Yves here. Forgive us for proving up Godwin’s law with our choice of post. In all seriousness, however, in the wake of the financial crisis, some economists warned that stagnant and falling living standards historically led to a political move to the right, and would support the rise of a radical right. That has come to pass in Europe and the US. So the notion that austerity played a role in the Nazis coming to power is no surprise. However, this post shows that the areas of Weimar Germany that suffered the most distress, and in particular, showed the biggest increases in mortality, showed the most pronounced shifts towards the Nazis. Yet most of America looks at deaths of despair and shrugs, or worse, blames people in flyover for not learning to code.
By Gregori Galofré Vilà, Universitat Pompeu Fabra and Barcelona Institute of Political Economy and Governance; Christopher Meissner, Professor of Economics at the University of California, Davis; Martin McKee, Professor of European Public Health, London School of Hygiene and Tropical Medicine; and David Stuckler, Professor of Political Economy and Sociology, University of Oxford; Research fellow, London School of Hygiene and Tropical Medicine. Originally published at VoxEU
Many Western countries pursued deep austerity measures in response to debts from the financial crisis of 2007-2008, and may again do so in the wake of COVID-19 stimulus packages. This column reviews how in the early 1930s, austerity measures worsened social suffering and contributed to political unrest paving the way for the rise of the Nazi Party in Germany. The authors argue that the absence of a coherent response to social suffering from the Weimar government worsened the slump, contributing to the radicalisation and polarisation of the German electorate.
Many pages have been written about what drove Hitler to power. While economic factors (from the Great Depression to high unemployment rates) and socio-cultural conditions (arising from the oppressive measures in the Treaty of Versailles) played an indisputably important role, the rapid rise of the Nazi Party is still, nearly a century later, a topic of considerable debate (Adena et al. 2015, Doerr et al. 2018, Eichengreen 2018, Ferguson and Voth 2008, Satyanath et al. 2017, Voigtländer and Voth 2012, Voth 2020).
In our recent work, we show how fiscal austerity contributed to Nazi electoral success in the early 1930s (Galofré-Vilà et al. 2020). Localities that experienced larger declines in spending and higher rises in taxes had higher vote shares for the Nazi Party in each and every German federal election between 1930 and 1933.
Fiscal policy at the time can was implemented through a series of emergency decrees, largely circumventing parliament, and they were introduced with the knowledge that they would cause enormous hardship. Chancellor Heinrich Brüning hoped that international media reports of German suffering would lead the international community to relax debt and reparations obligations on an economical prostrate Germany. Yet, as Hitler foresaw in June of 1931, “[t]his emergency decree will help my party to victory, and therefore put an end to the illusions of the present system”.1
The Impact of Austerity on Electoral Outcomes
Between 1930 and 1932, in the middle of the Great Depression, Brüning cut spending, increased taxes and rolled back the social safety net. Real expenditure was cut by 8% and central real expenditure by 14%. Relief payments and unemployment benefits were limited, social overhead expenditures faced the axe and government salaries were reduced. The impact was substantial in many respects, since government spending was already around 30% of GDP in 1928. Tax rates were also raised, hitting the lower income tax brackets the hardest in percentage terms. Rising numbers of Germans faced economic insecurity and marginalisation at a time when they needed it the most. Instead of an expansionary fiscal policy to combat the depression, Germans were forced to rely on an increasingly exclusionary and exhausted system of relief.
Could these austerity measures have contributed to radicalization of the electorate? And, if so, did this happen by disenfranchising the ‘squeezed’ middle classes? We test both these hypotheses using data from official German statistics from over a hundred cities and a thousand smaller districts in the period covering the four elections between 1930 and 1933. Overall, we find that areas more severely affected by austerity had relatively higher vote shares for the Nazi Party. Models controlling for other explanations for the Nazi’s success, while including city and election fixed effects, show that each one standard deviation increase in the depth of austerity was associated with between a two and five percentage point increase in vote share for the Nazis or, equivalently, between one quarter to one half of one standard deviation of the dependent variable (Figure 1). We also find that tax hikes correlate positively with Nazi electoral success. These results are robust to a range of specifications including an instrumental variable strategy and a border-pair policy discontinuity design.
We also investigated alternative explanations. The most prominent of these is, of course, ‘pocket-book voting’: the rise of the Nazi’s came simply from the economic downturn. Importantly, we can differentiate party votes in the data. As shown below, most of the shift in political support associated with austerity came from the Centre Party (which was Brüning’s party) transitioning to the Nazi Party. Moreover, none of the other main parties of the German political spectrum (including the German National People’s Party, which was another party with a far-right ideology) gained votes that could be linked to austerity. The worst off economically, the unemployed, turned not to the Nazis but to the communists. This is consistent with the notion that those just above them in the economic hierarchy, who had more to lose from the tax hikes and spending cuts, favoured the Nazis when their party failed to provide them economic relief.
Figure 1 Impact of city expenditures on the Nazi party vote share, elections 1930, 1932 and 1933
Austerity and Worsening Avoidable Mortality
We also study the impact of austerity on Nazi electoral gains in relation to different types of expenditure. Here we find that most of the electoral impact of austerity was driven by cuts to social spending on health and housing, two of the budget lines severely affected by austerity. These cuts in social spending plausibly exacerbated the suffering of many Germans. Indeed, we find that the localities experiencing relatively severe austerity experienced relatively high suffering (measured by mortality rates) and electorates in these areas with higher mortality were often more likely to vote for the Nazi Party. This is in line with the views of commentators at the time. For instance, by the fall of October 1930, Hjalmar Schacht (former head of the Reichsbank) gave an interview to the American press warning that “if the German people are going to starve, there are going to be many more Hitlers” (The New York Times, 3 October 1930).
Conclusions
The demise of Weimar Germany and the rise of Nazi fascism reveals that too much harsh austerity can trigger social unrest and unintended political consequences. Even after correcting for alternative explanations, including the economic downturn, it is clear austerity played a critical role. Our findings are consistent with the hypothesis that austerity led to substantial human suffering and exacerbated inequality and inequity. At a time when people needed the most from their government, the government failed them, and they were lured by the siren calls of radical populist parties.
See original post for references
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What’s your phrase, Yves? Not a bug but a feature?
It seems that we’re clearly witnessing a very similar scenario at play via the neoliberal Obama administration’s abandonment of the working class and the rise of Trump who was arguably put over the top by former Obama voters.
Obvious, I guess. And we don’t need a crystal ball to see where this could lead, especially with the kind of historical perspective that this post offers.
I think we can trace the abondonment of the working class by the Dems at least back to the Clinton administration’s “free trade” policies. Just sayin’.
Obama defeated Hillary, so there is an issue of broken promises. Carter would be the correct answer. In addition to deranged foreign policy, Obama broke those promises too, and Obama was given the keys to the kingdom in a way 42% wasn’t. In the end, it led to a DNC salute to the Republican Party 2020.
Actually, Thomas Frank says Edmund Muskie, the Democratic opponent Nixon most feared in 1968, was the one who came up with austerity as a public policy proposition. If memory serves, Nixon criticized Muskie’s wife, making him cry, and ultimately drop out of that race.
Noam Chomsky says Nixon was our last liberal president.
Nixon, for all his flaws, proposed and signed into law the creation of the EPA, the Clean Air Act and Clean Water Act. Possibly the last president to give a rat’s-a** about ordinary Americans.
this is why I can’t bear Chomsky. Nixon legalized for profit healthcare. Before that Blue Cross/Blue Shield HAD to be non-profit. Nixon appointed Rehnquist and many other horrible judges. He was our worst president before Shrub.
We still had a functioning Democratic party back then, and a functioning press. Nixon’s hand was forced on the EPA and OHSHA.
The thing is, Chomsky isn’t wrong – you’re both right.
I get that, but “Hope and Change” still resonated with many of the working class after the excesses of Bush jr’s years– there still was hope for (positive) change. But that’s gone except for the most delusional Dem supporters.
Clinton admin + Obama admin = deliberate, not accidental, screwing of We the People.
It is certainly no accident that the most enthusiastic partners for the Troika in Greece was Golden Dawn. The two groups feed quite well off each other.
If we assume the rise a really bad political movement in the US will come from the right, than the presence of Trump in the WH in a way could partly block this for 2020 elections, because Covid could work against the incumbent.
On the other hand, had Hillary won 2016 one can speculate things would go differently in 2020 with Covid changing the political landscape….
….my speculation of a Hillary incumbency would be that Covid might show up politically as radical anti mask-ers, advocates of herd immunity, rabid opposition to lock downs, return to the good old normal American Way, and rigid anti spending and an attack social programs and regulatory agencies greater than what Trump is currently doing currently. Racial issues might enter the mix with Asians be targeted in the US.
Add to this a desperate for re-election Hillary might look for hot wars to start to boost her 2020 prospects.
Why the Germans? Why the Jews? Countless historians have grappled with these questions, but few have come up with answers as original and insightful as those of maverick German historian Götz Aly. Tracing the prehistory of the Holocaust from the 1800s to the Nazis’ assumption of power in 1933, Aly shows that German anti-Semitism was―to a previously overlooked extent―driven in large part by material concerns, not racist ideology or religious animosity. As Germany made its way through the upheaval of the Industrial Revolution, the difficulties of the lethargic, economically backward German majority stood in marked contrast to the social and economic success of the agile Jewish minority. This success aroused envy and fear among the Gentile population, creating fertile ground for murderous Nazi politics.
Surprisingly, and controversially, Aly shows that the roots of the Holocaust are deeply intertwined with German efforts to create greater social equality. Redistributing wealth from the well-off to the less fortunate was in many respects a laudable goal, particularly at a time when many lived in poverty. But as the notion of material equality took over the public imagination, the skilled, well-educated Jewish population came to be seen as having more than its fair share. Aly’s account of this fatal social dynamic opens up a new vantage point on the greatest crime in history and is sure to prompt heated debate for years to come. https://www.amazon.com/Why-Germans-Jews-Prehistory-Holocaust/dp/0805097007/ref=sr_1_1?dchild=1&keywords=why+the+germans+why+the+jews&link_code=qs&qid=1597851597&sourceid=Mozilla-search&sr=8-1&tag=mozilla-20
Also: Jews could do usury…to non-Jews (according to an “innovative” reading of scripture) so they became financiers…long before Nazis were an issue.
(according to an “innovative” reading of scripture) Adam Eran
Ironically, Scripture provides quite a few hints as to how to do finance ethically* without collecting interest from one’s fellow countrymen.
However, it is widely assumed that the Bible is naive wrt economics – even among so-called believers in it.
*e.g. “Render to Caesar what is Caesar’s” blows needlessly expensive fiat (e.g. a Gold Standard) out of the water.
It’s actually quite clear in the Bible (Deuteronomy 23:19). But Christians got into banking very early through various subterfuges like Bills of Exchange, which disguised the interest paid. The Medici family were deeply involved in banking, for example, and had the Pope as a client: he usually had an overdraft.
But, counter-intuitive as it may sound, antisemitism had little to do with the rise of the Nazis. The antisemitic nutcases had already been voting for them for years.
Yes, the Great Depression was a MAJOR* cause of Hitler’s rise to power and the banks were a MAJOR cause of the Great Depression as Bernanke admitted.
*Or so wikipedia used to say …
You.literally copy.and pasted the Amazon book description.
Haven’t read it but it sounds like some Omer Bartov caliber defamation.
Heated debate, that’s how one could describe it.
The by far most common view as far as I can tell, among historians at least, is that Aly is a rightwing ideologue, propagandist and revisionist who is full of shit.
What the Nazis did promise was a generally higher material livingstandard, but equality was not a value espoused by anyone alive and in a position of influence after the Night Of Long Knives, original Version.
And of course equality was treason against the “aristocratic principle of nature” according to Hitler.
Of course the actual economic and labour policies of the Nazis were largely ones that not only seem very familiar and “modern” in the worst possible sense, and very close to the preferences of Götz Aly and his fellow rightwing reactionaries.
The article “The Economics Of Evil” that was linked here a while ago was a pretty decent starting point on the actual economic policies of the Nazis that the neoliberal and conservative media are usually suspiciously silent or (from their perspective with very good reason) lie about.
This is a little too twisty for me. The underlying argument is against populism and socialism and fascism because they turn into nazism and closed societies and eventually aggression. That’s my read. When governments impose austerity they drive voters to find a better way and that is always some way to alleviate austerity and poverty which uses progressive policies to create adequate social benefits, aka socialism. But the twisty part is that “open” societies (those that oppose socialism) impose an austerity from outside the government. Stick to your budget or we won’t loan you any more money. Open societies can cooperate and agree on certain issues to do with money, exchange rates, social spending and sovereignty. They agree to keep their currencies strong. This in turn insures that there can be free and open money markets and lucrative lending, protected from inflation of whatever currency. George Soros could have written this post. Without the slightest qualm that his money market freedom is every country’s austerity program. Germans didn’t embrace National Socialism because they wanted lunatic fascism – they joined because they were hungry, cold and ill. So that point is only touched upon by saying that when governments fail to provide adequate social benefits the electorate will look for another solution – but the overriding reality is that open money markets are used against sovereign societies and sovereign fiscal spending.
Sorry, “Stick to your budget or we won’t loan you any more money” is not true for sovereign, fiat currency creators (with a floating exchange rate). Reluctance to lend money would be expressed by financial markets as increased interest charges.
If what you say were true for monetary sovereigns then Japan would be paying record high interest rates. After all, their debt-to-GDP ratio is roughly 240%…
Go ahead, search for “Bank of Japan debt” … You’ll see the financial markets charge roughly 0% interest. As for the “lending”…any currency spent by governments, not retrieved in taxes is debt.
Germany’s war reparations were a unique condition that contributed to its financial contortions. What this article affirms is that it wasn’t the (earlier) hyperinflation that brought Hitler to power, it was the deflation induced by austerity.
And your point is?
Not sure how you “separate” the earlier hyperinflation and the deflation induced by austerity. The whole thing was a continuum of mismanaged money. WW1 was expensive, for the US but much more for Germany – and the entire world was trying to work out of all that debt. Here in the US we went for growing ourselves out of debt by deregulating business and we had the roaring twenties and a hugely over stimulated economy which crashed in 1929 and etc. In addition to the aftermath of the war we had a communist takeover in Russia. We saw an opportunity to bring Germany out of the Weimar hyperinflation by jumpstarting their MIC with US financing. The long term plan was that Germany would be a capitalist barrier to communism in Russia. So Germany went from defeat, ruin and reparations that caused hyperinflation to a booming industrial economy which became very aggressive. Even as it ran out of resources.
Adam Tooze covers the German WWI & II economy in his books and speaking gigs. “Wages of Destruction” in particular.
The Nazi economy was well-overrated and in one speech how he described the conditions of the Autobahn workers and other workers was revealing. Their implementation of “socialism” reminded me of USA benefits systems….
Interesting writings from Tooze, but I do not share his enthusiasm for preserving the alleged “global order”.
Yes, I started following him during the lockdown months. Currently enthusing over maps of the Franco-Prussian War of 1870. I wasn’t aware of the indemnity imposed on France by Germany, which was successor to that imposed by Napoleon on Prussia in 1807 (and calculated to match it to the pfennig) and precursor to Versailles in 1919. History is so neat and tidy and tragic.
The Marshall Plan broke that chain in both Europe and Japan and was nearly unique in history. I can’t conceive of a Trump Administration or today’s Republicans imagining such a thing.
That ushered in decades of peace and increasing prosperity from something that could have created revolution and fascism again. 4o5 years later, Eastern Germany got folded back into overall Germany.
Hi, this is my go-to for this issue:
“In this paper we study the political fall-out from systemic financial crises over the past 140years. We construct a new long-run dataset covering 20 advanced economies and more than 800 general elections. […]
On average, far-right parties increase their vote share by 30% after a financial crisis. Importantly, we do not observe similar political dynamics in normal recessions or after severe macroeconomic shocks that are not financial in nature.”
https://ideas.repec.org/a/eee/eecrev/v88y2016icp227-260.html
“Many pages have been written about what drove Hitler to power.”
OK, that’s enough. Stop it there. Take your hands off the keyboards and hold them where I can see them. Move over there, and put down that Mankiw economics textbook.
I see from my investigations that nearly all of your original sources are economists as well. Have you read basic texts like Overy and Kershaw on the rise of the Nazis? Have you done comparative studies of other countries, like Britain and France which also had austerity, but where the extreme Right was very weak? Thought not. Are you familiar with the mass of research over the last fifty years on who voted for the Nazis and when and where? Thought not. Do you know that nothing “drove the Nazis to power”?
Are you at least aware that the Nazis were a protest vote, that their support was already declining when they were brought into government, that no more than a third of the electorate voted for them and that the combined vote of the Left exceeded the vote for the Nazis? Sort Of, you say. I see. And you do realise that the Weimar Republic had been effectively dead since 1930 and the political system was falling apart? Well, that’s something. And that it wasn’t the Nazis being offered two posts in government that brought them to power, but their army of thugs in the SA? Well, even if you can’t quantify that kind of thing, there are books about it.
So this looks to me like just another rehash of the cliché that when conventional political parties fail, the electorate turns to unconventional ones, tricked out with a few statistics. Well, you’ll have your chance to persuade the jury of that. And I think they’ll agree that you’re also guilty of a PMC-style subtext about not voting for “populist” parties. So I’m taking you in for Gross Oversimplification of a Complex Issue, Lack of Originality, Straying Outside your Area of Competence, and Writing While Possessing a Hidden Political Agenda. Let’s go.
Like you, I have the impression that those authors have just discovered that water is wet.
The impact of austerity on the ascent of nazism has been known and discussed by historians for many, many decades. I seem to remember that based on a compilation of denazification debriefings performed after WWII, the Allies analyzed the reasons that pushed the interrogated Germans to join the nazis. There were of course a number of them, but poverty resulting from austerity policies implemented when the Great Depression struck figured at the top of the list.
I think the point of the article was that what has long been stated for a long time by historians has now been demonstrated in this paper by statistical studies. The more facts and statistics one can bring to bear on an argument, the better, it seems to me.
It would have been better if the paper had said “extremism”, however, rather than “populism” which has both positive (in the US) and negative (in Europe) definitions.
In 1930 when the depression struck, President Hindenburg had the idea of appointing Heinrich Brüning, an economist and a Centrist (as the Catholic party was then called), as Chancellor to balance the budget.
Hindenburg and his aristocratic and military friends wanted to restore the status quo ante WW1. They were monarchists who detested rule by parliament and wanted to restore the status quo ante — before WW1 and preferably, before 1798. Brüning the “centrist” was also a monarchist at heart. Hindenburg and Brünig ruled by decree, bypassing parliament altogether (which rule 48 of the Weimar Constitution allowed them to do in a crisis). They were supported by this by large numbers (fatally for them) of Social Democrats, fearful of the poor and anxious to preserve order by appeasing the right wing.
During this time the Storm Troopers were going around killing demonstrators and being let off by the judiciary because they were allegedly motivated by “law and order.” The Nazis, as has been stated attracted a protest vote that was a block eagerly courted by the reactionaries.
Interestingly, the Harvard board of governors later brought Brünig over to Harvard to teach when he had to leave Germany.
*Bruning — sorry for typos and repetition
Thank you.
Have you done comparative studies of other countries, like Britain and France which also had austerity, but where the extreme Right was very weak?
The extreme right was also weak in the US even though it had some famous and wealthy proponents. Here are a few differences that seem important. After WWI, the Kaiser abdicated and the old aristocratic govt was forcibly replaced by the Allies’ demand Germany become a democracy. Germany tried. However, having no working history of democracy its democratic govt was necessarily weak in both social understanding and weak in functioning effect. The demand for reparations payments to the victorious WWI Allies left a weak, new, democratic govt with fewer financial choices than existed for the Allies during the depression. A weak govt coupled with external demands it pay reparations and ‘balance its books’ left a govt resorting to austerity.
In contrast the US, UK, and France had long established democracies and social acceptance of democracy and fairly strong democratic govts; in the US, while Hoover insisted the US govt could do nothing to help people during the depression, FDR said the govt was strong enough to do much to help during the depression. This was also true in the UK, and in France.
It puzzled me that Mises and Hayek claimed a strong, democratic government leads to unleashing monsters of totalitarianism. Part of their reasoning that democratic governments should be weakened was to prevent the rise of monsters. However, looking at the 1930’s, I’d say it is weak democratic governments that give rise to the monsters Mises and Hayek feared.
I believe the last 40 years effort by neoliberals and libertarians to weaken democratic govt in the US and UK in order to put society in the hands of the “market”, an unaccountable ideology, is dangerous. Insisting on increasing peoples suffering with needless austerity for Main Street while heaping trillions on Wall St. is wrong. In some respects they are recreating for too many people the conditions of 1930’s in countries with weak democratic governments. Not a good prospect for future stability.
You forget the other monster that Hayek and von Mises feared even more, since it rose to power in an unimpeachable democratic way: the popular Front. At that time, France, Spain, Chile at the national level, the national coalitions under Social Democrats in Sweden and Norway, other countries such as Switzerland at the regional level.
The resulting governments had then the gall to legislate paid holidays, limit daily working time, introduce or extend social security, or engage in Keynesian economic policies — all truly totalitarian measures for the proponents of the then neo-classical, soon to become neo-liberal framework.
It also assumes that Mises and Hayek were basically honest about what they purported to fear, and about their own motivations, which is probably a dangerous assumption to make.
> However, having no working history of democracy its democratic govt was necessarily weak in both social understanding and weak in functioning effect
Oh dear.
Germany was a constitutional monarchy with a representative assembly elected by universal manhood suffrage from the time it achieved unification in 1871. Britain didn’t get universal manhood suffrage until the passage of the Fourth Reform Act in 1918 – when the British elite were shamed into acknowledging that if poor men could die for king and country in the trenches they were entitled to a say in deciding who got to send them there.
The idea that democracy was somehow an alien concept in Germany (or for that matter Japan, whose post Restoration assembly was actually modelled on Britain’s Parliament) is generally rooted in either ignorance or chauvinism.
The Weimar Republic was born under and ill star and it is not surprising that it failed given the succession of crises that occured during it’s brief life but that had nothing to do with Germans not understanding democracy.
Apologies for getting German democratic history wrong.
My point about weak democracies being a danger stands.
Richard J. Evans (The Rise of the Third Reich) says that the Weimar constitution was quite progressive and completely fine, as constitutions go. The problem was that the military and wealthy landed aristocrats clung to the belief that they had lost the war because “stabbed in the back” by liberals, Socialists, and Jews, and didn’t respect it. When the economic crisis of 1930 came they manipulated it by invoking “article 48”.
In case it wasn’t clear I was referring to the pre Weimar constitution.
I’m familiar with Evans’ work and I think you are greatly oversimplifying his argument.
No doubt.
David:
I came
I saw
I concur
Why the Germans? Why the Jews? Countless historians have grappled with these questions, but few have come up with answers as original and insightful as those of maverick German historian Götz Aly. Tracing the prehistory of the Holocaust from the 1800s to the Nazis’ assumption of power in 1933, Aly shows that German anti-Semitism was―to a previously overlooked extent―driven in large part by material concerns, not racist ideology or religious animosity. As Germany made its way through the upheaval of the Industrial Revolution, the difficulties of the lethargic, economically backward German majority stood in marked contrast to the social and economic success of the agile Jewish minority. This success aroused envy and fear among the Gentile population, creating fertile ground for murderous Nazi politics. https://www.amazon.com/Why-Germans-Jews-Prehistory-Holocaust/dp/0805097007/ref=sr_1_1?dchild=1&keywords=why+the+germans+why+the+jews&link_code=qs&qid=1597851597&sourceid=Mozilla-search&sr=8-1&tag=mozilla-20
As Germany made its way through the upheaval of the Industrial Revolution, the difficulties of the lethargic, economically backward German majority stood in marked contrast to the social and economic success of the agile Jewish minority. This success aroused envy and fear among the Gentile population…
If this is in fact true, the obvious question would be why was the German majority lethargic and backwards, and the Jewish minority agile and socially and economically successful?
Having been excluded from other occupations and land ownership for centuries, European Jews built legacies in finance. This probably gave them an edge over non-Jews, who were subject to more “real” constraints on prosperity and agility.
/scratch all that: check out this link, discussing literacy as the comparative advantage European Jews enjoyed, leading up to modernity.
https://www.pbs.org/newshour/economy/the-chosen-few-a-new-explanation-of-jewish-success
Interesting reasoning. Thank you for sharing your thoughts.
The Jews, especially those emigrating in large numbers from Eastern Europe because of famines and oppressive laws from the 1880s onwards , were seen as foreign, oriental, and incompatible with European Christian civilization. This was true in France and England, and even the United States, as well as Germany and Austria (where Hitler was from). People have wondered why Naziism arose in Germany rather than France, during the Dreyfus Affair.
I think it is a simplification to characterize them as economically successful, though perhaps anti-Semitic literature portrayed them as such. Some were, but there were an awful lot of poor Jews.
Worth noting that the myth is often repeated that the inflation of the early 1920s was responsible for the rise of the Nazis rather than the austerity of the late 1920s and early 1930s.
Also worth noting that the main “left” party of that era, the Social Democratic Party, spent much of its energy attacking those farther to its left. They even went so far as to hire proto-Nazis (Frei Korps) to murder the Spartacist leaders, Rosa Luxemburg and Karl Liebknecht.
First of all the Freikorps were politically conventionally right wing, not proto Nazis.
Second the Social Democrats controlled the German government when the Sparticists launched a Communist insurrection with the stated aim of overthrowing it by force and abolishing the republic. With no army of its own worthy of the name the Social Democrats had to turn to the only effective fighting forces still available. Politics makes for strange bedfellows.
Yes, the Freikorps murdered Luxemburg and Liebnecht. By the same token I can’t help but wonder what the fate of say Friederich Ebert would have been had the Communists triumphed – to say nothing of the Freikorps leadership (I’m pretty sure they couldn’t help but think of that as well). Perhaps we could look at what Luxembourg and Leibnechts fellow travellers were accomplishing in Russia at the exact same moment for some insight?
I think the apt aphorism is “live by the sword, die by the sword”.
Bruno Heilig – “Why the German Republic Fell” (1938) –
https://history.hanover.edu/courses/excerpts/111heil.html
From ‘the menace of privilege’ blog –
Heilig asserts that the rise of Hitler was caused by land speculation. I am no expert in German history, but he does seem to make a good case.
Not by land speculation exclusively, of course, but land speculation as an ingredient along with:
public aid to large landlords, encouraging them to withhold land from use
privatization, on especially favorable terms to connected individuals and groups
failure to fully utilize farmland, resulting in unemployment as well as high food prices
tariffs, raising prices of consumer and industrial goods
public subsidies to favored enterprises
control of the major news media by the landed class
Land prices soared, wages fell, eventually the economy slowed, and:
Although it was obvious that the, “invariable costs” — i.e. the tribute land monopoly exacts from the working people — were eating into all production, the responsible men and the leading exponents of what was taught as economics kept their eyes, as if under some hypnotic influence, fixed upon the worker’s pay-packet.
Reformers advocated unworkable or ineffective solutions: If progress brings poverty, they urged that we retard progress.
The newspapers, of course, served the interests of their owners:
I need not explain what that propaganda organization meant in operation. Its effect was to sway public opinion into believing that the interests of the landowners were the interests of the nation. Subsidizing the landlords was the accepted policy for preserving and even saving the sources of subsistence of the people: the higher tariff walls were for the benefit of the wage-earning population: increase in land values meant increase in the national wealth: and so on…
[A]s unemployment grew, and with it poverty and the fear of poverty, so grew the influence of the Nazi Party, which was making its lavish promises to the frustrated and its violent appeal to the revenges of a populace aware of its wrongs but condemned to hear only a malignant and distorted explanation of them.
Looks like the UK with it’s completely distorted land ownership, is potentially a candidate for a fascist government.
Related topic of how Germany under Hitler and the Nazis repudiated austerity policy and funded their full-employment infra projects, including the autobahn highway network so admired by Eisenhower, at a time when the German economy was extremely distressed, merits discussion. Believe they did so by having the German government independently create its own money without gold reserves and without access to foreign credit. Have read the model for their policy was the US government’s issuance of “greenbacks” during the Civil War of the 1860s.
Nazi Gernany created a company, the metal research company, MetallForschung or MeFo, which was used as the front to make commodity purchases from third countries. Its obligations were fiat scrip and always rolled over. It was a special purpose MMT vehicle. A bit like TARP or Maiden Lane….
In other words, they created a competing system to that of Wall Street and the City of London that allowed for full rearmament, full grocery shelves, the Autobahn and reindustrialization…”without access, nor servitude, to foreign credit.”
One can see why FDR and his handlers were so anxious to get us into the war with Lend Lease and other incitements to put a stop that potential end to debt capitalism. What would have happened if Germany had ignored its treaty obligations and not declared war on the United States after Pearl Harbor?
We’d probably have accomodated Nazi Europe the same way we did Communist China. Hitler would have died an old man like Franco, who suffered the same sanctions from the U.N. that Iraq and Iran do today and built Spain into an an independent nation with its own energy and domestic manufacturing.
Imagine, no Soviet Union, no nuclear bombs, no cold war, no Vietnam…
I know you can.
See The Forced War
David L. Hoggan
But Obama told us the national treasury is like a family budgeting at its kitchen table. There is no alternative to austerity, he said. Although, to be fair, the family doing its budget at the kitchen table that is also a sovereign currency issuer is rare, or, I dare say, non-existent.
“Obama told us the national treasury is like a family budgeting at its kitchen table.”
Are there no laws?
So I had made a comment in this morning’s links and there was this comment from Ambrit, which I agreed with.
Prescient? But as it fits this posting so well also, might as well repeat. If you haven’t seen it, its new to you as they used to say in TV land….
ambrit
August 19, 2020 at 8:33 am
The other “conspiracy to rig a presidential election” of note recently is Obama’s “Night of the Long Knives” to eliminate Sanders.
On a related note, even though Larry Johnson over at SST might be characterized as an old fashioned “conservative,” (PaleoCon,) he has made a very interesting observation concerning the zeitgeist of the American present and now former ‘middle class.’ People are scared. Frightened people often do irrational things. Frightened people can be manipulated into doing things that are, when viewed from a rational and disinterested point of view, counter to their best interests.
Various political ‘actors’ have trotted out the ‘demagogue’ trope to demonize Trump. They ain’t seen nothing yet!
This is a very schematic analysis, implying a causation of austerity to Nazis.
It leaves out of account Trotsky’s analysis of fascism: the failure of the socialist parties to propose an alternative.
The German Communist party had a million men under arms in 1931. Stalin told them NOT to revolt, NOT even to seek power, but to back Hitler!
This led to a big fight within the Comintern. Stalin feared that German Communism would mean the end of backward Russian Communism. In 1927 he had issued a similar directive to the Chinese Communist Party to back Chiang and the Nationaliss. The result was the Shanghai massacre that wiped out the entire CP leadership, leaving only Mao and his retinue.
Do you mean 1931 or 1941? I don’t think the KPD ever had a million members (the figures I have seen were less than half that, and very few had weapons). It’s true that the SPD and the KPD were at daggers drawn (literally) after Ebert’s use of extreme right-wing militias to crush the Sparticists in 1919. The KPD never forgave the socialists and referred to them as “social fascists” thereafter. They saw them as competition for the working-class vote, and so worse than the Nazis. Stalin of course agreed. But that animosity predated even Stalin’s rise to power. The great unanswered question is what would have happened if the Popular Front had arrived five years earlier. The Nazi Party was bankrupt by late 1932 and starting to lose support, and theoretically a centre-left government with passive support from the Communists could have taken power, as was the case in France later. But I suspect that in reality there would have been a coup d’etat of some kind, involving the Army.
1931. Trotsky’s Whither Germany provides the details, plus memories from old socialists who told me in the 1950s.
Couldn’t it be also implied that the Communists had more support in areas that had suffered the most under the Czar?
period drama treat: Kaisersturz, the fall of Wilhelm II, the events immediately leading up to his abdication
https://www.youtube.com/playlist?list=PLlRU8NuS9rKBST4HGjNWzaDLpAWxTvfte
Thanks, that adds a lot of detail.
What did the economists learn in the 1940s?
http://delong.typepad.com/kalecki43.pdf
In the paper from 1943 you can see …..
They knew Government debt and deficits weren’t a problem as they had seen the massive Government debt and deficits of WW2.
They knew full employment was feasible as they had seen it in WW2.
After WW2 Governments aimed to create full employment as policymakers knew it could be done and actually maximised wealth creation in the economy.
Balancing the budget was just something they used to do before WW2, but it wasn’t actually necessary.
Government debt and deficits weren’t a problem.
They could now solve all those problems they had seen in the 1930s, which caused politics to swing to the extremes and populist leaders to rise.
They could eliminate unemployment and create a full employment economy.
They could put welfare states in place to ensure the economic hardship of the 1930s would never be seen again.
They didn’t have to use austerity; they could fight recessions with fiscal stimulus.
We forgot everything they learned after the 1930s, and removed the things that stopped politics swinging to the extremes and populist leaders rising.
The intended audience for the paper appears to be the ruling class, the message appears to be that if you want to continue to be in the ruling class then you’ll actually have to do well for the electorate.
I’ve seen some papers indicating that people find it interesting (to the point of funding research/studies) to know how much can the lower classes be ignored before the ruling class is replaced.
The messages and the warnings about the fact that there are actually limits to how unequal a society can sustainally be before becoming so unstable that revoultions (peaceful and otherwise) happen are unlikely to be heard. Memories will fade, some will acknowledge the risk but consider it to be a material risk only sometime in the distant future so why not enjoy the now – similar to how they consider environmental problems.
There might also be a second audience with a second message:
I have the impression that papers like the one above are implying that voting for something other than the current ruling class always without fail leads to the persecution of minorities and since we know that persecution of minorities is wrong/bad then we should never ever vote for anything but the current ruling class. Which kind of implies that elections are pointless as the ruling class is defined now and forever….
You claim that “some economists warned that stagnant and falling living standards historically led to a political move to the right, and would support the rise of a radical right. That has come to pass in Europe and the US.”
That may be true, but it is a mistake to attribute recent right-wing populism in Europe to poverty. As the world-renowned authority on populism Cas Mudde explains in numerous articles and in a video called “How to deal with the far right” at https://youtu.be/rRUYNU4iq3A
the mainstreaming of the far right occurred in the course of the 3 major crises of the 21st century, namely 9-11 in 2001, the great bankster fraud-recession in 2008-2009 and the refugee crisis in 2015-2016. Crises nos. 1 and 3 were socio-cultural and crisis no. 2 was economic.
The economic crisis did not help the far right very much. By contrast it was crises nos. 1 and 3 that gave the far right a boost.
Consequently the current far-right wave is principally motivated by socio-cultural issues. Furthermore after 9-11, some existing ethno-nationalist conflcits turned into ethno-religious conflcits, as Mudde illustrates in the case of Holland (which is where he is from). Until 9-11 there had been anti-Moroccan sentiment, but after 9-11 it turned into Islamophobia.
Moreover voters for the right-wing German AfD party and the right-wing Spanish Vox party earn higher-than-average incomes.
In his fraudulent masterpiece The Road to Serfdom, Friedrich Hayek explains the rise of the Nazis in Germany as a result of the authoritarian rule of Brüning, but not in the same way as the authors of this article. The logic of The Road to Serfdom is that government planning is a slippery slope, and when you start ruling by decree you can’t stop and eventually wind up with full-blown totalitarianism. As a matter of fact this is the ONLY historical example that Hayek offers for his batsh*t theory.