Despite the common roots of national socialism and Russian socialism, the mainstream media of the day, as well as mainstream thought, refused to acknowledge them. Even after the war, when saner minds might have prevailed, most critics saw only the horrors of the Holocaust and not the link between that horror and the collectivism underlying socialism. Mainstream thought also ignored Stalin’s horrors for decades, and when they finally got around to acknowledging the terror of the gulag, they often refused to accept that terror was a consequence of socialism.
Shortly after World War II, in his essay “Planned Chaos,” Ludwig von Mises explained the superficial differences between Russian and German socialism.
Mises acknowledged that German socialism “seemingly and nominally, maintains private ownership of the means of production, entrepreneurship, and market exchange.”1 But Reisman points out that Mises “identified . . . that private ownership of the means of production existed in name only under the Nazis and that the actual substance of ownership of the means of production resided in the German government.”2
Ayn Rand in “The Fascist New Frontier” concurs: “The main characteristic of socialism (and of communism) is public ownership of the means of production, and, therefore, the abolition of private property. The right to property is the right of use and disposal. Under fascism, men retain the semblance or pretense of private property, but the government holds total power over its use and disposal.”3
Leonard Peikoff reinforces this point in Ominous Parallels: “If ‘ownership’ means the right to determine the use and disposal of material goods, then Nazism endowed the state with every real prerogative of ownership. What the individual retained was merely a formal deed, a contentless deed, which conferred no rights on its holder. Under communism, there is collective ownership of property de jure. Under Nazism, there is the same collective ownership de facto.”4
Under national socialism there was, as Mises put it, “a superficial system of private ownership . . . but the Nazis exerted unlimited, central control of all economic decisions.” With profit and production dictated by the state, industry worked the same as if the government had confiscated all the means of production, making economic prediction and calculation impossible.5
In addition, the Nazis dictated the wages of workers. By 1935, one’s choice of occupation was often dictated by the government. Employment was guaranteed by the government, but a forced labor camp was not what most workers imagined full employment would be.
As Adam Young reports, “Every German worker was assigned a position from which he could not be released by the employer, nor could he switch jobs, without permission of the government employment office. Worker absenteeism was met with fines or imprisonment—all in the name of job security.”6
The Nazis, like the Soviets, used slogans to reinforce their message. Nazi slogans like “Put the common interest before self” could have just as easily been seen in communist Russia. Substitute the word “fairness” for “the common interest” and you have a talking point for many of today’s new democratic socialists in the United States.
Wage and price controls were enacted and interest rates were fixed. As Mises puts it, once prices are fixed, “The authority, not the consumers, directs production. The central board of production management is supreme; all citizens are nothing else but civil servants. This is socialism with the outward appearance of capitalism. Some labels of the capitalistic market economy are retained, but they signify here something entirely different from what they mean in the market economy.”7
Adam Young describes how extensive the Nazi economic controls became. The Nazis established the Reich Food Estate “to regulate the conditions and production of the farmers. Its vast bureaucracy enforced regulations that touched all areas of the farmer’s life and his food production, processing, and marketing.” So, while the Nazis, for the most part, did not confiscate the farmland (except those farms owned by Jews), they exerted control over every aspect of how the land was used.8
The Nazis paid for this the same way their predecessors had paid for reparations. They simply printed the money and manipulated their foreign exchange rate. Tariffs shut down international trade and wage and price controls wreaked havoc on the economy.9
It wasn’t just Jewish businesses. As Mises reminds us, the Nazis used the word “Jewish” as a synonym for “capitalist.” Even non-Jewish businesses worried that the Gestapo would come for the “white-Jews” next, explaining that the Nazi animus featured both racial and traditional socialist anger toward capitalists.10
Economic controls threatened everyone. As one factory owner complained: “It has gotten to the point where I cannot talk even in my own factory. Accidentally, one of the workers overheard me grumbling about some new bureaucratic regulation and he immediately denounced me to the party and the Labor Front office.”11
As Ralph Reiland reports, this was official policy: “In this totalitarian paradigm, a businessman, declares a Nazi decree, ‘practices his functions primarily as a representative of the State, only secondarily for his own sake.’ Complain, warns a Nazi directive, and ‘we shall take away the freedom still left you.’”12
Young gives us an idea of how extensive the Nazi economic controls were. “The bureaucratization of the economy necessarily followed suit. The minister of economics in 1937, reported that ‘Germany’s export trade involves 40,000 separate transactions daily; yet for a single transaction as many as forty different forms must be filled out.’”13
Our Democratic regulation-loving colleagues should acknowledge the historic parallel of government overregulation and loss of freedom. The current U.S. government is awash in regulations. President Obama set the record for new regulations. In his last year in office he added 95,894 pages of them. In contrast, President Trump added the least amount of regulations in recent history but still managed to add 61,950 pages to the Federal Register. To its credit, the Trump administration did roll back some regulations; for example, a regulation mandating the number of cherries that must be used in a frozen cherry pie was repealed. I’m sure there are some democratic socialists complaining right now that our citizenry is no longer protected from the danger of purchasing a pie containing an insufficient number of cherries.
My friend Senator Mike Lee of Utah stacks the Federal Register of regulations in his office next to the corresponding legislation passed. The regulations reach to the ceiling and the laws are only a few inches high. The problem is that Congress, for decades, has delegated its authority to write regulations to the president.
While we don’t refer to our regulatory state as socialism (yet), the overwhelming regulatory control of business that occurred under the Nazis is a form of government control over the means of production and is, in essence, a form of socialism.
As Young describes it, under Nazi socialism “businessmen and entrepreneurs were smothered by red tape, were told by the state what they could produce and how much and at what price, burdened by taxation, and were forced to make ‘special contributions’ to the party. Corporations below a capitalization of $40,000 were dissolved and the founding of any below a capitalization of $2,000,000 was forbidden, which wiped out a fifth of all German businesses.”14
Reisman explains that “what specifically established de facto socialism in Nazi Germany was the introduction of price and wage controls in 1936. These were imposed in response to the inflation of the money supply carried out by the regime from the time of its coming to power in early 1933. The Nazi regime inflated the money supply as the means of financing the vast increase in government spending required by its programs of public works, subsidies, and rearmament. The price and wage controls were imposed in response to the rise in prices that began to result from the inflation.”15
Wage and price controls led to shortages and ultimately to chaos—not unlike what has happened in Venezuela. The Nazis, like Chavez and Maduro in Venezuela, tried to counteract the shortages with rationing and ultimately with production controls.
Reisman reminds us that “the combination of price controls with this further set of controls constitutes the de facto socialization of the economic system. For it means that the government then exercises all of the substantive powers of ownership.”16
He continues, “This was the socialism instituted by the Nazis. And Mises calls it socialism on the German or Nazi pattern, in contrast to the more obvious socialism of the Soviets, which he calls socialism on the Russian or Bolshevik pattern.”17
So, we see that the facts (and the Nazis themselves) argue that Nazism was a branch of socialism. The only reason this debate continues is that today’s socialists only want to admit to a lineage of “kinder, more gentle” socialists like the Danish (who are not socialist and utterly reject the description). Today’s socialists have seen it in their best interest to arbitrarily assign the Nazis to the “right wing.”
This debate still matters as each generation chooses the government and economic system they think will best provide prosperity. So, if you want to be an American socialist, by all means, learn of your forebears, including socialists like the Nazis, who decided to animate their socialism with racial hatred in order to implement it more quickly.18