 room to experiment with reforms.
On the very night that the Berlin Wall went up, Ulbricht initiated a program of de-Stalinization, changing the names of streets, squares, buildings, and factories. By 1963, the regime was comfortable enough to announce the New Economic System (NES). Aimed at improving productivity and making management more responsible, the NES was a limited market-oriented system that brought a short-term surge in growth. In the long run, however, the SED was unwilling to surrender enough control over the economy to make the system work. The NES was abandoned in 1970.
Curiously, in 1968 the SED had promulgated a new constitution that not only cemented the party's leading role in politics but also declared East Germany a socialist state, bringing the construction phase to a close. East Germany, however, could hardly be considered successful. The economy was stagnant, and East Germans continued to seek refuge in the West whenever they could. Pressure from the West, in the form of the Hallstein Doctrine, left the state isolated beyond the Soviet bloc.
Ulbricht, aging and increasingly out of touch, was quietly pushed aside in favor of Erich Honecker, formerly head of the communist youth organizations, in 1971. In Cold War terms, West German politics had shifted decisively as well, as the SPD came to power in 1969. As part of an initiative known as Ostpolitik, Willy Brandt, the new chancellor of West Germany, favored opening relations with East Germany. Honecker spoke of "no taboos," indicating a willingness to open East German society and culture, if not East German politics and the Berlin Wall.
The increased flexibility on both sides paid handsome dividends. Brandt opened his initiative with a visit to East Germany in May 1970 to discuss intra-German relations. Progress was limited, however, as Ulbricht insisted on linking other issues to the question of West Berlin's status. Under Honecker, representatives of West Germany and East Germany managed to work out new agreements on transit and tourism (part of the four-power Berlin accord of 1971) relatively quickly. On 8 November 1972, after only six months of negotiations, the two states concluded a Basic Treaty that established relatively normal relations between them. While the two Germanies stopped short of full-scale recognition, the Basic Treaty acknowledged the reality of two states.
This was a major triumph for East Germany, as its diplomatic isolation came to an end. Trade with the West grew substantially, and increasing visits from West Germans provided a steady source of hard currency. To a considerable degree, the West underwrote the refurbishment of the East German infrastructure. This allowed Honecker to implement social programs on a grand scale. Between 1971 and 1980, the regime built more than a million new housing units and renovated half a million more. Economic policy centered on the provision of consumer goods, and the East German standard of living, although still lower than West Germany's, was the highest in the Soviet bloc.
Under Honecker, moreover, the SED regime scaled back indoctrination campaigns, accepting public conformity as being sufficient. Most East Germans went along with the bargain, supporting—or at least not opposing—the SED in public and otherwise retreating into their private lives. Those who continued to criticize the regime openly, such as Wolf Biermann and Vera Wollenberger, usually found themselves "exiled" to the West. The Stasi established an extensive network of spies and informants that effectively quashed any nonconformist movements before they could start.
Honecker's no-taboos state thus evolved into a stagnant society—a "niche society" as Günter Gaus famously termed it—in which stability and outward conformity were most important. The politics of the East German state were nonetheless hollow. Although the SED professed confidence in its support from the population, it consistently refused to allow citizens below retirement age to travel to the West. Supported financially by West Germany and politically by the 