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The Wages of Destruction: The Making and Breaking of the Nazi Economy
The idea that Nazi Germany was an unstoppable juggernaut, backed by an efficient, highly industrialized economy, has been central to all accounts of World War II. But what if this was not the case? What if the war had its roots in Germany's weakness, not its strength? This is the radical argument in this pathbreaking book, the first account of the Nazi era for the twenty-first century and our globalized world.
There was no aspect of Nazi power untouched by economics, yet Adam Tooze is the first to place economics alongside race and politics at the heart of the story of the Third Reich. And America, in Tooze's view, is the true pivot for Hitler's epic challenge to a shift in the world order. Hitler intuitively understood how Germany's relative poverty in the 1930s was the result not just of global depression, but also of Germany's limited resources. He predicted the dawning of a globalized world in which Europe would be crushed by America's overwhelming power, against which he saw only one last chance: a German super-state dominating Europe. Doing what Europeans had done for three centuries, he sought to carve out an imperial hinterland through one last land grab to the east, to give him the self-sufficiency to prevail in the coming superpower competition. With the odds stacked against him, he launched his underresourced armies on their unprecedented and ultimately futile rampage across Europe.
Hitler knew by the summer of 1939 that his efforts to prepare for a long war with the West were doomed to failure. Ideology drove him forward. Hitler became convinced that Jewish elements in Washington, London, and Paris were circling round him, and from 1938, the international "Jewish question: was synonymous with America in his mind. Even in the summer of 1940, at the moment of Germany's greatest triumphs, Hitler was still haunted by the looming threat of Anglo-American air and sea power, orchestrated by, he believed, the world Jewish conspiracy.
Tooze also casts a stark new light on Albert Speer's role in sustaining the Third Reich to its bloody end, after the catastrophe of the Soviet invasion. Speer, Tooze proposes, was no apolitical agent of technocratic efficiency but a Hitler loyalist who would stop at nothing to continue a hopeless battle of attrition, at the cost of tens of millions of lives.
The Wages of Destruction is a chilling work of originality and tremendous scholarship that will fundamentally change the way in which we view Nazi Germany and the Second World War.
There was no aspect of Nazi power untouched by economics, yet Adam Tooze is the first to place economics alongside race and politics at the heart of the story of the Third Reich. And America, in Tooze's view, is the true pivot for Hitler's epic challenge to a shift in the world order. Hitler intuitively understood how Germany's relative poverty in the 1930s was the result not just of global depression, but also of Germany's limited resources. He predicted the dawning of a globalized world in which Europe would be crushed by America's overwhelming power, against which he saw only one last chance: a German super-state dominating Europe. Doing what Europeans had done for three centuries, he sought to carve out an imperial hinterland through one last land grab to the east, to give him the self-sufficiency to prevail in the coming superpower competition. With the odds stacked against him, he launched his underresourced armies on their unprecedented and ultimately futile rampage across Europe.
Hitler knew by the summer of 1939 that his efforts to prepare for a long war with the West were doomed to failure. Ideology drove him forward. Hitler became convinced that Jewish elements in Washington, London, and Paris were circling round him, and from 1938, the international "Jewish question: was synonymous with America in his mind. Even in the summer of 1940, at the moment of Germany's greatest triumphs, Hitler was still haunted by the looming threat of Anglo-American air and sea power, orchestrated by, he believed, the world Jewish conspiracy.
Tooze also casts a stark new light on Albert Speer's role in sustaining the Third Reich to its bloody end, after the catastrophe of the Soviet invasion. Speer, Tooze proposes, was no apolitical agent of technocratic efficiency but a Hitler loyalist who would stop at nothing to continue a hopeless battle of attrition, at the cost of tens of millions of lives.
The Wages of Destruction is a chilling work of originality and tremendous scholarship that will fundamentally change the way in which we view Nazi Germany and the Second World War.
802 pages, Hardcover
First published January 1, 2007
About the author
Adam Tooze
50 books653 followersAdam Tooze is a British historian who is a professor at Columbia University. Previously, he was Reader in Modern European Economic History at the University of Cambridge and professor at Yale University.
After graduating with a B.A. degree in economics from King's College, Cambridge in 1989, Tooze studied at the Free University of Berlin before moving to the London School of Economics for a doctorate in economic history.
In 2002, he was awarded a Philip Leverhulme Prize for Modern History. He is best known for his economic study of the Third Reich, The Wages of Destruction, which was one of the winners of the Wolfson History Prize for 2006.
After graduating with a B.A. degree in economics from King's College, Cambridge in 1989, Tooze studied at the Free University of Berlin before moving to the London School of Economics for a doctorate in economic history.
In 2002, he was awarded a Philip Leverhulme Prize for Modern History. He is best known for his economic study of the Third Reich, The Wages of Destruction, which was one of the winners of the Wolfson History Prize for 2006.
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August 24, 2012
For all its horrors, World War 2 is undeniably a really cool war to look at from a military perspective. However, anyone who plays the Could Germany Have Won game (or even a few rounds of Axis & Allies) is confronted sooner or later by the fact that a lot of Germany's military decisions seem a bit... eccentric, to put it mildly. Taking over Austria, yes; seizing the Sudetenland, sure; closing off the Polish Corridor, of course; but why go to war barely 6 years after taking power, way before your own rearmament timetable is done? Why fight Britain and France first off, when you don't even want their land? Why open up another front with Russia when Britain hasn't been beaten yet? In fact, why start a war at all with the countries around you, when every single one has an economy that's at least a match for your own? The traditional answer for questions like these is that Hitler simply wasn't a very good military commander, but while this is perfectly true, Tooze looks deeply into the economic background of Nazi Germany and finds that a lot of the wackier-seeming choices the Nazi leadership made do make a bit more sense given the economic options available to them, and even some of the more appalling facets of the Holocaust were driven as much by industrial considerations as by ideology. Tooze's decision to look at the war from an economic viewpoint is very refreshing, and allows him to bust a truly impressive number of myths, most notably for me the idea that Germany had any chance at all to win the war.
Though it's hard to appreciate now, Germany in the 1930s was not a very rich or developed country at all. The deprivation of World War 1, followed by Weimar hyperinflation, followed by Great Depression deflation, all overlaid on the fact that Germany had been a single unified country for barely a half-century, meant that though individual German firms were very competitive and productive, as a whole Germany was quite backwards in many ways (one graph on page 146 shows Germany in 1933 as having only 70% the income per capita as it had before 1914). The single goal of the Nazi Party was to transform Germany from the hemmed-in, middle-weight power it was into a true competitor to Britain, with its world empire, and America, with its continental resources. This primarily meant acquiring land, and Tooze assembles masses of agricultural statistics to show that the goal of Lebensraum, which strikes the modern reader as a bit weird (21st century Germany is much denser than even the most claustrophobic nightmares of Nazi planners), made a lot more sense in what was almost literally a peasant society in many regions. Expanding to the east would also have the benefit of allowing Germany to gather enough resources to be closer to self-sufficiency, a major concern for a country almost totally lacking in vital strategic materials like oil or steel. Removing the need to import important resources would have reduced the need to acquire foreign currency through export, as well as lessening the tension between production for domestic use and production for rearmament.
The beginning sections outlined Germany's struggles to emerge from the Great Depression with both a strong military and a robust consumer economy. They got fairly technical (it helps to know basic macroeconomic concepts like current account deficits, currency revaluation, or the relationships between deficit spending, taxation, and inflation), but they were necessary to understand why Germany chose to start the war in 1939, even though their own plans showed that they weren't ready. Putting yourself in the shoes of a Nazi economic planner, once you've taken the goal of Germany conquering all of Europe as a given, now you just have to figure out some way to implement it, and it would seem that waiting until you have a strong advantage would be the most prudent course. Unfortunately for Germany, despite their massive military spending at the expense of the civilian economy (much touted public works like the autobahn or the Volkswagen made surprisingly negligible contributions to Germany's recovery from the Depression), and even after years of treaty-defying rearmament, they were barely at parity with Britain or France. The reason for war beginning in 1939 was simply that waiting would have put Germany farther and farther behind those two powers, who were also beginning to accelerate their own military preparations.
Germany's stunning victory over Britain and France was both good and bad for them. Good, in that Germany at a stroke disabled the entire military of one of its enemies and most of the military of another. Bad, in that in a real way they were no closer to victory. Over the course of the war, though Germany helped itself to French tanks and military hardware, in an absolute sense captured French industry did not contribute very much materially to Germany's war effort, and Germany found itself in the position of having to expend its own resources on administering conquered territories. Tooze didn't use this metaphor, but I found myself reminded of a sort of military Ponzi scheme, where Germany kept having to conquer new territories to make up for the losses incurred in acquiring its last conquests. To make matters worse, different military initiatives required completely different production, so Nazi war planners found themselves jumping from priority to priority as targets shifted. There's a fascinating graph on page 148 of armament production from September 1939 to November 1941 that shows the sudden production surges and reversals, as well as the overwhelming focus on aircraft and ammunition. I had never realized that tanks were such a small percentage of the overall military budget, but as Tooze points out, aircraft gave by far the biggest bang for the buck.
Speaking of production shifts, I had always been under the impression that German war production had been dominated by political hacks, but Tooze makes a fairly convincing case that, aside from a few ill-advised late-stage "experiments" like the V2 rocket and the Type XXI U-boat, Germany's war economy ran about as well as could be expected, second only to the Soviet war economy, which he should definitely write another book about. More myths busted: that German women did not participate in the economy to the degree that their counterparts did for ideological reasons (false, German women were actually more involved), or that Germany did not have a total war economy until late in the war, also for ideological/propaganda reasons (false, Germany had been gradually letting its military cannibalize the civilian economy since day 1 of Nazi rule), or that people like Speer were miracle workers (false, production surges Speer took credit for were often statistical illusions or were due to other people). The main problem for German planners was that there was simply not enough of everything to go around; a precious resource like steel could be used for a gun, ammo for that gun, a railroad to transport that ammo, or a million other things, and there were just too many needs. By the end of the war Germany was being outproduced at least 4:1 in every single category, and even if every battle had been a crushing victory they still wouldn't have been able to last.
The most depressing parts of the book were where he discussed slave labor and Germany's economic relationship to its conquests. Here's how the logic went: Germany took basically all of its able-bodied men off the farm, and required huge food imports to avoid the mass starvation of World War 1. Those imports came from territories like Poland and Ukraine, directly at the expense of the Polish and Ukrainians, which meant that the Polish and Ukrainians had a direct incentive to help kill Jews, who were merely extra mouths to feed out of the leftover food. "... By comparison with a German ration of 2,600 calories in early 1940, the 'ration' for the inhabitants of Poland's major cities was set at 609 calories. Jews were provided with 503 calories per day." Of course, German factories also required extra labor for the same reason, and so there was a continuous stream of captive workers coming into concentration camps to be worked on substandard rations until they dropped dead, to be replaced by others. Even with millions of free disposable workers, by the end of the war Germany's economy was on its last legs and could no longer be sustained. While Tooze raised my opinion of the quality of German wartime economic planning, he really brought home what a stupid idea it was to try to conquer all of Europe. While individual military goals made more sense (even still-questionable ones like Barbarossa), from a practical standpoint Germany might as well have been trying to conquer the solar system. After having read this book, I don't think Germany ever could have won, but they could have failed even more spectacularly than they did in real life.
Though it's hard to appreciate now, Germany in the 1930s was not a very rich or developed country at all. The deprivation of World War 1, followed by Weimar hyperinflation, followed by Great Depression deflation, all overlaid on the fact that Germany had been a single unified country for barely a half-century, meant that though individual German firms were very competitive and productive, as a whole Germany was quite backwards in many ways (one graph on page 146 shows Germany in 1933 as having only 70% the income per capita as it had before 1914). The single goal of the Nazi Party was to transform Germany from the hemmed-in, middle-weight power it was into a true competitor to Britain, with its world empire, and America, with its continental resources. This primarily meant acquiring land, and Tooze assembles masses of agricultural statistics to show that the goal of Lebensraum, which strikes the modern reader as a bit weird (21st century Germany is much denser than even the most claustrophobic nightmares of Nazi planners), made a lot more sense in what was almost literally a peasant society in many regions. Expanding to the east would also have the benefit of allowing Germany to gather enough resources to be closer to self-sufficiency, a major concern for a country almost totally lacking in vital strategic materials like oil or steel. Removing the need to import important resources would have reduced the need to acquire foreign currency through export, as well as lessening the tension between production for domestic use and production for rearmament.
The beginning sections outlined Germany's struggles to emerge from the Great Depression with both a strong military and a robust consumer economy. They got fairly technical (it helps to know basic macroeconomic concepts like current account deficits, currency revaluation, or the relationships between deficit spending, taxation, and inflation), but they were necessary to understand why Germany chose to start the war in 1939, even though their own plans showed that they weren't ready. Putting yourself in the shoes of a Nazi economic planner, once you've taken the goal of Germany conquering all of Europe as a given, now you just have to figure out some way to implement it, and it would seem that waiting until you have a strong advantage would be the most prudent course. Unfortunately for Germany, despite their massive military spending at the expense of the civilian economy (much touted public works like the autobahn or the Volkswagen made surprisingly negligible contributions to Germany's recovery from the Depression), and even after years of treaty-defying rearmament, they were barely at parity with Britain or France. The reason for war beginning in 1939 was simply that waiting would have put Germany farther and farther behind those two powers, who were also beginning to accelerate their own military preparations.
Germany's stunning victory over Britain and France was both good and bad for them. Good, in that Germany at a stroke disabled the entire military of one of its enemies and most of the military of another. Bad, in that in a real way they were no closer to victory. Over the course of the war, though Germany helped itself to French tanks and military hardware, in an absolute sense captured French industry did not contribute very much materially to Germany's war effort, and Germany found itself in the position of having to expend its own resources on administering conquered territories. Tooze didn't use this metaphor, but I found myself reminded of a sort of military Ponzi scheme, where Germany kept having to conquer new territories to make up for the losses incurred in acquiring its last conquests. To make matters worse, different military initiatives required completely different production, so Nazi war planners found themselves jumping from priority to priority as targets shifted. There's a fascinating graph on page 148 of armament production from September 1939 to November 1941 that shows the sudden production surges and reversals, as well as the overwhelming focus on aircraft and ammunition. I had never realized that tanks were such a small percentage of the overall military budget, but as Tooze points out, aircraft gave by far the biggest bang for the buck.
Speaking of production shifts, I had always been under the impression that German war production had been dominated by political hacks, but Tooze makes a fairly convincing case that, aside from a few ill-advised late-stage "experiments" like the V2 rocket and the Type XXI U-boat, Germany's war economy ran about as well as could be expected, second only to the Soviet war economy, which he should definitely write another book about. More myths busted: that German women did not participate in the economy to the degree that their counterparts did for ideological reasons (false, German women were actually more involved), or that Germany did not have a total war economy until late in the war, also for ideological/propaganda reasons (false, Germany had been gradually letting its military cannibalize the civilian economy since day 1 of Nazi rule), or that people like Speer were miracle workers (false, production surges Speer took credit for were often statistical illusions or were due to other people). The main problem for German planners was that there was simply not enough of everything to go around; a precious resource like steel could be used for a gun, ammo for that gun, a railroad to transport that ammo, or a million other things, and there were just too many needs. By the end of the war Germany was being outproduced at least 4:1 in every single category, and even if every battle had been a crushing victory they still wouldn't have been able to last.
The most depressing parts of the book were where he discussed slave labor and Germany's economic relationship to its conquests. Here's how the logic went: Germany took basically all of its able-bodied men off the farm, and required huge food imports to avoid the mass starvation of World War 1. Those imports came from territories like Poland and Ukraine, directly at the expense of the Polish and Ukrainians, which meant that the Polish and Ukrainians had a direct incentive to help kill Jews, who were merely extra mouths to feed out of the leftover food. "... By comparison with a German ration of 2,600 calories in early 1940, the 'ration' for the inhabitants of Poland's major cities was set at 609 calories. Jews were provided with 503 calories per day." Of course, German factories also required extra labor for the same reason, and so there was a continuous stream of captive workers coming into concentration camps to be worked on substandard rations until they dropped dead, to be replaced by others. Even with millions of free disposable workers, by the end of the war Germany's economy was on its last legs and could no longer be sustained. While Tooze raised my opinion of the quality of German wartime economic planning, he really brought home what a stupid idea it was to try to conquer all of Europe. While individual military goals made more sense (even still-questionable ones like Barbarossa), from a practical standpoint Germany might as well have been trying to conquer the solar system. After having read this book, I don't think Germany ever could have won, but they could have failed even more spectacularly than they did in real life.
May 1, 2022
"The conquest of Lebensraum [German living space taken through warlike conquest, pg 9] in the East had of course always been Hitler's central strategic objective. The threat posed by the Anglo-American alliance, masterminded by the world Jewry, simply made this more urgent and more necessary than ever." pg 462
This was an in-depth analysis of the economic groundwork of the Third Reich. Adam Tooze did a good job of delivering a lot of information without losing me. I had to look up a few things (Gross Domestic Product, Keynesian theory, etc.) because I hadn't heard them since high school. There were concepts I had to pay attention to while reading (bankruptcy, debt, currency reserves, inflation, unemployment, imports & exports, household consumption, etc.) to help understand the big picture.
Post-WW1 economic recovery and sustainmemt took off when Hitler began the rearmamemt process. The budget spending allocated on the military brought jobs and was interesting. German business partnerships that developed with the government were Volkswagen, BMW, IG Farben (chemical industry), Thyssen and Krupp (iron and steel industry), and Siemens were companies (still in existence today) that were essential in stimulating the Nazi economy prior to the war. There was an entire chapter on Racial War and the economic impact of Hitler's vision of colonization of Eastern Europe. Operation Barbarossa become the turning point of the war both militarily and economically. Production pacing and resource allocation became a problem as the German industrial-military complex was outmatched by Allied economic might.
I learned a lot and remained engaged during the entire read. It was a lot to absorb and required me to look things up as I read. I would definitely suggest it to anyone interested in the financial subject of the Third Reich. Thanks!
This was an in-depth analysis of the economic groundwork of the Third Reich. Adam Tooze did a good job of delivering a lot of information without losing me. I had to look up a few things (Gross Domestic Product, Keynesian theory, etc.) because I hadn't heard them since high school. There were concepts I had to pay attention to while reading (bankruptcy, debt, currency reserves, inflation, unemployment, imports & exports, household consumption, etc.) to help understand the big picture.
Post-WW1 economic recovery and sustainmemt took off when Hitler began the rearmamemt process. The budget spending allocated on the military brought jobs and was interesting. German business partnerships that developed with the government were Volkswagen, BMW, IG Farben (chemical industry), Thyssen and Krupp (iron and steel industry), and Siemens were companies (still in existence today) that were essential in stimulating the Nazi economy prior to the war. There was an entire chapter on Racial War and the economic impact of Hitler's vision of colonization of Eastern Europe. Operation Barbarossa become the turning point of the war both militarily and economically. Production pacing and resource allocation became a problem as the German industrial-military complex was outmatched by Allied economic might.
I learned a lot and remained engaged during the entire read. It was a lot to absorb and required me to look things up as I read. I would definitely suggest it to anyone interested in the financial subject of the Third Reich. Thanks!
March 3, 2015
Ever since middle school I have been a huge WWII buff. I couldn't get enough of the Manichean clash of good versus evil (with good triumphing naturally). As I grew up I developed a more nuanced view of the war. Neat planes and cool tanks were replaced by the appreciation grand strategy and the details of battles. But as the old saying goes, amateurs talk about tactics, but professional study logisitics. And nothing can get to the heart of logistics more than the study of the industrial economies that supported WWII's massive mechanized forces. Tooze does an amazing job chronicling the German economy from the early Wiemar days though the fall of the Nazi regime. Tooze magnificently lays out the details and relationships within the German economy and how it explains the actions and results of WWII.
It was fascinating to learn about the pre-Nazi German economy. Contrary to common belief, it wasn't hyperinflation 24/7 until Hitler took over. Yes, there was a period with run away inflation, but it was actually gotten under control through a rather nifty financial setup. German leaders knew they could never compete with the empires of Britain and France, so they instead sought to align America's interest with their own. Through a scheme of loans from America, Germany was able to amortize their war reparations to Britain and France who were in turn able to pay back their war debts to America. This cycling of money resulted in a stable and growing global economy, more or less completely alleviating Germany of its reparations burden and keeping everyone invested in this scheme.
Then the depression hit and the US government ceased to provide these funds, the Hoover administration not having a suitable handle on the situation to see how it all tied together. Further, the raising of tariffs and economic barriers stifled German exports, which were essential for maintaining their foriegn currency reserve and for debt servicing. German Economic responses (deflation) led to domestic down turn and unemployment, opening the door for the nationalistic political right in Germany, of which the Nazis were members, to step into power.
And interesting recurring theme in the early Nazi administration was foreign exchange reserves. This is the amount of foreign currency available to the economy. It is needed to purchase imports which were essential for the German economy. Germany was short of several key resources, namely food and petroleum, as well key industrial inputs for heavy industries. However, the Nazi regimes resistance to devaluing their currency in order to stimulate exports in the face of a strengthening Reichsmark was not pursued for two reasons: price impact on citizens which would have to pay more for imported and import dependent goods and the servicing of foreign debt.
The Nazi response, which was to play out again and again over the course of the Nazi regime, was to create government coordinating organizations and subsidies to solve the problem. This would get repeated as the state slowly took over more and more of the economy: price setting, labor registration and allocation by a government body, profit caps for corporations, government bureaucrats setting wages. At times I would have to remind myself this was Nazi Germany, not its ideological foe Soviet Communism massively intervening in the economy.
Another new thing I learned was how Hitler's conception of Lebensraum ("living space"), which drove his conquest of the East, was tied to his view of competition with America. Because America was so large it had a massive domestic market which supported large, highly efficient factories to supply it. Coupled with abundant natural resources to feed these factories a European state simply could not compete economically. However, in Eastern Europe there was plenty of space for colonization and key resources to fuel German industry. With Western Russia and Eastern Europe under Nazi rule, Germany could have the same natural benefits America had. Cleanse it of racial inferior peoples, open it up to big German families, and it could compete economically with America. The intermixing of racial beliefs and economics gave me a new perspective on the conflict.
The last major insight this book provided me was how dependent Germany was on imports. Then, as now, Germany was not self-sufficient in many key areas, especially the armaments sector. It needed to import iron ore, grain, animal feed, metals for the alloying process, rubber, and petroleum. It tried to remedy this through technology, but synthetic rubber and fuel plants (which required a lot of coal) never reached the point of providing all of Germany's needs. Hitler hoped that Ukraine would be the solution to the food problem, but Germany faced food rationing pretty much from the outset of the war. The conquest of the West actually made Germany's situation even worse as the areas conquered, the Low Countries and France, were also importers of these key resources. WWII was as much about Hitler trying to secure resources to match America's natural endowment (and maintain the war machine) as it was to realize radical racial ideologies (though as shown above they often intermingled).
Probably the most important area Tooze illuminated was the economic logic of Hitler's war decisions. He didn't declare war in 1939 because he was gambling, but because there was nothing to be gained by waiting. The western allies had seen Germany's rearmament and responded in kind. Hitler reasoned that the advantage he had in 1939 would only diminish over time. Western allies could squeeze Germany economically (recall they were importers of key resources) and there was only so much the State could do to keep the economy humming. Without delivering full employment Hitler risked being forced from power. Likewise in 1941 Germany needed the resource of Ukraine and western Russia to sustain its economy and war effort or else it too would have crumbled. The economic logic of Hitler's situation compelled aggressive foreign action or to be content with being a second rate world power (Hitler chose the conquest option, no surprisingly).
There were tons of other fascinating insights I learned from this book: the doctrine of blitzkrieg was mostly an accident and not fully implemented until the Russian invasion, how key steel production was to the German war effort and the politics behind steel rations, the Speer armament "miracle" that wasn't, and the tension between the idealized view of the German farmer and the economic reality of them.
This was a stellar, if dense book, about a very fascinating historical subject. If you are looking to really get into the nitty-gritty of German economic policy from the 1920's through WWII you absolute must read this book.
It was fascinating to learn about the pre-Nazi German economy. Contrary to common belief, it wasn't hyperinflation 24/7 until Hitler took over. Yes, there was a period with run away inflation, but it was actually gotten under control through a rather nifty financial setup. German leaders knew they could never compete with the empires of Britain and France, so they instead sought to align America's interest with their own. Through a scheme of loans from America, Germany was able to amortize their war reparations to Britain and France who were in turn able to pay back their war debts to America. This cycling of money resulted in a stable and growing global economy, more or less completely alleviating Germany of its reparations burden and keeping everyone invested in this scheme.
Then the depression hit and the US government ceased to provide these funds, the Hoover administration not having a suitable handle on the situation to see how it all tied together. Further, the raising of tariffs and economic barriers stifled German exports, which were essential for maintaining their foriegn currency reserve and for debt servicing. German Economic responses (deflation) led to domestic down turn and unemployment, opening the door for the nationalistic political right in Germany, of which the Nazis were members, to step into power.
And interesting recurring theme in the early Nazi administration was foreign exchange reserves. This is the amount of foreign currency available to the economy. It is needed to purchase imports which were essential for the German economy. Germany was short of several key resources, namely food and petroleum, as well key industrial inputs for heavy industries. However, the Nazi regimes resistance to devaluing their currency in order to stimulate exports in the face of a strengthening Reichsmark was not pursued for two reasons: price impact on citizens which would have to pay more for imported and import dependent goods and the servicing of foreign debt.
The Nazi response, which was to play out again and again over the course of the Nazi regime, was to create government coordinating organizations and subsidies to solve the problem. This would get repeated as the state slowly took over more and more of the economy: price setting, labor registration and allocation by a government body, profit caps for corporations, government bureaucrats setting wages. At times I would have to remind myself this was Nazi Germany, not its ideological foe Soviet Communism massively intervening in the economy.
Another new thing I learned was how Hitler's conception of Lebensraum ("living space"), which drove his conquest of the East, was tied to his view of competition with America. Because America was so large it had a massive domestic market which supported large, highly efficient factories to supply it. Coupled with abundant natural resources to feed these factories a European state simply could not compete economically. However, in Eastern Europe there was plenty of space for colonization and key resources to fuel German industry. With Western Russia and Eastern Europe under Nazi rule, Germany could have the same natural benefits America had. Cleanse it of racial inferior peoples, open it up to big German families, and it could compete economically with America. The intermixing of racial beliefs and economics gave me a new perspective on the conflict.
The last major insight this book provided me was how dependent Germany was on imports. Then, as now, Germany was not self-sufficient in many key areas, especially the armaments sector. It needed to import iron ore, grain, animal feed, metals for the alloying process, rubber, and petroleum. It tried to remedy this through technology, but synthetic rubber and fuel plants (which required a lot of coal) never reached the point of providing all of Germany's needs. Hitler hoped that Ukraine would be the solution to the food problem, but Germany faced food rationing pretty much from the outset of the war. The conquest of the West actually made Germany's situation even worse as the areas conquered, the Low Countries and France, were also importers of these key resources. WWII was as much about Hitler trying to secure resources to match America's natural endowment (and maintain the war machine) as it was to realize radical racial ideologies (though as shown above they often intermingled).
Probably the most important area Tooze illuminated was the economic logic of Hitler's war decisions. He didn't declare war in 1939 because he was gambling, but because there was nothing to be gained by waiting. The western allies had seen Germany's rearmament and responded in kind. Hitler reasoned that the advantage he had in 1939 would only diminish over time. Western allies could squeeze Germany economically (recall they were importers of key resources) and there was only so much the State could do to keep the economy humming. Without delivering full employment Hitler risked being forced from power. Likewise in 1941 Germany needed the resource of Ukraine and western Russia to sustain its economy and war effort or else it too would have crumbled. The economic logic of Hitler's situation compelled aggressive foreign action or to be content with being a second rate world power (Hitler chose the conquest option, no surprisingly).
There were tons of other fascinating insights I learned from this book: the doctrine of blitzkrieg was mostly an accident and not fully implemented until the Russian invasion, how key steel production was to the German war effort and the politics behind steel rations, the Speer armament "miracle" that wasn't, and the tension between the idealized view of the German farmer and the economic reality of them.
This was a stellar, if dense book, about a very fascinating historical subject. If you are looking to really get into the nitty-gritty of German economic policy from the 1920's through WWII you absolute must read this book.
January 15, 2011
As it turns out the way to write real history is by taking things seriously. Slave labor, genocide, hunger plans, making neat entries in logbooks concerning the planned deaths from famine in the early months of your next invasion- these are treated by historians in apocalyptic and sensational ways that safely place what the Nazis did and what they were thinking in some kind of pointless realm beyond understanding. But the leadership of the lumpen Nazi movement didn't suffer from mass insanity and the millions of supporters they eventually gathered in Germany saw real benefits in their program. So what's up?
Tooze knows. Applying utterly basic methods of economic history and simply ignoring decades of scholarship based on grotesque faleshoods like the ones Speer shrieked to keep himself from the gallows at Nuremburg produces the scariest and best account of the Nazi regime's entire history- economic, political, diplomatic, etc. The War in the East turns from a terrifying near-death experience for the entire human race into a gigantic and ridiculous blunder that persisted as long as it did only because of a series of minor miracles. The conquest of France is reduced in stature from a strategic masterstroke into the worlds biggest meth-fueled traffic jam. But these military-history deflations only symbolize the larger picture: the entire Nazi empire was put together on a budget and unraveled as soon as it faced real pressure. Tooze's lesson is the same as Gibbon's, on a much smaller time scale: what is remarkable about the Nazis is not that they were defeated but that they even managed to contend in the first place.
Tooze knows. Applying utterly basic methods of economic history and simply ignoring decades of scholarship based on grotesque faleshoods like the ones Speer shrieked to keep himself from the gallows at Nuremburg produces the scariest and best account of the Nazi regime's entire history- economic, political, diplomatic, etc. The War in the East turns from a terrifying near-death experience for the entire human race into a gigantic and ridiculous blunder that persisted as long as it did only because of a series of minor miracles. The conquest of France is reduced in stature from a strategic masterstroke into the worlds biggest meth-fueled traffic jam. But these military-history deflations only symbolize the larger picture: the entire Nazi empire was put together on a budget and unraveled as soon as it faced real pressure. Tooze's lesson is the same as Gibbon's, on a much smaller time scale: what is remarkable about the Nazis is not that they were defeated but that they even managed to contend in the first place.
July 23, 2021
There are very few book-length studies on the economic policy of the Third Reich, and this one has cross over from academic monograph to reaching a popular audience - as much as a book about economic history can, in any case. I see it more recently referenced in wargaming groups. But it is still a serious analysis of the period, drawing from primary sources and the extensive literature on Nazi Germany.
While economic analysis does necessarily focus on figures and statistics, Tooze is also sure to outline Nazi ideology, to the extent that it can be defined around military aggression and racism. Even in the earliest years, 'make work' programs, infrastructural development, and agricultural support, are all based upon the regime's policy towards aggressive warfare. Additionally, Tooze also is sure to point out Hitler's own coveting of the economies of the world's great powers at the time: the British Empire and the United States. In statements, policy documents, and in Hitler's unpublished 'Second Book', Hitler points out the unparalleled manufacturing power of the United States, its unfathomably high standard of living, and also his perverse views on its racial law and demographic composition. Therefore, in order to compete, Germany would need to seize agricultural land from its neighbors, most of all the Soviet Union.
All of this military buildup in preparation for war with the Soviets. The war as even under the best possible circumstances, a gamble. And as the war progress, which in turn showed the weaknesses of German economy, which was still not nearly as wealthy as the United Kingdom or the United States and still dependent on foreign trade. The regime lurched from foreign exchange crisis to resource shortages, and it was this material precarity which, in Tooze's view, meant that the Nazi leadership felt that war had to come quickly or else Germany would be hopelessly outmatched. War was launched ahead of schedule; Germany was outproduced, outfought, and thankfully overrun.
This is also a dense book. Tooze encounters so many contentious points over the historical debate, and I cannot hope to cover them all here. One example of these is the role of Albert Speer, Hitler's Minister for Armaments, and how much of that 'miracle' came about. This included the use of investment projects where construction had begun well before his tenure; the production of lower-quality parts in lieu of quantity, and the use of slave labor. One last and most horrific point is the strategic use of famine - where, after invading and looting its way across all of Europe, Nazi Germany found itself with more people than it could reliably feed - and here is where ideology and beliefs came into factor. The policy response was therefore to starve what people could be considered expendable, and save the food for the rest.
There is more here, and the specialists can articulate it all better than I can. But my gut feeling is that this is a solid work of scholarship and one that will benefit patient readers and other scholars in the field for years.
While economic analysis does necessarily focus on figures and statistics, Tooze is also sure to outline Nazi ideology, to the extent that it can be defined around military aggression and racism. Even in the earliest years, 'make work' programs, infrastructural development, and agricultural support, are all based upon the regime's policy towards aggressive warfare. Additionally, Tooze also is sure to point out Hitler's own coveting of the economies of the world's great powers at the time: the British Empire and the United States. In statements, policy documents, and in Hitler's unpublished 'Second Book', Hitler points out the unparalleled manufacturing power of the United States, its unfathomably high standard of living, and also his perverse views on its racial law and demographic composition. Therefore, in order to compete, Germany would need to seize agricultural land from its neighbors, most of all the Soviet Union.
All of this military buildup in preparation for war with the Soviets. The war as even under the best possible circumstances, a gamble. And as the war progress, which in turn showed the weaknesses of German economy, which was still not nearly as wealthy as the United Kingdom or the United States and still dependent on foreign trade. The regime lurched from foreign exchange crisis to resource shortages, and it was this material precarity which, in Tooze's view, meant that the Nazi leadership felt that war had to come quickly or else Germany would be hopelessly outmatched. War was launched ahead of schedule; Germany was outproduced, outfought, and thankfully overrun.
This is also a dense book. Tooze encounters so many contentious points over the historical debate, and I cannot hope to cover them all here. One example of these is the role of Albert Speer, Hitler's Minister for Armaments, and how much of that 'miracle' came about. This included the use of investment projects where construction had begun well before his tenure; the production of lower-quality parts in lieu of quantity, and the use of slave labor. One last and most horrific point is the strategic use of famine - where, after invading and looting its way across all of Europe, Nazi Germany found itself with more people than it could reliably feed - and here is where ideology and beliefs came into factor. The policy response was therefore to starve what people could be considered expendable, and save the food for the rest.
There is more here, and the specialists can articulate it all better than I can. But my gut feeling is that this is a solid work of scholarship and one that will benefit patient readers and other scholars in the field for years.
August 7, 2018
Very long and dry at times but fascinating. For the non economist and lay history lover such as my self this really gave me the answers to a lot of questions I had had that were never been discussed in any depth in the many previous books and items I had read and the various documentaries I have seen about the Nazi economy.
May 4, 2022
Anyone seeking to read about the history of Nazi Germany has no shortage of books from which to choose. Practically from the moment of its establishment the Third Reich has generated a mountain of studies about nearly every aspect of its existence, evolving from contemporary reporting to the many histories based on the voluminous records kept by the regime. Having such a wealth of works available, though, can create the impression that we know everything here is to know about the Nazi regime. After all, with all of the works that have been written about it, what else is there to learn?
Among the many achievements of Adam Tooze’s remarkable book is to demonstrate the folly of such assumptions. In it he challenges the traditional narrative about the German economy during the Third Reich by offering a new perspective that brings to light previously overlooked details and corrects numerous misconceptions. By reassessing the massive amount of statistical data available about the economy and reexamining numerous archival sources, he prompts a broader rethinking of Germany’s rearmament program in the 1930s, the motivations behind Adolf Hitler’s decision to go to war in 1939, and the factors that shaped the conflict’s outcome. The result is something that is truly unusual: a fresh take on a well-worn subject.
Tooze begins by examining Germany’s economic recovery after the First World War. Faced with the disruption of Germany’s prewar economic dominance, the Weimar regime adopted a strategy of cooperation with the new global economic order. This meant ending the counter-productive opposition to paying the enormous reparations levied on Germany by the victorious allies, and establishing a trans-Atlantic partnership with the United States. In the aftermath of the French occupation of the Ruhr this policy paid dividends, as the loans contracted with American banks restored prosperity and turned the United States into an advocate of renegotiating Germany’s reparation obligations. The onset of the Great Depression at the end of the 1920s, however, discredited this strategy, as the collapse of the credit markets and the turn to protectionism brought about disaster for Germany.
The primary beneficiary of this was Adolf Hitler, who during the late 1920s articulated a more nationalist vision for the Germany economy. Here Tooze reframes Hitler’s world views by highlighting the role his fears of an American-dominated global economy played in driving his policies. Hitler’s response to this was to advocate a European economic bloc run by Germany, and upon gaining power in 1933 he proceeded to try to turn this vision into reality. His efforts were hobbled, however, by the demands of an industrialized economy, which required resources unavailable on the European continent. Because of this, Germany spent the rest of the 1930s carefully balancing the demands of rearmament with enormous trade and balance of payment issues. Yet as the decade came to an end the arms race unleashed by this effort threatened to undermine both Germany’s armaments gains and the economic recovery managed to that point.
By 1939 Germany found itself overmatched in an arms race with Britain and France, both of whom could count on the support of the United States. Facing with losing their head start in the arms race to a strategic alliance against which Germany couldn’t compete, Hitler gambled while he still had the advantage. The result was war, and it was one in which Germany defied the odds, first with its improbable alliance with the Soviet Union, then with its stunning conquest of France and the Low Countries. This created a German-controlled economy larger than that of the United States, yet cut off from vital resources. Worse, the situation left Germany dependent on raw materials from the Soviet Union, a condition that Hitler found intolerable. This promoted another massive military strike, this time eastward against the Soviets. As Tooze notes, the use of Blitzkrieg was driven even more by economic necessity than by military strategy, as even the expanded German economy could not sustain a long campaign. Because of this, Germany was doomed to defeat as early as the autumn of 1941 once the Wehrmacht’s failure to break the Red Army became evident, as they were now trapped in a conflict in which they were vastly outmatched economically.
Nevertheless, Germany continued to fight. Tooze details in full the cost of this decision, as virtually the entire economy of Europe was harnessed to continue waging a losing war. As he demonstrates, this was an effort that, contrary to misconceptions, dated back to 1939, with nearly every adult German participating in a wartime economy. Now millions of Europeans were enslaved as laborers while their resources were plundered. This required another balancing act, as Germans expected the increasing sacrifices in food to be borne by the foreign workers now laboring in their country, even though the ever-lower caloric counts diminished their usefulness. That Germans labored on in a hopeless effort was due in no small part to the efforts of Albert Speer, who as the Reich Minister in charge of the war economy promoted the message that victory was still possible through the miracles of armaments. Though Speer subsequently tried to distance himself from his role, Tooze demonstrates that he was a knowing participant in the regime’s brutal efforts to squeeze every last effort from the European populace. In the end, however, none of the fabled Wunderwaffen could overcome the economic juggernaut that ground Germany to ruin by 1945.
Tooze cites Speer’s postwar testimony as a key source of the myths and misconceptions that sprang up about the Nazi economy in the aftermath of the Allies’ victory. In this respect his book serves as revisionist history of the highest caliber. His use of data-based analysis to counter Speer’s self-glorifying image embodies well his approach to the history of the Nazi economy more generally. From it emerges a clearer understanding of an economic vision doomed to failure because of the insurmountable odds it faced, which is why this is a book that no one seeking to understand the history of Nazi Germany or the factors that determined the course of the Second World War in Europe can afford to ignore.
Among the many achievements of Adam Tooze’s remarkable book is to demonstrate the folly of such assumptions. In it he challenges the traditional narrative about the German economy during the Third Reich by offering a new perspective that brings to light previously overlooked details and corrects numerous misconceptions. By reassessing the massive amount of statistical data available about the economy and reexamining numerous archival sources, he prompts a broader rethinking of Germany’s rearmament program in the 1930s, the motivations behind Adolf Hitler’s decision to go to war in 1939, and the factors that shaped the conflict’s outcome. The result is something that is truly unusual: a fresh take on a well-worn subject.
Tooze begins by examining Germany’s economic recovery after the First World War. Faced with the disruption of Germany’s prewar economic dominance, the Weimar regime adopted a strategy of cooperation with the new global economic order. This meant ending the counter-productive opposition to paying the enormous reparations levied on Germany by the victorious allies, and establishing a trans-Atlantic partnership with the United States. In the aftermath of the French occupation of the Ruhr this policy paid dividends, as the loans contracted with American banks restored prosperity and turned the United States into an advocate of renegotiating Germany’s reparation obligations. The onset of the Great Depression at the end of the 1920s, however, discredited this strategy, as the collapse of the credit markets and the turn to protectionism brought about disaster for Germany.
The primary beneficiary of this was Adolf Hitler, who during the late 1920s articulated a more nationalist vision for the Germany economy. Here Tooze reframes Hitler’s world views by highlighting the role his fears of an American-dominated global economy played in driving his policies. Hitler’s response to this was to advocate a European economic bloc run by Germany, and upon gaining power in 1933 he proceeded to try to turn this vision into reality. His efforts were hobbled, however, by the demands of an industrialized economy, which required resources unavailable on the European continent. Because of this, Germany spent the rest of the 1930s carefully balancing the demands of rearmament with enormous trade and balance of payment issues. Yet as the decade came to an end the arms race unleashed by this effort threatened to undermine both Germany’s armaments gains and the economic recovery managed to that point.
By 1939 Germany found itself overmatched in an arms race with Britain and France, both of whom could count on the support of the United States. Facing with losing their head start in the arms race to a strategic alliance against which Germany couldn’t compete, Hitler gambled while he still had the advantage. The result was war, and it was one in which Germany defied the odds, first with its improbable alliance with the Soviet Union, then with its stunning conquest of France and the Low Countries. This created a German-controlled economy larger than that of the United States, yet cut off from vital resources. Worse, the situation left Germany dependent on raw materials from the Soviet Union, a condition that Hitler found intolerable. This promoted another massive military strike, this time eastward against the Soviets. As Tooze notes, the use of Blitzkrieg was driven even more by economic necessity than by military strategy, as even the expanded German economy could not sustain a long campaign. Because of this, Germany was doomed to defeat as early as the autumn of 1941 once the Wehrmacht’s failure to break the Red Army became evident, as they were now trapped in a conflict in which they were vastly outmatched economically.
Nevertheless, Germany continued to fight. Tooze details in full the cost of this decision, as virtually the entire economy of Europe was harnessed to continue waging a losing war. As he demonstrates, this was an effort that, contrary to misconceptions, dated back to 1939, with nearly every adult German participating in a wartime economy. Now millions of Europeans were enslaved as laborers while their resources were plundered. This required another balancing act, as Germans expected the increasing sacrifices in food to be borne by the foreign workers now laboring in their country, even though the ever-lower caloric counts diminished their usefulness. That Germans labored on in a hopeless effort was due in no small part to the efforts of Albert Speer, who as the Reich Minister in charge of the war economy promoted the message that victory was still possible through the miracles of armaments. Though Speer subsequently tried to distance himself from his role, Tooze demonstrates that he was a knowing participant in the regime’s brutal efforts to squeeze every last effort from the European populace. In the end, however, none of the fabled Wunderwaffen could overcome the economic juggernaut that ground Germany to ruin by 1945.
Tooze cites Speer’s postwar testimony as a key source of the myths and misconceptions that sprang up about the Nazi economy in the aftermath of the Allies’ victory. In this respect his book serves as revisionist history of the highest caliber. His use of data-based analysis to counter Speer’s self-glorifying image embodies well his approach to the history of the Nazi economy more generally. From it emerges a clearer understanding of an economic vision doomed to failure because of the insurmountable odds it faced, which is why this is a book that no one seeking to understand the history of Nazi Germany or the factors that determined the course of the Second World War in Europe can afford to ignore.
January 3, 2019
If you do a word search on this book, I bet you the two first entries will be “coal” and “steel.” What we have here, basically, is a history of German coal and steel production from 1933 to 1945: what motivated it, what it actually was used toward, and who made it possible.
Needless to say, the book is interesting precisely because coal, steel and (to a lesser extent, presumably for lack of data) wheat, oils and fat are the currency in which author Adam Tooze deals in Nazi Germany’s motivation, timing and the conduct of WWII, including its worst crimes.
In broad terms, and yes, I’m oversimplifying (read the full 675 pages to get the actual detail –you will not regret it) the author’s reading of Hitler’s “Mein Kampf” and “second book” forms the basis on which he gets into the dictator’s head to arrive at the following a priori judgements:
• The world’s mightiest empire, the British Empire, was about to be usurped by the United States of America, chiefly thanks to the immense success of American capitalists such as Henry Ford in developing the methods of mass production. This opened an opportunity for Germany to side with the US in the struggle for primacy and become the biggest European power. (Significantly, the author points out that this was not an enormous deviation from his Weimar Republic predecessors’ world view.)
• In the early 20th century, Germany was a less-developed economy than France or Britain from a manufacturing perspective and could not hope to catch up without a concerted, state-driven effort, which would have to start with the end of WWI reparations and the reclaiming of the Ruhr. (Again, this was hardly a radical view for a German statesman to hold at the time.)
• Germany, given its early 20th century borders, was doomed to lack of self-sufficiency in agriculture. For a number of reasons (all detailed in the book), redistribution of land would simply not suffice. (True enough, but also true of many other industrial powers)
• To achieve self-sufficiency, (and here’s where it all starts to go horribly wrong) it was necessary for Germany to expand eastward. Along the lines of the American ideology of the frontier a militarized Germany would have to re-claim the fertile plains of Poland and the Ukraine. This would entail driving out the current, lesser human inhabitants of these lands, along the lines (p. 469) of what had happened to the American “Indians.”
• The two arch-enemies of Germany in its efforts to achieve its destiny would be 1. the “Judeo-Bolshevik conspiracy” and 2. a chiefly “British / free markets / Jewish conspiracy” orchestrated by the likes of (American and 100% secular!) Louis Brandeis that for example favored free trade and whose appointed puppet in the world of politics was (p. 665) none other than Franklin Roosevelt.
The reign of the National Socialists (including industrial policy, economic policy, monetary policy, decisions regarding both when to start war and how to wage war, all the way through to the fate of the conquered peoples) is recounted through the prism of these basic judgements and always with an emphasis on Germany’s ability to produce coal and steel.
The book has three parts: before the war the protagonist is Goering and the story is told of how he and Schacht combined their efforts to bring about rearmament, which would have rendered Germany ready to fight by sometime in 1943-44, had Hitler been patient enough to wait.
Goering and his minions (as the book progresses it’s increasingly faithful party members like Autobahn-layer Todt who replace technocrats) are “credited” with both “laying down the law” with the industrialists, using coercion and threats and making them complicit in the crimes against humanity the regime had in store right from the beginning, but also allowing them to make solid returns on the necessary heavy investment by guaranteeing both volumes and profitability levels.
Schacht, on the other hand, is credited with succeeding in preventing the economy from running hot, in an environment where unemployment went from “worst ever” to literally zero. To do this, uniquely among developed nations, he never officially abandoned the gold standard, thereby creating a chronic lack of gold / currency, against which he had to suppress imports via a system like the one China runs today, whereby all transactions with foreign entities, and imports in particular, first had to be approved by the Reichsbank; a truly monumental endeavor.
A much darker corollary of this suppression, and the author goes into quite some detail on the topic, was that many Jews delayed their emigration until they could find a way past these controls in order to export their liquid wealth, to say nothing of the fact that it encouraged pogroms that were intended to persuade them to leave without having done so.
(N.B. the author has as good as expunged gold from the account, with zero loss to the story)
Adam Tooze takes the time to explain that the economic renaissance Germany went through in this period was entirely down to the rearmament effort. The sundry highways and vanity projects like the people’s radio and the people’s car were 99% propaganda and barely register in the numbers. Indeed, even investment in railways, the ultimate infrastructure of the period, suffered. This was actually a rare way in which the Nazis left Germany in 1939 less prepared for war than they found it. Also, rearmament took priority over consumption, which was suppressed in a large number of overt and covert ways.
From Goering’s preparations the author moves on to the decisions regarding the war itself. He does not get mentioned near as much as his lieutenants in the book, but the main character of the book at this stage is Hitler himself.
To cut a long story short, the decision to attack France came down to numbers: every day that went by, and despite the best efforts of the Germans, the finite capacity of the German war economy in conjunction with the squeeze from the balance of payments situation meant that the allies were producing steel at a rate that eclipsed that of the axis powers. In other words, every day that went by the French would be better able to defend themselves. So the best time to attack was the earliest possible! The trigger came when the Ribbentrop – Molotov agreement allowed Hitler to relax about the “Jewish-Russian conspiracy.” That was his chance and he grasped it with both hands.
The story Tooze tells next is fascinating: for all the talk about technological advances, the German army mainly moved on foot. WWII was the last war fought in Napoleonic style, not the first war of the modern era. And the swift conquest of France was down to the utter genius of von Manstein, who moved his army through the Ardennes and caught the British and the French napping. The myth of German “Blitzkrieg” was invented after the fact and was convenient to both the allies (who could claim to have lost to a new, mechanized, foe, rather than having been beaten on strategy) and to the Germans, who could suddenly believe they were conducting a winnable war.
The conquest of France / Holland / Belgium / Luxembourg also changed the balance very significantly in the race for armaments, of course. Germany could suddenly dream that it was no longer waging a war at a material disadvantage. The fascinating story is told about how Germany did not violate the market system in availing itself of these resources. Quoting from p. 388, “Exporters in each country were paid, not by their customers in Germany, but by their own central banks, in their own currency. The foreign central bank then chalked up the deficit to Germany’s clearing account in Berlin. The Germans received their goods, the foreign suppliers received prompt payment, but the account never settled. At the end of 1944, the Reichsbank recorded almost 30 billion Reichsmarks owing to members of the clearing system.” (nothing like a bit of history to drive one’s understanding of what Hans Werner Sinn is talking about when he complains about Target 2)
But the balance was not changed enough and Germany did not have the naval ability to conquer Britain, so in 1941 the exact same logic that had dictated the invasion of France dictated the invasion of Russia, this time on a very deliberate Blitzkrieg basis. In the conclusion to the book the author claims that Hitler's twisted ideology must also have played a part in this decision. In my view it’s the one bit of the book that’s probably a bit contentious. Yes, Hitler was ideologically driven to clear Germany’s Lebensraum of “lesser peoples,” but I find it hard to believe that even a madman of his caliber was fearful enough of what “world Jewry” might have had in store for him to precipitate an attack on Russia with inadequate resources that depended entirely on the hope of delivering a knock-out punch. In all probability, he’d started drinking some of his own “Blitzkrieg” cool-aid. Tooze himself backs up the idea that Hitler consciously shifted to Blitzkrieg (p. 667), if only because that was the only workable plan that would allow him to wage war on two fronts.
Militarily, the rest is history, as they say, and it’s recounted here well (with coverage for North African campaign to boot). Special emphasis is given to the extermination of the Jews in the Ukraine and Belarus. It appears that some 11.3 million were specifically targeted for extermination! The author chooses not to comment on whether the operation in which they perished (called Taifun) was a military blunder, given that it diverted the German war effort away from the prime objective of taking Moscow and dealing Stalin a blow he would not recover from, or a sine qua non, given Hitler’s intentions to exterminate the Jews.
But this is not a military history per se, so it shifts to Albert Speer and Fritz Sauckel and the way they conducted the losing war against the Soviets. In particular, and in keeping with the book’s unwavering theme, it is the story of how they went about producing the steel and armaments necessary to conduct that losing war.
This is, by some margin, the part of the book where I learned the most and by an even bigger margin, the most important work of historical research to be found in this tome.
The story is told of the millions of Slavs, chiefly, who were uprooted from their lands and sent to work in keeping the German war machine running. Their working conditions, the means by which they were rewarded and how they were actively worked to death.
What you get here, more than in any sci-fi movie or, indeed, 21st century computer game, is a picture of what Europe would have looked like after a Nazi conquest: a world where the able bodied of the slave race man the engine room of the master race. Tooze goes out of his way to mention that it is under this light that we should look at Schindler, even. (p. 524)
The author goes beyond penning an indictment of Speer, here: he takes you through the factories and camps and back to the times when wars were not yet fought for territory, but to bring back slaves.
It is ironic that this should be the most poignant element of a war allegedly fought for Lebensraum.
And it is doubly ironic that, in the author’s view, at least, this “third front” could be precisely where Hitler lost his war: had he spared the lives of the millions of slaughtered Jews and millions of starved Red Army prisoners and turned them to slave labor some two years earlier, his millennial plans could well have become our nightmare.
Agree or disagree, this was a monumental read.
Needless to say, the book is interesting precisely because coal, steel and (to a lesser extent, presumably for lack of data) wheat, oils and fat are the currency in which author Adam Tooze deals in Nazi Germany’s motivation, timing and the conduct of WWII, including its worst crimes.
In broad terms, and yes, I’m oversimplifying (read the full 675 pages to get the actual detail –you will not regret it) the author’s reading of Hitler’s “Mein Kampf” and “second book” forms the basis on which he gets into the dictator’s head to arrive at the following a priori judgements:
• The world’s mightiest empire, the British Empire, was about to be usurped by the United States of America, chiefly thanks to the immense success of American capitalists such as Henry Ford in developing the methods of mass production. This opened an opportunity for Germany to side with the US in the struggle for primacy and become the biggest European power. (Significantly, the author points out that this was not an enormous deviation from his Weimar Republic predecessors’ world view.)
• In the early 20th century, Germany was a less-developed economy than France or Britain from a manufacturing perspective and could not hope to catch up without a concerted, state-driven effort, which would have to start with the end of WWI reparations and the reclaiming of the Ruhr. (Again, this was hardly a radical view for a German statesman to hold at the time.)
• Germany, given its early 20th century borders, was doomed to lack of self-sufficiency in agriculture. For a number of reasons (all detailed in the book), redistribution of land would simply not suffice. (True enough, but also true of many other industrial powers)
• To achieve self-sufficiency, (and here’s where it all starts to go horribly wrong) it was necessary for Germany to expand eastward. Along the lines of the American ideology of the frontier a militarized Germany would have to re-claim the fertile plains of Poland and the Ukraine. This would entail driving out the current, lesser human inhabitants of these lands, along the lines (p. 469) of what had happened to the American “Indians.”
• The two arch-enemies of Germany in its efforts to achieve its destiny would be 1. the “Judeo-Bolshevik conspiracy” and 2. a chiefly “British / free markets / Jewish conspiracy” orchestrated by the likes of (American and 100% secular!) Louis Brandeis that for example favored free trade and whose appointed puppet in the world of politics was (p. 665) none other than Franklin Roosevelt.
The reign of the National Socialists (including industrial policy, economic policy, monetary policy, decisions regarding both when to start war and how to wage war, all the way through to the fate of the conquered peoples) is recounted through the prism of these basic judgements and always with an emphasis on Germany’s ability to produce coal and steel.
The book has three parts: before the war the protagonist is Goering and the story is told of how he and Schacht combined their efforts to bring about rearmament, which would have rendered Germany ready to fight by sometime in 1943-44, had Hitler been patient enough to wait.
Goering and his minions (as the book progresses it’s increasingly faithful party members like Autobahn-layer Todt who replace technocrats) are “credited” with both “laying down the law” with the industrialists, using coercion and threats and making them complicit in the crimes against humanity the regime had in store right from the beginning, but also allowing them to make solid returns on the necessary heavy investment by guaranteeing both volumes and profitability levels.
Schacht, on the other hand, is credited with succeeding in preventing the economy from running hot, in an environment where unemployment went from “worst ever” to literally zero. To do this, uniquely among developed nations, he never officially abandoned the gold standard, thereby creating a chronic lack of gold / currency, against which he had to suppress imports via a system like the one China runs today, whereby all transactions with foreign entities, and imports in particular, first had to be approved by the Reichsbank; a truly monumental endeavor.
A much darker corollary of this suppression, and the author goes into quite some detail on the topic, was that many Jews delayed their emigration until they could find a way past these controls in order to export their liquid wealth, to say nothing of the fact that it encouraged pogroms that were intended to persuade them to leave without having done so.
(N.B. the author has as good as expunged gold from the account, with zero loss to the story)
Adam Tooze takes the time to explain that the economic renaissance Germany went through in this period was entirely down to the rearmament effort. The sundry highways and vanity projects like the people’s radio and the people’s car were 99% propaganda and barely register in the numbers. Indeed, even investment in railways, the ultimate infrastructure of the period, suffered. This was actually a rare way in which the Nazis left Germany in 1939 less prepared for war than they found it. Also, rearmament took priority over consumption, which was suppressed in a large number of overt and covert ways.
From Goering’s preparations the author moves on to the decisions regarding the war itself. He does not get mentioned near as much as his lieutenants in the book, but the main character of the book at this stage is Hitler himself.
To cut a long story short, the decision to attack France came down to numbers: every day that went by, and despite the best efforts of the Germans, the finite capacity of the German war economy in conjunction with the squeeze from the balance of payments situation meant that the allies were producing steel at a rate that eclipsed that of the axis powers. In other words, every day that went by the French would be better able to defend themselves. So the best time to attack was the earliest possible! The trigger came when the Ribbentrop – Molotov agreement allowed Hitler to relax about the “Jewish-Russian conspiracy.” That was his chance and he grasped it with both hands.
The story Tooze tells next is fascinating: for all the talk about technological advances, the German army mainly moved on foot. WWII was the last war fought in Napoleonic style, not the first war of the modern era. And the swift conquest of France was down to the utter genius of von Manstein, who moved his army through the Ardennes and caught the British and the French napping. The myth of German “Blitzkrieg” was invented after the fact and was convenient to both the allies (who could claim to have lost to a new, mechanized, foe, rather than having been beaten on strategy) and to the Germans, who could suddenly believe they were conducting a winnable war.
The conquest of France / Holland / Belgium / Luxembourg also changed the balance very significantly in the race for armaments, of course. Germany could suddenly dream that it was no longer waging a war at a material disadvantage. The fascinating story is told about how Germany did not violate the market system in availing itself of these resources. Quoting from p. 388, “Exporters in each country were paid, not by their customers in Germany, but by their own central banks, in their own currency. The foreign central bank then chalked up the deficit to Germany’s clearing account in Berlin. The Germans received their goods, the foreign suppliers received prompt payment, but the account never settled. At the end of 1944, the Reichsbank recorded almost 30 billion Reichsmarks owing to members of the clearing system.” (nothing like a bit of history to drive one’s understanding of what Hans Werner Sinn is talking about when he complains about Target 2)
But the balance was not changed enough and Germany did not have the naval ability to conquer Britain, so in 1941 the exact same logic that had dictated the invasion of France dictated the invasion of Russia, this time on a very deliberate Blitzkrieg basis. In the conclusion to the book the author claims that Hitler's twisted ideology must also have played a part in this decision. In my view it’s the one bit of the book that’s probably a bit contentious. Yes, Hitler was ideologically driven to clear Germany’s Lebensraum of “lesser peoples,” but I find it hard to believe that even a madman of his caliber was fearful enough of what “world Jewry” might have had in store for him to precipitate an attack on Russia with inadequate resources that depended entirely on the hope of delivering a knock-out punch. In all probability, he’d started drinking some of his own “Blitzkrieg” cool-aid. Tooze himself backs up the idea that Hitler consciously shifted to Blitzkrieg (p. 667), if only because that was the only workable plan that would allow him to wage war on two fronts.
Militarily, the rest is history, as they say, and it’s recounted here well (with coverage for North African campaign to boot). Special emphasis is given to the extermination of the Jews in the Ukraine and Belarus. It appears that some 11.3 million were specifically targeted for extermination! The author chooses not to comment on whether the operation in which they perished (called Taifun) was a military blunder, given that it diverted the German war effort away from the prime objective of taking Moscow and dealing Stalin a blow he would not recover from, or a sine qua non, given Hitler’s intentions to exterminate the Jews.
But this is not a military history per se, so it shifts to Albert Speer and Fritz Sauckel and the way they conducted the losing war against the Soviets. In particular, and in keeping with the book’s unwavering theme, it is the story of how they went about producing the steel and armaments necessary to conduct that losing war.
This is, by some margin, the part of the book where I learned the most and by an even bigger margin, the most important work of historical research to be found in this tome.
The story is told of the millions of Slavs, chiefly, who were uprooted from their lands and sent to work in keeping the German war machine running. Their working conditions, the means by which they were rewarded and how they were actively worked to death.
What you get here, more than in any sci-fi movie or, indeed, 21st century computer game, is a picture of what Europe would have looked like after a Nazi conquest: a world where the able bodied of the slave race man the engine room of the master race. Tooze goes out of his way to mention that it is under this light that we should look at Schindler, even. (p. 524)
The author goes beyond penning an indictment of Speer, here: he takes you through the factories and camps and back to the times when wars were not yet fought for territory, but to bring back slaves.
It is ironic that this should be the most poignant element of a war allegedly fought for Lebensraum.
And it is doubly ironic that, in the author’s view, at least, this “third front” could be precisely where Hitler lost his war: had he spared the lives of the millions of slaughtered Jews and millions of starved Red Army prisoners and turned them to slave labor some two years earlier, his millennial plans could well have become our nightmare.
Agree or disagree, this was a monumental read.
May 22, 2022
Adam Tooze’s The Wages of Destruction is a comprehensive economic history of the Third Reich and re-evaluation of the role its economy played in both civil and military life, similar to reconsiderations in political and social histories that have been written by the latest generation of historians. The author marshals an enormous amount of data to describe how the Nazis transformed Germany’s economy in service to war, to Lebensraum and to the Holocaust.
If the reader is unequal to the task of perusing 650+ pages of said data, they can – as the author himself suggests in the Preface – skip to the final chapter and learn what it all means. But if you’re interested in the period then this is a fascinating book.
The author begins with a brief overview of the Weimar Republic’s response to the economic crises of the ‘20s and ‘30s. Overall, its strategy was to link Germany’s economy to the rising behemoth of the United States’. Tooze argues that Hitler’s regime turned that policy on its head; Germany’s goal from 1933 to 1945 was to make of itself an autarchy with access to resources and an industrial capacity that rivalled both the U.S.’s and Soviet Russia’s. A policy requiring expansion into Eastern Europe and the western half of Russia (while also requiring the extermination of the region's current inhabitants, both Slav and Jew - more ideological necessities than economic ones but they reinforced each other, as the author shows).
Parts one and two take us from 1933 to the early years of the war, when Germany seemed unstoppable until Hitler failed to invade Britain and the collapse of Operation Barbarossa at the end of 1941. Part three recounts the regime’s final years when the most fanatic Nazis seized total control over industry and mobilized Germany to prolong the war until its bitter conclusion in May 1945.
Along the way, Tooze offers provocative reassessments of many shibboleths. Two examples of particular importance (and interest to me) are the myth of Germany’s prewar economy and the character of Albert Speer and his role in the economic “miracle” of 1942-43. The first dismantles the idea of Germany as an economic powerhouse limited only by its access to resources. Outside of a few industries like chemicals (e.g., IG Farben), Germany's economy resembled that of other Central and Eastern European states. Particularly its agricultural economy, which had stagnated, mired in 19th century technologies. The second resizes Speer's role as the "miracle man" who revitalized the war effort. While he was admittedly a pivotal figure, much of Speer's reputation was self-invented and the achievements he claimed for himself, the work of other men.
Could the Nazis have won the war? Yes, anything is possible however improbable, but only by breaking the political will of the Allies, something Hitler failed to do. Militarily and economically – a fact recognized by economists and the generals on both sides – the Third Reich simply couldn’t compete with the Allied capacity to outproduce it. Though the Panther and Tiger tanks were formidable weapons incorporating technology that made the Soviet T-34s so effective, when the Russians could produce 1,000 of them for every 50 Panthers, it didn’t matter. (And that’s just one example of the staggering capacity of Allied war efforts.)
Recommended for a reader interested in the period and/or economic history. If your interest isn’t so strong but you’d still like to add a bit to your knowledge, follow the author’s advice: Find a copy of Wages at your local library or sit down at the local Barnes & Noble with an edition and read the final chapter.
[PS - If anyone knows of a similar treatment of Imperial Japan, I'd be interested in learning of it. Like its ally, Tokyo mobilized Japan's economy to drag out a war that - after 1942 - it clearly couldn't win.]
If the reader is unequal to the task of perusing 650+ pages of said data, they can – as the author himself suggests in the Preface – skip to the final chapter and learn what it all means. But if you’re interested in the period then this is a fascinating book.
The author begins with a brief overview of the Weimar Republic’s response to the economic crises of the ‘20s and ‘30s. Overall, its strategy was to link Germany’s economy to the rising behemoth of the United States’. Tooze argues that Hitler’s regime turned that policy on its head; Germany’s goal from 1933 to 1945 was to make of itself an autarchy with access to resources and an industrial capacity that rivalled both the U.S.’s and Soviet Russia’s. A policy requiring expansion into Eastern Europe and the western half of Russia (while also requiring the extermination of the region's current inhabitants, both Slav and Jew - more ideological necessities than economic ones but they reinforced each other, as the author shows).
Parts one and two take us from 1933 to the early years of the war, when Germany seemed unstoppable until Hitler failed to invade Britain and the collapse of Operation Barbarossa at the end of 1941. Part three recounts the regime’s final years when the most fanatic Nazis seized total control over industry and mobilized Germany to prolong the war until its bitter conclusion in May 1945.
Along the way, Tooze offers provocative reassessments of many shibboleths. Two examples of particular importance (and interest to me) are the myth of Germany’s prewar economy and the character of Albert Speer and his role in the economic “miracle” of 1942-43. The first dismantles the idea of Germany as an economic powerhouse limited only by its access to resources. Outside of a few industries like chemicals (e.g., IG Farben), Germany's economy resembled that of other Central and Eastern European states. Particularly its agricultural economy, which had stagnated, mired in 19th century technologies. The second resizes Speer's role as the "miracle man" who revitalized the war effort. While he was admittedly a pivotal figure, much of Speer's reputation was self-invented and the achievements he claimed for himself, the work of other men.
Could the Nazis have won the war? Yes, anything is possible however improbable, but only by breaking the political will of the Allies, something Hitler failed to do. Militarily and economically – a fact recognized by economists and the generals on both sides – the Third Reich simply couldn’t compete with the Allied capacity to outproduce it. Though the Panther and Tiger tanks were formidable weapons incorporating technology that made the Soviet T-34s so effective, when the Russians could produce 1,000 of them for every 50 Panthers, it didn’t matter. (And that’s just one example of the staggering capacity of Allied war efforts.)
Recommended for a reader interested in the period and/or economic history. If your interest isn’t so strong but you’d still like to add a bit to your knowledge, follow the author’s advice: Find a copy of Wages at your local library or sit down at the local Barnes & Noble with an edition and read the final chapter.
[PS - If anyone knows of a similar treatment of Imperial Japan, I'd be interested in learning of it. Like its ally, Tokyo mobilized Japan's economy to drag out a war that - after 1942 - it clearly couldn't win.]
September 18, 2023
I often find that with really great non-fiction books it is a choice of repeating the bare minimum summary of the books subject, which is invariably unnecessary; trying to recap in a fuller but always inadequate way the authors conclusion; or simply repeating over and over again how brilliant, stunning, interesting, revelatory, groundbreaking, etc. the book is. I will try to not fall into any of those traps.
This is a brilliant and important history and, if you are interested in this era, a must read. This is not a dry and dusty academic economic treatise, it is dealing with one of the central planks of Nazi theory, action and how it fought and fought for so long in WWII. It also puts into perspective the rather inflated reputation the Nazis as have as organisers in marshalling the resources from their conquered territories to sustain the war and in that of Albert Speer in supposedly transforming and making possible the continued existence of the Reich through his actions.
The truth is that the Nazi were poor economic managers at home and they were worse in the countries they conquered. Although France, the low countries, Norway and even the rump Czech state avoided the absolute despoliation that took place in Poland, the Soviet Union and elsewhere Nazi economic handling of its conquered territories was all about the extraction of as much as possible for as little as possible in the West and for nothing in the East. Nazi racial 'theories' were more important then any economic theory.
As for Speer, although he was a great administrator, he brought little new thought to the table when he took over from Fritz Todt, but like many sucessor's claimed credited for work and plans already in existence.
Don't imagine that because this book is dealing with the economy that the human cost Nazi rule is avoided, lessened or reduced to statistics. It is always overwhelming present - it is unavoidable both because of basic humanity and because the Nazis throughout their empire wasted one of their greatest spoils of war - people.
I could easily go on and on - so let me repeat this is a must read for anyone interested in the while sad tale of the Nazis.
This is a brilliant and important history and, if you are interested in this era, a must read. This is not a dry and dusty academic economic treatise, it is dealing with one of the central planks of Nazi theory, action and how it fought and fought for so long in WWII. It also puts into perspective the rather inflated reputation the Nazis as have as organisers in marshalling the resources from their conquered territories to sustain the war and in that of Albert Speer in supposedly transforming and making possible the continued existence of the Reich through his actions.
The truth is that the Nazi were poor economic managers at home and they were worse in the countries they conquered. Although France, the low countries, Norway and even the rump Czech state avoided the absolute despoliation that took place in Poland, the Soviet Union and elsewhere Nazi economic handling of its conquered territories was all about the extraction of as much as possible for as little as possible in the West and for nothing in the East. Nazi racial 'theories' were more important then any economic theory.
As for Speer, although he was a great administrator, he brought little new thought to the table when he took over from Fritz Todt, but like many sucessor's claimed credited for work and plans already in existence.
Don't imagine that because this book is dealing with the economy that the human cost Nazi rule is avoided, lessened or reduced to statistics. It is always overwhelming present - it is unavoidable both because of basic humanity and because the Nazis throughout their empire wasted one of their greatest spoils of war - people.
I could easily go on and on - so let me repeat this is a must read for anyone interested in the while sad tale of the Nazis.
April 13, 2024
This book is a truly impressive achievement. After I finished it, I found myself talking about it enthusiastically to a colleague. When he asked me: “So, what is Tooze’s thesis then?”, I was dumbfounded for a moment. Unlike so many books about the Third Reich, “The Wages of Destruction” does not articulate a single key insight which lets itself be summarised easily.
Instead, it offers a very meticulous chronological reconstruction of the economic policy dilemmas and trade-offs the Nazi regime confronted between 1933 and 1945 in view of the overriding objectives of rearmament and sustaining the war effort. It lays out these dilemmas and trade-offs in a very pedagogical manner, explains how the Nazis decided to resolve them and how the consequences of their economic policies affected the military capacity of the Reich and Hitler's strategic policy options.
To do all of this, Tooze triangulates diplomatic records, statistical sources about the German economy and military archives. The result is a very dense, thorough and compelling work of economic history which I found difficult to put down.
The fact that Tooze does not put forward a single main thesis, does not mean that his book lacks original insights. Quite to the contrary, his retelling of German economic history during the 1930s and 1940s convincingly debunks a number of widespread myths about the Third Reich such as the idea that the Blitzkrieg had been carefully planned and prepared for or that the Nazis were reluctant to impose hardship on the population during the early years of the rearmament effort.
Tooze also takes issue with the misconception that the Allies, having learned their lesson from World War I, did not extract reparations from the defeated nation and goes out of his way to demystify the carefully crafted self-image of Albert Speer as the miracle man who single-handedly managed to boost military output by virtue of his technocratic abilities and managerial skills.
To sum up, this is economic history at its very best and a must-read for anyone with an interest specifically in the history of the Third Reich or, more generally, with the workings of a planned economy.
Instead, it offers a very meticulous chronological reconstruction of the economic policy dilemmas and trade-offs the Nazi regime confronted between 1933 and 1945 in view of the overriding objectives of rearmament and sustaining the war effort. It lays out these dilemmas and trade-offs in a very pedagogical manner, explains how the Nazis decided to resolve them and how the consequences of their economic policies affected the military capacity of the Reich and Hitler's strategic policy options.
To do all of this, Tooze triangulates diplomatic records, statistical sources about the German economy and military archives. The result is a very dense, thorough and compelling work of economic history which I found difficult to put down.
The fact that Tooze does not put forward a single main thesis, does not mean that his book lacks original insights. Quite to the contrary, his retelling of German economic history during the 1930s and 1940s convincingly debunks a number of widespread myths about the Third Reich such as the idea that the Blitzkrieg had been carefully planned and prepared for or that the Nazis were reluctant to impose hardship on the population during the early years of the rearmament effort.
Tooze also takes issue with the misconception that the Allies, having learned their lesson from World War I, did not extract reparations from the defeated nation and goes out of his way to demystify the carefully crafted self-image of Albert Speer as the miracle man who single-handedly managed to boost military output by virtue of his technocratic abilities and managerial skills.
To sum up, this is economic history at its very best and a must-read for anyone with an interest specifically in the history of the Third Reich or, more generally, with the workings of a planned economy.
July 10, 2019
Adam Tooze's The Wages of Destruction offers an extraordinarily deep dive into Nazi Germany's economic structure and policy. Tooze's book argues that Nazi economics defy categorization within an easy capitalist-socialist box; instead, they introduced a state-directed (though not state-run) economy with the primary, even sole effort of preparing Germany for war. Thus Hitler introduces modest welfare programs and expansive internal improvements while crushing unions, coddling major corporations and funneling money and resources into military rearmanent, while attempting (and largely failing) to craft a self-sustaining autarky. Attempts to paint Hitler as a "socialist" fall afoul of the fact that he kept Germany's industrial concerns largely intact, allowing them to profit off the military build-up through lucrative contracts and conscripting slave labor. Yet it's hard to view Nazism as a traditional "free market" economy either, given the degree of state intervention and regulation of foreign trade; perhaps it's in this aspect of governance, if nowhere else, that the "national socialist" moniker seems most appropriate to the Third Reich. Nonetheless, Tooze argues, economics of any sort were never a major priority of Nazi ideology, rather a means to Hitler's apocalyptic end. As one might expect, the book is on the dense side and I probably wouldn't recommend it for a casual reader. For anyone seeking a deeper understanding of Nazi Germany or fascist ideology, though, it's an essential read.
June 3, 2018
The saying "The amateurs discuss tactics: the professionals discuss logistics" has been attributed to almost everybody from Napoleon to Darth Vader (no, not really). Whoever the author of this insight was, most professionals would agree with it (full disclosure: I have served as an officer in the Belgian army logistics).
I can therefore only applaud the increasing number of books that discuss the second world war from the perspective of logistics, and, more broadly, the industrial and economic policies of the belligerent parties.
For instance, “Freedom’s Forge” by Arthur Herman tells the extraordinary story of the mobilization of the American industrial potential. Of course, America was generally known to have incredible industrial resources even before the war, and the fact that they were underutilised due to the Great Depression made it much easier to mobilize these resources for military purposes when needed. Still, the truth is that, at the end of 1930s, the US were incredibly ill prepared for war, and that it required an incredible organisational effort to set this right. We know that the US succeeded brilliantly. Interestingly, this was not achieved through a top-down approach: market forces were very much allowed to play a key role in the allocation of resources.
Similarly, “Britain’s war machine” by David Edgerton shows how, contrary to widespread belief, the United Kingdom was an economic superpower, who was able to build on huge accumulated international assets to survive the period in which it was a military underdog (at least on the ground -in the air and on sea, it of course never was), and to build a counter offensive that was really based on the power of machines rather than on the blood of men.
“The wages of destruction” by Adam Tooze, which I review in more detail here, gives the German perspective.
Arguably the central contribution of Tooze's book is the claim that it debunks of the "inefficiency" myth. In short, the "inefficiency" myth claimed that Germany lost the war due to an overly relaxed and chaotic approach to its economic mobilization in the first years of the war, and that it was only when Albert Speer took over the coordination of this mobilization that Germany really realized its full potential, resulting in spectacular increases in its production of military equipment - but too late to turn the tide. This narrative was widely spread by Speer himself (surprise, surprise) and some of his lesser known acolytes, and also uncritically taken over by people such as John Kenneth Galbraith, whose reputation amongst the public as a pundit has never been fundamentally shaken by the fact that he was wrong about almost everything.
Tooze claims, and with some solid statistical facts, that the actual mobilization of resources in Germany was already formidable before the war even started, and that the claims of the war effort on the national economic resources were incomparable to anything that had been done before in documented history. In short, Tooze claims that the weaknesses of the German economy were not the result of the infighting and chaos within the Nazi regime, but were the inevitable results of structural weaknesses of the German economy. This is of course completely inconsistent with the view we have nowadays of Germany as an economic superpower, but Tooze illustrates that, in the 1920s and 1930s, it was only in some specific sectors that Germany was an advanced economy.
I suppose that Tooze's book will not be the final say on this highly controversial issue, and I do not feel qualified to arbiter on this controversy. I will limit myself here to some important points that I have learned myself.
If we want to grasp the economics of Nazism, it is important first to understand the fundamental problem of the German economy in the 1920s and 1930s: its structural struggle with its balance of payment (yes, the world was a different place then). German industry and agriculture was highly dependent on the imports of natural resources, but, as the result of the repair payments imposed by the Treaty of Versailles, Germany suffered structurally from a lack of foreign currency reserves. It thus faced the classical dilemma of countries with current account problems combined with a high external debt denominated in a foreign currency: devaluation would improve the competitive position of its export industries, but the domestic weight of its external debt would become even more unbearable.
Faced with this situation, Germany could have chosen the liberal approach of becoming more integrated within the world trade systems, and, at the same time, obtaining a writedown of a part of its external debt. This was effectively the approach tried under the Weimar Republic. The alternative approach was the Nazi approach of going for broke: solving the external balance problem by simply annexing countries where the essential resources could simply be plundered, while risking a new world war at a time where Germany did simply not have the industrial base to fight such a war. Tooze's book describes in detail how this worked out.
Tooze also settles an old discussion about strategic priorities. The first books narrating the second world ward emphasized Hitler's dilettantic approach to military affairs, and his inability to define priorities in the Russian campaign is often given as illustration for this. But the reality is that Germany really needed the natural resources of the Ukraine, the coal of the Donetz basin and the oil of the Caucasus. The decision to give priority to the southern flank of the Eastern front, rather than to taking Moscow, was not a symptom of amateurism, but of unsolvable strategic dilemmas.
One issue that stand out in this whole concept of a war for the conquest of natural resources, is the agricultural problem. The Nazi's obsession with Lebensraum reflected a very really issue with the productivity of German agriculture, and even serious agronomists agreed that a substantial increase in the scale of agricultural activity was required. In the first world war, Germany had come very close to a massive famine, and it was confronted with similar risk in the second world war. The Nazi agronomist Herbert Backe therefore proposed the so-called Hungerplan as a solution. The idea was that, if Germany invaded the Soviet Union, the German army would cut off the inhabitants of the cities from any agricultural supply, and send the surplus production to Germany. this would effectively come down to the deliberate starvation of dozens of millions of people in the Soviet Union. In other words, if the Hungerplan had been executed, it would have been a genocide that would have dwarfed even the Holocaust. Surprisingly, contrary to the Holocaust, the Hungerplan was not kept secret: it was widely disseminated to the lowest levels of the hierarchy, and widely endorsed. It is a bit of a puzzle to me why it has entered collective memory in the same way the Holocaust has. One possible reason is that the Germany army never had the resources to properly implement the plan, and thus, that it was a massive failure according to its own standards.
A final point I would like to make is about macro-economic policy. As I wrote above, the war effort's impact on Germany's economic resources were huge, even before the war. However, the Nazi leadership was desperate to find ways to hide this burden. Thus, up to the end of the war, Hitler refused to raise taxes and mainly sought to mobilize savings through increased loans. It is a basic macro-economic insight that, if aggregate demand increases more quickly than an economy's production capacity, inflation will follow. The Nazis tried to hide the inflationary pressures though a system of price controls that effectively transformed the German economy in a planned economy in all but name. However, just as one cannot avoid the laws of physics, there is no way to avoid basic principles of economics: inflation just showed up in decreasing quality of consumption goods such as clothes.
Well, I will leave it here, and leave it up to the reader to discover this impressive book. Just one caveat: at times (and certainly in the first half), the book is too long (an enumeration of which company chaired which commission should really be relegated to the appendixes, for instance). But the persistent reader will be rewarded by a book which confirms that the final word on one of the defining events of the 20th century has probably not yet been written.
I can therefore only applaud the increasing number of books that discuss the second world war from the perspective of logistics, and, more broadly, the industrial and economic policies of the belligerent parties.
For instance, “Freedom’s Forge” by Arthur Herman tells the extraordinary story of the mobilization of the American industrial potential. Of course, America was generally known to have incredible industrial resources even before the war, and the fact that they were underutilised due to the Great Depression made it much easier to mobilize these resources for military purposes when needed. Still, the truth is that, at the end of 1930s, the US were incredibly ill prepared for war, and that it required an incredible organisational effort to set this right. We know that the US succeeded brilliantly. Interestingly, this was not achieved through a top-down approach: market forces were very much allowed to play a key role in the allocation of resources.
Similarly, “Britain’s war machine” by David Edgerton shows how, contrary to widespread belief, the United Kingdom was an economic superpower, who was able to build on huge accumulated international assets to survive the period in which it was a military underdog (at least on the ground -in the air and on sea, it of course never was), and to build a counter offensive that was really based on the power of machines rather than on the blood of men.
“The wages of destruction” by Adam Tooze, which I review in more detail here, gives the German perspective.
Arguably the central contribution of Tooze's book is the claim that it debunks of the "inefficiency" myth. In short, the "inefficiency" myth claimed that Germany lost the war due to an overly relaxed and chaotic approach to its economic mobilization in the first years of the war, and that it was only when Albert Speer took over the coordination of this mobilization that Germany really realized its full potential, resulting in spectacular increases in its production of military equipment - but too late to turn the tide. This narrative was widely spread by Speer himself (surprise, surprise) and some of his lesser known acolytes, and also uncritically taken over by people such as John Kenneth Galbraith, whose reputation amongst the public as a pundit has never been fundamentally shaken by the fact that he was wrong about almost everything.
Tooze claims, and with some solid statistical facts, that the actual mobilization of resources in Germany was already formidable before the war even started, and that the claims of the war effort on the national economic resources were incomparable to anything that had been done before in documented history. In short, Tooze claims that the weaknesses of the German economy were not the result of the infighting and chaos within the Nazi regime, but were the inevitable results of structural weaknesses of the German economy. This is of course completely inconsistent with the view we have nowadays of Germany as an economic superpower, but Tooze illustrates that, in the 1920s and 1930s, it was only in some specific sectors that Germany was an advanced economy.
I suppose that Tooze's book will not be the final say on this highly controversial issue, and I do not feel qualified to arbiter on this controversy. I will limit myself here to some important points that I have learned myself.
If we want to grasp the economics of Nazism, it is important first to understand the fundamental problem of the German economy in the 1920s and 1930s: its structural struggle with its balance of payment (yes, the world was a different place then). German industry and agriculture was highly dependent on the imports of natural resources, but, as the result of the repair payments imposed by the Treaty of Versailles, Germany suffered structurally from a lack of foreign currency reserves. It thus faced the classical dilemma of countries with current account problems combined with a high external debt denominated in a foreign currency: devaluation would improve the competitive position of its export industries, but the domestic weight of its external debt would become even more unbearable.
Faced with this situation, Germany could have chosen the liberal approach of becoming more integrated within the world trade systems, and, at the same time, obtaining a writedown of a part of its external debt. This was effectively the approach tried under the Weimar Republic. The alternative approach was the Nazi approach of going for broke: solving the external balance problem by simply annexing countries where the essential resources could simply be plundered, while risking a new world war at a time where Germany did simply not have the industrial base to fight such a war. Tooze's book describes in detail how this worked out.
Tooze also settles an old discussion about strategic priorities. The first books narrating the second world ward emphasized Hitler's dilettantic approach to military affairs, and his inability to define priorities in the Russian campaign is often given as illustration for this. But the reality is that Germany really needed the natural resources of the Ukraine, the coal of the Donetz basin and the oil of the Caucasus. The decision to give priority to the southern flank of the Eastern front, rather than to taking Moscow, was not a symptom of amateurism, but of unsolvable strategic dilemmas.
One issue that stand out in this whole concept of a war for the conquest of natural resources, is the agricultural problem. The Nazi's obsession with Lebensraum reflected a very really issue with the productivity of German agriculture, and even serious agronomists agreed that a substantial increase in the scale of agricultural activity was required. In the first world war, Germany had come very close to a massive famine, and it was confronted with similar risk in the second world war. The Nazi agronomist Herbert Backe therefore proposed the so-called Hungerplan as a solution. The idea was that, if Germany invaded the Soviet Union, the German army would cut off the inhabitants of the cities from any agricultural supply, and send the surplus production to Germany. this would effectively come down to the deliberate starvation of dozens of millions of people in the Soviet Union. In other words, if the Hungerplan had been executed, it would have been a genocide that would have dwarfed even the Holocaust. Surprisingly, contrary to the Holocaust, the Hungerplan was not kept secret: it was widely disseminated to the lowest levels of the hierarchy, and widely endorsed. It is a bit of a puzzle to me why it has entered collective memory in the same way the Holocaust has. One possible reason is that the Germany army never had the resources to properly implement the plan, and thus, that it was a massive failure according to its own standards.
A final point I would like to make is about macro-economic policy. As I wrote above, the war effort's impact on Germany's economic resources were huge, even before the war. However, the Nazi leadership was desperate to find ways to hide this burden. Thus, up to the end of the war, Hitler refused to raise taxes and mainly sought to mobilize savings through increased loans. It is a basic macro-economic insight that, if aggregate demand increases more quickly than an economy's production capacity, inflation will follow. The Nazis tried to hide the inflationary pressures though a system of price controls that effectively transformed the German economy in a planned economy in all but name. However, just as one cannot avoid the laws of physics, there is no way to avoid basic principles of economics: inflation just showed up in decreasing quality of consumption goods such as clothes.
Well, I will leave it here, and leave it up to the reader to discover this impressive book. Just one caveat: at times (and certainly in the first half), the book is too long (an enumeration of which company chaired which commission should really be relegated to the appendixes, for instance). But the persistent reader will be rewarded by a book which confirms that the final word on one of the defining events of the 20th century has probably not yet been written.
November 30, 2016
A historian friend recommended this epic tome to me. I will admit it took me a little while to get into, mainly because the hardback edition is unwieldy. The writing, however, is anything but. Tooze has an academic yet engaging style, managing a difficult balancing act with abstract economic concepts and horrific war crimes. He also writes with specific aims in mind - to overturn popular conceptions of Blitzkrieg, of working women’s role in the Reich, and of Hitler's economic rationale for risking war in 1939. By the end of the book, I felt I had far better grasp on the economics of Germany in the 1930s and of Western Europe during the Second World War. A fair amount of that new knowledge is absolutely horrifying, which is no more than you expect when reading about the Nazis.
A significant thesis that Tooze emphasises throughout is Germany’s economic weakness. In the 1930s the German economy was underdeveloped relative to Britain and especially America, with a large agricultural sector of low productivity. In particular, Germany had a persistent balance of payments problem, due to dependency on imports of key primary inputs (iron ore, oil, wheat, etc). The ways in which the Nazi government kept this imbalance under some control, before and during the war, were often ingenious yet always temporary. It was a structural problem, exacerbated by rearmament. Tooze demonstrates that as soon as Hitler came to power the whole German economy was reorientated towards preparing for war. The level of intervention used to shape this war economy is quite amazing. I had not realised the range of quota-setting, price-fixing, and export-limiting that took place, on top of the close political relationships between heads of industry and the Reich. One thing that struck me as mysterious, though, was the ambivalent relationship between Nazi economic management and the concept of bureaucracy. It is evident that bureaucratic intervention was the first response to problems. Yet, bureaucracy was also repeatedly blamed for slow production, etc. It’s almost as if there was a constant quest for more perfect, more ideologically pure bureaucracy going on (as well as inevitable political one-upmanship and blameshifting). It seems to have been the older bureaucracies like army procurement that were condemned, whilst in the latter years of the war Speer was given more and more power over economic activity.
In addition to the well-argued points that Tooze advances, the book taught me some memorable facts. For instance, the tank invasion through the Ardennes, ‘called for the German armoured columns to drive for three days and three nights without interruption. To ensure the drivers could go without sleep, the quartermasters of the advanced units stocked up with tens of thousands of doses of Pervitin, the original formulation of the amphetamine now known as ‘speed’, but more familiar in the 1940s as ‘tank chocolate’ (Panzerschokolade)’. The theme of Germany pushing its economy and society to the limit in an attempt to win the war quickly is brought home by comments like: ‘By the summer of 1941, the Wehrmacht was already scraping the manpower barrel. Due to the small number of children born during World War I, Germany had no option but to send virtually all its young men into battle. Of those aged between 20 and 30, who were physically fit for military service, 85% were already in the Wehrmacht in the summer of 1941’. Given America’s economic strength and the USSR’s huge population, it is clear to the reader than Germany never had more than the slimmest of opportunities to win the war in Europe. Perhaps more striking is the extent to which various Nazi figures realised this and had serious reservations about Operation Barbarossa, even after the successful conquest of France.
Tooze characterises the Nazi invasion of Russia as, ‘the last great land-grab in the long and bloody history of European colonialism. [...] What was to follow was a gigantic campaign of land clearance and colonisation, which also involved the ‘clearance’ of the vast majority of the Slav population…’ It was invisaged that urban Soviet populations would be sealed off and starved to death. Despite the scale of their invasion, however, the Nazis vastly underestimated the resources and resistance they were up against. In his diary, General Halder said of the Soviets, ‘At the start of the war we reckoned with about 200 enemy divisions. Now we have already counted 360. These divisions are certainly not armed and equipped in our sense, in many cases they have tactically inadequate leadership. But they are there. And when a dozen have been smashed, then the Russian puts up another dozen.’ In fact, Tooze tells us, Halder was wrong and by the end of 1941 the Red Army had 600 divisions! Stalin was certainly willing to throw away the lives of millions of soldiers and civilians, a resource that Russia had in much greater abundance than Germany.
From chapter 14 onwards, genocide becomes a matter of economic planning in the German war economy. The scale and ubiquity of this is distinctly disturbing to read about. I was reminded of The Kindly Ones, one of the most intense, horrifying, and incredible novels I’ve ever read. That provides a fictionalised portrait of the seeming paradox that Tooze analyses: the Nazi economy could not reconcile the priorities of production and destruction. Workers were badly needed to make arms, but Nazi ideology required the death of millions of Jews and others seen as undesirable. Selected concentration camp inmates were murdered through labour, while industrialists complained that they worked too slowly and died too often to be productive. Tooze points out that the balance was struck on the basis of scarce food. Whilst slave labour was needed to make weapons, they also needed to be fed and Germans were always first in line for limited rations. Hunger was constantly employed as a weapon. The massive scale of forced labour used by the Nazis is very difficult to comprehend; their willingness to starve and kill millions is impossible to comprehend. Yet Tooze manages to clearly demonstrate the role of economic policy in enabling and promulgating such horror.
The disaster that consumed Germany at the end of the war is not examined in any great detail. Apart from anything else, during that time of chaos, famine, and refugee crises, normal economic activity was practically impossible. A barter economy prevailed. The reasons for this collapse are, however, made evident by the rest of the book. From 1933 onwards, Germany’s economy was centred on war. By 1943, 60% of Germany’s GDP consisted of war spending. The utter focus of the economy on war production, a reorientation over only a decade, is undoubtedly impressive as well as appalling. Yet this focus could never compensate for the advantages held by the Allies: America’s wealth and industrial capacity, Britain’s colonies, Russia’s population and industrial capacity. Once the war was evidently lost, Speer continued to claim in propaganda that a miracle technology - new tanks, jet aircraft, V2s - would turn the tide. As Tooze makes clear, such innovations were valid technological advances, but irrelevant to the war's final outcome. Lacking coal, steel, and labour, Germany could never have manufactured significant quantities of such weapons sufficiently fast to make a difference. So perhaps the overall message of the book is the momentum not of economics but of geography and demography. When war disrupts trade and emigration, primary resource availability and demography become the tight frame in which an economy operates. Within that fame, political prioritisation can make massive changes to the structure and function of the economy, but cannot transcend those limits.
A significant thesis that Tooze emphasises throughout is Germany’s economic weakness. In the 1930s the German economy was underdeveloped relative to Britain and especially America, with a large agricultural sector of low productivity. In particular, Germany had a persistent balance of payments problem, due to dependency on imports of key primary inputs (iron ore, oil, wheat, etc). The ways in which the Nazi government kept this imbalance under some control, before and during the war, were often ingenious yet always temporary. It was a structural problem, exacerbated by rearmament. Tooze demonstrates that as soon as Hitler came to power the whole German economy was reorientated towards preparing for war. The level of intervention used to shape this war economy is quite amazing. I had not realised the range of quota-setting, price-fixing, and export-limiting that took place, on top of the close political relationships between heads of industry and the Reich. One thing that struck me as mysterious, though, was the ambivalent relationship between Nazi economic management and the concept of bureaucracy. It is evident that bureaucratic intervention was the first response to problems. Yet, bureaucracy was also repeatedly blamed for slow production, etc. It’s almost as if there was a constant quest for more perfect, more ideologically pure bureaucracy going on (as well as inevitable political one-upmanship and blameshifting). It seems to have been the older bureaucracies like army procurement that were condemned, whilst in the latter years of the war Speer was given more and more power over economic activity.
In addition to the well-argued points that Tooze advances, the book taught me some memorable facts. For instance, the tank invasion through the Ardennes, ‘called for the German armoured columns to drive for three days and three nights without interruption. To ensure the drivers could go without sleep, the quartermasters of the advanced units stocked up with tens of thousands of doses of Pervitin, the original formulation of the amphetamine now known as ‘speed’, but more familiar in the 1940s as ‘tank chocolate’ (Panzerschokolade)’. The theme of Germany pushing its economy and society to the limit in an attempt to win the war quickly is brought home by comments like: ‘By the summer of 1941, the Wehrmacht was already scraping the manpower barrel. Due to the small number of children born during World War I, Germany had no option but to send virtually all its young men into battle. Of those aged between 20 and 30, who were physically fit for military service, 85% were already in the Wehrmacht in the summer of 1941’. Given America’s economic strength and the USSR’s huge population, it is clear to the reader than Germany never had more than the slimmest of opportunities to win the war in Europe. Perhaps more striking is the extent to which various Nazi figures realised this and had serious reservations about Operation Barbarossa, even after the successful conquest of France.
Tooze characterises the Nazi invasion of Russia as, ‘the last great land-grab in the long and bloody history of European colonialism. [...] What was to follow was a gigantic campaign of land clearance and colonisation, which also involved the ‘clearance’ of the vast majority of the Slav population…’ It was invisaged that urban Soviet populations would be sealed off and starved to death. Despite the scale of their invasion, however, the Nazis vastly underestimated the resources and resistance they were up against. In his diary, General Halder said of the Soviets, ‘At the start of the war we reckoned with about 200 enemy divisions. Now we have already counted 360. These divisions are certainly not armed and equipped in our sense, in many cases they have tactically inadequate leadership. But they are there. And when a dozen have been smashed, then the Russian puts up another dozen.’ In fact, Tooze tells us, Halder was wrong and by the end of 1941 the Red Army had 600 divisions! Stalin was certainly willing to throw away the lives of millions of soldiers and civilians, a resource that Russia had in much greater abundance than Germany.
From chapter 14 onwards, genocide becomes a matter of economic planning in the German war economy. The scale and ubiquity of this is distinctly disturbing to read about. I was reminded of The Kindly Ones, one of the most intense, horrifying, and incredible novels I’ve ever read. That provides a fictionalised portrait of the seeming paradox that Tooze analyses: the Nazi economy could not reconcile the priorities of production and destruction. Workers were badly needed to make arms, but Nazi ideology required the death of millions of Jews and others seen as undesirable. Selected concentration camp inmates were murdered through labour, while industrialists complained that they worked too slowly and died too often to be productive. Tooze points out that the balance was struck on the basis of scarce food. Whilst slave labour was needed to make weapons, they also needed to be fed and Germans were always first in line for limited rations. Hunger was constantly employed as a weapon. The massive scale of forced labour used by the Nazis is very difficult to comprehend; their willingness to starve and kill millions is impossible to comprehend. Yet Tooze manages to clearly demonstrate the role of economic policy in enabling and promulgating such horror.
The disaster that consumed Germany at the end of the war is not examined in any great detail. Apart from anything else, during that time of chaos, famine, and refugee crises, normal economic activity was practically impossible. A barter economy prevailed. The reasons for this collapse are, however, made evident by the rest of the book. From 1933 onwards, Germany’s economy was centred on war. By 1943, 60% of Germany’s GDP consisted of war spending. The utter focus of the economy on war production, a reorientation over only a decade, is undoubtedly impressive as well as appalling. Yet this focus could never compensate for the advantages held by the Allies: America’s wealth and industrial capacity, Britain’s colonies, Russia’s population and industrial capacity. Once the war was evidently lost, Speer continued to claim in propaganda that a miracle technology - new tanks, jet aircraft, V2s - would turn the tide. As Tooze makes clear, such innovations were valid technological advances, but irrelevant to the war's final outcome. Lacking coal, steel, and labour, Germany could never have manufactured significant quantities of such weapons sufficiently fast to make a difference. So perhaps the overall message of the book is the momentum not of economics but of geography and demography. When war disrupts trade and emigration, primary resource availability and demography become the tight frame in which an economy operates. Within that fame, political prioritisation can make massive changes to the structure and function of the economy, but cannot transcend those limits.
March 2, 2022
This is the best book on the economics of warfare I have read, a subject which current events have made tragically timely once again. The early chapters masterfully show the interaction between Germany's foreign exchange crises, its rearmament program, and the breakdown of European cooperation that might have averted war.
It's a little silly to try reduce this 700-page behemoth to an elevator pitch, but here's one attempt, which I will not belabor with the obvious analogies to the present day: in war, vastly superior economic power can take a long time to make itself felt. In the interim, this may encourage dictators (motivated by racist or nationalist ideology) to make horrific gambles to take advantage of their temporary superiority. Often these gambles succeed. And though, in World War II, the cold logic of economic superiority eventually prevailed, this was small consolation to the tens of millions who had already died.
Here are what I think are the major themes of the book, in greater detail:
(1) Nazi Germany was outmatched several times over by the economies of its enemies, most of all by the United States. Hitler was obsessed with this fact, as were Weimar planners before him. In a total war, any rational expert would say that Germany would eventually be crushed. (And so it was.)
(2) Hitler's goal was to conquer the lands of Eastern Europe for the German people, which he would depopulate with the mass murder of forty million of their inhabitants (an act he likened to America's genocide of the Native Americans). Only by building its own continental empire, he believed, could Germany achieve the same economic might and living standards of the United States. On this point, racist, anti-semitic ideology and a kind of twisted economic logic were in agreement.
(3) Knowing (1), that Germany's military advantage at the eve of war would always be temporary, Hitler embarked on a series of ever-larger gambles (Anschluss, the Sudetenland, Poland, invading France and the Low Countries, the Soviet Union), which through a combination of Allied confusion and sheer blind luck resulted in massive payoffs. None of these, however, altered the basic strategic logic of (1), so long as the USA and the Soviet Union remained unconquered.
(4) By 1942, Germany's luck started running out, and the inexorable logic of (1) began to reassert itself. Reorganizations and rationalizations and horrific slave labor (again showing the interplay between racist ideology and economics) helped squeeze more juice out of an ever-draining stockpile of natural resources, but even on that front the efficiency of German war mobilization was likely exceeded by the USS.R. Still, these efficiency gains and several Allied strategic blunders prolonged a war whose outcome was already clear by 1944. Millions more died.
It's a little silly to try reduce this 700-page behemoth to an elevator pitch, but here's one attempt, which I will not belabor with the obvious analogies to the present day: in war, vastly superior economic power can take a long time to make itself felt. In the interim, this may encourage dictators (motivated by racist or nationalist ideology) to make horrific gambles to take advantage of their temporary superiority. Often these gambles succeed. And though, in World War II, the cold logic of economic superiority eventually prevailed, this was small consolation to the tens of millions who had already died.
Here are what I think are the major themes of the book, in greater detail:
(1) Nazi Germany was outmatched several times over by the economies of its enemies, most of all by the United States. Hitler was obsessed with this fact, as were Weimar planners before him. In a total war, any rational expert would say that Germany would eventually be crushed. (And so it was.)
(2) Hitler's goal was to conquer the lands of Eastern Europe for the German people, which he would depopulate with the mass murder of forty million of their inhabitants (an act he likened to America's genocide of the Native Americans). Only by building its own continental empire, he believed, could Germany achieve the same economic might and living standards of the United States. On this point, racist, anti-semitic ideology and a kind of twisted economic logic were in agreement.
(3) Knowing (1), that Germany's military advantage at the eve of war would always be temporary, Hitler embarked on a series of ever-larger gambles (Anschluss, the Sudetenland, Poland, invading France and the Low Countries, the Soviet Union), which through a combination of Allied confusion and sheer blind luck resulted in massive payoffs. None of these, however, altered the basic strategic logic of (1), so long as the USA and the Soviet Union remained unconquered.
(4) By 1942, Germany's luck started running out, and the inexorable logic of (1) began to reassert itself. Reorganizations and rationalizations and horrific slave labor (again showing the interplay between racist ideology and economics) helped squeeze more juice out of an ever-draining stockpile of natural resources, but even on that front the efficiency of German war mobilization was likely exceeded by the USS.R. Still, these efficiency gains and several Allied strategic blunders prolonged a war whose outcome was already clear by 1944. Millions more died.
October 9, 2019
Tooze's The Wages of Destruction is the definitive book on the Nazi economy. It is as gripping as these kinds of books get, but at the end, still an economic history, and therefore rather dry and specialized reading.
Germany post-WW1 was a country of middling prosperity by per capita measures, lacking raw resources, and dealing with the legacy of war reparations and the immediate post-war hyper-inflation. Through the 20s, the German finance ministry steered a moderate course, maintaining a balance trade, and relying on American loans to pay off war reparations to France and Britain, which were then used to pay Allied war loans. The system worked up until 1929, when the Great Depression hit and global financial markets tanked. Hitler came to power in 1933, at the same time as Roosevelt took the dollar off the gold standard, which preventing some kind of coherent international response to the Nazis in the early 1930s.
Nazi ideology, as expressed in Mein Kampf and Hitler's "Second Book" had a coherent economic policy. German should be the center of a continental system, revitalized on the basis of lebensraum in the Eastern frontier. It was an explicit recreation of the American frontier mythos, with Poles and Russians replacing Indians, along with extreme antisemitism. Starting in 1936, Hitler launched an ambitious rearmament campaign, with the goal of a European war sometime in the 1940s.
The Nazi economy of the 1930 was overheated and generally weak, failing to raise German standards of living. It lasted only though a series of desperate improvisations in financial markets. But it did succeed in increasing German military spending from 1% of GDP to 20% of GDP. The army that took over Czechoslovakia, invaded Poland, and finally conquered France, was by no means qualitatively superior to the allies, but they were boldly lead and very lucky, particular in the Battle of France. 1940 was the high water-mark of the Nazi empire, as the gambit of Operation Barbarossa failed to knock Russia out of the war, and Pearl Harbor brought in American resources firmly on the Allied side. The burden of production in labor, steel, coal, oil, was 4 to 1 or greater. Nazi defeat was inevitable.
But that didn't mean that they couldn't drag the war out, and kill as many people as possible in the process. Hitler's empire turned to mass enslavement to get labor and resources out of conquered territory. Lacking the ability to feed everyone, the Hunger Plan proposed mass starvation for millions, starting with the Jews. If there's a villain to this book, it's Speer. Tooze demolishes Speer's self-serving memoirs, revealing him as a vulture rather than organizational genius, someone who took credit for production changes other had started, and who 'armament miracle' was little more than delusion. Speer's talents, if any, were exporting Nazi brutality from the concentration camps to the ordinary shop floor. He was absolutely complicit in the Holocaust, and made others complicit.
The Nazi economy failed entirely by 1944, done in by inflation and the deployment of the nation-wrecking force of the Allied strategic bomber offensive, which in the last months of the war essentially severed the industrial areas of the Ruhr valley from the rest of Germany. The balance of powers, in the end, was as it was in the beginning. Germany against the world, and Germany simply not wealthy enough to defeat the entire world.
I was hoping for more stories of Nazi procurement fuckups, as in this amazing series on the Amerika bomber program and related inability to make an actual heavy bomber. According to some historians who I trust, there were lots of examples of vaunted Nazi engineering which simply didn't work: interleaved wheels on their heavy tanks made track repair a multi-hour nightmare, uniforms which looked great in photos but were too hot in summer and too cold in winter, resources diverted to super-heavy tanks, experimental rifles, and superweapons like the V-2 which lacked the ability to shape the direction of the war. Tooze glances at these, but doesn't get in to the metal shavings of machining a panzer drive train.
This is a great book. I'm glad I read it, and that's on sale nowish. I don't know who else should read it.
Germany post-WW1 was a country of middling prosperity by per capita measures, lacking raw resources, and dealing with the legacy of war reparations and the immediate post-war hyper-inflation. Through the 20s, the German finance ministry steered a moderate course, maintaining a balance trade, and relying on American loans to pay off war reparations to France and Britain, which were then used to pay Allied war loans. The system worked up until 1929, when the Great Depression hit and global financial markets tanked. Hitler came to power in 1933, at the same time as Roosevelt took the dollar off the gold standard, which preventing some kind of coherent international response to the Nazis in the early 1930s.
Nazi ideology, as expressed in Mein Kampf and Hitler's "Second Book" had a coherent economic policy. German should be the center of a continental system, revitalized on the basis of lebensraum in the Eastern frontier. It was an explicit recreation of the American frontier mythos, with Poles and Russians replacing Indians, along with extreme antisemitism. Starting in 1936, Hitler launched an ambitious rearmament campaign, with the goal of a European war sometime in the 1940s.
The Nazi economy of the 1930 was overheated and generally weak, failing to raise German standards of living. It lasted only though a series of desperate improvisations in financial markets. But it did succeed in increasing German military spending from 1% of GDP to 20% of GDP. The army that took over Czechoslovakia, invaded Poland, and finally conquered France, was by no means qualitatively superior to the allies, but they were boldly lead and very lucky, particular in the Battle of France. 1940 was the high water-mark of the Nazi empire, as the gambit of Operation Barbarossa failed to knock Russia out of the war, and Pearl Harbor brought in American resources firmly on the Allied side. The burden of production in labor, steel, coal, oil, was 4 to 1 or greater. Nazi defeat was inevitable.
But that didn't mean that they couldn't drag the war out, and kill as many people as possible in the process. Hitler's empire turned to mass enslavement to get labor and resources out of conquered territory. Lacking the ability to feed everyone, the Hunger Plan proposed mass starvation for millions, starting with the Jews. If there's a villain to this book, it's Speer. Tooze demolishes Speer's self-serving memoirs, revealing him as a vulture rather than organizational genius, someone who took credit for production changes other had started, and who 'armament miracle' was little more than delusion. Speer's talents, if any, were exporting Nazi brutality from the concentration camps to the ordinary shop floor. He was absolutely complicit in the Holocaust, and made others complicit.
The Nazi economy failed entirely by 1944, done in by inflation and the deployment of the nation-wrecking force of the Allied strategic bomber offensive, which in the last months of the war essentially severed the industrial areas of the Ruhr valley from the rest of Germany. The balance of powers, in the end, was as it was in the beginning. Germany against the world, and Germany simply not wealthy enough to defeat the entire world.
I was hoping for more stories of Nazi procurement fuckups, as in this amazing series on the Amerika bomber program and related inability to make an actual heavy bomber. According to some historians who I trust, there were lots of examples of vaunted Nazi engineering which simply didn't work: interleaved wheels on their heavy tanks made track repair a multi-hour nightmare, uniforms which looked great in photos but were too hot in summer and too cold in winter, resources diverted to super-heavy tanks, experimental rifles, and superweapons like the V-2 which lacked the ability to shape the direction of the war. Tooze glances at these, but doesn't get in to the metal shavings of machining a panzer drive train.
This is a great book. I'm glad I read it, and that's on sale nowish. I don't know who else should read it.
October 2, 2021
My god what a fantastic, hard to put down book this was! I am a HUGE fan of everything Adam Tooze has written so far (and whatever he has in the works as well), yet that does not explain why I love this book. I love economic history reads the most and do my level best to complete at least one solid read on the same every year, yet that does not explain why love this book. I have obsessively read about the rise of the Nazis, Germany before and during their path to power, yet that also does not explain why I love this book.
I loved the ‘Wages of Destruction’ for all these reasons and because it forces you to question several narratives you assumed about Hitler, his strategy, some key players (mainly Albert Speer), the German business elite, and its bureaucracies as you race through every chapter. The grand narrative of the National Socialist path to power and war is well known, yet key events, decisions, and choices have usually been reduced to arbitrary decision making by Hitler and the Nazis. What has always been missing from the grand narrative were the economic imperatives which, while not causal alone on their own, manage to rationalize and explain many of the choices which seemed completely arbitrary or irrational when explained by ideology or fanaticism alone.
Tooze’ approach also cuts down to size narrative arcs which create an aura of mythology, when actions and outcomes alone are evaluated, absent the set of alternate choices. Thus, the German economy’s rise under Hitler, and its ‘unprecedented’ war production (especially under Speer, but also before his stint as self-promoting production bureaucrat in chief) are all grounded in evidence. This results in deflating these myths in a way that can be best appreciated by economic analysts, or those with a propensity towards such analyses. Tooze lays bare not just the choices that were made by the Nazis, and the costs and the opportunity costs of their choices, but also the relevant comparisons to the British, American and Soviet war time (and pre war time production) during this period. Equally importantly, Tooze, remains cognizant of the political and social determinants (and impacts) of these choices and actions, lacing and supplementing the narrative with their relevance wherever these, in his view, were either the catalysts or key determinants of the choices made by the Nazi regime. The full picture which thus emerges is thus more satisfying and informative than would have been the case otherwise.
Tooze, to me, also presented what to me was the single most interesting, and hitherto underappreciated argument, that the real spectacle of mass mobilization of economic resources to build a war economy was not that of Nazi Germany, but that of Stalin’s Soviet Russia – which moved whatever resources it could away from the German onslaught, built a war machine that was able to first withstand and then ultimately reverse the tide of the Wehrmacht.
If this review makes it sound like Tooze has written a dry tome with facts and figures, with arguments and counterarguments, then I would not have done justice to this masterpiece. Tooze’s writing moves fluidly from presenting his arguments, to crafting one narrative after another – you do not for a moment feel like you are reading a dry, if thoroughly well researched scholarship of an economist or a historian. Tooze the writer for Foreign Policy and New Yorker type articles shines through throughout his work, making this book incredibly hard to put down. I strongly recommend this as a must read to anyone interested in not just the rise of the Nazis, or World War II enthusiasts, but also to the average history (or econ) buff as well. This is the standard by which similar works should be evaluated, and the approaches adopted and questions explored should be the yardsticks by which history, and economic history, should be investigated.
Rating Infinite of 5
I loved the ‘Wages of Destruction’ for all these reasons and because it forces you to question several narratives you assumed about Hitler, his strategy, some key players (mainly Albert Speer), the German business elite, and its bureaucracies as you race through every chapter. The grand narrative of the National Socialist path to power and war is well known, yet key events, decisions, and choices have usually been reduced to arbitrary decision making by Hitler and the Nazis. What has always been missing from the grand narrative were the economic imperatives which, while not causal alone on their own, manage to rationalize and explain many of the choices which seemed completely arbitrary or irrational when explained by ideology or fanaticism alone.
Tooze’ approach also cuts down to size narrative arcs which create an aura of mythology, when actions and outcomes alone are evaluated, absent the set of alternate choices. Thus, the German economy’s rise under Hitler, and its ‘unprecedented’ war production (especially under Speer, but also before his stint as self-promoting production bureaucrat in chief) are all grounded in evidence. This results in deflating these myths in a way that can be best appreciated by economic analysts, or those with a propensity towards such analyses. Tooze lays bare not just the choices that were made by the Nazis, and the costs and the opportunity costs of their choices, but also the relevant comparisons to the British, American and Soviet war time (and pre war time production) during this period. Equally importantly, Tooze, remains cognizant of the political and social determinants (and impacts) of these choices and actions, lacing and supplementing the narrative with their relevance wherever these, in his view, were either the catalysts or key determinants of the choices made by the Nazi regime. The full picture which thus emerges is thus more satisfying and informative than would have been the case otherwise.
Tooze, to me, also presented what to me was the single most interesting, and hitherto underappreciated argument, that the real spectacle of mass mobilization of economic resources to build a war economy was not that of Nazi Germany, but that of Stalin’s Soviet Russia – which moved whatever resources it could away from the German onslaught, built a war machine that was able to first withstand and then ultimately reverse the tide of the Wehrmacht.
If this review makes it sound like Tooze has written a dry tome with facts and figures, with arguments and counterarguments, then I would not have done justice to this masterpiece. Tooze’s writing moves fluidly from presenting his arguments, to crafting one narrative after another – you do not for a moment feel like you are reading a dry, if thoroughly well researched scholarship of an economist or a historian. Tooze the writer for Foreign Policy and New Yorker type articles shines through throughout his work, making this book incredibly hard to put down. I strongly recommend this as a must read to anyone interested in not just the rise of the Nazis, or World War II enthusiasts, but also to the average history (or econ) buff as well. This is the standard by which similar works should be evaluated, and the approaches adopted and questions explored should be the yardsticks by which history, and economic history, should be investigated.
Rating Infinite of 5
May 17, 2024
More than just a good book, I think it’s a really important book for understanding the political economy of the Nazi war machine and how it influenced so many of the key decisions made by Hitler.
Earliest chapters are a bit tough for someone like me, as a non-economist, to parse but as the discussions of high finance in the interwar give way to discussing the war economy of the Third Reich it becomes much easier to follow.
Definitely a book I plan to come back to later for a reread once I have more econ knowledge
Earliest chapters are a bit tough for someone like me, as a non-economist, to parse but as the discussions of high finance in the interwar give way to discussing the war economy of the Third Reich it becomes much easier to follow.
Definitely a book I plan to come back to later for a reread once I have more econ knowledge
May 4, 2022
This book works on a premise that is generally not one that is associated with Hitler in most circumstances. This is a simple fact Hitler understood economics. With this idea as an accepted fact, the reasoning for his decisions makes more sense in regards to why Germany went to war when and where they did. There is still the fact that his vision is seen through his belief that there is a world Jewish conspiracy that twists everything. It does make it seem, somewhat more thought out.
The book also tears down a number of things that are considered the norm when it comes to German economic policies. Especially in regards to the Speer Miricle of production. A difficult, dry book to read but one that helps to understand how Germany was able to stay in the war as long as they were and why military choices were made in the way they were by Hitler when he overrode his Generals in regards to where attacks would be made and what territories would be held.
This book is not for everyone but it should be one that individuals make the effort to take a look at.
The book also tears down a number of things that are considered the norm when it comes to German economic policies. Especially in regards to the Speer Miricle of production. A difficult, dry book to read but one that helps to understand how Germany was able to stay in the war as long as they were and why military choices were made in the way they were by Hitler when he overrode his Generals in regards to where attacks would be made and what territories would be held.
This book is not for everyone but it should be one that individuals make the effort to take a look at.
September 4, 2008
h my, Adam Tooze's Wages of Destruction is quite a book. It an economic history of Nazi Germany and it provides economic reasons for Nazi policy making. This alone should raise interest (or potentially hackles). The discussion of lebensraum is illuminating. Most texts write this off as sheer propaganda or delusion, but Tooze shows that the German economy of the early 20th century was actually quite behind a number of competitors and that the very large agricultural work force was difficult to employ, hence the interest in stealing others land.
Tooze argues that there were other economic choices available to the Germans including taking a classically liberal export oriented approach, but that ideologically and politically this was a non-starter thanks in part to the inward turn of the United States in the early 30s. The Germans saw their future as that of an economic satellite of the United States or as the leader of a united Europe. They chose the later course, to the world's great dismay.
Too often analysis of political choices, at least in American writing, ignores economic influences. If they are identified, it is usually on the basis of nefarious special interests hoping to get their narrow agendas satisfied. It is much more rare to see an analysis of the economic situation facing leaders and how this constrains their behavior. Tooze explores how the balance of payments in Germany greatly influenced its foreign policy throughout the 30s. Today, you can't examine the US-China relationship without looking at the economic aspect. We need more books like Tooze's that examine these things.
The horrors of the Holocaust and the other other German atrocities also have economic underpinings. Most importantly, there was not enough food for everyone in Europe, at least with all the resources going to war making. Couple this with the extreme racism of the regime and the wholesale slaughter of Eastern Europeans and Jews by starvation and then mass murder becomes a policy choice rather than a fit of insanity.
This is a very large book that takes close reading. The subject range is massive, including an assessment of Albert Speer's economic wizardry, technology investments by the German military, relative economic strengths of the various powers and average farm size in 1930s Germany. For many readers it will be too much. For those of whom that is too much, consider picking it up and reading the introduction and the conclusion, which is easy enough. If you think you have read all you need about World War 2, think again.
Tooze argues that there were other economic choices available to the Germans including taking a classically liberal export oriented approach, but that ideologically and politically this was a non-starter thanks in part to the inward turn of the United States in the early 30s. The Germans saw their future as that of an economic satellite of the United States or as the leader of a united Europe. They chose the later course, to the world's great dismay.
Too often analysis of political choices, at least in American writing, ignores economic influences. If they are identified, it is usually on the basis of nefarious special interests hoping to get their narrow agendas satisfied. It is much more rare to see an analysis of the economic situation facing leaders and how this constrains their behavior. Tooze explores how the balance of payments in Germany greatly influenced its foreign policy throughout the 30s. Today, you can't examine the US-China relationship without looking at the economic aspect. We need more books like Tooze's that examine these things.
The horrors of the Holocaust and the other other German atrocities also have economic underpinings. Most importantly, there was not enough food for everyone in Europe, at least with all the resources going to war making. Couple this with the extreme racism of the regime and the wholesale slaughter of Eastern Europeans and Jews by starvation and then mass murder becomes a policy choice rather than a fit of insanity.
This is a very large book that takes close reading. The subject range is massive, including an assessment of Albert Speer's economic wizardry, technology investments by the German military, relative economic strengths of the various powers and average farm size in 1930s Germany. For many readers it will be too much. For those of whom that is too much, consider picking it up and reading the introduction and the conclusion, which is easy enough. If you think you have read all you need about World War 2, think again.
May 18, 2012
I have found one book that truly is monumental. Adam Tooze’s the Wages of Destruction is an incredible economic history of the Third Reich. Made even more interesting by the fact that the author connects seemingly mundane economics processes and problems with the political policy decision of the Nazi leadership. These economic issues are shown be one of the main driving forces behind Hitler’s conception of the world and the foreign policy decisions that those conception of the world propelled him towards. The section on the holocaust and the German food problem is phenomenal as well as his connection of Hitler’s view of a “world Jewish conspiracy” to the Führer’s economic and foreign policy goals. Additionally, for those interested in the overly moralistic debate on RAF and AAF strategic bombing policy, this book impressively argues against most of the common wisdom. The author even denies the existence of Albert Speer armaments miracle. In opposition to almost every other author I have read Tooze claims that the NAZI economy was actually at full mobilization for most of the war. What surprised me most about this book is that in the areas I am most knowledgeable (the German Army in the east, the operational doctrine of blitzkrieg and operational tactical history of the war) the book cites all the best sources. This one hefty book could actually function as both an economic history and an excellent survey of NAZI foreign policy and goals, a very accurate survey the course of the war, and an excellent explanation for NAZI racial and genocidal policy in the east from the perspective of NAZI racial theories and Economic difficulties. I cannot recommend it enough (the footnotes are phenomenal as well)!
January 2, 2022
A fascinating account of Nazi Germany's economy, policy making process and the people behind these decisions.The book discusses the cold and calculated rationale for all the horrors, including the holocaust, slave labor and disastrous campaign against Russia.
January 17, 2022
Reread in December 2021 / January 2022
November 12, 2020
Moved to gwern.net.
November 23, 2023
If you ever have the displeasure of having a colleague who is “right-wing” and says something delusional like “I don’t approve of the Nazis but you have to hand it to them with the economy” throw this book at them. A completely dismantling of the myth of Nazi efficiency in great detail with graphs and data that must’ve taken a lifetime to compile
November 1, 2021
This book is a page turner. Recommended. It's also just really disturbing, like any discussion of this period in Germany.
Tooze starts with the Weimar period and within-Germany arguments about the way to engage with the globalizing economy and the rise of the US (the folks who favored constructive global engagement lost the argument). The book ends in 1945, with just a very brief discussion of the German economy for the first few years after the war.
I sometimes feel inclined to believe that all economic crises are balance of payments crises, and the Nazi Germany case seems consistent with that. Particularly during the 1930s, the main constraint on German military expansion was the balance of payments, that is, insufficient foreign/hard currency to finance desired imports (in Germany's case, imports of raw materials, especially coal and steel but also eventually food). They had a fixed exchange rate which put them in perpetual shortage of forex. We are lucky German officials resisted devaluation or they might have ended up with a stronger economy going into the war. Instead of devaluing, they resorted to all sorts of shenanigans to try to boost import purchasing power, including financial repression and some complicated types of capital controls. Horace Schacht---the central banker until 1939---was quite creative in coming up with import finance under tough conditions.
After the conquest of much of western and central Europe, the focus on balance of payments sort of eases because Germany is occupying the sources of most of its 'import' needs. Indeed, there was a deliberate abandonment of focus on exports (for currency acquisition) and toward using the resources of the greater German empire, which now has more resources, including coal, steel, and food. Then it becomes about allocating resources for maximum armament production. That's really the whole story of the 1940s: completing the extension of state power over the entire economy and organizing conquered people as, effectively, slave labor for that end. Coal, steel, food, labor, and every other resource were optimized for armaments production and use. Raw materials and labor fully dictated the pace of the armaments economy. The entire economy was centrally planned basically from the late 1930s, with business owners and managers acting as little more than agents of the state. They also implemented full financial repression, with the state claiming virtually all savings and using rationing to set consumption at the minimal subsistence level. It's a useful case study in an economy pushed to its productive limits in pursuit of a single goal; naturally, the result was eventually out-of-control inflation and a lot of hungry people.
One of the striking features of the Nazi economy is how easily owners of businesses were co-opted to drive the war effort. It really didn't take much. "You will make money off of our crazed, genocidal conquests" was all it took to get business leaders on board. Indeed, it seems to me that virtually all German industrial companies used slave labor of some form---Jewish or foreign conquered peoples. IG Farben, BMW, Siemens, Daimler-Benz, VW, etc. I truly don't understand why any of these companies still exist. I guess Cold War considerations ended up letting a lot of German actors off easily. Obviously anyone who has read anything about the period knows this already, but this book really brought it home for me and made me uncomfortable with the idea of purchasing products from these companies.
Tooze summarizes his contribution in four parts:
1. We cannot separate the motives for the western and eastern fronts. The eastern front was ultimately about Germany obtaining Lebensraum (including coal, oil, and agricultural resources). To a high school history student it seems like invading the USSR was a stupid decision; but to Hitler, it was critical to obtain these resources, and quickly, before the US/UK war machine was fully prepared. The western front was about confronting the supposed Jewish conspiracy against Germany's acquisition of Lebensraum, with Roosevelt as the imagined figurehead of the imagined international Jewish conspiracy.
2. While it can be difficult to understand why Hitler invaded the USSR when he had a deal with Stalin and faced enemies elsewhere already, he sort of had no choice. He was out of coal, oil, and food. The German people were literally at risk of starvation (because resources were being thrown at the war machine). He needed these resources to keep the war going. He miscalculated how quickly he could obtain them and knock the USSR out. Of course, the racism fed these miscalculations. But he knew that the US/UK was coming to get him, and he knew he stood no chance without access to the natural resources of the USSR.
3. Contrary to some earlier arguments, the German war machine did not spare German consumers. And Blitzkrieg, in particular, was not about sparing German consumers. Blitzkrieg was motivated by the need to achieve war aims quickly and to reserve industrial resources for the confrontation with the US and the UK. Blitzkrieg is designed to facilitate fighting two wars at once. Blitzkrieg was overrated because the Germans sort of got lucky when they invaded France.
4. The genocidal activities and related enslavement were motivated by both ideology and "practical economics." The biggest example of this is the dramatic expansion of organized killing in 1942, when Nazi leaders made explicit calculations about the preferred tradeoff between allocating food for armaments labor and killing people who couldn't be productive workers. By 1944, foreign conquered peoples comprised 20% of the German workforce, and of course most of these were effectively slaves supplied to "private" companies by Himmler. Germans working in factories could not possibly have been unaware of the concentration camps and the enslavement, nor could any German bureaucrats of any level as every agency of the German government was eventually involved. And by the way, Hitler and many, many high-level German officials---many of whom survived Nuremburg---fully planned on starving 20 or 30 million Russians to death if the Russian campaigns had been successful. That was literally the plan for dealing with the conquered population. It's all extremely sickening, but I hadn't well understood it before.
Ultimately, the US economy saved the world from the Nazis. This is made very clear by the data. US trucks, tanks, and ammunition helped the Soviets turn the tide in the east and enabled the British to hold on until US entry into the war. We can complain a lot about the way the US economy developed during the 19th and early 20th centuries, but at the end of the day, US-style manufacturing and resource extraction are what solved the Nazi problem. Tooze reports lots of interesting data on US industrial output; once the US decided to be the arsenal of democracy---which was always inevitable---Germany's fate was decided. Germany simply wasn't in America's league economically, even with America supplying the Pacific front separately. The American shipbuilding miracle overwhelmed the (reasonably effective) attempts of the German navy to shut down supply lines to Britain. Then in the end, the Soviet advance deprived the Nazis of raw materials, and US/UK air power---the magnitude of which exceeded even American expectations---destroyed German manufacturing and transportation capacity, and the German war machine shut down almost completely. And give Churchill credit for knowing that it was worth hanging on while America figured out its priorities.
One other contribution: Albert Speer is very overrated. Earlier histories had him presiding over an "armaments miracle," but much of the surge in armaments production under his leadership was the harvest of earlier capital investments. Also, he was a fully committed Nazi, not the apolitical technocrat he claimed to be.
It was all such a tragic waste, it's still hard to get one's head around it. Ultimately, after 20 years of death and destruction, Germany returned to the old global engagement strategy that more sensible leaders had preferred in the late 20s and early 30s. I dunno, folks. Let's quit falling for economic nationalists and ethno-nationalists. Do not let them near the controls.
Tooze starts with the Weimar period and within-Germany arguments about the way to engage with the globalizing economy and the rise of the US (the folks who favored constructive global engagement lost the argument). The book ends in 1945, with just a very brief discussion of the German economy for the first few years after the war.
I sometimes feel inclined to believe that all economic crises are balance of payments crises, and the Nazi Germany case seems consistent with that. Particularly during the 1930s, the main constraint on German military expansion was the balance of payments, that is, insufficient foreign/hard currency to finance desired imports (in Germany's case, imports of raw materials, especially coal and steel but also eventually food). They had a fixed exchange rate which put them in perpetual shortage of forex. We are lucky German officials resisted devaluation or they might have ended up with a stronger economy going into the war. Instead of devaluing, they resorted to all sorts of shenanigans to try to boost import purchasing power, including financial repression and some complicated types of capital controls. Horace Schacht---the central banker until 1939---was quite creative in coming up with import finance under tough conditions.
After the conquest of much of western and central Europe, the focus on balance of payments sort of eases because Germany is occupying the sources of most of its 'import' needs. Indeed, there was a deliberate abandonment of focus on exports (for currency acquisition) and toward using the resources of the greater German empire, which now has more resources, including coal, steel, and food. Then it becomes about allocating resources for maximum armament production. That's really the whole story of the 1940s: completing the extension of state power over the entire economy and organizing conquered people as, effectively, slave labor for that end. Coal, steel, food, labor, and every other resource were optimized for armaments production and use. Raw materials and labor fully dictated the pace of the armaments economy. The entire economy was centrally planned basically from the late 1930s, with business owners and managers acting as little more than agents of the state. They also implemented full financial repression, with the state claiming virtually all savings and using rationing to set consumption at the minimal subsistence level. It's a useful case study in an economy pushed to its productive limits in pursuit of a single goal; naturally, the result was eventually out-of-control inflation and a lot of hungry people.
One of the striking features of the Nazi economy is how easily owners of businesses were co-opted to drive the war effort. It really didn't take much. "You will make money off of our crazed, genocidal conquests" was all it took to get business leaders on board. Indeed, it seems to me that virtually all German industrial companies used slave labor of some form---Jewish or foreign conquered peoples. IG Farben, BMW, Siemens, Daimler-Benz, VW, etc. I truly don't understand why any of these companies still exist. I guess Cold War considerations ended up letting a lot of German actors off easily. Obviously anyone who has read anything about the period knows this already, but this book really brought it home for me and made me uncomfortable with the idea of purchasing products from these companies.
Tooze summarizes his contribution in four parts:
1. We cannot separate the motives for the western and eastern fronts. The eastern front was ultimately about Germany obtaining Lebensraum (including coal, oil, and agricultural resources). To a high school history student it seems like invading the USSR was a stupid decision; but to Hitler, it was critical to obtain these resources, and quickly, before the US/UK war machine was fully prepared. The western front was about confronting the supposed Jewish conspiracy against Germany's acquisition of Lebensraum, with Roosevelt as the imagined figurehead of the imagined international Jewish conspiracy.
2. While it can be difficult to understand why Hitler invaded the USSR when he had a deal with Stalin and faced enemies elsewhere already, he sort of had no choice. He was out of coal, oil, and food. The German people were literally at risk of starvation (because resources were being thrown at the war machine). He needed these resources to keep the war going. He miscalculated how quickly he could obtain them and knock the USSR out. Of course, the racism fed these miscalculations. But he knew that the US/UK was coming to get him, and he knew he stood no chance without access to the natural resources of the USSR.
3. Contrary to some earlier arguments, the German war machine did not spare German consumers. And Blitzkrieg, in particular, was not about sparing German consumers. Blitzkrieg was motivated by the need to achieve war aims quickly and to reserve industrial resources for the confrontation with the US and the UK. Blitzkrieg is designed to facilitate fighting two wars at once. Blitzkrieg was overrated because the Germans sort of got lucky when they invaded France.
4. The genocidal activities and related enslavement were motivated by both ideology and "practical economics." The biggest example of this is the dramatic expansion of organized killing in 1942, when Nazi leaders made explicit calculations about the preferred tradeoff between allocating food for armaments labor and killing people who couldn't be productive workers. By 1944, foreign conquered peoples comprised 20% of the German workforce, and of course most of these were effectively slaves supplied to "private" companies by Himmler. Germans working in factories could not possibly have been unaware of the concentration camps and the enslavement, nor could any German bureaucrats of any level as every agency of the German government was eventually involved. And by the way, Hitler and many, many high-level German officials---many of whom survived Nuremburg---fully planned on starving 20 or 30 million Russians to death if the Russian campaigns had been successful. That was literally the plan for dealing with the conquered population. It's all extremely sickening, but I hadn't well understood it before.
Ultimately, the US economy saved the world from the Nazis. This is made very clear by the data. US trucks, tanks, and ammunition helped the Soviets turn the tide in the east and enabled the British to hold on until US entry into the war. We can complain a lot about the way the US economy developed during the 19th and early 20th centuries, but at the end of the day, US-style manufacturing and resource extraction are what solved the Nazi problem. Tooze reports lots of interesting data on US industrial output; once the US decided to be the arsenal of democracy---which was always inevitable---Germany's fate was decided. Germany simply wasn't in America's league economically, even with America supplying the Pacific front separately. The American shipbuilding miracle overwhelmed the (reasonably effective) attempts of the German navy to shut down supply lines to Britain. Then in the end, the Soviet advance deprived the Nazis of raw materials, and US/UK air power---the magnitude of which exceeded even American expectations---destroyed German manufacturing and transportation capacity, and the German war machine shut down almost completely. And give Churchill credit for knowing that it was worth hanging on while America figured out its priorities.
One other contribution: Albert Speer is very overrated. Earlier histories had him presiding over an "armaments miracle," but much of the surge in armaments production under his leadership was the harvest of earlier capital investments. Also, he was a fully committed Nazi, not the apolitical technocrat he claimed to be.
It was all such a tragic waste, it's still hard to get one's head around it. Ultimately, after 20 years of death and destruction, Germany returned to the old global engagement strategy that more sensible leaders had preferred in the late 20s and early 30s. I dunno, folks. Let's quit falling for economic nationalists and ethno-nationalists. Do not let them near the controls.
February 18, 2011
The Wages of Destruction is a brilliant contribution to our understanding of events in the 1930s and 1940s. It destroys many of the myths in which the Nazi regime has been wrapped, and shows that it was neither the miracle of efficiency claimed by apologists for dictatorships, nor the irrational buffoonery projected by some of its critics. Tooze documents how Hitler's government was driven to some of its most desperate actions by economic constraints, and highlights how cold economic logic was combined with extremist ideology to drive some of the worst atrocities in history. As so many large conflicts, the Second World War was decided by economic factors as much as by the force of arms.
Despite its great body of dense text, this is a well-written and quite readable book. I would have liked to see more hard data in the form of tables or graphs, but those that are provided are very illustrative. There are some errors or dubious claims, but probably fewer than could be expected in a book with such a wide scope. If you want to understand the history of Nazi Germany or WWII, this really is essential reading.
Despite its great body of dense text, this is a well-written and quite readable book. I would have liked to see more hard data in the form of tables or graphs, but those that are provided are very illustrative. There are some errors or dubious claims, but probably fewer than could be expected in a book with such a wide scope. If you want to understand the history of Nazi Germany or WWII, this really is essential reading.
July 23, 2019
Wow! What a book. I'll write lengthy review at a later date. 4 stars only because of some common historical inaccuracies. Despite that, it was a very indepth view of The Third Reich's economy and well worth the read.
Let me just leave you with this quote for now:
“Amateurs talk about tactics, but professionals study logistics.”
– Gen. Robert H. Barrow, USMC
Let me just leave you with this quote for now:
“Amateurs talk about tactics, but professionals study logistics.”
– Gen. Robert H. Barrow, USMC
December 27, 2020
This was a fascinating book. One would benefit from some economic knowledge reading it (to understand the balance of payments and monetary policy at least) to get full value from it.
Contrary to popular belief, the German invasion of the USSR was prompted by economic weakness rather than being the latest conquest of an unstoppable fighting machine.
Tooze skillfully demonstrates how reliant the German economy was on imports, as well as how much smaller than the US economy it was. This small size meant the Germans had to mobilise their resources overwhelmingly towards military production, which, of course, meant they had to go to war as their army could not be maintained in peacetime. Likewise, the greater economic potential of the UK, US, and France meant the Germans had to strike as quickly as possible. Reading this book, one ceases to ponder "Could the Germans have won WWII?" and starts to wonder why on earth they began it, and how on earth they managed to fight against the USSR and Allies for 3 years.
There are also fascinating sections on German economic policy in the 30s, the intersection between the chronic current account deficit the Germans ran and their huge reparations bill was hard to manage. There are also depressing and scarcely fathomable sections on the German economic plan for Eastern Europe (Generalplan Ost), which was to involve the deliberate murder of 40m million Slavic peoples and Jews to ensure all Germans could enjoy large farms. Hitler's obsession with securing a US-style "Great Plains" for Germany was most curious. This was likely the single most racist project in history, which fortunately did not come to fruition.
Contrary to popular belief, the German invasion of the USSR was prompted by economic weakness rather than being the latest conquest of an unstoppable fighting machine.
Tooze skillfully demonstrates how reliant the German economy was on imports, as well as how much smaller than the US economy it was. This small size meant the Germans had to mobilise their resources overwhelmingly towards military production, which, of course, meant they had to go to war as their army could not be maintained in peacetime. Likewise, the greater economic potential of the UK, US, and France meant the Germans had to strike as quickly as possible. Reading this book, one ceases to ponder "Could the Germans have won WWII?" and starts to wonder why on earth they began it, and how on earth they managed to fight against the USSR and Allies for 3 years.
There are also fascinating sections on German economic policy in the 30s, the intersection between the chronic current account deficit the Germans ran and their huge reparations bill was hard to manage. There are also depressing and scarcely fathomable sections on the German economic plan for Eastern Europe (Generalplan Ost), which was to involve the deliberate murder of 40m million Slavic peoples and Jews to ensure all Germans could enjoy large farms. Hitler's obsession with securing a US-style "Great Plains" for Germany was most curious. This was likely the single most racist project in history, which fortunately did not come to fruition.
October 31, 2023
A lucid account of the German economy during the Nazi reign.
And so ended my 'streak' of reading at least two books a month, going all the way to autumn 2020. Also ended my streak of reading one book a month going back autumn 2019. Reasons for it were major changes in life and this book. This book was so good that I didn't want to rush through any of it but took my time when my concentration was at minimum.
This book is something that comes up every now and then in source lists of modern WW2 history books and for a reason. It's comprehensive look into the economy of Germany and it's effects on their politics and ability to wage war. Adam Tooze goes through all sorts of economic aspects of the German state, from transport, resources, output, policies and so forth. He avoid's the pit trap of being too personal and instead uses very formal and matter-of-fact style which works great. Even still the book runs to almost 700 pages.
This book is for anyone who wants more thorough reasoning to the second World War especially through the eyes of economics. And economics weren't a separate sphere but very much entangled with almost every major decision of the war.
And so ended my 'streak' of reading at least two books a month, going all the way to autumn 2020. Also ended my streak of reading one book a month going back autumn 2019. Reasons for it were major changes in life and this book. This book was so good that I didn't want to rush through any of it but took my time when my concentration was at minimum.
This book is something that comes up every now and then in source lists of modern WW2 history books and for a reason. It's comprehensive look into the economy of Germany and it's effects on their politics and ability to wage war. Adam Tooze goes through all sorts of economic aspects of the German state, from transport, resources, output, policies and so forth. He avoid's the pit trap of being too personal and instead uses very formal and matter-of-fact style which works great. Even still the book runs to almost 700 pages.
This book is for anyone who wants more thorough reasoning to the second World War especially through the eyes of economics. And economics weren't a separate sphere but very much entangled with almost every major decision of the war.
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