Friday, March 28, 2014
Book Review 316: The Nazi Economic Recovery 1932-1938
THE NAZI ECONOMIC RECOVERY 1932-1938 (second edition), R.J. Overy. 77 pages. Cambridge University paperback There are two common views of Germany’s economic rebound after the Great Crash: that it was propelled by spending on warlike industries and a big army and air force; or that the Nazis were a sort of proto-Keynesians before Keynes. A later wrinkle on the second view -- because 21st c. rightwingers are desperate to find exculpations for the spectacular failure of their ideology in the Bush Crash -- is that because German economic moves were similar to those of the United States, that makes the New Deal fascist. None of this stands up to analysis, as R.J. Overy shows in what is virtually a review article on the economic history of Germany in the ‘20s and ‘30s. (The essay is intended as a scene setter for students, one of a long series sponsored by the Economic History Association.) The first common notion is easily disposed of: German recovery had gotten under way before military spending became important in 1936. In fact, current opinion is that the second Four Year Plan and rearmament retarded expansion by directing effort into unproductive areas. The second notion requires some sophistication to rebut. There is more to Keynesianism than government deficits. And as Overy shows in a long list, the Nazis adopted none of that. Germany was in a worse state than any other advanced state by 1931-32, but there are only a few broad areas in which economic policy can operate. Thus, if taxes are kept very high (as they were in Germany) then consumption must fall. And it did. By 1938, German workers enjoyed full employment (not all of it paid, though), but their pay was held low in both nominal and real terms. A German worker drank less than half as much beer in 1938 as he had in 1927. This was opposite from the situation in the United States, where real wages (for those employed) were higher. Overy does not mention that almost all of the 500,000 Germans who had emigrated to America to find work in the ‘20s returned to Germany after 1933. This makes the full employment regime achieved by the Nazis that much more impressive. Yet not all that impressive. Hitler saw to it that Germany looked busy, but economic expansion rates were considerably lower than in Germany before 1913 or after 1945, or in most of Europe in the ‘30s. Overy considers that politics trumped economics in the Nazi government. “Reemployment and trade revival he (Hitler) regarded as a precondition for further political ambitions.” Also, he had a mystical vision of German peasantry expanding into the east, but German agriculture was very inefficient, so that would have retarded expansion. As many historians have concluded, Nazism in practice was incoherent, with state and party agencies working at cross purposes and all of them imjecting bureaucratic sclerosis into an economic system that was already far behind Britain or the U.S. when it came to efficiency or innovation. The Four Year plans “never quite amounted to a central economic plan.” So much for the idea that because the movement’s name was National Socialist German Workers Party, it was socialist. It is a fair judgment on the depth of understanding of American rightwingers today that they can believe such nonsense. Nor was it, as noted above, pro-worker (though it was certainly national). But neither was it a party beholden to big business. The Nazis promised everything to every faction but in the end kept it all for the party.