How Socialist were the National Socialists? Part 1

An Endless "Debate"

Every so often, there’s a post that goes viral claiming that the Nazis were actually left-wing, anti-capitalist, and socialist. Usually, the main piece of evidence is the full name of the party, which was Nationalsozialistische Deutsche Arbeiterpartei — National Socialist German Worker’s Party, but sometimes people attempt to bring in putative examples of Nazi policy to “prove” that the Nazis were, in fact, a movement of the left. Now, it must be acknowledged that this is partly to troll lefties, and it does drive us crazy, but some people do seem to believe it sincerely.

The usual left-wing response is to object that the name was specifically designed to bamboozle workers, and then they bring up the Nazis' friendly accord with major German industrialists. But in so doing, they tend to underplay the genuinely anti-capitalist parts of the Nazi ideology and movement. It will not convince anybody, since this “debate” is not really about the facts at all, but I think the real history might shed some light on the theories of economic nationalism that have come back into vogue.

The Economy in Nazi “Theory”

Like few other examples in history, the Nazi party, movement, and state were the brainchild of one man, Adolf Hitler, so it’s to his thought one should turn first. Conveniently, Hitler addresses both the name of the party and his central beliefs on economic matters in a few adjacent paragraphs in Mein Kampf, where he discusses the formation of the NSDAP, whose nucleus was originally called “The German Worker’s Party” or German Labor Party, if you choose to translate it that way:

In our small circle we discussed the project of forming a new party. The leading ideas which we then proposed were the same as those which were carried into effect afterwards, when the German Labour Party was founded. The name of the new movement which was to be founded should be such that of itself, it would appeal to the mass of the people; for all our efforts would turn out vain and useless if this condition were lacking. And that was the reason why we chose the name ‘Social-Revolutionary Party’, particularly because the social principles of our new organization were indeed revolutionary.

But there was also a more fundamental reason. The attention which I had given to economic problems during my earlier years was more or less confined to considerations arising directly out of the social problem. Subsequently this outlook broadened as I came to study the German policy of the Triple Alliance. This policy was very largely the result of an erroneous valuation of the economic situation, together with a confused notion as to the basis on which the future subsistence of the German people could be guaranteed. All these ideas were based on the principle that capital is exclusively the product of labour and that, just like labour, it was subject to all the factors which can hinder or promote human activity. Hence, from the national standpoint, the significance of capital depended on the greatness and freedom and power of the State, that is to say, of the nation, and that it is this dependence alone which leads capital to promote the interests of the State and the nation, from the instinct of self- preservation and for the sake of its own development.

Previously I did not recognize with adequate clearness the difference between capital which is purely the product of creative labour and the existence and nature of capital which is exclusively the result of financial speculation. Here I needed an impulse to set my mind thinking in this direction; but that impulse had hitherto been lacking.

The requisite impulse now came from one of the men who delivered lectures in the course I have already mentioned. This was Gottfried Feder.

For the first time in my life I heard a discussion which dealt with the principles of stock-exchange capital and capital which was used for loan activities. After hearing the first lecture delivered by Feder, the idea immediately came into my head that I had now found a way to one of the most essential pre-requisites for the founding of a new party.¹

So, we can see the origin of the “bamboozle the workers” myth. It has some basis in fact: Hitler frankly says that the name of the party was to garner mass appeal, but then he says there is a deeper reason, and so begins his disquisition on economics. At first, it seems that there is something of a “socialist” impulse here, where Hitler demands that capital be subervient to the State, which in his mind is identical with the nation and the race. To your average internet libertarian, that’s socialism, Q.E.D. But then he goes on to distinguish between financial capital and creative or productive capital. He says that he got his ideas from the lectures of Gottfried Feder, an early Nazi party member and the godfather of Nazi economics. Hitler then goes on a rant about the Will and the Man of Destiny and all that nonsense for about a page and a half, and then returns to the economy, concluding:

When I heard Gottfried Feder’s first lecture on ‘The Abolition of the Interest- Servitude’, I understood immediately that here was a truth of transcendental importance for the future of the German people. The absolute separation of stock-exchange capital from the economic life of the nation would make it possible to oppose the process of internationalization in German business without at the same time attacking capital as such, for to do this would jeopardize the foundations of our national independence. I clearly saw what was developing in Germany and I realized then that the stiffest fight we would have to wage would not be against the enemy nations but against international capital. In Feder’s speech I found an effective rallying-cry for our coming struggle. Here, again, later events proved how correct was the impression we then had. The fools among our bourgeois politicians do not mock at us on this point any more; for even those politicians now see - if they would speak the truth - that international stock-exchange capital was not only the chief instigating factor in bringing on the War but that now when the War is over it turns the peace into a hell.

Speculative, financial capital is bad; internationalization — what we might call “globalization” today — is bad, but Hitler is clear: the Nazis oppose those things “without at the same time attacking capital as such,” because the development of productive capital is important for the growth of the nation. And who is responsible for financial capital? You guessed it! The Jews!

A subsequent paragraph shows how clearly Hitler wanted to differentiate his “National Socialism” from Marxism, which was also Jewish and secretly on the same side as the bankers:

I began to study again and thus it was that I first came to understand perfectly what was the substance and purpose of the life-work of the Jew, Karl Marx. His Capital became intelligible to me now for the first time. And in the light of it I now exactly understood the fight of the Social-Democrats against national economics, a fight which was to prepare the ground for the hegemony of a real international and stock-exchange capital.

A couple of possible objections: one might say that it’s impossible to have capitalism without finance of some kind, and you might be right—we will get to that—but I’m not here to defend Nazi economic theory, but rather to describe it. Second, one might say, “That’s obviously a piece of demagoguery designed to put capitalists at ease.” Okay, but listen carefully to yourself: that’s the same thing that left-wingers say about the “Worker’s” and “Socialist” bits. In fact, they are both right: the whole thing is just a piece of demagoguery!

As Robert Paxton argues in his The Anatomy of Fascism, Nazism and fascism in general do not have the same relationship to ideas as socialism or liberalism:

The role programs and doctrine play in it is, on closer inspection, fundamentally unlike the role they play in conservatism, liberalism, and socialism. Fascism does not rest explicitly upon an elaborated philosophical system, but rather upon popular feelings about master races, their unjust lot, and their rightful predominance over inferior people. It has not been given intellectual underpinnings by any system builder, like Marx, or by any major critical intelligence, like Mill, Burke, or Tocqueville.

In a way utterly unlike the classical “isms,” the rightness of fascism does not depend on the truth of any of the propositions advanced in its name. Fascism is “true” insofar as it helps fulfill the destiny of a chosen race or people or blood, locked with other peoples in a Darwinian struggle, and not in the light of some abstract and universal reason. The first fascists were entirely frank about this.

He goes on to write:

Hitler did present a program (the 25 Points of February 1920), but he pronounced it immutable while ignoring many of its provisions. Though its anniversaries were celebrated, it was less a guide to action than a signal that debate had ceased within the party. In his first public address as chancellor, Hitler ridiculed those who say “show us the details of your program. I have refused ever to step before this Volk and make cheap promises.”

Several consequences flowed from fascism’s special relationship to doctrine. It was the unquestioning zeal of the faithful that counted, more than his or her reasoned assent. Programs were casually fluid. The relationship between intellectuals and a movement that despised thought was even more awkward than the notoriously prickly relationship of intellectual fellow travelers with communism. Many intellectuals associated with fascism’s early days dropped away or even went into opposition as successful fascist movements made the compromises necessary to gain allies and power, or, alternatively, revealed its brutal anti-intellectualism.²

One of those intellectuals who fell by the way-side was Gottfried Feder, who wrote most of that 25-point program. He was pushed out of his position as chief economist by the Nazis after industrialists got uncomfortable with his anti-capitalism. This was apparent even to contemporary observers. Here’s an article in the New York Times from 1934:

A visible symbol of Dr. Hjalmar Schacht’s victory as economic and financial dictator of Germany was the official announcement today that Gottfried Feder, creator of the National Socialist economic program, had been placed on the retired list.

Herr Feder wrote most of the “unalterable” twenty-five theses that constituted the official party program when the National Socialists were fighting their way to power. Shortly after Adolf Hitler became Chancellor. Herr Feder was appointed Under-Secretary in the Economics Ministry to prepare for the execution of this program. In attempting to do so he came into conflict with Dr. Kirt Schmitt, Minister of Economics, which, it was believed, contributed to Dr. Schmitt’s retirement on “sick leave.” Later Herr Feder was sidetracked to the office of Commissar for Suburban Land Settlement and as his most recent promotion was appointed a professor.

Herr Feder, as one of the intellectual fathers of Nazi ideology, stood for that “economy of blood and soil” espoused by Dr. Richard Walther Darré, Minister of Agriculture, who, at a recent peasant congress at Goslar to which Dr. Schacht was not invited, predicted that all German business and industry would have to bow to the principles of an agricultural estate. These principles include the greatest possible autarchy, strict control of prices, production and distribution and a return to the semi-feudal “hereditary manor idea,” involving not only primogeniture but also restrictions in the use of property by an owner.

Particularly Herr Feder stood for the nationalization of banks, which was rejected in the recent report of the Bank Reform Commission, and for the financing of public works through non-interest bearing treasury notes-”Feder marks.”

…

Herr Feder’s retirement was preceded by the disappearance of the “leader of German business,” planned to educate German business men in Nazi principles, and followed the rather demonstrative withdrawal of support by two outstanding German industrialists. Fritz Thyssen and Dr. Krupp von Bohlen und Hallbach. Herr Thyssen, who largely financed the Nazi movement, went to South America on a prolonged “inspection of his South American interests.” Dr. Krupp, head of the Estate of German Industry, has not been exercising the functions of this office for some months, and Albert Voegler, head of the German Steel Trust, has been acting as his deputy. Dr. Krupp’s resignation is expected soon and Hermann Roechling, Saar industrialist, is already being mentioned as his successor.

Today’s announcement said that Herr Feder’s retirement was “for the present,” which parallels the warning by the Voelkischer Beobachter that capitalism is getting a new chance to prove that it can serve the purposes of the Nazi State and woe to it if it fails.³

Hjalmar Schacht, the man who succeeded Feder as chief architect of the Nazi economy, was no socialist: he was a banker by profession and realized the necessity of finance for a modern economy. And he said so, openly, with the imprimatur of the party. The New York Times records a speech in 1935, which Schacht gave after an all-day conference with Hitler, where Schacht defended the joint-stock company and outlined the “ten commandments” of German industry — SCHACHT DEFENDS CAPITALIST SYSTEM :

In his speech Dr. Schacht took account of the fact that many principles in law and economy and even many individual human rights are being subordinated to new political view points, but, he insisted, capitalism, capital stock companies and especially anonymous and easily sold capital stock shares were essential elements in a modern nation's economy and a necessary foundation even for an army. For this reason he laid down for the benefit of "German Socialists" ten commandments which, he said, must be carried out if the National Socialist State is to master the problems facing it.

Let’s look at those commandments:

“Firstly, legal security in the economic field is essential.

“Secondly, stock companies are a suitable instrument, especially in an economy poor in capital, to build up modern economic enterprises.

“Thirdly, the willing cooperation of the individual entrepreneur is indispensable.

“Fourthly, easy transactions in stocks are necessary for raising needed capital.

Leaders Not Appointed.

“Fifthly, leaders are not appointed; rather they develop and must stand the test.

“Sixthly, business leaders’ responsibility must not be weakened but rather strengthened.

“Seventhly, between the leader of an enterprise and the stockholder must exist a similar relation of trust as between the leader and his following or employes.

“Eighthly, control of accounts as against the business leader is necessary.

“Ninthly, differentiation in purpose and content of various stock enterprises requires a certain freedom in their statutes.

“Tenthly, the new stock law must take just as much account of the tasks of the future as of the faults of the past.”⁴

In other words, there have to be important elements of a market economy: rule of law and enforceable property rights, mechanisms for pooling private capital, voluntary entrepreneurship, liquid capital markets, leadership selected by performance rather than political appointment, genuine accountability of managers, fiduciary trust between management and owners, independent auditing, freedom of contract and organizational form, and a legal framework that adapts to changing conditions.

We are going from ideas to the actual practice of Nazi economic policy, but before that, I want to be fair and address the most “socialist” wing of the Nazi party. There really was an anti-capitalist current in the movement; The 1920 party program was full of it: nationalization of trusts, profit-sharing in heavy industry, expropriation of land without compensation, the death penalty for “usurers and profiteers.” Feder, who wrote most of it, sincerely believed this stuff, as we’ve seen. And he wasn’t alone.

The most important figures here were Gregor and Otto Strasser, brothers who led the northern, more radical wing of the party in the 1920s. They took the Sozialistische in Nationalsozialistische literally. Otto wanted workers to own 49% of every enterprise, with the state holding another 41%, and the previous owner reduced to a kind of feudal “fief-holder” with 10%.⁵ Gregor, the more politically powerful of the two, told the Reichstag in May 1932 that the Nazis were “deadly enemies of the present capitalist economic system.”⁶ And the SA, Ernst Röhm’s three-million-strong brownshirt army, was disproportionately working-class, disproportionately unemployed, and full of men who had joined up expecting an actual revolution against the bosses and the bankers, not a rearmament program run by Hjalmar Schacht.⁷

These people had a name for what they wanted: the second revolution. The first revolution had brought the Nazis to power in January 1933. The second was supposed to finish the job: purge the old industrial and aristocratic elites, redistribute property, and deliver on the socialist half of National Socialism. Through 1933 and into 1934, Röhm and others said this in public, repeatedly, and with growing impatience. They had not spent a decade fighting communists in the streets to end up with Krupp and Thyssen still running everything.

Hitler had other ideas. On 30 June 1934, he had between 85 and several hundred people murdered, including Röhm and Gregor Strasser, in the infamous “Night of the Long Knives.” The purge was mostly power-political, not ideological, and directed as much against the conservative right as the Nazi left, but, notably, the leaders of the anti-capitalist constituency within the party were eliminated at just around the same time as the Nazis moved towards a more pro-capitalist position.

This is getting long, so I’ll do a second part, where I’ll look at the actual functioning of the Nazi economic system.

1. Adolf Hitler, Mein Kampf, trans. James Murphy (London: Hurst & Blackett, 1939). pp. pp. 169–174

2. Robert O. Paxton, The Anatomy of Fascism (New York: Knopf, 2004). pp. 16-18

3. "NAZIS DROP FEDER AS ECONOMIC PILOT," New York Times, 30 August 1934, p. 8.

4. "Schacht Defends Capitalist System," New York Times, 1 December 1935, p. 36.

5. Otto Strasser, Aufbau des deutschen Sozialismus (Leipzig: Wolfgang Richard Lindner, 1932). For an English-language summary, see Patrick Moreau, Nationalsozialismus von links: Die "Kampfgemeinschaft Revolutionärer Nationalsozialisten" und die "Schwarze Front" Otto Strassers 1930–1935 (Stuttgart: Deutsche Verlags-Anstalt, 1985). Otto Strasser's later memoir, Hitler and I (Boston: Houghton Mifflin, 1940), is self-serving but useful for the internal arguments

6. Gregor Strasser, Reichstag speech of 10 May 1932. Quoted in Noakes and Pridham, Nazism 1919–1945, vol. 1, 67. See also Peter D. Stachura, Gregor Strasser and the Rise of Nazism (London: Allen & Unwin, 1983), the standard biography.

7. Conan Fischer, Stormtroopers: A Social, Economic and Ideological Analysis 1929–35 (London: Allen & Unwin, 1983). See also Peter Merkl, Political Violence Under the Swastika: 581 Early Nazis (Princeton: Princeton University Press, 1975)