The Economy & Class Structure of German Fascism: Chapter 17

The Class Structure of German Fascism

It must first be made clear what aspect of Nazi fascism is under analysis here. Naming it ‘Behemoth’, Franz Neumann¹ has master­fully dissected and portrayed the Nazi regime. In all essentials I am in agreement with him and would wish his conclusions to stand as a basis for this study, in particular his analyses of the bourgeois power base represented by its three pillars, monopoly capital, the army, and the state bureaucracy. What concerns us here is above all the fourth pillar which does not stem from the arsenal of bourgeois tradition: the fascist party² and the connections of its power with the economy. For the class structure of Nazi fascism becomes comprehensible only from a theoretical analysis which derives the setting up of a fascist dictatorship in Germany from the reaction of monopoly capital to the collapse of its own effectiveness in the world-wide economic crisis of the 1930s.

This crisis was something essentially different from the usual periodic cycle, the upsetting and the subsequent restitution of market equilibrium. It was a structural crisis which put the survival of the whole system in jeopardy. The reasons for its particular decline are to be found in the decisive changes to the industrial productive forces. These were changes which made it impossible for monopoly capital to revive production so long as the basic norm of market economy was adhered to — the creation of reproductive values and marketable goods. Within the given boundaries of the market there was no longer any profit margin to be hammered out of the mode of production and the increases of capacity which had emerged from the rationalization of the 1920s; there was, moreover, not any to be hoped for, even if the economic climate were to revive. The continued existence of monopoly capital demanded the bursting of these boundaries, the escape from the strait-jacket which they represented. Non-marketable goods were to be produced, non-reproductive values for which the state would supply the demand and whose payment the state could impose on the population, values with which the old boundaries could be forcibly expanded and which would allow military as well as merely economic means of competition in the world market. But for this a different kind of state was needed from the bourgeois traditional one, particularly as the leap into fascism absolutely had to impose a coercive regime upon monopoly capital as well. It is precisely this link in the interconnecting chain that is easy to overlook.

Capital is only in possession of its private initiative to dispose freely over its means of production while it keeps to the market rules. But only if one sees the crisis as an economic catastrophe which shatters all these rules can one get the measure of its immense dangers. In this case capitalism can survive in the paradoxical shape of the ‘corporate state’ in which the contradiction between the social character of production and the private appropriation of capital assumes the form of a state-run economy on private account.

The state takes over the entrepreneurial, managerial function but capital remains, as ever, private. What is produced, how and by whom, with what profit margins and at what prices, all this is decreed by the state: the state determines imports and exports for each firm, the procurement and distribution of their raw materials; it calls a wage-freeze for the population as producers and a price-freeze for them as consumers; it decides what building, what textile production, what means of transport, what machine construction should be promoted or scrapped, what terms of credit the banks should assent to and which ones they should refuse, what promissory notes should be endorsed and which should be cancelled. But the profits and losses of all this are entered as private profits and private losses of capital although the proportion of consumption to accumulation of private profits is again decided by the state.

The terroristic power of the fascist party serves not only to eliminate political enemies. It is the suspension of bourgeois laws which is the hallmark of fascism and it is by this means that it finally guarantees that the state can wield its entrepreneurial function smoothly and can aid and abet monopoly capital in its state of peril.

The fascist regime emerged through the actions of private monopoly capital which had to re-group itself for this purpose; it was thus its responsibility, and, in a manner of speaking, its own free decision. But in this freedom there lurked a dialectic which was at complete variance with it, that perverted it into nothing more than the freedom to dispense with its freedom. And the fatality of this decision remained hidden to its own authors. They had put their signature to something that continually rebounded in their faces, and allowed hardly any of their original schemes to run according to plan. To ignore this contradictory nature operating in fascism is to leave any interpretation wide open to error.

Never, of course, in the rational interests of humanity, should monopoly capitalism be permitted to side-track from its function of the economic reproduction of social wealth in order to pursue an economy of destruction. But if the political forces of social revolution fail to put an end to capitalism in its last struggle, then the blind causality of disaster is bound to take its course with all its murderous consequences.

I would call this process a natural catastrophe of economics, but when it occured in the 1930s in Germany it was not happening for the first time in history nor even without similar precedents. In actual fact this ‘destructive’ economy accompanies monopoly capitalism along its entire course, not merely as an alternative to a reproductive economy but actually compounded with it in varying degrees. Even when monopoly capital itself first emerged as a mutation helping capitalism out of its long depression from the 1870s to the 1890s a glance at historical events shows the same process in motion. In 1890 the Germans offered the English the rich island of Zanzibar in exchange for the barren rock of Heligoland, strategically indispensable for the existence of a German Fleet. In 1897 Tirpitz was made the State Secretary of the German Fleet and the following year the First Naval Bill was passed preliminary to the building of the Fleet. Meanwhile in 1893 the New Arms Bill had been passed which started the German armament drive followed by twenty years of intense international arms race directly leading to the First World War. The development of monopoly capitalism is inseparably bound up with these events.

There is indeed good reason to consider both the economic crisis of the 1930s and its fascist outcome as a replica of that first holocaust but in a dramatically telescopic form. In this case, even more unequivocally than before, events took their fateful cue from Germany, once more the link in the world imperialist chain most severely hit by the crisis. But in the latter case its consequences more quickly affected the whole of the chain, for in other countries too, and most particularly in America, monopoly capitalism was moving towards the brink of functional collapse. The switch towards a destructive economy imposed itself on the other powers as an external necessity, compelling them to join the arms race. It was only in Germany that fascism was required to produce the inner necessity to start the process, with ideological tools that caused Freud to believe in a hidden death wish, endemic to man. And this alternative to a life wish is indeed far from being a totally inadequate ideological interpretation for what was in economic terms a hard reality.

The genuine value categories of social life grow out of the roots of its reproductive economy. Fascism has to distort them into the opposite to dedicate the economy to war values. But one cannot deny that in Germany there were masses who flocked to the cry of Nazi propaganda as if, indeed, they had been waiting for it. Without a fascist party there can be no fascism. The party must first create the necessary mass basis for monopoly capital’s unconstitutional form of rule and erect a smokescreen for a ‘Volks- gemeinschaft’ (national community). But the social strata and classes which promoted the Nazi ascendancy and their election successes on their way to power are not the ones which served the Nazis when actually in power. The class structure of the first must therefore be strictly differentiated from that of the second. Nazism itself provided proof of this when, in the course of the war, Hitler passed laws which contributed more to the economic annihilation of his former voters than any other regime had ever dared before. And yet, to the great disappointment of many soothsayers abroad, this did not noticeably weaken the Nazis’ inner power position. It is quite extraordinary to note in what pronounced contrast the class bases of the party stood in the two phases of Nazi history. In both, before and after the take-over of power, the class structure stood in an eccentric relationship to bourgeois society and yet for quite diametrically opposing reasons: the earlier one limped behind the bourgeoisie’s state of development while the later one was in advance of it.

The Nazi ascendancy was carried by the strata and sections of the Population which were in one way or another backward because they had fallen permanently behind the socially necessary average level of labour productivity. These were the small peasant farmers, the independent artisans and the rest of the multifarious mass of individual tradesmen, petty entrepreneurs, salesmen and shop­ keepers. They were small-scale capitalists whose assets and liabilities too had been wiped out by the inflation of the 1920s. As a consequence, they had been temporarily saved from financial liquidation but subsequently their inability to compete on the market had plunged them into new debts which now threatened to destroy them. The process is generally paraphrased as being a tendential proletarianisation of the middle social strata. But what preceded this proletarianisation was the revulsion against it, the fear of it and the emotions engendered by the threat of it and to which Hitler’s emotionally perverted mentality was itself paradigmatically related.

In this respect the offspring of these middle strata were already one step further de-classed than their parents. They found themselves already in the definitive condition of wage and salary dependency but in addition they were unemployed; from the moment they left school a bleak hopeless future stared them in the face. At home with their parents they were without money, and unemployment condemned them to the monotony of inactivity.

The SA was recruited predominantly from the unemployed but precisely not those of proletarian, but rather of petty-bourgeois stock. The inducement was firstly cheap clothing and footwear and at least one hot meal a day, and secondly the activity of marching, singing, clashes and street fights with communists, paramilitary training and the excitement of playing at soldiers; altogether a political camaraderie which they thought would give their own future a turn for the good and counteract their social downgrading.

‘Take your place in the queue’ was one of Hitler’s slogans at the time of greatest unemployment. With it he promised everyone who joined the Party an official post in the future. The lower the party number, the sooner and more prominent the post. Increasingly, the young people changed their perspective. A post to which they could lay claim by assisting in Hitler’s rise to power, promised them a position of dominance over the proletariat all the sooner the more thoroughly they vanquished the ‘Marxists.’

The membership of the NSDAP (National-Sozialistische Deutsche Arbeiter Partei)³ soared at a rate of hundreds of thousands and then of millions. With his strategy of mass propaganda and with the continued growth of his election successes, Hitler held the initiative in the political power struggle. Under this pressure, the Communist Party executive allowed themselves to be misled into a struggle with the same weapons, but for them the wrong ones, of mass party and electioneering, and it was this that cost them their real chance of revolution. Because the fascist party was characterised by its eccentric relationship to bourgeois society, there arose that propaganda rivalry between the NSDAP and KPD (Kömmunistische Partei Deutschlands)⁴ which so confused the political field at the time.

Needless to say, the fascist party was not anti-capitalist. On the contrary, it thrived on capitalism — on a capitalism struggling desperately for survival. Only when things went economically wrong for bourgeois society did the Nazi Party flourish and vice versa. Their election successes and membership rose and fell in exact parallel to the unemployment figures. During the years of prosperity between 1924 and 1928 the Nazis as good as disappeared from the political arena. But again, the deeper the capitalists subsided into crisis, the more firmly did the fascist party sit in the saddle over them. Thus it was that the Nazi propaganda painted the weaknesses and misfortunes, the contradictions and sicknesses of bourgeois society in as black a tint as possible. Communist propaganda did the same. Both often sounded the same trumpet, slipped into the same groove, poured their critical bile into the same wounds and only competed to see which one could do it louder and more brashly. And more often than not, it was Goebbels’ ‘Angriff’ (Attack) rather than the ‘Rote Fahne’ (Red Flag) that won. Of course the jargons of their anti-capitalism — the genuine one of the Communists and the fake one of the Nazis — were worlds apart: class concepts here, racial ones there.

Economic arguments were for the Nazis only a pretence; for the Communists they were the stuff of reality. But nevertheless, the Communists never fully exploited the potential of their economic arguments. The only tangible alternative to the fascist solution for an end to unemployment would have been a full-scale economic plan linking the Soviet Union and Germany if the latter had become Soviet Germany. A detailed, long-term agricultural and industrial plan of cooperation between both countries, as Lenin had wished it, would have fully occupied the German production potential and defeated unemployment. That does not mean that this thought was not voiced here and there, but in the broad spectrum of propaganda and in the popular consciousness of 1933, it was missing. It has always been a mystery to me why the KPD left this stone unturned, though much the weightiest of its whole arsenal.

In contrast, the capitalists of the opposing camp fully appreciated the enormous value of trade with Russia — particularly as the export surplus from trade with the Soviet Union for 1930/31 had alone brought in a good 3 billion Reichsmark as well as earning currency and above all gold, which in the financial crisis of spring 1931 saved Germany from the worst extremes of catastrophe. When it was debated in capitalist circles how the economic profit and the political danger of an industrialisation of Soviet Russia with German aid were to be weighed against each other, the profit perspective usually came off best, — the extra, tempting inducement being that whoever delivered the basic order would be assured of all repair and replacement orders for years ahead, for the Russians were beginners in technology and would remain so for a long time. And it was thought that Stalin was positively inclined to do business with large-scale German capital. Thus, if the capitalists held the mere prospect of foreign trade with Russia in such high esteem, how might the Communists have considered the prospect of a community of planning with the Soviet Union? Or was it perhaps that the Russians had certain misgivings regarding the effects of a German revolution for their Soviet industrialisation?

What sort of positions were they that Hitler promised party members according to their place in the queue? What attractions could he hold out? Surely we cannot assume that he had already the outline of the ‘New Order’ in mind which he later imposed upon Europe as far as his conquests would let him. But many of his unemployed party members, whose mentality I knew from frequent contacts, perhaps did have such notions at the back of their minds. One thing is certain, the great majority of party members would not want to return to the miserable small trade ventures of their parents’ generation, but neither did they want to fall victim to the proletarianisation which is usually regarded as the only alternative to holding on to private property. Their hopes were to find employment in modern large-scale factories as a class in command of the workers.

The heavy productive forces now lying idle because they presented excess capacities relative to the peace-time markets were to be fully utilised by war-time conditions and rearmament. These were the type of modern mechanised mass-production plant characteristic of monopoly capitalism and analysed by Schmalenbach as we have seen in chapter 3 of this book. This structural development had a fundamental influence on the sequence of events in the Germany of the 1930s. One of the salient peculiarities of this modern production was the emergence of what was then called ‘the new intelligentsia’. If we turn to one of the most influential exponents of modern management, Frederick Winslow Taylor, we can easily see how this phenomenon arises. He emphasises in his book ‘Shop Management’ that his system ‘is aimed at establishing a clearcut and novel division of mental and manual labour throughout the workshops. It is based on the precise time and motion study of each workman’s job in isolation and relegates the entire mental parts of the tasks in hand to the managerial staff.’

In Germany at that time ‘the new intelligentsia’ was the term used to describe the engineers and technicians of the new order employed in the installation, operation, supervision and servicing of these large-scale modern plants and their comprehensively rationalized labour-processes. This expression is very well suited to our analysis because it attributes this intelligentsia to precisely that development which caused the inflexibility and inadaptability of production to the market. It is a development in which the classical form of capitalism has outgrown itself. It has put its economic effectivity into question and created the structural contradictions which are at best bridgeable, but simply not solvable, and which, in my understanding, constitute the basic cause of the onset of German fascism.

The ‘new intelligentsia’ in Germany occupied a problematic position between capital and labour and felt itself to be class-neutral. It stood, on the one hand, on the payroll of capital, on the same side as labour. On the other, it was enlisted in the service of capital to be functionally dominant over the workers. Moreover, it looked to a past, if not a tradition, of strike-breaking: as the notorious ‘technische Nothilfe’ (technicians’ emergency service) which operated during the revolutionary years of the 1920’s. It constituted one of the formative elements of Nazism and there is no doubt that this 'new intelligentsia’ provided the reliable technical staff of the Nazi Party when, in 1933, it took over large parts of State and productive administration. Their material interest was concerned only with their functional position in the production process; their career aspirations left them completely indifferent to the purposes of production. What counted for them was that production was maintained and did not stand still. It was this that determined their ties to Hitler, their unconditional trust in him. For them it was Hitler, not the capitalists, who revived production and promised it unlimited growth freed from any fears of crisis.

If one visited large factories and factory managements in 1934 and 1935, the years from which all my experiences originated, practically everyone, as in the wider society, identified with the Nazis to the extent of wearing the Nazi badge. However, there were important shades and variations in their behaviour and general demeanour. As a rule, the hard core of the workers, but to a lesser extent the younger ones and the new apprentices, were not Nazi and did not pretend to be Nazi. If one asked, then one heard everything from a disgusted spit to a mock humming or an ironic ‘yes’ according to who the questioner was and what his purpose might be. When their confidence was won one could hear all manner of home truths about the ‘workers’ whom the Nazis planted on the factory floor to spy and break the piece-rate; most were withdrawn just in time to save them from the revenge they deserved at the hands of the workers themselves.

On the opposite pole, the bosses made a show of being Nazis, or more correctly speaking, adopted an air which suggested that personally they had no need for it; it was rather their public position and the need to set a good example that obliged them to be party members. And so one was a Nazi, but in a cool and calculated, rather patronising, certainly not over-excited way. They declared their Nazism in the presence of others, privately they shrugged their shoulders, denied it and heaped abuse upon it. People either jeered and made jokes about Nazism or else they were white with fear. The one thing that did not exist in relation to Nazis was to treat them as normal people.

Personal courage did make a difference. When in the MWT office a Nazi ‘high-up’ held forth like Hitler on the corruption of the Weimar Social-Democratic Party officials, my boss, Dr. Max Hahn, screamed at him: ‘You just wait until your people rob the public coffers!’ His words echoed through the rooms and we would not have been surprised if they had led to his arrest. But although this was in March 1933 and thus at the early climax of the Nazi terror, he escaped untouched. I never asked him whether he was a party member or not. His sister, Grete Hahn, had been a Communist and he had great difficulty in getting her out of the concentration camp. I had good reasons to leave such personal questions unasked. He did not quiz me so I did not quiz him.

But the middle and lower white-collar workers were those for whom the party badge was a symbol of faith and who assumed unmistakeable Nazi bearings: the way they spoke, their impersonal, authoritative manner, their attitude to women, their arrogance, sloganising and boastfulness. The members of the ‘new intelligentsia’ were the most inflexible of these — the real rabid fanatics. They were the ones who threw up the riddle of why mere managerial employees, and by no means particularly highly paid ones, seemed so passionately committed to the interests of capital without having any personal shares in its winnings. At the same time they were the ones who solved the riddle. In the hierarchical organisation of mass-production they occupied a position which was specific and profiled enough to possess the semblance of class character. But based on neither property nor income it was not a class in the traditional and accepted sense.

It was not any material advantage deriving from this position but the specific function in the new mode of production that was the defining feature. Since, however, material advantages were lacking, there was no visible reason why the ‘new intelligentsia’ had to assume a stance of antagonism to the workers. According to its technical and organisational function, it should have been able to co-operate and solidarise just as well with the workers. In order to bring its material interests to bear against capital, this is what would have been needed.

Thus the class character of the ‘new intelligentsia’ was primarily a merely functional one although to derive it from its function is difficult. And yet it was a hard fact without anything ephemeral about it. The whole of the new order that Hitler planned for the Europe he would conquer was based on reserving for the ‘German master race’ every function above the level of proletarian labour in production, extending from organisation and direction, leadership and supervision right down to foreman and chief operator — while the ‘mixed-blooded’ and ‘inferior races’ which he subjugated would do the manual and dirty jobs of the proletariat. Thus the phenomenon has without doubt sufficient breadth and political weight to justify an in-depth study and an investigation of the authority structure peculiarly connected with the new mode of production.

If it is correct that the functions performed by the ‘new intelligentsia’ in the production process do not in themselves account for an antagonism of class and interests between it and the workers, then the antagonism which nevertheless existed under fascism must be merely secondary. The ‘new intelligentsia’ owed its position of authority over the proletariat to the fact that it performed its functions within the production process in the service of capital. Their members’ elitist role — what made them such ardent Nazis — was merely a borrowed one. It did not stem from the content of their activity but only from the fact that this content lent strength to the exploitation, an extra intense exploitation, of labour power by capital. Thus in order to bolster up its position of authority, the ‘new intelligentsia’ had to bolster up the capitalist system.

Conversely the rule of capital had become so weak, its economic and social basis so contradictory and precarious that it could only be kept upright by the crutches of fascism. Both sectors, capital and fascism, were chained together in a relationship of mutual dependency. It was not because of love that they held together but in spite of the fact that they hated one another. Each ruled in the fervent wish that it might be without the other. Their internal relationship consisted of a series of crises in which each intrigued and rebelled against, lied against and robbed the other so as to establish just once more that to do without each other was impossible.

There was no budgeting in the regular sense during the Third Reich. Just how the state coffers were robbed was never recorded. Admittedly it was internally known how Göring appropriated his industrial concern, his castles and art collections but what could the disappropriated parties do about it? Could they possibly have accused him?

Transferred to the magnified scale of the state and augmented by the amorality of fascist behaviour, the relationship between the fascist party and finance capital can best be compared to that which exists in private large-scale concerns between management and the moguls of capital itself. The analogy is in no way arbitrary. We have seen that in the switch from a reproductive to a destructive economy, capital relinquishes its power over its means of production and must allow this power to be wielded by the state which then becomes corporative. The result is a state-run economy for private profit. The contradiction reaches such a level that a fascist rule of terror is needed to master it. Now what is called ‘modem management’ is nothing more than the result of splitting the entrepreneurial function from the function of capital — a process which is achieved in the transition to monopoly capitalism. Therefore this justifies our analogy of the relationship between fascism and finance capital under conditions of a destructive economy.

My enquiry in this chapter was directed at the fascist party as the fourth pillar of the Nazi state and at the connection between its power and the economy. I could almost reduce my answer to the formula of a functional equation and say that the power of constraint that the fascist dictatorship exerts in the monopoly capitalist state is equal to the power of constraint in the situation which has led monopoly capital to create this state in the first place.

1. Behemoth. The Structure and Practice of National Socialism by Franz Neumann. Victor Gollancz Ltd. 1942.

2. It is interesting to note that in the Marxist framework “party” does not necessarily refer to a formal party organization. In Class Struggles in France 1848-1850, for example, Marx talks about the bourgeoisie constituting a party without having a formal party organization. This doesn’t necessarily change our understanding of Sohn-Rethel’s analysis, but it has the potential to lend more depth to that analysis and the implications it carries for analysis of contemporary reactionary movements. — Bluebird

3. National Socialist German Workers Party in English. — Bluebird

4. Communist Party of Germany in English. — Bluebird