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Tuesday, October 7, 2008

The Great Depression, the Fall of the Weimar Republic, Nazism, and the Modern Welfare-State

A Second Buggy Topic Today

Yes, not just another bugged-out commentary, but a lengthy second posted comment in the same thread at Carpe Diem, left by prof bug in response to the sheer ignorance that was reflected in the long thread by some other commentators, all libertarian zealots who blame government for almost everything that goes wrong in economic and social life, on how the existing governmental role taken by the Federal Reserve, the US Treasury, and other government agencies to deal with the existing financial crisis --- signed into law last week by President Bush (a free-market enthusiast), after Congress passed the revised economic rescue package --- might just lead to some hyperinflation(!) of the sort, these zealots claimed, that flared in the Weimar Republic and led to Nazism(!).

The Rejoinder

Prof bug responded.  He set out a lengthy analysis of the causal chain that led to the first real German democratic system --- which emerged in late 1918 after defeat in WWI and lasted only about 14 years in a Nazi takeover --- and showed that the hyperinflation was over in 1923 . . . followed by six years of the Weimar republic's "golden age" of prosperity and stability.

It was the Great Depression, chief and foremost, that let the Nazi party to grow from 2.6% of the vote in the 1929 to 33% in November 1932.  Two months later, conservative elites in the political world, financial sectors, and big business --- along with the officer corps --- maneuvered to bring Hitler to power, thinking they could control him for their own political ends.  They were wrong.  In the March 1933 election that Hitler called for a few weeks after his appointment as Chancellor by President Hindenburg (the top military officer in WWI and widely popular), the Nazis got 44% of the vote and soon ended the collapsing Republic, suspended all civil liberties, and established a Nazi dictatorship . . . followed by massive rearmament and a German welfare state for the masses, with vast Jew-hating propaganda aimed at preparing the Germans for total warfare to conquer first Europe and later the world. Heute Deutschland! Morgen die Welt!  And Jews --- about 1/2 of 1.0% of the German population --- were said to control simultaneously Communist Russia, the British empire, and Wall Street.

The Wider Repercussions of the Great Depression

These are set out carefully in the buggy comments.  By 1939, only the tiny Scandinavian countries --- along with tiny Switzerland, tiny Holland, and tiny Belgium --- were solid and stable democracies.  All the new ones --- Italy (Mussolini in 1922), Spain, Portugal, Nazi Germany, and the new East European countries --- had all seen their shaky democratic systems collapse under the pressures of the Great Depression, class- and ethnic-conflicts and hatred, and extremist political polarization, with militarized or fascist or Nazi regimes in place.  (Tiny Czechoslovakia, stable but with a disgruntled and tiny German minority in its borders that Hitler exploited, was abandoned by France and Britain and the Soviet Union at Munich in September 1938, followed a few months later by outright Nazi conquest . . . the prelude to WWII.).  Further to the east was the mass-murdering gulag slave-labor system of Stalinist and Communist Russia.

That left two large democratic countries in West Europe: Britain and France. France, however, was torn in the late 1930s by polarized politics and class-animosities, and --- despite its mighty military on paper --- was quickly defeated by the Nazi Germans in May and June 1940.

The Modern Democratic Welfare-State

That was the benign longer-term consequence of the Great Depression, initiated in its midst by the Swedish Social Democrats.  Alarmed by what they saw happening all over Europe, one democracy falling after another to right-wing extremist movements, they reached an historic compromise with the Swedish big business and financial sectors (along with small businesses).  They would give up their ultimate socialist goals of nationalizing industry in return for a large government role to stabilize the battered economy and set up what soon emerged as the modern welfare state.  Even today, 75 years or so after this historic compromise, big Swedish industry and virtually all the business sectors are still in private hands.

After WWII, every European country in West Europe followed the Swedish example . . . even Britain.  And, going back to the New deal of FDR, to an extent in the US . . . historically a country with no socialist traditions on the left or statist-Conservative of the pre-democratic, pre-industrial sort that flourished in Europe.  And, of course, the new former Soviet-ruled members of the EU in East Europe have a similar mixed-economy, with the US --- even in the Bush-W era --- moving to reassert government regulation over most of the financial world in this country, along with an ever larger role for government spending.


Click here for the buggy commentary.