Thursday, December 10, 2020

The Nazis and the Centrally Planned Economy That They Ran

 Richard Ebeling has a very important essay out, Why Hayek was Right About Nazis Being Socialists.

The essay is Ebeling's response to an article that appeared in the Washington Post ( December 5, 2020).  by  Ronald J. Granieri, “The Right Needs to Stop Falsely Claiming that the Nazis were Socialists” 

Ebeling reports that Granieri "seethes with frustration that those he calls on the political 'right' attempt to classify the German Nazi regime of the 1930s and 1940s as 'socialist.' Yes, the formal name of the Nazi Party was the National Socialist German Workers Party. But in his view, while the Nazis did impose an extensive degree of government intervention and control over the private sector, 'their ‘socialism’ was at best a secondary element in their appeal.'”

 Granieri goes on to write:

The Nazi regime had little to do with socialism, despite it being prominently included in the name of the National Socialist German Workers’ Party. The NSDAP, from Hitler on down, struggled with the political implications of having socialism in the party name. Some early Nazi leaders, such as Gregor and Otto Strasser, appealed to working-class resentments, hoping to wean German workers away from their attachment to existing socialist and communist parties...

Instead of controlling the means of production or redistributing wealth to build a utopian society, the Nazis focused on safeguarding a social and racial hierarchy. They promised solidarity for members of the Volksgemeinschaft (“racial community”) even as they denied rights to those outside the charmed circle.

So on a very technical basis if we define socialism as government ownership of the means of production. which is the Merriam-Webster definition:

 1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods

2a: a system of society or group living in which there is no private property

b: a system or condition of society in which the means of production are owned and controlled by the state

then  Granieri is correct. Ebeling in his essay attempts to dispute this and closes this way:

Like many others over the more than one hundred last years, Ronald Granieri may very well pooh-pooh this because he may not consider some loss of personal liberty something much to despair when it’s replaced with compulsory political paternalism that “guarantees” various material wants for some that he considers more important than the degree of freedom forgone by some others. 

But I would ask him to at least admit that this is freedom lost for a coerced “security,” for which some have had to be plundered; that is, have part of the income and wealth that was theirs taken from them without their voluntary consent. It is still a compulsory “taking,” whether done by a voting majority or dictatorial elite. 

And I would further ask him to concede that whether he agrees with the ends and goals of other socialists, their use of command and control and their introduction of some form of institutional central planning to pursue their declared “social good” makes their system just as much a “socialist” one as any other that Ronald Granieri might endorse or look more favorably upon. So, whether he likes it or not, the Nazis, too, were socialists, just a different stripe than the ones he feels more comfortable with.

Ebeling from my perspective is attempting to fit a square peg in a round hole here.

The better perspective is to recognize that both socialist governments and the Nazi government had centrally planned economies and that this is the problem. As Mises and Hayek have taught us the world is too complex to be centrally planned in any fruitful manner. 

Ebeling in his piece is brilliant in identifying the many ways that the Nazi government was centrally planned, although property, with extremely regulated limited rights, remained private. The Frankfurt Stock Exchange even continued to operate during the entire Nazi regime, admittedly on a limited basis, but even when the Frankfurt Stock Exchange building was badly damaged during an allied air raid in 1944, the stock exchange trading continued to be held in the cellar rooms of the building

From Ebeling's piece:

[T]he Nazis had a utopian vision for the future; it began with their notion of German race purity on the basis of which they rejected the older Prussian idea of aristocratic and class hierarchy. All “real” Germans were equal and were to be given opportunities for education, occupational and professional advancement as the means by which they could make their contribution to the high good of the German people as a whole. 

That Nazi egalitarianism was limited to only those “real” Germans possessing the racial characteristics that guided their ideological thinking, with Jews classified as the lowest and most treacherous of race enemies, does not change the fact that they, too, were “utopians” with social equality goals, but only for those within the “in-group.” This was nothing but a variation of the Marxist theme that the world is divided into irreconcilable social classes, with the “capitalists” being the inescapable “class enemies” of “the workers.” And as in the Soviet practice, they and their children were stripped of all rights and opportunities, and made into permanent pariahs to be reeducated to serve “the building of socialism” or liquidated.  

But what about National Socialist economics? Let us look at Gustav Stolper’s German Economy, 1870-1940 (1940). Stolper was the long-time editor of a German economic magazine oriented toward a classical liberal viewpoint. He was forced to leave Germany with Hitler’s rise to power due to his politics and his Jewish family background, and found refuge in the United States. Stolper explained some of the socialist aspects to Nazi ideology and policy:

“The National Socialist party was from the outset an anti-capitalist party. As such it was fighting and in competition with Marxism . . . National Socialism wooed the masses [from three angles]. The first angle was the moral principle, the second the financial system, the third the issue of ownership. The moral principle was ‘the commonwealth before self-interest.’ The financial promise was ‘breaking the bondage of interest slavery’. The industrial program was ‘nationalization of all big incorporated business [trusts]’.

“By accepting the principle ‘the commonwealth before self-interest,’ National Socialism simply emphasizes its antagonism to the spirit of a competitive society as represented supposedly by democratic capitalism . . . But to the Nazis this principle means also the complete subordination of the individual to the exigencies of the state. And in this sense National Socialism is unquestionably a Socialist system . . .

“The nationalization of big industry was never attempted after the Nazis came to power. But this was by no means a ‘betrayal’ of their program, as has been alleged by some of their opponents. The socialization of the entire German productive machinery, both agricultural and industrial, was achieved by methods other than expropriation, to a much larger extent and on an immeasurably more comprehensive scale than the authors of the party program in 1920 probably ever imagined. In fact, not only the big trusts were gradually but rapidly subjected to government control in Germany, but so was every sort of economic activity, leaving not much more than the title of private ownership.” (pp. 232-233; 239-240)

 Guenter Reimann, in The Vampire Economy: Doing Business Under Fascism (1939), highlighted that while most of the means of production had not been nationalized, they had nonetheless been politicized and collectivized under an intricate web of Nazi planning targets, price and wage regulations, production rules and quotas, and strict limits and restraints on the action and decisions of those who remained; nominally, the owners of private enterprises throughout the country. Every German businessman knew that his conduct was prescribed and positioned within the wider planning goals of the National Socialist regime.

Not much differently than the state factory managers in the Soviet Union, even at that time under Stalin, the German owners of private enterprises were given wide discretion in the day-to-day management of the enterprises that nominally remained in their possession. But Nazi planning agencies set output targets, determined input supplies and allocations, determined wage and work condition rules, and dictated the availability of investment funds and the rates of interest at which they could be obtained through the banking system, along with strict central control and direction of all import and export trade...

In other words, extensive and intrusive government regulations, restrictions, redistributions, and imposed centralized plans demonstrate what Friedrich A. Hayek was arguing over 75 years ago in The Road to Serfdom: that the more government command and control replaces market-based choices, decisions, and opportunities, the less freedom we have over increasing corners and aspects of our lives. (See my articles, “Is America Still on F. A. Hayek’s Road to Serfdom?” and “F. A. Hayek and Why Government Can’t Manage Society”.)

The problem with insisting that Nazis were socialists is that socialists can respond the way Granieri has, that the means of production in Nazi Germany remained in the hands of businessmen---as if that meant anything when the focus should be that both types of regimes maintain centrally planned economies and that is the primary problem.

College students now flirting with socialism are going to buy that Nazi Germany was evil but not socialist and dismiss the connection there, but if it is presented to them that Nazi Germany was a centrally planned economy and that socialist economies are also, and that this is the problem, then it would be a little bit more difficult for them to carry around pictures of Chairman Mao.



  1. I prefer your take on it. There's a meme with a triangle of fascists, socialists, and (classical) liberals and all three are pointing at the other two saying "You two are really the same." Despite their bitter hatred, fascists and communists have more in common than they realize.

  2. I also agree that the main focus/argument should be that the Nazis believed in and had a centrally planned economy. Whether you call it socialist or not is besides the point. However, I do not think Ebeling is wrong to argue the Nazis were socialist. As the numerous examples you cited illustrate, all the major corporations were private in name only being fully or near fully directed by the state. I suppose the argument is over what degree of socialism has been enacted. To me, the strongest point that they were fully socialist is the "'the commonwealth before self-interest,’" motto is most telling. I guess that just takes us back to what is your definition of socialism and if it's strictly state ownership of the means of production then technically you can argue the Nazis weren't fully socialist and round and round we go.

  3. Socialist claim that fascists leave the means of production with private parties but, when almost all private life is controlled by the state (as the whole western world has been heading toward) the line between private and public become meaningless. To say the NAZI’s were not socialist may be technically correct but the actual living conditions were that of living under centrally planned tyranny, similar to socialism.

  4. The gravamen of the animus and rivalry between Commies and Nazis in Weimar Germany and into the 30s was not ideology, but rather that both groups were in heated contest for control of the levers of power. But both were socialist, only using different methods and by different degrees. Will historians someday argue that Republicans and Democrats are on polar sides of the spectrum purely because of the intense hatred and animus they have for each other, and the ever more disturbing extremes the take in achieving political hegemony?
    Also, clearly the Nazi regime had constructive or de facto ownership of the means of production, if not technically de jure ownership: They had control over what was produced, how it was produced, the quantity produced, the prices levied on that which was produced, who it was sold or provided to, where the materials or inputs came from that were part of that production, how it was transported, who was employed in production, how much employees were paid, etc. etc.; If that level of control, planning and direction doesn't render property rights hollow and in-name only, and render government the true owners of the means and distribution of production, then our definition of socialism is too narrow.
    Again, fascism and socialism are slightly different flavors of the same thing---like French vanilla vs. regular vanilla---but not apples and oranges.

  5. I agree with your nuance, but if someone owns something but is told that they must only use it in a certain way then the fact that their name is on the deed is really just a formality. We know from the experiance of the Krupp company that property was far from assured.