• Eastern Germany Since 1945 by Stan Newens

    I am most grateful to John Rudge for locating and introducing this article, and to Stan Newens for giving permission to reproduce it.

    The article that follows, “Eastern Germany Since 1945”, was written by Stan Newens in 1952. It was the counterpart to the article “Western Germany Since 1945” which was also written by Stan and published in Socialist Review Vol. 1 No. 7 January-February 1952.

    Although it is referred to as being forthcoming in the “Western Germany” article this “Eastern Germany Since 1945” article was never actually published in Socialist Review. The reason for non-publication is unclear. It might be relevant that the Vol. 1 No. 7 issue was the last of the duplicated ones. After this Socialist Review moved to being professionally printed with a new layout and far fewer pages. I see no reason why non-publication would be due to political reasons. Stan does believe that this article was circulated internally within the Socialist Review Group but no original copy of this document is known to exist.

    The text reproduced here is the first draft of the article and was recopied by hand by Stan in 2015 from “a fading copy of the original”.

    With regard to his article Stan has said the following to me:

    “I do not now think that the style of the article was subtle enough, but it was a reasonably fair analysis at the time it was written.

    Subsequently, however, an attempt to build a “socialist” society was made in the GDR, but it was made by Stalinists who did not believe in democratic socialism. This is, however, not to deny that there were benefits for the mass of the population, many of which were swept away with the reunification of Germany.

    When the GDR collapsed I contributed to a London Co-operative Party pamphlet*. In it, I recognise some of the positive achievements of the GDR while still condemning the system. My reservations about my 1952 article are based on the fact that it is entirely negative.

    I have no particular objection to you circulating the article except that I think it is dated, but this does not invalidate it as a reflection of Socialist Review Group thinking in 1952.”

    I am grateful to Stan for sending me a copy of his handwritten version to enable it to be transcribed and saved.


    John Rudge

    5th October 2015

    * Newens, Stan. 1991. “Reflections on the East German Experience” in Stan Newens and Dr. Ian King. 1991. “East Germany: Revolution, Re-Unification, Re-Direction”. CRS London Political Committee and The UK Sonnenberg Association 13pp.

    Eastern Germany Since 1945

    In the last issue of Socialist Review, we examined the appalling record of the Western Allies in post-war Germany. The unavoidable conclusion was that policy has been dictated by selfish capitalist interests cloaked in false arguments to prevent a public outcry. In this article we examine the record of the Russians in Germany. Has the progress of events under their auspices given less reason for condemning it?

    The End of Capitalism in E. Germany

    The Western powers have reconstructed the German capitalist system and restored to power many of the same personalities who backed Hitler in a career that brought misery and death to millions. There can be little argument about the fact that no similar capitalist resurgence has taken place in Eastern Germany. When the Russians arrived in 1945, the capitalists were already disorganised by war conditions and depleted by flight to the west. Before they had an opportunity to recover and reform their ranks, the Russians delivered a series of hammer blows which shattered their property bases and destroyed any possibility of a return to power.

    Capitalists who lived in the German areas scheduled for annexation by Poland, Czechoslovakia or other Eastern European states were simply expelled along with the rest of the German population. Those who were domiciled in what remained German were expropriated. If their property was in land they were deprived by the land reform measure of 1947. Others lost industrial property first as ex-Nazis and others as monopolists.

    Three years after the cessation of hostilities, no area in excess of one hundred hectares was in the hands of any individual. In the industrial sphere, less than a third of total capacity and much less of actual production at that time was privately owned. Previously to surrender, 1.5% of the landowners owned 45.5% of the land and a small minority of industrialists owned the bulk of industrial property. The enormous contrast between before and after can leave no doubt about the complete destruction of traditional capitalism in Russian controlled Germany. The former capitalist class and the Junkers – erroneously termed feudal landlords who actually derived their incomes directly or indirectly from commodity production, not land, and their property system – was totally destroyed by Soviet policy.

    Is E. Germany Socialist?

    The question that immediately arises from the conclusion that capitalism has been destroyed is: what has replaced the system that has vanished? Those who see the only hope for mankind in the policy of the Kremlin assure us that the framework of a socialist society has been erected. Socialism, however, does not arise spontaneously from the expropriation of the capitalists. Hitler expropriated Jewish and other capitalists in eastern Europe but the system established after this was certainly not socialist. For a socialist society to arise, it is not enough to wrest control of production from the capitalist class. Production must be devoted to the purpose of satisfying human needs to the highest possible degree. This means the permanent abolition of all restrictions in production not in the interests of the workers and the expansion of output until no genuine demand remains unsatisfied. To decide whether this has occurred under the Russians in eastern Germany, we must investigate what happened to the confiscated property. Let us take the case of annexed areas first.

    The Annexation of East Prussia and The Sudetenland

    The lands annexed from Germany in 1945 comprise, in addition to those which Hitler incorporated into his Reich against the will of the inhabitants, the Sudetenland and German speaking areas lying east of the present Polish/German border. The complete expulsion of the German populations of these areas, with the exception of a few skilled technicians, retained for their usefulness alone, meant that the toilers were expropriated with the capitalists. They received no part of the land they had worked on to enrich exploiting landlords, nor any of the great industrial potential created by ploughing back profits realised from decades of their labour. The millions of hectares of confiscated agricultural land were distributed to Czechs and Poles in largely uneconomic holdings which are now being collectivised. The industrial property, which, in the case of Poland, was equal in capacity to the rest of Polish industry, was nationalised and allowed to stand partially idle until Polish workers could be found to man it.

    The populations expelled meanwhile, numbering without distinction of class, over 9 million people, were driven to put a heavy demand on the disorganised and overburdened resources of the eastern zone or to swell the tremendous potential of unemployed in the west. In their case, it is clear that they received no benefit at all from the expropriation of their exploiters. Practically everything, including their homes, was taken from them. Their expulsion greatly reduced output in the Sudetenland and East Prussia and increased disorganisation and unsatisfied demand in Potsdam Germany. Density of population statistics reveal that Czechoslovakia and Poland had far more land per head of population than East Germany and could support much greater populations without further development.

    The justifications put forward for the annexations and expulsions did not even claim economic or socialist advantages. They were purely nationalist. It was claimed that the Germans had originally stolen the areas from which they were expelled from Slavs. This is true but the thefts took place 500 years ago for the most part. If such justifications are acceptable, expulsion of the Americans by the Red Indians and the Russians by the Samoyed and other aboriginal tribes from Russia’s Asian lands would be justified.

    It was also claimed that the Slavs were a superior race. Zdenek Nejedly, Communist Minister of Education in Czechoslovakia at the time, said on the 29th May 1945:

    “We belong to the great Slav bloc, at the head of which the Russian people stand, with its leader, Stalin….And what can the Germans do? We are greater than all of them…..We will, first of all, carry our civilisation to the border regions and there we will plant our national cultural ideal.” [Ygael Gluckstein: “Stalin’s Satellites in Europe”, Geo Allen and Unwin, 1951, p.189-190 quoting “Der Sozialdemokrat”, June 1945).

    Clearly, neither of these justifications has anything to do with raising production in the interests of the masses or with socialism. A quotation from D.N. Pritt, who has faithfully reflected Russian and Communist propaganda for many years serves to remind us what attitude the Stalinists took up when the Sikorski exile government laid claim to the Ukraine and East Russia in 1940.

    Writing in 1941, at the time of the Nazi-Soviet Pact, he declared:

    “Here we have the organ of the Polish Government (i.e. its London paper “Dziennik Polski”)…putting forward, as its aim, the complete dismemberment of Germany, going far beyond the Treaty of Versailles and contemplating war against the Soviet Union presumably with the object of annexing Soviet soil….Here are war aims indeed that out Hitler Hitler.” [“Choose Your Future”, Lawrence & Wishart, London 1941, p.47).

    Similarly, the French Communist group in Parliament expressed its sympathy for Czechoslovak minorities oppressed by the then capitalist government and specifically mentioned the Sudeten Germans (M. Ceyrat – “La Trahison Permanente”, Paris, 1948, p.25, quoted by Ygael Gluckstein op. cit. p.193). Is any fair minded person able to defend these annexations in 1945 as steps along the road to socialism?

    Reparations [See J.P. Nettl: “The Eastern Zone and Soviet Policy in Germany”, Oxford 1951 as a source].

    Those Germans who already lived within the newly drawn frontiers of the Eastern Zone, did not lose their homes and employment by expulsion. This does not mean, however, that the property taken from the capitalists was used to raise production to the highest possible level in their interests and the interests of the international working class. At Yalta, Maisky proposed the reduction of German industrial potential by 80% and demanded $10,000,000 worth as Russia’s share to be taken as reparations.



    Capital Reparations

    In concert with this policy, which does not, however, appear to have been finally agreed by the western allies either at Yalta or Potsdam, though German productive power was to be reduced to 50-60% of 1936 levels, the first plant confiscated from the capitalists was not even left in Germany. It was hauled off in the most arbitrary fashion as capital reparations. Very little attention was paid to the requirements of the Eastern Zone, with the result that industrial capacity was reduced well below the level to which industrial value fell. Indispensable components of production were removed, immobilising considerable sections of industry that were untouched.

    Telephone exchanges, post office depots and railway equipment were taken at first, along with factories and other installations. The result was disorganisation. This situation was not improved by the removal of railway-trackline amounting, in the end to 29% of the total Eastern Zone mileage. Much of this was realised by taking up tracks as important as Berlin/Leipzig, Berlin/Stettin, Berlin/Frankfurt-on-Oder etc. The result was that by the end of 1946, about 39% of the 1936 value of the most important parts of German industry had been removed by the Russians [Nettl op. cit. p.295].

    The table below shows estimated reductions by industries in value of capital and output in 1946 as a percentage of 1936 [Source: Nettl op. cit.].

    Branch of Industry Reduction in Total Value Reduction in Output Value













    Leather Goods

    Rubber Goods

    Metal Goods



    Food Processing



















    According to Nettl, dismantling continued at a considerable level after 1945 and sporadically during 1948. The total value of removal of capital goods as reparations has not been officially published but Nettl, who is critical of the propaganda of both sides, estimates it as 4,100-4,300 million Reichmarks (£350,000,000 i.e. $1,368,000,000) at the 1936 level of prices [Nettl op. cited. p.207].

    Soviet Enterprises in Germany: Imperialism or Socialism

    Of the industrial capacity untouched by Soviet capital reparations policy, 15/17% in the most important branches of industry were taken over and run by Soviet Corporations (SAG) with German labour. These corporations were constituted as limited companies with obscure Russians named as shareholders. Their relationship to the E. German economy was similar to that of any big capitalist enterprise in a colonial or semi-colonial country. In production of liquid fuels, chemicals, vehicles, rubber and asbestos, they controlled half or more of current output in the Soviet Zone in 1947. Soviet political influence secured for them about 40% of raw materials free or at specially cheap rates and they naturally had priority, if supplies were short.

    To dispose of their produce, a number of Soviet subsidiaries of Soviet Trading organisations in Russia were set up in the Zone. These did not confine their activities to SAG goods and competed in the open market with German firms. The pattern of their activities was the export of SAG or other products to the USSR plus the export of products abroad to obtain raw materials or scarce goods, also for the USSR or for SAG factories. Thus they used German productive power to produce goods from which the German economy received no return apart from the wages paid to the German labour employed.

    What is the difference between this form of exploitation and exploitation of Malayan or other colonial workers by British capitalists? In both cases, a profit is made on labour – in Marxist terms, surplus value is extorted – which is not returned to the country where production takes place unless returned to be ploughed back, extending the scale of exploitation.

    The only difference between this Soviet imperialism in Eastern Germany and British imperialism in Malaya or elsewhere is that, in the former case, the profit goes to the Soviet state and not to private capitalists. What is socialist about that?

    Reparations from Current Production

    That comparatively small proportion of the original industrial capacity of the Eastern Zone which was not annexed to Poland or Czechoslovakia, removed as capital reparations to Russia or taken over by Soviet corporations in East Germany was still not free from the demands of the occupying power. In June 1948, well over half the industrial capacity of the Zone was in the hands of the provincial government or what was to become the central government, the Economic Commission. Thus the capitalists had been expropriated – with compensation in two cases – but only to make way for another form of exploitation of the workers. This is all it was though it was politely referred to as reparations from current production and justified by a much disputed section of the Potsdam Agreement.

    Reparations from current production included the provision of raw materials for Soviet Corporations, the supply of some machinery and considerable quantities of consumer goods. Nettl estimates that they represented in value 35% of the total Zone production down to the first half of 1948. They were paid for at 1936 prices which meant less than the cost of production. The deficit was frequently borne by subsidies derived ultimately from taxation and to some extent by inflation.

    The task of the Socialist Unity Party, formed from the enforced fusion of the old Social Democratic and Communist Parties, was to convince the workers engaged on consumer current reparations that their output was designed to make up for German destruction during the war and was going to the Soviet home market. Much, in point of fact, went to the Soviet trading companies who made a handsome profit by selling it abroad.

    What the East Germans Receive

    Only a comparatively meagre proportion of output in Eastern Germany was devoted to the needs of the East German population, increased, as it was, by the arrival of Germans from the annexed areas. The steadily mounting inflationary pressure reflected the fact that the E Germans, working for the Russians in one way or another, were receiving wages but putting hardly any goods into the German market. Consequently, there were not enough goods available and prices tended to rise. When Russian controls held prices down, goods just vanished from the market and rations were not honoured. The East German Currency Reform of 1948 restored the situation but only by cutting the purchasing power of every individual drastically. They had to give up 3 to 10 marks for one new mark but state works etc. had only to surrender one. Thus profiteers were hit but so were the masses who had accumulated small savings from their wages which – owing to lack of goods – just could not be spent. In other words, they were made to stand a further part of the loss sustained by the E German economy as a result of Russian reparations.

    Re-Industrialisation Following Disindustrialisation

    It is no wonder that it was decided to launch a 2 Year Plan based on the Soviet 5 Year Plan model in 1949-50. Such an expedient is the stock Stalinist remedy for developing a backward economy and after Soviet depredations, the East German economy was backward. After the disindustrialisation of East Germany, the plan was to reindustrialise it by keeping the living standards of the masses down and simultaneously increasing productivity. This is reflected in the fact that productivity in 1950 was to be 30% higher but wages only 15% higher. The worthy builders of “socialism”, who drew up the plan, promised that “a stern battle will be waged against levelling” (i.e. wages). However, realising that if the plan was to stand a chance of succeeding, such measures would not be enough, reparations of all sorts were reduced and capital and current production reparations brought to a stop.

    The Views of Lenin on Annexations and Reparations

    It is instructive to compare the way in which the East Germans have been treated by those who still claim to carry the banner of the Bolshevik Revolution of 1917 with the policy advocated by the original Bolsheviks. Lenin’s “Decree on Peace”, issued the day after the Revolution in Petrograd (Leningrad), on the 26th October 1917, called for “a just, democratic peace” which he defined as follows:

    “By a just, democratic peace for which the working and toiling classes of all belligerent countries…are craving… the government (i.e. the Soviet government) means an immediate peace without annexations (i.e. the seizure of foreign lands or the forcible incorporation of foreign nations and without indemnities” (Essentials of Lenin Vol. II p.228. Lawrence & Wishart, 1947).

    Is there any parallel between this policy and that pursued by Stalin’s Russia in Germany since 1945? The answer is a resounding negative and neither is there any parallel between the sort of leaders behind this policy.

    Maisky, who was the Soviet spokesman on reparations at Potsdam, replied to Winston Churchill’s opinion that reparations, as had been proved after Versailles, could not be obtained on the scale proposed, by declaring that the Allies in 1919 had concentrated too much on financial reparations. In other words, the standard-bearers of “socialism” would teach the foremost representative of capitalism a lesson in extortion. Their success is undeniable, in exceeding the excesses of Versailles, which all socialists worthy of the name, used to denounce as imperialist robbery.

    Has Soviet Policy in Germany Advanced Socialism

    No aspect of Soviet policy in Eastern Germany has genuinely advanced the cause of the working people to socialism. Even the land reform, which we mentioned but briefly for reasons of space, was reactionary, taken against the background of an advanced country. It involved the division of large efficient estates into small comparatively uneconomic units and the transference of industrial workers back to agriculture. Thus less productive land had to support more people. The classic example of town workers drifting back to agriculture is 16th century Italy and the process was one in which Italy drifted from comparatively high standards of life to miserable poverty. Something similar occurred in Spain.

    Thus our conclusion is that far from bettering the conditions of the workers in Eastern Germany, the Russians reduced them. They destroyed capitalist exploitation to replace it with something as bad. Those who consider the extension of the Kremlin’s rule has been progressive in any way are sadly mistaken. The only reason for a certain respite in the degree of exploitation at present, is the intention of attracting those who are exploited in a different way. The system that the Soviet leaders impose has nothing to do with communism. Their use of this term has besmirched the name which once described an ideal society based on the loftiest aspirations of man.

    Washington or Moscow

    It is clear from this article that the policy of the Soviet Union in Eastern Germany is just as alien to socialism as the policy of the West.

    The lesson for us in Britain is that while we can hope for nothing from the support of capitalism, directed ultimately from the White House, the Kremlin offers nothing better. The idea that we must choose one side or the other is a view we reject.

    Working people throughout Europe and the world beyond seek liberation from exploitation whatever form it takes. Only genuine socialist change can offer such a liberation.

    Stan Newens, 1952