Hitler and Capitalism

John Ralston Saul

[This is the fourth 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.) The entry below follows a third installment which attempted to clear up some common misconceptions about fascism which many see as threatening to take over the U.S. today just as it did Germany in the early 1930s. Fascism, the last entry concluded, might best be defined as “capitalism in crisis.” The current installment looks more specifically at Hitler’s relationship to capitalism. (Unless otherwise indicated, all references are to Jackson Spielvogel’s text, “Western Civilization,” a source commonly used in courses by the same name in colleges and universities.)]

To understand Adolph Hitler’s connection to capitalism, it helps to distinguish common perceptions from what textbooks like Spielvogel actually say. Common perceptions are that the German economy was devastated following World War I. The impositions of the Treaty of Versailles are well-known. Images of Germans marshaling wheelbarrows full of deutsch marks to pay their grocery bills are fixed in everyone’s mind. After the Great War, inflation was rampant. In such context, Hitler’s rise to power is typically explained as the reaction of a humiliated German people to the Allies’ shortsighted demands for war reparations and border concessions inherent in their Treaty. Germans were so desperate, the story goes that they turned to a madman, Adolph Hitler, to restore their national pride.

Of course, there is truth to such understanding. Germany’s economy was in a shambles after World War I. Inflation had reached unprecedented levels. Ordinary Germans saw their earnings and pensions disappear. They were humiliated, desperate and in search of an alternative to the Weimar Republic which was under fire from factions on both the left and the right.

However, two key realities, relevant to the argument at hand, are often overlooked about Germany’s post-World War I situation. The first reality is that by the time Hitler emerged as a serious factor in the German political scene, the country’s economy had long since been intensively and triumphantly capitalist. Already by 1870, Germany had become Europe’s undisputed industrial leader, replacing Great Britain in that role (Spielvogel 682). By the 1920s, the country’s real reins of power were firmly in the hands of capitalist giants.

Germany’s most effective leadership came no longer from the aristocrats of William II’s Empire. Much less was it provided by Paul von Hindenburg, the backward-looking monarchist who succeeded Friedrich Ebert and Gustav Stresemann to head the country in the mid-twenties. Instead, leadership and power found location in the private enterprises today being sued for compensation by those they employed as slave labor during Hitler’s Reich. That leadership resided in banking industry giants such as Deutsche Bank and Dresdner Bank; in auto-makers, Volkswagen and BMW; in chemical and pharmaceutical companies Bayer, Hoechst, and BASF; in industrial firms Degussa-Huels, Friedrich Krupp and Siemens; and in the Allianz Insurance Company.

Secondly, Spielvogel makes it clear that Germany’s economy had largely rebounded from the devastation inflicted by the Treaty of Versailles. In fact, from 1924-1929, the country actually participated in “the Roaring Twenties.”

“The late 1920s were . . . years of relative prosperity for Germany, and, as Hitler perceived, they were not conducive to the growth of extremist parties. He declared, however, that the prosperity would not last and that his time would come” (796).

Hitler, of course, was correct that his party’s time had not yet come. During the ‘20s, Hitler’s Nazis remained a minor right-wing faction. For example, in the elections of 1928, the Nazis gained only 2.6 percent of the vote and only twelve seats in the German Parliament (796).

Hitler was also correct that his time would come. It arrived with the onset of the Great Depression (796). The collapse of market economies throughout the industrialized world had their leaders scrambling to save a system that seemed moribund. Socialists and communists were gleeful and ascendant. Indeed, in 1934, Josef Stalin convoked a “Congress of Victory,” to celebrate socialism’s apparent triumph over capitalism and what he called “the end of history.”

As Spielvogel reports, such threats from the left forced German capitalists to turn to Hitler as their Messiah. Industrialists and large landowners provided the firm base of support he needed. More specifically, the elite were fearful, because the Depression’s economic hard times had given heart (and popular appeal) to socialists and communists who in Russia had seized power in the Bolshevik Revolution of 1917. Spielvogel writes:

“Increasingly, the right-wing elites of Germany, the industrial magnates, landed aristocrats, military establishment, and higher bureaucrats, came to see Hitler as the man who had the mass support to establish a right-wing, authoritarian regime that would save Germany and their privileged positions from a Communist takeover” (796).

The capitalist nature of Hitler’s system stands clear in this description – though it is fogged by circumlocutions. The attentive reader should note that, along with the military hierarchy and government administrators, the powers behind Hitler’s takeover of Europe’s leading capitalist nation are the captains of industry and large landowners.

Spielvogel’s avoidance of the term “capitalists” seems dictated by concerns about “political correctness” in a textbook intended for educational institutions whose mission is to inculturate rather than to raise consciousness. Once again, such avoidance contributes to general misconceptions about the nature of the Nazi regime.

(Next week: Capitalist Support for Hitler)

Fascism Is “Capitalism in Crisis”

Princess Bride

This is the third installment in a series on “How Hitler Saved Capitalism and Won the War.”

[Last Monday this series on the Second Coming of Adolf Hitler tried to connect Hitler and the response to the tragedies of September 11th, 2001. In the aftermath of those events, the U.S. Vice President’s wife, Lynne Cheney and her American Council of Trustees and Alumni identified university and college professors as “the weak link in the fight against terrorism.” They found it particularly offensive that some of the latter had identified the September 11th attacks as “blowback” for “American” Hitler-like policies in the Third World. Such response inspired me to do some research on the question paying particular attention to data found in a standard Western Traditions textbook used in many institutions of higher learning, Jackson Spielvogel’s “Western Civilization.” This third installment attempts to clear up some common misconceptions about fascism which many see as threatening to take over the U.S. today just as it did Germany in the early 1930s. (Unless otherwise indicated, all references are to Spielvogel’s text.)]

The thesis here is that privatized globalization is a continuation of Hitler’s system of fascism which is understood here as “capitalism in crisis.” To understand that position, it is first of all necessary to clear up prevailing confusions about fascism itself. Not surprisingly, misunderstandings abound concerning its nature. Most correctly identify fascism with a police state, with institutionalized racism, anti-Semitism, and totalitarianism (though they typically remain unclear about the term’s meaning). Most too are familiar with concentration camps, the Holocaust, and, of course, with Adolf Hitler. Some can even associate the Nazi form of fascism with homophobia and persecution of Gypsies. However, rarely, if ever will anyone connect fascism with capitalism. For instance, here is Jackson Spielvogel’s (Western Civilization) textbook description of Hitler’s thought:

“In Vienna, then, Hitler established the basic ideas of an ideology from which he never deviated for the rest of his life. At the core of Hitler’s ideas was racism, especially anti-Semitism. His hatred of the Jews lasted to the very end of his life. Hitler had also become an extreme German nationalist who had learned from the mass politics of Vienna how political parties could effectively use propaganda and terror. Finally, in his Viennese years, Hitler also came to a firm belief in the need for struggle, which he saw as the “granite foundation of the world.” Hitler emphasized a crude Social Darwinism; the world was a brutal place filled with constant struggle in which only the fit survived” (794).

Here it is interesting to note that racism, especially anti-Semitism, nationalism, propaganda, terror and Darwinian struggle are signaled as defining attributes of the Hitlerian system. Capitalism is not mentioned, though “struggle” is. Perhaps, had the term “competition” been used instead of “struggle,” the basically capitalist nature of “Social Darwinism,” and fascism might have been clearer.

Fascism and Communism

Textbooks typically add to the confusion by closely connecting fascist Nazism and Communism. For instance, Spielvogel’s Western Civilization deals with Hitler’s fascism and Josef Stalin’s socialism back-to-back, linking the two with the term “totalitarianism.” Spielvogel’s transition from one to the other illustrates how the merely mildly interested (i.e. most college students) might come away confused. He writes, “Yet another example of totalitarianism was to be found in Soviet Russia” (801). Spielvogel defines totalitarianism in the following terms:

“Totalitarianism is an abstract term, and no state followed all its theoretical implications. The fascist states – Italy and Nazi Germany – as well as Stalin’s Communist Russia have all been labeled totalitarian, although their regimes exhibited significant differences and met with varying degrees of success. Totalitarianism transcended traditional political labels. Fascism in Italy and Nazism in Germany grew out of extreme rightist preoccupations with nationalism and, in the case of Germany, with racism. Communism in Soviet Russia emerged out of Marxian socialism, a radical leftist program. Thus, totalitarianism could and did exist in what were perceived as extreme right-wing and left-wing regimes. This fact helped bring about a new concept of the political spectrum in which the extremes were no longer seen as opposites on a linear scale, but came to be viewed as being similar to each other in at least some respects” (Spielvogel 789).

Here Spielvogel correctly points out “significant differences between fascism and communism. One is radically right, the other radically left. Nazism is identified with nationalism and racism (not, it should be noted, with capitalism). Communism is associated with Marxism and socialism. In the end, however, the two are viewed as “similar to each other in at least some respects.” Thus, clarity of distinction given with one hand seems to be erased with the other. Confusion is the typical result. Such fogginess might have been cleared had Spielvogel employed greater parallelism in his expression – i.e. had he identified Stalinist communism with police-state socialism and Hitler’s Nazism with police-state capitalism.

National Socialism

Nonetheless, history books and teachers are not solely at fault for student confusion. There are other understandable reasons for the distancing of fascism from capitalism. For one, Hitler’s Party called itself the National Socialist German Workers’ Party (NSDAP). As a result, it is quite natural for students who reflect on the question at all, to conclude that Hitler and his party were “socialist,” or even “communist,” since the two terms are almost synonymous for most Americans. After all, well-indoctrinated students would be justified in reasoning that Hitler did such terrible things he must have been a communist.

Lost in such analysis is the historical realization that during the 1930s, all sorts of approaches to political-economy called themselves “socialist.” This is because they supported state intervention to save the market system that was in crisis during the Great Depression. Thus, there were socialisms of the left as found in Soviet Russia. But there were also socialisms of the right, such as Hitler’s in Germany, Mussolini’s in Italy, and Franco’s in Spain. In other words, interventionist economies easily adopted the “socialist” identification to distinguish themselves from laissez-faire capitalism, which in the aftermath of the Great Stock Market Crash of 1929, had been completely discredited. As we shall see below, in such context (were it politically possible) Franklin Roosevelt’s interventionist program to save capitalism could easily have been called National Socialism instead of the “New Deal.”

However, analysis of fascism’s approach to socialism must recognize the national character of the socialism advocated. [Yet even here, according to Spielvogel, Hitler’s program had a distinctly international dimension eerily evocative of promises associated with the current global economy. Spielvogel recalls, “After the German victories between 1939 and 1941, Nazi propagandists painted glowing images of a new European order based on “equal chances” for all nations and an integrated economic community.” (829)] The critical adjective (nationalist) was intended precisely to distinguish the right wing brand of socialism from its left wing international antagonist. In this connection Hagen Schulze writes in Germany: a New History (2001):

“The catch-phrase “national socialism” itself had been created before the First World War as a means to unite a variety of nationalistic organizations in the battle against “international socialism.” The term was designated to appeal to the working class, but it also proved attractive to young people from the middle and upper classes with romantic notions of Volksgemeinschaft, a “popular” or “national” community” (231)

The implication here is that right wing zealots “co-opted” a popular term to confuse the young – a strategy employed to this day with great success. Here as well one should note that “national socialism” is signaled as a direct opponent of “international socialism.”

Fascism as Mixed Economy

Yet another reason disjoining fascism from capitalism is that fascism was not capitalism pure and simple. (The same might be said of Roosevelt’s New Deal – and even today’s U.S. economy.) Both systems were “mixed economies.” That is, if capitalism’s essential components are private ownership of the means of production, free and open markets and unlimited earnings, socialism’s corresponding elements are public ownership of the means of production, controlled markets and restricted earnings. Both Roosevelt and Hitler combined the two approaches to economy.

Once again, in a period when free market capitalism had been widely discredited, both Hitler and Roosevelt performed a kind of “perestroika.” Soviet Premier, Mikhail Gorbachev would later use the term to refer to the restructuring of socialism, in order to save it by incorporating elements of capitalism. The suggestion here is that more than a half-century earlier, Roosevelt and Hitler had done the opposite; they had incorporated elements of socialism into the capitalist system in order to resurrect it. So, while the means of production most often remained in private hands, others (such as the railroads, the postal system, telephones and highways) were nationalized.

Similarly, while the free market was allowed to continue in many ways, its freedom was restricted by measures socialists had long advocated (e.g. rationing, legalized unions, social security, wage and price controls). Finally, high income taxes were used to restrict earnings and garner income for the state to finance its interventionist programs. [Few recall, for instance, that during the 1940s, U.S. federal income tax rates assessed incomes over $400,000 at a rate of 91% (See Howard Zinn’s A People’s History of the United States, 567-8). Government revenue collected in this way paid for populist programs that modestly redistributed income to the American working class and unemployed. Such redistribution found its way into workers’ pay envelopes, but also took the form of “social wage.”]

None of this is to say that Roosevelt’s and Hitler’s interventionist economies were the same. Mixed economies, after all, are not the identical. The key question for distinguishing between them is, “Mixed in favor of whom?” Some mixed economies are mixed in favor of the working class, others, in favor of their employers. As the product of a liberal capitalist, Roosevelt’s mixture successfully sold itself as the former. That is, while keeping most means of production securely in the hands of capitalists, Roosevelt gained the support of the working classes through his populist programs aimed at gingerly redistributing income downward towards those unable to fend for themselves. In other words, Roosevelt’s “mixed economy” was blended so as to facilitate its defense in populist terms – that is, as mixed in favor of the working class. And the defense achieved plausibility with the American people. Despite objections from more overtly pro-business Republicans, Roosevelt was elected four times in succession. His party remained in control of the U.S. Congress for nearly a half-century.

Hitler had another approach. Influenced by Herbert Spencer and (indirectly) by Friedrich Nietszche (see below), der Fuhrer was an extreme social Darwinist whose programs unabashedly favored elite Aryans and despised “the others,” particularly socialists, Jews, trade unionists, non-whites, Gypsies, homosexuals, the disabled and other “deviants.” On the other hand, Hitler despised “liberal” politicians like Roosevelt, with their programs of social welfare. On those grounds, he vilified the Weimar government which preceded his own. During the early years of the Great Depression, Weimar politicians had attempted to gain the favor of the working class, and to sidestep civil war by implementing wealth distribution programs (233). Funding the programs necessitated tax increases, unpopular with middle and upper classes. It meant strengthening unions along with socialists and communists.

The point here is that is it with good reason that few make the connection between fascism and capitalism. A student of Spielvogel, for instance, would have to be quasi-heroic to do so. After all, he or she would be not only resisting the confusion fostered by the text itself, but would also be swimming against the stream of American propaganda, which treats Hitler’s system as the product of an evil individual, and unconnected with any specific economic system (other than, mistakenly, socialism or communism).

Despite such ambiguity, next week’s blog entry will attempt to demonstrate more specifically that even a closer reading of a text like Spielvogel’s makes unmistakable the connection between fascism and capitalism.