Why Nazism Was Socialism

The following is an excerpt from Why Nazism Was Socialism and Why Socialism is Totalitarian, by George Reisman. It’s an essay that was originally delivered as a lecture at the Ludwig von Mises Institute in 2005.  Reisman is Pepperdine University Professor Emeritus of Economics and the author of Capitalism: a Treatise  on Economics.

The entire essay is available as a Kindle book at Amazon for just 99 cents.

Professor Reisman explains why Nazi Germany was a socialist state, not a capitalist one, and why Socialism requires either fraud or armed robbery or both in order to achieve power, and then the establishment of a totalitarian dictatorship in order to remain in power.

My purpose today is to make just two main points: To show why Nazi Germany was a socialist state, not a capitalist one. And to show why socialism, understood as an economic system based on government ownership of the means of production, requires a totalitarian dictatorship in order to remain in power.

The identification of Nazi Germany as a socialist state was one of the many great contributions of Ludwig von Mises. When one remembers that the word “Nazi” was an abbreviation for “der Nationalsozialistische Deutsche Arbeiters Partei— in English translation: the National Socialist German Workers’ Party—Mises’s identification might not appear all that noteworthy. For what should one expect the economic system of a country ruled by a party with “socialist” in its name to be but socialism?

Nevertheless, apart from Mises and his readers, practically no one thinks of Nazi Germany as a socialist state. It is far more common to believe that it represented a form of capitalism, which is what the communists and all other Marxists have claimed.

The basis of the claim that Nazi Germany was capitalist was the fact that most industries in Nazi Germany appeared to be left in private hands.

What Mises identified was that private ownership of the means of production existed in name only under the Nazis and that the actual substance of ownership of the means of production resided in the German government. For it was the German government and not the nominal private owners that exercised all of the substantive powers of ownership: it, not the nominal private owners, decided what was to be produced, in what quantity, by what methods, and to whom it was to be distributed, as well as what prices would be charged and what wages would be paid, and what dividends or other income the nominal private owners would be permitted to receive. The position of the alleged private owners, Mises showed, was reduced essentially to that of government pensioners.

De facto government ownership of the means of production, as Mises termed it, was logically implied by such fundamental collectivist principles embraced by the Nazis as that the common good comes before the private good and the individual exists as a means to the end of the state. If the individual is a means to the ends of the state, so too, of course, is his property. Just as he is owned by the state, his property is also owned by the state.

Professor Reisman further explains how wage and price controls and inflation were used by the German government after 1936 to pay for its programs in public works, subsidies and military rearmament.  This led to vast shortages of consumer goods which further led to economic chaos. It was not that much different from the current economic chaos we see today in Argentina, although the dictators and crooks in control of the Argentine government today have as their prinicipal aim merely to steal that nation’s wealth from the people. They do not appear to have as their goal the creation of an empire won by making war on neighboring countries, as did the German Nazis. They have so destroyed the economic wealth of their country that they do not command forces powerful enough to succeed in military conflicts anyway.

Socialism in Russia was imposed by brute force and murder. The Nazis imposed socialism by stealth. They imposed price controls which served to maintain the outward appearance of private ownership. The private owners were deprived of their property without realizing it and thus felt no need to defend it by force. It was like boiling a frog by starting out with warm water that makes the frog feel good and then slowly turning up the burner until the frog becomes too weak to jump out of the pot.

Economic chaos is likewise caused by the slow destruction of the price system until it’s too late and the people find themselves in the middle of chaos. The government promises that socialism with be the perfect cure, but socialism does not end this chaos. It perpetuates it.

Socialism on the Nazi pattern is, of course, not the same as socialism on the Argentine pattern of today nor socialism on the Russian or Bolshevik pattern that existed in the Soviet Union from 1917 to 1991. No matter what brand or pattern of socialism may exist in a country, they all lead to the same consequences of economic confusion, chaos and totalitarianism.

Professor Reisman anticipates an objection that the reader may think, what about Sweden and the other Scandinavian countries? Doesn’t socialism work just fine for them? Reisman shows that these countries are actually “hampered market economies” and not socialist.  We might call them welfare states that are still based on the characteristic driving force of production and economic activity and not government decree but the initiative of private owners motivated by the prospect of private profit.

Read the whole thing, at 99 cents it’s one of the best bargains you’ll ever find.


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