The Vampire Economy

Chapter I

WHAT HAPPENED TO THE BUSINESSMAN

“The role of the individual businessman has been completely altered in the totalitarian States, and his position cannot be judged by American standards.”

BUSINESSMEN all over the world are dissatisfied and apprehensive. The depression has proved to be not only the most drastic and widespread in modern times, but also the most lasting. It can no longer be dismissed as a mere trough between waves of good times, as just, an unpleasant but passing phase of a business cycle. Economists and businessmen alike disagree as to what it portends and what measures should be taken to meet it—or whether, indeed, any governmental measures are helpful in the situation which faces us. While one school of thought demands increased activity from the State, another calls for a complete cessation of State economic activities and insists that private economy be permitted to work out a solution.

With the world still at the crossroads, one may well conclude that there is something to be learned from the experiences of businessmen in the two countries which, without abolishing private property, have gone farthest in State interference to insure national prosperity. In both Germany and Italy the problem of unemployment seemingly has been solved. The industries of both countries are running at full speed, demand apparently outstrips supply, labor unions have been abolished, and manufacturers have become authoritarian “leaders” of their employees. It is inevitable that American businessmen, harassed by what they regard as unreasonable government interference, finding a large part of their profits siphoned off by taxes, direct and indirect, confronted with what is apparently a shrinking market, worried by increasing competition, should examine critically, objectively, and even sympathetically, the situation in the totalitarian States.

What has been the result for the individual businessman in the two countries governed by administrations put in power by business interests and devoted to restoring economic prosperity?

What has the businessman gained in Germany? A great deal, if we may credit the headlines in the Voelkischer Beobachter, official newspaper of the Nazi party. There we read:

NO UNEMPLOYMENT—TREMENDOUS SUCCESS OF THE FOUR-YEAR PLAN—WORKERS WILLING TO WORK HARDER–CELEBRATING THE NEW WORK COMMUNITY—RISING SALES AND DIVIDENDS.

Beneath these headlines the reader will find many facts and figures designed to prove their truth, figures relating to the scarcity of workers, the increase in production, the rise in building activity, the rise in profits. These figures, upon analysis, prove to be largely correct so far as they go, but it is apparent that they tell merely part of the story. They do not reveal how Germany’s new prosperity is distributed—whether it is shared by all industries or by only a few, and whether it is confined to a comparatively few large units. The figures do not show what happens to the profits, how large a proportion of them are absorbed by taxes, nor what the businessman is permitted to do with the portion that is left to him. They give little hint of the extent to which the government intervenes in every business transaction. They do not reveal whether the individual businessman is permitted to raise his prices if his costs advance nor whether he is allowed to shut down a department or even an entire factory, the operation of which is proving unprofitable.

We cannot be satisfied merely with official statistics and reports, nor with fragmentary comments. We must penetrate the mystery arising out of contradictory facts—an industrial boom coupled with increasing bureaucratic intervention, a mounting accumulation of State debts in order that the State may maintain its position as the consumer of the largest part of the nation’s production.

The answer to this problem cannot be a simple one; it will be found in the pages of this book. It must be understood, however, that the role of the individual businessman has been completely altered in the totalitarian states, and his position cannot be judged by American standards. The reader must try to put himself in the place of the German or Italian businessman in order to understand the latter’s problems and his new position. As a general introduction to the subject and as a means of approaching it from a sympathetic point of view, we cannot do better than read a letter written by a responsible German businessman during a visit to a neighboring country where he was free from censorship. The communication might be almost as appropriate if it came from an Italian industrialist, for there is little difference, so far as the individual is concerned, between conditions in the two totalitarian countries.

This man’s letter expresses worries and fears unknown to the businessman in America. He writes:

Dear Mr. X. Y.:

This letter will probably be a disappointment to you, but I must confess that I think as most German businessmen do who today fear National Socialism as much as they did Communism in 1932. But there is a distinction. In 1932, the fear of Communism was a phantom; today National Socialism is a terrible reality. Business friends of mine are convinced that it will be the turn of the “white Jews” (which means us, Aryan businessmen) after the Jews have been expropriated. Just when this will happen and the extent to which “Aryan” businessmen will be pillaged depends on the internal struggle within the Nazi party…

When we consider that Hitler himself came not from the ranks of organized labor, but from the ruined middle class or the fifth estate, what guarantee have we that he will not make common cause with the bandits whom he has put into uniforms? The difference between this and the Russian system is much less than you think, despite the fact that officially we are still independent businessmen.

You have no idea how far State control goes and how much power the Nazi representatives have over our work. The worst of it is that they are so ignorant. In this respect they certainly differ from the former Social-Democratic officials. These Nazi radicals think of nothing except “distributing the wealth.”

Some businessmen have even started studying Marxist theories, so that they will have a better understanding of the present economic system.

How can we possibly manage a firm according to business principles if it is impossible to make any predictions as to the prices at which goods are to be bought and sold? We are completely dependent on arbitrary Government decisions concerning quantity, quality and prices for foreign raw materials. There are so many different economic agreements with foreign countries, not to mention methods of payment, that no one can possibly understand them all. Nevertheless Government representatives are permanently at work in our offices, examining costs of production, profits, tax bills, etc.…

There is no elasticity of prices, sorely needed though it be by businessmen. While State representatives are busily engaged in investigating and interfering, our agents and salesmen are handicapped, because they never know whether or not a sale at a higher price will mean denunciation as a “profiteer” or “saboteur,” followed by a prison sentence.

You cannot imagine how taxation has increased. Yet everyone is afraid to complain about it. The new State loans are nothing but confiscation of private property, because no one believes that the Government will ever make repayment, nor even pay interest after the first few years. Compared with these new State loans, the bonds issued during the World War were gilt-edged investments.

We businessmen still make sufficient profit, sometimes even large profits, but we never know how much we are going to be able to keep…

Workers also make a fair living, particularly where the hourly rate has not been changed. A workingman who worked six hours a day before must now work eleven and twelve hours daily. Often his wife and children are also employed so that the family income has considerably increased.…

You will find it hard to understand that, although from the financial point of view we ought not to complain, no one enjoys life any more. Everywhere there is a growing undercurrent of bitterness. This feeling is worse now than it has ever been. Everyone has his doubts about the system, unless he is very young, very stupid or is bound to it by the privileges he enjoys. Therefore the real enthusiasm we experienced after the occupation of the Saar is no more and it cannot be revived. Even great historical events, such as the Anschluss of Austria and the Sudetenland, did nothing to lift this bitter spirit. Everywhere I hear businessmen declare that Anschluss with bankrupt concerns makes a bankrupt enterprise still more bankrupt.

All of us—even convinced Nazis—are hungry for news from abroad. Somehow British broadcasts seem better than the French, but perhaps that is only our imagination, because we know England’s attitude is decisive to us. An alliance with Italy is quite unimportant as compared to our relations with England. Most Germans feel that another war would be lost before it started if England as well as America were against us.

If a war should start, we should probably have a revolution in Germany very soon. The French Revolution will seem like nothing in comparison. A tremendous reservoir of hatred exists and it has no outlet at present. As in 1918, the workers will not start the revolution. It will begin with the army; young officers are as unpopular as they were in the old Prussian army. Personally I predict that there will be mass desertions. A good many people feel that the soldiers will start the revolution by massacring all the Nazis. In any case, our government is certainly not going to feel safe, and it is sure to introduce a reign of terror of Draconic proportions. Hatred and bitterness will increase just that much more.

There are terrible times coming. You can imagine how I feel when I think that I am going to have to go through this terrible debacle. If only I had succeeded in smuggling out $10,000 or even $5,000, I would leave Germany with my family…

The totalitarian state has fundamentally changed conditions of business life. In this book an attempt has been made to describe the experiences and to explain the anxieties of a businessman in a totalitarian State. We shall accompany him to various Party and State institutions. We shall try not merely to show how a private enterprise must be conducted in a State-regimented economy, but also how the fascist businessman is affected as a human being. We shall deal with the complexity of trends resulting from the existence of private economy side by side with State economy. In conclusion, we shall endeavor to arrive at an understanding of the new social position of the private capitalist in a totalitarian State and to give an evaluation of the historical role of the authoritarian bureaucracy.

The old type of capitalist who adheres to the traditional concepts of property rights is doomed to failure under fascism. The Voelkischer Beobachter predicts that “a new type of individual will arise in the economic field who will enjoy living dangerously and who by his individual efficiency will create freedom of economic action for himself.” We shall have to find out what this “new type” of capitalist is like.