In the socialist countries of Eastern Europe, political prerogatives largely established the boundaries of individual consumption, much as they directed the economy as a whole. From an economic standpoint, consumer behavior was determined, above all, by personal income and the availability, diversity, quality, and price of goods. The central economic decision making body, that is, the government or the leading figures in the Communist Party, exerted extensive control over these factors, although their control was never total. The state set wages and prices and administered the supply of goods with the aim of eliminating the interaction between supply and demand. This is what the Hungarian sociologist Ferenc Fehér and others mean by the phrase “dictatorship over needs.” Yet this formulation, in a pure form, was more theoretical than actual. By (incompletely) fixing these factors, the state could only limit and constrain consumer behavior; it never succeeded in eliminating the freedoms inherent in economic matters.

In the German Democratic Republic, or GDR, a growing economic crisis prompted the ruling political party, the Socialist Unity Party (Sozialistische Einheitspartei Deutschlands, or SED), to carry out comprehensive economic reform in 1963. The reform was called the New Economic System (Neues ÖOkonomisches System). Its purpose was to liberate the economy from its political guardians and to introduce over time profitability as an evaluative yardstick. This chapter looks at whether politics continued to shape consumer behavior, even in this context. I focus primarily on retail prices because they provide an illustrative example of the contemporary political doctrine.