The Unification of Germany by L. Goldstein

Socialism was established in a backward Russian capitalism, extensive devastation resulting from WWI, capitalist military intervention, and civil war. Out of necessity, the entire surplus product had to be centralized, put into the hands of the state, and all decisions about the use of this surplus were centralized. The economy was not only highly centralized but became bureaucratically top-heavy. Its effectiveness was enormously reduced, and, as it turned out, was a major factor in its collapse.

The situation was similar after the Second World War: immeasurable loss of life and destruction of housing and industrial plants meant that the Soviet Union was in no position to help the new socialist countries. Indeed, between 1945 and 1947 the Soviet Union transplanted a large part of the Eastern German plants in order to overcome the war damage. It carried off one set of the railroad rails of the double-railed system. Moreover, the Eastern Germans paid war reparations which in 1948 amounted to 25% of the GNP. What remained went into steel and mining. The German Democratic Republic had very little means for research and the application of research in industry. It had to equip not only its own plants but also those or the Soviet Union and other socialist states, while the Federal Republic of Germany was at this time receiving Marshall Plan dollars for investment in plant and equipment.