Starvation and Military Keynesianism
by Julian Adorney
Many Americans, from the Glenview State Bank of
Chicago to author Ellen Brown assume
that the Nazi economic regime was successful, but closer examination tells a
tale of rationing, shortages, and starvation. Learning why their economy failed
can teach us how to avoid the same fate.
Background
The myth endures that after Hitler inherited a country
ravaged by the Great Depression in 1933, his aggressive policies turned the
nation around and created an economic powerhouse. But the truth, as Professor
Evans of the University of Cambridge argues in his seminal history The Third Reich Trilogy, is something far
different.[1]
Evans, a Marxist sympathetic to Keynes and state
intervention, nonetheless tells a story of rationing, shortages, and misery in
the Third Reich. The Reich Food Estate, the state-controlled corporation
responsible for agricultural production, regularly failed to feed its people.
Agricultural output rarely surpassed 1913 levels, in spite of 20 years of
technological advancement. Demand outstripped supply by 30 percent in basic
foodstuffs like pork, fruit, and fats. That meant that for every ten German workers
who stood in line to buy meat from the state-owned supply depots, three went
home hungry.[2]
The same story was retold when it came to cars,
clothing, and iron. New houses had to be built with wooden plumbing, because
iron was so scarce. Nationalized iron depots couldn’t produce enough for the
army, let alone civilians. Clothing was rationed. Fuel and rubber shortages led
to what one US observer called, “drastic restrictions on the use of motor
vehicles.”[3] Of course, because the state dictated which car
and truck models could be produced, there weren’t very many motor vehicles to
begin with.
The overall tale is one of misery for the average
German citizen. So how did the Nazis so hurt their people, and what lessons can
we learn?
Lesson 1: Military
Keynesianism Produces Austerity
Hitler’s rearmament program was military Keynesianism
on a vast scale. Hermann Goering, Hitler’s economic administrator, poured every
available resource into making planes, tanks, and guns. In 1933 German military
spending was 750 million Reichsmarks. By 1938 it has risen to 17 billion with
21 percent of GDP was taken up by military spending. Government spending all
told was 35 percent of Germany’s GDP.
Many liberals, especially Paul Krugman, routinely argue that our
stimulus programs in America aren’t big enough, so when they fail it’s not an
indictment of Keynesianism. Fair enough. But no-one could say that Hitler’s
rearmament program was too small. Economists expected it to create a multiplier
effect and jump-start a flagging economy. Instead, it produced military wealth
while private citizens starved. Employed on the largest scale ever seen,
military Keynesianism created only ruin.
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