This is a question I wanted to ask for a long time. If you check the GDP or East Germany in 1989 and compare it to that of banana-producing countries you can see:

GDP in billions USD (1989):
East Germany: $160
Ecuador: $13.89
India: $296
China: $347.8
Philippines: $42.58
Vietnam: $6.293

GDP per capita USD (1989):
East Germany: $9679
Ecuador: $1390.21
India: $346.11
China: $310.88
Philippines: $705.58
Vietnam: $94.56

With these numbers, trading something for a banana should have been possible. The East German was better off than an Indian or Chinese, not to mention other banana-producing nations like Ecuador. I know that foreign currency was in hot demand in communist countries to repay debt, so maybe an account-deficit is the reason why the East Germans could not buy tropical fruits (i.e. they lacked the means to trade, foreign currency)? Still, these numbers make me wonder. Deals could be made in the banana-producing nation's currency. Some banana producers were/are communist. Maybe the numbers are incorrect?

EDIT: Here is a relevant quote:

Bananas had been rare in the GDR because the imports, coming mainly from Ecuador, were limited due to lack of convertible currency.

Obviously, I disagree, there is always a way to pay and Ecuador was not the only producer. Note how West German ads made a permanent impression on the East Germans:

Today the consumption of bananas in East Germany is 20 percent higher than in West Germany.

Also, the all-important image from those days:

enter image description here

  • $\begingroup$ How is “lack of convertible currency” unclear to you? $\endgroup$ – Samuel Russell May 26 at 1:07
  • $\begingroup$ I don't think it's true, not that it's unclear. You can pay in local currency, for example, and there are other ways as well. $\endgroup$ – user1095108 May 26 at 2:13
  • $\begingroup$ I'm firmly convinced, that deals can always be made, as long as something worthwhile is actually being produced. That's why I'm concerned about the GDP numbers. $\endgroup$ – user1095108 May 26 at 12:54
  • $\begingroup$ Except the DDR didn’t use a gdp. And historically deals weren’t made. The economic history of the DDR was one of foreign exchange shortage and non-convertibility. In economic history the case study trumps theory. The easiest way for you to maintain your belief in the face of evidence is to consider some decisions by the SED such as parity with the Bonn mark or planned capital good purchases in convertible exchange as over determining the possibility of banana deals. $\endgroup$ – Samuel Russell May 26 at 21:10
  • $\begingroup$ Yet, the DDR never defaulted, a positive economic indicator, there was a higher population growth than now and almost full employment, all positive indicators. $\endgroup$ – user1095108 May 28 at 11:49

You seem to be a native English speaker, and that implies you probably earn more than I do. (Trust me on this.) Do you want to buy my rocking chair, car or flat? While these are all possible options, that does not mean it is the best use of your limited funds.

Do you have reason to believe that East Germans desperately needed bananas?

P.s. Even the pricing is a bit off, as you are competing with other foreigners for these export goods, not the natives.

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    $\begingroup$ Foreigners also want the best possible price for bananas and yes, the lack of tropical fruit was a major issue in communist nations politically. Were are thinking apes, you see. Folks would say: see, we can't even buy a banana, while westerners could. $\endgroup$ – user1095108 May 24 at 13:37
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    $\begingroup$ There were several major issues in communist countries, perhaps they did not think bananas were the most important one. $\endgroup$ – Giskard May 24 at 13:55
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    $\begingroup$ @user1095108 I think it does not matter if I underestimate it or not - question is did the DDR government underestimate it? Was this a major issue according to their beliefs when they allocated their scarce funds? $\endgroup$ – Giskard May 24 at 16:46
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    $\begingroup$ "Were they scarce"? In the DDR? Compared to Western countries it was. "They were producing something". Sure? How does this contradict scarcity? You know, I guess there is no need to carry on in the comments, this just is not the answer you are looking for. That is fine by me. $\endgroup$ – Giskard May 24 at 16:57
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    $\begingroup$ @Giskard maybe harsh was a wrong word, to me your answer seems to to be a bit dismissive of the question (maybe that’s better word I don’t know) answering the Q in terms of preferences and seems to imply that the answer is self evident. Although I see where you are coming from and in fact it I agree that bananas must have been the least of DDR worries, but it doesn’t not address the core of a question why there were shortages. Bananas were presumably not important in US yet people could get them. While I don’t disagree with your answer I also think it does not address the underlaying question $\endgroup$ – 1muflon1 May 25 at 10:25
  1. there actually were some bananas in communist countries. There was just shortage of bananas and other products as well such as toilet paper etc.

As this article from Financial Times shows, there actually were some bananas in East Germany.

Near the queue, locals were doling out used toys and bananas (the West Germans believed the East Germans didn’t know what bananas were). “But we had bananas from Cuba,” Meinfelder says in exasperation.

So there were bananas in communist countries but there was a shortage of them, and as with other products their availability for you dependent on your contacts and what (political) class you were member of (shopkeepers would often set aside high in demand products for friends). Prominent members of party had access to things ordinary people not in special shops reserved for them and so on.

  1. Why there was a shortage of bananas?

Because, centrally planned economies are very inefficient when it comes to aggregating the information about what consumers want compared to market economies which aggregate the information using price system. Moreover, price system provides not just information to market participants but also gives them incentives to behave in a way to avoid surpluses and shortages on the market, whereas in the centrally planed economies there are no efficient mechanisms to achieve that.

For example, central planners might decide that the quantity of bananas they want to import should be some $x$ based on their calculation of how much bananas an average person could eat in a year. Afterwards, the central planners decide on price not in a way which they think the supply equates the demand (and in fact central planners are even not able to get such information since market mechanism is absent - so they cant do that even if they would wanted), but in a way they believe it is appropriate by making guesses or following some political/ideological/moral criteria.

For example, if a demand for bananas is given by $D_{b} = 100- p $, where $p$ is the price, and supply of bananas is given by $ S_b= -10 + p$ (lets say this is the supply at which Cubans are wiling to send bananas to East Germany) then at a market price $p=45$ there will not be any shortage of bananas. At price $\$55$ people will demand exactly $45= D_b$ bananas and supply of bananas will also be exactly $45 = S_b$.

But if someone just arbitrarily decides to set price to $\$20$ - maybe the political leadership wants to make bananas affordable to everyone, the demand for bananas at $\$20$ will be $80 = D_b(\$20)$ while the Cubans will only be willing to supply $10$ bananas $S_b(\$10) = 10$. Hence people will want to buy 80 bananas but stores will only have 10 and there will be shortage. During shortages goods are often being allocated through personal favors, or first come first served system, or goods might be reserved for members of 'upper class' (i.e. politburo) and so on. This is why many communist countries experienced long ques shortages and economic malaise in general.

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  • $\begingroup$ If I understand correctly, bananas should have been on display (like in North Korea today), but no one could possibly afford them. This would then solve the shortage problem. People would not feel there was a shortage, as they could buy a banana at any time, if only they had the money for it. A shortage is how people feel about availability of something. Actually, in many poor Asian countries today, you can see shops are full, but almost no one can afford anything. Basic items like refrigerators are guarded by armed guards. $\endgroup$ – user1095108 May 24 at 14:03
  • $\begingroup$ @user1095108 it wasn’t necessarily about being able to afford them. In fact as mentioned above there problem was probably that the price was too low. Rather the problem is that if the price is too low many people will want to buy bananas, while relatively few people will want to sell them -that creates shortages. The experience, of many poor Asian countries nowadays is not exactly the same as many have sort of market mechanism where there is no shortage per se but people are not able to afford products because they are too expensive but that’s not the same as shortage economically speaking $\endgroup$ – 1muflon1 May 24 at 14:16
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    $\begingroup$ It is the opposite of what was the case in communist countries. The price can also be set too high, not too low, but then there is no shortage - this is what I wanted to say. There won't be a perception of a shortage, if the price is too high. $\endgroup$ – user1095108 May 24 at 14:20
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    $\begingroup$ The point is that when central planning failed to match supply and demand there would be shortages, followed by queues when new stock arrived. This could include bananas and many other things, but there was nothing special about bananas beyond being imported from outside East Germany so more likely to face such issues. On the other hand cheap plentiful bananas were a West German political obsession, causing all kinds of problems for decades in the EEC/EU with France who wanted to protect its (ex-)colonies against Central American competition, leading to a major trade dispute with the USA $\endgroup$ – Henry May 24 at 20:29

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