Dark Continent: Europe's Twentieth Century (23 page)

Thus although Germany came to dominate their trade, the Balkan states never became more than minor trading partners for the Reich. Their value lay chiefly in specific commodities—Yugoslav bauxite, Greek tobacco, Romanian oil—vitally needed for the overheated German armaments boom. This was exploitation, perhaps, but not of a kind which could offer a country like Germany anything more than short-term benefits. From 1938, barter trade was overshadowed
by more direct forms of economic exploitation: valuable minerals, foreign-exchange reserves and extra steel capacity from the
Anschluss
with Austria; then, with the occupation of Czechoslovakia the following year, more gold and the Škoda works, the most important arms producer in central Europe. Foreign conquest—the primary goal of Nazi economic policy—had begun.
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FASCIST CAPITALISM

“We are now burying economic liberalism,” Mussolini proclaimed in 1933. By then, the end of laissez-faire had been accepted by most people. The active state had taken the place of the free market; the liberal’s selfish individual had been succeeded by the disciplined collectivity. It was easy to see how such trends might make fascism look like the capitalist economics of the future. But was there a specifically fascist economics? If liberalism was now dead, did that mean fascism had all the answers?
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Fascism certainly brought its own style to the management of the economy—activist, heroic, militaristic: Mussolini’s “Battle of Wheat” was followed by a “Battle of the Lira,” a “Campaign for the National Product” and later by Hitler’s “Battle for Work.” Fascists also liked to turn “economic problems” into “questions of will,” which was often another way of saying the leadership had no idea what to do next. In fact, fascist ideology was almost wilfully obscure on economics, partly because the leadership needed to keep both Left and Right wings of the movement happy, but partly too because it was not very interested in the subject, seeing economics as means to an end. Hitler wanted to use “the production technique of private enterprise in line with the ideas of the common good under state control,” a formula which satisfied everyone and no one. Fascism was strongly anti-communist but also anti-plutocratic. It was opposed to international finance—often condemned as “parasitic” and “cosmopolitan”—but in favour of national “production.” Did this make it socialist? Perhaps in a special, airily non-class sense. “Our socialism is a socialism of heroes, of manliness,” declared Goebbels, who came from the left wing of the Party.
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A “socialism of heroes” implied endless hymns to the Worker:
every dictator in Europe must have posed at some time as his country’s First Peasant or First Worker. But fascism stressed manual labour rather than machinery and technology as in the USSR or the USA. Fascist men wielded scythes, they did not drive tractors. “I am a socialist,” Hitler stated, “because it appears to me incomprehensible to nurse and handle a machine with care but to allow the most noble representatives of labour, the people, to decay.” Posters emphasized craftsmen and artisans—a look backwards which perhaps helped draw labour away from its contemporary strong class connotations. Even motorway workers—according to Nazi publicity brochures—were pictured above the caption: “We plough the eternal earth.”
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In practice, however, fascism was scarcely the worker’s friend. Both Mussolini, the former socialist, and Hitler spoke one way to the workers before they had achieved power, and another way after it. Left-wing Italian Fascists had feared just this, and urged Mussolini not to cave in to the employers; anti-capitalist “Red Nazis” like the young Goebbels had exactly the same fear. “All the disgust provoked by parliamentarianism, and the just criticism of socialism and democracy, will end in bitter disappointment and inconclusive rhetoric and—worse still—a fatal reactionary illusion,” a leading pro-labour Fascist warned the Duce, “if Fascism is not to have a more solid, realistic and human base … The Communist utopia might still recover its deleterious influence if the new order were to show itself incapable of ensuring a minimum of economic welfare.” But such warnings not to sell out the workers were disregarded: Fascist and Nazi left-wingers were quietly brought to heel and the principle of private property was never seriously challenged. Left-wing Nazis dreamed of a “second revolution” against capitalism, but in Germany this prospect ended with the Night of the Long Knives and the murder of Gregor Strasser in 1934; in Italy it had vanished years earlier.
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In industrial relations, fascist regimes clearly leant towards the bosses. Independent unions were smashed in both Italy and Germany, but employers’ associations were permitted to exist, and there was little check to employers’ power except through the power of the labour market once full employment returned. Fascism remained a low-wage economy, different in kind from that of post-1945 western Europe.

If the kind of working-class protest which generations of Leftist
historians have searched for failed to materialize, this may be partly because of the success of the regime’s German Labour Front (DAF) and its subsidiaries in organizing welfare and improving working conditions in the factory; after all, with an income three times that of the Nazi Party itself, and a membership many times larger, the DAF was not completely without influence. In Italy, the Dopolavoro organization also signalled the regime’s interest in workers’ leisure and welfare. At the same time, the new hierarchical order introduced into workplace relations made collective action harder to achieve.

Perhaps more crucial, though, was the memory of unemployment. As an observer of Germany noted in 1938, “although [the workers] know there is a labour shortage—they are all scared of losing their jobs. The years of unemployment have not been forgotten.” But the Nazi achievement could also be expressed more positively; in 1938 unemployment stood at just 3 per cent compared with 13 per cent in the UK, 14 per cent in Belgium and 25 per cent in the Netherlands. Much higher levels of unemployment in Italy may explain why Italian workers seemed to stay more alienated from the regime than their German counterparts. Nazi slogans about the “dignity of work” and the “honour of German labour” may actually have struck a chord; caught between the threat of “emergency labour” camps, on the one hand, and organized concerts, films, sports and travel, on the other, the average worker put political struggle behind him.
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After all, in both Italy and Germany, private property no longer reigned supreme either. As Hitler put it, one did not require expropriation when one had a strong state. There were now higher values—the Italian “Nation” and the German
Volk
—in whose name the economy was now to be administered. “In future the interests of individual gentlemen can no longer play any part in these matters,” Hitler had stated in 1936 as he gave the green light for rearmament. “There is only one interest, the interest of the nation.” In a wonderfully precise formulation, a senior German civil servant advised businessmen that “at bottom we do not seek a material but a mental nationalization of the economy.” This was a warning to private enterprise as well as a disclaimer. Likewise, Italian bankers were reminded that “the Banks are no longer the dominators of the economy of the Nation but only the instrument of the exercise of a particular form of credit”; business
had “the right and the duty to enjoy the use of all the sources of credit which the Nation puts at the disposal of the productive activity of the Italian people.”
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Despite the endless appeals to “efficiency” and “coordination,” though, it is difficult to discern a distinctive fascist approach to the state. The state as modernizer? Hardly. In Italy, the need to rescue failing industrial concerns led to the formation of giant public-sector holding companies. On paper, there was a great increase in state control over the economy. In practice, however, industrial managers continued much as before. The Third Reich developed a panoply of state controls, before the 1936 Four-Year Plan spearheaded the rearmament drive under Goering’s leadership: by the late 1930s, his ministry determined around 50 per cent of total industrial investment in Germany. Inspired in part by the Soviet example, the German state undertook a massive scheme of capital investment, building up the most powerful military-industrial complex in Europe. Yet the gargantuan achievements—such as the Brunswick metallurgical works, the world’s largest aluminium industry, the high-quality weaponry—belied a chaotic reality, bedevilled by bureaucratic in-fighting and lack of central planning or even mere coordination. Standards of craftsmanship were high, but distracted attention from what was really needed—efficient mass-production. When it was put to the test, the German war economy—despite the attention lavished on it by the Nazi regime—was unable to match its rivals, both capitalist and communist.
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REFORMING A DEMOCRATIC CAPITALISM

“It suffices to consider countries as different as the United States of America, Soviet Russia, Italy or Germany,” insisted the leading Belgian socialist Hendrik de Man in October 1933, “to understand the irresistible force of this push towards a planned national economy.” The question for western Europe in the 1930s was whether democracy could learn from these striking new tendencies in economic life.
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The fascist and communist emphasis on will and action impressed west European intellectuals who felt increasingly surrounded by
mediocrity and fatalism. After 1933, it was above all younger socialists—stunned by the swift annihilation of German social democracy—who became impatient with their own leaders’ caution. Mocking the mood of the French socialist leadership at their 1933 congress, one critic wrote sarcastically that the delegates had been told “it was necessary to be prudent, it was necessary to be patient, it was necessary to measure the opposing forces accurately. We were not to advance towards power because that would be too dangerous; we would be crushed by the resistance of capitalism itself; we were not to advance toward revolution because we were not ready, because the time was not ripe … We are to advance nowhere!”
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In Britain, similar feelings attracted Labour MP Oswald Mosley to fascism; he was not alone in feeling exasperated by what a fellow-MP called the Labour leadership’s “passion for evading decisions.” Mosley proposed a radical plan for economic recovery at the 1930 Labour Party conference; its rejection by the leadership on grounds of cost prompted him to leave the party and begin the move rightwards which would culminate in the British Union of Fascists.
⁴⁵

A generational gulf of outlook and temperament separated young men like Mosley, who had fought in the First World War, from the older socialist leadership. The latter were keen to show the electorate they could play by capitalism’s rules; the “Front Generation” thought the rules themselves irrational and the leadership passive, defeatist and geriatric. “This age is dynamic, and the pre-war age was static,” argued Mosley. “The men of the pre-war age are much ‘nicer’ people than we are, just as their age was much more pleasant than the present time. The practical question is whether their ideas for the solution of the problems of the age are better than the ideas of those whom that age has produced.” For many of the “Front Generation,” fascism and communism both represented more “modern” and more dynamic forms of economic organization than either liberalism or reform socialism.
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Their exasperation was understandable. Only occasionally did socialist parties even try rethinking theory and practice in the light of unemployment and the slump. The best example was Sweden, which devalued early and recovered fast, thanks to the reflationary policies of its 1932 Social Democratic government. Here was an administration
keen and prepared to use fiscal policy to engineer an upswing. “There will be no spontaneous recovery,” affirmed the Swedish finance minister in 1933, “except to the extent that the policy of the state will help to bring it about.” The government gave a massive boost to investment and by 1937–8 unemployment was shrinking fast (from 139,000 in 1933 to under 10,000) and there was a manufacturing boom. Official policy was worked out in advance and carefully planned. It is true that Sweden enjoyed certain economic advantages which protected the country from the worst of the international depression: nevertheless, in its counter-cyclical fiscal policies and the pact between unions and employers which helped regulate industrial relations, it looked ahead to the managed capitalism which the rest of western Europe only adopted after 1945.
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Industrial Belgium, clinging to gold and mired in depression, provided the other noteworthy response—capitalist planning. In 1933 Hendrik de Man returned there from Germany to work on his
Plan van der Arbeid
. The novelty of the idea that there might be a socialist effort to plan within a capitalist framework, and within a nationalist one at that, was reflected in the opposition which greeted de Man even within his own Workers’ Party:

When I first unfolded the
Plan
before the Executive Bureau of the Workers’ Party in October, I met more opposition than I had foreseen. Some said: “You are really too moderate in that you replace the concept of socialization with that of a directed economy. And in place of loyalty to class struggle you seek an alliance with the middle class and the farmers.” Others: “What you lay before us is thinly-disguised fascism. You make the state all-powerful and you can only realize your programme through a dictatorship. And above all, you expect everything from the nation and nothing from the International.”
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