The Führer Had a Four Year Plan Too …

Our recent article on the “EU’s Stalinesque 4 Year Plan” has been picked up by a number of other websites, and on one of them (David Stockman’s Contra Corner), a reader by the name of Mauro Cella wrote a comment adding some additional color regarding the history of government-directed central economic planning. We found his remarks quite interesting and asked him if we could re-publish his comment here. Here it is:

 

nazi-germany

Reprinted from ‘The Vampire Economy: Doing Business Under Fascism’, Vanguard Press, 1939.

 

 

“Four Year Plan is a terrible name. It sounds exactly like the program initiated by Adolf Hitler in 1936 to fight unemployment and create “self-sufficiency” in Germany. Apparently the Fuhrer wanted to show the superiority of National-Socialism over old fashioned Communism (“Stalin says he can do it in five years? We’ll do it in four!”).

To continue with the inauspicious similarities, it’s well known if Hitler had a weakness, it was grandiose engineering projects.

Gustav Krupp von Bohlen, heir to the legendary German industrial empire, may have been a man with many faults but he knew how to read people like an open book. When the Fuhrer visited the Krupp works in Essen in 1936, the magnate showed him blueprints and scale models of colossal artillery pieces which would have been capable of defeating even the most powerful fortifications of the Maginot Line. Hitler was obviously ecstatic.

Krupp promised him that “if we are given access to all the resources we need” he could deliver the first guns by late 1940-early 1941. This was a time when Hermann Goering was locked in a bitter feud with German industrialists who were seeing resources allocated to them dwindle in favor of Goering’s fledgling economic empire. Gustav Krupp played his cards well by going straight to Hitler: as soon as the Fuhrer was back in Berlin, he immediately ordered Krupp should be given access to whatever resources he needed so the super-guns could be delivered on schedule. Goering was openly warned not to interfere.

What are modern grandiose and really expensive infrastructures if not the spiritual heirs of the Krupp super-guns? Politicians love ribbon cutting and bureaucrats love overseeing huge projects which will increase their power and prestige. Industrialists who can get first in line at the trough will make a bundle.

And very much like the Krupp guns, these engineering projects are high maintenance and nigh on useless. A new (toll) highway built in Italy requires € 60 million/year (on top of tolls, obviously) just to stay open. This is provided on a no-questions-asked basis by the local government, which will obviously later lament they have no money to resurface the ordinary roads people use every day …”

 

Indeed, the National Socialists were eager to refashion the German economy into an autarky. Hitler’s war, especially the attempt to conquer Stalin’s Soviet Union and other Eastern nations, was meant to make this autarky possible. The idea was that if Germany could conquer all the places that contained the natural resources it needed to import, it would no longer need to be involved in international trade.

 

stalin and f++hrer-2Germany’s “Führer” Adolf Hitler and Soviet leader Joseph Stalin: Birds of a Feather

 

The Vampire Economy

We are not overly surprised to learn that Hitler adopted a “four year plan” to compete with Stalin’s five year variety. As Ludwig von Mises has pointed out, there was little practical difference between the Soviet socialist economy in which the government owned all the means of production and what he termed the Zwangswirtschaft (literally: a coerced economy) implemented by the Nazis.

The fact that the Soviet State was the sole owner of all capital goods rendered economic calculation impossible and put a serious dent in the arrival of the much-heralded Land of Cockaigne that the proletarians were supposed to enter once communism was fully implemented. The citizens of Germany were given similarly empty promises by the Nazis, who erected an economic system that was doomed from the outset. From the beginning of Nazi rule it was basically set up as a war economy, and it eventually needed a war to be maintained.

In Nazi Germany the means of production were still nominally privately owned, and selected barons of industry like Mr. Krupp profited handsomely from their arrangements with the government. However, for the economy at large this nominal private ownership was de facto meaningless, as government bureaus dictated what could be produced, when, where and at what price. Every single import of much-needed raw and intermediary goods required approval by a raft of bureaucracies.

Günter Reimann termed the economic arrangement put in place by the Nazis the “Vampire Economy”. Below is an image excerpted from the book of the same name, which shows the many hoops German entrepreneurs had to jump through if they needed to order large amounts of materials from abroad.

 

German Nazi economyThe plight of manufacturers in the Nazi Zwangswirtschaft, from Günter Reimann’s The Vampire Economy – click to enlarge.

 

It should be blindingly obvious that such a system cannot work – not to mention that it will invite graft and corruption on a gargantuan scale. Obviously, this was indeed a Zwangswirtschaft in which private ownership had little practical meaningthe car manufacturer in the example given by Reimann above has almost no control over how he employs his own property.

If one looks at the red tape and the huge bureaucratic apparatus in EU countries today, it is in many respects reminiscent of what the chart above depicts. Nearly every type of business requires permits, licenses and bureaucratic approval, usually from a whole host of different bureaucracies. There are more and more rules regulating every nook and cranny of business activity if one actually gets past the headache of establishing a business in the first place. And if one is prepared to bear all these crosses and finally manages to make a profit, much of it is promptly taxed away, making it nigh impossible to accumulate meaningful amounts of capital. It is no wonder that the same countries are opting for “economic growth ordered from above” in the form of four year plans and giant investment boondoggles.

 

Conclusion

As Mauro Cella’s interesting comment shows, there is really nothing new under the sun. We believe it is no exaggeration to call the grandiose projects planned by today’s EU the “spiritual heirs of Krupp’s super-guns”. They make exactly as much economic sense and benefit mainly those who implement them and their cronies.

 

Chart by Günter Reimann, from “The Vampire Economy”

 

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Dear Readers!

You may have noticed that our header carries ab black flag. This is due to the recent passing of the main author of the Acting Man blog, Heinz Blasnik, under his nom de plume 'Pater Tenebrarum'. We want to thank you for following his blog for meanwhile 11 years and refer you to the 'Acting Man Classics' on the sidebar to get an introduction to his way of seeing economics. In the future, we will keep the blog running with regular uptates from our well known Co-Authors. For that, some financial help would be greatly appreciated. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

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