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The Currency of Socialism: Money and Political Culture in East Germany.

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 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 in 1970/71 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 Ho-necker'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 Gunter 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 backtoom schemers, as public power-mongers, as serious, if seriously flawed, economic planners, and as dedicated, if increasingly perplexed, ideological Communists.

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's burgeoning historiography and of theoretical work ranging from economics to cultural studies.

Based on this broad foundation of evidence, Zatlin is able to demonstrate, rather than just assert, that the FRG's Ostpolitik, the rising indebtedness of the GDR to the FRG, and the GDR's growing dependence on consumer imports from the West temporarily undergirded but finally undermined the stability of SED-rule. Zatlin recognizes the role of the ordinary East German in all this. He understands that without consumer demand, combined with the SED's increasing readiness to meet demand, the GDR would not have stumbled down the path of indebtedness or set itself up for a doomed economic comparison with the West. His chapter on citizens' petitions illustrates the private desires of East Germans and reveals their growing sense of entitlement, on the one hand, and rising fury, on the other, with a regime that promised plenty and social equity but failed to deliver on either pledge.

Overall, the book makes a convincing case for the centrality of economics to the demise of Communism in the GDR. Zatlin argues, however, that the death blow was not delivered by a literal economic break-down which was not, he concludes, imminent. Rather, it was the perception of economic decline and the gap between rhetoric and reality that provoked mass protests against SED-rule. This delegitimation, he suggests, occurred in the eyes not only of the masses but also, crucially, of many Communist cadre and leaders.

I have only one criticism of the book. Focused as it is on the Honecker years, the book arguably overstates the suddenness of the policy turn taken by Honecker after he bumped Walter Ulbricht from the seat of power. Historians of the Ulbricht era have shown that both consumer production and social policy spending rose, if stingily and temporarily, at several points during his reign, only to veer back toward parsimonious hyper- productionism in 1969, prompting Honecker's bid for power. Not only the social and economic causes, but also the unintended consequences of Ulbricht's zigzag course between orthodoxy and experimentation are important for understanding why Honecker believed the GDR had to spend millions on social programs and consumer goods. This point is not meant to detract from Zatlin's accomplishment. His is the best study in English, and arguably in any language, of the political economy of the GDR in the 1970s and 1980s. It also offers a novel explanation of a basic flaw in Communist economic theory and practice that can be applied to other state-socialist regimes as well.

Donna Harsch

Carnegie Mellon University
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Author:Harsch, Donna
Publication:Journal of Social History
Article Type:Book review
Date:Dec 22, 2009
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