In 1949 the constitution formally established a democratic federal republic and created the states chamber and the people's chamber. The third Party Congress in July of 1950 began to emphasize the industrial progress. The industrial sector had employed 40% of the working population, and was subjected to further nationalization, which formed the People's Enterprises.

In March of 1953 Stalin died and in June of 1953 the SED announced the New Course, which was to help give workers an improved standard of living. The policy was initiated by Soviet Unions Georgi Malenkov, who stressed a shift in investment toward light industry and trade and greater availability of consumer goods. There were still high quotas though, despite the increase in consumer goods workers could get.

By 1961 the socialist sector produced 90% of East Germany's agricultural products. However, the annual industrial growth rate was declining steadily after 1959. To help this cause, the Soviet Union recommended that East Germany implement the reforms of economist Evsei Liberman. In 1963 Liberman's theories of the New Economic System (NES) were adapted and introduced. The NES was aimed at creating an efficient economic system and transforming East Germany into a leading industrial nation.

The main task in 1971 was introduced by Honecker to help formulate domestic policy. The program helped re-emphasize Marxism-Leninism and the international class struggle. The main task restated the economic goal of industrial progress and was aimed at achieving the context of centralized state planning. Consumer socialism was the new program that was featured in the main task, which was an effort to magnify the appeal of socialism

From the mid-1970's, East Germany remained poised between the East and the West. The 1974 amendment to the Constitution designated East Germany as a socialist nation-state of workers and peasants. Détente helped strengthen the ties between the two Germany's and 5 to 7 million West Germans and West Berliners visited East Germany each year. Personal ties between the two Germany's were becoming restored and East German citizens had more direct contact with West German politics and consumer goods.

The growing international debts of the GDR lead to an international debt crisis within a year or two. With continuous debt problems going into the 1980's, the end of East Germany followed the March 1990 elections, as there was a financial collapse in the months up to reunification.