Who decides what is produced?
Imagine, in simplified terms, a central authority deciding how much of certain goods should be produced. Individual enterprises then work towards assigned targets. This example explains the term without reconstructing a particular historical enterprise.
The State Planning Commission and industrial ministries were important parts of this direction. The decisive difference is not whether people make plans at all, but whether central state instructions shape the economic system.
The other three answers
The other terms do not name the GDR’s central economic system.
Market economy
A market economy contrasts with central state planning. It is not the required name for the GDR economy under the SED.
Supply and demand
Supply and demand describe economic quantities and their relationship. Here they are not the name of the state-directed system sought.
Capitalism
Capitalism does not describe the GDR’s socialist centrally planned economy. The decisive issue is the system, not merely the existence of money.
A planned economy does not mean every activity worked identically.
The GDR also had money, prices and, at various times, private enterprises. These individual features do not automatically make a predominantly state-directed economy a market economy. The question asks for its defining economic system.
In 1990 the transition to a social market economy began before political unity. The economic, monetary and social union took effect on 1 July; reunification followed on 3 October. The catalogue term describes the GDR economy under the SED, not an unchanged system until its final hour.
Central planning · House of History ↗Planned economy = central state economic planning.
Ask which level is meant: a personal plan, a business plan or state direction of the economy?
Three words for this question
- die Planwirtschaftplanned economy
- An economic system shaped by central state instructions.
- die Produktionproduction
- The manufacture of goods.
- der Betriebenterprise
- An economic organisation that, for example, produces goods or supplies services.