Tooze's Wages of Destruction : An Inquiry

[Guaporense]

Two notes:

1 - Germany's wages of the 1930's appear to suggest an income level of around 20,000 - 25,000 dollars. Compared to 12,000 dollars for Brazil and 48,000 dollars for the United States.

2 - Notice that the average wage ratios of USA(2011)/Germany(1937) and Brazil(2009)/Germany(1937) if divided yield a ratio USA/Brazil = 4.14. The Per Capita Income PPP ratio is 4.39, a discrepancy of only 6%. Adding to the validity of comparing wages.

[ljadw]

Where is Tooze claiming that a 1940 RM was the equivalent of 10 Euro of 2007 purchasing power ? Page number please?
For the rest,comparing the prices of bread,bacon,meat,patotoes and cheese with the price of steel,to prove WHAT ? ,is IMHO,crap .

[Guaporense]

Where is Tooze claiming that a 1940 RM was the equivalent of 10 Euro of 2007 purchasing power ? Page number please?

Wages of Destruction, look at the final pages. That would mean that average wages in Germany in 1940 would be around 20,000 euros in modern values. Not that bad.

from page 445:

"Altogether, the Upper Silesian chemicals complex must have consumed in the order of 1.3 billion Reichsmarks, or roughly 13 billion euros in modern money."

I think he makes such conversion several times.

Anyway, it is obvious that Germany was not that poor in 1940 as Tooze portrays it. Even in terms of cars it wasn't that bad: A worker made 1,900 Rm a year while a cheap car was sold for 1,200 Rm and the beetle was planned to be produced at 990 Rm.

Germany lacked motor vehicles if compared to the US or even France in 1938 mostly because:

1 - Lack of time to develop the car market.
2 - High fuel prices, several times higher than in the US.

Not because Germans were too poor to afford a car. They could afford housing units which had average prices of 8,000 Rm, that's the price of 7 cheap cars and about 8 beetles.

For the rest,comparing the prices of bread,bacon,meat,patotoes and cheese with the price of steel,to prove WHAT ? ,is IMHO,crap .

You could try to act like an adult, for start.

Steel is the most common metal and the largest industrial raw material by value in the world, both in the 1930's and today. Food is obviously relevant.

The idea was the express wage purchasing power both in terms of consumer goods and producer goods.

[ljadw]

You could try to use logic,for a start:if one 1940 RM was the equivalent of 10 Euro,that will not say that this RM had the puchasing power of 10 Euro.
You are comparing a 2007 economy in peace with a 1940 war economy,where the RM had no purchasing power as such:all was depending on the possibility of products being available .
You also are comparing with an economy (in 1940) where most persons had no cars,could not buy petrol,going abroad on holiday,had no own house,lived in rented houses,were spending almost the half of their earnings on food (if there was some available),etc.
I repeat :it is crap :the price of steel in 1940 was unimportant:in wartime,prices are irrelevant :what the government needed was production .If the price of a Pz was 100000 RM,or 200000,what about ? No one did care .
It is crap to say that with ONE RM of 1940,one could buy,what one is buying with 10 euro in 2007.
As every economist will know:money has no value on itself,the value of money is depending on the products one can buy with the money .
And,how do you include social security in your calculations ?

[Cannae]

And also there is the fact that he does a series of invalid assertions at the beginning of the book (one gets the impression that Germany was a third world country in the 1920's and 1930's from Tooze's book).

The main premise of Tooze, set out early in the book, is that had Germany not launched the war as early as it did, Germany's economy would collapse. A political limit for Hitler was that, for him to execute his “Bread and Circuses” effectuating a secure leadership meant to restore and maintain the trust among the German people. To do so meant, from an economic standpoint, employing the un-utilized labor pool, which was large due to the Weimar crisis. How he did this was through credit funds, i.e. he was running a risk for insolvency. Construction workers were hit hardest by Hitler's regime because they didn't have the skills necessary in contributing to rearmament (airfields, strategic railways, etc.).

In the crisis of 1934, the consequences of utilizing credit funds could be seen. When Hitler had taken power, Roosevelt had decided to depreciate the dollar, hence the Richsmark gained in value to the dollar. If the Reichsmark hadn't followed the dollar in moving off gold, it would remain uncompetitive in every export market. A fixed exchange regime was set up, resulting in the very uncompetitive exports.

Germany needed imports to feed its population on food. But at the same time, war reparations were eating up foreign currency holdings, which made paying for imports even harder, and why hiring on credit funds was costly.

Yes it seems that I am advocating that the Nazis could've handled their economy better, but they actually highlight the economic cycles persistent throughout the 12 years. To prove that the economy could've been led better pre-war, you need to prove that

A. There are other methods of creating jobs than credit funds
B. The Germans could sustain themselves in International Trade
C. Business Cycles could've been avoided

[Guaporense]

The main premise of Tooze, set out early in the book, is that had Germany not launched the war as early as it did, Germany's economy would collapse.

Define "collapse". Then we talk.

A political limit for Hitler was that, for him to execute his “Bread and Circuses” effectuating a secure leadership meant to restore and maintain the trust among the German people. To do so meant, from an economic standpoint, employing the un-utilized labor pool, which was large due to the Weimar crisis. How he did this was through credit funds, i.e. he was running a risk for insolvency. Construction workers were hit hardest by Hitler's regime because they didn't have the skills necessary in contributing to rearmament (airfields, strategic railways, etc.).

In the crisis of 1934, the consequences of utilizing credit funds could be seen. When Hitler had taken power, Roosevelt had decided to depreciate the dollar, hence the Richsmark gained in value to the dollar. If the Reichsmark hadn't followed the dollar in moving off gold, it would remain uncompetitive in every export market. A fixed exchange regime was set up, resulting in the very uncompetitive exports.

Germany needed imports to feed its population on food. But at the same time, war reparations were eating up foreign currency holdings, which made paying for imports even harder, and why hiring on credit funds was costly.

Yes it seems that I am advocating that the Nazis could've handled their economy better, but they actually highlight the economic cycles persistent throughout the 12 years. To prove that the economy could've been led better pre-war, you need to prove that

A. There are other methods of creating jobs than credit funds
B. The Germans could sustain themselves in International Trade
C. Business Cycles could've been avoided

A is obvious. B, of course they could. Show me statistics of German massive trade deficits in 1937-1938-1939.

C, you mean that in 1939 Germany was finishing the boom phase of the cycle and to stop the business cycle Hitler had to create WW2?

Anyway, my main criticism of the book is that it gives a very biased impression of the world of the 1930's. Especially regarding Germany, Tooze claims that it was a third world country. That's a ludicrous assertion.

Germany was one of the most advanced economies in the world in the 1930's and the second largest as well. One that denies that is one that is either ideologically motivated or is an ignorant.

[Guaporense]

In the wages of destruction back we have this text:

The idea that Nazi Germany was an unstoppable juggernaut,
backed up by a highly industrialized economy, has been central
to all accounts of the Second World War. But what if this was
not the case? What if the tragedy of twentieth-century Europe
had its roots in Germany's weakness, rather than in its
strength?

Adam Tooze has written the first radically new account of the
Second World War in a generation. He does this by placing
economics alongside race and politics at the heart of the story.
An intuitive understanding of global economic realities was
fundamental to Hitler's worldview. He understood that
Germany's relative poverty in 1933 was the result not just of
the Great Depression but also of its limited territory and
natural resources. He predicted the dawning of a new,
globalized world in which Europe would be crushed by
America's overwhelming power. There was one last chance: a
European superstate under German rule.

But the global balance of economic and military power was
from the outset heavily stacked against Hitler, and it was to
forestall this danger from the West that he launched his underresourced
armies on their unprecedented and ultimately futile
rampage across Europe. Even in the summer of 1940, at the
moment of Germany's greatest triumph, Hitler was still
haunted by the looming threat of Anglo-American air and sea
power, orchestrated, he believed, by the World Jewish
conspiracy. Once the Wehrmacht ran aground in the Soviet
Union, the war rapidly developed into a battle of attrition that
Germany could not hope to win. The failure of Hitler, Albert
Speer and others to admit this meant that the Third Reich was
destroyed at the cost of tens of millions of lives.

Well, I think that such claims need a certain degree of revision.

See: viewtopic.php?f=66&t=191325#p1719581

Where I started a discussion on the world's distribution of economic power.

[Cannae]

Define "collapse". Then we talk.

Let's see, a drop to the bottom of the business cycle, i.e. a depression or recession.

A is obvious.

The preferred solution is a job guarantee of some sort, since it is directly in line with a wartime economy (all war economies are socialized) but this makes capital immobile, your original thesis is that there was excess capacity for production. So how does labor move around to meet any deficient sector? There are other solutions to it so what is your proposal?

B of course they could.

Not according to how international trade practice was of the day. Germany's port carrying capacity was too small to meet the shortage in food, thus the only other way is to import from land routes. But this means going through France, Poland etc. and totally contradicts the whole premise of Nazi ideology. You know how much foreign reserves Germany had to fund the imports, its export capacity? Or its elasticity for demand?

C, you mean that in 1939 Germany was finishing the boom phase of the cycle and to stop the business cycle Hitler had to create WW2?

Tooze actually does give the figures for imports and exports, so to prove that you have read Tooze, can you cite his figures? No other way around, Germany was heading down the business cycle and to create jobs, private expenditure etc. it was in his best suit to mobilize for WW2. Consult his chapter on the matter.

This might interest you: http://cgsc.contentdm.oclc.org/cdm/comp ... 583/rec/21

[ljadw]

Tooze does not claim that Germany was a third world country,because,there were not third world countries in 1939.
The only thing that's relevant is the question:what was the economic position of Germany compared to countries as :the US,Britain,France,the SU,.....

[Qvist]

Ehm. Read Overy's books like "Göring: Hitler's Iron Knight" and "War and Economy in the Third Reich" and his various scholarly articles available via Jstor.org Also "Demystifying the Armaments Miracle" is extremely helpful. Tooze's book is a flawed analysis of the situation in the Third Reich. Before Speer the economy WAS badly run, but was fully converted to the war effort. Speer improved efficiency somewhat, took credit for improvements made by Milch, and screwed up other things. Some of what was going on was also just improved economic efficiency from making the same products for years, some was propaganda, and some was genuine improvement due to Speer's influence. Tooze does question Speer supposed genius more in depth than any author to date though, so I will at least give him that.

It's been many, many years since I read Overy, but my recollection is what you describe - he does take issue with the Speer myth.

If you want a serious analysis I suggest checking out the "Germany and the Second World War" series by the Bundeswehr; its pretty much the official German history of the war. Volume 5 parts 1 and 2 deal with the war economy in Germany. I suggest you read about the 'war of all vs. all' that prevailed in 1939-1941. It took until mid-1940 to actually convert to war priorities because of multiple competing bureaucracies sending out different orders to factories and other projects to appropriate labor and resources.

However, I don't agree with you that DRZW offers a better analysis than Tooze. On the contrary, I think that exactly it's focus on the endless internal squabbles detracts from its ability offer clear analysis. Nothing is easier to source than the existence of bureaucratic infighting, particularly with something as large and complex and involving so many instances as a total war effort carried out by a major power - and if one sticks with these narratives, then you are left with the image of a disorganized jumble. But what does that really explain? The result was not in fact anarchy and randomness. As Tooze clearly shows, there were distinct priorities made which in fact changed and shaped German output very markedly. He deserves credit for doing what Müller and co fails to do, which is to rise above the miasma of bickering by memorandum, and focus on the visible effects. Because that is the relevant basis on which to assess the German war economy - not the extent to which Göring, Thomas and Todt expressed similar views in conferences.

Putting it pointedly, of course. I'm not arguing that one should ignore the bureaucratic documentation, nor that interdepartemental wrangling and overlapping authorities had no negative consequences. but I am convinced Tooze's focus is the appropriate one, and also that DRZW simply fails to provide an adequate analysis of its subject through an exaggerated focus on the decision making process rather than on its results.

[Qvist]

The main premise of Tooze, set out early in the book, is that had Germany not launched the war as early as it did, Germany's economy would collapse.

Er, no. In fact, as far as I can recall, he does not even make such an argument. He does argue that they would not have been able to sustain the pace of rearmament under peacetime conditions any longer, but that is not the same thing as economic collapse. Nor does that make it a "central premise".

A political limit for Hitler was that, for him to execute his “Bread and Circuses” effectuating a secure leadership meant to restore and maintain the trust among the German people. To do so meant, from an economic standpoint, employing the un-utilized labor pool, which was large due to the Weimar crisis. How he did this was through credit funds, i.e. he was running a risk for insolvency. Construction workers were hit hardest by Hitler's regime because they didn't have the skills necessary in contributing to rearmament (airfields, strategic railways, etc.).

What? If there is one thing rearamament entailed, it was a massive use for construction workers, wince it brought with it large-scale investment in infrastructure.

In the crisis of 1934, the consequences of utilizing credit funds could be seen. When Hitler had taken power, Roosevelt had decided to depreciate the dollar, hence the Richsmark gained in value to the dollar. If the Reichsmark hadn't followed the dollar in moving off gold, it would remain uncompetitive in every export market. A fixed exchange regime was set up, resulting in the very uncompetitive exports.

Germany needed imports to feed its population on food. But at the same time, war reparations were eating up foreign currency holdings, which made paying for imports even harder, and why hiring on credit funds was costly.

Yes it seems that I am advocating that the Nazis could've handled their economy better, but they actually highlight the economic cycles persistent throughout the 12 years. To prove that the economy could've been led better pre-war, you need to prove that

A. There are other methods of creating jobs than credit funds
B. The Germans could sustain themselves in International Trade
C. Business Cycles could've been avoided

Well, but the central aim of Hitler's economic policy was not to create sustainable employment. It was to rearm Germany in preparation of the coming conflagration he intended. High employment was considered politically crucial, but ultimately that too was only a means to an end. For that matter, the purpose of exports and foreign currency earnings was also to feed rearmament through a limited period of preparation of war. There was never any intention for Germany to rely on a competetive global export industry - indeed, the only rationale behind exporting anything at all was the incovenient fact that rearamament required certain natural resources Germany did not posess. The economy, in short, was considered a tool in the service of highly specific and quite immediate-term ends and were not run on the basis of making it self-sustaining.

[Cannae]

Hi Qvist, I have the relevant passages in Tooze for construction workers, his thesis, and employment but other topics have deprived me of a reply to your post as of lately.

[pugsville]

The Last actual reparations payments were made in 1929. There was a moratorium,. then the total sub was written down to what was already paid. There were US loans which among other things did provide cash that was used to pay reparations, and the money borrowed (1919-1929) was not written off, but that was debt , not reparations (though there is a connection)
(the recent German payments where part of the post war deal about interwar loans by Germany, there was a agreement thingy late 50s I think that had clause about paying some more in German was unified again)

Anyway "war reparations were eating up foreign currency holdings" NOT in 1934, Not Under Hitler. There were no reparations payments as such. (debt repayments the main cause, bigger than reparations cash was the Wiemar republic running large deficits)

I sure Hitler claimed he ended reparations payments, but it's not factual.

[Cannae]

Anyway "war reparations were eating up foreign currency holdings" NOT in 1934, Not Under Hitler. There were no reparations payments as such. (debt repayments the main cause, bigger than reparations cash was the Wiemar republic running large deficits)

Do you think the large deficits under the Weimar Republic could've been avoided?

[Dili]

Why not? The German Government spent the money in what?