NAZI ECONOMIC SYSTEM

Southland Times, Issue 23648, 25 October 1938, Page 6

NAZI ECONOMIC SYSTEM

Contrast With Great Britain SEEKING SOLUTION FOR GREAT PROBLEM The great industrial democracies of the West —America, Britain, France — are not yet sure that they have reversed the recession of 1937-38. In Great Britain, where the decline has been far less drastic than in America, there are also fewer definite signs of recovery. France is still struggling with the interlocking difficulties of prices, wages and foreign exchange. Even in the United States, where the upward trend has since June, become unmistakably clear, it is far too soon to say how long it will last. At the best, it will be some months before the democracies regain their economic self-confidence, writes Geoffrey Crowther in The New York Times. The dictator States (a dictator State has been defined as one where everything that is not forbidden is compulsory) have, of course, never lost their economic self-confidence. If they had, some dictators would be looking for jobs. In fact, there is a new note of boastfulness in the propaganda: Dictatorship, we are told, not only solves all questions of politics, it has solved the economic problem, too. While the democracies face the wasteful- miseries of unemployment, the dictatorships have an actual shortage of labour. It is a proud boast and an effective one; and there are many people in the democracies who are beginning to wonder if dictatorship does not possess some magic economic power to which democracy cannot hope to aspire. Let us examine the matter. Have the dictatorships—in particular, have the German Nazis—solved the economic problem ? Let us first be clear what we mean by the economic problem. Nowadays the man in the street would probably declare that unemployment was the only economic problem worth considering, and that even some sacrifice to the standard of living of the workers is worth while if it provides them all with jobs. But he did not always think so. A generation ago unemployment was an obscure and neglected paragraph of the economic textbooks. It was then taken for granted that the object of all economic effort was to improve the standard of living of the average man; unemployment was an unfortunate byproduct of progress. SOCIAL STABILITY Our fathers were undoubtedly wrong in ignoring unemployment; but we shall F- equally wrong if we ignore the standard of living. The economic problem is to provide the ordinary working man both with security against unemployment and the other evils of social instability and with a steadily rising standard of decent living. Only when a nation has solved both sides of the problem can it be satisfied with its economic policies. With this preliminary warning, let us examine the record. Let us select a democracy to set against NaA Germany for comparison. Of the large ,democracies, Great Britain is the most close-, ly comparable with Germany. There are, of course, enormous differences between the two countries. But in size, in the proportion of industry and agriculture, in their commercial place in the world —in the combination of factors that add up to a nation’s economic structure—they are the most comparable of the Great Powers. . When Herr Hitler was speaking to the Reichstag in February, just before the invasion of Austria, he treated his audience to two solid hours of statistics to illustrate the economic progress of Germany under his rule. Never before have so many figures been poured into so many ears on a single day. And they made, undeniably, an impressive record. Herr Hitler took as his starting point the year 1932. Now, that year happened to be the last of semi-democratic rule in Germany. But it was also the worst year of the depression. If Germany has recovered under Herr Hitler, America under Mr Roosevelt and Britain under the Conservative Gpvernm'ent of Messrs MacDonald, Baldwin and Chamberlain, at least a large part of the fact must be ascribed to the good fortune of these gentlemen in taking office at the bottom of the slump. And, obviously, the country that had the severest slump will show the largest recovery. If 1937 is compared with 1932; many of the indices of production can be shown to have risen more rapidly in. the United States than in Germany, solely because thej were lower at the beginning. But that does not prove that the policies of the New Deal were more soundly conceived than those of the Nazis. It proves only that the depression was worse in the United States than in Germany. COMP AR A?” YEARS So we must look for another basis of comparison, and the obvious one is the year 1929—the last year of prosperity roughly comparable to 1937. Herr Hitler can have no logical objection to such a basis. For his claim is that Nazi economics is superior to democratic economics. If there is anything in his claim, it ought to show on a comparison of the good Nazi year, 1937, with the good democratic year, 1529. Let us make the comparison between these two years, using the democratic economics of Great Britain as a comparative test. Here are some of the more important figures, showing increase or decrease of econcmic activity in the two countries in 1937 as compared with 1929:

On the score of mere industrial achievement, then, democracy can turn in as good a record as Nazi dictatorship—indeed, a slightly better record. Now let us turn to the specific issue of unemployment, upon which the Nazis base their strongest case. The official German figure of unemployment averaged 1,892,000 in 1929 and as much as 5,575,000 in 1932. In 1937, under the Nazis, it had fallen to as little as 912,000. The comparable British figures are 1,212,000 in 1929, 2,756,000 in 1932 and 1,413,000 in 1937. Thus, Germany’s 1937 unemployment was less than half the 1929 figure and less than one-sixth of the depression total. Unemployment in Great Britain, on th. other hand, was still, in 1937, onesixth higher than in 1929 and more than half the crisis figure. Moreover, while unemployment has been further reduced in Germany in 1938, it has been rising in Great Britain. At first glance, then, Nazi policies seem to have an advantage over democratic methods as a cure f • • unemployment. INCREASE IN WORKERS Second glances, however, give a rather different impression. To begin with, although unemployment in 1937

was greater relatively to 1929, in Britain than in Germany, so also, as the above table shows, was. employment. Part of the explanation lies in the fact that the employable population in Great Britain has been increasing rapidly in the past decade. But the major explanation is that the Nazis have discovered a way by which hundreds of thousands of men can be neither employed nor unemployed. The German standing army is from 600,000 to 700,000 men (at least) larger than it was before the Nazi era. In addition there are 300,000 men in the compulsory labour corps, and perhaps another 300,000 in the S. S., or Black Guards. The air force and navy have about 200,000 men between them, and there are several more scores of thousands of men kept busy in the various Brown Shirt formations, additional police, fortification buildings, and so on. There are thus at least 1,500,000 men in Germany today—and probably many more—who are not unemployed, but are equally not employed in useful industry. From the economic point of view, there is absolutely no difference between the soldiers or Brown Shirts or labour conscripts of Germany and the WPA workers of America. Both are being paid by the government tor doing work which, if it has any economic value at all, returns less than it costs. Indeed, the balance of economic benefit is clearly on the side cf the WPA. The population of Great Britain is about two-thirds that of Germany (excluding Austria which is omitted from all the figures of this article). If Britain had armed forces of two-thirds the German size, that is, of about 1,000,000, her unemployment figure of 1,773,000 might well be reduced to something very like the small figure of which the Nazis boast.

Figures of employment and unemployment, however, ignore the second vital side of the economic policy—the standard of living. How has that fared?

One way of answering that question is to take, for each’ country, the officially published index of wage rates and compare it with the official indices of the' cost of living. When that is done, it will be found that the real income (that it, income in terms of the goods and services it will buy) of the British working man rose between 1929 and 1937 by almost 11 per cent., while the real income of the German worker, on the showing of the official figures, fell by just over 2 per cent,

CONTRIBUTIONS FROM INCOMES

In point of fact, the comparison is even more striking than the official figures show. For the German index of wage rates takes no account of the numerous “voluntary” contributions which eat into a German worker’s income and have been estimated, at different times, to reduce it by as much as 10 per cent. Nor, to be fair, does it include the new services provided by the Nazis, such as Strength Through Joy cruises and the like; but it is highly improbable that these benefits offset the contributions levied. And, finally, an index of the cost of living can''’make no allowance for changes in the quality of the goods consumed. In Great Britain there has been a marked tendency in recent years for consumption of the better foods to increase, while consumption of the less nutritious variety has fallen off. In Germany, there has, by the testimony of all foreign and many German observers, been a noticeable deterioration in the quality of the food consumed. It is probable that the margin between the standards of living of the Englishman and the German has widened during the past decade by considerably more than the 13 per cent, shown by the official figures. In the final and comprehensive bal-ance-sheet, therefore, the democratic system of economics has nothing to fear from the totalitarian. If some' democracies do not show up very well, that is the fault of the precise policies they have adopted, or the misfortune of their geographical position in the world. It is no defect of democracy, since Great Britain, among the larger democracies, and the Scandinavian States among the small, have all shown that they can do at least as well as the Nazis. British industrial production has increased faster, on a fair comparison of years, than Germany’s. Britain’s total of employment has shown a bigger increase; and if unemployment has not been so spectacularly- reduced, that is chiefly because Britain has not hidden her unemployed in the armed forces. And, finally, Britain has achieved these results while the standard of living of her people has shown a steady increase. None of this is intended to disparage the striking successes that Nazi economic policy has achieved. None of it is intended to exalt the wisdom of British policy, which may have reached its results by good fortune •as much as good management. The Germans are fully entitled, if they wish, to prefer thensystem to ours. But there is no evidence whatever to support the claim that Nazi economics is in any way superior, to democratic economics, either in providing for the members of the community or in enabling them to earn the materials of the more abundant life. ....

GerGreat many Britain p.c. p.c. Industrial Production +16.9 + 22.7 Coal Output + 9.2 — 6.1 Electricity Generated +49.0 +122.5 Steel Production +18.3 + 19.2 I.'otor-car Production +89.9 +112.6 Employment + 3.0 + 12.4