How Hitler's Thoughts on Privatization and Nationalization

Adolf Hitler's attitude on private ownership and nationalization seems to be very straightforward. Hitler widely favored private ownership of the means of production and opposed nationalization.

Leaving it at that, as is customary, would be shallow, since this statement is much too undifferentiated and leaves far too many open concerns. In my book Hitler’s National Socialism I analyze the dictator’s economic and sociopolitical thinking.

Pollock: “Destruction of All the Essential Traits of Private Ownership”

In an article on the economic system of National Socialism published in 1941, the economist and sociologist Friedrich Pollock (a cofounder of the Institute for Social Research in Frankfurt, which later became the nucleus of the Frankfurt school) pointed out the following:

I agree that the legal institution of private ownership was maintained, and that many attributes characteristic for National Socialism begin to manifest themselves, albeit still vaguely, in non-totalitarian countries. But does this mean that the function of private ownership did not change? Is the “increase of power of a few groups” really the most important result of the change which took place? I believe it reaches far more deeply and should be described as the destruction of all the essential traits of private ownership, saving one exception. Even the mightiest concerns were denied the right to set up new fields of business in areas where the highest profits were to be expected, or to interrupt a production where it became unprofitable. These rights were transferred in their entirety to the ruling groups. The compromise between the groups in power initially determined the extent and direction of the production process. Faced with such a decision, the title of ownership is powerless, even if it is derived from the possession of the overwhelming majority of the share capital, let alone when it only owns a minority.

As is well known, Hitler's technique was seldom to simply abolish an institution or organization, but rather to continue eroding its underlying essence until essentially nothing remained of its original purpose or content. For the purpose of comparison, we should add that the Weimar constitution was never repealed either, but its content and meaning were gradually weakened, eventually leading to its abolition in effect.

Hitler called for land nationalization in his early speeches but remained a principled supporter of private ownership. As Otto Wagener's papers demonstrate, Hitler's skepticism of nationalization stemmed from his socio-Darwinist ideas. Otto Wagener, who commanded the NSDAP's Economic Policy Department from early January 1931 until June 1932 and served as Hitler's economic policy adviser, says that Hitler declared in 1930:

As far as this goes, the whole concept of nationalization in the form in which it has been attempted and demanded so far appears to me to be wrong, and I come to the same conclusion as Herr Wagener. We have to bring a process of selection into the matter in some way, if we want to come to a natural, healthy and also satisfying solution of the problem, a process of selection for those who should be entitled—and be at all permitted—to have a claim and the right to property and the ownership of companies.

On the other hand, Hitler frequently and emphatically stated that the disposal of his property was in no way the private affair of the industrialist. On October 9, 1934, for example, he declared:

Therefore wealth in particular does not only have greater possibilities for enjoyment, but above all greater obligations. The view that the utilization of a fortune no matter of what size is solely the private affair of the individual requires to be corrected all the more in the National Socialist state, because without the contribution of the community no individual would have been able to enjoy such an advantage.

Hitler was unconcerned with the formal preservation of private property. When the state has unrestrained authority over the owners of the means of production, the formal legal institution of private ownership loses much of its meaning. This is what Pollock means when he declares a "destruction of all basic characteristics of private ownership" with the exception of one. When owners of means of production lose their ability to freely choose the content, timing, and magnitude of their investments, the fundamental qualities of private ownership are lost, even if the legal guarantee of private ownership remains.

Hitler said in his table talks on September 3, 1942, that land was "national property" that was "finally granted to the individual as a loan." Hitler accepts private ownership only inasmuch as it is utilized in accordance with the concept "common good before private gain," which implies, concretely, insofar as land is used to further the state's purposes. According to Hitler, the concept of "common benefit before private advantage" implies that if it is required for the common good, the state retains the authority to determine the manner, extent, and timing of private ownership, with the common good being determined by the state.

Hitler announced in May 1937:

I tell German industry for example, “You have to produce such and such now.” I then return to this in the Four-Year Plan. If German industry were to answer me, “We are not able to”, then I would say to it, “Fine, then I will take that over myself, but it must be done.” But if industry tells me, “We will do that”, then I am very glad that I do not need to take that on.

The businessmen realized that Hitler's warnings were not empty threats on July 23, 1937, when Hermann Göring announced the foundation of the "AG for Ore Mining and Iron Smelting Hermann Göring." The process that began with Hitler's and Göring's continuous threats culminated in the establishment of the Reichswerke Hermann Göring, which employed 600,000 people by 1940. Salzgitter's facility eventually became the biggest in Europe. This demonstrated that the National Socialist state took its oft-professed "primacy of politics" seriously and would not hesitate to get involved and build up state-controlled firms in sectors where private industry defied state orders. On February 14, 1942, during a conversation with Joseph Goebbels about the problem of increasing production, Hitler stated: "[H]ere we must proceed rigorously, that the entire production process must be re-examined, and that industrialists who refuse to submit to our directives will have to lose their plants regardless of whether they are economically ruined."

Hitler’s Role Model: Stalin and His Planned Economy

The National Socialists intended to expand the planned economy for the period after the war, as we know from many of Hitler’s remarks. He increasingly admired the Soviet economic system. “If Stalin had continued to work for another ten to fifteen years,” Hitler said at a small group meeting in August 1942,

Soviet Russia would have become the most powerful nation on earth, 150, 200, 300 years may go by, that is such a unique phenomenon! That the general standard of living rose, there can be no doubt. The people did not suffer from hunger. Taking everything together we have to say: They built factories here where two years ago there was nothing but forgotten villages, factories which are as big as the Hermann Göring Works.

On another occasion, speaking to his close group, he said that Stalin was a "genius" who deserved "unqualified praise," particularly in light of his extensive economic planning. Hitler said that he had no doubt that Soviet Russia, unlike capitalist nations such as the United States, had never experienced unemployment.

The dictator repeatedly stated to his closest allies that it was vital to nationalize significant joint-stock enterprises, the energy industry, and all other sectors of the economy that generated "critical raw materials" (e.g., the iron industry). Of fact, the war atmosphere was not conducive to such dramatic nationalizations. Hitler and the National Socialists were fully aware of this, and in any event, they had made every effort to soothe the country's business community's worries of nationalization. Thus, an October 1942 document from SS leader Heinrich Himmler warns that "during the war," a major transformation of Germany's capitalist economy would be impossible. Anyone who "resisted" this would trigger a "witch-hunt" against him. The question "Why does the SS participate in economic activities?" was addressed as follows in a July 1944 report made by an SS Hauptsturmführer:

This question was raised specifically by circles who think purely in terms of capitalism and who do not like to see companies developing which are public, or at least of a public character. The age of the liberal system of business demanded the primacy of business, in other words business comes first, and then the state. As opposed to this, National Socialism takes the position: the state directs the economy, the state is not there for business, business is there for the state.

Mises: “Socialism with the Outward Appearance of Capitalism”

This was how Hitler and the National Socialists saw the very essence of the economic system they had established, but it was also how astute observers such as the economist Ludwig von Mises saw it. Incidentally, he came to the same conclusion as the left-wing economist Friedrich Pollock, quoted at the beginning of this article. On June 18, 1942, Mises wrote a letter to the editor of the New York Times. More clearly than many of his contemporaries and, above all, more clearly than many authors writing about National Socialism today, he recognized that

The German pattern of socialism (Zwangswirtschaft) is characterized by the fact that it maintains, although only nominally, some institutions of capitalism. Labor is, of course, no longer a “commodity”; the labor market has been solemnly abolished; the government fixes wage rates and assigns every worker the place where he must work. Private ownership has been nominally untouched. In fact, however, the former entrepreneurs have been reduced to the status of shop managers (Betriebsführer). The government tells them what and how to produce, at what prices and from whom to buy, at what prices and to whom to sell. Business may remonstrate against inexpedient injunctions, but the final decision rests with the authorities…. Market exchange and entrepreneurship are thus only a sham. The government, not the consumers’ demands, directs production; the government, not the market, fixes every individual’s income and expenditure. This is socialism with the outward appearance of capitalism—all-round planning and total control of all economic activities by the government. Some of the labels of capitalistic market economy are retained, but they signify something entirely different from what they mean in a genuine market economy.

As we know from Hitler's words, he desired to accelerate the transition to a state command economy after the war's conclusion. Hitler said in his July 27–28, 1941 addresses to his inner circle (dubbed "table talks") that "a rational use of a nation's strengths can only be accomplished by a planned economy from above." About two weeks later, he stated: "In terms of economic planning, we are still very much at the beginning, and I suppose it would be rather lovely to build up an all-encompassing German and European economic order."

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