Economic Policy of Fascism - History of Economics

9.2.2. The economic policy of fascism

The Great Depression had a significant negative impact on the economic life of Germany. Continuous deterioration in the parameters of economic development continued until the summer of 1932 (Table 6). The country's production capacity was only used by a third. By 1932 68,000 industrial enterprises had collapsed, the volume of production was reduced by 40%.

Table 6. Dynamics of production in Germany

Dynamics of production in Germany>

About half of all employees of hired labor lost their jobs in Germany, the number of unemployed was 8.5 million. Germany set a European record for the level and duration of unemployment (2-4 years). Only 1/3 of the workers were loaded full-time. At the same time, workers received wages half the amount of the subsistence minimum. The average wage of the worker was 22 marks a week with a subsistence minimum of 40 marks. The wage fund fell by half. Handicraft production and small trade, in which more than 10 million people were employed, also decreased almost twofold. Only 20% of unemployed received meager unemployment benefits.

On January 30, 1933, Hitler became a Reich Chancellor, and the period of the fascist dictatorship began. After Hitler came to power in the country, the economic policy of fascism began to be carried out. The ideology of fascism, the desire for world domination and the creation of the Third Reich, orientation toward the Second World War were reflected in the economic policy of Germany.

The main content of the economic policy of fascism and the main direction of the way out of the crisis is the general militarization of the economy on the basis of close ties between the state, monopolists and the ruling party and transition to the predominantly administrative management of the economy.

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Administrative management of the economy. There is a formation of a complex state apparatus for managing the economy and its regulation, market methods of self-regulation based on economic freedom are a thing of the past. A number of state structures are being created that implement militaristic economic policy. The State Economic Policy was directed by the General Council of the German economy. It included 12 representatives of the largest monopolies. The General Council managed the economy of the country on the basis of a combination of sectoral and regional management (Figure 20). Management of the economy, built on a sectoral basis, determined the development of industry, energy, trade, craft, banking and construction. At the same time, the formation of a territorial management structure is also beginning. Administrative methods of managing the economy become predominant. The state regulation of the distribution of raw materials was carried out.

General Council of the German Economy

Figure 20

The growth of state control over the economy, as a result of which a totalitarian system of government is being formed, enabled Germany to develop and implement several four-year plans.

The general militarization of the economy is becoming the main direction of economic policy, which at that time was conducted under the slogan "guns instead of butter." Militarization of the economy was carried out at an accelerated pace and was seen as the main means of overcoming the crisis. The expenditures of the state budget, which stimulated high rates of growth in the production of military products, primarily heavy industries: metallurgy, transport engineering, electric power, chemistry, etc., increased significantly. These enterprises were primarily provided with loans and provided with all necessary resources.

Three-fifths of all investment spending went to industries producing "military products". The newest factories for the production of military equipment were built, raw materials and foodstuffs were formed, money funds were transferred to the military, standardization of railways, steel products and machine parts was carried out. The extraction of iron ore was expanded, the production of petroleum products, synthetic materials, machine tools, cars increased. Military expenditures in 1933-1939. increased by 10 times, and the output of heavy industry exceeded the level of 1929 by 50%. The share of military products accounted for 80% of the country's total industrial output.

Enterprises, whose products did not fall into the category of war-important, were subject to liquidation. In nonmilitary branches of production, there was a sharp decline in production, a direct ban was imposed on investments in paper, woolen cotton and a number of other industries. The government practically did not direct funds for the development of industries producing consumer goods, housing construction remained at a low level.

Administrative management is much easier and more effective if a small number of large enterprises operate in the economy, rather than a large number of relatively small ones. The compulsory cartelization of the economy was carried out on the basis of the Law on Forced Cartelization of the Economy (1933), in accordance with which the process of merging industrial firms begins. A policy of compulsory cartelization and syndication is beginning in the country. The Minister of Economy had the right to unite existing enterprises in cartels and syndicates, prohibit the production of certain types of products and increase the production of others.

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The reform of joint-stock companies liquidated all organizations that had capital of less than 100 thousand marks, and for the opening of new ones capital was needed of 500 thousand marks or more, there was a "capitalization of capitals". As a result, the concentration of production increased, and in a number of industries, associations of firms were established. Since 1934, the Minister of Economy has been authorized to create economic associations, dissolve them, merge, and appoint leaders.

The strengthening of the economic role of the state led to a significant development of the public sector of the economy.

Originally it was formed on the basis of the confiscated property of the "non-Aryans" and entrepreneurs, disloyal to the fascist regime. Then state enterprises began to be created at the expense of the budget. At the same time, the state's share in enterprises of mixed ownership with a large monopoly capital grew.

A serious problem for the German economy was the lack of strategic raw materials - non-ferrous metals, aluminum, oil, rubber, etc. The problem of providing the industry with strategic raw materials was solved in three ways:

- the growth of exports to receive foreign currency and the purchase of necessary raw materials abroad. Benefits were granted to enterprises working for export;

- a reduction in imports of all other types of products and a centralized definition of the volume of imports;

- development of the production of synthetic materials.

The development of agriculture was controlled by the state. The Imperial Estate for food was formed, which united agricultural workers, peasants, cadets, food producers, merchants of agricultural products, relying on landowners, Junkers and well-to-do peasants. The main purpose of the Imperial Estate for food was to create food reserves for a future war.

The state actually determined all the major directions of agricultural enterprises: production volumes, specific types of products, prices, and the volume of mandatory deliveries to the state. Each peasant became a "soldier of the front supply". The production of agricultural products was put under strict state accounting. A system of compulsory supply of agricultural products was introduced, which was to be surrendered to the state at the prices set by it.

In agriculture, the policy of agglomeration of farms was carried out. Under the Law on Hereditary Yards, the development of large rural farms belonging to the "pure Aryans" was supported. Large agrarian capitalist farms (from 7.5 to 125 hectares) were declared inalienable "hereditary households" and could only be inherited by the eldest son. A special card for each farm was established, in which all the agrotechnical measures determined by the government were recorded. Thus, the rural population was divided into peasants and rural masters. The last state regulated practically all economic activity, prescribed that it should sow what to hand over to the state and at what prices.

The regulation of labor relations was based on the Law "On the Organization of National Labor" (1934). Workers and entrepreneurs were united into a single "German Labor Front," claiming the realization of ideas about the social partnership of labor and capital. The idea was declared of ending the class struggle on the basis of the transformation of every worker into a "soldier of the labor front", and the owners of enterprises - in their "Fuhrer" who received unlimited dictatorial powers - could establish quotations, production rates, working hours, fines and penalties .

On the basis of the declaration on the cessation of the class struggle, collective agreements were abolished, trade unions were dissolved, strikes and strikes were prohibited. Workers were deprived of the right to unauthorized transition to another enterprise and dismissal. All civil rights and freedoms were eliminated, mass repressions were carried out against ideological and political opponents, persons of "non-Aryan" nationality.

The fight against unemployment was carried out by the peculiar measures typical for the dictatorial regime - the system of forced labor began to be formed. No man had the right not to work. The gradually emerging system of forced labor is becoming a means of combating unemployment. Labor service is formed in two stages: initially (since 1935) for youth of 19-25 years, and since 1938 labor service has become universal.

All these socio-economic transformations led to the formation in Germany of a totalitarian administrative model of the economy with rigid centralization of management.

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