Progress in Purgatory

Seen through the calculating eyes of East Germany's economic planners, the Berlin Wall has been a huge success.

Though a moral outrage and a physical eyesore, it has stanched the drain of manpower that until 1961 was the worst economic problem in Walter Ulbricht's grim satellite. By thus stabilizing the labor force and preventing much-needed technicians from escaping to the West, the Wall has contributed substantially to a rise in East German production.

Last week the highly regarded West Berlin Institute for Economic Research reported that the East German economy at last has come to "the end of years of economic stagnation."

After growing less than 3% annually in the early 1960s, East Germany's production this year will climb 5%, to $21 billion, at official if somewhat inflated rates of exchange. Though that is only one-fifth of West Germany's output, East Germany has become the top producer for the Soviet orbit outside of Russia itself. It has the highest living standard of any Communist country and--at least by its own statistics--ranks as the world's tenth biggest industrial power, eighth in production of TV sets, seventh in chemicals, fifth in exports of office machines. From such plants as the Leuna chemical works at Merseburg and the Carl Zeiss works at Jena--mostly established before World War II and rebuilt after bombings and Soviet dismantling--skilled workers turn out an array of petrochemicals, computers and heavy machines for the entire Eastern bloc.

Looking to Liberman. Along with forcibly stopping the leakage of labor, East Germany has taken another important step toward stability: it has embraced capitalist-like reforms for its economy more thorough than those of any other Soviet satrapy. Instead of Marx's hoary notion of giving "to each according to his needs," it is tending toward Soviet Economist Evsei Liberman's philosophy of reward according to efficiency. Since 1963, East Germany has also adopted what used to be heresy: industrial decentralization and looser planning. The regime granted more powers to local managers to boost or slash production, prices, investments and labor forces. At least some factories are now expected to justify their existence by showing steady profits.

Converting a command economy into an incentive economy is hard enough; it is doubly difficult to get managers to think for themselves in a country in which Stalinism and central authority are still deeply ingrained. The East German regime is trying to accomplish it by turning over more responsibility to a new generation of younger technocrats. The new Minister for Foreign Trade, Horst Soelle, is 41, and many plant managers are now between 25 and 40. While such men are sometimes critical of the East German economy, what they fault is not the totalitarian system, but the old, open-collared party hacks who resist change. Says Kurt Leopold, West Germany's former chief trade negotiator with East Germany: "The younger generation is conspicuously pressing for reform. The older party officials hate them but are powerless to stop the trend."

Socialist Deodorant. East Germany and its people look somewhat less shabby than a few years ago, partly because of the reforms and partly because even minor improvements seem large compared with the previous grimness.

It is no longer very easy to tell East Berliners from West Berliners simply by their clothes. The deadly gloom of East Berlin's Unter den Linden has lately been relieved by a couple of fashionable boutiques and some six-story buildings of aluminum and glass. The ponderous, ugly neoclassicism of the Stalinist era is shunned by the city's chief architect, Joachim Mather, 40, who draws his inspiration from Manhattan's Lever House. But to step into glistening West Berlin is still not only to step into another country; it is almost to visit another planet.

Also becoming more popular in East Berlin are tuxedos, French perfumes, books on etiquette, and--advertised in neon--a socialist deodorant. Still, a mass-consumption society is a long way off. For one thing, four-fifths of the country's production remains in industrial goods; for another, the average wage of $ 151 a month does not go much beyond bare necessities. The East German worker must skimp to buy coffee at $9 a lb., a TV set at $500, or the cheapest 26 h.p. car at $2,000. Last year 62,698 cars were made for a country of 17 million people; naturally, the waiting lists are long.

Widening Gap. Despite a three-year campaign to improve the quality of exports, the regime admits that only 10% of East Germany's production is as good as Western output. Partly because the Scandinavians and some other West ern buyers have complained that East German products fall apart after a few months' use, the country's sales to the West have flattened out at 16% of its $3 billion export total--of which West Germany takes 10% and Russia 50%. Moreover, the economic gap between East and West Germany is widening. Though the East should be growing faster because it begins from a much smaller base, its economy is expanding only half as rapidly as booming West Germany's.

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