Parallels

I finally finished reading Peikoff’s book (“The Ominous Parallels”) yesterday, two-odd months after I started it. I will (hopefully) write about it in some future post, but the following extract shows the parallels between the Germany of the 1930s and the USA of today. This is not to say that the US will adopt National Socialism to the extent Germany did, but the signs are there and the fact that the US is philosophically bankrupt means that the idea is within the realm of possibility with no “politically relevant” block available to question it. Well, more on that later. The following paragraphs are from the chapter “The Killers Take Over”, p. 215-218-

The Great Depression merely forced the issue, which had been implicit all along in the Germans’ philosophy. Economic catastrophe in Germany was an effect, the last link in a long chain of ideas and events—and a catalyst, which gave Hitler a real opportunity for the final cashing in. The catalyst worked because the nation was already ripe for Hitler’s kind of cashing in.

If a man long addicted to a toxic drug suffers sudden convulsions and then dies from them, one might validly say that the convulsions were the cause of the death, so long as one remembers the cause of the cause. The same is true of a country addicted to a toxic ideology.

* * *

For several years after the inflationary debacle, the Republic had seemed to return to normal, enjoying its so-called “period of prosperity.” It was a shaky, foredoomed prosperity built on credit and quicksands.

In essence, Germany’s recovery was the result of a massive inflow of foreign—primarily American—capital, in the form of huge loans along with large purchases of German securities. America was experiencing the artificial boom of the twenties, a pyramid of highly speculative investments and wild spending made possible by a variety of governmental actions—most notably, the action of the Federal Reserve Board in generating a cheap-money policy in the banks. The influx of this capital into Germany, which also lacked the free-market restraints on inordinate speculation and spending, helped to fuel a similar artificial boom.

In particular, the various levels of government in Germany, which had learned nothing and forgotten everything from the inflationary crisis, were once again pouring out money and piling up debts; they were endowing lavish public works, starting a program of unemployment benefits, enlarging the bureaucracy, raising its salaries, and the like. This time, however, the governments were not counting on the printing press to finance their activities, but on the Americans. “I must ask you always to remember,” said Gustav Stresemann to his countrymen, “that during the past years we have been living on borrowed money. If a crisis were to arise and the Americans were to call in their short-term loans we should be faced with bankruptcy.” He said it to deaf ears, in 1928.

When the New York stock-market crash signaled the collapse of the American boom, the collapse of Germany followed immediately, as a matter of course. For the second time in less than a decade a protracted agony struck the country, this time involving plummeting investments, the crash of famous financial houses, cascading bankruptcies, soaring unemployment, tobogganing farm prices, and widespread destitution.

The mania of the inflation years had been succeeded by a wave of giddy, unreal prosperity. Now the unreal stood revealed as unreal. Giddiness gave way to panic and to black despair.

The unphilosophical majority among men are the ones most helplessly dependent on their era’s dominant ideas. In times of crisis, these men need the guidance of some kind of theory; but, being unfamiliar with the field of ideas, they do not know that alternatives to the popular theories are possible. They know only what they have always been taught.

When Hans Fallada in his popular novel of the time asked Little Man, What Now? the little men in Germany (and the other kinds, too) knew the answer, which seemed to them self-evident. They turned to the group—to their economic class or trade association—as their only security; each group blamed the others for the crisis; each party demanded action, the kind of action it understood, government action, i.e., more controls.

Man is rotten, the omnipresent chorus of “Weimar culture” was crying, the individual is helpless, freedom has failed.

The Social Democrats, however, playing out to the end their founding contradiction, were unable to act. One union leader at a party convention indicated the reason eloquently. He asked whether the party at this juncture should strive to preserve the “capitalist” Weimar system, or to topple it. Should socialists stand “at the sick-bed of capitalism” as “the doctor who seeks to cure,” he wondered, or as “joyous heirs, who can hardly wait for the end and would even like to help it along with poison?” His answer was that the party is “condemned” to play both roles at once, which in fact is what it did, by switching back and forth at random between them.

In the early months of 1930, with the nation desperate for leadership, the party stumbled into its “proletarian” stance: it decided to bring down a coalition government headed by a Social Democratic Chancellor, Hermann Mueller, because of a proposed measure that might have had the effect of reducing unemployment benefits in the future. The Weimar politicians had long been engaged in Kühhandel, as the Germans called it, “cattletrading,” and had treated the country to a procession of musical-chair coalitions, sudden governmental collapses, and continual new elections. The spectacle had evoked widespread contempt for popular government even before the depression. After the Mueller cabinet fell on March 27, however—the “black day” of the Republic—no new coalition could be formed; the economic warfare among the parties was too virulent. The Germans’ contempt for the Reichstag became disgust. There was only one solution that seemed feasible.

On March 28, 1930, the Reichstag’s normal legislative prerogatives were suspended by President Hindenberg. A semi-dictatorial system of government, a system of rule by emergency executive decree, was established under Chancellor Heinrich Brüning, a conservative Centrist. Popular government was abandoned for the duration of the emergency. The dichotomy between political and economic freedom was breaking down by itself, without any help from the Nazis.

In regard to methods, the Brüning government was dictatorial. In regard to policies, however, it was democratic. The program Brüning (and his two short-lived, authoritarian successors in 1932) enacted was an exact reflection of the popular will. These men “did something,” in the German sense of the term.

The government issued a torrent of new decrees. It raised the tariffs, the taxes, the unemployment-insurance premiums; it expanded public works, imposed rigid restrictions on foreign exchange, and introduced a twenty-month “voluntary labor service” for young people; etc. Most important of all, the Reich in this period effectively erased the last significant remnants of private economic power, by turning the banks, the cartels, and the labor unions into mere administrative organs of the state. The Republic, writes Gustav Stolper (a member of the Reichstag at the time), “came close to being a thoroughly developed state socialism. . . . Government was omnipresent, and the individual had been used to turning to it in every need.”

The government’s policies did not work. Among other things, hyperprotectionism (in Germany and abroad) was strangling the country’s vital foreign trade; the cascade of sudden new taxes and emergency decrees was creating a climate of acute business uncertainty, which made impossible any significant recovery of German investment and production; the unions’ adamant opposition to further wage cuts was exacerbating the unemployment.

The Germans attempted to assess the situation and determine the cause of government’s failure. “At last,” writes Stolper,

it became common knowledge that all this state interference . . . was of no avail in the most disastrous economic crisis that had befallen Germany in the course of her history. Paradoxically, the system of state interference as such, being far too deeply rooted in the German political and economic tradition, was not blamed by the opposition. On the contrary, the general mood of the public backed the demands that this imperfect and incomplete system of state intervention be superseded by one more perfect and complete. This was the content of the so-called anti-capitalistic yearning which, according to a National Socialist slogan of the time, was said to pervade the German nation.

Naomi Wolf (not Klein) thought that fascism would creep into America from the right, and given Bush’s track record, few would deny the fear. But what must not be forgotten is this – it can just as easily come in from the left; the right does not hold a patent on fascism.

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