Probably the most important and most controversial question we face in the interpretation of Hitler’s economic concepts is the one about the relationship between market economy and planned economy elements in his thinking. Turner has advanced the thesis that Hitler had ‘taken the liberal principle of competition as the foundation for his views of domestic business matters’. He points to the connection between Hitler’s fundamental socio-Darwinistic convictions and his affirmation of the economic principle of competition. According to Turner, Hitler had regarded free enterprise as being a special case of the fundamental socio Darwinistic principle, according to which life is a constant battle in which the more competent and the more capable survive.

Barkai disagreed with Turner’s interpretation and advocated the theory that the most outstanding characteristic of Hitler’s concept was his ‘extreme anti-liberalism, the fundamental rejection of the laissez faire principle of the unrestricted free market economy initiative of the entrepreneur’. Hitler had not rejected competition as a matter of principle, but he wanted, suggested Barkai, to ‘unconditionally subject the individual free play of forces in the economy to the authority of the “national community” and the state’. The attempt to reconcile these two opposites was one of the most outstanding traits of the National Socialist economic concept. While Barkai does succeed with his convincing arguments in casting doubt on Turner’s interpretation, he is only partially successful in proving his own. Barkai attempts to explain the weakness of his line of reasoning by claiming that Hitler had hardly expressed his views on these matters in public speeches or articles because he believed it would have been a tactical mistake to attract the hostility of the entrepreneurial class. While this is quite correct, we intend to show that Barkai’s theory – that his conviction of the necessity of ‘restriction of competition by the state’ and ‘state control of the economy’ stood at the centre of Hitler’s thinking – can be proved far more conclusively if we draw on numerous statements by Hitler which Barkai has not taken into consideration or mentioned.

While we agree with Barkai’s thesis, this does not mean that Turner’s interpretation is completely wrong, because he expressly only refers to Hitler’s position on the economy and society before 1933. In fact, to a certain extent we can only speculate on Hitler’s true position before 1933, because Hitler – as Barkai rightly points out – kept his plans strictly secret, primarily in order not to offend the businessmen. In his talks with Wagener, the chief of the economic policy section of the NSDAP, Hitler underlined the importance of keeping his economic plans secret time and again. In September 1931, for example, he said:

The conclusion from this is what I have said all along, that this idea is not to become a subject for propaganda, or even for any sort of discussion, except within the innermost study group. It can only be implemented in any case when we hold political power in our hands. And even then we will have as opponents, besides the Jews, all of private industry, particularly heavy industry, as well as the medium and large landholders, and naturally the banks.

In the spring of 1932 Hitler explained to Wagener that, while he was a socialist, at the moment he had to show consideration ‘for the men in business for political reasons’. He was against a publication of the party’s economic clans because ‘there only has to be one word in there which is not correct or can be falsely interpreted. All of our enemies will then seize upon that word, and will then not only drag your publication, but our whole party and all of its objectives, down into the dirt.’ Time and again Hitler expressly insisted that ‘for the time being all of these thoughts and problems are not to be discussed outside of a certain circle’.

In a conversation between Hitler and Wagener which took place in the autumn of 1930 the latter said:

The economic self-administration structure I have recommended, and the control of the economy by the state which it makes possible, will bring these things [the over-expansion of export and the neglect of domestic food production – R.Z.] back into order automatically. I shall be curious to see when the first big industrialist will come to you and start ranting against this structure and against a planned economy – as they call this – and in the final analysis against me.

Hitler replied:

That is why it is good that we decide these questions before we get into disputes with these people. And it is also appropriate that we keep our plans secret until we are sitting in the government. Otherwise they too [i.e. big capital – R.Z.] will set the whole horde of uncomprehending industrial workers on us beforehand and we will never gain power.

This conversation between Hitler and Wagener shows that it was precisely those plans aimed at state control of the economy that Hitler wanted to keep secret at all costs before the seizure of power. In a later conversation Hitler accused Wagener of underestimating the political power of the business leaders:

You are underestimating the political power of these men, Wagener, and of business in general. I have the feeling that we will not be able to conquer the Wilhelmstraße against them [i.e. the Reichs Chancellory, located in Wilhelmstraße in Berlin – H.B.]. As much as I therefore consider your plans, which are also my plans, to be correct and necessary, to the same degree it appears to be necessary to hold back these plans completely until we are firmly seated in the Wilhelmstraße and until we have at least two-thirds of the German people firmly behind us.

This is the reason why it is indeed difficult to determine Hitler’s position on free enterprise or planned economy before 1933. One of the few sources which provide information about Hitler’s economic concepts before 1933 is the notes made by Wagener, who had many talks with Hitler about economic problems. Wagener’s overall impression here was that ‘he [Hitler] was obviously of two minds about this ... He was a socialist and deliberately so. But in his attachment to nature he was constantly able to observe the fight for existence, the struggle to defeat the other one, and to recognize this as a natural law.’ With Hitler we therefore concurrently find both elements of a planned economy as well as ones which emphasize the principles of competition and selection. In a conversation with Wagener, for example, Hitler said, ‘That is what I keep saying, right from the start there is a lack of leadership in business, a lack of planning! Yes, there is even the lack of any consideration of this, the will to even think about it.’ In another conversation he attempted to reconcile the principle of state control with the independence of business:

If, for example, industrial companies were to decide from a higher insight no longer to compete with each other but to form a community of interests, then each company in itself would remain independent. It would only be integrated into the community production-wise and sales-wise according to a higher plan and according to points of view of common sense and profitability. It will therefore have to relinquish some part of its sovereignty in the interest of the whole, and thereby also in its own interest.

As he declared in early 1931, Hitler was looking for a ‘synthesis’ which would lead to a ‘radical removal of all the bad results of industrialization and unrestricted economic liberalism’. On another occasion he told Wagener that

The liberalism of the industrial nations, the insistence on freedom and self-control over property and jobs on the part of the entrepreneurs has turned into its opposite! Now only the big ones benefit from liberalism any longer, the mass has sunk down to become their servants and to become slaves. Even in the organizations and chambers of the democracies, business sense reigns supreme, the owners of private capital, the big industrial magnates, the trusts, rule the state.

All of these statements are expressions of a critical position towards economic liberalism. Hitler believed that unrestricted economic liberalism had become outdated and had to be replaced by a new economic system. ‘We are living in the middle of a turnabout, which is leading from individualism and economic liberalism to socialism,’ he said to Wagener in June 1930.

On the other hand, Hitler was a convinced socio-Darwinist: ‘In all of life anywhere, only a selection process will always be decisive. With animals, with plants, everywhere we look, the stronger, the better, will basically always impose itself.’

Hitler’s main intention was obviously to reconcile the advantages of the principles of competition and selection (in the socio-Darwinistic sense) of economic liberalism with the advantages of a state-controlled economy. While the state was to direct the economy according to the principle ‘common interest before self-interest’ and to set the objectives, within this framework the principle of competition was not to be abolished, because in Hitler’s view it was an important mainspring for economic development and technical and industrial progress. What was important, however, was that Hitler did not share the beliefs of the advocates of ‘free trade’, according to which the common good would come about as a sort of automatic result of the play of the various self-interests. In a speech on 13 November 1930 he said:

In all of business, in all of life in fact, we will have to do away with the concept that the benefit to the individual is what is most important, and that from the self-interest of the individual the benefit to the whole is built up, therefore that it is the benefit to the individual which only makes up the benefit to the community at all. The opposite is true. The benefit to the community determines the benefit to the individual. The profit of the individual is only weighed out from the profit of the community ... If this principle is not accepted, then an egoism must necessarily develop which will destroy the community. When somebody says that the present age will not stand for such an uneconomic way of thinking, then we have to answer him, a way of thinking is either right or wrong. If it is right, then any age will stand for it, and if it is wrong, then it will be wrong for any age.

In Hitler’s view, therefore, the economic egoism of the individual and the principle of competition are important mainsprings of economic life, but they must be held in bounds by the state and not be allowed to unfold without restriction, because the common good does not result from the pursuit of special interests of the individual as the adherents of ‘free enterprise’ believe. With this the framework has been defined within which Hitler accepted private initiative.

In a speech at the Second Working Congress of the DAF on 16 May 1934, the two sides of Hitler’s thinking were clearly expressed. On the one hand, Hitler said, the free play of forces must be granted as broad and free a field as possible; on the other hand it must be emphasized that this play of forces had to remain within the framework of the given human communal necessity, in other words within the framework of the national community. In this speech it again becomes clear that Hitler was transferring his fundamental socio-Darwinistic convictions to the field of economics as well:

Free life is as natural as the battle out there in nature, which also does not have any compunctions and destroys many living beings, so that only what is healthy survives. If this principle were to be removed by nationalization, then the principles of civil administration would be applied to the structure of our whole economic life and we would experience a pitiful collapse. We cannot achieve any sort of human progress at all in a completely bureaucratic economy.

Hitler was therefore initially also sceptical of a planned economy, even though he believed in the need for state control of business. In a policy speech in the Reichstag on 21 May 1935 he declared that the task of making Germany economically independent could ‘only be solved by a planned economy’, and then added that this was

... a dangerous undertaking because any planned economy was followed all too easily by bureaucracy and therefore the stifling of eternally creative private initiative. And in the interest of our nation we cannot wish that, by an economy approaching Communism and the dulling effect on productive energy this entails, the total productive achievement of our existing labour force is reduced, and thereby the standard of living experiences, instead of an increase, all the greater a decrease. This danger is even increased by the fact that any planned economy all too easily abolishes, or at least restricts, the harsh laws of economic selection of the better and destruction of the weaker, in favour of a guarantee of even the most inferior average at the expense of higher ability, greater diligence and value, and therefore at the expense of the common good. If we decided to go this route despite these insights, then we did this under the most harsh constraints of necessity. What has been achieved in the last two and a half years in the areas of a planned provision of jobs, a planned regulation of the markets, a planned structuring of prices and wages, would have been considered to be completely impossible only a few short years ago.

Hitler’s reservations against a planned economy are therefore primarily an outcome of his socio-Darwinistic convictions. He feared that the elimination of free competition could remove a mainspring of business life. On the other hand, from his fundamental principle of the ‘primacy of polities’ and his concept of ‘the secondary role of the economy’ he derived the stringent demands of state control of business, because in the final analysis only state control would be able to enforce the state-defined common good against the private interests of the individual.

In view of the successes then achieved by the economic policies of the government, Hitler’s reservations against state planning of the economy gradually diminished. In addition, the requirements of rearmament and preparation for war, as well as the attempt to achieve the relative autarky this entailed, required as rational an economic structure as possible. In a speech on the occasion of a harvest festival Hitler looked back on the economic successes achieved since the seizure of power and attributed these to planned economy elements and state measures:

Certainly, and this is clear, we could not simply let things run on. Such a miracle would not have come about of itself. If Germany intends to live, then it must ... run its whole economy in a manner that is clear and planned ... We cannot manage without a plan. If we were to let things run on according to the principle everyone may do as he likes, then in a very short time this freedom would end up in a terrible famine. No, we have to conduct our business and run our economy according to plan ... Therefore the National Socialist government cannot be dependent on any individual interests. It cannot be dependent on the city or the country, not on workers and not on employers. It cannot be dependent on industry, on the crafts, on trade or on finance. It can only accept one obligation ... The nation alone is our master and we serve this nation to the best of our knowledge and belief.

How important Hitler considered the question of state-controlled planning of the economy to be can be seen from the fact that in August 1936 he personally wrote a ‘Memorandum on the Four-Year Plan 1936’. In this memorandum his admiration and fear of the Soviet system of planned economy were expressed:

‘The German economy, however, will learn to understand the new economic tasks, or it will prove itself to be incapable of continuing to survive in these modern times in which the Soviet state sets up a gigantic plan.’ As we shall see later, Hitler was convinced of the superiority of the Soviet planned economy system over the capitalist economic system. This must be regarded as an essential reason why he so vehemently demanded and enforced the extension of state control of the economy in Germany as well. This motive – namely Hitler’s fear, clearly expressed in his memorandum, that if the German economy kept its system of free enterprise ‘in these modern times in which the Soviet state sets up a gigantic plan’ it could no longer survive – has previously not been acknowledged by research.

At the culture meeting of the 1936 Reichsparteitag Hitler declared that ‘the free play of forces’ had now ended in politics as well as in business. In his opening proclamation he said that it was ‘a matter of course that the lack of restraints of a free economy had to be ended in favour of planned direction and planned action’. In this, the National Socialist leadership had always avoided exercising greater influence on business than absolutely necessary. Ahead of all other considerations had always stood the principle that the nation and business were not the slaves of capital, ‘but that capital is only a business tool and therefore also subjected to the higher necessity of preserving the nation’. Hitler then went on to set the objective that in four years’ time Germany must have become independent of other nations for all those materials

... which can somehow be provided by German ability, by our chemical and machine industries as well as our mines ... Maybe we will soon again be hearing the criticism from the mouths of the western democracies that we are now also no longer granting business the freedom to do as it likes, but are putting it into the strait-jacket of our state planning. But, my fellow national comrades, you must understand that this is not a matter of democracy or freedom, but of being or not being. The issue is not the freedom or profit of a few industrialists, but the life and the freedom of the German nation.

In his speech on 30 January 1937 on the fourth anniversary of the seizure of power, Hitler sharply attacked the idea of economic liberalism and expressed his conviction of the necessity of a state-controlled economy:

There is no economic concept or economic view which can claim to be gospel. What is decisive is the will to always assign business the role of servant of the people and capital the role of servant of business. National Socialism is, as we know, the sharpest opponent of the liberalistic point of view that business existed for capital and the people for business. We were therefore also determined from the very first day to break with the mistaken concept that business could lead an unbound, uncontrollable and unsupervised life within the state. A free economy, in other words one completely left to itself, can no longer exist today. Not only would this be politically intolerable, no, economically too, impossible conditions would result. Just as millions of individual people cannot structure or perform their work according to their own ideas or needs, so also business as a whole cannot act according to its own opinions or in the service of egoistic interests. Because today it too is no longer able to bear the consequences of a mistake all by itself. Modern economic development concentrates enormous masses of workers in certain types of jobs and in certain regions. New inventions or the loss of markets can destroy whole industries in one blow. The industrialist may be able to close the gates of his factory, he may even attempt to find a new field of activity for his drive to be active. In most cases he will not go under so readily, and, apart from that, here we are only dealing with a few individuals. But facing these there are hundreds of thousands of workers with their women and their children! Who will take them and who will care for them? The national community! Jawohl! It has to. But then it cannot be accepted that the national community is only burdened with the responsibility for the catastrophe of business, without having any influence on, and responsibility for the direction and the control of business by which the catastrophe could be avoided! My fellow members! When in 1932 to 1933 the German economy appeared to be finally heading for complete destruction, the following became even more clear to me than in earlier years: the salvation of our nation is not a problem of finance, but exclusively a problem of the use and employment of our existing working forces on the one hand and the utilization of existing land and natural resources on the other. It is therefore first and foremost a problem of organization. We are therefore also not dealing with phrases such as ‘freedom of the economy’; the issue is rather to give the workforce the possibility of a production and a productive activity by all available means. As long as business, in other words the sum total of our enterprises, is able to do this, all the better. But if it is no longer capable, then the national community, in other words in this case the state, is obliged to take care of the employment of the existing workforce for the purpose of a useful production, or to take the appropriate measures for this.

The crucial problem could only be solved by ‘a planned direction of our economy’ which found its ‘most powerful expression’ in the setting-up of the Four-Year Plan.

Such statements clearly show that Hitler was gradually giving up his initial scepticism towards a state controlled economy and formulating his criticism of the free enterprise system with growing sharpness and increasingly as a matter of principle. In Hitler’s view, the free play of forces in the market place in no way automatically resulted in a functioning, orderly and flourishing economy. This economic objective could only be achieved by means of state control of the economy. While Hitler continued to believe that a general nationalization of the means of production was not necessary in order to be able to organize total production rationally, on the other hand he threatened – openly or otherwise – nationalization as a possibility in case the free economy were not able to achieve the objectives the state had set.

On 20 February 1937, for example, at the opening of the International Automobile and Motorcycle Show, he said:

In one to two years we will be independent of foreign countries in our requirements for fuel and rubber ... And there must be no doubt, either the so-called free economy is able to solve these problems or it will not able to continue to exist as a free economy! The National Socialist state will not capitulate under any circumstances before the laziness, nor the lack of intelligence, nor the malice of the individual German.

The sentence that the free economy must either be able to solve the problems, or ‘it will not be able to continue to exist as a free economy’ was heavily emphasized in the newly published periodical Der Vierjahresplan [The Four-Year Plan – H.B.]. Hitler, as we shall see in the next chapter, was soon to prove that this threat was meant quite seriously.

On various occasions Hitler emphasized that there was no such thing in business as an untouchable dogma. Free enterprise was not gospel for him either. At the Reichsparteitag in 1937 he declared:

Business is one of the many functions in the life of the nation and can therefore only be organized and directed under considerations of expediency and never treated according to dogma. As a dogma there is neither a socialist economy nor a free economy, there is only a committed economy, in other words an economy which has the overall obligation of providing a nation with the highest and best living conditions. In as far as it fulfils this task without any direction from above, only out of the free play of forces, all the better, and above all very pleasant for the government. In as far as it is no longer able to fulfil its task as a free economy in some specific area, the leadership of the national community has the obligation to give the economy those directions which are necessary in the interest of the preservation of the whole. But when in one or the other area an economy is completely incapable of solving the great tasks it has been set, then the leadership of the national community will have to look for other ways and means with which to satisfy the requirements of the community.

The closing sentences again contain a threat which is only lightly veiled. With his oft-repeated thesis that there were no such thing as dogmas in the field of business, Hitler wanted to make it clear to the business leaders that they had to fulfil the tasks assigned to them by the state, or, should ‘the objective set’ not be reached ‘by these means, the nation itself will take over this work’. Hitler wanted to exploit the advantages of free trade, above all the principle of competition, as the mainspring for the constant growth of the economy but was very sceptical with regard to the possibility of achieving an optimal economic process without state control of business. This scepticism grew, probably based on various negative experiences, and therefore Hitler’s announcements or threats that, if private industry were incapable of fulfilling the tasks it had been set, other ways and means would be found to achieve the necessary objectives. In the speech in the Reichstag just cited, he also emphasized that Germany could not tolerate ‘every individual’ being ‘allowed to do what he likes’ in the field of business.

In Hitler’s view the requirements of rearmament in particular prohibited the taking of investment decisions primarily on the basis of personal capitalistic considerations of profitability. Hans Frank (Reichs Law Leader and Governor-General of Poland during the Second World War), for example, reports on a talk between Hitler and Mussolini during the visit to Italy in May 1938. Addressing himself to the problem of iron and steel production Hitler had said:

But if it should ever again come to war, then Germany’s iron and steel production stands prepared for the highest achievements. I am grubbing around in the soil of Germany and where I can find even as little as one thousand tonnes I dig them out. But a procedure such as this can only be done by a state which, like Italy or us, has made itself independent of capitalist methods, for whom the exploitation of national raw materials is only important from the point of view of earnings, in other words so-called profitability. But these raw materials must be gained one way or the other, because what must be important is not whether a capitalist can make money with them but whether the power of the national economy can be increased. This alone is the task, for which – naturally – only the possible degree to which the general welfare can be increased is at all important in the end.

Hitler attributed the success of National Socialist economic policy primarily to state control of the economy:

But this also required an organization of work which compelled everybody to put the interests of the whole ahead of his own. Here the National Socialist state imposed itself without compunction. Only thereby was it possible for us to install a unified leadership in our economy, which as a result produced those gigantic achievements which benefit the whole nation.

Hitler’s view that the positive results of NS economic policy are mainly to be attributed to state control of the economy is still shared today by some historians. Karl Hardach, for example, writes:

That the National Socialists were able to implement their extensive rearmament programme without any significant currency devaluation, or any significant reduction of the standard of living of the masses, was only possible because over the years – without following a preconceived plan – they had been able to convert what was left of the German free economy into a planned economy step by step.

The tendency towards bureaucracy which the establishment of the principles of a planned economy entail had also developed in Germany, said Hardach, but

... in many respects the system of the ‘tied economy’ need not shun a comparison with other economic systems of the day. By means of a partial planning and the continued application of the price mechanism as a means of directing the economy, the National Socialists hoped to achieve an harmonious relationship between the adaptability and the stability of the economy. Any running down of their time-consuming search for a new economic order, and the experimentation this required, as having been a senseless and unsystematic attempt to muddle through is a sign of a misapprehension of their intentions and objective possibilities. Rejection of and contempt for the political and social principles of the National Socialists should not make an analysis of their economic system which is free from emotions and prejudices impossible. They considered neither a centralized total planning following the Soviet example nor a free economy of the Western type to be appropriate, but without any dogmatic compunctions instead chose those economic-political instruments they felt would further the ends according to the needs.

The thesis that the gradual restrictions of the principles of free enterprise had taken place ‘without following any preconceived plan’ and that the National Socialists had undogmatically helped themselves to the instrument they considered to be useful from case to case could lead to the false conclusion that NS economic policy had been completely pragmatic and free of any ideology. But this is not the case at all. On the contrary, it is characterized by an inner logic by which economic reality was gradually revolutionary reshaped according to the principles of Hitler’s economic concepts. The establishment of a new economic system which, as Hardach himself correctly states, ‘was to be an alternative to capitalism and Communism, and meant neither free enterprise nor total planning’ was one of the most important objectives of the revolution Hitler intended.

On the other hand we must take into consideration that such an economic system had not been tried in practice before, any more than had Keynes’ theories and those of others which revolutionized economic theory. Therefore the practical experiences gained with this economic system in their turn influenced Hitler’s economic thinking, and he increasingly came to the conviction that the problems of business could only be solved by centralized planning and state intervention.

In a conversation with the Italian Minister of Justice Grandi on 25 November 1940, Hitler criticized the governments of the democracies: ‘They actually do no work but leave everything to civilian initiative and business. With this their problems are not only not solved but simply ignored.’ In table talks on 27/28 July 1941 Hitler said that ‘A sensible employment of the powers of a nation can only be achieved with a planned economy from above.’ About two weeks later he said: ‘As far as the planning of the economy is concerned, we are still very much at the beginning and I imagine it will be something wonderfully nice to build up an encompassing German and European economic order.’ The statement that as far as the planning of the economy was concerned one was still at the very beginning is important because it shows that Hitler was not thinking at all of a reduction of state intervention – not even for the time after the war – but, on the contrary, intended to expand the instruments of state control of the economy even further.

On 5 July 1942 Hitler expressed the opinion in a table talk that if the German economy had been able so far to deal with innumerable problems,

... this was also due in the end to the fact that the direction of the economy had gradually become more controlled by the state. Only thus had it been possible to enforce the overall national objective against the interests of individual groups. Even after the war we would not be able to renounce state control of the economy, because then every interest group would think exclusively of the fulfilment of its wishes.

Hitler’s view of the Soviet economic system apparently also changed from strong scepticism to admiration. As we have shown, we already find the beginnings of a positive view of the planned economy system of the USSR in Hitler’s memorandum on the Four-Year Plan 1936. On the other hand, in a conversation with Goebbels on 14 November 1939 for example, he still expresses himself very critically on the Soviet economic system, which he accuses of being over-centralized and bureaucratic and of stifling private initiative and efficiency. Less than three years later, in a table talk on 22 July 1942, Hitler vehemently defends the Soviet economic system and even the so-called ‘Stachanow System’, which it was ‘exceedingly stupid’ to ridicule:

One has to have unqualified respect for Stalin. In his way, the guy is quite a genius! His ideals such as Genghis Khan and so forth he knows very well, and his economic planning is so all-encompassing that it is only exceeded by our own Four-Year Plan. I have no doubts whatsoever that there have been no unemployed in the USSR, as opposed to capitalist countries such as the USA.

Until now research has not recognized that Hitler’s economic convictions, most notably his conviction concerning the superiority of a system of a planned over a free economy, were decisively shaped by his impressions of the superiority of the Soviet economic system. Hitler’s admiration for the Soviet system is also confirmed in the notes of Wilhelm Scheidt, who, as adjutant to Hitler’s ‘representative for military history’ Scherff and a member of the Führer Headquarters group, had close contact with Hitler and sometimes even took part in the ‘briefings’. Scheidt writes that Hitler underwent a ‘conversion to Bolshevism’. From Hitler’s remarks, he says, the following reactions could be derived: ‘Firstly, Hitler was enough of a materialist to be the first to recognize the enormous armament achievements of the USSR in the context of her strong, generous and all-encompassing economic organization.’ Hitler’s surprise, which also apparently struck Scheidt as well as the other members of the Führer Headquarters group in view of their impressions of the effectiveness of the Soviet economic system is expressed in Scheidt’s subsequent statements:

And, indeed, for any eye accustomed to European forms of economy, it was most compelling to see the differences that became apparent when one entered into Soviet territory. Even from an aircraft one observed the sudden change in the cultivation of the land. The many small fields that are characteristic for the European farmer disappeared and gave place to a wide-spaced but still rational division of land. The fertile plains of the Ukraine spread out in gigantic rectangles impossible to overlook, ordered and impeccably cultivated like a carpet of order and diligence, which could hardly be more impressively conceived. It was manifest that here something had been achieved and developed economically, with which the forms of western economies could not compete in the long run. This impression is confirmed by the detailed reports of agrarian experts. The same impression is repeated when inspecting even the destroyed industrial plants. Even from their ruins one could see that they had been equipped in the most modern fashion and had disposed a gigantic production capacity.

Scheidt writes that in view of such impressions Hitler had recognized and expressed ‘the inner relationship of his system with the so heatedly opposed Bolshevism’, whereby he had had to admit that ‘this system of the enemy was developed far more completely and straightforwardly. His enemy became his secret example.’ The ‘experience of Communist Russia’, particularly the impression of the alleged superiority of the Soviet economic system, had produced a strong reaction in Hitler and the circle of his faithful: ‘The other economic systems appeared not to be competitive in comparison.’ About the impression of the rational organization of farming in the USSR and the ‘gigantic industrial plants which gave eloquent testimony despite their destruction’, Hitler, says Scheidt, had been ‘enthusiastic’. As he admitted during a conversation with Mussolini on 22 April 1944, Hitler had become convinced: ‘Capitalism too had run its course, the nations were no longer willing to stand for it. The victors to survive would be Fascism, and National Socialism – maybe Bolshevism in the East.

Hitler’s Reichs Press Chief Otto Dietrich writes in his memoirs that Hitler had sensed that

... the economic requirements of human largearea development had outgrown the structure of the former self-regulating private capitalistic economic system and that common sense demanded a new, more efficient economic structure, in other words a planned overall management. The economic principle he was envisaging can be expressed as follows: private capital production based on a belief in the common good and under state control!

We must note, however, that in this Hitler sometimes played with the idea of calling the principle of private ownership into question and nationalizing important parts of industry – as we will show in the next chapter.

Speer reports that in the light of such tendencies, which were analogous to an actual development in which the influence of the state on business continued to grow, serious ‘ill humour’ began to spread among industrialists, including the representatives of the armaments industry, directed against the

... increasing spread of the power of the party machine on business. And, in fact, a sort of state socialism appeared to be gaining ground in the minds of numerous party functionaries ... Our system of controlling industry the war had caused, and which above all else had also shown itself to be very effective, was well suited to become the pattern for a state-controlled nationalized economic order, so that it was the industrialists themselves who by their improved results were, if you like, delivering tools for their own destruction into the hands of the party leaders.

This background information is required for us to understand the speech which Hitler gave on 26 June 1944 at the Obersalzberg to representatives of the armaments industry. Speer had expressly requested that Hitler allay these fears of the industrialists in a speech, whereupon Hitler asked Speer to give him some cues. Speer reports:

... I noted down for him that he should promise the representatives of industrial self-administration that they would receive help in the times of heavy crisis to be expected, furthermore that they would be protected against interference by local party authorities, and finally an emphatic avowal of the ‘invulnerability of the private ownership of the production plants’ even when these were temporarily moved underground as plants run by the state, free enterprise after the war, and a fundamental rejection of the nationalization of industry.

None of this was at all in line with Hitler’s true convictions. Nevertheless he saw the need to follow Speer’s advice and dispel the suspicions of the industrialists.

And indeed, in his speech we find several statements in which he rejects any nationalization of the means of production, declares his respect for private ownership and explains the economic principle of competition in terms of socio-Darwinism. Many of these statements are not to be taken seriously – even if they might have equated to some of his views in former years – because we know from Speer that the purely tactical objective of dispelling the suspicions of the industrialists was the overriding motive. And Hitler did not really succeed in presenting the assurances Speer had asked of him convincingly and credibly. Speer reports on his impression of Hitler’s speech: ‘In his speech, in which he kept to my cues, Hitler gave the impression of being inhibited. He made frequent slips of the tongue, stopped, broke off in mid-sentence, lacked fluidity of expression and occasionally confused himself.’ Speer also attributes this to Hitler’s state of exhaustion. What appears to be more important to us, however, was that Hitler had been compelled to state views which were far removed from his true convictions, and to give a speech which, in contrast to his custom, had partially been written by someone else. And, as Speer noted, Hitler immediately relativized his statements:

At first Hitler rejected any ideological reservations ‘because there can only be one dogma, and this dogma says in short, the right thing is the thing which is expedient’. With this he reinforced his pragmatic way of thinking and in the true sense took back all of the assurance given to industry.

In fact Hitler began his speech with the following:

... in the liberal state of yesteryear, business, in the final analysis, was the servant of capital, the people, in the opinion of many, a means for business. In the National Socialist state the people are the dominating factor, business a means in the service of the preservation of the people, capital a means of directing business ... In directing the fight for existence of a nation there can be only one dogma, namely to apply those means which lead to success. Any further dogma would be harmful. I would therefore not shrink back from anything if I knew that one or the other of these methods was failing.

This introduction by Hitler, as Speer rightly notes, was not at all appropriate for reassuring the industrialists. But only if looked at superficially is it an expression of ‘a pragmatic way of thinking’. In reality Hitler’s statement that there was no dogma in business, had, as we have already shown, more of the function of a warning that for him the system of free enterprise was also not gospel. When he then added that he would ‘not shrink back from anything’ if one or the other method were to fail, then this too was only a thinly veiled threat which made all of his subsequent avowals in favour of private ownership and against nationalization worthless.

Hitler went even further and told the industrialists that state control of the economy would continue after the end of the war in order to maintain a relative autarky for Germany:

This, gentlemen, is immediately an area where, in future as well, state control will have to intervene. It must intervene here from the vantage of a higher insight. It is an insanity to produce cartridges out of brass in times of peace and to know very well that after three months of war one then has to immediately convert to cartridges out of iron or steel, an insanity! But the brass cartridge is prettier, it is easier to manufacture and furthermore it is well introduced. This is where the task of state control begins, or where it receives its assignment, namely to assure that the higher insight of war is taken into account here.

In the end, the speech Hitler had given on Speer’s advice and which Speer had helped to formulate had a completely different result from what Speer had imagined. As Speer summarizes: ‘The avowal of a free economy in times of peace, which I had asked of Hitler and been promised, came out far less clearly than I had expected.’ Nonetheless, said Speer, some of the statements in the speech had been noteworthy, so he asked Hitler for permission to file it in the archives – which never came about because Bormann prevented it and Hitler remained evasive.1

Hitler himself was convinced, as he emphasized in his last radio address on 30 January 1945, ‘that the age of unrestricted economic liberalism had outlived itself.’ In his final dictations to Martin Bormann about one month later, he said in looking back: ‘The crisis of the thirties was only a crisis of growth, albeit of global proportions. Economic liberalism unveiled itself as having become an outdated formula.’

These statements of Hitler’s in 1935 to 1945, but particularly from the beginning of the 1940s on, show that he had become a vehement critic of the system of free enterprise and a confirmed adherent of the system of a planned, state-controlled economy. Basically, these convictions were logically derived from his thesis of ‘the secondary role of the economy’. If he hesitated from time to time to draw these conclusions, then this must certainly be attributed to his fundamental socio-Darwinistic position, which made him believe in the importance of the principle of competition in business. When his practical experiences, the difficulties with the economy on the one hand and the successes of the experiments with a planned economy on the other, showed him the possibilities of a state-controlled economy, then the step to becoming a convinced adherent of state control was only a short one and basically only consistent. This does not mean that Hitler gave up his convictions of the usefulness of competition in business which he derived from socio-Darwinism. This side of the question was by then, however, no longer essential for his economic thinking, but his conviction was that the system of economic liberalism had outlived itself and that the future belonged to the state-controlled, planned economy.

The example of Hitler’s views on the problem of ‘market versus plan’ is well suited to demonstrate the degree to which the premises of the dictator’s Weltanschauung were turned into reality. During the early years of National Socialist rule, as Barkai has written in his basic study The Economic System of National Socialism, state intervention in the economy was ‘incomparable to any other capitalist country, including Fascist Italy, as far as degree and depth is concerned’. In many aspects, the economic policy of the National Socialist was comparable to the recommendations of the ‘reformers’ among the economists, who during the world economic crisis had advocated the thesis that only an active stabilization policy could achieve the objective of reinstating full employment. But while most of the reformers saw their recommendations as being emergency measures of limited duration, and only defined them as being ‘initial charges’ after which the economy, once started again, could return to free market conditions, these theoretical economic instruments of the reformers in the hands of the National Socialists became ‘an ongoing economic and financial control of an economy being directed in the service of the “primacy of politics”’.

Slowly but surely all the sectors of the economy were subjugated to state control. The ‘New Plan’ set up in 1934 resulted in the complete and direct control of foreign trade. Every single import contract had to be approved by one of 25 ‘control authorities’ organized according to branches of industry. Only on the basis of this approval was the importer allocated the necessary foreign currency by the regional ‘foreign currency office’. For all practical purposes the ‘New Plan’ was nothing but an almost ‘total state monopoly of foreign trade’. While private ownership remained largely untouched, the state did create a comprehensive set of instruments for the direct control of investments. The control of raw materials in particular, which had been introduced in March 1933 and formalized by law in July 1934, was used for this purpose. The 28 ‘allocation offices’ also began to use the information they collected for the purpose of deciding on new construction or expansion of industrial plants. This power of confirmation and supervision was transferred to the Reichs Minister of Economics by the Decree to the Law on Compulsory Cartels of July 1933. With this, for all practical purposes, the whole of private investment activity was subjected to state control. Decrees were then issued prohibiting investments for whole industries, for example textiles, paper, cement and glass, but also for segments of heavy industry such as lead and pipes.

Within the framework of National Socialist economic theory, all of this was consistent:

In the context of a state-directed economic concept, the creation of capital and investments assume a central role. What was at first sensed more intuitively here, namely the importance of investment for the cyclical process of the economy, was soon able to see itself confirmed by modern economic theory, that such an important factor for employment and the balancing of the economy could not be left to the free initiative and the desire to invest of the entrepreneurs.

Wages and prices, which in the capitalist free enterprise system are left to the free play of forces of the market to regulate, were state-controlled in the Third Reich.

While there had already been a Reichs Price Commissioner in Germany since 1931, the creation of a new ‘Reichs Commissioner for Price Formation’ at the end of October 1936 was ‘more than just the reactivation of an already familiar institution under a new name. Under the Four-Year Plan it developed into a central control institution for economic policy.’ The duties of the Price Commissioner did not consist of merely ‘controlling’ and correcting market prices, but also of the ‘official formation of the price’. The assignment of labour was also state-controlled by means of various instruments and measures. A directive issued in 1936 within the framework of the Four-Year Plan, for example, required every company in the iron and metal industry and the building trade to train a certain number of apprentices as a means of reducing the lack of skilled workers. In summary we can note that the state created a comprehensive planning instrument and by a number of direct and indirect measures controlled the allocation of raw materials, investments, wages, prices and in part also consumption.

It would now be too one-sided, as both Petzina and Barkai have emphasized, to want to explain this policy of state control of the economy only by the necessities of rearmament. The thesis according to which the regime only created these instruments for the pragmatic purpose of an optimal realization of rearmament misapprehends the fact that, completely independently of this, it was a key objective of the National Socialists to establish an anti-liberal economic system and to abolish the economic system based on private capital. The restructuring of the economic order which had already begun in the early years of the Third Reich was pushed even further during the war. Within the system of the war economy, the state as the sole customer set the priorities, decided what was to be produced in its ‘central planning’ and allocated the raw materials, labour, energy and transport capacity.

For Hitler none of this was in any way an emergency measure only required because of rearmament and war, but rather a deliberately created instrument for the revolutionizing of the economic order and the establishment of a new economic system that was to be characterized by a synthesis between elements of free enterprise and state control, whereby the preponderance clearly lay on the aspect of state control which was to implement the ‘primacy of polities’.

The fact that a planned economy could be installed in Germany so quickly was predicated on a variety of factors. Politically the dictatorship was able to break all opposition, even from the side of industry. Barkai rightly emphasizes that

It is highly doubtful whether any democratic government of the day could have overcome the opposition by the business interests, which were organized into political pressure groups, in order to implement a uniform unorthodox economic policy, even if it had been able to bring itself to theoretically recognizing these necessities.

On the other hand, in German political science there was a long ‘étatistic’ tradition, which can be traced from Adam Müller and Friedrich List all the way to Werner Sombart. During the world economic crisis, which demonstrated in the eyes of many the failure of the capitalist system in view of the problem of full employment, concepts of a planned economy became popular. The Left, particularly the KPD, was critical of, or even opposed, the capitalist system anyway, and propagated the planned economy as an alternative to capitalist ‘anarchy of production’. But even economists like Werner Sombart proclaimed in presentations, articles and popular brochures that the future belonged to the planned economy.

Hitler was influenced by these concepts, which were widespread within the circles of the ‘conservative revolutionaries’. They agreed with the basic premises of his Weltanschauung, in which the freedom of the individual (which is cited by the exponents of economic liberalism as the legitimization for their system) had no intrinsic value but where everything had to submit itself to the ‘common good’, in other words to the interests of the nation as defined by the Führer. The practical successes achieved by the application of instruments of the planned economy then confirmed his economic concepts for him. By 1936 the number of unemployed could already be reduced from 5.6 to 1.6 million. At the same time the gross national product rose by more than 40 per cent and national per capita earnings by 46 per cent (compared to 1932). In 1943–44, when Speer was systematically extending the planning system under the war economy, German armaments production achieved a three-fold increase compared to 1941, and this despite the Allied air attacks.

For Hitler the surprisingly effective Soviet war production also appeared to confirm his thesis of the superiority of the planned over the free economy system. And when ideological premises, economic principles derived from these and the practical successes of an economic policy agree to such a degree, it would be mistaken to assume that after the war Hitler would have returned to the ‘old’ system of free enterprise. The opposite is true. Since the system of a planned economy was in complete agreement with the premises of Hitler’s Weltanschauung, and seemed itself to be extremely effective in practice, after the war Hitler would (as the industrialists quite rightly feared) not have chosen the path of a gradual reduction of state intervention, but would most probably have continued to extend this system consistently – and his statements indicate this.