During my time in Moscow, I had the opportunity to visit all the socialist countries and meet with many colleagues there. And because the Moscow Institute was affiliated with the United Nations, I was able to travel to New York, Washington, and Geneva. That would probably not have been possible from East Berlin.

I will never forget the first time I arrived in New York. I got out of the taxi at the hotel and saw a man begging with a huge sign saying “Please help me, I am hungry!” Now Moscow was not exactly banqueting at the time, but I never saw anyone begging for bread on the street. This was the time when New York was completely bankrupt. Trash was piled up on the streets, almost a story high. But the elevator shot to the top of the Empire State Building in seconds. That was when I understood: socially it was pretty grim, but technically they were worlds ahead.

I wish more people could have had that kind of experience. They could have learned to value what we had, but also where we had to catch up or even overtake. That was my goal when I came back to Berlin, to the university.

There was an organized division of labor between the socialist states, but it was not really viable. Comecon included relatively developed economies like East Germany and Czechoslovakia, and intermediate ones like Poland and Hungary. But there were also countries like Romania and Bulgaria, and later also Mongolia, Vietnam, and Cuba. They were simply too far apart in terms of their economic and scientific-technical potential, and in their standard of living — and in some cases also their mentalities. The bloc’s foundations were political rather than economic. But the idea was that they should all be able to participate in manufacturing, rather than just supplying raw materials. That was the origin of the idea of manufacturing cooperation.

Take combine harvesters for example. One country made the chassis, another the engines, the wheels elsewhere, and the cutter bars somewhere else again. Great idea actually. But it did not work in reality. Nobody wanted to buy a combine harvester “made in Comecon”; they all wanted combine harvesters “made in GDR.”

I think the European Union is doing something similar today. Its expansion is politically driven. The countries do not fit together at all in terms of their economic potential, their mentality, their history, and their standard of living. They are only held together by money — and that creates problems.

Believe me, I was not just sitting at home waiting for a call. When the East German parliament asked Hans Modrow to form a new government, I congratulated him in the name of the university and told him we were ready to help.

The next day I got a call from the Council of Ministers asking me to come and meet with Modrow. He believed that the next East German election would be in May 1990 and that the political constellation after that would not be the one I was entering now. But we certainly did not expect the Christian-Democratic Alliance for Germany to win in such a landslide. They got almost 50 percent. We knew we were not going to have years, but not that it would be just three months.

I think we did achieve something simply through the way we worked, how we related to the people in the towns and villages, in the communities. That was already a feather in our cap, simply that we listened and tried to make some initial adjustments.

I had been shocked in 1972 when Günter Mittag, the central committee secretary for economic questions, expropriated the remaining private small- and medium-sized enterprises and merged them into the combines. That curbed — and often killed — so much productivity, so much drive, so much innovation. It was a nail in the coffin of the East German economy.

Rectifying that was one of my first acts — giving those businesses back to their former owners, if they were still alive, or to their heirs. There was great support for that. I also argued for the right to start a business. If someone is willing and able to take on the risk, they should be permitted to do so.

We certainly wanted to avoid privatizing the combines in key sectors like heavy industry, energy, water, and electrical engineering. Instead, we tried to hive off activities that were not their core business. Back then, every combine had to have its own works department, transport department, and so on. If it wanted to build something it could not just go to the market and buy services. They had to have everything in-house. We wanted to change that because it was unproductive.

Above all, we wanted to modernize the enterprises. We were not looking to privatize them, certainly not in a rush. We also wanted to keep the profit motive out of certain public services like health and education. And then came the news that the West German chancellor, Helmut Kohl, was offering to give the East Germans the deutsch mark straight away. That was on February 6, 1990. That meant being able to travel abroad without being treated as a second-class German. A majority of the East German population was thrilled — well, a majority begins with 51 percent, doesn’t it? They fell for the illusion that we would be able to keep everything we liked about life in East Germany, and get the hard deutsch mark too. They thought we could have had the best of both worlds.

As we know, of course, that was an enormous mistake. He who pays the piper calls the tune. The West made sure we knew that.

West German Finance Minister Theo Waigel said it quite openly in the Bundestag: Dear fellow citizens in the East, we are giving you the best we have — the hard deutschmark and the social market economy. You have to realize that that will cost a great deal. We will have to borrow to finance it, and for that we need securities. That will include your state-owned assets, which will have to be privatized.

The privatization of state-owned assets was the price for getting the deutsch mark, which the West would have blocked otherwise. Kohl was not offering this because he loved his “brothers and sisters” in the East. Kohl had his back to the wall. Hundreds were moving to the West every day. And that was not exactly popular there. Kohl had to do something. He knew his reelection was threatened if he did nothing.

So, in the first place they offered the deutsch mark to the East Germans to placate the population in the West. The Westerners could relax, because he was telling them: if the East gets the deutschmark they will stay where they are and you will have nothing to worry about. And then he promised the East Germans sunlit uplands.

There were other ways to reduce state ownership. It did not have to be such a rushed privatization. I am not the only one saying that; many prominent western German economists do, too. But we did not believe that it was necessary for everything to remain in state ownership.

If all the apples in an orchard ripen in the same week and have to be sold, what happens? In the end, most of them will be given away because there are not enough buyers. When supply exceeds demand, prices fall. So it was with the East German enterprises. It could have been avoided.

The example of [optics firm] VEB Carl Zeiss Jena shows what could have been done differently. Renamed Jenoptik, the regional government retained a stake for the first decade after reunification. Sacrifices had to be made, of course, but all in all it survived the transformation process much better than others, because the regional government felt responsible for sustaining its old markets and opening up new ones. The official in charge of the privatization program, Birgit Breuel, felt no such responsibility. She said the markets for the East German enterprises had collapsed. But they had not simply imploded, they had been destroyed by the chosen currency conversion rate. And then companies from the West took them over.

Every region should have identified enterprises that provided significant employment and training, whose products were in demand globally. Every region could have preserved at least one “beacon” like that, by taking them into regional government ownership at least temporarily. For example, it would have been possible to save the East German enterprises that supplied specialized oil and gas equipment to the Soviet Union. They were concentrated in Saxony and Saxony-Anhalt. They still had production capacity, and they had the specialists who knew how to install and maintain equipment in polar ice and permafrost. But the idea of deals in kind — supplying equipment in exchange for oil and gas — was not given a chance. Employee equity schemes could have been promoted and cooperatives could have been expanded in certain areas.

There were many possibilities, but they were all rejected. West Germany saw the opportunity to impose its systems and practices on the East at the stroke of a pen. The West’s existing system was imposed on the East.

A lot of land was in public ownership. At least that should not have been privatized. As John Stuart Mill said, “No man made the land.” This is actually the area where privatization was most intense, despite the concept of public ownership appearing in the German Basic Law. Land became “green gold” after reunification — and it still is today. They wanted to get rid of everything associated with life in East Germany.

And then planning permission was granted to build on farmland, with enormous profits for the landowners. And when housing is built, the exploding price of building land is factored into the rent. There are studies showing that 80 percent of the rise in housing rents in the past ten years is attributable to the increasing price of land. That has become one of my hobbyhorses.

I am also a bit annoyed with the Left for not taking up this issue more energetically. You can introduce as many rent caps as you like. Their effect is not enduring. And they do not apply to new builds anyway. There should be no speculation with land, that is what I think.

No, I reject the term in this connection. One can certainly identify features that echo colonialization, like swapping out elites, annulling laws, and so on. But the East Germans had the choice. They were free to choose, and they did so. The colonies in Africa and Asia had no choice, that is the difference. But the way the West felt superior and regarded the East as some kind of hellhole, that was similar. And unless we can overcome that, nothing will come of German unification.

What do we mean by opportunities? Well, a lot of money needs to be spent. For example, the tax system has remained unchanged since reunification. Subsidiaries here in the east still tax their profits in the jurisdiction of their company headquarters, which is usually in the West. So, profits are made here, but if the parent company is based in the state of North Rhine–Westphalia, then that is where the tax revenues are collected. And then some of it is generously returned here as transfers. That needs to change.

Look at the rural areas. Basically, only the old people are still there. The young have gone away, for work. Then the last bus services get cut. The train timetable is reduced. The doctors’ practices are gone, the shops are gone. And then it is no surprise if nobody wants to stay at all, and it becomes a goldmine for those who already own most of the land and now want to grab the rest on the cheap. Mostly they are “investors” who know nothing about farming: insurance firms, supermarket chains, trusts, and so on. They do not create jobs here. In spring they truck their machines over here, and the same again in fall for the harvest. They need a driver for the tractor, and maybe someone to keep an eye on things.

So, the demographic problem is a problem of German unification. Change the tax system, have more people socialized in the east in positions of leadership, relocate company headquarters to the eastern states, and nurture rural areas to make them attractive for people who are not so mobile, people who are attached to the place they live. That would provide opportunities.