Economics of fascism

The economics of fascism refers to the economic policies implemented by fascist governments. "Fascism" itself is a term used to refer to totalitarian nationalist and corporatist movements. [Heater, Derek Benjamin. 1967. Political Ideas in the Modern World. University of Michagan. Pp 41-42. [http://books.google.com/books?id=v4gFAAAAMAAJ&q=fascism+%22totalitarian+nationalism%22&dq=fascism+%22totalitarian+nationalism%22&pgis=1] ] [Koln, Hans; Calhoun, Craig. "The Idea of Nationalism: A Study in its Origins and Background." Transaction Publishers. Pp 20. [http://books.google.com/books?id=Qnwbviylg6wC&pg=PA20&dq=fascism+%22totalitarian+nationalism%22&lr=&sig=ACfU3U3ATCdRb6PO8HRi-LEcgwmwDjYXDA] ] [University of California. 1942. "Journal of Central European Affairs". Volume 2. [http://books.google.com/books?id=gUw9AAAAIAAJ&q=fascism+%22totalitarian+nationalism%22&dq=fascism+%22totalitarian+nationalism%22&lr=&pgis=1] ] [Gentile, Emilio. 2003. "The Struggle for Modernity: Nationalism, Futurism, and Fascism". Greenwood Publishing Group. Pp 8. [http://books.google.ca/books?id=TNmrDDs8lSkC&pg=PA8&lpg=PA8&dq=fascism%22+totalitarian+nationalism%22&source=web&ots=oLSKn0coXu&sig=t0LHbSJM8P2irioa8EmpL3U4c6E&hl=en&sa=X&oi=book_result&resnum=8&ct=result] ] [Brewer, Ebenezer Cobham; Room, Adrian. "Brewer's Dictionary of Modern Phrase and Fable". Sterling Publishing Company, Inc. Pp 228. [http://books.google.com/books?id=N5FdEcKfhAIC&pg=PA228&dq=fascism+%22totalitarian+nationalist%22&sig=ACfU3U299Bj9_u17-yuC4Q51LFVEzx_Gnw] ] [Adams, Ian. 2001. "Political Ideology Today." Manchester University Press. Pp 176 [http://books.google.com/books?id=apstK1qIvvMC&pg=PA176&dq=%22corporatism%22+hitler+mussolini&lr=&sig=ACfU3U2v_ien34dHVqxy6YNMyNMTjfda4A] ] [Adams, Ian; Dyson, R.W. 2003 "Fifty Major Political Thinkers." Routledge. Pp 179. [http://books.google.com/books?id=kOs0B-VTFMkC&pg=PA179&dq=%22corporatism%22+hitler+mussolini&lr=&sig=ACfU3U2bF9T7G1iRyhQThmbVfpyjQQtNfQ] ] [Griffiths, Richard. 2005. "Fascism: 1880-1930." Continuum International Publishing Group. Pp 120 [http://books.google.com/books?id=OKU5YKV7dxQC&pg=PA120&dq=%22corporatism%22+hitler+mussolini&lr=&sig=ACfU3U2JrHnDbWCzKJV0wsl-VCBtJjgXMg] ] [Griffin, Roger (editor). 1998. "Fascism, neo-fascism, new radical right?" - by Diethelm Prowe. "International Fascism: Theories, Causes and the New Consensus." London: Arnold Publishers. Pp. 309. (Speaks of corporatism, nationalism and totalitarianism as being key elements of fascism. On corporatism as a key economic policy that transcended multiple fascist movements in Germany, Italy, Romania, Spain and others. The quotation says that fascism advocated "An institutional structure of 'representation' reflecting functions and duties in politics and the economy, such as corporatism, designed to eliminate traditional material interest group conflicts, building on some mythical past of co-operation and obligation.")] There is no single established definition of fascism, and most groups identified as "fascist" do not use that description for themselves, usually claiming instead to be based on the particular traditions of their country of origin and to have little or no connection with each other. Also, the term "fascism" itself has largely fallen into disuse as a term of description, and is currently used mainly as a term of approbation or as a political epithet. This, in addition to the fact that fascist ideologies rarely concern themselves with economic issues, poses serious obstacles to any comparative study of the economics of fascism.

Nevertheless, some scholars and analysts argue that there is an identifiable political economy of fascism that is distinct from other systems, comprised of essential characteristics that fascist nations shared. [Baker] Others argue that while fascist economies share some similarities, there is no distinctive form of fascist economic organization. [Payne; Paxton, Sternhell, et al.]

Fascists pioneered third way, welfare state, and labor union empowerment called corporatism. In many ways, today's social democratic parties and neo-corporatist systems resemble fascism. [DiLorenzo] [Wolin, Britt] [Hasler, Stephen,]

General characteristics of fascist economies

The first fascist or proto-fascist movements arose in the last years of World War I. They carried a promise of national rebirth, they blamed liberalism, communism and materialism for the decadence they perceived in society and culture, and they advocated a return to traditional conservative values (though they proposed to achieve this through a new political system). [Joseph A. Leighton, "Social Philosophies in Conflict", D. Appleton-Century Company, 1937. pp. 32]

One significant fascist belief was that prosperity would naturally follow once the nation has achieved a cultural and spiritual re-awakening. [William G. Welk, "Fascist Economic Policy", Harvard University Press, 1938. pp. 38-39] As a result, fascists considered the economy to be of little importance and did not have clear economic views. Often, different members of a fascist party would make completely opposite statements about the economic policies they supported. [Henry A. Turner, "German Big Business and the Rise of Hitler", 1985, pp. 61-68] Once in power, fascists usually adopted whatever economic program they believed to be most suitable for 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.

Nevertheless, fascists did have a number of important political views that shaped many of their economic decisions. The first of these was the fundamental fascist opposition to both socialism and liberal capitalism. Fascists argued that the implementation of their ideas into the economic sphere would represent a "third way", and they favoured corporatism and class collaboration. They believed that the existence of inequality and separate social classes was beneficial (contrary to the views of socialists)cite encyclopedia|year=1932|title=The Doctrine of Fascism| encyclopedia = Enciclopedia Italiana|publisher="Istituto Giovanni Treccani"|location=Rome " [Fascism] affirms the irremediable, fruitful and beneficent inequality of men"] , but they also argued that the state had a role in mediating relations between these classes (contrary to the views of liberal capitalists). [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. (Mar., 1935), pp. 13-20.]

Fascists claimed to provide a realistic economic alternative that was neither laissez-faire capitalism nor communism. [Philip Morgan, "Fascism in Europe, 1919-1945, New York Tayolor & Francis 2003, p. 168] An inherent aspect of fascist economies was economic "dirigisme" [ Tibor Ivan Berend, An Economic History of Twentieth-Century Europe, Cambridge University Press, 2005, p. 93] , meaning an economy where the government exerts strong directive influence, and effectively controls production and allocation of resources.

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. [James A. Gregor, The Search for Neofascism: The Use and Abuse of Social Science, Cambridge University Press, 2006, p. 7]

Fascism also operated from a Social Darwinist view of human relations. Their aim was to promote "superior" individuals and weed out the weak. [Alexander J. De Grand, "Fascist Italy and Nazi Germany", Routledge, 1995. pp. 47] In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class. [Alexander J. De Grand, "Fascist Italy and Nazi Germany", Routledge, 1995. pp. 48-51] 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." [Salvemini, Gaetano. "Under the Axe of Fascism" 1936.]

Finally, fascism was highly militaristic. As such, fascists often increased military spending significantly, and their main reason for economic development was the wish to have a strong economy backing a strong military. 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". [Alexander J. De Grand, "Fascist Italy and Nazi Germany", Routledge, 1995. pp. 57] In most cases, this meant that foreign trade was discouraged or outright banned; 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. [Alexander J. De Grand, "Fascist Italy and Nazi Germany", Routledge, 1995. pp. 60-61]

Political economy of Fascist Italy

The National Fascist Party of Benito Mussolini came to power in Italy in 1922, at the end of a period of social unrest. Working class activism was at a high point, militant trade unions were organizing increasingly frequent strikes to demand workers' rights, and the Italian Socialist Party was making significant electoral gains. This caused widespread fear among Italian business circles and part of the middle class, who believed that a communist revolution was imminent. With the traditional right-wing parties appearing incapable of dealing with the situation, King Victor Emmanuel III turned to the young Fascist movement, which he considered to hold a hardline right-wing orientation by violently suppressing strikes, and appointed Benito Mussolini prime minister. Soon after his rise to power, Mussolini defined his economic stance by saying that:

Specifically, during the first four years of the new regime, from 1922 to 1925, the Fascist had a generally laissez-faire economic policy under the Finance Minister Alberto De Stefani. Free competition was encouraged. De Stefani initially reduced taxes, regulations and trade restrictions on the whole. [Sheldon Richman, "Fascism".] De Stefani reduced government expenditure and balanced the budget. Some former government monopolies (such as the telephone system) were privatized. Some previous legislation introduced by the Socialists, such as the inheritance tax, was repealed. [William G. Welk, "Fascist economy policy; an analysis of Italy's economic experiment", Harvard University Press, 1938. pp. 160-161] During this period prosperity increased and by mid-1920s industrial production had passed its wartime peak. However, this was accompanied with inflation. [Patricia Knight, "Mussolini and Fascism", Routledge 2003 page 64] Overall, this was a period when Fascist economic policy mostly followed classical liberal lines, with the added features of attempting to stimulate domestic production (rather than foreign trade) and balancing the budget. [William G. Welk, "Fascist economy policy; an analysis of Italy's economic experiment", Harvard University Press, 1938. pp. 163] In a speech given in May 1924, Mussolini declared that he supported the right to strike. [Nicholas Farrell, Mussolini: A New Life, Sterling Publishing Company, Inc, 2005, p. 195]

However, "once Mussolini acquired a firmer hold of power... laissez-faire was progressively abandoned in favour of government intervention, free trade was replaced by protection [ism] and economic objectives were increasingly couched in exhortations and military terminology." [Patricia Knight, "Mussolini and Fascism", Routledge 2003 page 64] De Stefani was forced to resign in 1925 because his policy of free trade was opposed by many Italian business leaders, who favored protectionism and subsidies to insulate domestic business from international competition. In 1926, Mussolini gave an impassioned speech demanding monetary policies to halt inflation and stabilize the Italian currency (the lira). He also took the final step of officially banning any kind of strike action. From 1927 to 1929, under the leadership of the new Finance Minister Alberto Beneduce, the Italian economy experienced a period of deflation, driven by the government's monetary policies. [William G. Welk, "Fascist economy policy; an analysis of Italy's economic experiment", Harvard University Press, 1938. pp. 165] [Adrian Lyttelton (editor), "Liberal and fascist Italy, 1900-1945", Oxford University Press, 2002. pp. 75]

In 1929, Italy was hit hard by the Great Depression. The Italian economy, having just emerged from a period of monetary stabilization, was not ready for this shock. Prices fell and production slowed. Unemployment rose from 300,787 in 1929 to 1,018,953 in 1933. [William G. Welk, "Fascist economy policy; an analysis of Italy's economic experiment", Harvard University Press, 1938. pp. 166] Trying to handle the crisis, the Fascist government nationalized the holdings of large banks which had accrued significant industrial securities. [Gaetano Salvemini, "Italian Fascism". London: Victor Gollancz Ltd., 1938.] The government also issued new securities to provide a source of credit for the banks and began enlisting the help of various cartels ("consorzi") that had been created by Italian business leaders since 1922. The government offered recognition and support to these organizations in exchange for promises that they would manipulate prices in accordance with government priorities. [William G. Welk, "Fascist economy policy; an analysis of Italy's economic experiment", Harvard University Press, 1938. pp. 169] A number of mixed entities were formed, called "instituti" or "enti nazionali", whose purpose it was to bring together representatives of the government and of the major businesses. These representatives discussed economic policy and manipulated prices and wages so as to satisfy both the wishes of the government and the wishes of business. The government considered this arrangement to be a success, and Italian Fascists soon began to pride themselves on this outcome, saying they had survived the Great Depression without infringing on private property. In 1934, the Fascist Minister of Agriculture said:

This economic model based on a partnership between government and business was soon extended to the political sphere, in what came to be known as corporatism. From 1934 onwards, believing that Italy could have avoided the Great Depression if it had not been linked to international markets, Benito Mussolini insisted that autarky should be one of the primary goals of his government's economic policy. To this end, the Fascists began to impose significant tariffs and other trade barriers. [William G. Welk, "Fascist economy policy; an analysis of Italy's economic experiment", Harvard University Press, 1938. pp. 172] In 1935, Mussolini boasted that three-quarters of Italian businesses relied on the government. [Carl Schmidt, "The Corporate State in Action London", Victor Gollancz Ltd., 1939, pp. 153–76.] Mussolini also adopted a Keynesian policy of government spending on public works to stimulate the economy. Between 1929 and 1934, public works spending tripled to overtake defense spending as the largest item of government expenditure. [Farrell, Nicholas, "Mussolini: A New Life", Sterling Publishing, 2005 page 233]

In 1935, following the Italian invasion of Ethiopia, the League of Nations imposed trade sanctions on Italy. This forced Italy to achieve autarky immediately, and strengthened Mussolini's belief that economic self-sufficiency was vital to national security. The sanctions did not have their intended effects, because the Italian government had already begun restricting trade and preparing for autarky. In particular, Italy imposed a severe ban on most imports, and the government sought to persuade consumers to buy Italian-made products. For instance, it launched the slogan "Preferite il Prodotto Italiano" (Buy Italian). [William G. Welk, "Fascist economy policy; an analysis of Italy's economic experiment", Harvard University Press, 1938. pp. 175] In May of 1935, the government compelled individuals and businesses to turn over all foreign issued securities to the Bank of Italy (Banca d'Italia). On July 15, 1936, the economic sanctions on Italy were lifted, but the Fascists continued to insist on economic isolation.

Throughout the 1930s, the Italian economy maintained the corporatist model that had been established during the Great Depression. At the same time, however, Mussolini had growing ambitions of extending Italy's foreign influence through both diplomacy and military intervention. After the invasion of Ethiopia, Italy began supplying both troops and equipment to the Spanish nationalists under General Francisco Franco, who were fighting in the Spanish Civil War against a leftist government. These foreign interventions required increased military spending, and the Italian economy became increasingly subordinated to the needs of its armed forces. By 1939, Italy had the highest percentage of state-owned enterprises after the Soviet Union. [Patricia Knight, "Mussolini and Fascism", Routledge (UK), ISBN 0-415-27921-6, p. 65]

Finally, Italy's involvement in World War II as a member of the Axis powers required the establishment of a war economy. This put severe strain on the corporatist model, since the war quickly started going badly for Italy and it became difficult for the government to persuade business leaders to finance what they saw as a military disaster. The Allied invasion of Italy in 1943 caused the Italian political structure - and the economy - to rapidly collapse. The Allies, on the one hand, and the Germans on the other, took over the administration of the areas of Italy under their control. By the end of the war, the Italian economy had been all but destroyed; per capita income in 1944 was at its lowest point since the beginning of the 20th century. [Adrian Lyttelton (editor), "Liberal and fascist Italy, 1900-1945", Oxford University Press, 2002. pp. 13]

Political economy of Nazi Germany

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". [Henry A. Turner, "Hitler's Einstellung", 1976, p. 90-91] 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. [Henry A. Turner, "German Big Business and the Rise of Hitler", 1985, p. 73]

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"), [Lee, Stephen J. (1996), Weimar and Nazi Germany, Harcourt Heinemann, page 28] 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. [Henry A. Turner, "German Big Business and the Rise of Hitler", Oxford University Press, 1985. p.62] 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". [Henry A. Turner, "German Big Business and the Rise of Hitler", Oxford University Press, 1985. p.77]

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", [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] 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." [Francis Ludwig Carsten, The Rise of Fascism, University of California Press, 1982, p. 137. Hitler quote from "Sunday Express".] 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." [Henry A. Turner, "German Big Business and the Rise of Hitler", Oxford University Press, 1985. pg 77] 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...." [ [http://econ161.berkeley.edu/TCEH/Slouch_Purge15.html Nazis and Soviets] ] In private, Hitler also said that "I absolutely insist on protecting private property... we must encourage private initiative". [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] 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. [Richard Allen Epstein, Principles for a Free Society: Reconciling Individual Liberty With the Common Good, De Capo Press 2002, p. 168] 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." [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 78]

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. [Adolf Hitler, "Mein Kampf", vol. 1, chapter 11.] However, Hitler's interpretations of this idea produced two separate and almost incompatible conclusions: On the one hand, 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. On the other hand, Hitler also believed 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. [Henry A. Turner, "German Big Business and the Rise of Hitler", 1985, p. 76]

Pre-war economy: 1933-1939

Before World War II, the Nazis placed non-Nazi 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 indeed a major reduction in unemployment over the following years, while price controls prevented the recurrence of inflation.

Meanwhile, the Nazis outlawed trade unions and banned strikes. They also directed Schacht to place more emphasis on military production and rearmament. Germany slowly began to recover from the Great Depression, but this recovery was driven primarily by a military build-up. A number of economists, starting with Michal Kalecki, have seen this as an example of military Keynesianism. Others have reviewed the recovery as an example of the successful implementation of debt-free fiat currency issued directly from the Treasury, without recourse to a central bank loan from gold reserves for its issuance. [ [http://www.freedom4um.com/cgi-bin/readart.cgi?ArtNum=59343&Disp=5&Trace=on How Germany solved its infrastructure problems] ]

In June 1933, the "Reinhardt Program" was introduced. It was an ambitious project for the development of infrastructure; it combined indirect incentives, such as tax reductions, with direct public investment in waterways, railroads and highways. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 83]

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; by 1936 the number had gone up to 2,000,000. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 84]

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. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 83-84]

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. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 85]

The year 1936 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. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 86]

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. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 101]

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. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 102]

Throughout the 1930s, German businesses were encouraged to form cartels, monopolies and oligopolies, whose interests were then protected by the state. [Arthur Schweitzer, "Big Business in the Third Reich", Bloomington, Indiana University Press, 1964, p. 265] In his book, "Big Business in the Third Reich", Arthur Schweitzer notes that:

As big business became increasingly organized, it developed an increasingly close partnership with the Nazi government. The government pursued economic policies that maximized the profits of its business allies, and, in exchange, business leaders supported the government's political and military goals. [Arthur Schweitzer, "Big Business in the Third Reich", Bloomington, Indiana University Press, 1964, p. 288]

While other Western capitalist countries strove for state ownership. Nazi Germany tranferred public ownership and public services into the private sector. [ [http://www.ub.es/graap/nazi.pdf Against the mainstream: Nazi privatization in 1930s Germany] ]

Wartime policies: 1939-1945

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. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 114]

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. [Hans-Joachim Braun, "The German Economy in the Twentieth Century", Routledge, 1990, p. 121]

Even before the war, Nazi Germany maintained a supply of slave labour. This practice started from the early days of labour camps of "undesirables" ( _de. 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 (perhaps millions) of 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. [Sohn-Rethel, Alfred "Economy and Class Structure of German Fascism", CSE Books, 1978 ISBN 0-906336-01-5] 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. [Michael Thad Allen, "The Business of Genocide", The University of North Carolina Press, 2002. p. 1] The Nazis also had plans for the deportation and enslavement of Britain's adult male population in the event of a successful invasion. [ Shirer, William. "The Rise and Fall of the Third Reich", Arrow books 1991.]

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

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

During and after the 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 absence of Marshall Plan help after the war, Spain’s economic growth stagnated after World War II. The Spanish corporative system was less successful than the Italian experience, and at one point the Spanish farmers' corporation created a massive lack of bread because they had set the prices too low, and farmers abandoned bread to produce other, more profitable goods. The aim of this policy was to make bread accessible to even the poorest among the population - but it worked the other way around, and created a black market.

As in Italy, wages were set by the state in negotiations between officially recognised workers' syndicates and employers' organizations, with the state as mediator. Most pre-Civil War workers' groups had aligned with the Communists, anarchists or other republican forces, however, Franco's regime tended to favor the bosses despite its syndicalist rhetoric. As a response, workers created illegal syndicates and organized strikes, which were often brutally repressed by Franco's police state.

The Popular Front of the Spanish Republic had started a land redistribution program, forcing wealthy landowners to sell some of their land to the state, which then gave it to poor farmers who formerly rented. After the Civil War, the original landowners were given their land back. Most of the Falange's focus, however, was on rebuilding and improving the urban centers, giving little support to the countryside.

Liberalization and Opus Dei

In 1954, Franco abandoned his old economic policies. Free-market reforms were implemented by economic technocrats who were often members of the religious organization Opus DeiFact|date=November 2007, a Catholic lay group to which Franco had given powerful positions within the ministry of finance and economics. The 1950s reforms were a huge success, and Spain experienced a massive economic boom known as "the miracle of Spain", continuing until Franco's death in 1975. During this period, tourism became an important part of the Spanish economy. The corporativist organs and rhetoric from the protectionist years were maintained, but now played a secondary role. Spain's economy was further liberalized by the Spanish transition to democracy following Franco's death.

ee also

*Dirigisme
*Economic nationalism
*Fascism and ideology
*Fascism
*Corporatism
*Mercantilism
*Protectionism
*Statism
*War Corporatism
*War economy
*Military-industrial complex
*Distributism

References

Bibliography

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* Alpers, Benjamin L. "Dictators, Democracy, and American Public Culture: Envisioning the Totalitarian Enemy, 1920s-1950s." University of North Carolina Press. 2003
* Baker, David, "The political economy of fascism: Myth or reality, or myth and reality?" New Political Economy, Volume 11, Issue 2 June 2006 , pages 227 - 250
* Blum, George P. "The Rise of Fascism in Europe" Greenwood Press, 1998
* Brady, Robert A. "The Spirit and Structure of German Fascism" 1937.
* Brady, Robert A. "Business as a System of Power". New York: Columbia University Press, 1943, argues National Association of Manufacturers (NAM) as well as NRA were proto-fascist
* Braun, Hans-Joachim. "The German Economy in the Twentieth Century", Routledge, 1990.
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* Burnham, James. "The Managerial Revolution: What Is Happening in the World" 1941.
* Cannistraro, Philip (ed.). "Historical Dictionary of Fascist Italy", Greenwood Press, 1982
* Diggins, John P. "Mussolini and Fascism: The View from America." Princeton University Press, 1972.
* Falk, Richard. "Will the Empire be Fascist?," The Transnational Foundation for Peace and Future Research, March 24, 2003, [http://www.transnational.org/forum/meet/2003/Falk_FascistEmpire.html] .
* Feuer, Lewis S. "American Travelers to the Soviet Union 1917-1932: The Formation of a Component of New Deal Ideology." "American Quarterly" 14 (June 1962): 119-49. in JSTOR
* Griffin, Roger. " The Nature of Fascism" London, Routledge, 1993
* Kershaw, Ian. "The Nazi Dictatorship. Problems and Perspectives of Interpretation", London, Arnold, 3rd edn, 1993.
* Leighton, Joseph A. "Social Philosophies in Conflict", D. Appleton-Century Company, 1937.
* Lyttelton, Adrian (editor). "Liberal and fascist Italy, 1900-1945", Oxford University Press, 2002.
* Maddux, Thomas R. "Red Fascism, Brown Bolshevism: The American Image of Totalitarianism in the 1930s." "Historian' 40 (November 1977): 85-103.
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* Morgan, Philip. "Fascism in Europe, 1919-1945" Routledge. 2002
* Payne, Stanley G. "A History of Fascism, 1914-1945" 1995
* Paxton, Robert O.. "The Anatomy of Fascism," New York: Alfred A. Knopf, 2004
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* Rosenof, Theodore. "Economics in the Long Run: New Deal Theorists and Their Legacies, 1933-1993". University of North Carolina Press, 1997.
* Salvemini, Gaetano. "Italian Fascism". London: Victor Gollancz Ltd., 1938.
* Schmidt, Carl T. "The corporate state in action; Italy under fascism", Oxford University Press, 1939.
* Schweitzer, Arthur. "Big Business in the Third Reich", Bloomington, Indiana University Press, 1964.
* Sohn-Rethel. Alfred. "Economy and Class Structure of German Fascism", CSE Books, 1978 ISBN 0-906336-01-5
* Skotheim, Robert Allen. "Totalitarianism and American Social Thought." Holt, Rinehart, and Winston, 1971.
* Sternhell, Zeev, with Mario Sznajder and Maia Asheri, "The Birth of Fascist Ideology", translated by David Maisel (Princeton: Princeton University Press, [1989] 1995).
* Swedberg, Richard; "Schumpeter: A Biography" Princeton University Press, 1991.
* Turner, Henry A. "German Big Business and the Rise of Hitler", 1985.
* Welk, William G. "Fascist Economic Policy", Harvard University Press, 1938.
* Wiesen, S. Jonathan. "German Industry and the Third Reich" Dimensions: A Journal of Holocaust Studies Vol. 13, No. 2 [http://www.adl.org/Braun/dim_13_2_forgetting.asp]
* Haseler, Stephen "The Death of British Democracy: Study of Britain's Political Present and Future. " Prometheus Books 1976. p. 153

External links

* [http://aida.econ.yale.edu/seminars/echist/eh04-05/buchheim102004.pdf "The Role of Private Property in the Nazi Economy: The Case of Industry (pdf)] by Christoph Buchheim and Jonas Scherner
* [http://www.aapsonline.org/brochures/fascism.htm "Economic Fascism"] by Thomas DiLorenzo
* [http://64.233.179.104/search?q=cache:BwbKQ2go9GYJ:www.shef.ac.uk/~perc/sems/bakerpaper.pdf "The ‘Political Economy of Fascism’: Myth or Reality: or Myth and Reality?"] by David Baker [Now offline, but edited and published under this title in "New Political Economy", Volume 11, Issue 2 June 2006 , pages 227 – 250.]
*Wiesen, S. Jonathan "German Industry and the Third Reich" Dimensions: A Journal of Holocaust Studies Vol. 13, No. 2 [http://www.adl.org/Braun/dim_13_2_forgetting.asp]
* [http://www.archive.org/details/GermanEconomicPolcy "German Economic Policy" by Wilhelm Baur. An official Nazi pamphlet]