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Asking about Nazi Germany Economy

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LandJ posted on Sat, Apr 6 2013 1:23 PM

 

Many critics admire the economic policies of Nazi Germany. They claim that Germans were prosperous during this period.
 
What was the system back then? Corporatism?
Subsidies? Licensing?
High tariffs?
High taxation?
 
a. Can you inform me about the economy of Nazi Germany, please?
 
b. Assuming that indeed Germans were prosperous then, why would you oppose it?
 
c. Could the same policies apply today in the era of globalization? Why or why not?
 

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Suggested by No2statism

Well, I would assume that it was very corporatist because it is defined as fascists which means basically corporatism.

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I really wish that I kept better notes of what I've read so I could offer you references, but anyway;

Nazi Germany was corporatist, but there is some truth that they were prosperous. Prosperous in the sense that they redistributed the wealth of France and other countries they had conquered into Germany. Of course since all they were doing was redistributing wealth, and not setting up institutions to grow it, it didn't take long before this fake prosperity went away. 

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Marko replied on Sat, Apr 6 2013 2:49 PM

Many critics admire the economic policies of Nazi Germany. They claim that Germans were prosperous during this period.

Really? Like who?

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FDR?  Robert Michaels?  Herman Bormann?

"The Fed does not make predictions. It makes forecasts..." - Mustang19
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https://en.wikipedia.org/wiki/Economy_of_Nazi_Germany

Short version: Keynesianism plus slave labor plus 25% drop in wages, and when that inevitably failed in 1936, total takeover of the economy by the govt. Economic offenses, such as ignoring a price control, punishable by concentration camp.

 

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The Economic Doctrine of the Nazis-Hans Hermann Hoppe

You might find this lecture useful.

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LandJ replied on Sun, Apr 7 2013 5:16 AM
  • - Nowadays, in the era of globalization, would Nazi economy remain competitive?

 

  • - What drawbacks, what would happen in a country with such economic policies and what would be the results, keeping in mind the globalization, the increased global competition etc.
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I believe the economy was prosperous for a time, but at the cost of life, liberty, and property.

The economy wasn't really that much different than FDR's economy because FDR's economy had slave labor (like the concentration camps) also.

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Hitler stopped war reparations payments which was one of the main reasons why the german state had to hyperinflate in the 1920s. With no hyperinflation any economy immediately receives quite a boost.

I think that alone accounts for how he could both fund a socialistic state and keep output and employment growing.

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reparations payments which was one of the main reasons why the german state had to hyperinflate in the 1920s.

Not so. https://en.wikipedia.org/wiki/World_War_I_reparations#Impact_on_the_German_economy

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Answered (Not Verified) Marko replied on Sun, Apr 7 2013 8:14 PM
Suggested by Malachi

From: Cry Havoc: How the Arms Race Drove the World to War

In the summer of 1914, the major European powers plunged into war with
offensive plans for quick victories. By the winter those plans had come
to naught. The elusive short war of maneuver turned into a long one of
trenches and grinding industrial attrition. During 1915, Europe’s political
leaders and general staffs soon discovered that they lacked the deep reserves
of men and munitions to wage what would be called “total war.”

As the battles raged on, governments scrambled to turn whole economies
and societies into gigantic war machines. Raising the vast quantities of men,
money and munitions demanded industrial and popular regimentation on
an unprecedented scale. Peacetime government structures creaked and
groaned under the mounting pressure. Existing bureaucracies swelled, and
new hydra-like mobilization agencies sprang up as powerful emergency instruments
of state control and central planning. While wartime leaders diverted
ever larger percentages of national resources into producing war
materiel, prewar patterns of trade and financial practices became distorted
and market forces were curbed. Those who lived through the war experienced
it as a titanic siege fought between economies and societies racing toward
all-out mobilization.

Naturally, the cataclysm made an indelible imprint on the minds of those
who survived it and who came of age after it. For many officials, soldiers,
statesmen, scholars and industrialists of all political shades, the war had
opened up the awe-inspiring possibility that in the future technocratic elites
could rationally plan and manage entire industrial economies and societies
to realize grand political aspirations. In the years just after the conflict, however,
the overwhelming political impulse among the victors was not to perfect
the wartime practices of centralized state control but to put into reverse
the political, economic and social distortions generated by total war.

During the 1920s one of the major feats of this demobilization project was
the restoration of the pre-1914 mechanism of international currency stabilization
and exchange known as the gold standard. By adhering to the gold
standard, all the capitalist states not only promoted the smooth flow of trade
and capital across frontiers but also locked themselves into a strict budgetary
discipline that would inhibit massive arms build-ups. Among the major capitalist
nations, the onset of the Great Depression from 1929 onward broke
the trend toward demobilization. The industrial slump, the spectacular failure
of markets to self-correct and the breakdown of the gold-standard system
helped to propel into positions of power many cohorts of eager scholars, bureaucrats,
soldiers and politicians who dreamed of salvation through the exercise
of advocated state control over aspects of national life, especially
markets.


During the 1930s, surges of action-reaction among the great powers sped
up the making of ships, tanks, guns and aircraft. Diverting ever more money,
factories imported raw materials and labor to the mass production of munitions
at the cost of profitable exports, and living standards placed tremendous
strains on each nation and each nation’s rivals. In the shorthand of the day,
arming diverted production from butter to guns—or in the case of Japan,
from rice to guns. To do so the competitors found themselves imposing, or
under mounting political, economic and competitive pressure to impose, state
control over economic and social life. Entering the arms race was not a politically
neutral act. The symptoms of escalating arms growth—swelling bureaucracies,
multi-year industrial plans and social regimentation—proclaimed
a new order to come. As the race spiraled out of control, it was no coincidence
that “future war” became interchangeable with “totalitarian war.” Planning
trampled freedom: an efficient war economy was irreconcilable with
parliaments, free markets and social progress. Arming meant turning entire
nations into tightly integrated war machines that were self-sufficient (autarkic)
in food and industrial raw materials. That was the universal militarypolitical
lesson of 1914–18 and the compelling emulate-or-capitulate logic that
drove the arms race forward.

Not everyone reacted to that competitive pressure to conform in the same
way. Some embraced it; others resisted. Everywhere military men saw disciplined
societies and state-managed economies as the logical necessity of modern warfare and
the arms race. Sometimes they met opposition from industrialists and state officials; sometimes they
allied with like-minded entrepreneurs and ambitious civil servants to lobby hard in the budding
bureaucratic power bonanza for industrial concentration, autarky and technocratic
rule. The new revolutionary movements that secured power after
1914–18—Bolshevism, Fascism and National Socialism—were profoundly
marked by that conflict and by a belief in the need to prepare for future
total wars that would demand sweeping mobilization. During the 1930s,
once the arms race heated up and another big war loomed, it was widely accepted
that the states that had already gone totalitarian had a head start in
the race toward all-out social and economic mobilization. Confounded by
runaway German rearmament, the liberal democracies struggled with the
problem of how to arm themselves against the escalating threat of total war
without succumbing to totalitarianism. Some predicted that the Nazi
regime would eventually run out of steam; others thought that the only answer
to the threat was to accelerate the arms race by redirecting ever more
national resources into armaments; and others hoped to buck the relentless
totalizing trend by arming just enough to deter Hitler.

In what follows I hope readers will be struck by the similarities between the
internal political debates and organizational processes over arming that occurred
at different times and in different places. Though expressed in different
tongues, conceptions of the arms race, its logic and the measures it
required, varied little. No matter what type of regime or its military starting
point, the race sent everyone down the same totalitarian track. In the general
effort to turn ideas into reality, similar technical, economic, political and military
problems came up repeatedly. Everywhere the internal debates had a
marked tendency toward rhetorical absolutes with a sharp political edge. Air
force zealots untiringly oversold the capabilities of bombing to win bigger
budgets. Intelligence was prone to inflation or (much less often) deflation of
foreign threats to advance the goals of its advocate. And, as one exasperated
economist noted at the peak of the race, disputes about economic organization
flew off into fantasy. “Much nonsense has been talked in some countries
about planning,” he shrewdly remarked, “and much ink spilt in defence or attack
of economic freedom that never existed and equally of patchwork intervention
that was never logically planned.” Still, however detached from reality
some of the debates may have been, narrating them in parallel, as I do here,
reveals much about how the arms race acted as an agent and a rationale for
action.


Also see: link

Nazi economics did not make Germans prosperous nor was it designed to do so. It was designed to ease military procurement and make Germany into an autarkic great power capable of total war. Those who admired the Nazi (or even more so the Soviet) system did not do so for its ability to bring about prosperity for the people, but for its ability to "rationally plan and manage entire industrial economies and societies to realize grand political aspirations".

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The economy wasn't really that much different than FDR's economy because FDR's economy had slave labor (like the concentration camps) also.

FDR introduced slave labour? Really? Specifically what are you referring to here?

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It is in fact an interesting question, and I think it deserves a couple of answer not to be found in common economic theories.

First of all one should distinguish between pre-war and war time nazi Germany. For example there was in enourmous rise in US GDP during the war, though hardly anyone would consider these "good years". Huge public weapon procurement programs do hardly compare to common economic activity. And surely that is one part of the answer..

It has been noted already, that germans stopped reparation paymens that were a huge burden to their economy before. And it is also correct, that this can not be precisely owed to the nazis, but the overall rise of nationalism and rebellion against allied policies certainly contributed.

It is not true, that the economic build up till 1939 was only due to massive government spending. In fact public debt was relatively stable, and of course sharply down with respect to reparations.

A part of public funding however came from the confiscation of jewish property, and that of course goes well beyond "economic policies". However, on other occasions, "land reforms", which frequently went along with confiscations, had also shown positive effects on economic growth.

But the most important "nazi achievement" was probably an overall mobilisation of people. They had 100.000s of NSDAP members working for free,  building roads, doing social stuff .. whatever. They fought unions and eventually made them illegal. The "master race" was a hard working one as well. Demanding hard work was widely accepted, as economic progress was evident and fears were rather bound to joblessness and poverty. The overall optimism in pre war nazi Germany was also evident in birth rates.

If one could inject such kind of optimism into a democratic society, then for sure there would be some lessons to learn at this point. And maybe programs like "new deal" did just that, without being specifically usefull with regard to their explicit economic effects. The concept would be to make market participant more flexibel in their price expectations, thus solving a lot of issues with sticky prices while encouraging investment...

 

Anyway, war time Germany was a different story again. Specifically in the early years, despite the huge resources gained, german arms production remained at a relatively low level. The nazis thought they had already won the war and had put (too) little effort into producing more arms. It was only in 1943 that they eventually cought up with the pace of allies and soviets, at that time however it was already too late.

 

 

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Answered (Not Verified) Jargon replied on Thu, Apr 11 2013 10:56 AM
Suggested by Neodoxy

The Nazi economic policy is a lot like FDR's, and metroeconomics will show growth in the face of such an explosion. But what kind of economy is this?

http://wiki.mises.org/wiki/Inflation_in_Nazi_Germany

The Nazi policy was essentially to borrow money in an exponential curve, and then when they had no further collateral, to depreciate the currency. They gained wealth from the conquered territories of Africa, France and Eastern Europe and set it towards their goals. But what kind of economy is this?

Sure we can say that FDR's policys tacked on some GDP points, but what's the other side of the story? It's no longer a market economy. It isn't an economy. It's massive government spending fueled by a massive taking-on of debts. Keynesians have long declared that this is 'fine'. That bond-buyers are mentally handicapped. That we can inflate away the debts. That no structural instability comes from debtloads larger than the produce of the country.

The Nazi miracle was not an economy. It was a strategy, and this is it:

Take on enormous debt, transform into greatest war machine in the world while neglecting the citizenry's needs, conquer lands and put their facilities toward your own uses. If they had won, they would have had hard times: hyperinflation again, namely, what with their boatload of debt and already depreciated currency. It's cutting off one's nose to spite the face. That is unless, of course, you think that world domination, occupation, parasitism is a viable economic vision. 

Land & Liberty

The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger

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