain than basic foodstuffs, particularly in the
off-season, and their quality was often inferior to accepted
standards in the West.
With regard to housing, another necessity of life, the East
German government did not take serious action to provide modern
facilities until the late-1960s. The devastation of World War II
had created tremendous housing problems in the Soviet occupation
zone, particularly in the cities. Beginning in the late 1960s,
the government initiated a major campaign to provide modern
housing facilities; it sought to eliminate the longstanding
housing shortage and modernize fully the existing stock by 1990.
By the early 1980s, the program had provided nearly 2 million new
or renovated units, and 2 million more were to be added by 1990.
As of 1985, progress in this area appeared to be satisfactory,
and plan targets were being met or exceeded. Most governmentbuilt housing consists of high-rise apartments, often neither
spacious, diverse, nor pleasing to the eye. Nevertheless, such
apartments are functional, and they usually provide easy access
to schools, transportation, restaurants, playgrounds, post
offices, and supermarkets. In addition to this kind of housing,
individuals can build their own homes (outside of East Berlin).
About 15 percent of the units constructed up to 1981 were
privately built and owned.
In the mid-1980s, the availability of durable consumer goods
and luxuries remained less satisfactory, though it was improving.
Demand for automobiles as well as for such items as washing
machines and refrigerators was greater than the supply available;
however, improvement over the years had been steady. In 1985
about 99 percent of the households owned refrigerators, compared
with only about 26 percent in 1965. For washing machines, the
numbers for the same years had increased from 28 percent to 92
percent; for television sets, the numbers had increased from 49
percent to 93 percent. Automobiles were more difficult to obtain,
and delivery could come after as many as ten years of waiting. In
1985 about 46 percent of the households owned an automobile, and
demand had not been satisfied. The quality of the most common
automobile, the domestically produced Trabant, was not up to
world market standards.
Services are another important area of consumer welfare in
any industrialized society. The term is used here in a broad
sense to include retail trade, public transportation, and
communications, as well as barbers, plumbers, and automobile
service stations. In the mid-1980s, East German consumers
continued to complain of both a shortage of workers in the
service sector and deficient quality. Automobile repair
facilities were inadequate, for example, as were supplies of
spare parts. Although again improvements had been made--the
number of supermarkets and other stores, restaurants, and service
centers had risen significantly by the mid-1980s--it seemed clear
that meeting the needs of an increasingly prosperous society
would remain a problem in East Germany for the foreseeable
future. In the 1980s, the government acknowledged the existence
of the problem and encouraged specialized private craftsmen and
traders to help fill the void.
East Germans compare their own overall situation as consumers
with that of other East Europeans and are aware of their favored
economic position in the Soviet bloc. However, they also compare
themselves with the West Germans. A comparison between an East
German and West German household's normal purchasing capacity has
limited value, unfortunately, because the selection of goods
available is vastly greater in West Germany and the material
inputs and technical characteristics of West German products are
usually of higher quality. In 1983, however, the Institute for
Economic Research in West Berlin undertook one of its periodic
studies in which the purchasing power of the GDR mark was
measured against that of the West German D-mark (officially they
are exchanged at 1 GDR mark per 1 D-mark). Typical "market
baskets" of goods purchased in the two countries were the basis
of comparison. When the consumption patterns of the East Germans
served as the basis for deciding what should go into the market
basket, the GDR mark purchased more than the D-mark. That is,
were West Germans to purchase exactly the same things in the same
proportions as their East German counterparts, the West Germans
would have to pay more (24 percent more for an average worker's
household with four members). If, however, West German
consumption patterns were used as the basis for the comparison,
the results would be reversed (the GDR mark then would purchase
only 87 percent as much). The institute concluded that as a
whole, the GDR mark could be considered to have 106 percent the
value of the D-mark in purchasing power, an impressive gain over
the 76 percent estimated for 1960, 86 percent for 1969, and 100
percent for 1977. Although in many ways the West German consumer
had a more favorable position, with regard to both consumer
options and income, the analysis clearly invalidated the view
commonly held in the West that the GDR mark had very little
purchasing power.
The East German leadership acknowledged, as of 1985, that the
quantity, range, and quality of many goods and services offered
to the East German consumer needed improvement and that the
public's desires needed to receive more attention. It should also
be noted, however, that East German press, television, and radio
reports frequently stressed the insecurity of life in the
consumer society of West Germany. West German television
broadcasts themselves did not convey an idyllic picture of
consumer well-being, containing as they did substantial amounts
of self-criticism and discussions of West German weaknesses.
Data as of July 1987
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