In July 1958, Walter Ulbricht, the first secretary of East Germany’s ruling party, was feeling optimistic. The 65-year-old dictator had survived two world wars, the Nazi regime, Stalin’s murderous purges and a mass uprising against his regime in East Germany in 1953. Things now appeared to be settling. Granted, well over 100,000 of his people had left the German Democratic Republic (GDR) every year since the state was founded; in the crisis year of 1953 the figures had risen above 300,000. The easing of restrictions and improvements in living conditions had led to a record low in 1958.

The leader of the ruling Socialist Unity Party (SED) took the opportunity of its Fifth Congress to share his optimism with his comrades. Inspired by the motto of the event, ‘Socialism Will Win!’, he declared that he intended to develop the economy ‘within just a few years so that it proves once and for all the superiority of the socialist system of the GDR as compared to the imperialist forces of the Bonn state [West Germany]’.

In hindsight, that sounds at best a bold claim and, at worst, delusional. By the GDR authorities’ own admission, the small state’s economy lagged around 30 per cent behind that of its much bigger and more prosperous Western counterpart. It had paid the lion’s share of war reparations as the Soviet Union continued to take what it needed to nurse its own ravaged economy back to life while the Western allies held back, allowing Chancellor Konrad Adenauer to rebuild and rearm, supporting him in the process with $1.5 billion from the Marshall Plan.

In addition, the East German economy was strangled by a lack of trading opportunities caused by Bonn’s policy of isolation. West Germany’s Hallstein Doctrine, introduced in 1955, postulated that it would not establish diplomatic and economic relations with any country which chose to recognise the GDR as a sovereign state. Given the size of the West German economy compared to the East, few countries dared to pay the economic price for snubbing Bonn’s express wish. A trade embargo in anything but name, it forced the GDR into economic and diplomatic isolation and complete reliance on Soviet goodwill for imports and exports. The Hallstein Doctrine would not be lifted until 1970. The result was that products such as coffee, soap or chocolate, and anything else that needed to be imported, were hard to come by.

Such troubles notwithstanding, Ulbricht was by no means the only one to feel optimistic in 1958. The last ration coupons were on their way out and would completely disappear the following year. The hard work many people had invested in removing the rubble from cities such as Dresden, Magdeburg and Rostock was beginning to clear the way for a slow but visible rebuilding process. And it was the Soviets who had shot the first artificial satellite (Sputnik 1) into space in 1957, causing shock in the West and astonishment in the East.

If the economically weaker Soviet Union could push ahead of the prosperous United States in the space age, then perhaps East Germany could overtake West Germany, too? This thought process was quickly turned into a propaganda slogan and one of the GDR’s early mantras: ‘Overtaking Without Catching Up’.

So how could the GDR’s isolated economy work? For all his faults, Walter Ulbricht understood that the answer wasn’t to create a bigger economy but a better one. In other words: technology would be key. Or, as Ulbricht put it: ‘We have little plaster, so we’ll have to think faster.’

And so, the socialist state invested enormous resources in innovation, data processing and microelectronics. In some areas there were remarkable, if punctuated, successes. Take the Trabant, perhaps East Germany’s most emblematic product. In the West, the drab, outdated car symbolised the technological underachievement of the GDR as a whole. Its undersized engine produced only 23 bhp, while the smell and sound of its output were distinctly reminiscent of decades gone by, when models that were practically unchanged since 1963 rolled across the open inner-German border in 1989.

By the 1980s, the Trabant had indeed become the dated and underpowered relic that the West so ridiculed. In the early 1960s, however, it helped to support Ulbricht’s rebranding of the GDR economy and get the public on board. A special new edition had been developed for the Sixth Congress of the SED in 1963: the ‘Sachsenring Trabant 601’. Built in Zwickau, Saxony, it bore resemblance to the British Triumph Herald, following the same design techniques, which were indeed modern and considered fashionable at the time.

The zeitgeist spoke of technological progress. Many films, including those produced in East Germany, featured futuristic themes of technology and space exploration, which fascinated young people especially. With Yuri Gagarin, the Soviets had sent the first man into space in 1961, and, in 1963, Valentina Tereshkova became the first woman, orbiting the earth 48 times in her three-day solo tour. When the pair visited the GDR in October 1963, many people were genuinely excited to see the newly-famous cosmonauts.

Ulbricht’s economic reforms were designed to match and encourage this spirit of technological optimism. The ‘New Economic System’ (NES) was introduced in 1963, which introduced some market-like conditions back into the socialist economy. Even the West German newspaper Süddeutsche Zeitung speculated that the GDR might be ‘returning to a form of capitalism’. The politburo decided that the ‘theory of the prevalence of politics over economics’ must come to an end – ‘economic tasks will have priority’.

For a time, state intervention and investment focused on technological progress, not just political control. More responsibility and freedom over development and production methods were handed back to the country’s highly specialised companies with their long and proud traditions of research. They should get a comparatively free hand to do what they do best: develop world-class technology.

For example, Carl Zeiss Jena, a company which to this day produces lenses and other high-precision engineering in the field of optics, complained in January 1962 that the demands placed on it by centralised economic planning were stopping it from ‘concentrating on the development of the data processing technology needed for the completion of Zeiss’s own measuring devices’. That began to change. Ulbricht’s NES enlisted experts such as Erich Apel, one of the rocket engineers who had worked on Nazi military projects in Peenemünde during the Second World War. Accordingly, East Germany’s GDP and productivity rose. Even the West German Cologne Centre of Historical Social Science reckoned that the GDR was beginning to catch up.

In a planned economy, however, innovative zeal is dependent on political whim. Ulbricht was getting old in the late 1960s, his dream of a technology-based economy was interpreted by many of his comrades as the fantasies of an old man in search of a legacy to build. There was to be no more such supposedly futuristic nonsense for the 1971-75 plan.

Ulbricht’s successor, Erich Honecker, wanted initially to tighten relations with Moscow; this also meant not pressing ahead with the single-handed development of new technology in the GDR. Much later, one of the GDR’s key economic policy-makers, Günter Mittag, commented bitterly that, when it came to a push in technological development, ‘we still laboured under the illusion that it was possible for the GDR to do this in close cooperation with the Soviet Union’.

With the Soviet Union jealously guarding its own research and development while denying the GDR many of the resources it needed to continue with its own, Honecker eventually began to look to non-socialist countries for partnership and inspiration in the technological sector. There was one natural candidate: Japan. Throughout the 1970s, the two countries began to collaborate and trade chemicals, metals and electrical engineering. The last had been of particular interest, given that the GDR needed desirable new electronic devices of the kind that were becoming increasingly affordable and widespread in the West, such as radios, TVs and stereos.

In May 1981, Erich Honecker travelled to Japan on a full state visit, during which the two countries concluded trade deals totalling $440 million. The general secretary was also deeply impressed by Japanese work culture and marvelled at the automation processes that used robots to make high-end products.

The more the GDR managed to fulfil the desires of the population, however, the more they demanded. By 1980, there were 105 television sets per 100 households, which also meant that more and more people were exposed to Western culture, including advertising.

Karl Nendel, state secretary of the Ministry for Electrical Engineering and Electronics, found it impossible to keep up the pace. He asked VEB Electronic Components in the city of Gera to produce an affordable cassette recorder, a task that the company found challenging. Nendel, frustrated with the lack of results, summoned the director of the state-owned works and snapped: ‘You must understand that it is politically necessary to finally have our own recorders!’ It was too much for the director, who now clutched his chest. He had suffered a heart attack.

In the end, the decision was made to import entire production lines. A deal was struck with Toshiba, for instance. The Japanese industrial giant already had a footing in the GDR, where it was helping to establish factories for the production of colour TV sets in Berlin and Ilmenau, with imports to the tune of 850 million West German marks. On 13 May 1982 it added a factory for audio technology, with the capacity to produce 750,000 cassette recorders and 30,000 hi-fi cassette decks. VEB Stern Radio Berlin, the state-owned radio production company, used Japanese systems and parts imported from the US.

Herbert Roloff, general director of International Trade for the Import of Industrial Technology from 1980, remembered that the success of this huge undertaking was limited: ‘Yes, we managed to put new types of entertainment electronics and household appliances on the market. Instead of one model, there were two or three. But on the shelves in the West – and that includes our Intershops [which sold Western goods for Western currency] – there were 20 models.’ Focusing on microelectronics and rationalisation wasn’t enough to heal the GDR’s festering economic wounds, even if some in the politburo never stopped believing it would.

By 1989, Honecker was severely ill and frail, but the illusory belief that technology could fix everything remained. The dictator made a rare public appearance, visiting the VEB Kombinat Mikroelektronik Erfurt, where he was shown the prototype of a 32-bit processor. He seemed entirely detached from the protests that were now underway and would soon help bring down his regime. Enamoured with the technology he had just been shown, he proclaimed: ‘Neither ox nor ass can stop socialism in its path.’

The unshakable belief that technology would make socialism victorious had been the problem all along. Yes, the GDR did manage to make remarkable technological advances given its size and the difficulties it faced, but such successes were all state-driven and, therefore, dependent on ideology.

For almost all of its existence, between 1949 and 1990, the GDR saw the technological battle as ‘a question of survival’ and ‘an intrinsic component of the entire system of economic warfare’. Money for technology was therefore not always spent on useful or economically viable projects. Indeed, a lot of it was funnelled into the coffers of the Ministry of State Security, better known as the Stasi.

Controlling and pedantic, its boss, Erich Mielke, demanded to ‘know everything’. He established a firm grip over the members of the politburo themselves in order to get vast amounts of public funds for projects that stemmed from his own paranoia. A thoroughly ruthless man, this Moscow-trained terrorist was allocated huge amounts of money to follow his pathological instincts to monitor and control.

The Stasi concentrated much of its efforts on what it called the OTS, its Operative-Technological Sector. This oversaw the development of highly specialised surveillance technology, such as separate camera systems for people, buildings and documents. Some of its equipment consisted of ordinary civilian technology imported from the West, such as Polaroid cameras, which were used during covert house searches to ensure items were placed back exactly where they had been.

Other areas of development produced elaborate technology that wouldn’t be out of place in a James Bond film. There were tiny cameras disguised as lipsticks that activated when they were opened, so that a planted secretary might film documents on her desk. Hidden infra-red cameras could photograph through special leather briefcases.

Mass surveillance and data processing were also very important to the most effective state surveillance system that ever existed. The so-called Central Control System. or Ceko, became operational in 1973 at the cost of 150 million marks – the equivalent to the annual pay of around 10,000 engineers. This allowed the Stasi to tune in to 4,000 telephone conversations at the same time – in addition to local and mobile stations, for example in important factories. The Stasi even eavesdropped on its own employees, such as in the Cottbus branch where 20 control units had been installed.

The recording and processing of these conversations were labour-intensive and happened at district level. The conversations were recorded on cassettes and stored for around two weeks, depending on how important they were deemed to be. The cassettes were then blanked and reused. If what was on them was of long-term interest, they were transcribed by typists.

Given the limitations of the East German economy, the elaborate expenditure on technology that was used to suppress opposition and monitor the everyday lives of citizens highlights the fundamental issue: overall state control stifled innovation, made bad use of the significant human resources available, and sought to repurpose much of what it gained for political ends.

The successes of the GDR compared with other states within the communist bloc show that it achieved a lot within the limitations it had. There was a lot of potential. With its focus on hard sciences, and the possibility for targeted investment of vast sums of state money into specific areas for specific purposes, it might have worked miracles.

It is exactly that ‘purposeful’ investment, however, that stands in the way of fruitful tangents. The same ideological zeal that leads individuals or states to invest eye-watering sums in specific sectors of development, often those that seem remote, futuristic and utopian, also inevitably tempts them into misusing technological development for political purposes.

East Germany’s impossible struggle to catch up with the West and eventually overtake it in the technological field was motivated by more than sheer economic necessity or vanity. The technological battle was no less than a question of survival, prompting targeted investment and strategic planning, which often led to remarkable successes. At the same time, it also surrendered much of the control over it to a security apparatus unique in world history for its compulsive mass surveillance.

There are clear parallels to countries such as China and Russia today, where technology is highly political and entire sectors are controlled, supported, dropped or invested in according to the aims of the regime. East Germany’s obsession with technology poses even broader questions about the implications of state intervention globally in the sector – with outcomes that span from the good to the bad and the ugly.