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I’d like to continue the discussion of Scott Sehon’s article “No, the Nazis Were Not Socialists” that I began last week. At the end of my article, I berated Sehon. He says that the word “socialist” in the name of the Nazi Party (National Socialist German Workers’ Party) doesn’t show that the Nazis were really socialist. I complained, “Sehon is right that the word ‘socialist’ does not by itself tell us much, but unfortunately it does not occur to him to investigate what the Nazis meant by this word and why they used it.” Sehon might well answer me that that I didn’t do this either, and this is what I’m going to address in today’s article.

Sehon gives us a good suggestion that helps us to understand what the Nazis meant by “socialism.” He rightly calls attention to the 25-point Nazi Program of 1921. This, he says, is not a call to nationalize industrial production. Rather, it is a largely pro-business plan directed against the Jews: “When the Nazis talked about expropriation, they meant taking property belonging to Jews; they were quite in favor of private property for others.”

If we look at the Nazi program, this isn’t quite what comes to mind. Its dominant theme is that the German people have to come together as a collective entity: the common good must be put before the individual good. Differences in class and wealth must be strictly subordinated to the good of the German people (Volk) as a whole. Points 10 and 11 of the program declare:

The first obligation of every citizen must be to productively work mentally or physically. The activity of individual may not clash with the interests of the whole, but must proceed within the framework of the whole for the benefit for the general good. We demand therefore: Abolition of unearned (work and labour) incomes. Breaking of debt (interest)-slavery.

Point 14 is “We demand that the profits from wholesale trade shall be shared out.” Crucially, point 24 is

We demand freedom of religion for all religious denominations within the state so long as they do not endanger its existence or oppose the moral senses of the Germanic race. The Party as such advocates the standpoint of a positive Christianity without binding itself confessionally to any one denomination. It combats the Jewish-materialistic spirit within and around us and is convinced that a lasting recovery of our nation can only succeed from within on the framework: “The good of the community before the good of the individual”. (“GEMEINNUTZ GEHT VOR EIGENNUTZ”).

The great Austrian historian Erik von Kuehnelt-Leddihn has given the best analysis of Hitler and the the Nazi Party Program in his Leftism. He emphasizes Hitler’s disdain for traditional German society:

[Hitler] wanted to see Germany in complete monotony, with local traditions eliminated, regional self-government destroyed, the flags of the Länder strictly outlawed, the differences between the Christian faiths eradicated, the Churches desiccated and forcibly amalgamated. He wanted to make the Germans more uniform, even physically, by planned breeding and the extermination, sterilization, or deportation of those who deviated from the norm. The tribes (Stämme) should cease to exist.

Contrary to the impression Sehon gives, Hitler didn’t see himself as a partisan of business. In a conversation with Carl J. Burckhardt, the League of Nations high commissioner in Danzig, Hitler called himself a “proletarian.”

Sehon’s answer to this is that Hitler in power wasn’t a radical. There were socialists in the Nazi Party, such as Gregor Strasser, but Hitler kicked them out and in many cases killed them. He surrendered to big business in order to gain power. He did not nationalize the major industries of Germany. He was no socialist but favored private property and business enterprise.

In answer to Sehon, I mentioned Mises’s vital distinction between two kinds of socialism. In one of them, the state owns the means of production. In the other, private property still exists but the state tells the owners what to do. This is a form of central planning and still counts as socialism, and it was this that the Nazis put into practice.

Sehon says that this isn’t an accurate account of the Nazi economy and cites an article by Christoph Buchheim and Jonas Scherner to support his claim that private business enjoyed considerable autonomy in the Third Reich. Thanks to Mr. Paul McElroy, I now have access to the article.

Before I discuss this article, I need to mention another of Mises’s vital insights. As readers will remember, Mises in his famous socialist calculation argument proved that a fully socialist economy would collapse into chaos. If this is right, how can ostensibly socialist economies such as Soviet Russia exist? In answer, Mises said that these economies weren’t fully socialist. They allowed scope for private enterprise, albeit of a limited sort. Mises’s point applies to the German form of socialism as well as the Russian.

Thus, Buchheim and Scherner’s argument, even if we accept it, doesn’t disprove Mises’s claim that the Nazi economy was a form of socialism. Nazi control of business wasn’t complete, but neither was the Soviet economy totally socialist.

But should we accept Buchheim and Scherner’s argument? No, we shouldn’t. It is a response to a number of economic historians who accept an analysis of the Nazi economy like that of Mises. In particular, these authors criticize the famous MIT economist Peter Temin’s article “Soviet and Nazi Economic Planning in the 1930s,” available here by scrolling down.

In my opinion, Temin has the better of the argument. Buchheim and Scherner acknowledge:

The Nazi regime did not have any scruples to apply force and terror, if that was judged useful to attain its aims. And in economic policy it did not abstain from numerous regulations and interventions in markets, in order to further rearmament and autarky as far as possible. Thus the regime, by promulgating Schacht’s so-called “New Plan” in 1934, very much strengthened its influence on foreign exchange as well as on raw materials’ allocation, in order to enforce state priorities. Wage-setting became a task of public officials, the capital market was reserved for state demand, a general price stop decreed in 1936. In addition state demand expanded without precedent. Between 1932 and 1938 it increased with an average annual rate of 26 per cent; its share in GNP exploded in these years from 13.6 to 30.5 percent. As a consequence private consumption as well as exports were largely crowded out.

But, they say, this isn’t the whole story:

1. Despite widespread rationing of inputs firms normally still had ample scope to follow their own production plans. 2. Investment decisions in industry were influenced by state regulation, but the initiative generally remained with the enterprises. There was no central planning of the level or the composition of investment. 3. Even with respect to its own war-related investment projects the state normally did not use power in order to secure unconditional support of industry. Rather, freedom of contract was respected. But the state tried to induce firms to engage according to its plans by offering them a whole bundle of contract options to choose from.

I think that their caveats, when read in the light of Mises’s point that a socialist economy needs to allow scope for private enterprise, leave Mises’s account of the Nazi economy intact. In this connection, an incident that Temin mentions is telling:

Terror was still a potent reality for I.G. Farben in 1939, at the probable zenith of its influence. The head of one the firm’s three divisions (Sparten) was alleged to have said to a visiting group of party officials that Hitler and Göring ‘were not sufficiently expert to be able to judge something like this…’.The Farben executive was denounced to the Gestapo, and threatened with a trial and possible prison sentence….He was subject to lengthy interrogation at the Gestapo office and had to petition the local Nazi Kreisleiter for permission to call on him and apologize. The Nazi Gauleiter reprimanded him and said that he could not protect him again from more serious consequences.

Sehon also takes it as an argument that the Nazis weren’t socialists that they suppressed the Communist and Social Democratic Parties and sent many of their members to concentration camps. I suggest that he look up what Stalin did to Mensheviks and dissident Bolsheviks. Socialists often kill their own, a point Sehon would do well to remember.

From Mises.org, here.