Why Did Capitalists Support Hitler?

[This is the fifth entry in a series on “How Hitler Saved Capitalism and Won the War.”(The previous mini-essays are found under the heading “Hitler and Christianity” just below the masthead of this blog site.) I’m running the series because the triumph of “Hitlerism without Hitler” led by the United States is becoming more evident by the day. (Citations here are from Jackson Spielvogel’s text, “Western Civilization,” a source commonly used in courses by the same name in colleges and universities. John K. Galbraith’s “The Age of Uncertainty” (Boston: Houghton Mifflin Co., 1977) and Hagen Schultze’s “Germany: A New History” (Trans. Deborah Lucas Schneider (Cambridge Harvard University Press, 1998) are also cited.]

Capitalists supported Hitler because he would not threaten the most important element of their system (private property), because he would keep their working class antagonists under control, and because his anti-Semitism promised to eliminate a major source of commitment to the victims of social Darwinism. Consider the first two points here. The reasons for Hitler’s anti-Semitism will be discussed later.

To begin with, the most important component of the capitalist system is private ownership of the means of production. To save that, capitalists during the 1930s generally agreed that it would be necessary to tinker with the system’s two other defining elements, viz. free and open markets, and unlimited earnings. That is, to save the system, the German government would have to intervene in markets and modestly limit and redistribute some income. Despite pressure from some in his party, Hitler assured his powerful backers that he would not generally nationalize German industry. Once again, Spielvogel makes this clear:

“In the economic sphere, Hitler and the Nazis also established control, but industry was not nationalized as the left wing of the Nazi Party wanted. Hitler felt that it was irrelevant who owned the means of production so long as the owners recognized their master. Although the regime pursued the use of public works projects and “pump-priming” grants to private construction firms to foster employment and end the depression, there is little doubt that rearmament was a far more important contributor to solving the unemployment problem” (799).

Again, as we shall see below, Hitler’s approach to Depression economics was not far removed from Franklin Roosevelt’s. Consciously or unconsciously, it was classic Keynesianism with its refusal to nationalize extensively, and with its public works and “pump-priming” grants aimed at ending widespread unemployment. John Kenneth Galbraith, Roosevelt’s chief economic advisor, makes this point.

“The Nazis were not given to books. Their reaction was to circumstance, and this served them better than the sound economists served Britain and the United States. From 1933, Hitler borrowed money and spent – and he did it liberally as Keynes would have advised. It seemed the obvious thing to do, given the unemployment. At first, the spending was mostly for civilian works – railroads, canals, public buildings, the Autobahnen. Exchange control then kept frightened Germans from sending their money abroad and those with rising incomes from spending too much of it on imports. The results were all a Keynesian could have wished. By late 1935, unemployment was at an end in Germany. By 1936, high income was pulling up prices or making it possible to raise them. Likewise wages were beginning to rise. So a ceiling was put over both prices and wages, and this too worked. Germany, by the late thirties, had full employment at stable prices. It was, in the industrial world, an absolutely unique achievement.” (Galbraith 213-14)

Galbraith’s words concretize the basic elements of John Maynard Keynes’ interventionist approach to economic reform, which Hitler unwittingly adopted. The key was borrowing and spending with abandon. Railroads, canals and superhighways renovated Germany’s economic infrastructure for capitalists, while putting the unemployed to work. Public buildings were given new faces when administration centers, court houses, libraries and post offices were renovated or rebuilt. Meanwhile, local industry was protected by way of exchange controls preventing the well-to-do from not “buying German.” And, as Galbraiath says, it all worked. Unemployment plummeted; wages, prices and profits rose. Hitler then applied wage and price controls, all with such great success that by 1935 Germany had already largely emerged from its depression. Capitalism had been saved. Socialists and communists had largely lost the grounds for their critique of the system.

Besides his reassuring approach to private ownership of the means of production, Hitler attracted capitalist support because of his labor policy. For one thing, he eliminated labor unions independent of the state. Thus employers were relieved of the threat of strikes and of the necessity of protracted collective bargaining sessions. For their part, workers were impressed by Hitler’s spectacular job-creation programs. They also saw their benefits packages improve, along with free time activities (Schulze 256). The key concept here was that of control. Secretary of Labor, Robert Ley, made sure mollified workers would not prove threatening to their employers.

“The German Labor Front under Robert Ley regulated the world of labor. The Labor Front was a single, state-controlled union. To control all laborers, it used the work-book. Every salaried worker had to have one in order to hold a job. Only by submitting to the policies of the Nazi controlled Labor Front could a worker obtain and retain a workbook. The Labor Front also sponsored activities to keep the workers happy” (Spielvogel 800).

Such pro-capitalist policy and the manipulation of the German labor movement led some on the left to see Hitler as a puppet of “monopoly capitalism.” For instance, a 1932 cover of AIZ Magazine portrayed the “real meaning of the Hitler salute.” It pictured der Fuhrer’s extended right hand raised, palm open, to receive money from a huge bourgeois figure standing directly behind (Schulze 239). The cover’s intention was to unveil the ultimate source of Hitler’s power.