Pryor, Frederic L.

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Swarthmore College Works Economics Faculty Works Economics Spring 1993 Review Of "Radical Traditions: The Survival And Revival Of Entrepreneurs In The GDR" By A. Pickel Frederic L. Pryor Swarthmore College, fpryor1@swarthmore.edu This work is brought to you for free and open access by . It has been accepted for inclusion in Economics Faculty Works by an authorized administrator of Works. For more information, please contact myworks@swarthmore.edu. Follow this and additional works at: https://works.swarthmore.edu/fac-economics  Part of the Economics Commons Let us know how access to these works benefits you  Recommended Citation Frederic L. Pryor. (1993). "Review Of "Radical Traditions: The Survival And Revival Of Entrepreneurs In The GDR" By A. Pickel". Slavic Review. Volume 52, Issue 1. 143-143. DOI: 10.2307/2499611 https://works.swarthmore.edu/fac-economics/215  ReviewAuthor(s): Frederic L. PryorReview by: Frederic L. PryorSource: Slavic Review, Vol. 52, No. 1 (Spring, 1993), p. 143Published by: Association for Slavic, East European, and Eurasian StudiesStable URL: http://www.jstor.org/stable/2499611Accessed: 11-04-2016 13:57 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available athttp://about.jstor.org/terms JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusteddigital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information aboutJSTOR, please contact support@jstor.org.Association for Slavic, East European, and Eurasian Studies is collaborating with JSTOR todigitize, preserve and extend access to Slavic ReviewThis content downloaded from 130.58.65.20 on Mon, 11 Apr 2016 13:57:11 UTCAll use subject to http://about.jstor.org/terms Book Reviews 143 Radical Traditions: The Survival and Revival of Entrepreneurs in the GDR. By Andreas Pickel. Boulder: Westview Press, 1992. xii, 242 pp. Index. Figures. Tables. Paper. Andreas Pickel is a political scientist who addresses several critical questions about the operation of the private sector within an ostensible socialist economy: why did the private enterprise sector in the former GDR remain larger than that of other CMEA nations for so long? Even after it was reduced in size in 1972, how did it manage to survive as a legitimate part of the GDR economic system? And what lessons can be learned about institutional change that would be useful to the transition to capitalism? This is an important and well crafted study, even though I disagree with many of the author's interpretations, particularly with regard to the post-1990 period. Until 1972 the former GDR had a relatively large private sector, especially in handicraft, light industry and retail trade. Pickel argues that until the construction of the Berlin Wall in 1961, the economic competition with West Germany constrained the type of total nationalization witnessed in such nations as Czechoslovakia. Although much of his discussion covers the same ground that was previously surveyed by Anders Aslund in his 1984 study of private enterprise in east Europe, Pickel places much more emphasis on the manner in which the local governments had responsibility for supervising these enterprises and how these local governments created a series of institutional infrastructures that supported the private enterprises, supplied them with industrial inputs, provided them with a type of political representation and gave them a certain political legitimacy. He might well have also noted that a much larger share of total industrial production was carried out in cooperative enterprises or in state- owned enterprises managed by local governments than in most other CMEA nations so that these local governments had an enhanced economic role placing them in a better position to carry out these roles toward the private sector. In 1972 the central government nationalized most of these previously private enterprises, a decision Pickel argues came directly from the top with relatively little outside discussion. An unintended consequence of the slow transition in previous years was the creation of this institutional infrastructure so that the remaining private enterprises were to flourish. The local officials responsible for supplying the popula- tion with goods and services were able to find no suitable substitutes; and, in contrast to other CMEA nations, these private enterprises were able to serve their functions without the need for massive dealing with the black market to obtain supplies. In sum, they could carry out the economic functions assigned to them both legally and com- petently. Pickel argues that slow institutional change has some useful unintended conse- quences. He pleads for a slower institutional change in east Germany, so as to allow an institutional development permitting these private GDR entrepreneurs a chance to expand, rather than the quick change that is leading to a West German takeover of the former GDR economy. But this argument glides over two important facts. The private entrepreneurs in East Germany in the late 1980s were primary petty capitalists whose economic horizons were not necessarily very broad. Furthermore, the currency reform was carried out with an overvalued ost-mark so that most East German firms were bound to fail, no matter what institutional changes were occurring. Nevertheless, Pickel provides a detailed and fascinating analysis of the politics and economics of the East German private sector from 1945 to 1991. The anomaly of a private sector in one of the most dogmatic marxist nations has many lessons to teach, and the author carries out his task in a competent and thorough fashion that adds much to our knowledge of the former GDR. FREDERIC L. PRYOR Swarthmore College The New Democracies in Eastern Europe, Party Systems and Political Cleavages. Studies of Communism in Transition. Eds. Sten Berglund andJan Ake Dellenbrant. Brookfield: Edward Elgar, 1991. xii, 237 pp. Indexes. Tables. Figures. $55.95, hard bound. The title of this book promises a lot. The new, or-to express it more cautiously-the emerging democracies in eastern Europe present fascinating opportunities for anyThis content downloaded from 130.58.65.20 on Mon, 11 Apr 2016 13:57:11 UTCAll use subject to http://about.jstor.org/terms

Review Of  Radical Traditions: The Survival And Revival Of Entrepreneurs In The GDR  By A. Pickel

Swarthmore College 
Works 
Economics Faculty Works Economics 
Spring 1993 
Review Of "Radical Traditions: The Survival And Revival Of 
Entrepreneurs In The GDR" By A. Pickel 
Frederic L. Pryor 
Swarthmore College, fpryor1@swarthmore.edu 
Follow this and additional works at: https://works.swarthmore.edu/fac-economics 
 Part of the Economics Commons 
Let us know how access to these works benefits you 
 
Recommended Citation 
Frederic L. Pryor. (1993). "Review Of "Radical Traditions: The Survival And Revival Of Entrepreneurs In The 
GDR" By A. Pickel". Slavic Review. Volume 52, Issue 1. 143-143. DOI: 10.2307/2499611 
https://works.swarthmore.edu/fac-economics/215 
This work is brought to you for free by Swarthmore College Libraries' Works. It has been accepted for inclusion in 
Economics Faculty Works by an authorized administrator of Works. For more information, please contact 
myworks@swarthmore.edu. 
 
Review
Author(s): Frederic L. Pryor
Review by: Frederic L. Pryor
Source: Slavic Review, Vol. 52, No. 1 (Spring, 1993), p. 143
Published by: Association for Slavic, East European, and Eurasian Studies
Stable URL: http://www.jstor.org/stable/2499611
Accessed: 11-04-2016 13:57 UTC
 
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
http://about.jstor.org/terms
 
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted
digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about
JSTOR, please contact support@jstor.org.
Association for Slavic, East European, and Eurasian Studies is collaborating with JSTOR to
digitize, preserve and extend access to Slavic Review
This content downloaded from 130.58.65.20 on Mon, 11 Apr 2016 13:57:11 UTC
All use subject to http://about.jstor.org/terms
 Book Reviews 143
 Radical Traditions: The Survival and Revival of Entrepreneurs in the GDR. By Andreas
 Pickel. Boulder: Westview Press, 1992. xii, 242 pp. Index. Figures. Tables. Paper.
 Andreas Pickel is a political scientist who addresses several critical questions about
 the operation of the private sector within an ostensible socialist economy: why did
 the private enterprise sector in the former GDR remain larger than that of other
 CMEA nations for so long? Even after it was reduced in size in 1972, how did it manage
 to survive as a legitimate part of the GDR economic system? And what lessons can be
 learned about institutional change that would be useful to the transition to capitalism?
 This is an important and well crafted study, even though I disagree with many of the
 author's interpretations, particularly with regard to the post-1990 period.
 Until 1972 the former GDR had a relatively large private sector, especially in
 handicraft, light industry and retail trade. Pickel argues that until the construction of
 the Berlin Wall in 1961, the economic competition with West Germany constrained
 the type of total nationalization witnessed in such nations as Czechoslovakia. Although
 much of his discussion covers the same ground that was previously surveyed by Anders
 Aslund in his 1984 study of private enterprise in east Europe, Pickel places much
 more emphasis on the manner in which the local governments had responsibility for
 supervising these enterprises and how these local governments created a series of
 institutional infrastructures that supported the private enterprises, supplied them with
 industrial inputs, provided them with a type of political representation and gave them
 a certain political legitimacy. He might well have also noted that a much larger share
 of total industrial production was carried out in cooperative enterprises or in state-
 owned enterprises managed by local governments than in most other CMEA nations
 so that these local governments had an enhanced economic role placing them in a
 better position to carry out these roles toward the private sector.
 In 1972 the central government nationalized most of these previously private
 enterprises, a decision Pickel argues came directly from the top with relatively little
 outside discussion. An unintended consequence of the slow transition in previous
 years was the creation of this institutional infrastructure so that the remaining private
 enterprises were to flourish. The local officials responsible for supplying the popula-
 tion with goods and services were able to find no suitable substitutes; and, in contrast
 to other CMEA nations, these private enterprises were able to serve their functions
 without the need for massive dealing with the black market to obtain supplies. In sum,
 they could carry out the economic functions assigned to them both legally and com-
 petently.
 Pickel argues that slow institutional change has some useful unintended conse-
 quences. He pleads for a slower institutional change in east Germany, so as to allow
 an institutional development permitting these private GDR entrepreneurs a chance
 to expand, rather than the quick change that is leading to a West German takeover
 of the former GDR economy. But this argument glides over two important facts. The
 private entrepreneurs in East Germany in the late 1980s were primary petty capitalists
 whose economic horizons were not necessarily very broad. Furthermore, the currency
 reform was carried out with an overvalued ost-mark so that most East German firms
 were bound to fail, no matter what institutional changes were occurring.
 Nevertheless, Pickel provides a detailed and fascinating analysis of the politics
 and economics of the East German private sector from 1945 to 1991. The anomaly of
 a private sector in one of the most dogmatic marxist nations has many lessons to teach,
 and the author carries out his task in a competent and thorough fashion that adds
 much to our knowledge of the former GDR.
 FREDERIC L. PRYOR
 Swarthmore College
 The New Democracies in Eastern Europe, Party Systems and Political Cleavages. Studies of
 Communism in Transition. Eds. Sten Berglund andJan Ake Dellenbrant. Brookfield:
 Edward Elgar, 1991. xii, 237 pp. Indexes. Tables. Figures. $55.95, hard bound.
 The title of this book promises a lot. The new, or-to express it more cautiously-the
 emerging democracies in eastern Europe present fascinating opportunities for any
This content downloaded from 130.58.65.20 on Mon, 11 Apr 2016 13:57:11 UTC
All use subject to http://about.jstor.org/terms


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Review Of Radical Traditions: The Survival And Revival Of Entrepreneurs In The GDR By A. Pickel

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