fwd: Another Nazi Myth Bites the Dust

Rosser Jr, John Barkley rosserjb at jmu.edu
Mon Oct 5 10:32:38 PDT 1998

--- Begin Forwarded Message --- Date: Sun, 04 Oct 1998 09:38:44 -0400 (EDT) From: "LYNN TURGEON, PROFESSOR EMERITUS OF ECONOMICS, HOFSTRA UNIVERSITY, ECOELT at VAXB.HOFSTRA.EDU" <ECOELT at Hofstra.edu> Subject: Another Nazi Myth Bites the Dust Sender: owner-pkt at csf.colorado.edu To: POST-KEYNESIAN THOUGHT <pkt at csf.colorado.edu>

Reply-To: pkt at csf.colorado.edu Message-ID: <01J2KF5VUG508Y4XF5 at Mail.Hofstra.edu>

The following review of Dan Silverman's "Hitler's Economy" has been sent to Amazon.com:

According to conventional wisdom, as a result of Nazi rearmament, Hitler's economy went from 34% unemployment when he entered office in early 1933 to virtually full employment by 1936. Professor Silverman, on the other hand, argues as a result of impressive research in Nazi archives, that it was work creation programs that account for this "miracle" and it was the 4-year plan announced in 1936 that represented a new emphasis on autarky and the rearmament program that produced over-full employment and a seller's market.

It is surprising how conservative Hitler's initial plans were since they relied on the financial expertise of Hjalmar Schacht, who was replaced by Walther Funk after the announcement of the four-year plan. The early years represented considerable continuity with the Bruning policy, particularly the Fritz Todt plans for motorization and the famous autobahns, one of the positive legacies of Hitler.Silverman's account of sharp regional differences is also interesting with East Prussia getting back to full employment at an early date and Aachen lagging.

It is natural to compare Hitler's achievements with FDR's New Deal which initially had to deal with only 25% unemployment. Generally speaking, Hitler was the more successful, particularly in view of FDR's attempt to balance the budget in 1937 thereby producing the Roosevelt recession and a rise in unemployment from 14 to 19 percent in 1938. While Currie and Eccles managed to achieve the Keynesian euthanasia of the rentier in the late 30s, Roosevelt was overall a timid Keynesian until World War II and was plagued with double-digit unemployment until 1941.

FDR devalued the dollar in 1933 by about the same percentage as Britain in 1931 but Hitler and Schacht ruled out currency devaluation because of fears that it would be inflationary. Policies under the Bruning government had been brutally deflationary with workers taking a 10% cut in wages, but the 1923 hyperinflation (and Schacht's role in stopping it) was still fresh in policy-makers minds, Workers in volintary labor camps (like the New Deal's CCC) which absorbed unemployment were paid very low wages and lost their unemployment benefits thereby helping retain price stability.

Strangely Silverman hardly mention the USSR as a source of ideas in the Hitler years although the 4-year plan itself was inspired by thr Soviet FYP, the second of which was being successfully completed in 1937 by the time Goebbels began the German equivalent. Earlier (February 1935) Soviet type Workbooks became necessary for employment.

The Russian economy today would seem to have more to learn from the German experience after 7 lean years of deflationary monetarist policy under Yeltsin than from FDR's fiscal bungling. The non-payment of wages and pension arrears is a historic low in the application of the neo-classical notion that attributes recessionary ubemployment to exhorbitant wages

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-- Rosser Jr, John Barkley rosserjb at jmu.edu

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