Regime In The 1930s

What we already knew about the prewar 1930s comes from Barkai (1990) and Abelshauser (1998), among others, and on the big questions, Tooze reaches the same conclusions. The German recovery from 25 percent unemployment in
1932 to less than 5 percent by 1936/7 was achieved by a money‐financed fiscal
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expansion. These authors ask how and when the Nazis “became Keynesians before Keynes,” when during the same period the Roosevelt New Deal was failing to bring the US unemployment rate down to single digits. All three authors trace the idea for credit‐financed expansion back to the previous Weimar government and to the Nazi Sofortprogramm contained in a 1932 political manifesto that was “widely circulated in pamphlet form . . . during the campaign
Abelshauser (1998, p. 169) calls this “military Keynesianism on a large scale.” The central resource constraint in the 1930s was foreign exchange, and this shortage led to a byzantine system of export subsidies and import controls. Why did the regime refuse to devalue the Reichsmark, particularly in 1936 when most of its neighbors devalued? The answers suggested by Tooze and his predecessors make little sense. According to Tooze, the Nazi regime feared the consequences of devaluation for servicing its large foreign debt, but why could the Nazis not have devalued in 1933‐34 and repudiated that foreign debt (after all, they imposed a moratorium on foreign debt repayment as early as June, 1934)? Did the refusal to devalue represent a fear of inflation? While this explanation might seem plausible after the trauma of 1922‐23, it becomes less convincing with the passage of time as the German economy expanded toward full employment during 1933‐
36 without any significant inflation.
Did private consumption rise in the 1930s or was it squeezed by the shortage of foreign exchange and the demands of the rearmament program? The reader searches in vain among Tooze’s many figures and tables for an
But Tooze has nothing to say about the change in the real wage, only about the low level of the German standard of living as measured by how many minutes of labor were necessary to purchase everyday items like cigarettes or coffee (pp. 141‐3). These indicators of relative German poverty are used by Tooze to suggest that German workers had a standard of living only
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one‐fourth the level of Americans. He makes no attempt to achieve a reconciliation with Maddison’s estimates that the ratio of German to US real
GNP per capita, after declining from 72 percent in 1913 to 65 percent in 1928, jumped to 84 percent in 1938 (see Harrison, 1998, Tables 1.1 and 1.2). Granted that GNP includes more than consumption, particularly in view of rearmament expenditure, but the gulf between Tooze’s one‐fourth estimate and Maddison’s much higher implicit estimate seems too large to bridge.
A major share of Tooze’s prewar analysis is devoted to German agriculture, in order to support his central point that economics created the motivation for war. The Nazis’ only perceived solution to inadequate food production was an eastward expansion to obtain lebensraum by force. The 1933 census revealed that fully 29 percent of German employment was in