INDUSTRIAL ORGANISATION IN GDR AND FUTURE POSSIBILITIES 39 enterprises and for beginning bankruptcy procedures. The traditional avenues open to enterprise management to project jobs are formally precluded by the reforms. Self management implies that the top enterprise management is now to be periodically elected for a five year term, by a workers* conference in multi-candidate elections. Management would be required to work in close association with the workers' council in devising ways to improve enterprise performance. In addition, private and cooperative activities will be encouraged in the service sector, consumer goods sector and a few branches of industrial goods. In the case of NES3 in GDR, the annual plans and material balancing were not abolished completely. However, the enterprises received a considerably reduced number of plan indicators which were also modified. Karen (1973a) has compared the details of plan indicators in the pre NES days (1963), middle of NES (1966) and towards the end (1969/70). Thus, instead of defining the complete assortment that an enterprise should produce, only output targets for important products were given. Average wage indicator was first removed and then the specification on the number of workers was also removed. Only wage fund indicator remained. At the same time material balances to be handled by the central authority also reduced. The State Planning Commission and the National Economic Council were responsible for some 1200 balances in 1963, for 20 per cent of this number in 1966 and for under 12 per cent, in 1967. On the other hand the commodity balances, for which VVBs and VEBs were responsible, increased by nine times during this period (Karen, 1973a). The importance of inter-enterprise contract as an instrument for coordination increased vastly. The 1968 balancing decree made long-term inter-enterprise contract binding on the balancing organs, unless they contradicted the plan. If such contracts were otherwise over-ridden by the balancing organ, it was to idemnify the party. The set of economic and financial levers introduced, for indirectly steering the economy, included the following measures. 1. Gross commodity production was replaced by profitability as the main performance indicator. Although other indicators were not withdrawn completely, bonus fund was mainly dependent on net profits of the enterprise. 2. In order to avoid wasteful use of capital goods, a capital charge of 6 per cent was imposed. Wastage of capital goods rather than shortage of energy or raw material was the main source of preoccupation in the sixties. 3. According to the principle of autonomous fund-raising, the enterprise investments were to be financed from their own funds supplemented by credits. The state control on enterprise behaviour was retained through (i) net profit levy, which gave preferential treatment to the branches to be developed faster, (ii) a judicious credit policy; and , most ^