ABSTRACT

Several factors were instrumental in prompting the political leadership to embark upon a reform of the detailed planning system. Amongst these were the stagnation of the economy at the beginning of the sixties; the freer discussion of ideas from 1956 in the course of destalinisation; the sealing of the border with West Germany; and the need to inspire confidence in a somewhat demoralised population. Perhaps the most important factor was the Liberman discussion in the USSR, which indicated that the Soviet Union was considering an overhaul of its own system. Liberman expounded his ideas in an article entitled “Plan, Profits and Bonuses” published in Pravda on 9 September 1962, and proposed a reform of the planning system with “profit” as the main enterprise success index. One month later, Walter Ulbricht spoke of the need to alter the GDR’s system, and in January 1963 unveiled proposals for reform which allocated a central role to financial instruments such as profit, prices, bonuses and taxes called “economic levers”. The proposals were tested in several enterprises, and in July 1963 the “Principles for the New Economic System of Planning and Management of the National Economy” were approved by the Council of Ministers. 1