The Social Economy

“Earn it if you would own it!” National Socialist economic theoretician Dr. Otto Wagener and the ‘third way’ between nationalization and socialization

A common misconception I see about National Socialism is that the movement “had no theory,” that it comprised at best a set of mindless slogans and aesthetics which had no solid intellectual footing. The swaggering remarks made by some NSDAP leaders admittedly have not helped allay this perception, as they were often overly keen to define their movement as one of “action” in order to set it apart from the staid, dogma-laden, bourgeois respectability of more mainstream competitors. Yet the claim that National Socialism was bereft of ideas or principles cannot have been particularly convincing to anyone alive when it was at its most active, at least to those with eyes. The movement in its heyday produced massive quantities of publications examining political, economic, scientific, and philosophical issues from the perspective of the “nationalsozialistische Weltanschauung,” including a number of theoretical journals. Particularly central to National Socialist ideology was its economic theory, which had deep roots by way of Social-Democracy and the Kathedersozialisten, and which the Party’s Economic Policy Department (Wirtschaftspolitische Abteilung, WPA) worked into a variety of draft policy proposals in the early 1930s. The head of the WPA was Dr. Otto Wagener (b.1888 – d.1971), a man who for several years was a senior figure in the NS leadership as well as the NSDAP’s chief economic theoretician. One of the potential models for a National Socialist economic order explored by Wagener was that of the “social economy” (Sozialwirtschaft), a system in which the principles of natural selection and worker participation would merge to form a new alternative to both nationalization and socialization. Property rights in Wagener’s “social economy” would not be absolute, with the system instead being characterized by a gradual and continuous transfer of business and industry ownership into the hands of the most capable workers. Wagener’s idea, like many of the draft proposals researched and debated by the WPA, never actually became official policy, but it nonetheless still serves as a perfect example of the theoretical credentials of a movement so often painted as crudely anti-intellectual. The text below is an excerpted chapter from Wagener’s post-War memoirs, in which the author gives an account of the informal economic policy conferences he held with Hitler in 1930 where the idea of the “social economy” was first discussed. The majority of the text is taken verbatim from Ruth Hein’s English translation of Wagener’s memoirs, although I have edited it slightly to add in several sections from the German original which Hein cut from her translation. 

Plans for a “Social Economy”
An Informal Economic Policy Conference, Summer, 1930
From the memoirs of Dr. Otto Wagener

NS_Swastika

In the early summer of 1930, Hess asked me on behalf of Hitler whether I had time at a certain hour the next day for an economic policy conference. Strasser and Dr. Wagner,1 at that time Gauleiter of Munich, would be present.

The next day the four of us sat around the round table in Hitler’s office.

Hitler raised the issue of my position on the problem of nationalization and socialization. I had the feeling that he wanted to familiarize himself for the first time with my attitude towards economic policy.

I began by stating something like the following:

“Of course, I am naturally well-acquainted with what the points of the NSDAP programme say regarding this topic. But since you are asking how I feel about these problems, I shall now neither take these into account nor refer to them.”

In wide-ranging remarks on the problem between “capital and labor” in industry, Wagener in the following pages of his memoir then rejects as a solution both nationalization and a “direct socialization” through the takeover of enterprises by workers.2 A “direct socialization” is impractical in the long term, especially with regard to future investment. Nationalization merely replaces the private entrepreneur with the state, while leaving the worker in a service relationship with capital. This entangles the state in the conflict between capital and labor, a development which could have dangerous political consequences. Nationalization also leaves unanswered the question: Who is the state? Its final result would be domination by those groups which control the state, the consequence being the spread of the “spirit of the feeding-trough.” In addition, the “automatic self-healing mechanisms” inherent within “healthy competitive struggle” would also be lost. Wagener therefore warned against the nationalization of those enterprises which the state did not absolutely need to possess. “Completely different methods” would be necessary in order to achieve the transition from individualism to socialism.

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Basic Features of the National Socialist Economic System

Cambridge economist C.W. Guillebaud’s 1939 analysis of the essential features of Hitlerian economic ideology

NSDAP - Hitler-BewegungObjective analysis of National Socialism is virtually impossible nowadays. The enduring hangover of the War, the popular use of ‘Nazi’ as a pejorative divorced from its original ideological meaning, the adoption of Hitler’s image and ideas as an easy shorthand for Ultimate Evil – these have all combined to ensure that peoples’ responses to the subject are inherently emotive, and that academics who do attempt a dispassionate assessment risk suffering the potentially career-ending accusation of “sympathy”. This is not a new phenomenon; a contemporary Canadian review of the 1939 book The Economic Recovery of Germany noted that its author, Cambridge University economics lecturer C.W. Guillebaud, had recently been accused by another reviewer of being an apologist for German policies over his book’s tone of unbiased critique. But the accusation did not spell doom for Guillebaud’s public image, as it would do now. In the same year as his book’s publication Guillebaud became a government advisor on economics issues, beginning a distinguished career in the public service which included many years on the Council of the Royal Economic Society and a seat on numerous industrial dispute tribunals and wage arbitration committees, where he came to develop a reputation as a pro-labour maverick. Guillebaud’s interest in industrial relations is probably what prompted his study of the economic system in Hitler’s Germany, rather than any covert sympathy for ‘Nazism’; his other works suggest a strong interest in social policy and modern forms of industrial arbitration, both areas in which NS Germany was experimenting with new, progressive models. The chapter from Guillebaud’s book which I have excerpted below is typical of his fair, balanced approach. It describes in detail the basic features of the economic system in Germany at the time, outlining its core ideological principles as well as its strengths and weaknesses, and does so in a manner which is remarkably impartial in comparison with writing on the same subject produced by authors today. The excerpted chapter is one of the best and most concise descriptions of Hitlerian economic policy during the 1933-39 period I have come across, and the fact the author does not feel the need to browbeat the reader with the Germans’ moral shortcomings every other sentence is remarkably refreshing. 

Some Basic Features
of the National Socialist Economic System
Chapter V of  ‘The Economic Recovery of Germany’
by C.W. Guillebaud

Reichsadler

This chapter is an attempt to sum up in a few words what would appear to be the salient characteristics of the German economic system as it took shape during the years 1933 to March 1938.

State Control Over Investment, the Money Market, the Rate of Interest, and the Foreign Exchanges

By the establishment of a rigid and highly effective control over the foreign exchanges the German economy has in a large measure, though by no means completely, been rendered independent of fluctuations in the outside world. Under these conditions external changes could alter the total volume of Germany’s foreign trade, but could not cause wide divergences to occur between the value of imports and exports taken as a whole.

Down to the end of 1937 it was in fact possible to preserve a favourable balance of trade and to redeem a considerable part of the foreign debt whose existence has been, and still is, so great a handicap to Germany’s freedom of movement in her commercial relations with foreign countries. As a further result of foreign exchange control the internal monetary and price structure has been divorced from world price movements and from the influence of gold. The export of capital also can be effectively held in check.1

Inside Germany the monetary system has been based on the general principle that the effective volume of money and credit in circulation should keep pace with the growth of production and the output of goods and services. Continue reading

Why Mosley Left the Labour Government

Extracts from Oswald Mosley’s 1930 speech on his resignation from the MacDonald government, published as a British Union pamphlet

Mosley_Punch_CartoonThe text I have transcribed below is taken from a British Union pamphlet titled Why Mosley Left the Labour Government, published sometime around 1938 (the actual pamphlet is undated, but an advert in it for Mosley’s Tomorrow We Live provides some hint as to the time of origin). The pamphlet actually consists of extracts of the speech Sir Oswald gave on 28 May, 1930, explaining his decision to resign from the MacDonald Labour government over the way his efforts to deliver policy recommendations on resolving the unemployment crisis (something he had been given responsibility for, as a Minister without portfolio) had been frustrated by his superiors and scuppered by the hesitancy of his own government. I debated with myself over whether to post the entire speech or just the truncated version in the pamphlet (the speech can be read in full on Hansard); in most circumstances I prefer to post the entirety of an article or speech where possible, as I dislike having content filtered for me by someone else’s conception of which parts they consider “important”. In this instance, however, because the entire speech can already be read for free if one has the energy to navigate the Hansard website, I decided that just posting the pamphlet version was enough. For one thing, it shows which sections of the speech British Union still found relevant enough to reproduce 8+ years after the event, something that is interesting in itself (Mosley’s worldview from Tory to Fabian to Fascist to Pan-European remained remarkably consistent). The speech when first delivered was met by wild cheering from the House of Commons, was hailed by newspapers as a “triumph”, and made Mosley a hero not only among the Labour backbenchers but with the younger generation even in the Liberal and Conservative parties. Under the circumstances it is perhaps understandable why Mosley tried to use the momentum of this growing notoriety as the springboard for a new political movement and career – his New Party (later to evolve into the BUF) would be founded in February 1931, with a reworked version of the memorandum Mosley had produced while in government as its programme.  

SIR OSWALD MOSLEY’S RESIGNATION SPEECH
on Relinquishing his Office in the Labour GovernmentLion_Unicorn

These extracts from Mosley’s famous speech contain the whole of his economic proposals. As all these suggestions are embodied in British Union policy to-day, this document entirely refutes the widely circulated charge of inconsistency against him. Administrative and financial details alone have been omitted, as these are now largely out of date, owing to changed circumstances. 

The complete text can be read in Hansard, Vol. 239, cols. 1348 to 1372

House of Commons, May 28th, 1930

Sir OSWALD MOSLEY: In the earlier stages of this debate to-day, to which I will return with the leave of the Committee, we have had from the Prime Minister an exposition of Government policy, and also some of the customary exchanges of debate from two great masters of that art. I do not propose to indulge in any form of dialectics, because I believe the purpose which this Committee desires can best be served if, as directly as possible, I proceed to the actual facts of the great administrative and economic issues which are involved.

The Prime Minister, in his speech, pointed out that a fact which none can deny, that world conditions have been vastly aggravated since the arrival in power of the present Government, and that no one can suggest that the Government are responsible for those conditions. None can deny that fact, but this I do submit, that the more serious the situation the greater the necessity for action by Government.

We must, above all, beware, as the world situation degenerates, that we do not make that situation an excuse for doing less rather than a spur for doing more. That is the only comment on the general situation that I would permit myself before coming to the actual issues involved.

General surveys of unemployment I have always distrusted, because they are liable to degenerate into generalities which lead us nowhere. If we are to discuss this matter with any relation to realities, we must master the actual, hard details of the administrative problem, and to that problem I desire immediately to proceed. Continue reading

‘The Commercial Absurdity of Financial Democracy’

Chapter V of William Joyce’s book on British National Socialism, ‘Twilight Over England’

Das_ist_England

William Joyce, ex-Propaganda Director of the British Union of Fascists and leader of the tiny National Socialist League, is more infamously known by his sobriquet ‘Lord Haw Haw’, a name given him by the British public in response to the jeering propaganda broadcasts he made to the United Kingdom on behalf of the German government during World War II. In 1939 Joyce, anticipating internment by the British government, fled to Germany with his wife, the Reich offering them asylum in exchange for English-language propaganda work. It was in 1940 that Joyce’s book ‘Twilight Over England’ was first published in both German and English. Intended in part for distribution to British prisoners-of-war, it is a striking book. Its cynical, informal, self-effacing tone is typical of Joyce’s writing and speaking style, and helps both disarm the reader’s defenses while seeking to inflame their sense of injustice. The book serves as an overview of UK history, politics, and economics from a National Socialist perspective, critiquing all three in service of the lambasting of the British government for its hypocrisy regarding Germany’s foreign policy and treatment of minority ethnic groups. The foundation of the book is Joyce’s passion for economic reform and issues of social justice – the book is redolent with the evisceration of Britain for its treatment of its poor, its disenfranchised, and its laboring industrial and agricultural workers. In chapters such as the fifth, ‘Finance’, which is reproduced in full below, Joyce contrasts the deficiencies of British capitalism with what he regards as the more socially conscious ideals of National Socialist economic ideology. 

In the last chapter, some account, however sketchy, was given of the deplorable economic condition into which the majority of British men and women had sunk in recent times. It must not be forgotten, however, that there was a rich and contented minority. Whereas the state of the masses of the people was unworthy of any civilized nation, above all unworthy of a nation which had such resources as England, there was in the land a ruling class which was probably more prosperous than any similar class in the world. Attached to this sacred caste was an “upper-middle-class” stratum which certainly had no good reason to complain. There were, in fact, two Englands, each ignorant of the other’s existence. If nine or ten people were crowded into a little damp basement in Hoxton Market, there were 550 persons in Britain whose personal wealth had passed the million mark.

The plain fact of the matter is that Jewish Law ruled in England. Those who merely produced wealth were the lowest caste. The path to splendour was the path of exchange. To make the soil yield up a few more turnips was to attract the highly suspicious attention of Government servants. To sit on the fattest rump that good living could provide and wait for foreign dividends to come in was the qualification for national approval and membership of the Order of Sacred Beasts. The soundest advice that a business-man could give to his son, unless destined for the Guards, would be: “Produce nothing, my boy — not even children. Buy something in the way of shares, if you can, and wait till you find some bloody fool who will pay you more than you gave for them. Also, join the Craft. Above all, do nothing extraordinary. Otherwise people won’t trust your judgement.” Continue reading