Walter Ulbricht

The Berlin Wall was the most dramatic decision of Ulbricht's political career and became the defining symbol of the Cold War. From the GDR's founding in 1949 through 1961, some 2.6 million East Germans fled to the West. This 'flight from the Republic' (Republikflucht) bled the economy of skilled workers and professionals. Even after the inner-German border was sealed in 1952, the four-power governance of Berlin left the intra-city sector border open, turning Berlin into the escape hatch. By summer 1961 the exodus exceeded 1,000 persons a day, and Ulbricht urgently appealed to Khrushchev.

After the June 1961 Vienna summit between Khrushchev and Kennedy ended without agreement on Berlin, Ulbricht told a press conference on 15 June: 'Nobody intends to build a wall', a statement that entered history in stark contrast to the order he gave two months later. At a secret SED Central Committee meeting in early July, Ulbricht advanced the border-closure plan in earnest. On 1 August he met Khrushchev alone in Moscow; Khrushchev approved placing 'an iron ring around Berlin' with Soviet forces securing the outer perimeter and East German troops controlling the border. Ulbricht replied that barbed wire had already been stockpiled and the operation could proceed 'very quickly.' The Warsaw Pact Political Advisory Committee, meeting in Moscow on 3–5 August, formally endorsed the closure.

On the evening of 12 August 1961, Ulbricht, acting as chairman of the National Defence Council, signed the Council of Ministers resolution. At 1 a.m. on 13 August, units of the National People's Army, border police, and combat groups began sealing the sector boundary in Berlin. Streets were torn up, barbed-wire barriers went up, and building exits facing West Berlin were bricked shut. Over the following weeks and months, barbed wire gave way to concrete walls, a death strip, and watchtowers. The GDR officially called it the 'Anti-Fascist Protection Rampart' (Antifaschistischer Schutzwall); the West called it the 'Wall of Shame.'

In the short term, the Wall stabilized the GDR regime. Stemming the refugee outflow halted the labour drain and created the political precondition for Ulbricht's New Economic System (NÖS) reforms of 1963. By securing Soviet backing while demonstrating his own capacity to act decisively, Ulbricht emerged as one of the most assertive leaders in the socialist camp. Yet the Wall simultaneously exposed the regime's fundamental vulnerability to the world: a state that had to hold its own citizens at gunpoint to prevent them from seeking freedom and prosperity elsewhere. That contradiction defined the GDR's international image for the next 28 years and remained Ulbricht's legacy until the Wall fell on 9 November 1989.

Ulbricht's most ambitious domestic policy was the 'New Economic System of Planning and Management' (Neues Ökonomisches System der Planung und Leitung, NÖS), unveiled at the Sixth SED Congress in January 1963. The Stalinist five-year plans of the 1950s had repeatedly missed production targets, forced collectivization in 1960 had worsened food shortages, and West Germany's 'economic miracle' was overwhelming the GDR in systemic competition. Only after the Berlin Wall (August 1961) stemmed the mass exodus did political space open for internal reform. The chief architects alongside Ulbricht were State Planning Commission chairman Erich Apel, economic secretary Günter Mittag, and their staff.

The NÖS retained the framework of central planning but introduced three key innovations: evaluating enterprises by profit rather than mere quota fulfillment; building a more realistic price system reflecting raw-material and energy costs; and deploying material incentives and performance bonuses for workers and managers. Associations of publicly owned enterprises (VVB) were transformed from administrative bodies into economically accountable entities, and the influence of technocrats and industry experts grew relative to party ideologues. Ulbricht spoke of 'economic levers' (ökonomische Hebel), attempting to graft efficiency principles onto the planned economy.

Early results were striking. Industrial production grew at over 6% annually from 1964 to 1967, real wages rose, and consumer goods improved. The GDR soon achieved the highest standard of living in the Eastern Bloc, and Ulbricht's slogan 'overtake without catching up' (Überholen ohne einzuholen) captured his confidence that East Germany could surpass the FRG economically. But fundamental contradictions were also evident. Closing unprofitable factories, a logical consequence of profit incentives, ran into resistance from workers and local authorities; consumer prices could not be liberalized for political reasons. As enterprise autonomy expanded, wages outpaced productivity, deepening goods shortages. Khrushchev's fall in 1964 left Soviet backing for reform uncertain and weakened Ulbricht's position.

At the 11th SED Plenum in December 1965, the conservative wing led by Erich Honecker counterattacked by reasserting party control over arts and culture. Planning chairman Apel, crushed by competing pressures, died by suicide on 3 December 1965. In 1968 the NÖS was reorganized into the 'Economic System of Socialism' (ESS), shifting emphasis to high-tech industry while rolling back most market-oriented elements. By late 1970–early 1971 the conservative wing terminated the NÖS reform line entirely, a key economic backdrop to Ulbricht's removal from power in May 1971. Though it ended in retreat, the NÖS is recognized as one of the socialist bloc's first comprehensive attempts to overcome the limits of Stalinist planning from within.