The Limits of the Plan and the Promise of Opportunity: Building a Communist Flagship Enterprise

The cultural industries of Eastern Bloc countries faced tough challenges throughout the Cold War era. While virtually all of them relied on Western know-how and resources to produce modern mass commodities, they struggled to generate content that could compete with Western offerings for popular appeal. Examining the rare case of an internationally esteemed and domestically profitable monopolist, this paper discusses how state-owned enterprises in communist economies of scarcity managed to soar.

Under the auspices of a management that ingenuously reconciled political directives with economic aspirations, Deutsche Schallplatten (German Records) evolved into a flagship enterprise of the German Democratic Republic (GDR). Enforcing modernization and boosting productivity between the mid-1960s and mid-1980s, the managers boldly pushed the limitations that industries commonly faced in the centralized and planned economies of communist countries. Embracing opportunities to serve as a supplier of recorded high-brow content to Western record companies, the enterprise earned hard currencies to purchase its entire machine park from manufacturers in capitalist countries. Using business relations with international partners to import carefully selected popular content, it succeeded in exhausting domestic purchasing power. Subsidizing prestigious cultural institutions with surplus earnings, it pacified political authorities to gain a maximum of autonomy. Keeping ideological peer pressure to a minimum, it attracted talent and expertise to safeguard its favorable development. With inventive strategies and diplomatic finesse, Deutsche Schallplatten’s managers created a shining singularity in the GDR’s deteriorating industrial landscape.

Investigating a success story at the nexus of culture, politics, and economy, this paper examines the business models and managerial rationales that drove the monopolist’s development. It illuminates how directors of communist enterprises carved room for experimentation within centralist policies. The paper argues that even in the rigidly regulated command economies of the Eastern Bloc, managers created distinct and successful corporate cultures.