Breakdown part 4: German fascism

Introduction

Another example of a crisis in profitability can be found in the German economy in the inter-war period. Sanctions, demobilisation of the economy and limitations on accessing international markets severely affected the German capitalists, especially those within the heavy industry sector. In this part we will see how this economic crisis was able to emerge from World War I and its parallels with the marxist theory of breakdown.

But more than that, we will focus on how the German bourgeoisie tried to tackle this crisis. Its plans and strategies as well as the political framework required to put them into action. This is important to us because those actions were taken in order to restore profitability for the German industry. Because of this they constitute some of the counter-tendencies to the general breakdown of capitalism we’ve been discussing so far.

While this approach can grant us some insight as to the means capital has at its disposal to combat breakdown and how far capitalists are willing to go + add the strategic outlook for striking a weak point, it is important to keep in mind that the rise of German nazism as well as its form was not predicated solely by this economic crisis. Even though we won’t focus on them here, the political and ideological context and the organisation of German capital before the crisis were also decisive in shaping German fascism.

Consequences of capital accumulation wrt fascism

During the first world war, the German heavy industry sector was able to develop spectacularly in a context of almost unlimited demand as their products were necessary in feeding the war effort. The industrialists were therefore able to accumulate capital to great extent and were easily able to garner surplus value and profits from that process. However this accumulation of capital would not solely result in new and bigger factories or in technological innovations whose only effect was to increase productivity. Indeed as the war stopped the heavy industry sector was faced with a dire need for rationalisation with their main market becoming suddenly unavailable. In order to face off against this initial crisis, the industrialists decided to reduce cost by linking different parts of the production cycle. For example gases from blast furnaces were reused in the same plant as fuel for other parts of the factory.
This indeed led to an important increase in productivity but it made sure that the factory could not operate below a certain rate of productivity as slowing down too much one part meant shutting down other parts of the factory and a breakdown of production.

With the war over, the defeat of Germany, the sanctions and war repayment imposed on it meant that the heavy industry no longer had access to that precious, almost unlimited market for its products. The consequences of losing the war also stacked the deck of international trade against it further crippling the German industrialist.

Therefore the German heavy industry was thrown into an irrational state, as it made no sense to organise its capital that way in times of peace when demand was limited. However, during times when demand was high, then that irrational organisation of capital would become its most rational organisation. The German heavy industry could have been rationalised through the means of a planned economy or through the decrease in the value of accumulated capital. Both of those options were unthinkable to the German capitalist since the first would wrangle away their control over production while the second one would incur massive losses upon them. Therefore,the industrialists’ need for rationalisation was to ensure high demand for their products. This in turn led to a need for new markets beyond Germany’s borders setting the course towards a conflict with the imperialist world order after the end of World War One.

This led to the creation of the Harzburg Front, a gathering of conservative and reactionary political figures and movement, such as the Nazis under Hitler, as well as representatives of German monopolies, particularly those most affected by this derationalization of the industry. This group endeavoured to solve the current state of the German economy in favour of the heavy industrialist.

However, the heavy industrialist did not compose the entirety of the German bourgeoisie. In particular the various manufacturing industries of Germany had interests opposed to those of the heavy industrialists. The heavy industrialists could not compete on the international markets and were plagued by the repercussions of technological advancements on the production process. In comparison, the manufacturing sector could leverage the German technological expertise to acquire international contracts in the electrical sectors, for example where German industries were contracted to build and develop the electrical network of whole countries.

Those industries that were faring better in the inter-war were represented politically through the Brüning Camp, far more conservative in the measures it proposed than the Harzburg Front. Relying on the existing political status quo the Brüning Camp at first dominated in the power struggle against the Harzburg Front.

Rearmament as a way to increase profits

Locked in a dilemma in which the industrialists were losing money as a result of overproduction as there wasn’t a big enough market for their products but would lose more if they chose to reduce production as it would mean shutting down whole production lines depending on one another to keep running.
The lack of a market to sell their products was inherited from the way this industrial sector developed during World War I, in times of peace most of its production was not needed for the normal reproduction of German society. Therefore, what the industrialists needed was a guarantee that society would accept to pay for goods that it did not seem to need. A market for such products can only be imposed on society. It does not organically appear, it is rather imposed on society by the state or the capitalists themselves. We can find other examples of this phenomenon when we look at how contemporary capitalist states or institutions fund capitalist projects that are not necessary for the continued existence of capitalist society (the hyperloop or the F-35 program comes to mind).
Getting back to the German context of the 1920s, the solution to the industrialists’ problems took the form of a rearmament plan to be imposed by the state on Germany. This plan had political implications such as the fact that, past a certain point, an extensive rearmament plan necessitates a desire to put it to use through war. This was also used to convince the military elite of Germany to join the fascist camp.

While the heavy industrialists’ solution to the crisis was a rearmament plan to be succeeded by imperialist war it is worth noting that it does not apply to every sector of German capital. For example, Siemens, an electrical conglomerate, did not suffer from the same difficulties in valorising its production as it benefited from significant international contracts.

Therefore, for Siemens, what threatened its profitability was the possibility of being cut off from international markets which would happen should Germany be isolated as a result of rising international tensions.

We can see here precisely one of the biggest opposition between the Harzburg Front, who were in favour of rearmament, and the Brüning Camp, who would not sacrifice Germany’s position on the world market.

Agricultural situation

In the inter-war period, German agriculture was divided between large landowners drawing from the aristocracy called Junkers producing mainly for distilling and other industrial uses of agricultural products on one hand and small to medium farmers who produced mainly for food consumption on the other. The Junkers’ desired to expand their control over all of Germany’s agriculture and tried to ally with the Harzburg Front to that end. In response the Brüning Camp also decided to align with the small and medium farmer families. On both sides, no alliance was able to truly form until it was time for one of the two factions to break apart completely. This status quo was shattered alongside the Brüning Camp in the early 1930s as the deterioration of the German economy provided the Junkers with the opportunity to realise their ambition.

At the onset of this new decade, the German economy had to face yet another obstacle that would further cement the ascension of the Harzburg Front. The Sterling Block was formed, securing preferential customs agreement for Great Britain and other countries who used the Sterling pound as their currency. This domination on trade was further reinforced via other customs agreements. All this led to a deepening of the crisis of German capitalism bringing it closer to complete collapse. In face of this looming catastrophe, drastic action had to be taken.

Being cut from the international market meant that German farmers desired a policy of protectionism to survive only on the German market. On the other hand, the manufacturing industries of the Brüning Camp had to pursue a policy of wage cuts in the face of diminishing exports. The Camp was put in an untenable position in which it had to pursue a policy of raising food prices while slashing down wages. Unable to face off against the trade unions and entangled in its contradictions, the Brüning Camp collapsed .

To save themselves and restore profitability, German heavy industrialists formulated a plan that not only involved a drastic cut to wages but also required great control over the stock exchange, the credit system and commodity markets. Such a plan could not be realised without extensive state control over large swathes of the German institutions as well as control over parliament and the press. As the Brüning Camp collapsed in the face of German exclusion from international trade, the Harzburg Front was able to decisively seize the upper hand.

One of the first steps to ensure their dominance was to secure an alliance with the Junkers through the establishment of a policy of agricultural cartelization. This policy was accompanied with plans to shift the direction of agricultural exports towards Europe, particularly Eastern Europe. This was to be done through the means of imperialist war. Out of this deal the junkers would gain new land to exploit and new markets free of their former international competitors.

With this, the alliance between the Harzburg Camp and the Junkers from which a significant part of the German military elite originated was finally cemented. Soon after the Harzburg Front would cement its hold with the Nazis’ rise to power. This was however also not to last as the capitalists would eventually fall under the control of the Nazis. Not that they did much to oppose them as they considerably profited from the situation.

The road to genocide

Now I will be talking a bit about the genocides carried out by the Nazis and their economic underpinnings. Once again I feel it is necessary to put a short disclaimer. This lecture is intended to give a somewhat detailed account of the economic woes that pushed part of the German capitalists to support the nazi party. It does not fully explain their rise to power or their actual politics.

Even though this topic is very complex and would warrant an in-depth analysis to do it justice, I unfortunately only have time to approach it very briefly through one example. The genocide of people with disabilities started off during the Weimar Republic under the SDP before the nazis even took power. Still the process was vastly accelerated under Hitler. Under various eugenicist or economic reasons disabled people were sterilised, tortured and executed, sometimes at birth, by a medical personnel so over-eager that sometimes even the SS had to step in to slow down the pace a bit.

This genocide was not solely carried out through sterilization and simple executions. They were also exploited as much as possible, where some were experimented upon before or after their executions, others were worked to death in factories as a very cheap source of labour. In one instance, in a factory producing military uniforms for the German army, the prisoners working there were sent to be executed in a concentration camp after they broke their fifth sewing needle.

This part is intended to show how far the capitalist class is able to go when faced with severe economic hardship. We have seen in the beginning of this lecture that one of the counter-tendencies to the fall in the rate of profits is to increase the degree of exploitation suffered by the working class. Ie to reduce the ratio of wages over surplus value. In the case of nazi Germany the capitalists had the opportunity to reduce variable capital to somewhere between 4 and 5 sewing needles per worker. They took that opportunity. What I mean to say here is that until the complete abolition of capitalism there will always be a need to drive the cost of labour down and the capitalists are not shy away from using any means available to them including the mass murder of workers on an industrial scale to keep the wheels of production turning at a profitable rate.

What happened in Germany was done as a way to increase profits through reducing variable and constant capital as much as possible. Still, it is far from being the only example of the incredibly violent nature of capitalism. Today the indigenous people of the amazon rainforest are also effectively genocided to allow for further capitalist expansion through gold mining and deforestation. While the goals may differ, the trail of bloodied corpses left in capitalism’s wake remains.

What this should teach us is that there is no compromise possible with capitalism. No amount of reforms or safeguards can truly defuse its murderous exploitation of the working class. And when the system starts to break down once again then the capitalist class will not think twice about offering up more human blood for profits.