September 11, 2006
From the desk of Jane Galt:Why is this a useful article?*
Mark Thoma seems to think that this is useful and informative:
"In the late 1930s and the early 1940s, a number of works were devoted to the analysis of economic policy in Germany under the rule of the National Socialist Party. One major work was Maxine Yaple Sweezy's (1941) The Structure of the Nazi Economy. Sweezy stated that industrialists supported Hitler's accession to power and his economic policies: "In return for business assistance, the Nazis hastened to give evidence of their good will by restoring to private capitalism a number of monopolies held or controlled by the state" (p. 27). This policy implied a large-scale program by which "the government transferred ownership to private hands" (p. 28). One of the main objectives for this policy was to stimulate the propensity to save, since a war economy required low levels of private consumption. High levels of savings were thought to depend on inequality of income, which would be increased by inequality of wealth. This, according to Sweezy (p. 28), "was thus secured by 'reprivatization' …. The practical significance of the transference of government enterprises into private hands was thus that the capitalist class continued to serve as a vessel for the accumulation of income. Profit-making and the return of property to private hands, moreover, have assisted the consolidation of Nazi party power." Sweezy (p. 30) again uses the concept when giving concrete examples of transference of government ownership to private hands: "The United Steel Trust is an outstanding example of 'reprivatization.'" This may be the first use of the term "reprivatization" in the academic literature in English, at least within the domain of the social sciences."192-3: "The primary modern argument against privatization is that it only enriches and entrenches business and political elites, without benefiting consumers or taxpayers. The discussion here suggests a rich historical irony: these modern arguments against privatization are strikingly similar to the arguments made in favor of privatization in Germany in the 1930s. As Sweezy (1941) and Merlin (1943) explicitly point out, German privatization of the 1930s was intended to benefit the wealthiest sectors and enhance the economic position and political support of the elite. Of course, this historical connection does not prove that privatization is always a sound or an unsound policy, only that the effects of privatization may depend considerably on the political, social and economic contexts. German privatization in the 1930s differed from the privatization of Volkswagen in the 1950s, and both of these situations differ from, say, the British privatizations of the 1980s, the Russian privatizations of the 1990s, or the privatizations across Latin America over the last two decades."
The practice of attributing policies you do not like to the Nazis must stop. It is annoying when the right-wing defends gun rights by arguing (apparently incorrectly) that the first thing the Nazis did when they came to power was to enact stiff gun control laws. But at least this has some connection to the atrocious crimes of the Nazis: if this factoid were true, its proponents would be saying "guns in the hands of private citizens might help prevent genocide."
But I assume that the fellow who wrote this is not arguing that state ownership of factories prevents genocide. The primary problem with the Nazis is not that state policies benefitted a few rich factory owners (and anyway, the distributional effects of Nazi government were considerably more complicated than that); the problem is that they herded 11 million people into camps and gassed them. Articles like this one attract attention not because they are particularly interesting--who coined the term "privatisation" is a pretty trivial basis for an article in an economic journal--but because they allow people who don't like privatisation to say "Look! Nazis liked privatisation! Therefore, privatisation=bad!"
I am pretty sure that the Nazis were in favour of eating, sleeping, long walks on the beach, quality time with family and friends, and cute little furry puppy dogs. I don't intend to give up any of these things just because Hitler did them too. Call me a genocidal maniac, but I stand by my puppies.
* Tee-hee! Double entendre! "This" is a very useful article--in fact, I can't think of anything that could replace it. The article on privatisation and the Nazis, not so much.
"This" is a very useful article--in fact, I can't think of anything that could replace it. The article on privatisation and the Nazis, not so much.
Isn't it a demonstrative adjective or a relative pronoun? Definitely not an article. Anyway, you could be like a lawyer and just replace all of your proper demonstrative adjectives and relative pronouns with "such."
As a Keynesian, I have no problem with the observation that the Nazis were the first to practice Keynesian policies successfully (though unconsciously, since they started before Keynes’ General Theory was written). In fact, I’ve always found that fact interesting. I don’t see why advocates of privatization should have a problem with the observation that the term was coined by the Nazis. The Nazis did a lot of good things in addition to the bad things that they are most famous for (and that were, unquestionably, more important than the good things they did). Economic etymology and economic history are interesting in their own right, and I think it’s kind of silly to say, “If the Nazis did anything that I would agree with, please don’t tell anyone about it.”
Perhaps I am missing something but it seems to me that the article does make sense.
It saying that a historical arguement in favor of privatization is that is that it benefits the state and some larger ideological goal.
Yet, ironically the current arguements against privatiization are that it is does not benefit the state or some larger ideological goal.
I think this quote sums it up
The discussion here suggests a rich historical irony: these modern arguments against privatization are strikingly similar to the arguments made in favor of privatization in Germany in the 1930s.
It also seems that the article is not anti-privatization but supports a more balanced prespective.
Of course, this historical connection does not prove that privatization is always a sound or an unsound policy, only that the effects of privatization may depend considerably on the political, social and economic contexts.
Unfortunately, the argumentum ad Hitlerum is far too useful a rhetorical tool to disappear. It will be fogging brains for the foreseeable future.
The problem is, first, that the definition of "privatisation is pretty tenuous--much of the "privatisation" followed close on the heels of Great Depression government bailouts, making them look more like sectoral reorganisations than what we think of as privatisation, and another huge hunk consists of things that were "privatised" by handing them to quasi-governmental wings of the Nazi party; and second that this reading is kind of tenuous. The Marxist historian is the only one that attributes this specific theory to the "privatisations". Other contemporary accounts from the same paper sound pretty much like the arguments made for privatisation today:
Hans Wolfgang Singer used the term in “The German War Economy – VII,”
published in the Economic Journal in 1942.4 Singer (1942, p. 377) reported the claims by
German officials that the new policy was to “produce more and organize less” and “in
pursuance of ‘re-privatisation’ factories and machine tools which were previously only leased
to private business-men are now to be sold to them.”
There are also descriptions of basic looting of state assets by the party elite, but I'm unconvinced that this was an actual theory the Nazis subscribed to, as opposed to something that happens rather inevitably in a one-party state. The Politboro looted their system rather thoroughly too, but that's not really relevant to whether or not we should nationalise healthcare.
There's a valid critique of privatisation, based on the fact that elites often gain control of the same assets they controlled as apparatchiks; that's pretty much what happened in Eastern Europe. This leaves a lot of room for new models as to how to privatise, when to privatise, and the speed at which one should privatise. But the Nazi experience isn't really particularly useful in that context, because the state didn't own that much, and the "privatisations" didn't look much like today's privatisations. Furthermore, we have a lot of modern failed privatisations, which have been much more thoroughly studied (the linked paper relies entirely on papers from the late thirties and early forties, when there wasn't exactly good economic data coming out of Germany; presumably the relevant records were destroyed during the war.) Aside from a trivial point about nomenclature, how much value is there to studying privatisation via third-hand accounts of Nazi interference in the machinery of the economy, when you have Poland, Argentina, and so forth to look at right now? Other than that "Nazi" sells?
Moreover, even if the papere itself had been interesting, the fact is that most people linking it are interested in the Nazi hook, which lets them lash privatisation to genocide by association, not in whatever thin lessons it might offer for today's privatisations.
I think a closer comparison than guns is the "Hitler was a vegetarian/Nazis were obsessed with health and anti-smoking" argument.
There are sort of legitimate cases-- eugenics is a case where the Nazi policies can be seen as a sort of logical consequence/slippery slope result from beliefs once held here and elsewhere. But as you note, it's precisely those end results of eugenics taken to the uttermost extreme that is horrific about the Nazis, not their fascination with not smoking.
So the Nazis supported privitisation and genocide. The Soviets supported nationalization and committed far greater genocide as a direct result.
It is annoying when the right-wing defends gun rights by arguing (apparently incorrectly) that the first thing the Nazis did when they came to power was to enact stiff gun control laws.
That is, indeed, incorrect -- what the Nazis did was use *existing* gun-control laws to disarm the public. The laws had, ironically, been enacted in response to violence by left-wing and right-wing extremist groups such as the Nazis and Communists, and basically gave the police and military the power to determine who would and wouldn't be allowed to own guns.
The lesson to draw from this isn't "gun control is a Nazi policy", but "gun control gives the government an enormous amount of power -- are you convinced no bad people will ever get elected?".
If the Nazis didn't exist, we would have to invent them, just so we would have the perfect negative example for everything.
Incidentally, how come Communists -- who killed (and are still killing) a lot more innocents than the Nazis ever did -- never get used this way? How come there are no grammar Commies or fashion Commies? Why wasn't there a Seinfeld espisode about The Soup Commie?
Why not a soup commie?
War movies of course. Heroic exploits of good American boys fighting the evil Nazis. Easy and clean. Movies with commie bad guys are much more complicated and certainly fewer.
What's ironic (and sad) is that despite the countless analogies to Hitler and Nazism made by both the left and the right since the end of WWII, it doesn't seem that we've learned much from those years and that we often fail to apply the lessons to subsequent crises and circumstances.
Most people seem to agree that the Holocaust is evil and that genocide (or mass murder by totalitarian/despotic regimes) should never happen again to any group of human beings regardless of their race, ethnicity, religion, economic status, etc. An inference from this is that good people (whoever they are) will be vigiliant and oppose (and perhaps successfully stop) genocide should it ever happen again to any group.
Was genocide and mass murder by governments stopped by the United Nations, the Western democracies, and others after WWII?
Four years after Hitler blew his brains out, Mao Tse-Tung took power in China. During his reign (1949-1976), he killed tens of millions of people and is acknowledged as history's worst mass murderer. (Stalin is second.)
What effort was made to stop Mao's genocide?
In 1975, Pol Pot took power in Cambodia, which had a population of about nine million or so. By the time Pol Pot was overthrown in early 1979 by invading Vietnamese armies, Cambodia's population dwindled to about 4.5 million. Between 1.5 and 2 million were killed. Many others fled.
Before 1979, what effort was made to stop Pol Pot?
Bosnia . . . . Rwanda . . . .
It's important to acknowledge the differences between what Mao, Stalin and Hitler did.
Hitler sought to eliminate an entire race from the face of the earth. Neither Stalin nor Mao did that.
Most of the deaths Mao and Stalin caused were the result of famines brought about by their economic policies.
Moreover, Mao's death toll tooks decades to accumulate. Hitler got it done in a few short, genocidal, years.
Sorry for that everyone, but he really did ask for it.
It is not a claim that the Nazis privatized anything, only that it was used in describing what they did.
I cannot honestly believe that in 1941/1942 anyone really knew what was going on inside Germany.
Their "selling" instead of "leasing" could just as easily be seen as a way to get more money NOW to pay for the war. The question of whether a transfer of control was made remains.
The phrase the Derek Lowe is reaching for is, I think, reductio ad Hitlerum, and comes from Leo Strauss, who interestingly in this context fled Nazi Germany. Here is the original quote, from Chapter 2 of Natural Right and History, p. 42 and 43 of my copy:
To see this more clearly and to see at the same time why Weber could conceal from himself the nihilistic consequences of his doctrine of values, we have to follow through his thought step by step. In following this movement towards its end we shall inevitably reach a point beyond which the scene is darkened by the shadow of Hitler. Unfortunately, it does not go without saying that in our examination we must avoid the fallacy that in the last decades has frequently been used as a substitute for the reductio ad absurdum: the reductio ad Hitlerum. A view is not refuted by the fact that it happens to have been shared by Hitler.
Essentially, Strauss is here refusing to use a fallacious argument that would, if it were not fallacious, bolster his argument, as well as pointing out the fallacy. As Jane points out, it is a depressingly frequent fallacy.
Incidentally, how come Communists -- who killed (and are still killing) a lot more innocents than the Nazis ever did -- never get used this way?
Possibly because it would lose its audience among the "thinking persons" in both the US and Western Europe, where distressingly large portions of the literati and upper-class are still fascinated with the idea that "maybe communism could work, if --"
No sense trying to argue with such folk on the basis that communes have never worked outside of small, consenting groups; or that the necessary concentration of state power and resource collection for broad-scale communism automatically devolves to the lowest common deonominators of corruption and totalitarianism. Been there, done that, got blown off for "not really understanding the debate."
Nazis are just easier to hate, because they came, they saw, they conquered, and then they got wiped out in a second world war. All nations suffered and the perpetrators are now mostly dead. Communism never produced a world war, unless you count the cold war, and if you want to wade into the true depth of intelligent thought in Western Europe during that period, a quick re-listen of The Russians should wet your ankles.
The narrative is either mistaken or it is willfully mendacious. The National
Socialists nationalized; they didn't privatise. Now this is from memory, and
I apologize in advance for any inaccuracies, but within the first year or two
of National Socialist rule one-third of all the farmland was taken from the
original owners and given to nazi supporters.
But these supporters were only owners in a nominal sense, since their continued
occupation of these farmlands was conditional on their meeting the production
quotas assigned to them by the state. If they didn't meet their quotas or if they
in any significant way dissatisfied the government authorities, the land would be
taken from them and given to someone else. Further the government fixed the
prices to be paid for all agricultural goods. These rules applied to all farmers
and not just the ones given stolen land by the state.
Under National Socialist ideology all property was owned by the state (as the
representative of the people of germany). There was no private property and
anything a person had in his or her possession was on loan from the state. You
could be sent to prison for neglect of these things in your care. Taking any
object outside of Germany, such as money or jewelry, without official permission,
was theft and a capital crime.
Since most of the population of Germany in the 1930s worked in agriculture, just
these laws on farming alone meant that most of the population was now quasi-governmental
employees. 'Quasi' in the sense of having none of the perks of the more formal
employees of the state, but employees in the sense of being told what to do
and being paid by the state.
All of the food processing companies were nationalized and merged together into
one state corporation.
The Herman Goering Works, formed largely from the remnants of companies originally
owned by people opposing the National Socialists or suspected of opposing them,
was of course an agency of the government and the largest business-like organization
in germany. Seven hundred thousand people worked for the Herman Goering Works.
Volkswagen began as a sub-agency of the National Socialist government. Except
it wasn't called Volkswagen, it was called "Strength Through Joy." Although
Volkswagen was only a small part of "Strength Through Joy."
Imagine working for a government agency called "Strength Through Joy."
All of Germany was organized into neighborhood committees that met weekly
and that everyone was required to attend. These committees were meant
to be self-improvement and re-education sessions. People failing to meet
the standards of their neighbors were sent to state-organized re-education camps
as early as 1934.
Every german was required to listen to four hours of government news, lecture,
and instructions on what to think a day. Not doing so was a crime and a quick
pass to a re-education camp.
There was no unemployment in nazi germany because it was illegal to not work,
and if you did not have a job you were supposed to report to the government and
they would tell you what to do.
It was illegal to make more money than an official government employee. I need to
check on this, but I believe it was in fact a capital crime.
By 1935, every newspaper, every magazine, every school, every university, and
every business of any size was National Socialist from top to bottom. Or if there
was anybody in any these organizations that wasn't it was because they were sure
good at pretending to be nazi. People who were opposed or suspected of being opposed
were either killed (relatively rare), sent to re-education camps (relatively rare),
or became one of the millions in the common labor pool or the state job-given
employed unemployed (pretty common).
It amazes me that this isn't common knowledge. Some of this is pretty dramatic.
One would think a movie would have been about it sometime, somewhere.
Hitler sought to eliminate an entire race from the face of the earth. Neither Stalin nor Mao did that.
No, they just tried to eliminate all non-Communists from the face of the Earth. I happen to belong to that group, so I don't see any reason why I shouldn't consider them worse than Hitler.
Oh, and Jews are an ethnic/religious group, not a race.
Yes, millions starved to death in the Soviet Union and China. (Although the famine in the Ukraine was deliberately engineered by Stalin and covered up by the NY Times.)
But millions were also killed in concentration camps and gulags and executed by the Soviet and Chinese authorities as enemies of the revolution, proletariat, etc. during purges.
Did Thoma and the author of the article he cites ever read Hayek's "The Road to Serfdom" (1944)?
Interesting post by Mark. That was generally my understanding of Nazi economic policy. So, I have always been puzzled as to why they are generally considered "far right" and the communists "far left." Seems to me that they are both variants of the far left.
I'm currently trying to plow through Rise and Fall of the Third Reich, but haven't gotten to any discussion of such policies yet, so I don't even know if it is discussed. Is there another source that discusses this, which would be accessible even to a non-ecomomist engineer?
Bill,
There's "The Approaching Storm: One Woman's Story of Germany 1934-1938."
Written by Nora Waln, published in 1939, and based entirely on her
experiences and those of the people she met. It can be bought at amazon.com.
It's far from an economics text but explores some of the human impact
of the policies above.
Also there's "The Nazi Years, A documentary History," edited by Joachim
Remak. This is entirely a collection of short excerpts of various nazi
documents translated to english. This can also be bought from amazon.com.
Again it's far from an economics text but inevitably touches on it in various
ways.
Most people don't seem to know that William L. Shirer, the author of
"Rise and Fall of the Third Reich" and numerous other books about Nazi
Germany went to germany in the late 30s with his wife and lived there
for two years. For the first year he wrote article after article extolling
the virtues of National Socialism. In the second year he went through
a conversion of sorts and decided that National Socialism was seriously
bad news instead of heaven on earth. The fact that is took Shirer, a
bright man and a prominent member, along with his wife, of the american
socialist movement, a year of immersion in nazi germany to come to the
conclusion that it wasn't really socialism hints at the subtlties of the
distinction.
Regardless he played a constructive role. His later efforts helped to
persuade the american left that National Socialism was right-wing (aka evil)
and without that the course of the war might have been different. Shirer
could have been excellent source for nazi economics given the high-level
access the german state gave him. But (a) I don't think William Shirer
was all that in to economics and (b) he was embarrassed about his past.
I'd really like to find more first person accounts of nazi germany.
With all the literate people living in germany at the time one would
have thought there'd be quite a few. I suspect the problem is that the greater
part of the intelligentsia were sympathetic to the nazis at some point
and they or their families burned what they'd written later on.
There's a two volume diary by Victor Klemperer, "I Will Bear Witness," that was published in the late 1990s.
I have always been puzzled as to why they are generally considered "far right" and the communists "far left."
1. Successful socialist propaganda, to position the mild socialists as the "center" between the Nazis and the Commies, for the nitwits who think that political positions can be summarized on a single axis.
2. Nazism differs from all forms of leftism, classical liberalism, and American conservatism in that it openly and proudly inverts their values. Freedom:"What is not compulsory is forbidden." Equality under the law: racial laws, special rights for party members, might makes right. Human dignity and rights: concentration camps. Peace (whether the blindly sought peace-at-any-price of Chamberlain and the Vietnam-obsessed left, or the peace through strength of the conservatives): glorification of war.
What muddies the comparison is that Communists loudly claim to be following the first set of values while doing things that result in a more thorough realization of the second set of values than even Hitler aimed for. And a good many leftists who certainly believe they are not Communists are nevertheless following the same path, just a little bit at a time.
In other words, Hitler identified what totalitarian socialism really was good for, and he liked it and proclaimed it as his goals. Leftism loudly proclaims goals that most any normal person living in the last 200 years would approve of, while pursuing them in such a way as to achieve something quite different, and cloaks the difference in bafflegab and doublethink.
I just posted a comment from the author of the JEP paper along with the introduction and conclusion to a paper of his on Nazi Privatization. If you are interested, it's at http://economistsview.typepad.com/economistsview/2006/09/nazi_privatizat.html
As I noted in the post, I think it answers why we would be interested in tracing the word privatization to its origins.
Mark Thoma
Hi again,
Many thanks for your time spent with this comments.
One of the objectives of the long paper is to show that contemporary authors saw this policy as a privatization policy, no matter how each one of them evaluated it. The only way to show this is ‘second hand’ references.
Other objective is to try to find as much information as possible on the privatization operations. In this sense, main sources used are:
Der Deustche Volkswirt. Weekly magazine widely seen as the official speaker for the Ministry of Economics in the Reich
Reichs-Kredit-Gesellschaft reports. This was a Reich owned bank that published the most complete official reports on German Economy in the period.
Any scholar interested in Nazi Economy would consider this first hand sources, particularly when original files are so scarce.
Incidentally, two of the privatization operations found in Der Deustche Volkswirt had not been previously noticed in the literature. The (admitedly incomplete) estimation on the privatization revenues is, to my knowledge new in the literature.
With respect to the analysis of the objectives of Nazi Privatization with contemporary tools, theories and concepts, it is logically of first hand, since there is not modern analysis of Nazi Privatization.
Conclusions are on the paper, so I do not go again into them. The main point is that Privatization and Regulation are substitutive tools to control markets. Nazis did strictly regulate and privatized, so that they could keep control. European experience in the last two decades has been much the same.
Cheers,
Germà
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