Gottfried Feder’s 1932 outline of the fundamental principles and proposals of National Socialist economic policy
The article by Gottfried Feder translated below first appeared in the 1932 edition of the Nationalsozialistisches Jahrbuch, a collection of ideological and organizational resources published annually for members of the National Socialist German Workers’ Party. Feder at the time of writing was chairman of the NSDAP’s Reich Economic Council (Reichswirtschaftsrat, RWR), a body established in 1931 to ostensibly act as the Party’s “supreme organ for all fundamental questions of National Socialist economic policy,” and his article provides a general outline of the foundational ideological principles which Feder believed should guide the development of the NSDAP’s proposed economic reforms. Following its massive success in the 1930 national election the NSDAP had become increasingly focused on the task of developing practical policy solutions to the problems facing the German economy; party organizations like the RWR, and articles like Feder’s, were part and parcel of this attempt at making National Socialist economic remedies more accessible to German voters and more realizable to the country’s financial experts. Despite the prominence of the NS Jahrbuch and the lofty-sounding description of the RWR’s role, it should be noted that Feder’s position as the party’s economic authority in this period was not as authoritative as one might first assume. From 1930 onwards Feder found himself in direct competition with figures like Otto Wagener, head of the NSDAP’s Economic Policy Department (Wirtschaftspolitische Abteilung, WPA), who maintained a much closer working relationship with Hitler and who had been far more competent at building up a base of influential supporters within the ranks of the party. Feder’s prior status as the “Ideologist of the Movement” had been largely honorific, a propagandistic title conferred upon him by the party press in recognition of his role in the early development of the NSDAP and its programme, and even as chair of the RWR he struggled to maintain a level of influence within the party bureaucracy commensurate with that of some of his rivals (by 1934, in fact, he ended up completely sidelined from the leadership and from policy-making altogether). Feder’s views in this article thus provide a fairly succinct overview of a very prominent perspective on National Socialist economic principles, but it is not necessarily a completely definitive perspective. Not everyone within the movement would have agreed with Feder’s positions on private property or corporatist organization, for example, particularly those within the more ‘revolutionary’-minded factions of the National Socialist Party.
The Fundamentals of National Socialist Economic Policy
First printed in the National Socialist Yearbook for 1932.
1. The Purpose and Spirit of the Economy
The national economy in its totality has the purpose above all of adequately providing for the three basic necessities of all folk-comrades in terms of food, housing, and clothing, and beyond that of satisfying every need of a cultural and civilizational nature in accordance with the state of technology and the income conditions of the time. The economy as a whole is a serving limb in the overall organism of the Volk; in the best sense it is of service to the Volk for the greatness and the welfare of the nation.
A nation’s economy is not an end in itself, it is not there to enrich individual business leaders at the expense of their officials, employees, and workers, and even less is it there to serve as an object of exploitation for international High Finance.
2. Form of Economy
There are three possible directions for an economy:
1. A free economy without any fetters (capitalist-liberal).
2. A tethered, bound, planned economy (Marxist-collectivist).
3. A corporatively-structured, genuinely national economy (universalist-National Socialist1).
The completely unfettered capitalist economic form leads to ever sharper disparities between rich and poor; it produces methods of exploitation which culminate in the depersonalization and degeneration of the entire economy; and it unleashes prolonged economic struggles which the state itself, impotent and passive, has to sit back and observe. The tethered, bound, and planned Marxist economic form, the socialization of the means of production, leads to the elimination of the most powerful economic factor, the productive personality. Under such a system, economic fruitfulness atrophies and declines.
Only the organically-structured National Socialist economy, which liberates the productive personality from capitalist exploitation and from Marxist homogenization,2 can become, under the diligent assistance of the state, a source of real welfare for the entire population.
The class-conflict split between employer and employee must be bridged by the National Socialist slogan:
Workers of brain and fist, unite!
Only in this way will each individual be in the position to be able to do the best for his Volk, and therefore also for himself.
3. State and Economy
In the liberal era the organic management of the economy was dissolved, and a ferocious power struggle between state and economy ensued.
This power struggle can result in two potential outcomes: either pure materialist-capitalist interests triumph over the state and thus over the population (interest-slavery); or political rulers seize the entire economic apparatus for themselves (socialize it), in which case the state itself is transformed completely into an economic machine and descends to the level of a forced labor institution, as in Russia.
National Socialism assigns the state unconditional primacy over the economy, because the state as the representative of the nation, as the guardian of the nation’s power, honor, and prestige, as the Increaser of the Realm,3 must not involve itself within the productive economy, since it would then all too soon be drawn into the lobbyism of the individual sectors of the economy and would no longer be able to freely care for the common good as a whole.
With regards to the relationship between state and economy, it therefore follows that 1. the state has right of supervision over the economy, and 2. the state has right of intervention through policing, administrative, and fiscal policy (taxation) measures, if the general interests of the state so demand.
4. Economic Principles
Productive, creative work, the labor of brain and fist, is the foundation of all economics. Labor therefore deserves the foremost place of honor within the economy as a whole. Wealth, property, possessions, profit from material goods of all kinds, money, capital, houses, factories, the means of production, machines, building plots and farmland – these are all only the fruits of productive labor. The highest duty of the coming state will be the preservation of the productive personality and the protection of the workforce from exploitation. All labor is worth its wages, and all labor must yield its due reward. From this it follows that the proceeds from diligent and skillful labor, whether through the cultivation of land, whether through tools and assets, pass into the free ownership and possession of the producer and are to be protected by justice and by the law. The same holds true with regards to intellectual property rights.
National Socialism recognizes private property as a matter of principle, and places it under the protection of the state.
But it binds the right to own property to a moral duty towards the Volk as a whole.
National Socialism also recognizes the right of inheritance, since for it the family is the most important cell of the state.
The right to the proceeds of labor must not be construed as meaning that it will ever be possible to make the sales value of a product the basis of wages. Product prices (their sales price) must incorporate numerous rates for raw materials, machine wear and replacement, buildings, manual labor, commercial and technical management, social and sanitary facilities, as well as for education and training, welfare for the elderly and the sick, and for state institutions to be able to facilitate and secure production, the administration of justice, commercial contracts – and, yes, even national production by the police and the army, etc.
Alongside this most widespread form of private property, collectivist property is naturally also possible in the form of state property and communal property, cooperative property, or the property of legal entities under civil law. In contrast to the capitalist and Marxist systems, the National Socialist state will make it possible once more for every productive worker to be able to acquire property.
In the National Socialist state the dispossessed proletariat shall acquire property through diligence and ability. They should feel themselves to be full citizens, as well as shareholders in the total national production.
5. Labor and Capital
Capitalism has managed to completely subjugate labor, to exploit it and make it subject to interest. In the process it has turned the natural and healthy relationship between labor and capital (money) practically on its head. The current condition of the state, municipalities, and economy illustrates the disastrous consequences of this unhealthy, even fatal development. National Socialism terms this condition: interest-slavery.
The despotism of loan-capital is no longer contented with simple forms of money-lending; through anonymization (the conversion of economic enterprises into share companies) it has long deprived productive personalities of the best part of their potential capabilities, and has transitioned the economy away from its original function of the fulfillment of demand towards a purely profit-oriented standpoint. Moreover, finance-capital has also succeeded in completely converting the financial management of the public sector over to the calamitous loan system (read: the incurment of debts), and on a worldwide scale the horrific treaties between Germany and the Allies (the Versailles Treaty, Dawes Pact, and Young Plan) signify the consummation of High Finance’s interest-domination over German labor.
The Breaking of Interest-Slavery
is the biggest and most significant problem of economic policy that the National Socialist state has to solve. It is the prerequisite for economic recovery. Specific details about the measures proposed by the NSDAP are outlined comprehensively within the party’s official publications.
During the interim period, the National Socialist state will make measured use of its right to create money in order to finance large public works and the construction of housing, in the spirit of my well-known proposals (a Construction and Commercial Bank, etc.).4
6. The Organic National Economy
National Socialist Economic Development:
The economy is an elaborate, articulated structure. Today’s prevailing cross-relations (workers, employees, officials, entrepreneurs, syndicates) lead to the fragmentation of the economy into disparate interest groups which are in open or covert conflict with one another.
The truly genuine economy strives to dissolve these inorganic cross-relations, seeking the amalgamation of employers and employees within the various sectors of the economy in the form of a structure of Occupational Estates.5
The National Socialist state considers it one of its most important responsibilities to lift the relationship between employer and employee out of the poisonous atmosphere of class struggle and class prejudice, and to orient all of those who are faithfully and responsibly involved in the production process towards the common goal of national labor.
Under the concession of extensive self-administration, the Occupational Estates will have to carry out the regulation of wage and leave conditions; above all, they will also have to work for the reawakening of professional honor and the coordination of all personal relationships between those employed in enterprises and those managing them. These Occupational Estates will be consolidated together in district, municipal, and provincial associations, and will be headed by a central authority at Reich level.
Alongside these Occupational Chambers and Chambers of Estates, which regulate personal relationships, so-called Economic Chambers will be established as a new phenomenon in economic life, comprised of independent men who in no way have a personal stake in nor are dependent upon the economy itself. The Economic Chambers have the task of reviewing the significance of the individual occupational sectors and of overseeing them in the spirit of, and in service to, the interests of the general public.
A particularly important task of these Economic Chambers will be the cultivation of the domestic market and the careful supervision of foreign trade.
The Economic Chambers will be integrated together within the Reich Economic Council, which safeguards the general interests of the entire nation against the special interests and wishes of the individual sectors of the economy.
During the years 1925 – 1930, the Saxon textile industry experienced an extraordinary boom due to the fashion for brightly-colored ladies’ stockings, which went out all around the world. At the same time, German knitting-machine manufacturers were also marketing their warp-knitting-machines all over the world. For the German textile industry, every knitting-machine sold abroad meant competition for the German textile worker, as well as unemployment, hunger, and misery. The Economic Chambers of the Third Reich will bear the responsibility of making reciprocal competition of this kind impossible; knitting-machines which deprive German textile workers of their bread must not be exported. A modern example on a grander scale consists of the orders which Soviet Russia issued to German industry in order to be able to initiate a terrible competitive struggle against the German economy.6
7. Trade Policy
The maxim of National Socialist foreign trade policy is:
Every product which is able to be grown or manufactured in Germany may not be purchased from abroad. This means protecting the German economy in city and country from foreign competition.
When today Germany imports foreign foodstuffs (wheat, barley, fruit, vegetables, butter, eggs, cheese, meat, etc.) for around 4,000 million people, this means misery and hardship within German agriculture, as well as unemployment and a perpetual drain upon Germany’s national wealth. (Example: The importation of frozen meat). Equally outrageous is the fact that more than 2,000 million finished goods (clothes, linen, machinery, automobiles, ironware, etc.) have been imported into Germany from abroad. A German who purchases an expensive foreign car pays around 3,000 RM for it in wages to foreign workers. German workers who could afford to do the same will become unemployed, and the German taxpayer will be forced to throw in 2,000 RM more in unemployment benefits for every such vehicle purchased. The prohibition on importing superfluous foreign goods by no means signifies a foolish and impracticable isolation from foreign countries and from the world market, but just as foreign nations will still need high-end, high-quality German products for many years to come, we will still urgently require the raw materials which are absolutely imperative for our processing industry: wool, cotton, hides, furs, mineral oils, iron ores, etc.
8. Transitional Measures
The Elimination of Unemployment.
Upon its attainment of political power, National Socialism will find the German economy to be in a positively dire condition. An army of 5 million unemployed is demanding reintegration into the production process; public finances have been wrecked; state and economy are thoroughly indebted; the population’s purchasing power and its capacity to pay taxes have been drained; the state coffers are empty; agriculture, industry, commerce, and the trades are on the verge of collapse. In addition, a system of irresponsibility, corruption, and party-political feeding at the trough holds sway, and our spirit has been polluted by the concept of class struggle. As our first task, there is an enormous amount of purifying and educational work to be accomplished.
The Provision of Work and Bread.
The introduction of compulsory labor service will relieve approximately half a million German folk-comrades from the curse of unemployment. The necessary dismantling of tenancy legislation will initially take the form of exempting those subject to taxation on housing rent from at least half of their tax liability, so long as they produce receipts of the repair work on their properties for the exempted amounts. Hundreds of thousands will be fed, and hundreds of thousands will be reintegrated back into the economic process.
Following this, the construction industry will find employment through the promotion of the building and settlement sectors, through the provision of cheap (interest-free) credit along the lines of my proposals, and through the establishment of Social Construction and Commercial Banks.
Under pressure from the state, an extensive restriction on imports will be implemented, with demand channeled towards the domestic market. Agriculture will, with the utmost urgency, be put in the position via interest rate reductions, debt restructuring, tax relief, and the provision of cheap credit, to be able to produce imported eggs, fruit, vegetables, meat, butter, etc. on German soil, and to bring them to market. We must succeed, through domestic production, in making at least 2 billion imported foodstuffs superfluous. This would permit at least 1 million unemployed to be reintegrated back into production. The same goal will be achieved by cutting off the import of foreign industrial products onto the German home market. And, once again, hundreds of thousands will thus be able to find employment in the revitalized economy. In the field of fiscal policy, the strongest incentives and relief will come from the reduction of high interest rates, in the first place by means of nationalizing the Reichsbank and the remaining banks of issue.
The nationalization of real-estate loans and the transformation (conversion) of high-interest-bearing mortgage bonds will stimulate a tremendous revival of the housing and property markets.
The nationalization of the big banks – or, to be precise, their positioning under governmental administration – will pave the way for loosening and releasing the broadest sectors of the economy from their interest-bearing indebtedness.
The nationalization of the electricity supply will result in a very substantial reduction in power costs, and will have an invigorating impact on overall production.
Alongside these measures, which denote a powerful revitalization of the domestic market, there are major foreign policy tasks which can only be intimated here:
The abolition of the Young Tribute,7 the expansion of our economic sphere through tariff agreements, etc. A vigorous policy of alliances will guarantee the restoration of a German State of Labor and Achievement which, far removed from imperialist goals, will see its only task in securing work and bread, in freedom and honor, for the German population.
1. The word “universalist” is a direct reference to the theories of Austrian economist Othmar Spann. Spann’s “universalist” economic doctrine argued that economics was not innately “atomistic” (as per liberalism), but rather that “all economic phenomena are, by their very nature, an interarticulated structure of achievements,” i.e., they are innately interconnected in such a universal fashion that they require coordination through a corporativist system which sets social harmony and stability as its central economic precepts, not maximum profit and perpetual growth. Spann’s ideas were highly influential within the German and Austrian national-revolutionary movements, and also played a role in the development of the state ideology of Engelbert Dollfuss’s ‘Austrofascist’ regime. Feder too was sympathetic to Spann’s universalism; he had personally attended economics courses given by Spann, and Spann mentions Feder’s own theories favorably in the revised 1929 edition of his treatise Die Haupttheorien der Volkswirtschaftslehre (translated into English as Types of Economic Theory). Despite the influence which Spann had upon sections of the nationalist movement, the National Socialists never fully accepted Spann’s universalist principles. Relationships between the ‘Spann-circle’ and the National Socialists were complex; some within the NSDAP embraced Spann’s ideology while others rejected it as insufficiently völkisch and as inadequately socialist (i.e., they argued that Spann’s corporatism gave far too much autonomy to business circles and to financial interests). Spann would end up persecuted by the National Socialist regime after the 1938 Anschluss, and Feder was publicly censured by party publications in the late 1930s for his ties to Spann’s “alien” ideology.
2. The word Feder uses here in German is “Gleichmacherei,” which has a pejorative sense – to make things equal through the artificial removal of objective, individual characteristics and differences, i.e. a “levelling-down” or a “homogenization.” It is sometimes translated as “egalitarianism,” but there is a separate German word for that concept which has a far less negative connotation: “Egalitarianismus.”
3. A reference to one of the various honorifics given to the Holy Roman Emperor – “zu allen Zeiten Mehrer des Reiches,” i.e., “ever Increaser of the Realm.” The title’s inspiration was derived from one of the standards of the Roman Empire, “semper Augustus” – i.e., “ever Augustus” or “ever exalted.”
4. The “Social Construction and Commercial Bank” (“soziale Bau- und Wirtschaftsbank”) was an idea which Feder had advocated as early as 1921. It was spelled out in specific detail within the 8th edition of the Nationalsozialistische Bibliothek series (a collection of pamphlets covering various aspects of National Socialist theory): Die Wohnungsnot und die soziale Bau- und Wirtschaftsbank als Retterin aus Wohnungselend, Wirtschaftskrise, und Erwerbslosenelend (“The Housing Shortage and the Social Construction and Commercial Bank as Savior from the Housing Situation, Economic Crisis, and the Misery of Unemployment”). Feder’s proposal entailed establishing a national bank for the purpose of alleviating the housing shortage. This Construction and Commercial Bank would issue money for housing development; the money issued would be covered by the newly-constructed houses, thus theoretically freeing their construction from the burden of interest, which Feder argued was a major barrier to the construction of affordable housing for Germans of all classes.
6. Feder seems to be suggesting that strikes and other actions by German industrial workers, initiated by the Communist Party of Germany, were actually inspired by the machinations of the Soviet government and by its desire to make Germany less competitive against Soviet industry.