That East Germany's system of economic planning was a failure is not a new proposition. In common with the rest of the eastern bloc, it lacked incentives for improved productivity. Or rather there were some incentives, but they were not tied to improvements in efficiency. They were not “performance-enhancing” (p. 63). Honecker, in particular, increased welfare provision without ensuring increases in productivity (p. 147). There was consequently a lack of fit between living standards and personal performance. André Steiner's achievement is not to tell us something we did not already know. Instead, what is impressive is the scale of the evidence he marshals to support his argument and the clarity of that argument.

State planning emphasized quantity over quality. There were no effective mechanisms for assigning value in relation to supply and demand. Enterprises were rewarded for production but not for the sale of their products. As a result, firms failed to be penalized for producing shoddy, substandard products. To cope with the problems presented by the plan, companies hoarded labor, equipment, and material. As a result stockpiles sat alongside permanent shortages (p. 7). Some stores overflowed with unwanted clothing. Others presented customers with bare shelves. Large sectors of the economy were inefficient and wasteful. Supposed “teething problems” with the plan turned out to be long lasting. Problems were hidden by inflated production figures.

Steiner starts by demonstrating how the plan was undermined by the scale of Soviet reparations (p. 15 f). He goes on to outline several lost opportunities for reform. East German planners were always looking for a “leap forward” in technological development (p. 134). This would allow the GDR to “catch up with and overtake the West.” The first major attempt was the New Economic System of the early 1960s. It was supposed to modernize the economy and increase productivity. Reformers even tried to simulate market mechanisms. But they were undermined by the suicide of a key technocratic adviser (Erich Apel). In the late 1970s Honecker sank vast sums into electronics (p. 142) in a similar drive to catch up with the west. But the return on this investment was paltry. These attempts to speed up growth all caused economic crises and had to be abandoned (p. 8).

It remained politically inconceivable for the party leadership to abandon the plan or to risk unpopular price rises. The technology gap with the west grew larger. Eastern goods could not compete with western standards “technically, in consumer-friendliness, in design, or in packaging” (p. 129). A few ultramodern enterprises stood out against a backdrop of general ruin and decay. Attempts to square the vicious circle by acquiring western technology led to increasing indebtedness. The GDR was very nearly insolvent in 1982 (p. 165). In the short term, western money shored up the GDR. In the longer term, it fatally undermined it. By the mid-1980s, the regime had failed “economically, ideologically, and eventually also morally” (p. 189). The system was fundamentally incapable of being reformed without collapsing.

The regime's leaders measured their performance against the economic situation that had existed during the world Depression of the 1930s. This preoccupation led them to subsidize food and rents heavily. To increase prices on staples was seen as politically unacceptable. The regime was haunted by memories of unrest in June 1953 when it had tried to raise prices and work norms. The East German population had shorter memories. They took full employment and cheap bread for granted. They compared their standard of living with West Germany's economic miracle in the present rather than with the situation of Germany back in the crisis-ridden early 1930s. In spite of the long waiting period for a Trabant, they began to see car ownership as the norm rather than the exception. Steiner presents East Germany's economic problems as essentially insoluble as long as the regime remained wedded to the planned economy. What was missing for me was a reassessment of eastern European planned economies in the light of China's recent economic success. Steiner presents any abandonment of the planned economy as politically inconceivable for the East German communist leadership. Yet the Chinese Communist Party has managed to do so and still cling to power.

Steiner's approach is deliberately macroeconomic. Although he recognizes the problems with East German statistics, the text is peppered with them. Although he exposes failures at every level, most blame is placed at the politburo's door. “Fundamentally all essential questions were decided centrally” (p. 5). The occasional anecdote does surface toward the end of the book. For example, Steiner recounts the “coffee crisis” of the late 1970s (p. 159). But he generally eschews the microeconomic, the subjective, and the psychological dimensions of economic failure. Faced with “soft” plans, he favors “hard” facts. The translation by Ewald Osers is masterful. If certain passages are still a bit impenetrable, then it has more to do with the original macroeconomic theory. There is an index, but no conclusion. This book is likely to feature as a key part of any examination of the failure of East German communism. It complements, but does not really replace, the more bottom-up micro-level analysis of socialism in everyday life. Students of the GDR will appreciate the succinct summary of the failure of economic planning. But (with a few exceptions) they will generally have to look elsewhere for practical examples of how this failure affected day-to-day lives.