FORTUNATELY, THE RATIONALISMS ARE ALL INSANE:

"The Wages of Destruction" | An unusual portrait of Nazis' real downfall: a review of "The Wages of Destruction: The Making and Breaking of the Nazi Economy"
by Adam Tooze (Bruce Ramsey, 3/23/07, The Seattle Times)

When Adolf Hitler took power in 1933, the German economy devoted 1 percent of its output to the military. By 1939 it was 30 percent. The Nazis, writes Adam Tooze in "The Wages of Destruction," had undertaken the "largest transfer of resources ever undertaken by a capitalist state in peacetime."

Tooze, a lecturer in economic history at the University of Cambridge, undertakes to explain how the Nazis overcame their economic problems -- or didn't. He shows how economics influenced Hitler's decisions about going to war, and how to undertake his persecution of the Jews. Tooze affixes an economic turning point for the war -- late 1941 -- and he attacks what he declares to be misconceptions about the German economy,

For example, unlike some theorists, he does not portray the Nazis as pro-business. The party's name was, after all, the National Socialists, and its real interest was conquest rather than commerce. Most German industrialists went along with the Nazis because they promised to tame the unions and leave company management alone. What business got was an economy in which it could make money if it did what the government wanted, which was to build a war machine.

Tooze's story is far more realistic than the cartoonish tale Americans are told about Hitler aspiring to "take over the world." His dream was less than that, but grandiose enough. He was trying to create an Eastern European empire that would be self-contained in raw materials and could hold its own against the British Empire and the United States.

In pursuit of that goal, the Nazis cut Germany off from dependence on the global economy. They stiffed Germany's British and American creditors. They allowed only those imports that fed the military machine and only the exports that paid for the imports. Before the war, the Nazis pressed the Jews to leave, but the central bank wouldn't allow them to take their money out because the foreign exchange was for the military.

By the time Hitler began the war, his central bank was broke. He was not about to subject his dreams to the limitations of bankers. But during the war, he had no choice about subjecting them to the limitations of coal, oil, iron ore, steel, copper, fodder, food, labor and recruits. All were scarce. On paper, Nazi Europe should have been as productive as the United States, but that was impossible because of the predatory way the Nazis ran it.

You can still see remnants of it among the elites who think the Chinese can catch up to us running an authoritarian economy and among folks who think Iran is a threat, but the older among us will recall that as recently as twenty or thirty years ago--in other words, pre-Reagan--it was an article of faith among intellectuals that America was at a disadvantage when it fought the Nazis and Communists because our economy and society were free and therefore somewhat unruly while theirs were strictly controlled. The reality -- that all of the isms are incapable of functioning well, nevermind competing with us, for precisely the reasons that the rationalists thought them superior -- is slow to sink in.

Posted by Orrin Judd at March 23, 2007 8:34 AM