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Wages of Destruction Bernd 07/09/2019 (Tue) 20:28:52 [Preview] No. 27926
As I promised I'll write about this book.
It's quite lengthy but you'll reach the end if you read at your own pace. Most of the book isn't dense for me, an economic layman, with the exception of the parts about trade, which left me confused. I'll write what I manage to understand.
The author wrote it to argue in historiographical debates and make some points, but I read it just to add to my historical knowledge.

I'll write in sections, at most one a day so Bernd doesn't get overwhelmed, and will try to make the sections more thematic rather than just a sythesis of each chapter, as Hitler himself suggests in Mein Kampf for how one should mentally organize knowledge. I want to write about:

-Trade and controls of foreign currency and raw materials
-Budgets and revenue
-Businessmen and workers
-Consumer goods
-The fate of different industries
-General progression from 1933 to 1939

If I give up on writing I hope at least to cover the prewar period. I also hope to write on:
-Armaments priorities until 1940
-Historiography of the battle of France
-Occupied economies and pre-1941 America
-Wartime budgets
-Foreign labor
-Leadup and economic reasoning for Barbarossa
-The Speer miracle
-General progression from 1939 to 1945

But first I must make some notes on the Weimar era.

Bernd 07/09/2019 (Tue) 20:30:03 [Preview] No.27927 del
(180.16 KB 622x712 stresemann.png)
Weimar prelude and the alternative to Hitler’s strategy

The book’s introduction presents two conflicting paths interwar Germany could pursue to leave the abyss it found itself in: the one it historically followed after 1933, represented by Hitler, and an “Atlanticist” geopolitical strategy implemented to a large extent in 1924-1933, represented by Gustav Stresemann, foreign minister from 1923 to 1929. Hjalmar Schacht is the middle ground.
Firstly, what did they have in common?
Both were keenly aware of America’s rise to superpower status and the importance it would play in European geopolitics. This game-changing American rise is one of the book’s major themes. Both Hitler and Stresemann knew that America’s population, land area and resources allowed it to outcompete any individual European state through economies of scale. Their strategies centered on how to preserve German and European relevance in light of this development.
Both understood the Great War as the result of imperial competition, with Great Britain as the Second Reich’s nemesis.
Both pursued a revision of the burdens imposed by the winners: reparations, the occupied Rhineland and the new borders.

Hitler’s vision of history was not deterministic, and he thus believed it was possible for Europe to achieve parity with America by forming a market of similar size and population, which would be created not through something along the lines of the EU but through a dominant state’s hegemony, as Prussia had done in its unification of Germany. This state would, of course, be Germany itself.
The primary purpose of this hegemony would be the acquisition of means of sustenance, the struggle for which he considered the engine of history. It is for this reason he calculated Great Britain would have no inherent geopolitical reason to oppose his policies. Wilhelmine Germany’s rising exports and market dominance brought it into direct competition with Britain, and hence, its allies, cementing its destruction in the Great War.
He would not repeat the same mistake: Germany would not seek primacy through economics, avoiding a commercial confrontation with Britain, and would only seek to secure its means of sustenance on the continent, where the British wouldn’t lose any means of sustenance as theirs were on the empire. It would thus be possible to have a neutral or friendly London. This was one cornerstone of his vision: Britain as a counterweight to America.
The logical conclusion was that war would happen sooner or later, allowing Germany to settle scores with the French and assert its hegemony to the East. As risky as it could be, Hitler saw Germany’s confrontations with the other great powers as an existential struggle and thus accepted the risk.

Bernd 07/09/2019 (Tue) 20:30:37 [Preview] No.27928 del
Stresemann, a bourgeois optimist who had no active service in the war due to ill health, was not as apocalyptic as Hitler. He refused to accept the border with Poland and embraced dreadnought building, U-boat usage and territorial expansion, all views he never retracted, but believed a military solution was no longer possible to Germany’s issues. Instead, it could still be relevant in the sphere of economics.
His worldview encompassed not just great power competition but also the interconnectedness of the global economy, which meant Germany’s enemies still depended on it. America, in particular, could be turned into a counterweight against Britain (the opposite of Hitler’s belief) by giving it a stake in the German economy, and thus, an interest in its stability. This would pave the way for a negotiated removal of the winners’ burden and a return to the concert of nations.
It bears noting that this strategy is close to that followed by West Germany.

This was implemented in practice through a non-confrontational diplomacy with France, the sale of shares in German firms to Americans and the use of American credit to pay reparations to France and Britain.
Interwar Germany owed reparations to those two, who in turn owed war debts to America. German reparations to America didn’t matter much. Germany could pay reparations by running an export surplus (with unspent surplus staying at the Reichsbank’s foreign exchange reserves) or by borrowing. It chose the latter option, though it just meant replacing a debt towards France&Britain with a debt towards America.

This had the side advantage of guaranteeing a higher standard of living as the balance of trade wasn’t a concern. The Weimar Republic had a brief period of stability in 1924-1929, with the NSDAP receiving little of the vote in 1928. But its primary aim was to expand this American debt so much America would have to intervene to secure more lenient terms on reparations in order to let Germany pay the new debt.
It worked. The Dawes (1924) and Young (1929) Plans alleviated reparations demands and provided credit, the former also providing for an American middleman, the Reparations Agent, who, although damaging to national prestige, could halt payments if they destabilized the Mark and insulated the German government from external pressure on this matter.

Bernd 07/09/2019 (Tue) 20:31:07 [Preview] No.27929 del
But by 1929 the situation began to veer off the rails. The Young Plan was not as generous as expected, the “neutral” Reparations Agent was gone and America’s new Smoot-Hailey tariff made it harder for European debitors to fund their payments. American lenders found this new environment unsafe and their credit dried up. With American aid weakened Germany could seek confrontation or European integration, though for the moment it mostly remained in its Atlanticist path.
Political instability brought to power a string of conservative minority governments, starting with Bruening in 1930. He veered foreign policy in a nationalist direction, ordering two cruisers for the Navy, seeking bilateral trade deals in southeast Europe and proposing a customs union with Austria. The latter was received positively in America –proof the Atlanticist strategy had tangible geopolitical effects- but all three antagonized France.

As the French were by 1931 willing to lend to Germany, this was a great blunder. Since 1930 Germany couldn’t borrow enough and Bruening had to achieve a trade surplus to pay off debt. In the economic orthodoxy of the time this could only be done by reducing imports through austerity.
Massive budget cuts and tax increases skyrocketed unemployment and forced the government to nationalize a number of ailing industries. Fringe parties found fertile ground. But an export surplus of 2,8 billion RM (1931) was achieved, Germany was paying its debts and Atlanticism was still bearing fruits. In 1932 both reparations and inter-Allied war debts were frozen, leaving Germany only with its non-Versailles debts to deal with.

Previously, in June 1931 Bruening had aggressively demanded an end to reparations, setting off a chain reaction through the fragile world economy. In the end the Reichsbank’s foreign exchange reserves were precariously low, the pound sterling and dollar devalued and the franc and reichsmark lost their free convertibility. The Reichsbank tightly controlled all foreign currency in Germany and rationed it among importers, reducing the import side of the trade surplus.
But now the Reichsmark was valued higher than other currencies, lowering German exports as they became uncompetitive. The trade surplus was reduced to almost nothing. One solution was to devalue it. This option was repeatedly considered in the following years, so why was it avoided?
-Devaluation was associated with inflation, which Weimar-era Germans were wary of.
-It was risky given the Reichsbank’s limited reserves.
-A strong currency reduced the value of debts in terms of Reichsmarks.
-Under Hitler and Schacht both had pledged not to devalue, so there was prestige and political capital invested in the status quo.

So with Lausanne reparations were gone. The Atlanticist strategy was now spent. It could no longer go further for a series of factors:
-Under Roosevelt’s first years in office America turned inwards and didn’t exert influence in Europe
-America’s trade balance with Europe was unfavorable to Europeans
-The international scene was unfavorable to globalization, with increasing protectionism and political radicalism

The stage was set for Hitler.

Bernd 07/11/2019 (Thu) 05:37:40 [Preview] No.27957 del
I'm gonna chew through myself of this ofc.
You can continue anytime.

Bernd 07/11/2019 (Thu) 17:43:58 [Preview] No.27962 del
All right. So this is a new way of looking this topic for me. I'm definitely interested. Especially bout the causes of Barbarossa - maybe we'll learn some moral in relation to Suvorov.
For now I don't have a question, looks straightforward. However it seems the impact of the Great Depression on international relations was left out from the equation. Or maybe just wasn't mentioned.

Bernd 07/11/2019 (Thu) 18:14:41 [Preview] No.27963 del
The dollar's devaluation was in 1933, not 1931.

>Great Depression
It's mentioned by name in the preface and introduction. The evaporation of American credit, the June 1931 crisis and the decline of globalization all happen in its context. It's emphasized that multilateral deals were harder to create, with bilateralism seeing a resurgence, and France, Britain and the United States were no longer acting coherently together.

Bernd 07/12/2019 (Fri) 02:10:43 [Preview] No.27967 del
You know the story. It’s 1933 and the new Chancellor has on his hands a ruined nation with millions unemployed. Through work creation drives and other Keynesian stimuli he builds autobahns and reduces unemployment to almost zero in a handful of years without the rise of inflation. What happened?

First, it’s important to know the peak of the crisis had already been overcome. The highest level of unemployment, exceeding 6 million, was in winter 1931/32. The following winter already had a lower figure. Observers were optimistic about the future. There would have been some recovery even if policies remained exactly as they were.
Under a number of different policies and governments, too, there would have been recovery, perhaps better than what was achieved. But that is speculative.
GDP statistics show private investment boomed in 1933 but was offset by a decline in private consumption (wages stagnated and prices rose), so the public sector did carry the recovery.

Work creation wasn’t a central pillar of NSDAP policy. It was brought to power by the farmer’s lobby (an important force with its own chapter), the military and some leaders in the nationalist right. Its priorities were protecting the rural population, rejecting the impositions of Versailles and, most importantly, rearmament. Its Strasserist wing did care about work creation but for the mainstream that topic was on the table only around 1932-1934.

Bernd 07/12/2019 (Fri) 02:11:39 [Preview] No.27968 del
Hitler’s predecessor, General Schleicher, had already planned a work creation drive of his own and had earmarked 600 million credit-financed Reichsmarks for it. Why credit-financed?
Contemporary economists debated the feasibility of state-conducted work creation and economic stimulus. One consensus was that it couldn’t be funded by raising new taxes, as that would offset any gain in demand. So debt was the alternative for funding such programs; they were financed from unspent household savings, whereas taxes just transferred circulating money from private hands to the state. But the government couldn’t simply borrow from the banks, as that could make it harder for private investors to get loans; instead, it’d need “new credit”.
Stimulus spending in Germany was paid not directly in Reichsmarks but in IOUs, with the promise that ultimately the Reichsbank would later repay them with loans or the increased tax revenue of a recovered economy.

To Hitler’s joy, none of this money had been spent. His government thus spent a third of it on the military, a third to local government and a third on agricultural land amelioration.
His own spending was began with the 1 billion Reichsmark Reinhardt programme of June 1933. A further 800 million Reichsmarks were designated in September. Those were substantial sums given the size of the German economy, but the funding stopped there. Programs continued with the resources still available and the state focused on its true priorities, chiefly rearmament. Even of this sum, 230 million were siphoned off to military ‘special measures’ –airfields, barracks and so on.

Initially this stimulus took the form of a work creation drive, the Battle for Work. Its first target was East Prussia, where by July nearly all unemployed had been put to work on improving rural land and infrastructure. Behind this spectacular success, intensely covered in public media, lay two facts: the province received disproportionately high funds given its population and its agrarian society made it easy to employ idle hands in simple earth-moving work.
Once the program moved into more industrialized regions, it found clerks, secretaries, metalworkers and even bricklayers and plumbers demanded more complex work that was harder to set up.
Nonetheless, unemployment was steadily decreasing. It only lingered on within export-oriented industries, as the problem of the uncompetitively high Reichsmark had still not been solved. At their peak work creation initiatives were only directly responsible for 30% of the reduction in unemployment, so they were merely part of a wider recovery.
Though poor Germans could finally find work, their living standards were still stagnant and private consumption shrank in 1933. For this reason the government’s initiatives against unemployment gradually shifted towards indirect methods, such as financing mortgages.
The Battle for Work received disproportionate attention in propaganda given its relative importance within economic recovery and priorities in Berlin, where critical decisions on debt and rearmament were being made.

A famous achievement of this period is the Autobahn network. It was the responsibility of Fritz Todt, a capable civil engineer deeply loyal to Hitler, who was now general inspector for German roads. The highways were conceived firstly as a military asset for rapid movement of troops (Tooze doesn’t mention it, but their actual military usefulness would prove limited during the war). Todt did a competent job with them, particularly given he didn’t receive the budget he expected –and prestige projects like Autobahns were severely constrained by the raw materials rationing enforced some years later-, but they didn’t employ a lot of workers.
A curious fact about German infrastructure was that railways were underinvested on due to the focus on highways and other projects. Few freight cars were bought and those in service were in a bad condition. By 1938 the rail system was in crisis, with bottlenecks, jams, and, funnily enough, delays.

Bernd 07/12/2019 (Fri) 02:52:13 [Preview] No.27969 del

How was inflation kept in check as unemployment decreased by the millions? In fact, there was inflationary pressure. It picked up by 1938, not at the beginning of recovery.
Returning to the contemporary economists who debated work creation: many objected to it on the ground that government stimulus would just increase inflation, negating any benefit it could provide. Others argued that this held true in conditions of full employment, but not when there was idle capacity, and therefore, governments could spend but only as much as necessary to get rid of unemployment, with too much spending causing inflation.
From 1933 onwards the German economy grew while the unemployed found work and there was little inflation. By 1938 the military-industrial complex and related sectors were still booming while the workforce was almost fully employed. All the conditions for inflation were there. Workers wanted better pay and employers were willing to provide it to continue expanding their businesses.
It was contained by a growing bureaucratic barrier: the suppression of wage growth at 1933 levels, which was already in place for years and extensive price controls. The wage freeze was partially circumvented in industries with less central oversight (ironically favoring subcontractors and suppliers over immediate producers of armaments) through “accelerated
promotion, high-status apprenticeships, retraining schemes, hiring bonuses, improved working conditions and a variety of supplementary social benefits”.
Wage and price suppression had the side effect of nullifying market mechanisms for reassigning labor between industries, demanding more bureaucratic oversight to replace those mechanisms. Detailed information was gathered on every worker. Regional migration was restricted. Rural workers were prohibited from taking industrial jobs; this backfired when farmers found a loophole by no longer employed their sons at all. And the state gained the power to conscript labor.
So under conditions expected not to produce inflationary pressure, there was none, and under conditions expected to produce it, it existed. No surprise here.

Bernd 07/12/2019 (Fri) 03:05:56 [Preview] No.27970 del

Bernd 07/12/2019 (Fri) 05:25:11 [Preview] No.27971 del
Without reading what you wrote. That chart about unemployment. Those regular spikes are associated with seasonal workers?

Bernd 07/12/2019 (Fri) 12:20:26 [Preview] No.27974 del
Yes, on warmer seasons they're hired for the harvest and construction.

Bernd 07/13/2019 (Sat) 01:50:11 [Preview] No.27984 del
Germany had naturally high imports. Though strong in manufacturing (the basis of its export sector), on the raw materials side its only plentiful resource was coal. Cotton and wool for the textile industries, coffee and food for consumption, oil for fuel, rubber for automobiles, iron ore for the steel industry and other commodities all had to be brought from abroad. There could be no production and consumption without foreign goods.
Imports shrank due to the crisis, and by 1933 they were 50% lower than in 1928. Now they were on the rise, a sign of a recovering economy but also a pressure against the balance of trade.
Just as imports rose, exports were falling. The international environment was hostile, with widespread protectionism. But the main reason for this was that by 1933 both the pound sterling and the dollar had devalued while the Reichsmark remained in its value, making German goods comparatively more expensive.
Compounding this problem, the Reichsbank could fund a trade deficit by running down its foreign exchange reserves but those were very limited.

And yet Germany absolutely needed an export surplus to pay debt and imports. Hence, the balance of trade was the most important limiting factor to the Nazi economy and played a central role in policy. Great pains were taken to lower imports and boost exports.

Bernd 07/13/2019 (Sat) 01:50:26 [Preview] No.27985 del
On the import side, Bruening’s government had successfully lowered purchases at the cost of mass unemployment and Hitler did not repeat his mistakes. One legacy the Weimar period did leave was the system of foreign exchange rationing: exporters handed the foreign currency they gained to the Reichsbank, which repaid them in Reichsmarks and distributed it to importers. Germany thus had a mechanism to reduce imports by handing out less currency, which it extensively did. And in 1934 the RWM (Business Ministry) set up surveillance agencies (Ueberwachungsstellen) to organize the rationing of commodity imports in some sectors, such as wool, cotton and nonferrous metals.

Those were still ad hoc measures and importers found loopholes around them, so a bureaucracy had to be set up to institutionalize the system. From August 1934 the Reichsbank would allocate foreign currency based on export returns, keep some to pay debt and hand over the rest to 25 supervisory agencies, one for each kind of commodity. Prospective importers would file applications to their agency, which then doled out its limited funds to imports deemed of higher priority. Successful applications resulted in Exchange Certificates (Devisenbescheinigungen), without which imports were banned.
Besides lowering imports, this structure was used to direct resources to key industries at the expense of those of lesser importance to the state’s goals. Hence, through the 30s the textile industry stagnated while the military-industrial complex boomed. It also magnified the dominance of raw materials within the composition of German imports. As a side effect, industrialists no longer had to worry about competition with foreign manufactured goods within the internal market.

Germany’s commercial relations were revised to improve the balance of trade. What resulted was not “autarky” in the full sense of the word: mercantile disengagement happened just with France, Britain, and, primarily, America. A trade deficit with the USA existed and remained, but the total volume of trade shrank from a few billions to just hundreds of millions of Reichsmarks. Transatlantic diplomatic relations deteriorated at the same rate.
With other trading partners, Germany rejected multilateralism and sought bilateral deals with each. In Western Europe, threats of moratorium broke European-American coordination and allowed agreements with the Netherlands, Switzerland, and even Britain; a trade war with the latter would have been damaging for both parties.
To replace raw materials no longer provided by America and Britain, German trade made inroads in Latin America and Southeast Europe. Copper and saltpetre came from Chile, wheat and maize from Romania, Hungary and Yugoslavia, oil from Romania, cotton from Brazil and Peru and coffee from Brazil. This had geopolitical consequences: Southeast Europe was drawn into a German sphere of influence and Brazil found itself in a better position to handle its American debt.

Another aspect of import reduction was investment in technologies such as synthetic fuel and rubber.

Imports were thus squeezed as much as possible. Nonetheless, some (not all) industries were still expanding through the 30s and demanding more and more imported raw materials. With supply restricted and booming demand, there was a tendency towards inflation. To prevent this, rationing was implemented for commodities themselves and not just the foreign currency to buy them. Most importantly, steel was rationed from 23 January 1937. Initially rationing was balanced and rearmament didn’t receive as much steel as one would expect, but later on this, too, became a mechanism for focusing resources on the military-industrial complex.

Bernd 07/13/2019 (Sat) 01:51:05 [Preview] No.27986 del
On the export side, the simplest solution was to devalue the Reichsmark. This was debated in the Weimar era and, behind closed doors (as a politically sensitive topic), in 1934 and 1936, but ruled out for aforementioned reasons (debt, fear of inflation and prestige). This forced Germany to come up with creative methods to lower the price of German exports.
The first was, starting in 1933, a complicated system of bond buy-backs (I, for one, didn’t understand it; it’s described in page 77) which essentially subsidized exporters at the expense of Germany’s foreign creditors.
As this wasn’t enough, in 1935 exports were subsidized by a new tax levied on industry as a whole. A progressive tax rate of 2 to 4 percent on turnover raised tens of millions of Reichsmarks every month. The largest payers of this tax were in the booming armaments industry, which ultimately propped up the export sector and the balance of trade. The tax was unpopular with businessmen, particularly since it left some industries in the red, but it was effective at least in the short term.
On the long term it began to draw hostility from trade partners as it was essentially state-subsidized dumping, a point made in a memorandum written by Carl Goerdeler in 1936.

The objective of a positive balance of trade was contradicted by another policy, the encouragement of Jewish emigration. As emigrants left with their property and had to be provided with foreign currency by the Reichsbank, they constrained Germany’s limited supply of foreign currency. The Haavara Agreement was one workaround to this: as Jews leaving for Palestine paid German goods, they compensated their departure with an increase in exports.
Kristallnacht was a setback, as replacements for vandalized goods had to be imported at a steep price. Goering was incensed, not about the events themselves but of their financial effect.

The whole system of import rationing and export subsidies, imperfect as it was, is called remarkable by Tooze. It allowed Germany to survive and trade with foreign exchange reserves much smaller than those of most countries today. Though even before the war it was already strained by neverending rearmament and measures such as tight controls of foreign currency and one-time acquisitions had to be taken, it was still the same framework of German trade well into the war.

Bernd 07/13/2019 (Sat) 07:43:15 [Preview] No.27989 del
Rearmament was an easy way of creating jobs and channeling production since there was basically no military - and no military spending in the budget.
The "usual" way of presenting as if Germany was creating an over proportionate war machine even tho they were just shooting for equal amount of military to their similar sized rivals had. The overestimation of the creation of the Autobahn system by other writers, this is also related to their diligence to inflate the aggressive nature of the Nazi Germany. "They prepared for war! WAAAAAAAAAAARR!" Frankly every sober nation prepares for war to some extent, even Romans said so.

I think the Nazis had only vague ideas what to do with the economy once they are in power. They were kinda whatever works. There were promises and demands in their political program but as usual with such programs there wasn't any hint on the "how" ofc. So they employed such means that were in accord with their non-economic "reforms" and general plans.

Bernd 07/13/2019 (Sat) 22:59:41 [Preview] No.27995 del
Indeed, even in the 20s the Reichswehr already took covert rearmament measures. Hitler just amplified the process. The Versailles powers would rather have their defeated enemies remain in the defeated status forever, but a return to normality implied Germany rearming to some extent. It's like what you've said of Hungary and the Trianon states.
What made Hitler's military buildup bellicose, according to Tooze, was the nature of military spending itself, civilian gains forfeited by rearmament, the willingness to risk recovery altogether for the sake of the Wehrmacht and Hitler's strategic views on war.
Germany didn't pursue a double-barred recovery with vigorous civilian and military growth not because it didn't want to, but because it couldn't have both. Imports were severely restricted, so Hitler had the choice of importing for civilian industries or the military-industrial complex, and he chose the latter. Hence the textile industry stagnated. Under the import rationing system, some industries would have to starve, and he chose to starve textiles to feed weapons.
While talking of rearmament he mentions the usual opinion of economists about the arms industry: that it's a dead end, a money sink, whose final products aren't used to further develop the economy. And yet this doesn't hold true for the 30s Wehrmacht, which improved national prestige and made Germans happier. More than that, it was an investment which would be paid back in the future.
How an investment? Hitler didn't believe that peaceful capitalist development could save German geopolitics and provide a high standard of living, as Germany lacked means of sustenance and competition in world markets would lead to another defeat by Britain and its allies. Ultimately those aims could only be successful after scores were settled with Germany's enemies in a war. Such a war would inevitably happen, though not in 1939, as rearmament plans expected full preparedness by the 1940s and the Kriegsmarine would only be ready by the very end of the 40s.
The NSDAP's agrarian constituency also believed military expansionism was necessary to secure good living conditions in the countryside, and as I'll write later they had good reasons for thinking this.
Despite this funneling of resources to the military and the "money sink" nature of military spending, it employed many workers, created demand for the factories and carried along the recovery. The problem is that by the late 30s military expansion was going so fast it now contradicted rather than spearheaded economic recovery. The carefully built trade system and administrative controls were suffering under the strain. The regime's economists, such as Schacht, now advocated that rearmament should proceed at a slower pace to preserve the economy, but Hitler rejected them. One must conclude he was using his "economic miracle" as a means to achieve rearmament rather than the other way around.

Bernd 07/13/2019 (Sat) 23:12:12 [Preview] No.27996 del
And on the Autobahn network, Tooze's argument rests on his evidence that it was thought in military terms by the leadership. He does neglect to mention that they didn't have much military use, and does kind of mention they weren't used much by civilians either as car ownership wasn't widespread. But the highways were certainly a boon for postwar German civilians.

>the Nazis had only vague ideas what to do with the economy once they are in power. They were kinda whatever works.
That's more or less correct. They had economic promises in their programme upon taking power, such as reviewing the relationship between local and national budgets and work creation, the latter a recent point, but not a full plan. Hitler did have in hand Schacht, a "dark wizard" of economics who had been by his side since the last years of the Weimar republic, and other specialists. They tackled the critical issues facing the country -within the constraints of political aims- one by one with bureaucratic means, and then had to create more and more bureaucracies to tackle the new issues arising from their solutions to the old ones. And the regime as a whole faced a number of crisis, the first one already in 1934. See imports, foreign currency was rationed to save the balance of trade but after a couple years this created the threat of inflation, so raw materials also had to be rationed. Or inflation, which arose once conditions meant recovery would cause it: price and wage controls kept it in check but eliminated market reallocation of labor, so new measures had to be taken to bureaucratically reassign workers.

Bernd 07/14/2019 (Sun) 08:09:14 [Preview] No.27998 del
Civilian industry buildup couldn't have been successful, since the result, all that goods produced, would have needed markets to sell at (inner markets can suck up only so much) which were impossible to find. Even the author says so with that level of civilian production they couldn't find buyers, also the relatively strong Reichsmark also was in the way of meaningful export. And the overproduction of goods, creating needless supply also hurts the economy.
So the reanimation of the military industry basically was the only way forward and inevitable.

Bernd 07/14/2019 (Sun) 12:48:43 [Preview] No.28002 del
That's a good way to look at it: with no buyers German industry had to produce "money sinks". Where have you read it? If it's nowhere on the literature then you have a novel insight.
But the "money sinks" didn't have to be military, they could have been civilian. Autobahnen themselves were a production of this kind. A huge investment in subsidized or free housing could have been made. Tooze repeatedly argues Hitler made decisions and had several options available.

>inner markets can suck up only so much
There was leeway for expanding inner markets. German consumers didn't have that much purchasing power because Germany itself wasn't a very wealthy country (this is a big point in the book), but a large portion of their income went to savings and taxation and could thus be funneled towards consumption. Some things were in very high demand, such as housing, which faced an acute shortage.
>the relatively strong Reichsmark also was in the way of meaningful export
A "remarkable" workaround was found, and another one (devaluation) was available.

Bernd 07/14/2019 (Sun) 14:58:49 [Preview] No.28003 del
>Where have you read it?
That's just follows what you wrote here based on Tooze's work. Tho yes I could have thought about spending the money differently since Hungary was in similar shoes. She was isolated with very few trade partners, but we spent mostly on not profit producing investments, because we mostly kept the military restrictions we were sanctioned (well at least we colored out of the lines less boldly than the Germans), only later in the 30's we started to invest in the military more heavily.
Also the situation also similar what we are in the EU. What the moneyz EU gives, we can't support local companies (we aren't allowed to produce competing goods) we can only spend it on logistics and niceties.

Bernd 07/14/2019 (Sun) 16:28:41 [Preview] No.28004 del
The military has a potentially infinite demand to be exploited and all of its funding comes from taxpayers. This rearmament is essentially forcing the people, who would otherwise not pay for consumer goods, to buy military items, though they do not contribute to living standards (Tooze notes they did, in a certain way). Since Germany's factories couldn't find buyers, taxpayers were herded into being its clients. It's forced consumption with no direct increase in living standards.
But the "money sink" interpretation makes the whole recovery seem even more ridiculous. The Reich used an irregular accounting scheme (Mefo bills) to pay money that didn't exist (but was promised to be paid back with interest) to companies producing dead-end goods that weren't productively used and then taxes those companies to artificially boost exports. It sounds like a pyramid scheme, though all stimuli of this kind sound absurd, with Keynes even claiming that burying bottles filled with cash in abandoned mines and letting the private sector dig them up would be a net benefit to the economy.
Things start to make more sense if military spending is, instead of a bottomless pit, an investment to be paid back in the future through war.

Bernd 07/14/2019 (Sun) 17:16:58 [Preview] No.28005 del
I think "we" view economy all wrong. We just assume that every economy should conform to capitalism's ruleset when other systems can exist successfully. Frankly even planned economy works just fine if you don't have to compete in arms race, nuclear race, space race, whatever race.

Bernd 07/15/2019 (Mon) 02:52:58 [Preview] No.28014 del
(579.00 KB 1307x793 finance.png)
>even planned economy works just fine if you don't have to compete in arms race, nuclear race, space race, whatever race.
Of course a hermit kingdom like North Korea can be stable. It can't be efficient because of the calculation problem and other inescapable reasons.

The Reich dealt with funding of two kinds: safe, from taxation and long-term borrowing, and risky (for inflation, debt and so on) from short-term borrowing and money creation.
Taxation was, by the late 30s, the heaviest in Europe. Of note were taxes on Jews, taxes on imported oil, a part of the autarky programme, and the elimination of the car tax.
Long-term borrowing came from retained business profits and household profits in the banks. This money was also used by private investors and so measures were taken to ensure more of it went to the state, with banks being pressured to invest in government bonds and private construction constrained by a ban on new mortgage borrowing in autumn 1938.
More funds were made available to Berlin by taking resources from local governments. Hitler had promised to rationalize the relationship between central and local government and did so by centralizing public finance.
Off-budget IOUs helped fund rearmament and the Battle for Work.

Safe funding was enough at first. Then it failed to keep up with surging spending and the Reich increasingly had to rely on unsafe funding, with the threat of inflation appearing. An emergency measure was the New Finance Plan of March 1939, which forced the Reich’s suppliers to accept 40% of their payment in credits with promises of tax exemption, but the problem as a whole was not solved. Short-term credit had to be taken, which amounted to printing money, and the volume of money in circulation doubled in the two years before the war.

Bernd 07/15/2019 (Mon) 05:33:18 [Preview] No.28015 del
Now that I think about it, military spending isn't entirely "money sink". It stimulates the economy indirectly. Via the state owned companies the money flows to private contractors and workers, both utilizing it again, and now elsewhere in the economy.
Also rearmament was also a popular move, great many in Germany would wanted to see their country regain her rightful place as a world power as it was previously. And for that at the time proper army was needed, especially if they wanted to be taken seriously by other powers, particularly at the conference table over maps revisioning borders and such they oh so longed for.
And again I'm compelled to write about the volume of the rearmament. It seems a lot because it they had to build from almost zero. But it's extent worth only something if we compare it to other nations.
When Germany attacked France, they stood about on equal grounds, tho France had more tanks and Germany more airplanes.
When Germany stroke the Soviet Union... the latter had way, way more technical equipment, both in tanks and aircrafts they had overwhelming numbers... and this is after the German military industry started really booming. And the Soviet Union paid the price dearly, for all those equipment to have they sacrificed not just the standard of living but actually the lives of millions.

Bernd 07/15/2019 (Mon) 07:40:33 [Preview] No.28016 del
>Now that I think about it, military spending isn't entirely "money sink". It stimulates the economy indirectly.

It gives you a lot of negotiation power (or negotiation leverage) in any kind of deal. The US is obviously one of the best examples of a nation using its military spending in order to boost its economy or eliminate competition on the world stage. The Petrodollar, the Panama Canal. More recently the fight against Huawei or meddling in Egyptian politics. If you are in the stronger position (or alliance) you can save a lot of money.

Bernd 07/15/2019 (Mon) 11:28:21 [Preview] No.28020 del
>Via the state owned companies the money flows to private contractors and workers, both utilizing it again
State owned companies are paid with taxes from private contractors and workers in the first place. But in Germany that wasn't fully the case as nonexisting money paid for rearmament. And still, if the whole scheme had been used to produce tractors and the like the end product itself could have been utilized to further develop the economy, something that doesn't happen with the military unless it's used agressively.
>But it's extent worth only something if we compare it to other nations.
It also needs to be compared to Germany itself. It was mobilizing more of its own economy than other powers.

That's what Hitler did, Austria, the Sudetenland and Memel were all acquired through military intimidation in one way or another.

Bernd 07/15/2019 (Mon) 15:18:39 [Preview] No.28021 del
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> Frankly even planned economy works just fine
worst part of planned economy it's cumbersome and it's mostly tried by failed states.

nowadays thanks to modern computers planning is easier but still cumbersome, it's just nowhere near 60's tier. I think in future natural resources will be scarce and planned economy will play bigger part thanks to these reasons.

Bernd 07/15/2019 (Mon) 17:19:34 [Preview] No.28022 del
More on planned economy:
I disagree it can work efficiently in a different environment than the Soviet Union had.
What I already mentioned the burden what the race in the Cold War meant was way to heavy for it to compete successfully with another economic system which aim is basically generating endless wealth via increasing consumption and debt infinitely.
One great problem you mention is the calculation one. Since planned economy works on hypothetical numbers existing only on paper the feedback from the working economy should be constant and precise, so the plan could be altered accordingly. But in the atmosphere of the Soviet Union where you could have been gulaged on a whim prevented such thing happening. One didn't just simply stood up and said "I don't have the number", this could resulted in a one way ticket to Siberia. In a freer society, without the fear of being punished they could work with accurate numbers and course correct anytime.

>State owned companies are paid with taxes from private contractors and workers in the first place.
No. As you mentioned previously the payment was done with Mefo bills.
I can rationalize it's "essence" as a crossover of getting a loan and issuing more money. In that situation they could have either got a loan to gain more capital to invest into stuff but this would resulted the state in debt (to some Jewish bank no doubt). Or they could have print more money but that would have caused the Reichsmark devaluate (which at that time they felt undesirable - maybe the fear from hyperinflation was still too strong).
So basically they made more money without devaluating it, but with the promise that it will be paid and can be exchanged to real money.
And why it worked? Maybe because if people believe in some things those really work. Or maybe because the money devaluates only when it is available in too much supply. Or too little demand because it rests on the balance of supply and demand, and as long as there is enough demands to met the supply the new money won't lose it's value. And military spending, rearmament is a great way to spend that money, there one can always create enough demand. If I start building houses I'll arrive to a point where noone wants to move in because everyone has a house, but I can always spend it on more tanks, airplanes, ships and bullets, research new tech and build new models and scrap the old (or sell it to others), or spend the material in wars. It's an endless demand.

Bernd 07/15/2019 (Mon) 17:55:39 [Preview] No.28023 del
>In a freer society, without the fear of being punished they could work with accurate numbers
In a planned economy there aren't any numbers to work with, that's the gist of the calculation problem. Some of the information needed for calculation can only be expressed in market prices, which don't exist in a planned economy.

Bernd 07/15/2019 (Mon) 18:11:36 [Preview] No.28024 del
Of course there are numbers. The number of people, the amount of food they will to eat, the number of tools they needed, the amount of necessary raw materials etc etc.

Bernd 07/15/2019 (Mon) 18:18:53 [Preview] No.28025 del
Hmm. another problem with the planning in the Soviet Union. They thought that the tovarishes in Moscow know better what and how much localities needed than the people at the site. Planning also can be decentralized or a mix of it to help cooperation between the communes/settlements, counties, regions etc.

Bernd 07/15/2019 (Mon) 18:22:25 [Preview] No.28026 del
Those numbers aren't the whole reality of what determines prices and values and any "calculation" based just on them would have distortions.

Bernd 07/16/2019 (Tue) 03:23:39 [Preview] No.28029 del
Interwar Germany was still in transition to an urbanized society. In the 1933 census there were 9 million agricultural workers, with 32.7% of the population in communities of less than 2,000 inhabitants and 56.8% in settlements of less than 20,000. Every party sans the KPD and SPD catered to the agrarian lobby, which was one of the players in Hitler’s rise to power and a significant faction within the NSDAP in the years to come.

Tooze stresses to his liberal readers that, though Nazi agrarians seem “atavistic”, “archaic” and “backwards-looking”, they had their feet firmly on the ground of the grave and real problems faced in the German countryside.
Long processes in the previous centuries of agricultural history are the backdrop to this story. Leaving their overcrowded continent, Europeans with an “insatiable urge to overcome scarcity” had conquered much of the Americas, Africa, Asia and Oceania, decimated several native populations, overseen a demographic transfer of 70 million slaves and settlers to the New World and created a global commodity economy supplying their continent, where peasant populations continued to skyrocket. Productivity leapt with technological advances. Large monocultural estates in the Third World and farmer homesteads in America, both geared towards maximum capitalistic efficiency, outcompeted self-sufficient peasant economies, including in Europe, once transportation costs cheapened.
As a legacy of these conquests, several European states still had vast swathes of land in their colonial empires, but Germany had just been stripped of what little it had.
Liberalism, starting with the French Revolution, uprooted the old feudal order and made land into a commodity.
Urbanization and declining birthrates happened everywhere industrialization took hold.

German peasants were not the main winners of this. Their living conditions were poor: class photographs from rural elementary schools routinely captured images of row upon row of barefoot children, whose parents were too poor to afford shoes, at least for the summer months. Images of fieldwork show broken old people bent double over primitive ploughs pulled by worn-out cattle (p. 167). They were often overworked, some with over 12 hours of daily labour for six days a week for both men and women. Their income per hour was lower than urban workers; agrarians deemed this an injustice but it reflected lower rural productivity. Production methods were primitive and technology limited, with much labour still done by hand.
Birthrates, already declining in the cities since the 1870s, began to plunge in the fields after the Great War, reaching 20 per thousand in the 30s.
Urbanization reduced the rural workforce with every passing year and heightened the fertility reduction.
The food supply was not secure. As elsewhere in Europe, the lowest strata of society suffered chronic malnutrition even in times of affluence. The past century had seen many famines through the world as the global food economy was rearranged, but mass hunger and death weren’t far away in space and time, taking place in Eastern Europe through the 20s and 30s.
Food had to be imported and hostile powers could block its maritime trade routes, which is exactly what Britain did in the Great War, creating an epidemic of malnutrition blamed for 600,000 deaths. The distribution of food production favored Great Britain, France and the United States and they would rather see Germany remain just as a food importing economy.
Besides direct food imports, many inputs were of foreign origin, particularly animal feed, where maize, oilseeds and other items allowed some dairy and pig farmers to achieve high yields and profit. This was an issue for the balance of trade.

Bernd 07/16/2019 (Tue) 03:24:56 [Preview] No.28030 del
In spite of the Ministry’s best efforts, urbanization continued. It was a source of worry due to its effect on birthrates; in the Darwinist worldview where the nation’s death lay around the corner, infertility and food insecurity were things to fear. And birthrates were still falling in the countryside, as women were overworked due to the general high demand for labour in the mid 30s (with unemployment already very low) and the pressure to secure better harvests (from 1934 onwards the climate was unfavorable). In 1937 manpower shortages in the fields had to be supplemented by Labour Front draftees, soldiers, convicts and schoolchildren.

Properties were stratified according to size ownership in large estates (>100 ha), viable medium farms (10-100 ha) and poor marginal farms (<10 ha). Junkers employed conventional wage labour and supporting personnel. Medium farms in the 20-100 range employed servants and maids who received part of their pay in kind. 20 hectares was the minimum farm size for a guaranteed livelihood but estates of 10-20 ha were viable with good soil and close markets. Below 10 ha, some peasants could supplement their income with other activities but full-time labourers were overworked paupers.
Land was concentrated, with estates in excess of 500 ha representing 0,2% of the farms and 25% of the farmland. 88% of the farming population had less than the critical 20 ha threshold.
Marginal farmers would see their life improve if they had more land. One solution would be land reform, and for decades one plan for land reform had been proposed by many from centrists to the radical right: the breaking up of eastern Junker estates and settlement of East Prussia with small viable peasant farms, which would alleviate poverty, expand food production and provide a demographic bulwark against the Poles. The Weimar Republic accepted this and had a land reform program. It didn’t go far because of Junker resistance and high costs. But its more fundamental problem was arithmetic. Even if all cultivated land were equally divided among the rural population, every family would receive 13 hectares, less than the minimum viable size.
So “land hunger” wasn’t jingoistic Nazi rhetoric but a reality. As a topic it wasn’t an exclusivity to Germany, as it was a prime motivation for the conquest of the Americas and the still ongoing settlement of Russian Asia. Germany really had a ratio of rural population to land far higher than France, Britain and America.

In light of this, Nazi agrarianism sought not to set back the clock all the way to the 18th century but a rebirth of renaissance of the countryside. Their target audience was neither the most marginal farmers nor the Junkers, the latter calling them “agrarian bolshevists”, but the medium peasants. They occupied the Ministry of Food and Agriculture, organized assemblies and festivals, made peasant courts, defined law and policy –but not to the full desired extent, as their interests clashed with those of other constituencies- and formed a powerful organization, the Reichnaehrstand (RNS). Funded by a tax on every farm, it had over 20,000 employees and overwhelming economic powers, controlling 40% of the workforce and influencing the life of even the rural population. Its oversight reached even cooperatives, merchants and food industries and covered “every nook and cranny” of the countryside with an Orstbauernfuehrer in every one of the country’s 55,000 villages, and above, 500 Kreisbauernfuehrer and 19 Landesbauernfuehrer, with 3 divisions for ideology, farmyard and market issues.

Bernd 07/16/2019 (Tue) 03:25:38 [Preview] No.28031 del
Much effort was spent to propagate information and make the peasantry adopt modern farming methods.
Increasing yields and saving the balance of trade were contradicting aims but imported inputs in animal nutrition were successfully replaced without a drop in production.
Protectionism, gradually implemented since Bismarck’s time, and import quotas set up in the last Weimar years were continued and expanded.
Prices for agricultural produce were now determined by the RNS rather than the market. It hoped to direct production and increase the rural standard of living with them. Price increases in 1934 were met with widespread discontent (1934 was a crisis year), and from then on political pressure forced the RNS to keep them low. This backfired when demand rose as the economy recovered, leading to some shortages of meat and butter, not because of lack of production but because higher prices would have been necessary to stimulate production and lower demand. In 1938 higher prices would be paid to dairy suppliers but consumer prices weren’t raised, stimulating production but doing nothing with demand. There was also some subtle rationing.
The RNS administered the food supply and stocks.

An escape from land hunger was the addition of farmland to the Reich. An increment of 7-8 million ha to the existing 34 million would be enough. Thus, with a rational basis, agrarians were enthusiastic supporters of military expansionism and the Drang nach Osten, which would serve the same purpose as previous European colonialisms and, in their mold, reserve a secondary status for the conquered populations. Herbert Backe, future Minister, mentioned in his 1926 dissertation “The Russian grain economy as the basis for the people and economy of Russia” an uplifting of Russia’s farmland through ‘the infiltration of foreign ethnic elements of higher quality that will form themselves into an upper class and do battle with the mass of the population. The reservoir [for this infiltration] will be "The People without Space"’. (p.180) Walther Darré, who headed the Ministry for a long time, spoke to an audience of RNS officials in early 1936 directly of settlement all the way to the Urals: “The natural area for settlement by the German people is the territory to the east of the Reich's boundaries up to the Urals, bordered in the south by the Caucasus, Caspian Sea, Black Sea and the watershed which divides the Mediterranean basin from the Baltic and the North Sea. We will settle this space, according to the law that a superior people always has the right to conquer and to own the land of an inferior people”. (p.198)

Bernd 07/16/2019 (Tue) 03:26:16 [Preview] No.28033 del
The agrarians’ vision would be enshrined into law by the Reichserbhofgesetz, proposed in September 1933. In its first draft it created a new category of estate, the Erbhof, owned by physically able gentiles with a farmsize of 7.5-125 ha who applied in the Erbhofrolle. Erbhoefe were to be protected from the market: their sale and use as mortgage security were banned, providing both security and severe constraints, and the debt of their owners (6 – 9 billion Reichsmark) would be paid collectively through the Rentenbank Kreditansalt, which would tax all Erbhoefe. As this was harmful to those with little debt they’d be compensated with preferential treatment in the settlement of East Prussia.
This faced severe opposition, with the Ministry of Economic Affairs (RWM) complaining that excessive protection would sap the peasants’ initiative and the Reichsbank refusing to accept the dismantling of conventional rural credit. A compromise was reached and the collective debt relief was abandoned. Though Schacht’s Reichsbank obstructed credit for Erbhoefe, courts followed a loose interpretation of the mortgage restriction (and even the restriction on sales) and the Ministry of Food and Agriculture provided grants and loans, allowing rural financing to continue normally.
Another point of contention were the new rules of inheritance, which intimately intruded on old regional customs and infuriated the peasants themselves. Undivided properties would pass down to a male heir (Anerbenrecht), as was the custom in northern Germany, but there peasants used to have the freedom to make other arrangements and often compensated siblings who didn’t receive the main property. In south and western Germany, partible inheritance was the norm and the law was received with “blank hostility”. The restrictions on female inheritance, too, were unprecedented. Once again courts were lenient and agrarians compromised, accepting shared ownership within the first generation.
The principle of undivided inheritance also drew fears of a decline in fertility.

Through its meticulous regulations and oversight of farm life the RNS created resentment from peasants. Its centralization of milk deliveries was met in September 1935 with a “milk strike” and an increase in the black market. But Tooze says the peasants weren’t fully in the right: after receiving for decades lavish protection from the state, it now had the right to demand something back from them.
The RNS did achieve an increase in rural living standards to above pre-Depression levels, higher food production and a more resilient rural economy. Tooze excuses some of its shortcomings on the difficulties of handling a society in transition.
Germany didn’t attempt as radical of a modernization of its agriculture as the Soviet Union because it postponed a full resolution to the matter, like several others, until after the impending war.

Bernd 07/16/2019 (Tue) 16:36:05 [Preview] No.28038 del
All right. I'm gonna need some time to catching up. I still wanna reply on the planned economy sidetrack, and still have to read Budget.

So planned economy: >>28026
That depends how we view prices and values. If we view them through the glasses of capitalism, where supply and demand will determine largely then sure, they will be distorted why not? But why assume that the normality is on the side of capitalism? In fact prices are distorted largely there, they related more to what people are willing to pay for an item (based on abstract and sometimes arbitrary values, for example why people pay X amount for an iCrap when the same chinkshit are sold for the low price of X/10?).
We could translate the "worth" of any item to how much energy was spent to produce that item. There, that's an objective value. Compared to that the prices we have to deal with in our lives are way out of touch with reality. In fact prices in our economy are the tools of speculators and people who want to get rich by exploiting and conning others.
But what is money? A tool to make the exchange of goods and/or services easier. Here and now however it is source of wealth and status (even money can be sold and bought, can be speculated with). In planned economy there is the potential to restore it's original purpose.
Now we are threading on the hypothetical, but ofc in planned economy prices can be arbitrary too (compared to a "true" value), or at least changed depending on the situation.

Bernd 07/16/2019 (Tue) 16:42:17 [Preview] No.28039 del
>local governments
The governments of the constituent states or governments of municipalities?

Bernd 07/16/2019 (Tue) 17:00:07 [Preview] No.28041 del
>arbitary values
>objective value
Value is, at least in part, subjective. Prices in voluntary exchanges reflect, among other things, this subjectiveness of value. A planned economy has no access to those prices and thus, insufficient information for its calculations.


Bernd 07/17/2019 (Wed) 04:33:35 [Preview] No.28050 del
subjective theory of value was debunked
source: bunkerchan

Bernd 07/17/2019 (Wed) 05:28:30 [Preview] No.28051 del
There is not just one value, there are others. There is a relative value which based on different factors, there is use value which depends on the utility of the thing which is part of it's relative value, and there is exchange value of course and others I probably didn't know about.
But every item, goods, commodity and service have something common in them (a common denominator if you will) which can be used to determine their value which independent from any perceived value - which depends on the subjective judgement of the people - they have. It's the labour behind them to produce one unit of them (well at least Marx called it labour, I would say energy since labour can be determined in joules or spent calories or whatever, basically units of energy).
Why diamond is more expensive than coal? Their rarity their utility, their percieved value will decide how much it will cost to someone. But beside that we can calculate that 1 unit of diamond is more labour intensive to produce than 1 unit of coal. Let's say I want to produce 1 cubic meter of both. I have to spend way more labour on producing this 1 cubic meter of diamond than coal (it is related to it's rarity ofc, but rarity in itself can be perceived relatively), hence their value in labour (can be also expressed in working hours, but I would still remain at spent energy) will be different. This "labour value" doesn't depend on any relative or subjective factors, hence this is an objective way of expressing value.
I think this can be understood with common sense.

Btw capitalism is a failed system. The Great Depression shows it's failure, it had to be saved everywhere by state intervention and since then it kept afloat everywhere on the world with governmental regulations. The only ongoing debate on this is how much regulations it needs.

Bernd 07/17/2019 (Wed) 12:27:35 [Preview] No.28052 del
Price correlates with labour, yes, but value is not price. The labour theory of value is disputed. It explains why more labour-intensive goods have higher prices, but not why mutually beneficial exchanges could still happen even in the absence of labour and modification of goods, culture has a major impact on demand, demand rises in the expectation of future shortages and demand for a good lowers the more someone has of that good available. The subjective theory of value explains all of these aswell as the correlation of price and labour -the cost of purchasing labour is embedded in the price, and the sale of labour itself involves subjective valuation, the worker thinks he has more to gain with the wage than with the labour time he forfeits and vice versa for his employer. Diamonds have value because their buyers think they have more to gain with the diamond (because of its beauty or whatever, not because they desire it for the labour expended on it) than with the money they have forfeited in its purchase.

Bernd 07/17/2019 (Wed) 16:09:01 [Preview] No.28053 del
I wasn't talking about prices, I was reacting what you wrote here: >>28041
>Value is [...] subjective.
This, especially with the italic emphasis, implies that only one value exist. When in fact there are several, among them one which independent from human perception, resulting in an objective or "true" value.

I would write more but I really want to read today the part about Agrarianism. If you wish you can continue with the next topic or comment further on these planned economy, value sidetracks, I don't mind.

Bernd 07/18/2019 (Thu) 02:28:07 [Preview] No.28066 del
The question is wheter a planned economy can exist without over- and underproduction and stores with overstockings and shortages. It can't because of the information the planners cannot possibly obtain.

Bernd 07/18/2019 (Thu) 02:29:14 [Preview] No.28067 del
A common interpretation of the Nazi regime, long espoused by the KPD and SPD, is that it was a “dictatorship of the bosses”. This has some truth: industrialists gained more with the new order than their workers. But the NSDAP was not put in power by the industrialists, ruled in its own benefit rather than theirs and made many decisions against their will.
As mentioned, the forces behind Hitler’s rise were some nationalist politicians and agricultural and military interests, not the business class. Several industrialists funded Hitler after a meeting on February 1933, but key magnates were missing and the rest had nothing to say or discuss: Hitler just described what he was about to do, argued why it would benefit them and requested their monetary support.
It is worth noting that IG Farben, a name now immediately associated with the regime, was a supporter of Stresemann’s diplomacy. The German industrial class endorsed internationalism and free trade and was satisfied by the Weimar Republic in this regard. The Reich would not please them with its import and raw materials restrictions, export levy and severe expansion of bureaucratic burdens.

What the regime could satisfy was their conservative internal agenda. Industrialists were anti-communist, wished to run their factories as they saw fit and despised the Weimar Republic’s welfare state and strong state unions. Hitler did not disappoint: as part of his seizure of power (Machtergreifung), communists and social democrats were wiped out of the political scene, unions were dismantled and a state of labour demobilization achieved. Bargaining power shifted towards employers and this was cemented by the national labour law of 1934. Firms were free to manage their internal affairs. The concepts of Fuehrertum and Unternehmertum (entrepreneurial leadership) blended well.
This doesn’t mean there wasn’t any programme for employees. Regional trustees of labour (Treuhaender der Arbeit) were set up to mediate workplace conflicts. The NSDAP had its own labour movement, the NSBO, but as it was too radical it got sidelined. What gained prominence was Robert Ley’s German Labour Front (DAF), a large, self-supporting organization like the RNS. It was distinct from the Labour Ministry. The DAF ran the famous Kraft durch Freude, took measures to improve working conditions and was part of the funding for programs such as what would become the VW Beetle. I’ll write of the Beetle and living standards in general later.

Wages were suppressed at their 1933 level, with any increases negotiated through the trustees. This seems like a strongly pro-business move as 1933 wages were lower than pre-Depression values, but prices, too, had lowered and the Depression wasn’t a boon for businessmen. Prices, too, were eventually suppressed, but as demand rose they grew faster than wages. Combined with the absence of foreign competition enforced by the import system, firms made healthy profits. Worker incomes also increased but not as much.
Rather than personal consumption, the profits were mostly accumulated and reinvested. The Reich sought to direct household savings to banks and then to its own funding, while industries would fund their expansion with their own profits. Shareholders were forbidden from receiving more than 6% of the capital, leading to companies piling up massive reserves. And the Reichsbank’s oversight expanded while new legislation limited the provision of loans. Companies were thus obstructed from the banks and led to use the reserves for their investment.

Bernd 07/18/2019 (Thu) 02:30:41 [Preview] No.28068 del
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A hierarchy was set up. At the top was the Ministry of Economic Affairs (RWM), and then Reich Groups, Business Groups, Branch Groups and the firms themselves, whose participation was compulsory. The Groups were staffed by men suggested by the industry and vetted at the top. Standardized book-keeping and compulsory reports produced a lot of statistics now useful for historians. Like the RNS, guidelines and recommendations for production methods were distributed. And this bureaucracy was part of the trade system, providing staff for the import supervisory agencies and managing the export subsidy tax.
New regulations were inspired in measures taken in the Great War and ideas discussed since the 20s. But now the state was more powerful and independent than ever before. Bureaucrats no longer faced the formula “technically right but politically impossible”.
Cartelization was encouraged. It was already happening for decades, forming giants, but industries like printing were still divided among thousands of local producers. The pace of consolidation heightened and the RWM even imposed a few compulsory cartels. Cartels set prices and could pursue independent firms in court to enforce them.
Foreign investors –American, British, Dutch and Luxembourgish- could succeed if they cooperated with the state, but sending back profits was difficult.
Jewish-owned companies gradually passed to gentile hands as part of “Aryanisation”, but only in some sectors like retail, textiles and private banking Jewish presence was strong enough to mean a major change in ownership.
Synthetic production useful for autarky was expanded under state guidance. Typically funding would come from half-coerced industries, the state would block non-synthetic foreign competition, guarantee a modest rate of profit for the company involved and keep the rest of the income. Later on it’d provide funding of its own and direct more resources through the Four Year Plan.

In banking, the “Great Banks” (Deutsche, Dresdner and Commerzbank) never fully recovered from the Depression and made profit, but not as much as other businesses.
In electricity, the market was shared (“Elektrofrieden”) between the RWE in the west and 3 state holdings. They competed with local producers, which were taken over by local NSDAP organizations. Those were in turn outmaneuvered, with the sector consolidated and the RWM given powers of oversight.
The steel sector had a number of powers. Vestag and Krupp should be familiar but five others are cited. They had different niches and political proclivities, some old guard conservatives and others fascist reformists. They fared well, Krupp reviving its military shipbuilding at the Germaniawerft (kept afloat specifically expecting a future rearmament) and Vestag landing positions in the industrial bureaucracy. Along with coal, production didn’t grow as much as one would expect for fears of overinvestment, which had previously happened in the Great War. The Reich technologically excelled at cutting-edge electrically melted steel. A curious figure is Walter Rohland, who besides an industrialist served in the 11th Panzer Regiment to have first-hand experience of what he was producing.
Textile industries were losers in the 30s, but received attention in a drive to replace American cotton with synthetic fibers. Four regional syndicates were set up and textile producers, some voluntarily and some under pressure, provided capital for IG Farben and Vereinigte Glanztofffabriken (VGF) to produce rayon.

Bernd 07/18/2019 (Thu) 02:31:27 [Preview] No.28069 del
In chemistry, IG Farben stood out. Hydrocarbons are versatile and the company was the key to sourcing more and more things out of Germany’s plentiful coal. It and its predecessors had a long-term plan in the field of coal to fuel conversion: since the 20s it used profits from explosives, fertilizer and other sectors to fund research into coal hydrogenation, betting on a future shortage of oil. The gamble failed when new fields were found in Venezuela and the USA, bringing fuel prices far below the expensive price of any advanced synthetic alternative. With all its other businesses IG Farben would have prospered under any regime, but the Nazi autarky drive gave it a way to save this specific investment in coal hydrogenation. They reached a deal: with funding from the coal industry, IG Farben would expand its Leuna plant (working since 1928) and the Reich would tax imported oil, guarantee a 5% profit and keep any further profit. 5% seemed great when the technology was a gamble, but with Germany’s oil shortage production turned out great shortages and IG Farben regretted it. Leuna only produced 350,000 tons per anuum; more plants were built and synthetic fuel came to play an important role.
In the Four Year Plan it also led the production of synthetic rubber (Buna), a more recent technology that was still experimental by the mid 30s.

Overall Nazi rule was just a new reality German industry had to live with and it had several displeasures to quietly tolerate. But it adapted to the situation and found ways to gain handily from it.

Bernd 07/18/2019 (Thu) 02:34:27 [Preview] No.28070 del
*production turned out great profits

Bernd 07/18/2019 (Thu) 03:53:02 [Preview] No.28072 del
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anonymous delivers

Bernd 07/18/2019 (Thu) 05:44:13 [Preview] No.28074 del
In this particular post of mine here: >>28051 no, my point wasn't related to planned economy, it was related to you're being full of shit when implying/saying only one value exist. I tried to say this nicer here >>28053 but you didn't uderstand.

But you also mix up two things. The critique of planned economy about the "inefficient resource distribution: surplus and shortage" and the "socialist calculation debate" (quoted from Wikipee).
Whataboutism incoming:
Shortage and surplus problem also exist in market economies, the "market" just "corrects" it with changing price. But it doesn't solves the problem.
If there is less goods on the market than needed some people won't satisfy their needs because they can't no matter how high the prices will go. If there is not enough bread people will die of hunger easily. Poor people because the rich can buy it still and will buy up everything causing more shortage.
If there is more goods in the market it doesn't matter if the price goes down the goods will be wasted - not on the side of the seller, granted, but at those who buy it because they really don't need it (just buy it because it's cheap) so it won't be used efficiently. I can buy two loafs of bread but if I can eat only one in a given time the other will dry out or worse gets moldy and I have to throw it out. Or I eat double but then I just get fat.
How any of these two solves the problem of shortage and surplus? It's don't.

Bernd 07/18/2019 (Thu) 05:47:51 [Preview] No.28075 del
The shortage problem seems to be solved only by our age and place's overabundance, where no serious shortages occur at least in the part of the world where I live in and in the "West". But it is solved with wastage, we have waaayy more goods than what we need.

Bernd 07/18/2019 (Thu) 13:59:12 [Preview] No.28076 del
>If there is less goods on the market than needed some people won't satisfy their needs because they can't no matter how high the prices will go.
In the short term high prices stimulate production. In the long term our present state of abundance can be achieved, an impossibility in a planned economy.
>those who buy it because they really don't need it
Well, with low prices production will decrease. Consumers have decreasing marginal gains and may not buy the bread at all. But if they want to buy more bread and there is bread then that's a success. That they don't consume it in a way we find proper is our judgement.
>How any of these two solves the problem of shortage and surplus?
For one thing, they don't create the new problems of shortages and surplus introduced by price setting. Impose price controls on a normal market economy and you'll find shortages caused by a problem with that measure itself. This is well documented and understood, it happened with meat and dairy in Germany and it's happening right now in Venezuela with farmers not selling goods because legal prices are too low. It happens in market economies with price controls and planned economies are no better. They won't work just fine. In this regard playing within "capitalism's ruleset" is the wisest thing to do.

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