JAYA MEHTA" Industrial Organisation in the GDR and Future Possibilities Gorbachev's complete change of paradigm with respect to inter-state relations and the accompanying domestic reforms have aroused serious concern in many quarters. It is feared that the changes taking place may entail erosion of the socialist base in the Soviet economy. If such a trend should continue, it would have serious implications not only for the other socialist countries but for all progressive movements, which consider the socialist world as their natural ally. The Soviet leadership, however, insists that the reforms aim towards 'more socialism'. The Soviet economy had stagnated during the Brezhnev era and rampant inefficiency and courruption in all spheres has led Soviet society to a crisis situation. It is, therefore, absolutely necessary to restructure not only the planning and management system but also the political process in order to ensure the benefits of socialism to the Soviet citizens. Accepting the premise that the basic character of a socialist state is not to be compromised, it becomes necessary to investigate in detail the possibility that the given set of measures would enable a successful transition from an extensive to intensive path of development. The particular management details in a socialist state, namely the extent of decentralised decision making and the use of economic and financial levers, depend on the specific historical situation of the economy. It is not necessary to have a uniform management model throughout the socialist world. Gorbachev himself has repeatedly insisted on the necessity and desirability of pluralism. Nevertheless, Eastern Europe watches Soviet developments with keen interest. Apart from the implications for the CMEA co-operation every country looks for solutions to its own management problems in the Soviet experiments.1 The reactions of different countries vary widely. Hungary and Poland have welcomed the new trend enthusiastically as it conforms to their own framework—more economic in the case of Hungary and more political in the case of Poland. On the other hand * Gokhale Institute of Politics and Economics, Pune.