How do Austrians account for the creation of the Nazi war machine?

[ianlippert]

So today was the day!

My Macro 101 class finally got to learn about how the depression was caused by a lack of aggregate demand and how world war 2 saved us from eternal unemployment. It was beautiful, Keynes saved the day!

But as I was running the usual austrian arguements against keynsianism I did come to one interesting point that I couldnt answer. My teacher made the arguement that Hitler accidently stumbled upon Keynesian economics since his change to a war economy pulled the german people out of poverty.

I have to say I dont really get how hitler was able to pay for his military. I could see it if he was able to print off money like they do nowadays, but Germany had already reached the bottom of that barrel. The Deutch mark was so devalued that printing more money would probably have no effect. How did he produce a military out of thin air?

Was it because the german economy was actually recovering and he could run government spending on the back of a semi productive economy? Was he just lucky that the other countries agreed with classical economics and followed an agenda of savings and non intervention?

There is a lot of hand waving that goes on this course, so I wouldnt be surprised if there is way more to what actually went on, unfortunately I havent read past Rothbards 'Americas great depression' and it seems the Austrian arguement runs a little short at this point.

[hmkpoker]

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My Macro 101 class finally got to learn about how the depression was caused by a lack of aggregate demand

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This will never stop being funny to me. The depression happened because people stopped wanting things. Yeah, and we're nuts.

I really don't know much about what happened, but I imagine that basically the German people accepted a very low quality of life at high cost and worked many hard hours for it. Clearly, something rather substantial was produced, so there had to be someone producing it. When social norms require people to produce lots of resources and consume few of them, you end up with a surplus.

[Poofler]

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I really don't know much about what happened, but I imagine that basically the German people accepted a very low quality of life at high cost and worked many hard hours for it. Clearly, something rather substantial was produced, so there had to be someone producing it. When social norms require people to produce lots of resources and consume few of them, you end up with a surplus.

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I'd say pretty much bingo. But replace "social norms" with "fascism". Threat of violence did help control the behavior of the population that you just described.

[Nielsio]

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My teacher made the arguement that Hitler accidently stumbled upon Keynesian economics since his change to a war economy pulled the german people out of poverty.

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This is wrong. At that time, it was the Americans who were becoming red and the Germans who actually had some decent economic measures.


The economic model of the fascist state
http://www.mises.org/media.aspx?acti...ame&ID=425

[tolbiny]

This is just a partial answer i am sure, but one of the big reasons for choosing the Jews as a scapegoat was the high concerntration of wealth they had which was confiscated from them, which was put to rebuilding the German economy.

[Darryl_P]

He created a closed society and based the economy on the productive capacity of the German worker himself. This way he wouldn't have to grovel to international bankers for credit. Foreign trade was on the barter system, so no cash or precious metals were needed.

It was quite a brilliant system, provided you have a homogenous society that doesn't mind closing itself off from the rest of the world. Also, the people in the society need to be motivated hard workers with a sense of collective identity. The same model likely wouldn't work for Somalia.

Some may argue that such a nationalist system necessarily leads to atrocities, but that can only be true if you have a minority of outsiders controlling a significant part of the wealth who are not loyal to the cause, and cannot be made to be with any amount of negotiation.

Before I get accused of anti-Semitism again, I'd like to point out that I don't endorse what Hitler did to the Jews, just pointing out how the potential for such a thing may have come about.

P.S. If any mod believes I should be banned because of the above, please be so kind as to just ask me nicely to stop posting in politics. I will be happy to oblige. No need to use force when a simple request is enough.

[iron81]

This is what Darryl is talking about.

[Darryl_P]

[img]/images/graemlins/grin.gif[/img] n1

[Poofler]

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He created a closed society and based the economy on the productive capacity of the German worker himself. This way he wouldn't have to grovel to international bankers for credit. Foreign trade was on the barter system, so no cash or precious metals were needed.

It was quite a brilliant system, provided you have a homogenous society that doesn't mind closing itself off from the rest of the world. Also, the people in the society need to be motivated hard workers with a sense of collective identity. The same model likely wouldn't work for Somalia.

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Certainly part of the answer, though it wasn't total autarky. As raw materials prices rose (imports) and manufactured goods prices fell (exports), Germany developed very interdependent relationships with several eastern/southern European countries on a barter system. And the leverage of constituting a majority of a country's exports didn't hurt.

And once the war started, the economic model that perpetuated the war machine relied heavily on conquering nations to provide even cheaper materials/goods to the Germans economy and a steady influx of slave labor.

[Mickey Brausch]

Your post was brilliant but the message should be clearer. I edited it a bit:

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Adolph Hitler created a closed society and based the economy on the productive capacity of the glorious German worker himself. This way he wouldn't have to grovel to international bankers for credit.
<font color="white">. </font>
National Socialist economy was quite a brilliant system, provided you have a homogenous society that doesn't mind closing itself off from the rest of the world. Also, the people in the society need to be motivated hard workers with a sense of collective identity.
<font color="white"> . </font>
Such a nationalist system necessarily leads to atrocities, but that can only be true if you have a minority of outsiders, like the Jews, controlling a significant part of the wealth - the kind of people who are not loyal to the cause, and cannot be made to be loyal with any amount of negotiation.


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And let's not forget the best part : Hitler put women in their proper place.

Mickey Brausch