Liberal Fascism

[Kidlicious]

Originally posted by Arrian
Kid,

My recollection of the history of Nazi Germany was that their economic situation pre-war (1939) was tenuous, and w/o the war may have collapsed again.

-Arrian

My view is that planned economies collapse due to war. War strains resources and causes shortages.

You have to remember who is writing the history books, neo-liberal economists.

[Arrian]

Did the neo-liberal economists just make up the part about the Nazis plundering other countries?

-Arrian

[Kidlicious]

Originally posted by Arrian
Did the neo-liberal economists just make up the part about the Nazis plundering other countries?

-Arrian

So you are saying that since the Germans invaded other countries that they had to in order to sustain their economy? That's false. Hitler planned on invading other countries in 1933. It's a historical fact that he told his advisors about his plans in 1933.

[Arrian]

So you are saying that since the Germans invaded other countries that they had to in order to sustain their economy?

No, that's not what I said.

-Arrian

[Kidlicious]

Originally posted by Arrian


No, that's not what I said.

-Arrian

Then the answer to your question is no. I thought it was rhetorical though. I admit, I don't know what your point is.

[Arrian]

My point was that, based upon my recollection of my studies of Nazi Germany, their economic situation right before the war was not good, and the war helped (much like WWII was rather helpful to the USA's economy) - in a sense it saved their economy (temporarily - until the bombs started falling on them).

Saying that does not in any way imply that the Nazis started the war to save their economy. They didn't. As you noted, it's clear Hitler was after war all along. The economy policies he enacted, as I recall them, were designed to gear the country for war.

The economy recovery, as I recall it, was financed by racking up a ****load of debt and then going to war. In other words: unsustainable unless there was war. That was fine by Hitler, b/c he wanted war all along.

-Arrian

[Kidlicious]

Originally posted by Arrian
My point was that, based upon my recollection of my studies of Nazi Germany, their economic situation right before the war was not good, and the war helped (much like WWII was rather helpful to the USA's economy) - in a sense it saved their economy (temporarily - until the bombs started falling on them).

That's nonsense. Germany had full employment when they started rearming. The US still had quite a bit of unemployment at that time. German rearmament strained resources and US armament employed them where they were not previously employed.

Saying that does not in any way imply that the Nazis started the war to save their economy. They didn't. As you noted, it's clear Hitler was after war all along. The economy policies he enacted, as I recall them, were designed to gear the country for war.

The economy recovery, as I recall it, was financed by racking up a ****load of debt and then going to war. In other words: unsustainable unless there was war. That was fine by Hitler, b/c he wanted war all along.

-Arrian

It wasn't simply a financed recovery. The recovery was achieved by import substitution, managing trade, and control of revenue, investment, and resources. The debt created was not substantial. The reason for that is that the Nazis simply couldn't raise all the debt they desired. Whether or not more debt woudl have caused serious problems is another argument.

The Nazi Economy

Rearmament spending was not the chief architect of the German economic recovery. Spending on armaments was only 10% of government spending in 1933, gradually increasing to 25% by 1935. By FY (Fiscal Year) 35-36 the majority of increase in GDP, decrease in unemployment, and other such indicators that would happen prior to the war had occurred. Analysis indicates that during this period, some of the largest contributions to growth were spending on motor vehicles, transportation infrastructure, and construction. The Nazi policy in these areas was to link increases in government investment with increases in private investment, and to explicitly manipulate economic policy to maximize investment and increase in employment.

...

Things changed somewhat around 1936 when explicit plans for war began. Government spending increased dramatically, while increases in government revenue did not keep up. By FY 38-39, the last fiscal year before the war, expenditure exceeded revenue by 86% and total debt load exceeded annual revenue by 136%. Government spending reached 33.5% of GNP, up from 19% in 1933. Total production was up 25% above 1928 levels (and up around 100% from what it was at the height of the depression in 1932), almost all of which is due to increased production of capital goods (infrastructure, heavy industry, etc.) rather than consumer goods. Remember, the Nazis were a totalitarian government interested in increasing the power of the state, their goal was not to produce a wealthy consumer economy or to promote trade. While Nazi Germany was technically still a capitalist economy, it was an entirely isolated one with tremendous levels of government involvement, and was never intended (nor, really, able) to engage in long-term competition with the western free market economies.

In 1936 rearmament spending doubled from what it was in the previous year, and jumped ahead of the combined figures for transportation and construction for the first time. It also changed its character. In the early years spending had involved significant amounts of research, development, and capital investment. In 1936 rearmament switched to being primarily intended to produce and maintain actual military equipment, an activity which is on the whole less economically beneficial. By FY 38-39, rearmament accounted for 46% of German government spending. This all contributed to a substantial debt load, financed by predominantly by internal borrowing rather than foreign borrowing. Germany's trade agreements were deliberately restricted to the import of critical goods, paid for primarily by bilateral barter agreements. It was explicit Nazi policy to isolate the German economy from the rest of the world, trading only when they had no alternative way to obtain what they needed.

[Arrian]

Well, this is the part I was thinking of:

By FY 38-39, the last fiscal year before the war, expenditure exceeded revenue by 86% and total debt load exceeded annual revenue by 136%. Government spending reached 33.5% of GNP, up from 19% in 1933.

The part about how things stood in 1935-36 is interesting.

-Arrian

[Kidlicious]

Originally posted by Arrian
Well, this is the part I was thinking of:



The part about how things stood in 1935-36 is interesting.

-Arrian

Oh, ok. I agree that after they spent so much to rearm that they had to invade other countries to get more resources. But before 1936 they didn't rearm significantly.

[Arrian]

Btw, your source is alternatehistory dot com? What is that?

-Arrian

[Kidlicious]

Originally posted by Arrian
Btw, your source is alternatehistory dot com? What is that?

-Arrian

None other than that it is the first source with the information I needed.

[Arrian]

Your source's source appears to have been The Nazi Economic Recovery 1932–1938, by R.J. Overy. This is a blurb that describes that book:

The performance of the German economy between the Great Crash and the Second World War has been the subject of intense academic debate. The problems of economic growth were acute in inter-war Germany, and the depression of the early 1930s intensified these problems, driving many Germans towards the political extremes. The Nazi seizure of power in 1933 was followed by the introduction of an extensive ‘package’ of government policies to expand demand and increase investment. These policies were not Keynesian, for by 1939 the government had extended its range of controls over the whole economy and it became part of the Nazi political system for waging war. In this new edition of The Nazi Economic Recovery 1932–1938, R. J. Overy discusses the main areas of the debate, arguing that the war preparation that took place at this time was ultimately incompatible with long-term economic recovery, and that the German economic miracle did not occur until after 1945.

Now obviously I haven't read it, so I don't know how accurate this short blurb is regarding Overy's conclusions (and, if it is accurate, whether Overy's conclusions were well supported by the evidence).

-Arrian

[Arrian]

From your source:

From FY 33-34 to FY 35-36, government expenditure exceeded government income by roughly 50%. This is actually consistent with the revenue/expenditure balance present since at least FY 28-29 (before the Nazis came to power). Thus Hitler’s government actually continued a deficit spending trend that was in place before the Nazis came to power.

So it appears the Nazis stuck basically to the existing Weimar Republic policies until 1936, at which time they cranked up the war machine.

It is interesting to note that German productivity only grew 1.3% per year from 1929 to 1938, roughly half the growth rate of Britain in the same period. The primary effect of the Nazi policies was to recover from the substantial collapse of the German economy early in the Great Depression, not to stimulate unusual amounts of fundamentally new capacity. The German economy actually had a lot of structural problems, including the fact that many plants had invested heavily prior to 1929 and so later increased their capacity by putting old equipment back into use. German industry was also slow to adapt many more modern production methods. Thus it may be seen that the “miraculous” Nazi recovery was not in fact miraculous in terms of what modern economic policies can do. It was clumsy and inefficient compared to what we are now capable of doing through the application of counter-cyclical economic policies. It was helped significantly because the German economy had collapsed to such artificially low levels during the Depression, and in the end German economic growth during the period was not at all impressive.

And they didn't really do particularly well - it seems it was more a case of things were so bad there was only one way to go - up.

-Arrian

[Arrian]

Based on the above, your claim:

You are talking about the greatest economic recovery/expansion in the history of the world.

Seems, well, not terribly well grounded.

-Arrian

[Kidlicious]

Oh ****. I've already spelled it out for you. Your making me repeat myself.