August 04, 2015

Were the Nazis really socialists? The proof - and numbers - are hard to find

Aaron ClareyRebel Blogger

I faced a problem.

I had found another one of those "universally known economic assumptions" that everybody assumes is true, but did not know for a fact whether or not it was.  We all know these economic assumptions, and even we are guilty of assuming they're true every day:

  • - Capitalism is the best economic system there is. (Proven true.)
  • - "The rich don't pay their fair share." (Proven false.)
  • - "Sexism is causing the wage gap." (Proven false.)
  • ...and...
  • - "Housing always goes up." (Absolutely proven false.)

However, this one was going to be a little bit harder to prove:

Were the Nazis (the National SOCIALISTS) indeed socialist?

The reason I was interested in proving this right/wrong is because it often surfaces when people are debating ideologies and many conservative/libertarian/free market types will point out that the "Nazis were socialist" in order to show that not all socialists are "nice" and that Hitler wasn't "right wing." 

However, it wasn't simply going to be a matter of going to the FRED database, pulling two data series, correlating them in Excel and then giving the proverbial statistical finger to the left.  It was going to be more problematic. 

First, I'll buy you a beer if you can find the actual Nazi budgets.  And I'll buy you a chaser if you can find them going back to pre war Germany. AND I'll buy you a martini if you can get me their GNP/GDP figures!

They just don't seem to exist. 

It's either been too long ago or the actual documents have been destroyed or they're buried in some CIA warehouse next to the Ark of the Covenant. So I couldn't conclusively point at numbers and had to find some other means.

This brought up the second problem. Without actual budget figures, I had to rely on academic research. Unfortunately, this academic research largely focused on military spending and not non-military spending or the overall political-economic philosophy of the Nazi party. However, it did provide some great insight into what Hitler was "thinking" in terms of economics, as well as precise and specific actions the government took during pre-war and wartime Germany.  Some of these actions included:

  • - Price controls
  • - Establishing a national labor group
  • - Massive deficit spending (however no obvious data was available)
  • - Massive public works (like our CCC, the autobahn, and other Keynesian things)
  • - Rationing
  • - Nationalizing industries
  • - Banning large retail stores (though due to their primarily Jewish ownership)
  • - Government issuance of securities rising to 90% of total securities issued (ie only 10% private sector)
  • - And a corporate tax reaching 98%

All of these are obviously and blatantly socialist, and conservatives may think they've won the debate about whether the Nazis were socialist here.  But you know the left and you know merely citing actions Nazis took is NOT going to convince them.

  • You need data.
  • You need charts.
  • You need irrefutable proof.

That's the only way to get leftists to stare blankly at your data, be speechless, then shrug their shoulders, dismiss your data, and call you a racist (which is the only form of victory you can get over leftists because they are so delusional they think they can never be wrong). 

So inevitably, I knew I would have to find data. And after a solid hour of researching, I found two datasets, pre-war Germany, that though NOT GDP and the actual Nazi federal budgets, still allowed me to do a little bit of Algebra (that's "math" for you liberal arts majors) and come up with the precise numbers I was looking for:

Nazi military expenditure as a % of GDP


The pre-war budget of the Third Reich

When I put them together I could infer the dataset I universally use to determine whether or not a country is "socialist" or "capitalist."

Government spending as a % of GDP:

And when we look at the actual numbers we can conclusively say that the Nazis were indeed socialists.

Government spending as a percentage of GDP averaged around 40% pre-war. Additionally (at least in the beginning) 80% of the budget was spent on social programs, not the hallmark of an "evil, right wing, capitalist economy." And when combined with the blatant socialist moves of nationalization, government work projects, price controls, and other forms of government intervention it is very clear that the effective economic philosophy of the Nazis was socialism.

However, in intellectual honesty (as well as intellectual interest) there are some interesting observations that need to be pointed out.

One, there was not much time to witness or study Nazism's economic policy that wasn't obscured or masked by Hitler's war ambitions. Matter of fact nearly all of the academic research on "Nazi Economics" was about Hitler's drive for re-armament. Ergo, to see the default state of a "peace time Nazi economy" you maybe get that in 1935 before Hitler ramps up the military spending.

Two, the "Nazi miracle" (where Hitler gets Germany to full employment faster than any other western nation out of the Great Depression) is actually quite misleading. Yes GDP was growing at double digit rates. Yes, "full employment" was attained. But it was all due to an overly aggressive rearmament. So aggressive that actual standards of living decreased. The military took so much in terms of resources civilians had to suffer rationing, consume less consumer goods and in general sacrifice for the military. And this was NOT even during the war.

Three, ironically the same could be said about the US. Once we entered the war we essentially did what Nazi Germany did during pre-war. Build up our military at all costs. Food and fuel rationing. But in a Keynesian dream come true we "got that dem der GDP figure nice and high and got dat dem der employment rate to full" even though people will still sacrificing. 

About the only thing that could be said that was better in the US was that pre-war we were getting out of the depression by supplying the Europeans the materials they needed to kill each other. This once again shows the obfuscating effect war has on an economy making it difficult to discuss whether that economy is indeed "capitalist" or "socialist."

Finally, the father of Nazism himself, Hitler, actually didn't seem too interested in economics.  He was not consistent in different economic stances, first claiming one thing, then contradicting in another. And though I did not read Mein Kampf, his overall effective actions (in my research) were to outsource the economics of Nazism to his financial leaders (Schacht, Funk, and Goering). Here (once again) the focus shifted almost immediately from rebuilding Germany to preparing it for war.

In the end, however, whatever Hitler's and the Nazi's ultimate philosophical economic aims were, the actions and numbers were effectively socialist. Certainly during "peacetime" and especially so during war (as military spending is still state spending, akin to North Korea). Thankfully, it is a theoretical debate about what a post-WWII Nazi economy would look like.


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commented 2015-08-06 11:49:50 -0400
Putting aside the unusual religious element of Nazism, namely the irrational hatred of Jews, the movement was indeed a form of statism, in which can be lumped Mussolini’s fascism, Bolshevism, Trotskism,, ect. As Von Mises put it, you are either a laisse faire free market advocate or a statist. He was generous and allowed another middle designation called interventionism. An interventionist was not intentionally a statist but their general way of going about governance amounted to a less aggressive version of statism. George W Bush would fit nicely as an interventionist in Von Mises speak.

It was a trick of the liberal left, or progressives as they were called then, to call Nazism right wing. Indeed, Mussolini was a great fan of Lenin and his work. At first all the statist movements worked together, until Hitler’s great betrayal. Then really what started was a civil war within the statist movement. This is not unique to the history of socialism. There has often been wars and purges in the movement of purists and moderates by the more totalitarian of the group.

It is useful for the left to be able to label Nazism as right wing, as it gets to lump Nazism with conservatism. The right wing gets to own all the evils of the world past and present and there is less hot air left to really peer into the evils of the left. After all, there is little the left hates more than to be called “Nazis”. Those are fighting words. But to be called a “Stalinist”? Meh.
commented 2015-08-06 00:00:10 -0400
I’ve been warming to the idea that the Nazis were inspired by Marxism for some time. A key element against was that the Nazis chose different enemies, but given the feminist antics, this appears unsubstantial. Jews having been confined to finance, they would have formed a substantial part of the richer classes, which may have been perceived as the “real problem” with the Socialist enemy. The problem is also compunded with the Eugenicists, which appears to have been the core ideology behind the Nazi death camps.
commented 2015-08-05 14:08:39 -0400
The “right wing” German party of that era were the Conservative Royalists. Any left wing party associated with Jews such as Bolsheviks (Marxist-Leninists) or Trotskyist were banned as state enemies…as were the various flavours of Anarchist.

The National Socialist German Workers Party…as the name implies…were a nationalistic (favouring protectionism and trade agreements benefiting the national interests first) and a state bureaucratized labour policy rather than free range unions.

Not only did they impose price controls, they also imposed wage and benefit controls.

The prevalence of Jews in the German health care professions were seen as one of the worst abuses of the “Zionist capitalist” system and an obstruction to achieving health care that was affordable to the workers.

Probably the most tangible evidence of a socialist agenda was the Volkswagen (people’s car) designed by Ferdinand Porsche who was on the executive of the NAZI party. The idea was to produce a car that would cost no more than the average annual salary of a worker.

Resource investment in the arms industry is not an indicator of capitalism or socialism. The whole “warmonger” and “military-industrial complex” thing is clap trap and propaganda. Sweden produces ALL of the world’s naval cannons and most of the anti-aircraft guns. The Czechs have been gunsmiths to both communist and capitalist regimes and have never needed to pick a fight in order to sell their wares.
commented 2015-08-05 08:04:58 -0400
In the Nazi SS in contrast to the army, soldiers did not use the expression “Herr” when addressing officers and non-commissioned officers. That was definitely a socialist habit.
commented 2015-08-05 01:06:56 -0400
Written at the beginning of WWII was The Road to Serfdom, by economist Fredrick Hayek, though it’s more about the mindset rather than the economic numbers.
commented 2015-08-04 15:33:23 -0400
A good source of information on this subject is “The Wages of Destruction: The Making and Breaking of the Nazi Economy” by Adam Tooze. The publisher is Allen Lane (2006).