The Vampire Economy

Chapter XV

PLANNING FOR WAR

“Not the military experts, but the Party leaders, decided the tempo of militarization and rearmament.”

MANY businessmen had nurtured the hope that the Army could be relied upon to prevent tyrannical abuse of power and that it would restore the traditional basis of bourgeois society—the sanctity of private property. This—when Hitler came to power—was the viewpoint of the political leader of the German conservative nationalists, Alfred Hugenberg, as well as of Dr. Hjalmar Schacht.

There naturally existed, and to a certain extent still exists, an important distinction between the Army and the Party. The Army was primarily an instrument for external war. German generals were patriots fond of their profession, who thought in terms of “serving the fatherland” and wanted to make practical use of the military power at their command for this purpose only. They were reluctant to apply their power to maintain order within Germany itself. They wanted to stand “above the parties” because they did not want to share responsibility for unpopular measures of the Government or of the Reichstag. They wanted Hitler and the Party to assure internal order so that they, the Army leaders, might better prepare the whole nation for external war. But fascist party leaders cannot be satisfied with playing a subsidiary role. Their controlling position cannot be maintained if they are reduced to the role of commanders of the police force. The leader of a totalitarian State cannot allow the Army to stand apart from the Party. The Party leaders must make it clear to the Army that the existence of the Army itself is dependent on the preservation of the Party regime, for a situation might well arise where the internal war front is even more important than the external war front. The Army must openly demonstrate its readiness to protect the regime—internally and externally. Army and Party troops—the S.S., S.A. and Gestapo—are sections of one Greater Army, both wearing the insignia of the Party and owing unconditional allegiance to the Party leader.

The widespread hope that the Army would restrain the dictatorship of the Party was an illusion. Two absolute powers cannot coexist in one totalitarian State. But there has been no complete victory either of the Party over the Army or of the Army over the Party; the armed forces of the Party—the S.S., S.A. and Gestapo—and the Army still exist as separate organizations. Hitler, the Party Leader, is in control of the Army. The commanders of the S.S. and S.A.—mere Party formations—do not control the Army, although the Gestapo keeps a close watch over the leaders of the Army. No Army man is allowed to be a member of the Party, while the Party’s military forces—the S.S., S.A., Gestapo and the ordinary police—are kept apart from the command of the Army. There still exists, however, a division of labor between the Army and the armed forces of the Party, with the major functions of the latter being the preservation of internal order, while the main function of the Army is the preparation of the country for wars against foreign powers.

There is no “conservative” army officer who did not welcome the open flouting of the Versailles Treaty and the strengthening of German militarism. But many military experts regarded with skepticism not only the armament policies of the Nazi regime, but also its return to the prewar style of army, based on general conscription.

A retired army officer, Major Soldau, former editor of the official army organ, Deutsche Wehr, wrote in 1933:

“I am strictly opposed to conscription. … A return to conscription means a step backward to the old system as contrasted with the new system represented by the army of today; it means disregarding the essential lessons of the World War and implies fatal ignorance of the political developments since the end of the war.” 1

Many leading army officers are extremely dissatisfied with Hitler’s armament policies as well as with his foreign policies, yet they do not see any chance of acting contrary to his wishes without such a breakdown of the system as would bury the whole structure of German militarism.

It is a common mistake to count the military strength of a State in terms of the number of planes ready to fly, the number of guns available at the moment a war starts, or the number of soldiers who can be put in uniform at a moment’s notice. Counting these factors only, Hitler’s armament policies have been exceedingly successful. There is no other country in the world—except the Soviet Union—with as large an army and as great an air fleet as Nazi Germany. But increase in armaments does not in itself mean a corresponding growth of military strength. It might be the decisive factor if there were a chance of winning a final victory in the first battle, a battle which would crush the adversary before he had a chance to mobilize his forces. Such a quick victory, however, would be possible only against a small country or against a big country in no way prepared for war. Under any other circumstances, a war cannot possibly be decided in a single battle. Other factors then become more decisive than the number of planes, guns and soldiers ready to fight on the day the next war is declared; these factors are the capacity for the production of all kinds of war materials in huge quantities and the production of sufficient consumption goods to prevent starvation. Particularly in a long war are these factors vital to the maintenance of morale.

Furthermore, the horrors of modern warfare make it more necessary than ever before that the soldiers and the people be firmly convinced that the war is unavoidable. From this point of view, the fascist philosophy does not promote the required war morale. The fascist philosophy, expressed by Mussolini himself, declares war to be something which is in itself desirable, regardless of the fact that complete destruction might be the final outcome of that war.

“All doctrines which postulate peace at all costs are incompatible with Fascism. Equally foreign to the spirit of Fascism—even if accepted as useful in meeting a special political situation—are all international or League superstructures which, as history shows, crumble to the ground whenever the heart of nations is deeply stirred by sentimental, idealistic or practical considerations. Fascism carries this anti-pacifist attitude into the life of the individual. ‘I don’t care a damn’—the proud motto of the fighting squad—is not only an act of philosophical stoicism; it … is evidence of a fighting spirit which accepts all risks.” 2

Hitler’s armament policies seem to follow the fatal example of the plans of the leading war strategist of the Kaiser’s army, von Schlieffen, who relied on a few “great decisive strokes” to insure an immediate and decisive victory.

“We learned that what Your Excellency aspired to was not partial successes, but great decisive blows. Your Excellency does not want a war which would be prolonged indefinitely until the power of one country is exhausted by the power of the other. You want great decisive strokes, and your goal was the destruction of the adversary. All forces should be directed toward that supreme goal, and the will which led you was the will for victory.” 3

Recent war experience and the development of war technique contradict the possibility of an army’s winning a quick victory against an adversary who can defend himself with the same means and tactics as those used by the aggressor.

“It is probable that a European war will start as a war of position. … This means a considerable weakening of the war strategy and war policies of the German State as a result of its geographical situation and its raw material dependence.” 4

Nobody can foresee how long a new European war will last. The hope that one short decisive battle might decide the whole war prevailed among German pre-War militarists who thought in terms of the Franco-Prussian War of 1870. German post-War strategists abandoned the hope of a quick and easy victory against another big power. This implied a change in the traditional conception of war preparations. It is no longer sufficient to have a few large armament plants and to store enough materials to satisfy the demands of a short war. A steady supply of raw materials and foodstuffs is as important as the existence of armament and gun factories.

Enough has been written about the probable character of the next large-scale war. Practical experience has shown that such a war would be “totalitarian” because the whole nation, all the economic forces of the country, would have to be mobilized for it. Such a vast mass of material and human beings will be needed that a country unable quickly to mobilize all its material and human forces for the purpose of war would be doomed to fail.

It seems as if a totalitarian State should be the ideal political regime for the preparation of totalitarian war, since it should be able to secure complete preparation of the entire social system for war. The fascist war preparations, however, have defeated their own ends. They have created tremendous armies and vast masses of war materials, but simultaneously there has been such strain on the whole economy, such an exhaustion of economic reserves, such a decline of the “morale of the people”—a factor as important as reserves of raw materials, guns or planes—as to make the State unable to stand the strain of a real totalitarian war for any length of time. It is even doubtful whether the most recent increases of army strength and of the number of planes, guns and the big naval program have not weakened rather than strengthened the military system, and whether further increases will not have similar adverse effects.

The real strength of the military system of a totalitarian regime has not yet been seriously tested. Therefore whatever may be claimed for it is open to doubt. There are, however, certain fundamental facts which modern militarism has to take into account. In the long run there is scarcely a single branch of industry that can be spared during a totalitarian war. One industry might be more important than another, and some industries might be superfluous if the war lasted only a few weeks or months. But a totalitarian war makes claims upon the entire economic structure. One missing link might bring the war machine to a standstill. Production of uniforms must continue during a war because the soldiers cannot march and fight in worn-out rags. Butter is no less important than guns—Goering to the contrary notwithstanding—for without butter the physical strength of the soldier breaks down and he will lack the fighting spirit and morale which will be more necessary than ever in the war of the future.

“In a totalitarian war, every State reaches its optimum of war power only by a balance between land, air and sea forces in accordance with the availability of supplies. … Decisions of the commander which result in an exhaustion of the available reserves before having achieved the purpose of the war have a decisive effect… .”5

The Nazi leaders have disregarded this aspect of armament. They have built up a large army and air fleet, but there has been no corresponding growth in the other parts of the economic system necessary for maintaining and supplying such a huge army and air fleet.

The armament policies of fascism, and especially of Hitler in Germany, have strengthened the military forces and certain branches of war production on so large a scale that the foreign world has wondered how such huge armament expenses could be undertaken without a financial breakdown. It did not see the impoverishment of the economy as a whole, nor the shrinkage of the economic reserves which are so essential for a totalitarian war. This latter factor is not so readily discernible as the impressive growth of the army and the air fleet.

Tremendous fortifications were erected in western and eastern Germany; new investments in ersatz production industries signalized the growth of economic preparations for war. But simultaneously Germany’s dependence on foreign raw materials has grown because raw material reserves have had to be used up without sufficient replacement, and because industries which do not directly produce munitions, but which are also essential for totalitarian warfare, have decayed.

The Army leaders were alarmed over the complete lack of gold and foreign currency reserves, for they appreciated the absolute necessity of Germany’s importing huge quantities of foreign materials in wartime in order to keep the war machine running and to avoid starvation of the people. An influential representative of the Army leadership wrote as an answer to declarations of Party leaders that a totalitarian State does not need gold:

“One cannot expect in another war that neutral, or even friendly, countries will send supplies which … cannot be paid for in gold, foreign currency or essential goods. Therefore, it may happen that gold will become the most important war material. From the point of view of war economy … limitation of the measures of self-sufficiency might become necessary.” 6

Last but not least—the morale of the people has suffered under the economic strain and under the militarization of the country in peacetime. The will to defend the Nazi fatherland has not grown with the increase in numbers of planes and guns and soldiers. All reports which indicate the trend of war morale in Germany—and the same applies to Italy—confirm the fact that it has declined, and that the increase in armaments has been achieved at the expense of the whole economic system, which has been made subservient to militarization and to the parasitic existence of the Party and State administration.

As a warning against the illusions raised by the selfsufficiency policy of the Nazi government, the organ of the Army Staff pointed to pre-War experiences:

“Full foodstuff independence was impossible before the war. We should have had to pay for such an attempt with heavy losses to our industrial world position. … Peace economy should be burdened as little as possible by economic preparations for war. The principal aim must be the formation of wealth, the creation of reserves. … Foodstuff independence in peacetime is no guarantee of foodstuff independence in wartime. … World economy has not undermined our safety, but it was one of the most important factors of our ability to resist during the World War.” 7

Nazi militarism might be compared to the athlete who overtrains one part of his body for some special purpose, disregarding the training of other parts. He might boast of the tremendous size of a few specially trained muscles and yet be unable to stand the strain of an effort involving his entire body.

The Nazi State has a tremendous air fleet. It is equipped with well-organized factories for mass production of planes. But other essential parts of the economy are weaker than at the beginning of the big armament program.

Armaments are by their very nature unproductive; at best, they are not used at all and become obsolete. In case of war, there will be a suddenly increased production and consumption of armaments. Capacity to increase this kind of production will be a decisive factor in military strength. Such production can be greatly expanded only if huge economic reserves exist. The greater the economic wealth of the nation, the more can be wasted—used up—in wartime. If, however, there is such a strain on the economy in peacetime that the necessary reserves needed for carrying on a totalitarian war cannot be built up, then the war preparations are jeopardized. This is a circumstance peculiar to the economic structure of the totalitarian states.

“Germany is far behind her capabilities, not because her working population works too little, but because so large a proportion is engaged in unproductive work, and in piling up overhead charges; because so large a proportion of her resources remains dormant or is misdirected without due reference to calculations of ultimate advantage; because her present economic situation is so little adapted to developing her real but latent powers.” 8

This picture resembles the development of German economy during the World War. A study of the economic trends in that period shows a close similarity to the economic development of Germany under the Nazi regime.

“Germany is spending about two billion marks a month on the war. About one-sixth of the national capital will thus have been spent by the end of the year. Whence do all these billions come? The shells are shot off, the guns are worn out, motors are used until they become old iron, the soldiers’ uniforms are worn into rags, and so forth. We work exclusively for the war, and a great part of the cost of war is covered by this work. For the rest we are living on capital. The first and chief cause is the fact that we are using up our stocks—the copper reserves in the home (urns, kitchen utensils, etc.) ... as well as the accumulated raw materials in the warehouses. Another cause, which also means a drawing on capital, consists in the fact that plants are worn out without immediate repairs being made. In peacetime the industrialist regularly writes off big sums for the depreciation of buildings, machinery and other assets, and then acquires new machinery to replace the old in order to avoid being faced in the end by the fact that his whole factory has been worn out. Such sums are, of course, still being written off the balance sheets; but the industrialist generally abstains from making the actual replacement purchase, either because he cannot obtain the necessary goods or because, in view of the fundamental changes in markets and prices, he wishes to wait and see what methods of production he will be able to use in the future. As private individuals, people save money in order to invest it in war loans, but in the economic sense, for the requirements of war, we are saving materials and labor which in peacetime would otherwise have been used in order to make good wear and tear. We are living on capital in order to finance the immediate needs of wartime economy.” 9

This is exactly what is happening in Germany today, although the country is not yet involved in another world war. The nation’s savings are used for unproductive expenditure to the detriment of consumption and investment for truly productive purposes.

These huge armament expenditures represent only one aspect of the inroads of the totalitarian State on the economic life of the country. There is still another aspect of State interference. Unforeseen economic difficulties are encountered which necessitate sudden changes in economic plans and state policies in order to satisfy the most urgent needs of the moment.

Yet the authoritarian State always pretends to act in accordance with a grandiose plan, in execution of a “program.” The character of the authoritarian State, however, makes it necessary to prevent its actions from appearing as the result of unforeseen developments or subject to the force of circumstances or emergency situations.

The rulers of a totalitarian State boast that their interference with the economic processes eliminates the effects of the business cycle. The State itself “manipulates economic laws.”

“We intend to manipulate economic laws ourselves in place of private interests and of Jews.… The Germans are no longer dependent on the restrictions and artificial speculation in a glutted market. The Germans are no longer the proletarians of world economy, but workers for Germany.” 10

Even though State policies are officially independent of the business cycle, the authoritarian rulers, like all others, must take into consideration basic economic facts. Whether or not they are willing to admit it, they must make concessions to economic conditions. The totalitarian State must always pretend that its Fuehrer or Duce cannot be mistaken, that he foresaw what would happen, that his power cannot be impaired by economic difficulties. Yet it would be virtually impossible to find a plan or scheme which substantiates these pretensions.

“Out of import restrictions there arose the system of State administration of raw materials with its system of purchasing and processing permits, and prohibitions against investment and use of raw materials; and out of the State control of raw materials there arose in turn the control of production, of investments and of consumption and the exact regimentation of the volume of labor to be employed for given purposes. The development of the twenty-eight control offices is particularly significant, for this machinery which at present is responsible for the direction of every economic process is a definite emergency measure. This also explains its complicated nature and its obscurities. It would be different if a planned economy of this kind had been deliberately aimed at. The freedom of business is restricted to such a degree that a paralysis of the economic forces is to be feared in the long run.” 11

When we search for a predominant plan in the Nazi economy, we see that apparently all individual activities are directed toward military preparation. It seems that the State is co-ordinating all State acts and private activities according to a single consideration: does it help to strengthen us from the military point of view?

Economic restrictions are officially justified by the claim of military necessity. In reality, the rearmament plan which the Army Staff worked out, important as it is, is not the sole guiding principle of the fascist State. Fascist State policies are largely designed to strengthen and to preserve the autocratic power of the Party leaders. Consequently, armament policies are largely influenced by the narrow interests of the fascist bureaucracy. This explains why the fascist regimes disregarded the plans and recommendations of their best military experts, compelling them to adapt or change their military plans according to the policies and interests of the authoritarian dictators.

German military experts never desired the peacetime autocratic rule of an unpopular bureaucracy. They did not approve of the State’s suppression of private initiative in economic life.

“As to industry, we should not forget that the Fuehrer has said: ‘The new State will not be and does not want to be an entrepreneur. Planned economy must be rejected from the point of view of rearmament.… We insist upon free initiative and full responsibility of the businessman in accordance with the general policy of the State.’”12

German military leaders wanted to prepare and equip the entire industrial machinery and to mobilize the whole people for war. They recognized the futility of having an inflated State-owned or State-subsidized industry for the production of airplanes or machine guns if other important branches of industry were to be allowed to deteriorate. The “conservative” Army leaders did not wish the State to abolish private enterprise in armament manufacture. They were afraid that such a measure would interfere with the balanced development of all industries necessary for a wartime economy and would thus hinder rather than aid the country’s preparation for a totalitarian war.

“State ownership of armaments industries … might be justified for Italy. It does not suit Germany. We want to mobilize the full strength of the highly developed German economy. The more peacetime industries can be put on a war footing, the more efficient will be the German war economy.

“We do not want to abolish the private initiative of the German businessman.” 13

The Army officers approved of a policy which would “direct” the private initiative of the entrepreneurs in such a way as to make their business conform to the interests of militarism. The German Army leadership rejected plans for a “corporate state” with “guilds” or corporations in control of production and prices. They supported Schacht’s endeavor to strengthen or reconsolidate the system of privately owned banks and industries.

The Party leaders, however, welcomed the necessity of extending the centralized administration because it put them in charge of a more powerful State bureaucracy. They needed quick successes in foreign policy in order to consolidate their autocratic power and to justify their suppression of individual rights and liberties. They thought that the difficulties arising from an intensification of the economic strain would enable them to extend their power in the direction of State capitalism. Not the military experts, but the Party leaders, decided the tempo of militarization and rearmament. They enforced a peacetime extension of the Army and of the air fleet which was out of proportion to the strength of the economic basis on which the Army and the air fleet had to rely.

Hitler’s foreign policy was greatly influenced by the internal condition of the Nazi party. The Party leaders undermined the position of defiant nationalist generals by a more rigid militarization than the militarists themselves had advocated. Their foreign policy created situations which made it necessary to prepare for another world war against the West, the East, or both. The creator of the German Reichswehr, von Seeckt, was fearful of another war in which German militarism might be cut off from foreign resources and might be completely isolated. He preferred to follow the policy of Bismarck rather than that of the Kaiser, trying to neutralize Russia in case of a conflict with the Western powers. Hitler’s aggressive foreign policy, however, compelled German militarism to change the militarization program; to prepare for another conflict in which Germany would be cut off from supplies from overseas as well as from Russia.

The more unstable the economic system becomes, the greater is the necessity for a repressive leadership and State bureaucracy. It has to whip up the militancy of its Party members, and raise the prestige of the Leader. It orders Party actions, the economic effects of which cannot be foreseen by businessmen.