The Nazi Economy

DANIEL.DAVIES at flemings.com DANIEL.DAVIES at flemings.com
Wed Jan 5 05:41:21 PST 2000


Ulhas wrote:


>Absolute surplus value is hardly non-capitalist mode of production.

Sorry, that sentence is badly written. It should be saying that *neither* a switch from relative to absolute surplus-value *nor* a switch from capitalist to slave mode of production is going to account for an economic boom. The first would imply that the marginal (material) productivity of labour in Nazi Germany was greater than that of capital, by a sufficiently large degree to account for the boom, which seems improbable; the second would imply that slave production is more efficient than capitalist, which might or might not be true but seems to definitely contradict historical materialism.


>DD seems to believe that policies and programmes of the bourgeois state
can
>eliminate business cycle. This would have to be established.

That's true. Although actually I think I can actually get away with the much weaker Keynesian/monetarist conclusion that economic policy can *influence* the business cycle. All I really need is the proposition that a large monetary expansion financed by a large international transfer payment (default on debts) is sufficient to engineer a boom.

With emphasis on the word "sufficient" there, and its implication that if a sufficient condition is present, no other condition prevailing at the time can be considered a cause.(J Mackie's definition). That's what makes me think that the rest of what happened in 30's Germany (including the public works, etc) was not part of the cause of the boom, and therefore not necessarily part of what Keynes was endorsing. I don't want to deny that enslavement, supression of unions, etc happened, or that they were part of Nazi economic policy. I've only ever been making the claim that, /pace/ Kalecki and Doug, the (monetary) causes of the boom are separable from the rest of Nazi policy.

Utterly without permission, I'll quote out of context these words from one of the greatest economists of the late twentieth century (who may recognise them):

-------------------------
>>"The industrial policies of the Third Reich were in the beginning the
brainchildren of Hjalmar H.G. Schacht, who assumed office as president of the central bank under Hitler in 1933, and because [sic-dd] finance minister in the following year. Schacht was one of the few finance ministers to take advantage of the freedom provided by the end of the gold standard to keep interest rates low and government budget deficits high: massive public works funded by large budget deficits. The consequence was an extremely rapid decline in unemployment--the most rapid decline in unemployment in any country during the Great Depression. Eventually this Keynes-like policy was to be supplemented by the boost to demand provided by rearmament and swelling military spending.

In the longer run the corruption and bureaucracy that the Nazi government imposed on the government would slow Germany's economic progress. Hjalmar H.G. Schacht was replaced in September 1936 by Hitler's lieutenant Hermann Goering, with a mandate to make Germany self-sufficient to fight a war within four years (and to acquire a vast industrial conglomerate from looted Jewish-owned properties for himself. Under Goering imports were slashed. Wages and prices were controlled--under penalty of being sent to the concentration camp. Dividends were restricted to six percent on book capital. And strategic goals to be reached at all costs (much like Soviet planning) were declared: the construction of synthetic rubber plants, more steel plants, automatic textile factories.

The replacement of Schacht by Goering was fortunate for the rest of the world: the German economy during World War II was not as strong, and hence could not give as much support to the military, as it might have."<< -------------------------------

Which is not as pure a monetary explanation as my personal taste would dictate, but seems close enough for rock'n'roll.

While I'm here, Doug said:


>And sterilized politically by busting unions and sending the
>unemployed to work camps.

Which seems wrong to me -- shurely it's contractionary policies whose effects need to be sterilised politically, not expansionary? I have an uncomfortable feeling that I'm missing something.

And (sorry for length, but overlimit yesterday) KL said:


>Second, the monetary manipulations were trivial in
>this context and, in any case, no different in kind from what Schacht had
>done previously during the Weimar years, so not a distinctive feature of
the
>Nazi economy.

Which is not really true. For one thing, Germany was on the Gold Standard for all but two of the Weimar years, which strikes me as a very significant difference in kind. For another, Germany did not carry out its first large-scale defaults on Montagu Norman's "Hitler Bonds" until 1934, which marked another qualitative change in its ability to carry out expansionary monetary policy. And finally, "no different in kind" is a weasel phrase here -- differences of degree *matter* when the context is monetary policy.

And also:


>If Daniel thinks that central bankers are in themselves the ruling class,
or
>its determining sector, I think the discussion has sunk to the level of
>kindergarten for socialists, which doesn't interest me.

Sod that for a game of soldiers! On many occasions, myself and others have gone through points about banks, financial markets, etc for anyone who asked, in order to promote mutual understanding. All I'm asking for is some clarification of how:


> [Ken] That inverts the relation between the ruling class and its
>central banker

is such a fantastic argument to establish the proposition:


> > [Ken:] Anyone who regards Schacht's
> > monetary tricks as crucial must regard Alan Greenspan as the U.S.
> > sovereign
> > today.

For what it's worth, the relationship between the ruling class and the central bankers *has* changed in the last ten years, beyond belief, and for the well-established reason that monetary sovereignty in the hands of anyone but a neutral technocrat has known severe problems. Although, frankly, the idea of further discussion with a man who pulls out the New York Times style guide for his correspondence doesn't exactly have my heart doing back-flips, either.

slightly cross regards,

dd

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