Economics of fascism

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The economics of fascism refers to the economic policies implemented by fascist governments.

Historians and other scholars disagree on the question of whether a specifically fascist type of economic policies can be said to exist. Baker argues that there is an identifiable economic system in fascism that is distinct from those advocated by other ideologies, comprising essential characteristics that fascist nations shared.[1] Payne, Paxton, Sternhell, et al. argue that while fascist economies share some similarities, there is no distinctive form of fascist economic organization.[2] Feldman and Mason argue that fascism is distinguished by an absence of coherent economic ideology and an absence of serious economic thinking. They state that the decisions taken by fascist leaders can not be explained within a logical economic framework.[3]

General characteristics of fascist economies[edit]

An inherent aspect of fascist economies was economic dirigisme,[4] meaning an economy where the government exerts strong directive influence over investment, as opposed to having a merely regulatory role. In general, apart from the nationalizations of some industries, fascist economies were based on private property and private initiative, but these were contingent upon service to the state.[5]

Fascism operated from a Social Darwinist view of human relations. The aim was to promote superior individuals and weed out the weak.[6] In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class.[7] Fascist governments encouraged the pursuit of private profit and offered many benefits to large businesses, but they demanded in return that all economic activity should serve the national interest.[8] Historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise, because "the State pays for the blunders of private enterprise... Profit is private and individual. Loss is public and social."[9]

One significant fascist economic belief was that prosperity would naturally follow once the nation has achieved a cultural and spiritual re-awakening.[10] Often, different members of a fascist party would make completely opposite statements about the economic policies they supported.[11] Once in power, fascists usually adopted whatever economic program they believed to be most suitable for their political goals. Long-lasting fascist regimes (such as that of Benito Mussolini in Italy) made drastic changes to their economic policy from time to time. Stanley Payne argues that while fascist movements defended the principle of private property, which they held "inherent to the freedom and spontaneity of the individual personality", a common aim of all fascist movements was elimination of the autonomy or, in some cases, the existence of large-scale capitalism.[12]

The fascists opposed both international socialism and liberal capitalism, arguing that their views represented a third way. They claimed to provide a realistic economic alternative that was neither laissez-faire capitalism nor communism.[13] They favoured corporatism and class collaboration, believing that the existence of inequality and separate social classes was beneficial (contrary to the views of socialists).[14] Fascists argued that the state had a role in mediating relations between these classes (contrary to the views of liberal capitalists).[15]

In most cases, fascists discouraged or banned foreign trade; fascists believed that too much international trade would make the national economy dependent on international capital, and therefore vulnerable to international economic sanctions. Economic self-sufficiency, known as autarky, was a major goal of most fascist governments.[16]

Fascism was highly militaristic, and as such, fascists often significantly increased military spending.

Essential features of the economies of the fascist states[edit]

The concept of "state monopoly capitalism" (MMC) describes approximately the same phenomenon as the "dirigisme" - a policy of active intervention in the management of the economy of the state. The author of "An Economic History of Twentieth-Century Europe" (Cambridge, 2006), Ivan T. Berend said the economy of Nazi Germany just these features: the government has a strong control action, effectively controlling the production and distribution of resources. On the whole, except in a few cases, nationalization of the economy of the fascist states developed on the basis of private property and of private initiative, but it was subordinated to the tasks of the state. As part of the relations between workers and employers fascism was guided by the principles of social Darwinism: the strongest prosper, while the weaker are rooted out. In economic practice this meant on the one hand, protecting the interests of successful businessmen, on the other the destruction of trade unions and other organizations of the working class, "the use of extreme violence to suppress the working class and all working people." As he wrote in 1936, Gaetano Salvemini, saying the responsibility of taxpayers to private capitalist enterprises, the state thus covers failures of the capitalists' profits - business and private individual; loss - public and social work ". The fascist government approved pursuit of private profit and gave significant concessions to large corporations, requiring instead that all of their economic activities serve the public interest. An essential element of the economic doctrines of the Nazi party was the belief that the economic suffering of the exploited classes will go into the past as soon as the nation completes its cultural and spiritual revival, the official anthem of the NSDAP, "Horst Wessel" promised "to live long slavery" (German: Die Knechtschaft dauert nur mehr kurze Zeit). However, since the destruction of the issues of exploitation has long been staged in Germany, in particular, and German Social Democrats, on the level of ordinary members of the NSDAP there was not unanimity on this issue and often their views on economic policy were diametrically opposed . Coming to power, the Nazis adapted its economic doctrine to political expediency. fascist regimes that have lasted a long time (such as Italy under Mussolini), observed regular, sometimes substantial revisions of economic policy. In 1919, at a rally on the square in Milan Sepolkro San, Benito Mussolini said:

"We want to be aristocrats and democrats, conservatives and liberals, reactionaries and revolutionaries, legalists and antilegalistami - depending on the circumstances of the time, place and situation."

Subsequently, the ideologues of fascism railed against the proletarian internationalism, and against the liberal capitalism, arguing that their views represent a third way (Italian terza via), a real alternative to both capitalism and free competition (laissez-faire), and the planned socialist economy (in their terminology - communism). The Nazis favored corporatism and class collaboration for assuming - as opposed to the Socialists - that the existence of inequality and the division of society into classes - it's good. "Enciclopedia Italiana" in 1932, wrote in an article entitled "The Doctrine of Fascism": "Fascism is a necessary fixes, productive and beneficial inequality of men." In contrast, proponents of liberalism, the Nazis welcomed the participation of the government in resolving the interclass protovorechy. Foreign economic policy of the fascist states was based on the need to achieve independence from foreign markets and foreign capital. Maintaining strict control over imports, the movement of funds between the country and abroad, in some cases, the state resorted to a direct prohibition of certain foreign operations. However, this economic autarky system is not sought, as this term implies a complete closure of reproduction processes, eliminating not only imports but also exports, while exports to Italy as a source of foreign currency is not refused. One of the most essential characteristics of the fascist states of the economy was extremely high degree of militarization - the share of military items in the budget and the total product going to the military.

Political economy of Fascist Italy[edit]

Political economy of Nazi Germany[edit]

Adolf Hitler regarded economic issues as relatively unimportant. In 1922, Hitler proclaimed that "world history teaches us that no people has become great through its economy but that a people can very well perish thereby", and later concluded that "the economy is something of secondary importance".[17] Hitler and the Nazis held a very strong idealist conception of history, which held that human events are guided by small numbers of exceptional individuals following a higher ideal. They believed that all economic concerns, being purely material, were unworthy of their consideration. Hitler went as far as to blame all previous German governments since Bismarck of having "subjugated the nation to materialism" by relying more on peaceful economic development instead of expansion through war.[18]

For these reasons, the Nazis never had a clearly defined economic programme. The original "Twenty-Five Point Programme" of the party, adopted in 1920, listed several economic demands (including "the abolition of all incomes unearned by work," "the ruthless confiscation of all war profits," "the nationalization of all businesses which have been formed into corporations," "profit-sharing in large enterprises," "extensive development of insurance for old-age," and "land reform suitable to our national requirements"),[19] but the degree to which the Nazis supported this programme in later years has been questioned. Several attempts were made in the 1920s to change some of the program or replace it entirely. For instance, in 1924, Gottfried Feder proposed a new 39-point program that kept some of the old planks, replaced others and added many completely new ones.[20]

Hitler refused to allow any discussion of the party programme after 1925, ostensibly on the grounds that no discussion was necessary because the programme was "inviolable" and did not need any changes. At the same time, however, Hitler never voiced public support for the programme and many historians argue that he was in fact privately opposed to it. Hitler did not mention any of the planks of the programme in his book, Mein Kampf, and only talked about it in passing as "the so-called programme of the movement".[21]

Hitler's own views on economics, beyond his belief that the economy was of secondary importance, are a matter of debate. On the one hand, he proclaimed in one of his speeches that "we are socialists, we are enemies of today's capitalistic economic system",[22] but he was clear to point out that his interpretation of socialism "has nothing to do with Marxian Socialism," saying that "Marxism is anti-property; true Socialism is not."[23] At a later time, Hitler said: "Socialism! That is an unfortunate word altogether... What does socialism really mean? If people have something to eat and their pleasures, then they have their socialism."[24]

He was also quoted as saying: "I had only to develop logically what social democracy failed.... National Socialism is what Marxism might have been if it could have broken its absurd ties with a democratic order.... Why need we trouble to socialize banks and factories? We socialize human beings...."[25] In private, Hitler also said that "I absolutely insist on protecting private property... we must encourage private initiative".[26] On yet another occasion he qualified that statement by saying that the government should have the power to regulate the use of private property for the good of the nation.[27] Hitler clearly believed that the lack of a precise economic programme was one of the Nazi Party's strengths, saying: "The basic feature of our economic theory is that we have no theory at all."[28]

Hitler's political beliefs drew heavily upon Social Darwinism - the view that natural selection applies as much to human society as it does to biological organisms.[29] Hitler believed that history was shaped by a violent struggle between nations and races, and that a nation needed to be united under a strong, centralized state led by an heroic leader in order to succeed in this struggle and that individuals within a nation battled with each other for survival, and that such ruthless competition was good for the health of the nation, because it promoted "superior individuals" to higher positions in society.[30]

Pre-war economy: 1933-1939[edit]

Before World War II, the Nazis placed non-Nazi Party professionals in charge of economic policy. Hitler appointed Hjalmar Schacht, a former member of the German Democratic Party, as Chairman of the Reichsbank in 1933, and minister of economics in 1934. At first, Schacht continued the economic policies introduced by the government of Kurt von Schleicher in 1932 to combat the effects of the Great Depression. These policies were mostly Keynesian, relying on large public works programs supported by deficit spending - such as the construction of the Autobahn - to stimulate the economy and reduce unemployment (which stood at 30% in early 1933). There was a major reduction in unemployment over the following years, while price controls prevented the recurrence of inflation.

The Nazis outlawed trade unions and banned strikes. They also directed Schacht to place more emphasis on military production and rearmament. After the Nazi takeover in 1933, Germany slowly began to recover from the Great Depression. Several economists, such as Michal Kalecki, have seen the German recovery as an example of military Keynesianism. However, others have noted that the bulk of the German military buildup occurred after 1936 when the economic recovery was well underway.[citation needed]

In June 1933, the Reinhardt Program was introduced. It was an extensive infrastructure development project that combined indirect incentives, such as tax reductions, with direct public investment in waterways, railroads and highways.[31] The Reinhardt Program was followed by other similar initiatives, with the result that, between 1933 and 1936, the German construction industry was greatly expanded. In 1933, only 666,000 Germans worked in construction, and by 1936, the number had increased to 2,000,000.[32] In particular, road construction was expanding at a very rapid pace. This was part of Hitler's war preparations: Germany needed a state-of-the-art highway system in order to be able to move troops and materials quickly. As a side effect, cars and other forms of motorized transport became increasingly attractive to the population. Therefore, the German car industry also experienced a boom in the 1930s.[33]

In 1936, military spending in Germany exceeded 10% of GNP (higher than any other European country at the time). Military investment also exceeded civilian investment from 1936 onwards. Armaments dominated government expenditures on goods and services.[34] That year also represented a turning point for German trade policy. World prices for raw materials (which constituted the bulk of German imports) were on the rise. At the same time, world prices for manufactured goods (Germany's chief exports) were falling. The result was that Germany found it increasingly difficult to maintain a balance of payments. A large trade deficit seemed almost inevitable. But Hitler found this prospect unacceptable. Thus Germany, following Italy's lead, began to move away from partially free trade in the direction of economic self-sufficiency.[35]

Unlike Italy, however, Germany did not strive to achieve full autarky. Hitler was aware of the fact that Germany lacked reserves of raw materials, and full autarky was therefore impossible. Thus he chose a different approach. The Nazi government tried to limit the number of its trade partners, and, when possible, only trade with countries within the German sphere of influence. A number of bilateral trade agreements were signed between Germany and other European countries (mostly countries located in Southern and South-Eastern Europe) during the 1930s. The German government strongly encouraged trade with these countries but strongly discouraged trade with any others.[36]

By the late 1930s, the aims of German trade policy were to use economic and political power to make the countries of Southern Europe and the Balkans dependent on Germany. The German economy would draw its raw materials from that region, and the countries in question would receive German manufactured goods in exchange. Already in 1938, Yugoslavia, Hungary, Romania, Bulgaria and Greece transacted 50% of all their foreign trade with Germany.[37] Throughout the 1930s, German businesses were encouraged to form cartels, monopolies and oligopolies, whose interests were then protected by the state.[38] In his book, Big Business in the Third Reich, Arthur Schweitzer states:

In the same book, Schweitzer details the triangular power structure that existed between the Nazi party, big business and the generals in 1936. Within a few years of Hitler's accession, "middle-class socialism" had been defeated, collective bargaining had been banned and unions had been outlawed. Large companies were favored over small businesses.[40] Shortly after Hitler became chancellor, Germany refused to pay its reparation payments as was mandated in the Versailles Treaty. It also diverted large sums of money to rearmament, which violated that treaty. This had the support of the generals and the business community, since their profits were guaranteed on these orders.

Under Hjalmar Schacht, a policy was introduced whereby certain nations who traded with Germany (such as the United States) had to deal with special banks. Foreign currency was deposited in these institutions and Americans were paid for their goods (especially raw materials) in scrips that could only be redeemed for German goods in kind. Soon these scrips declined in value, as they were not truly fungible. Many were used by travellers to Germany in the mid-1930s. Schacht was able to build up foreign currency reserves for later use.[41]

Big business developed an increasingly close partnership with the Nazi government as it became increasingly organized. Business leaders supported the government's political and military goals, and in exchange, the government pursued economic policies that maximized the profits of its business allies.[42] Nazi Germany transferred public ownership and public services into the private sector, while other Western capitalist countries strove for increased state ownership of industry.[43]

Wartime policies: 1939-1945[edit]

Initially, the outbreak of World War II did not bring about any large changes in the German economy. Germany had spent six years preparing for war, and a large portion of the economy was already devoted to military production. Unlike most other governments, the Nazis did not increase direct taxes by any significant amount in order to fund the war. The top income tax rate in 1941 was 13.7% in Germany as opposed to 23.7% in Great Britain.[44]

During the war, as Germany acquired new territories (either by direct annexation or by installing puppet governments in defeated countries), these new territories were forced to sell raw materials and agricultural products to German buyers at extremely low prices. Hitler's policy of lebensraum strongly emphasized the conquest of new lands in the East, and the exploitation of these lands to provide cheap goods to Germany. In practice, however, the intensity of the fighting on the Eastern Front and the Soviet scorched earth policy meant that the Germans found little they could use. On the other hand, a large quantity of goods flowed into Germany from conquered lands in the West. For example, two-thirds of all French trains in 1941 were used to carry goods to Germany. Norway lost 20% of its national income in 1940 and 40% in 1943.[45]

Even before the war, Nazi Germany maintained a supply of slave labour. This practice started from the early days of labour camps of "undesirables" (German: unzuverlässige Elemente), such as the homeless, homosexual and criminals as well as political dissidents, communists, Jews, and anyone that the regime wanted out of the way. As the war progressed, the use of slave labour experienced massive growth. Prisoners of war and civilian "undesirables" were brought in from occupied territories. Hundreds of thousands of Poles, Jews, Slavs and other conquered peoples were used as slave labourers by German corporations such as Thyssen, Krupp, IG Farben and even Fordwerke - a subsidiary of the Ford Motor Company.[46] By 1944, slave labour made up one quarter of Germany's entire work force, and the majority of German factories had a contingent of prisoners.[47] The Nazis also had plans for the deportation and enslavement of Britain's adult male population in the event of a successful invasion.[48]

The proportion of military spending in the German economy began growing rapidly after 1942, as the Nazi government was forced to dedicate more and more of the country's economic resources to fighting a losing war. Civilian factories were converted to military use and placed under military administration. By late 1944, almost the entire German economy was dedicated to military production. At the same time, Allied bombings were destroying German factories and cities at a rapid pace, leading to the final collapse of the German war economy in 1945.[citation needed]

Political economy of Franco's Spain[edit]

Francisco Franco, dictator of Spain from the Spanish Civil War in the 1930s until his death in 1975, based his economic policies on the theories of national syndicalism as expounded by the Falange (Spanish for "phalanx"), the Spanish Fascist party founded in 1933 by José Antonio Primo de Rivera, which was one of Franco's chief supporters during his bid for power.

Protectionism and syndicalism[edit]

During and after the Spanish Civil War, Franco and the Falange created a corporative system based on the Italian model. Economic liberalism was replaced with economic intervention according to the wishes of the corporations, which also set prices and wages. Combined with autarky, and in the absence of Marshall Plan aid after the Second World War, Spain’s post-war economic growth stagnated. The Spanish corporative system was less successful than the Italian experience. At one point, the Spanish farmers' corporation created a massive bread shortage by setting the price too low. As a result, bread production was abandoned in favour of other, more profitable goods. Although the aim of this policy was to make bread accessible to the poorest among the population, the opposite occurred, and a black market emerged.

Prior to the Franco régime, the Popular Front of the Spanish Republic had begun a land redistribution program, forcing wealthy landowners to sell some of their land to the state, which in turn was given to impoverished tenant farmers. After the Spanish Civil War, the original landowners had their land returned. The primary focus of the Falange, however, was on the rebuilding of urban centers, whilst providing only limited support to the countryside.

As in Italy, wages were set by the state in negotiations between officially recognized workers' syndicates and employers' organizations, with the state as mediator. During the Spanish Republic, workers' groups had aligned with the communists, anarchists or other republican forces. Franco's regime, however, tended to favour the interests of large businesses, despite its syndicalist rhetoric. In response, workers created illegal syndicates and organized strikes, which usually were repressed brutally by Franco's police state.

Liberalization and Opus Dei[edit]

In 1954, Franco abandoned the corporative system in favour of free-market reforms implemented by economic technocrats. Many of these technocrats were members of Opus Dei, a Roman Catholic lay group to which Franco had given powerful positions within the Ministry of Finance and Economics.[49] The reforms of the 1950s were a huge success, and Spain experienced a period of rapid economic growth known as the "Spanish Miracle", continuing until Franco's death in 1975. During this period, tourism became an important part of the Spanish economy. Although the corporatist organs and rhetoric from the earlier years of the Franco regime were maintained, they now played a secondary role. Spain's economy was further liberalized by the Spanish transition to democracy following Franco's death.

See also[edit]

References[edit]

  1. ^ Baker
  2. ^ Payne; Paxton, Sternhell, et al.
  3. ^ Daniel Woodley, Fascism and Political Theory, Routlede, 2010, ISBN 978-0-415-47354-5, p.161
  4. ^ Ivan T. Berend, An Economic History of Twentieth-Century Europe, Cambridge University Press, 2006, p. 93
  5. ^ James A. Gregor, The Search for Neofascism: The Use and Abuse of Social Science, Cambridge University Press, 2006, p. 7
  6. ^ Alexander J. De Grand, Fascist Italy and Nazi Germany, Routledge, 1995. pp. 47
  7. ^ Alexander J. De Grand, Fascist Italy and Nazi Germany, Routledge, 1995. pp. 48-51
  8. ^ Alexander J. De Grand, Fascist Italy and Nazi Germany, Routledge, 1995. pp. 57
  9. ^ Salvemini, Gaetano. Under the Axe of Fascism 1936.
  10. ^ William G. Welk, Fascist Economic Policy, Harvard University Press, 1938. pp. 38-39
  11. ^ Henry A. Turner, "German Big Business and the Rise of Hitler", 1985, pp. 61-68
  12. ^ Payne, Stanley (1996). A History of Fascism. Routledge. ISBN 1-85728-595-6 p.10
  13. ^ Philip Morgan, Fascism in Europe, 1919-1945, New York Tayolor & Francis 2003, p. 168
  14. ^ "The Doctrine of Fascism". Enciclopedia Italiana. Rome: Istituto Giovanni Treccani. 1932.  "[Fascism] affirms the irremediable, fruitful and beneficent inequality of men"
  15. ^ Calvin B. Hoover, The Paths of Economic Change: Contrasting Tendencies in the Modern World, The American Economic Review, Vol. 25, No. 1, Supplement, Papers and Proceedings of the Forty-seventh Annual Meeting of the American Economic Association. (March, 1935), pp. 13-20.
  16. ^ Alexander J. De Grand, Fascist Italy and Nazi Germany, Routledge, 1995. pp. 60-61
  17. ^ Henry A. Turner, "Hitler's Einstellung", 1976, p. 90-91
  18. ^ Henry A. Turner, "German Big Business and the Rise of Hitler", 1985, p. 73
  19. ^ Lee, Stephen J. (1996), Weimar and Nazi Germany, Harcourt Heinemann, page 28
  20. ^ Henry A. Turner, "German Big Business and the Rise of Hitler", Oxford University Press, 1985. p.62
  21. ^ Henry A. Turner, "German Big Business and the Rise of Hitler", Oxford University Press, 1985. p.77
  22. ^ Hitler's speech on May 1, 1927. Cited in Toland, J. (1976) Adolf Hitler Garden City, N.Y. : Doubleday Speech. May 1, 1927. p. 224
  23. ^ Francis Ludwig Carsten, The Rise of Fascism, University of California Press, 1982, p. 137. Hitler quote from Sunday Express.
  24. ^ Henry A. Turner, "German Big Business and the Rise of Hitler", Oxford University Press, 1985. pg 77
  25. ^ Nazis and Soviets
  26. ^ A private statement made by Hitler on March 24, 1942. Cited in "Hitler's Secret Conversations." Translated by Norman Cameron and R.H. Stevens. Farrar, Straus and Young, Inc. 1953. p. 294
  27. ^ Richard Allen Epstein, Principles for a Free Society: Reconciling Individual Liberty With the Common Good, De Capo Press 2002, p. 168
  28. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 78
  29. ^ Adolf Hitler, "Mein Kampf", vol. 1, chapter 11.
  30. ^ Henry A. Turner, "German Big Business and the Rise of Hitler", 1985, p. 76
  31. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 83
  32. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 84
  33. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 83-84
  34. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 85
  35. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 86
  36. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 101
  37. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 102
  38. ^ Arthur Schweitzer, "Big Business in the Third Reich", Bloomington, Indiana University Press, 1964, p. 265
  39. ^ Arthur Schweitzer, "Big Business in the Third Reich", Bloomington, Indiana University Press, 1964, p. 269
  40. ^ Arthur Schwietzer "Big Business in the Third Reich"
  41. ^ Arthur Schwwietzer "Big Business in the Third Reich"
  42. ^ Arthur Schweitzer, "Big Business in the Third Reich", Bloomington, Indiana University Press, 1964, p. 288
  43. ^ Against the mainstream: Nazi privatization in 1930s Germany
  44. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 114
  45. ^ Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 121
  46. ^ Sohn-Rethel, Alfred Economy and Class Structure of German Fascism, CSE Books, 1978 ISBN 0-906336-01-5
  47. ^ Michael Thad Allen, "The Business of Genocide", The University of North Carolina Press, 2002. p. 1
  48. ^ Shirer, William. The Rise and Fall of the Third Reich, Arrow books 1991.
  49. ^ "The Franco Years: Policies, Programs, and Growing Popular Unrest." A Country Study: Spain <http://lcweb2.loc.gov/frd/cs/estoc.html#es0034>

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External links[edit]