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Old March 6th, 2008 #10
Alex Linder
Join Date: Nov 2003
Posts: 45,338
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Alex Linder

[From paper linked above]

The Nazi regime did not have any scruples to apply force and terror, if that was judged
useful to attain its aims. And in economic policy it did not abstain from numerous regulations and interventions in markets, in order to further rearmament and autarky as far as possible. Thus the regime, by promulgating Schacht's so-called "New Plan" in 1934, very much strengthened its influence on foreign exchange as well as on raw materials' allocation, in order to enforce state priorities. Wage-setting became a task of public officials, the capital market was reserved for state demand, a general price stop decreed in 1936. In addition state demand expanded without precedent. Between 1932 and 1938 it increased with an average annual rate of 26 per cent; its share in GNP exploded in these years from 13.6 to 30.5 per cent. As a consequence private consumption as well as exports were largely crowded out.

A major part of the rise of state demand was in the form of orders for manufacturing enterprises. Thus it could have appeared quite rational to the state authorities to create state firms for their execution. For in that case the state would have been able to save the large profits which in fact were paid to companies which engaged in the production for state demand. However, the state did not proceed along this path. There occurred hardly any nationalizations of formerly private firms during the Third Reich. In addition, there were not very many enterprises newly created as state-run firms either. The most spectacular exception to that rule was the Reichswerke Hermann Göring which was founded in 1937 for the exploitation of the German bad-quality iron ore deposits.

The main question treated in this paper is why was that the case. Why did the Nazi state refrain from widespread nationalization of industry, contrary to the Soviet Union which it is sometimes compared with? In view of the violence displayed by the regime otherwise it can be taken for certain that the reason was not any respect for private property as a fundamental human and civil right.

In the second part of the paper it is analysed whether private property of industrial companies in the Nazi economy, the formal existence of which is unanimously agreed on in the literature, was perhaps an empty shell without much significance to entrepreneurs, a proposition which is voiced quite often. In that case there would have been not such a great real difference between the Nazi economy and socialism. It is shown, however, that freedom of contract, that important corollary of private property rights, was as a rule not abolished during the Third Reich. In fact firms preserved a good deal of their autonomy even under the Nazi regime. Therefore the causes for the reluctance of the state in the Nazi period to encroach on private firm property are analysed in the third part. In conclusion we then will suggest a general characterization of the Nazi economy with respect to industry which accords to the results of this paper.