Three Theses (not really: more like two graphs and a link) on Nazism and Capitalism

Commenters on my little Nazism and capitalism post are claiming that the graph tells us nothing about the Nazis and capitalism; it only tells us that the economy improved under the Nazis. As it did in the United States under FDR. So maybe the graph plotting capital’s return under Nazism just shows general improvement in the economy in the 1930s, an improvement widely shared throughout the industrial world?

Luckily, Suresh Naidu, the kick-ass economist at Columbia, supplied me with the following graphs.

This first graph, which comes from Thomas Piketty’s Capital in the Twenty-First Century, compares the share of national income that went to capital in the US and in Germany between 1929 and 1938. Suresh tells me that the share roughly tracks capital’s rate of return. Long story short: capital was doing better under the Nazis than under FDR. Not because of overall increases in economic performance in one country versus another but because of the economic policies of the regime. Or so Suresh tells me. (Usually academics are supposed to acknowledge their debts to their friends and readers but own all errors as their own: in this case, I’m blaming everything on Suresh.)

From Thomas Piketty, Capital in the Twenty-First Century

The second graph—which comes from this fascinating article by Thomas Ferguson and Hans-Joachim Voth, “Betting on Hitler: The Value of Political Connections in Nazi Germany“—tracks the stock market’s performance in Britain, US, France, and Germany, from January 1930 to November 1933. As you can see, in the early months that Hitler came to power, Germany’s stock market performance was quite strong, outstripping all the others; it’s not until July that it even crosses paths with Britain’s, the second best performer.

From Thomas Ferguson and Hans-Joachim Voth, “Betting on Hitler: The Value of Political Connections in Nazi Germany”

The last tidbit I want to share is this article by Germà Bell, “Against the Mainstream: Nazi Privatization in the 1930s,” from The Economic History Review. Phil Mirowski sent it to me, after I shared with him the Bell article on the language of privatization that I cited in my previous post. This article also has some fascinating findings. From the abstract:

In the mid-1930s, the Nazi regime transferred public ownership to the private sector. In doing so, they went against the mainstream trends in western capitalistic countries, none of which systematically reprivatized firms during the 1930s.


  1. Evan Harper April 22, 2014 at 4:14 am | #

    If you’re interested in this stuff I highly recommend Tooze’s book, from which that original graph is taken. It’s in a chapter called “Partners: The Regime and German Business.” Here’s some text from the same page:

    The combination of rising domestic demand, an end to foreign competition, rising prices and relatively static wages created a context in which it was not hard to make healthy profits. Indeed, by 1934 the bonuses being paid to the boards of some firms were so spectacular that they were causing acute embarrassment to Hitler’s government. In the light of the far more modest increase in workers’ incomes, it seemed that the Communists and Social Democrats did indeed have a point. The Nazi regime was a ‘dictatorship of the bosses’. Having regulated imports, exports, and domestic price-setting, the RWM [Economic Ministry] therefore moved in the spring of 1934 to control the use of business profits. The distribution of profits to shareholders was not to exceed a rate of 6 per cent of capital. This did not of course have any effect in underlying profitability. It simply meant that corporate accountants were encouraged to squirrel profits away in exaggerated depreciation and reserve bookings […]

    [T]hough it is important to do justice to the shift in power relations between the state and business that undoubtedly occurred in the early 1930s, we must be careful to avoid falling into the trap of viewing German business merely as the passive object of the regime’s draconian new system of regulation. As we have seen, profits were rising rapidly after 1933 and this opened attractive future prospects for German corporate management […] Despite the dramatic growth of state regulation, industrialists and their managerial and technical staffs were indispensable, if not in the conception then at least in the execution of national policy.

  2. David Chuter April 22, 2014 at 6:00 am | #

    I’m afraid I still don’t see what this is proving. The experience of other countries is only relevant if their circumstances were the same, but they were not. Rearmament started later in Britain and France, for example, and was less thorough-going.
    On the graphs it seems to me that (1) The economy did better because of the economic policies of the regime (notably but not only rearmament) so the two arguments are effectively the same and (2) The stock market went up once the political crisis of 1930-32 was resolved, which was what you would expect in any country.
    Two augments are being mixed together here. Either
    (1) The Nazis came to power with a deliberate policy of favoring capital and bearing down on the working class to increase profits and dividends and put this into effect, or
    (2) The Nazis came to power with a deliberate policy of beginning a crash programme to build a war economy, which incidentally resulted, among other things, in increased profits and dividends, and imposition of restrictive measures on the workforce, in the interests of rapid mobilization.
    So far as I’m aware the evidence is in favor of (2).

    • suresh April 22, 2014 at 7:25 am | #

      I agree its difficult to argue definitively with this kind aggregate data. Tooze’s chapter on “Partners: The Regime and German Business” and Ferguson and Voth paper are both pretty persuasive that the Nazis were eagerly anticipated by various segments of business, particularly for their hostility to the left and not because of anticipated foreign policy (“according to the surviving record”, at least). I like the bit in Tooze about how the campaign contributions were won when Goering suggested that the March 5th election would be the last one for the next 10 years, probably the next 100 years. And the Ferguson and Voth paper shows that it was particularly the firms connected to Hitler that gained disproportionately from his election.

  3. Randy White April 22, 2014 at 7:13 am | #

    Reblogged this on Randy C White.

  4. Roquentin April 22, 2014 at 12:01 pm | #

    If you’re arguing that the private sector and German business had plenty to gain by having Hitler in power, you’ll get no opposition from me on that point. It certainly would turn out better for them than a communist revolution. You could make a pretty decent case the “military Keynesianism” was at work both in Hitler’s German and FDR’s America, basically stimulating the economy and putting people back to work building a massive war machine.

    The economic policies of the Nazis were not extreme but very ordinary and something akin to the political center. While not being lassiez-faire, they were not socialist either in a meaningful way (especially in practice). Furthermore, I would also conclude that economic policy was not the decisive factor in what caused the terrible things which happened in National Socialist Germany, but if you want to make that argument it would be an indictment of the center rather than the Austrian/Chicago school or Marxism. I would even say that anti-antisemitism was more specific to Germany than fascism itself, as it played a drastically reduced role in the policies of Mussolini.

    Practically no nation, ideology, or people emerged from the first half of the 20th century with their hands clean politically. I think that gets lost now in hagiography about the “Greatest Generation” and cant about the heroism of battle. WWII was one of the greatest geopolitical catastrophes in recording history and the furthest thing from heroic.

Leave a Reply