The Vampire Economy

Chapter XVII

A WORLD OF ABSURDITIES

“The fascist dictatorship grows stronger—internally and
externally—the more it increases the dangers against which
it pretends to protect the businessman.”

IN NAZI GERMANY there is no field of business activity in which the State does not interfere. In more or less detailed form it prescribes how the businessman may use capital which is still presumably his private property. And because of this, the German businessman has become a fatalist; he does not believe that the new rules will work out well, yet he knows that he cannot alter the course of events. He has been made the tool of a gigantic machine which he cannot direct. He looks at the rest of the capitalist world, hoping for help in winning back from the State his lost rights and freedom. But wherever he turns there are trends and changes of a similar, though milder, character, indicating that the totalitarian regime in Germany cannot be attributed to the madness of one man or to the self-interest of one ruling party; that it represents in caricature some of the fundamental phenomena in modern capitalism, which lead to more and more State interference and consequent usurpation of the businessman’s rights and privileges.

State Secretary Brinkmann summarized the lost rights of the German businessman as follows:

“You will call attention to the fact that the freedom of disposition of the entrepreneur in the sphere of commodity purchases is chained down by the system of supervisory boards and other regulations, that the utilization of labor is subject to various restrictions, that the wage ceiling and prohibition of price increases [Preis-Stop] force a price level which in a liberal economy would be impossible, that money intended for consumption is forcibly shifted to capital investment and the entrepreneur sees himself forced under State interference to make capital investments which he would never have made if he had been left to his own doing, that; money capital is enfeebled by the law for the Compulsory Investment of Surplus Dividends1 [Anleihestock] and is forced by the prohibition of private issues to offer itself at a cheap rate for purposes in which it is but little interested.

“And you will argue further that in the shadow of this governmental procedure, which you call economy of coercion, there is occurring under the eyes of the same state the very thing it wishes to prevent, namely, choking up of individual initiative by administrative activity, a burdening, perhaps even an overburdening, of the economic apparatus with dead costs; the impairment of a standard of living to be derived from a certain nominal income, due to rising taxes and monopoly prices; a still further expansion of the already great concerns, and death or dormancy among the small and medium-sized businesses.” 2

This frankness on the part of the former State Secretary is evidence that he is speaking of something which is the common experience and knowledge of any businessman in Germany.

That it is also the common experience of businessmen internationally, the Nazi leaders never fail to stress. They impress the German businessman with the international character of his own experiences and thus deprive him of any hope that the “good old days” will return. They increase his fatalistic point of view, directing his gaze to the rest of the world, so that he may see, once and for all, that he has no alternative, that he must accept the totalitarian State as the new form of society, as his destiny and inescapable future.

It is worth while to quote the German government’s spokesman again:

“It may be that other countries use different methods, and, indeed, in some cases in the Anglo-Saxon countries a word from a leading man often suffices for direction of business, while in Germany we still need law and regulation. We call a spade a spade and openly admit that in the National-Socialist State the primacy of general policy prevails. The parliamentary states come to practically the same result, but the governments there allow themselves to be empowered to undertake measures which are no longer in accordance with the principles of individualism and liberalism but which are in accordance with the principle of planned economy. But the interventions are, at least in substance, as similar to ours as one egg is to another. Or was it no great intervention of the state in business, when first England, then the United States, then France and finally about fifty countries devalued their currencies? … Great Britain, in order to counteract the credit withdrawals in 1931 and, by maintaining stable wages and prices, to revive domestic business activity through exports; the United States in order to force a decrease in domestic indebtedness and by a rise in prices to let loose the forces of revival; France in order to close the gap between domestic and foreign prices. We were not the founders of trade quotas for the purpose of isolation, nor were we the inventors of clearing agreements with their destructive result on commodity trade. Furthermore, was it not management of business when England went over to a protective tariff and signed the Ottawa Agreements, and were not the international production restrictions for tin, rubber, copper and other materials, as well as the formation of an association of the English coal mines and of the Manchester cotton spinners, a regulation of markets? Prohibition of private issues on the capital market was known in England and the United States before it was known in Germany, under reference to the national obligation of business, and forced interest reductions, before we ever carried out conversions. No matter where you look you will see: State economic leadership attempting by the granting of State orders, especially by utilization of armament programs, to maintain the level of business activity, attempting to make up for the inability or lack of desire of private business to make capital investments, attempting to finance these orders by tax revenues. You will see export management, export subsidies, the hindering of economically undesirable imports, and exertion of influence on the price level in one form or another right down to, and including, our prohibition of price increases. You see, not we alone have State economic leadership and restriction of freedom in business life, even though the form, name and degree in other countries may differ from ours.” 3

The representative of the German State bureaucracy makes it appear that State interference has increased less in Germany than abroad. This obvious misrepresentation of facts is a product of his effort to make palatable the very unpopular measures taken in Germany. Many businessmen in Germany would like to flee to a free country with their capital, to some part of the world where money power is still unrestricted and has an independent existence. But any attempt to do so is very risky. The new penal code in Germany provides the death penalty for any person caught trying to take money out of the country.

What position in society does the businessman have when he lives under a totalitarian regime from which he cannot escape? Many businessmen in Germany would answer this question with an anecdote which is very popular among them. It tells of two peasants who did not understand the difference between Bolshevism and National Socialism. One of them asked the other his opinion on the matter. The answer was:

“Under Bolshevism all your cows will be taken away from you because you are a kulak. Under National Socialism you are allowed to keep the cows; but the State takes all the milk, and you have the expense and labor of feeding them.”

In order that a capitalist may exercise his proper function, it is essential that he use his capital freely for his own personal advantage. But this principle is no longer valid in Germany. The State bureaucracy “directs” the use of capital “in the interests of the State.” The attitude of the businessman toward his loss of freedom, and what he thinks about the State’s diversion of capital to its own uses, is well illustrated by the story of the owner of a Westphalian machine-tool plant. In describing his experiences to a friend, this industrialist declared:

“I have a million marks to invest. If I could use this money as I please, I would buy gold. This I would put in a safe deposit vault where not even the Reichsbank president could touch it. The gold would earn no interest. I would lose possible profits. But I would be free of the constant fear of losing my capital. I would not have to worry about having to invest it where I can never be sure of its worth from day to day. But I cannot buy gold with my million marks. I must invest it as soon as possible, since if I leave it in my bank account too long, it may be confiscated by the tax controller, the Party may demand a large contribution, or the Party secretary may inform me that I am to be honored as the founder of a new enterprise for the unprofitable production of some ersatz product. Before I receive some such suggestion, I must make up my mind about the possibilities of investment. Two years ago I might have decided to buy a new house for my family, or to erect an apartment building. I would not have cared particularly whether there were tenants or not, inasmuch as I would at least have had some real property that could not be wiped out by inflation, and that would be at my free disposal. But today this is out of the question without a special permit from the State. The only way out seems to be to invest the money in extending my own plant.”

A few weeks later the manufacturer again met his friend and reported to him:

“New decrees forbid installation of machinery made of iron and steel, whenever ersatz materials can be used. I cannot get any new machinery for the next fifteen months. However, the State has taken care of my worries. I was ‘asked’ to build a huge refuge where valuables could be safely stored and workers accommodated during air raids. It will cost nearly 150,000 marks. Then our manufacturers’ association worked out several new machines for using ersatz materials. Replacement of my obsolete machines cost me 500,000 marks. Then the tax controller discovered I had liquid assets and found a ‘mistake’ in a tax return I made some years ago; I had to pay a fine of 350,000 marks. So I am relieved of the worry of how to invest my million marks.”

Nevertheless the State refuses to become the owner of industrial or distribution enterprises; it prefers to leave the difficulties of production to the private entrepreneur. But markets with price movements dependent mainly on the business cycle have been supplanted by markets dependent on State policies and on the whims of the commissars who carry them out. The markets as such, however, still exist. Private enterprises do not buy or sell goods as agents of the State; they still act on private calculation. The system thus is a strange mixture of State interference and planning combined with private management—an economic system which is neither competitive capitalism, nor the planned economy of state socialism nor state capitalism. It is so bewildering in its complexity that the capitalist no longer knows whether he is a capitalist or whether he has become a mere agent of the State.

The new system has, as its representative, a powerful bureaucracy which is not particularly interested in the defense of any system—except insofar as it contributes to the bureaucracy’s own absolute power. Capitalist enterprises are desirable and tolerated as long as their existence is compatible with and useful to the State bureaucracy.

This raises the question of the position in society of the State bureaucracy. Is it a dictatorship standing above and against all social classes? A comparison with the State which emerged from the Russian Revolution is relevant.

The fate of the proletarian revolution in Russia has aroused extensive discussion among socialists. Is the Soviet system a dictatorship of the workers or over the workers? This question cannot be answered categorically one way or the other. Even the early Soviets, which were democratically elected, had, on occasion, to suppress the individual rights and liberties of the workers who elected them. In emergency situations the individual worker had to be restricted for the sake of the common interest. Such a dictatorship is a dictatorship of as well as over the working class. But when the State bureaucracy degenerates and fosters certain interests of its own at the expense of the common interests of the citizens, then it becomes a dictatorship over and against the general class interest.

Similar questions might be raised in discussing the character of the fascist dictatorship. The fascist parties, which were originally largely financed and sponsored by influential capitalist groups, have also established dictatorships over and even against capitalist enterprise. However, it would probably be more accurate to describe the dictatorship of the fascist party as a dictatorship for and against capitalist enterprise.

Although defending a system of private property, the fascist State bureaucracy and all those whose existence is dependent on the absolute power of the totalitarian State must act in defense of their own interests even if this hurts the interests of all classes in society.

Many German capitalists who demonstratively show their devotion to the Fuehrer, secretly believe that fascism or National Socialism is “almost the same” or “just the same” as Bolshevism. Under both regimes the State bureaucracy is independent of any democratic institution; it is under the sole command of an authoritarian leadership.

In both countries the economic system is difficult to define because of its complexity. This is particularly true of fascism. Here the capitalists may feel that they are mere agents of a State which is building up a new anti-capitalist society. But it is easy to prove that fascism relies on capitalist economy. Capitalist owners or managers—so-called “leaders”—still try to enrich themselves by obtaining as much profit as possible. State regulations restrict their activities and they may disagree with State policies. Yet the fact that this clash of interests between the State and the capitalist still occurs is in itself proof that private property and the search for profit have not ceased to exist under fascism. Balance-sheets may reveal that dividends have increased, yet the amounts paid in taxes considerably exceed these profits. There is much planning, leading to more State interference in private enterprise, yet there is no national plan which abolishes private enterprise as such, except in the event of a wartime economy.

The present economic system under fascism or National Socialism escapes definition in a single term, such as “capitalist” or “socialist.” Two mutually contradictory systems exist side by side—the genesis of a planned economy and unplanned private enterprise.

Capitalism still exists, because private enterprise still owns as private property most of the means of production and distribution. But the State has already introduced measures typical of state socialism, such as national investment boards, state control of prices, banking, and foreign trade, general regimentation of business activities. These measures have not, however, been introduced on the basis of any new principle, but in order to maintain and increase the absolute power of the State.

The progress which state capitalism has made in fascist countries has created economic phenomena similar to those in Soviet Russia. In both cases the Five- and Four-Year Plans diverted capital funds into the army’s budget and into armament industries. At the end of the first Five-Year Plan in the U.S.S.R., just as at the end of the first Four-Year Plan in Nazi Germany, the onesided development of the armament industries led to a distressing shortage of consumption goods. For similar reasons both countries experienced a serious railway crisis; too little capital had been spent for repairs and extension.

Under both systems an inflationary increase of State credits and currency circulation took place, but the immediate effect of this process was not a general rise in prices; a number of State-regulated prices remained “stable” while other prices rose considerably and the quality of most goods declined. The peasants felt that they were being exploited and that the prices they received for agricultural products no longer made their production worthwhile. Consequently, they answered with “sabotage” of production for the market, while at the same time the State tried to compel the peasants to fulfill “their duty” and feed the towns. A new type of agrarian crisis had occurred, quite different from such crises under a competitive economy. The German peasants were not yet threatened with starvation, but they lost interest in producing for a State-regulated market.

This was also a feature of the agricultural crisis in the U.S.S.R. during the first Five-Year Plan, when the peasants received almost nothing in return for the grain they were forced to deliver to the State. In 1932-33, it was realized that some inducement must be given to the peasants. So they were allowed to sell in the free market any produce they might have left after delivering their quotas to the State. For a time two price systems existed side by side: a free market where shortage of foodstuffs led to excessively high prices, and the State shops where all workers and employees could buy their bread rations and a very few other necessities.

During this period there existed in addition “closed distributors” (shops where only those who have a special permit may buy) ranging from those for the highest functionaries where many articles could be bought at low prices, to those for the skilled workers where rations of meat and butter and a few other consumption goods were provided. In 1935 most of the “closed distributors” were abolished, bread prices were increased but bread ceased to be rationed, and all goods were sold freely to all citizens at prices lower than the previous free market prices, but much higher than the prices charged by the “closed distributors.” This change meant, in effect, that bread was no longer sold at artificially low prices in the towns, and that the income of the peasantry was increased—mainly at the expense of the workers. However, the major profit from the increased price of bread was retained by the State.

This is equally true of Nazi Germany where the State is playing a similar role. The Reich Nutrition Estate—a huge bureaucratic State organization—has completely replaced private grain dealers and has established a strict control over sales of most foodstuffs. State agencies buy grain at artificially low prices while the price for flour has been increased. The higher profit of the “distributor” State is largely spent by the administration for the huge costs of its bureaucratic machine. In Germany the Government has somewhat disguised the increased profit which it takes from producers and consumers by lowering the quality of the bread supplied. In addition, the Party bureaucracy endeavors to foster an artificial antagonism between town and country by telling the workers that the peasants are responsible for the poor supplies. When workers visit the villages they are astonished to find how little the peasants are, in fact, receiving, and both feel oppressed.

In Germany the peasants have not been “collectivized” and they therefore feel the more keenly the loss of their right and freedom to sell their products as they please. But a loosening of State control and a return to private marketing of agricultural products could be inaugurated only if the Government agreed to an increase of prices for these products.

Will the Nazi government have to make a change in its price policy similar to the new agrarian policy in the U.S.S.R.? This would mean granting higher prices to the agrarian producers, thereby encouraging them to supply the market. The inauguration of such a price policy does not depend merely on the Government’s will. When the second Five-Year Plan in Russia and the second Four-Year Plan in Nazi Germany were under discussion, a greater rate of increase in consumption goods was promised, but this promise was rendered largely inoperative by a further increase in armament production caused by the international armaments race. Consequently the second Five- and Four-Year Plans differed less from the first plans than originally intended. There are other features of State bureaucratic control of economic life which can be observed in both Soviet Russia and Nazi Germany.

Although there is no such clash between the State and the capitalists in the Soviet Union as in Nazi Germany, industrial managers in the Soviet Union also have experienced difficulties as a result of the tremendous growth of State bureaucracy, which compelled them to act on their own initiative, independent of, and even against, the decisions of that bureaucracy.

It seems to be a general characteristic of too extensive a State bureaucratic regulation of economic life that “middlemen” should appear who correct and change the “plan” and supplement the bureaucratic regimentation by private initiative. This also happened in Soviet Russia at the end of the first Five-Year Plan. There, only State enterprises existed; all directors of factories were mere State functionaries; bureaucratic decisions accorded with the “plan” but often not with real life.4

Further confusion was introduced by so-called “socialist competition,” which led to one factory competing against another for raw materials in the effort to “over-fulfill” its quota.

The economic system of this period in Soviet Russia represented a clash between theory and practice in all spheres. For example, according to the general plan, a factory was to be supplied with a certain quantity of raw materials and credits and was expected to fulfill a set production schedule. On paper, there was an effective control of the financial affairs of a State trust or factory, and each allotment of materials was calculated in advance at prices fixed by the State. Costs of production likewise had been calculated in advance. A credit plan had been fixed based on cost of raw materials, labor, new machinery, etc. The task of the director was to meet his production quota, or even to exceed it. But in practice the director had to try to fulfill this plan against odds which had been neither foreseen nor calculated. Most factories were unable to obtain on time the raw materials they were supposed to receive, and the quantities and qualities differed from the original specifications. Complaints were dealt with bureaucratically. A stoppage of production in one industrial plant led to the interruption of production in other dependent plants.

The director of a plant was often in an extremely difficult position. If he kept to the official rules and made his complaints in the prescribed way, the chances were that he would fail to get the raw materials he needed. He might also be short of food for the workers. Responsible for failure to fulfill the plan and unable to resign, he was compelled to develop sufficient “private initiative” to overcome the difficulties created by bureaucratic decisions and ineptitudes. It would seem that in such a state of regulated economy “private initiative” on the part of industrial leaders would cease, inasmuch as everything was planned and regulated by the State. In reality, however, the whole economic life would have come to a standstill had not the directors of industrial plants and trusts developed initiative in violation and circumvention of bureaucratic decisions and official rules. To carry on their business it was absolutely vital that they obtain materials with or without plan or provisions. A typical experience was reported to the author by a Communist who worked as the technical director of a new industrial combine in Caucasia. He was responsible for completing the construction of a new factory before the beginning of winter. But his building materials did not arrive in time despite dozens of complaints. Work had to stop. Workers received wages but did no work. The whole budget fixed by the Planning Commission was overthrown by the tremendous rise of unproductive costs. And worse than that, if the new plant could not be finished before winter set in, the half-finished work would be destroyed by the weather.

Finally he started out on his own to discover whether building materials might be found in his district. In a neighboring town he located building materials of the kind he needed. They had been stored many months for construction work planned for the coming year. He demanded that they be given to him in exchange for the materials he would receive too late for his needs. But it was impossible to obtain the necessary official permits for such an exchange. His work was delayed more and more. Finally he acted on his own initiative, but in agreement with the local Party secretary. The trucks which were at his disposal transported the building materials from the neighboring town to his work location without any official permit. The authorities of the other town tried to mobilize the G.P.U. against him. The case was serious—according to official rules. But the local G.P.U. chief, an experienced Communist, approved the director’s action.

In many other cases factory managers, who needed materials they could not obtain but had to have for their work, tried to save the situation by private barter. The director of a plant which produced shoes would arrange with the director of another plant which produced tools for an exchange of shoes for tools. This was done as a private arrangement without an authoritative permit and in violation of the plans and official rules. But it often had the approval of the local Party authorities and even of the local G.P.U., because sticking to the letter of the laws or decrees would have caused a disastrous decline in production and waste of materials. The danger, however, was that the G.P.U. might later use this against the manager and have him “purged.”

Private barter deals and illegal purchases of raw materials reached such a point by the end of the first Five-Year Plan that regular “middlemen” began to operate. They had an expert knowledge of what different factories produced and what they needed, so that they could arrange or facilitate barter deals. The G.P.U. must have known of the existence of such “middlemen” but tolerated them because they helped to overcome anarchy of production within the planned economy. The role of these “middlemen” is similar to the role of “contact men” under fascism. The fascist “contact man” works for private firms and for bribes. The “middlemen” in Soviet Russia arranged exchanges of industrial products from one State plant to another, receiving an illegal commission for this service. Nevertheless, by violating the Plan they facilitated its fulfillment.

The industrial manager in fascist Germany or Italy is not merely interested in production as an end in itself. He is also interested in profits. His income (or dividends to the shareholders) is not fixed by the State, although the size of it depends largely on his relationship with the State bureaucracy. As a manager he is under pressure from two sides—from the State and from the private owners or shareholders. They may both be in harmony, but more often they disagree and a compromise is arranged, leading to the many economic absurdities described in previous chapters.

The fascist State bureaucracy appears as a super-capitalist power, which takes a heavy toll from all private enterprises, treating them as subsidiaries of one big State trust, from which the supreme leadership requisitions the greater part of the aggregate profit. But the leaders of the subsidiaries, the private capitalists, are bound to the trust—or the system—unless they wish to lose what the State has left them.

The U.S.S.R. does not have a capitalist class tied to the regime by privileges which are of a nature different from those a State bureaucrat can obtain from society. Yet a very interesting social phenomenon can be observed both in the U.S.S.R. and in Nazi Germany—an authoritarian Party dictatorship which is strong because it can suppress antagonistic forces from the right as well as from the left.

Many capitalists may fear and despise the State bureaucrats, yet they are afraid of losing everything with the downfall of the regime. The fascist regime rests on two pillars: the absolute power of the State and the power of private property holders whose property rights are protected by and are dependent on the State. This is not the first time in history that an absolute dictatorship has become independent of all social classes and yet has retained the support of those who fear the worst from a change in the regime. Napoleon was able to gain and hold the support of the peasantry because they were afraid of losing their new property rights under whatever regime might follow. If the Vendée had won, the feudal landlords might have been restored to power and the peasants might have been forced to return the land they had taken. On the other hand, the left-wing Jacobins had too little respect for private property rights to gain the support of the peasants. Consequently Napoleon appeared to the peasants as the best protector of their new property rights. But his imperialist policy was so expensive for the people in France and cost so many lives that in the end even the peasants became dissatisfied.

Because the Nazis are under some compulsion to make palatable the decrees which make them feared and despised, they have attempted to connect totalitarian philosophy with the respectable and historic policy of mercantilism. Nazi economists often picture fascism as the beginning of a new age of mercantilism—neo-mercantilism—under the inspiring guidance of the fascist totalitarian State.

The comparison of the economic policies of a totalitarian regime with the mercantilist state is not entirely out of place. There are, indeed, some striking parallels: The State exercises the function of deciding which industries should be developed and which should be suppressed; it regiments foreign trade and all economic life in order to become self-sufficient and militarily strong. Military strength is identified with economic self-sufficiency. The philosophy of mercantilism agrees in many respects with the philosophy of the totalitarian regime—“The State is everything—the individual nothing.” (Mussolini.) Yet in spite of many mercantilist trends there is no real return to the mercantilism of the seventeenth century.

Mercantilism was the prevailing policy at a time when bourgeois society was just emerging from feudalism; when commodity production was superseding individual production by the feudal family or village unit.

The world situation is quite different today. This discussion would take us too far afield, but there is one interesting historical parallel worth noting. Just as the Prussian king in the eighteenth century, in an effort to strengthen the State which still defended the privileges of the formerly independent feudal class, found it necessary to introduce and encourage new methods of production appropriate to the coming social order, so the Nazi leaders must use methods of social planning which are appropriate to socialism, in order to buttress the shaky State power which is dedicated to the preservation of a private property economy.

The fascist totalitarian State of today is essentially a capitalist society with private enterprise and private property as the foundation of its economy. Yet it already applies methods and policies typical of another society. In an effort to defend the old, decaying system, it introduces measures which may be part of a future system, but which do not create a new society. At the same time the fascist State weakens and undermines the forces on which the old capitalist system relied. It has expropriated and ruined the greater part of the middle class—to which, incidentally, most of the Jews in Germany belonged.

The ruin of the middle class has strengthened the position of a few great concerns and trusts; the standard of living of large sections of the middle classes has declined to such an extent that their income is often below that of the working class. Middle-class businessmen have witnessed a rise of the nouveaux riches, whose wealth has not been accumulated as a result of efficient business methods or general prosperity but through the application of the absolute power of the State bureaucracy. Respect for private property has vanished, because property morale has been destroyed. The new justification for the ownership of private property is absolute power.

Regimented and led by a power over which he has no control, the businessman under a totalitarian regime is compelled to carry on. He has lost faith in the old competitive system, although he cannot help thinking with fatalistic nostalgia of the “good old days.” He finds it impossible to believe that they will ever return, yet he thinks of them wistfully in a vain attempt to forget his anxieties for the future. For the economic policy pursued by the fascist dictators deepens social antagonisms, weakens the capitalist system and increases the danger of a proletarian revolution with which the dictators blackmail other imperialist powers. The fascist dictators endeavor to strengthen their authoritarian position by making themselves indispensable to those who fear the loss of their privileges and property rights. The narrower the stratum of those whose business interests are still protected by the regime, the more these businessmen become dependent on the absolute power of the State as represented by the fascist bureaucracy. The fascist dictatorship grows stronger—internally and externally—the more it increases the dangers against which it pretends to protect the businessman.

In the name of militarism business is treated with contempt, but even purely military interests suffer, because first and foremost the system serves the absolute power of an authoritarian bureaucracy. New privileged business interests and supermilitarization have a disastrous effect on the system of private business as such because they increase the absolute power of the state bureaucracy rather than make the whole nation strong. A member of the German General Staff expressed the strongest possible criticism of fascist militarization as follows:

“If indirect costs are increased more and more by economic preparations for war, and if a war economy is carried on in peacetime, domestic investments will depreciate and in the end the nation will not succeed in its national defense plan. The effects and difficulties of war will be better endured by the people if they are well fed and dressed and trained, if the reserves are great and industry well equipped.” 5

General Thomas, Chief of the Economic Council of the War Department, also expressed his anxiety over the probable final result of fascist militarization:

“Experience has shown us the close relationship between military and economic leadership in war. Men like Alexander the Great and Hannibal, in spite of their great strategic talents, had to give way on account of economic facts.… And whether we quote Frederick the Great’s attempts to strengthen Prussia economically for war or the collapse of Napoleon’s world power on account of its inadequate economic foundation, we always find proof of the close interdependence of economic and military leadership in history. In particular, we see the consequences if military leaders err in estimating the economic forces of their own country or of the enemy’s.” 6

But the conservative leaders who appraise the strength and inner force of a system in the traditional way do not recognize the dynamic strength of a totalitarian dictatorship. They do not recognize that explosive forces have been created which may be used as weapons against hostile powers.

The position of the fascist dictators might be compared to that of Schweik, the “good soldier” in a tale by Hajek, the Czech writer.

Looking for a place where he could defy his superiors, Schweik entered a gunpowder magazine. Seating himself on a keg of gunpowder, he pulled out his pipe and contentedly began to smoke. But he did not remain undisturbed for long. The sergeant appeared. Excitedly he began to berate Schweik and threaten to punish him, but the sight of a few sparks from Schweik’s pipe halted Ms tirade. Schweik smiled innocently at the sergeant and puffed again on the pipe. The sergeant trembled and changed his tone. In the friendliest manner he tried to hint that Schweik would really feel much better in the fresh air. Wouldn’t Schweik take a walk with him? But Schweik declared that he was quite contented to sit on the keg of gunpowder smoking his pipe. Schweik could continue to defy his sergeant not because he was inherently strong, but because of his position on the keg of gunpowder. The sergeant represented a gigantic military machine which Schweik could never have hoped to overpower. But Schweik could destroy the whole barracks, the sergeant and all superior officers with a single spark from his pipe.

The fascist dictator is in the same position as Schweik. The preponderant weight of force, both internally and externally, is against him, but he, like Schweik, with lighted pipe in hand, is seated on a keg of gunpowder. The conservative forces which helped the fascist dictator to power thought they would be able to control him, but now they do not dare to make use of their power against him. They know that nothing of the old system would remain if the structure he has built were to fall.