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Dwight Macdonald

Fascism – A New Social Order

(May 1941)

From New International, Vol. VII No. 04, May 1941, pp. 82–85.
Transcribed & marked up by Damon Maxwell for ETOL.
Proofread by Einde O’ Callaghan (December 2012)

IN DEVELOPING THE CONCEPTION of Nazism which I sketched in outline in The New International two months ago (and which the interested reader may find argued in more detail in the current issue of Partisan Review), I naturally have had many discussions with adherents of more “orthodox” views. These objections run pretty much along a few lines (most of which are laboriously traced out in Albert Gates’ article in the last New International). It seems useful, therefore, to try to formulate these objections in the form of five “hard questions,” and to try to deal with them briefly. [1] I hope that at least the answers may lay to rest certain elementary misconceptions about Nazi economics, as well as certain false assumptions as to the conclusions that one must “necessarily” draw if one insists that bureaucratic collectivism has displaced capitalism in Germany today.

Control Is Decisive

1. Has there been any trend towards greater nationalization (state ownership) of property under Hitler? If not, doesn’t this conflict with your theory?

Not only has there been no such trend, but the tendency has been in the other direction. “Reprivatisierung” (“reprivatizing”) was carried out by the Nazis on a big scale in 1936 and 1937. In this period, the state sold back to private interests its controlling shares (acquired in the last years of the Republic to prevent the bankruptcy of certain key banks and trusts) in Thyssen’s great steel trust, Vereinigte Stahlwerke; in the German Shipbuilding & Engineering Co.; in the Hamburg-South American Shipping Co.; and in the three big banks which dominated the whole banking system – the “Dedi” (Deutsche Bank & Disconto Gesellschaft), the Commerz und Privatbank, and the Dresdner. Yet this “reprivatizing,” which seems to support the traditional Marxist conception of the Nazi state, actually turns out to be a particularly nice example of the miscalculations one falls into if one takes too seriously the matter of private ownership in a totalitarian society, whether Nazi or Stalinist. By reprivatizing these banks and trusts, the Nazis gained (1) large sums of cash, (2) a certain amount of goodwill and confidence from the business community, which, in 1936 at least, still took these matters of “ownership” with Marxian seriousness. Both these commodities were useful to the Nazis, embarking on the Second Four Year Plan. In return, they gave nothing of importance. For note that they “restored” the properties not in 1934, when big business was still in the saddle, but in 1936-7, that is, after they had achieved such a degree of control of the economy that ownership had become a secondary matter. How secondary was to be revealed dramatically several years later when Fritz Thyssen, in 1936 restored by the Nazis to his full glory as the private owner of the Steel Trust, in 1939 fled across the border into exile.

Even more significant was the case of the Big Three banks. “There is no longer any question of private control,” commented the New York Times at the time. “All banks are now under the central control of the Reichsbank and the Economic Ministry, but the regime believes in private ownership so long as it does not involve the question of control.” Or, as Stolper put it in German Economy: “The subsequent reprivatizing of the large banks was of no practical consequence because meanwhile the state had assumed full control of the economic system as a whole.” At the same time as the Nazis reprivatized the Big Three banks, they also extended direct state control over the decisive factor in the banking system: the Reichs-bank, for so many years Dr. Schacht’s base of power. The New York Times of February 13, 1937, reported: “By a law decreed today, the Reichsbank was stripped of its technically independent character and placed under Chancellor Hitler’s direct authority as an organ of the German government.” A Marxist description of the German economy, written in 1936, had had this to say about the Reichsbank: “Schacht’s paramount economic power derives from the position of the Reichsbank, which is the most important economic institution in Germany. It has complete control of the capital market and of the main financial resources of the country. It forms a part of the Fascist state, yet it is – besides the Army – the only institution to which the Fascist totalitarian principle has not been applied.”

In his Fascism and Big Business, Guerin describes the change in ownership of the Big Three banks, which he, of course, sees as one more verification of the traditional Marxist thesis: but he does not even mention the much more significant change in control of the Reichsbank.

Could there be a clearer illustration of the misleading nature of the traditional Marxist categories than this matter of reprivatizing?

The Nature of Nazi Superiority

2. Is German fascism economically superior to democratic capitalism? If so, in what sense precisely?

The answer to the first question is Yes. Since 1936 Germany has been operating at practically 100 per cent capacity, with no unemployment and full use of the national plant. This production has been directed into the most necessary channel to any modern imperialist state: war production. The democracies have not produced at anything like 100 per cent and are not even now doing so, and their production is not even yet adequately integrated into the supreme purpose of a modern state – war. Furthermore, since 1936 we have seen Germany producing in quantity a whole series of synthetic products which hitherto modern industry had been able to produce only on a laboratory scale. Thus the German economy would seem to be dearly superior, in productivity and in technology, to the French, British and American economies.

The Marxist, however, asks: (1) is this increased production the result of new industrial techniques which exploit human labor more effectively, expressing themselves in higher productivity per man per hour – the sort of increased productivity which the industrial revolution at the end of the eighteenth century brought about? And (2) is this large-scale synthetic production due to new (post-Hitler) inventions and laboratory advances, comparable to the inventions of Watt, Arkwright, Whitney and other heroes of the industrial revolution? If the answer is Yes, then German fascism is a new form of economy in the sense that modern capitalism is, which is to say it is “progressive” in a Marxist sense. This does not seem to be the case, however. There is no significant difference, in this sense, between the German and the British or American forms of production. I have seen no figures indicating any superiority, in post-Hitler Germany, in man-hour productivity, nor is there any evidence that the new synthetic production, technologically, is anything more than an extension and application of discoveries made before 1933.

Wherein lies the superiority of Nazi economy may be suggested by Stolper’s comment on the production of synthetic materials: “The scientific and technical problems of their production were solved long before National Socialism came into power. The difficulty was merely the economic application of scientific devices on a large scale. This difficulty consisted first in the huge amounts of capital that had to be diverted to the new plants from other purposes, where they were employed more economically. The second difficulty was that these new materials were several times as expensive as the materials they were supposed to replace. For example, the price of Buna rubber is about seven times the price of genuine rubber.” That is, as I have shown above, it was desirable, for political reasons, for the Germany economy to cut loose from the world market and the international division of labor, since only thus could German supplies of essential war materials be assured. Laboratory technique gave the possibility of making artificial rubber, oil, wool, etc., on a big scale. But this ersatz production was so expensive and unprofitable – in terms of the world market – that business would never have undertaken it unless compelled to do so by the state. In a word, the problem of mass production of ersatz materials inside Germany was primarily a political, rather than an economic, problem, and the totalitarian controls wielded by the Nazis were what made a solution possible.

Similarly with the matter of production in general: the great problem of any advanced economy is not how to devise more efficient techniques for producing goods (technologically, we have been living in an economy of abundance, as against the i9th century economy of scarcity, for many years) but how to control the existing industrial mechanism so as to get it to work at full capacity on those products which are most desirable and useful for whatever aims the society may have. The problem is not how to increase productivity, but how to increase production, and the solution can be found only by political means. The Nazi economy is superior to those of England and America today in that it allows the state power to intervene so as to get 100 per cent production from the existing national plant and to organize this production in a planned, purposeful way. This can only be done by bursting the antiquated fetters which bourgeois economic forms place on production – and in this sense fascism is a kind of “black socialism.”

Fascism as a Class Society

3. If the Nazi is as you say it is, then will it not be able, in the future after the war, to introduce production for use, a planned economy, and plenty for all? In that case, what are the reasons for opposing it?

There is no economic reason why fascism should not create such a society after the war, and, by the same token, there is no economic reason for Marxists opposing it – any more than there was for their opposing the concentrating of industry into monopolistic trusts. But we don’t evaluate a society in terms of economic production alone; we also consider its effect on human beings. And here, as in the case of the trusts, there are good political reasons for fighting against fascism.

Fascism is not only a form of class society, but it is one in which the dominance of the ruling group and the exploitation of the ruled group reaches a degree of intensity unparalleled since the great slave states of antiquity. On a world scale, it means an Asiatic subjugation of all non-Germanic peoples to a German ruling race, just as internally it means the totalitarian control, by terror and propaganda, of the great mass of Germans by a political bureaucracy. This bureaucracy can maintain itself only by drawing an extremely sharp class line between themselves and the rest of society: absolute power must be counterposed to absolute subjugation. Hence, while it would be economically possible for fascism to develop into a sort of technocratic Utopia in which living standards would be high, politically this would tend to decrease the differences between rulers and ruled, since (1) access to and control of the means of production would have to be spread much more widely, and (2) such an economy would mean well-fed and well-housed masses, which in turn would mean leisure, education, a higher cultural level. Scarcity, hunger, ignorance – these are the necessary conditions for the maintenance of a totalitarian bureaucracy. As for conquered nations, the Nazis have already indicated the policy they must pursue there: not organization of their economies on a higher level, but, on the contrary, the de-industrialization of these nations, reduction of them as much as possible from advanced manufacturing nations to suppliers of foodstuffs and raw materials to a super-industrialized Germany. (Yes, Comrade Gates, there is “export of capital” – but to, not from, Germany!) Once more the relations inside Germany are reproduced on a world scale: in order to maintain absolute rule over conquered nations, the German state must concentrate the instruments of production in its own hands, keeping the rest of Europe on a subsistence level.

This is the most favorable possible outcome of the present war, for Germany. More likely is a continuance of the struggle with England for years, the entrance of the United States and possibly Russia into the conflict, and a long period – ten to twenty years – of continual or intermittent world conflict between Germany and her major imperialist rivals. In such a case, it would dearly be even less likely that the Nazi bureaucracy would relax any of its control over either the German masses or the European conquered nations or that we would see any technocratic era of plenty ushered in by fascism.

The distinction between the two outcomes is not very important anyway, since the first would merely postpone for a few years the struggle for world power between Germany and the United States. So even in that case, there could be little relaxation of the present “war economy.”

The New Ruling Group

4. How can Germany be termed a non-capitalist society when (1) the bourgeoisie still retain their property, still amass huge profits; (2) the bourgeoisie also keep their social status largely intact, living better than the rest of society and occupying positions of authority; (3) this alleged new ruling class, the bureaucracy, is just a handful of politicians with the same essential relationship to the means of production as politicians in capitalist countries?

Even traditional Marxists would agree that you have in Germany two economic systems existing side by side the familiar capitalist system with its apparatus of prices, profits, private property, money, the market, etc.; and a new sort of system, which might be called bureaucratic collectivism, in which production is ordered not by the interplay of capitalist factors but by official decrees and regulations based on a plan worked out consciously by state bureaucrats. The same dualism exists in this country today: the diehard Republicans are right when they detect in various New Deal measures (SEC, TVA, Wages and Hours Act, Wagner Act, AAA, RFC, FCC, FDIC) a non-capitalist tendency. The question is: which of these systems is dominant? My contention is that, while clearly it is the first in this country, in Germany it is the second. While the forms of capitalism still exist there, they have lost their autonomy and hence their character of economic prime-movers, and have become merely the technical bookkeeping means whereby the plans of the bureaucracy are put into effect.

(2) It is true that the bourgeoisie have not been reduced to the level of the working class either in power or in living standards – to put it mildly. There is some disagreement as to just how much the bourgeoisie’s living standards have been reduced, but it seems probable that their living standards are still far above those of the masses and that there still is a considerable degree of luxury open to them. It is also true that they exert a much greater degree of influence on the Nazi regime than any other of the old social classes do, and that many Nazi top bureaucrats have also become members of the bourgeoisie through acquisition of property. But these are not decisive tests of class rule. The position of the German big bourgeoisie in relation to the Nazi bureaucracy has resemblances to the relationship, centuries ago, between the feudal nobility and the new bourgeois ruling class. The feudal nobles were by no means reduced to the status of their peasants by the bourgeois revolution; in England especially, they kept much of their wealth and were able to fuse themselves with the new ruling class. But this did not alter the fact that they were no longer the ruling class in society. When one form of class rule succeeds another, the new ruling class often treats the old one with more consideration than the masses get. This is partly due to snobbery, but chiefly to the common interest both classes have in keeping the great mass of people out of power (the old ruling class, in the transition period, still commands some of the instruments of control) . It is only when a revolution is made by believers in a classless society, leading the lowest of the old classes, as in Russia, that the break with the old ruling class is sudden and complete.

(3) Finally, the new ruling class in Germany is by no means “just a handful of politicians.” Guerin describes it: “A caste of parasites, greedy and corrupt, was installed in the government. An idea of its numerical size can be obtained from the fact that at the Nuremburg Congress every year the parade of party leaders alone included nearly a million participants.” It is true that because of its hierarchical and centralized form of organization, the class is itself controlled at the top by a small number of political leaders. But the entire mass, from Hitler down to the humblest youth leader, has a common interest in the perpetuation of the party’s monopoly of power, derives a common economic security from its privileged status, and has a common sense of superiority, prestige and real power vis-à-vis the ‘grey mass’ of non-party people. Nor is it accurate to describe this political organization as essentially a reproduction, on a bigger scale, of capitalist political parties. These new rulers of society, like the bourgeoisie, rule because they have control of the means of production. It is true that this control is exercised in a different form from that of the capitalist ruling class, that it is based on political power over the means of production rather than on legal ownership of them. But the relationship of the Nazi bureaucracy to the means of production is that of a ruling class, in the strictest Marxist sense. [2] Sidney Hook well summarized the matter when he wrote in the New Leader of July 20: “If we follow the customary usage of scientific historians, the term “social revolution” will designate (1) a change in property relations, (2) effected by a transfer of political power from one class to another. Once we define property functionally, i.e., as the right, enforced by state power, to exclude others from the use of goods and services, then it is strictly accurate to say that in Germany (as in Russia) the basic instruments of production are owned by the party bureaucracy.” [3]

The Character of the Order

5. But why isn’t it “just a war economy,” a long-term in-vestment by the German big bourgeoisie?

By now almost every one grants the existence of certain non-capitalist features at least at present in the Germany economy. The theory of “just a war economy” or “a long-term investment by the bourgeoisie in future profits to be realized after the war” implies that these tendencies, however non-capitalist, are merely temporary, that after the war is over assuming a German victory – there will be a return to more “normal” capitalist economic and political methods. [4] This in turn implies a belief in the possibility of the reconstruction of the world market – with Germany in England’s place – and in the possibility that capitalism – failing as a successful socialist or colonial revolutionary movement – can survive this war. With these assumptions I disagree.

For my views on the world market and Germany’s war aims, I must again refer the reader to the current Partisan Review. Here I want to make a few points about the internal political situation in Germany today.

In a recent lecture, Shachtman made a notable admission: that today in Germany the bourgeoisie no longer control politically the Nazi bureaucracy, that they have for the moment lost (or surrendered) their political power – while, of course, still keeping their ownership of the means of production. At first glance, this seems to contradict the usual Marxist view of the state power as “the executive committee of the bourgeoisie.” For here we have a state power which makes political decisions independently of the bourgeoisie, who thus become pensioners of the state power, enjoying economic benefits only insofar and for so long a time as seems best to the bureaucracy to grant them. In answering a question pointing this out, Shachtman made two points: (1) Nazism is a species of Bonapartism, in which the state power temporarily assumes an independence from direct control by the ruling class; (2) as Engels pointed out, the development of finance capital long ago turned the bourgeoisie into a caste of superfluous, parasitic coupon-clippers, who no longer play an important role in production (as the early capitalist entrepreneurs did, who personally directed production, built up new industries) but who have become rentiers drawing “pensions” from the stocks and bonds which are their legal titles to the income from production.

To deal with (2) first: in the pre-fascist era the bourgeoisie controlled the state politically, and it was precisely the most important function of the state power to protect these pensioners’ property rights to the lion’s share in the income from production; under fascism, the state power has become politically independent of the bourgeoisie. Parasitic pensioners from the economic point of view in both instances, the big bourgeoisie in the one case controlled the political instrument which could guarantee their legal rights to their pensions, in the other case lost this control. Thus we come back once more to the central point, which traditional Marxists seem unable to grasp: that it is political control, and not legal ownership which is decisive.

Shachtman’s second point, that this is an essentially Bonapartist regime (admittedly a much more stable kind than has ever existed before), means that after the war the bourgeoisie will regain their political control of the state. What form, precisely, could this take? I can imagine only two – either a restoration of some degree of democracy or else a “palace revolution,” perhaps aided by the conservative army chiefs, which would replace fascist-quasi-Bonapartism with the pre-Hitler type of Bonapartism. But the latter would merely postpone the decision, since it is generally agreed that this type, purely and frankly a “rule of the saber,” cannot last any considerable period. Thus the general perspective must be a trend back towards democracy – which is, after all, the political form best suited to a capitalist market economy. I think this trend is unlikely for both political and economic reasons. Politically, why should the Nazi bureaucracy, which has won the war by its own methods and its own policies, both of which were strongly opposed by the big bourgeoisie, as I have shown, why should this triumphant class step aside and let the bourgeoisie take command again? And, assuming the Nazis would not yield voluntarily, how could the bourgeoisie engineer a palace revolution when the bureaucracy, having reduced to political impotence the junkers, the finance capitalists and the conservative army clique, is firmly in control of the whole state apparatus? Economically, the shift is even less likely, since, as I have tried to show, Nazi bureaucratic collectivism has won out over Schacht’s capitalist policies because it more closely corresponds to the structure of Germany’s highly rationalized, large-scale industrial economy. It is precisely the failure of the political-economic forms expressing finance capitalism – from the Bruning-Schleicher-Papen types of Bonapartism through Schacht’s “New Plan” – to solve Germany’s economic problems that made inevitable the establishment of the Second Four Year Plan and the victory of the Nazi bureaucratic forms. But will these difficulties be more or less serious after the war? If less, then there is at least a theoretical possibility of the relaxation of totalitarian controls. If more, there is not even such a theoretical possibility.

The crux of the whole matter is the possibility of the survival of capitalism throughout the next period of world war, and of the reconstitution, after the war, of the world market and an international capitalist economy. My views on this subject are expressed in detail in the current Partisan Review. It cannot be too often emphasized that the perspective of “orthodox” Marxists like Gates, Shachtman and most of the other leaders of the Workers Party is based on the assumption that, at some time in the future, with peace, there will be a tendency back to a more “normal” capitalism, that the bourgeoisie will take back the state from the “Bonapartist” totalitarians, and that it will be economically possible to restore something at least approaching the traditional capitalist world market. For my own part, I cannot share this faith in the recuperative powers of capitalism. I am much less optimistic about its survival!



1. In these questions I do not deal with perhaps the main point raised by Albert Gates: that inside Germany you have monopoly capitalism, and outside Germany the struggle of a “state capitalist” imperialism for a bigger share o! the world market. This is because in my article, The Economics of Nazism, in the current Partisan Review it chances that I deal extensively with these themes. Comrade Gates would have been well advised to restrain his polemical ardor until he had read this article!

2. In an article, Is Russia a Workers’ State? in The New International for December 1940, Max Shachtman argues that, while the Stalinist bureaucracy is a new class, the Hitler bureaucracy is not. He rests his entire argument on the purely formalistic quibble that in Germany you have private property forms, and in Russia you have collectivized property forms. The heart of Shachtman’s argument is this paragraph: “Private ownership of capital, that ‘juridical detail’ before which Hitler comes to a halt, is a social reality of the profoundest importance. With all its political power, the Nazi bureaucracy remains a bureaucracy; sections of it fuse with the bourgeoisie, but as a social aggregation it is not developing into a new class. Here control of the state power is not enough. The bureaucracy, insofar as its development into a new class with a new class rule of its own is concerned, is itself controlled by the objective reality of the private ownership of capital.” In this article I have tried to present data to show that, under Nazism as under Stalinism, “control of the state power” is “enough,” and that these private property forms are precisely – forms. Elsewhere in his article, Shachtman makes a valid distinction between property forms and property relations. The conclusion he reaches as to the nature of the Soviet economy applies word for word to the Nazi economy, as may be demonstrated by substituting the word “private” for “nationalized” and “Germany” for “the Soviet Union” – to wit: “However, what is crucial are not the property forms, i.e., nationalized [private] property, whose existence cannot be denied, but precisely the relations of the various social groups in the Soviet Union [Germany] to this property, i.e., property relations! [“!” indeed!]. If we can speak of nationalized [private] property, in the Soviet Union [Germany], this does not yet establish what the property relations are.” Thus we find Shachtman, in writing of Soviet economy, basing his conclusion on the property relations, correctly rejecting the property forms as secondary, while in defining the Nazi economy, he looks only at the property forms, which are those of private property, without considering, as this article tries to do, “the relations of the various social groups to this property.” To such shifts is the “orthodox” Marxist reduced today when he tries to escape the embarrassing – to his theory – implications of fascist economics.

3. It might be well to point out that, in agreeing with Hook’s formulation on this point, I do not at all agree with his general political conclusions as to the desirability of supporting England against Germany in this war – any more than, in accepting Hilferding’s analysis of totalitarian economics, I accept his well known general political views. As the Persian proverb has it: “A wise man gathers knowledge even out of the mouths of unbelievers.”

4. It is interesting to note that the two schools of thought which held this “long-term investment” theory most tenaciously were the conservative-bourgeois and the traditional-Marxist. Schacht and Trotsky both emphasized the fact that the big bourgeoisie was only yielding its control to the Nazis for the time being, that its concessions and sacrifices would be more than restored “after the war.” Schacht and the big bourgeoisie, being actually involved in the development of Nazism, have been the first to lose this illusion. The Marxists, looking on at a distance, have been able to remain blind to the reality even up to the present. This parallelism between Marxist and conservative-bourgeois thought, by the way, cannot be dismissed an as “amalgam,” since it can be shown that the thought-patterns are the same in each case because both schools of thought analyze economic relations in Germany within a capitalist framework, the Marxists putting a moral plus sign where the bourgeoisie put a moral minus sign.

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