Germany and the U.S. Empire (Pt. 4)

Right-wing election victories, the U.S. Federal Reserve System and the ghost of Adolf Hitler

Over the last few months, there have been a wave of alarming electoral gains by right-wing and far-right parties in a series of countries. These countries are as different as Argentina, Venezuela, Poland and France. In the United States, the racist, anti-immigrant, Islamophobic billionaire real-estate magnate and demagogue Donald Trump has emerged in the polls as the favorite candidate among Republican voters.

Not all recent elections have seen gains only by right-wing candidates. Forces on the left have won victories as well. Among these was the victory of the veteran left-wing anti-war activist Jeremy Corbyn, leader of Great Britain’s traditionally very pro-imperialist Labour Party. Parties of the left have won a majority in the recent elections in Portugal as well.

In the U.S., too, where it has been extremely weak if not altogether absent in electoral politics, the left has made inroads. In the Democratic Party, the “socialist” candidate Bernie Sanders is drawing the largest crowds. He is the first avowed “socialist” to stand any chance—even if still a long shot at this point—of actually winning the presidency in U.S. history. Nothing like this has ever occurred in U.S. politics, even during the Depression. U.S. politics is therefore not so much moving toward the right as becoming polarized between an increasingly extreme right and an emerging mass “socialist”—though not yet in the Marxist sense of the word—left.

Later in the new year, I will take a closer look at the evolution of U.S. politics that features both the rise of the Sanders “socialist” left and the Donald Trump far right in light of the long-term social and economic trends reshaping U.S. society and beginning to transform its politics.

Similar trends of gains by both the right and the left are visible in other countries as well. In the elections that have just been held in Spain, new parties of the left and the right made gains at the expense of the parties that have dominated post-Franco Spain.

So all is not doom and gloom on the electoral front for the left. But since this post examines the rise of Adolf Hitler to power in Germany during the 1930s Depression, and since we must know our enemies, I want to take a brief look at victories of parties that operate on the right wing of bourgeois politics and see if there is any common denominator that explains their wave of electoral victories.

Right-wing gains

Most distressing to leftists is the election of the pro-imperialist, neoliberal Mauricio Macri as president of Argentina and the landslide victory of the reactionary, pro-imperialist MUD (Mesa de la Unidad Democrática—Democratic Unity Roundtable) coalition in the Venezuelan congressional elections.

The latter victory gives MUD a super-majority in the Venezuelan congress. Under the Venezuelan Bolivarian constitution, the MUD-dominated congress will have the right to call a constitutional convention that could restore the old pre-Chavez oligarchical constitution and effectively dismantle the government of Bolivarian President Nicolás Maduro. The Maduro government is challenging the election of nine MUD congresspeople in the courts. If the challenges of all nine is confirmed, MUD will be stripped of its congressional super-majority. However the court challenge plays out, it will be the coming battles in the factories and streets that will determine whether MUD is actually able to implement its reactionary program.

In the recent French elections to regional governments, the National Front won the highest percentage of votes—about 27 percent—though they didn’t win control of a single regional government. The National Front was frustrated by the electoral bloc between the Socialists and the parties of the traditional “moderate right.” To actually win control of a regional government, the National Front would have had to win 50 percent or more of the vote, and they are still far from that. The fact remains that as of now the far-right, traditionally anti-Semitic but now Islamopobic, National Front is France’s largest electoral party.

Far-right government in Poland

Not all these recent right-wing victories are the same. In Poland, the far-right clerical, racist, Islamophobic Law and Justice Party won both the presidency and a majority in the Polish parliament. However, the Polish far-rightists have done this by running against the neoliberal economic policies imposed by successive Warsaw governments since 1989. In a country where right-wing nationalists have historically been extremely anti-Semitic, Law and Justice has made clear that “non-Christian” immigrants are unwelcome. In the past, this would have meant Jews, but today it refers to Muslim refugees. Perhaps Poland, more than any other country in Europe, illustrates how the “old” anti-Semitism is morphing into the “new” Islamophobia.

The imperialist media have expressed little enthusiasm for the Law and Justice government. This contrasts with the glee they have expressed for the right-wing victories in Argentina and Venezuela. This is not because they are concerned about the rights of Muslim refugees who might find themselves stranded in a hostile Poland. Nor are they concerned about Polish leftists endangered by the Law and Justice Party. (1) What concerns them is that the new Polish government complains that “foreign capital” has too much influence in banking and natural resources.

The Law and Justice government even raided a NATO “training” facility recently, which provoked a wave of outrage in the imperialist media. Moves by the Law and Justice Party to take control of Poland’s security forces—political police—though obviously of great concern to all in Poland who oppose the Law and Justice Party, are also a potential threat to U.S.-NATO domination of Poland’s security services.

During the Cold War, the U.S. government and media went out of their way to encourage nationalist trends in Poland. (2) Today, Washington has no more use for Polish nationalism even in the form that is pushed by the extremely racist and Islamophoic Law and Justice Party, which has always been very pro-U.S.

Is Donald Trump a potential new Hitler or a new Reagan?

Could this swing to the right, and in some countries to the far right, indicate a new wave of fascism? What are the chances of a government coming to power in a major imperialist country—not necessarily Germany—in the near future comparable to the government of Adolf Hitler? Most frightening of all, could Donald Trump actually win the U.S. 2016 presidential election and establish a fascist dictatorship in the most powerful imperialist country? Or is Trump more like another extreme right-wing Republican, Ronald Reagan, who won the 1980 U.S. presidential election?

These are questions that the workers’ movement and its allies will be dealing with in the coming period, especially in the event of another deep recession. It is important to realize that not every right-wing movement, party, or individual politician is a fascist. Much of the left has gotten into the habit of using the term as a kind of political swear word. Any serious examination of the Third Reich shows that this loose use of the word “fascist” is harmful because we then have no word for it when faced with the real thing. Because real fascism is so uniquely horrible, it is extremely important to distinguish between it and other forms of capitalist reaction. Especially in a period of growing economic and social crisis, it is important that the left break the habit of using the word “fascism” as a term of abuse for all political reactionaries in general.

To illustrate this point, let’s contrast the extreme political reaction represented by Reagan and Thatcher with Hitler and Mussolini.

Unlike Hitler, Reagan, though he followed extremely reactionary policies as president, did not establish a fascist dictatorship but worked within the existing U.S. political system. After serving his two constitutionally allowed terms, he left office. This shows that not all far-right political forces are actually fascist.

What is the relationship between the personal fascist dictatorships Hitler and Mussolini established in the 1920s-1930s and other forms of extreme right-wing reaction such as represented by Ronald Reagan and Margaret Thatcher in the 1970s and 1980s? By examining the rise to power and evolution of the regime of Adolf Hitler, we can, I hope, understand in what ways fascism is similar and in what ways it differs from other forms of extreme political reaction.

Finally, is there a common denominator behind the current wave of electoral victories of right-wing political parties in a series of capitalist countries that differ as radically as imperialist France and Venezuela—the latter trying to throw off neo-colonial domination? I believe there is, though the situation has been aggravated, at least in the case of France, by the recent terrorist attacks carried out by the Islamic State and in the U.S. the killing of 14 people and the wounding of many more at a holiday party at a state government office in San Bernardino, California, by reputed sympathizers of the Islamic State.

The common denominator behind the recent wave of right-wing electoral victories is not terrorist actions by a handful of Muslims driven to despair by growing Islamophobia, continued imperialist support for racist apartheid Israel, and colonial wars carried out by imperialism in their homelands. These factors played no role whatsoever in the recent elections in Argentina and Venezuela, which have not been engaged in wars against Islamic countries and have experienced no attacks by Muslim terrorists. Rather, the common factor has been a recent worsening of the economic conditions in a whole series of countries.

This worsening of the economic situation has been felt primarily in countries producing raw materials that had been doing relatively well economically in the last few years. The immediate cause of the recent worsening in the economies of these countries can be traced to the moves by the U.S. Federal Reserve System to “normalize” its monetary policy in the wake of the extraordinary policies it adopted following the economic crash of 2008.

The media has reported that the recent rise in the federal funds rate (for overnight loans between banks) and some other short-term interest rates announced by the U.S. Federal Reserve Board on December 16 marks the beginning of a “tightening cycle.” In reality, the Fed has been tightening for more than a year, having drastically slowed the growth of the dollar-denominated monetary base and bank reserves. Between December 10, 2014, and December 12, 2015, the U.S. monetary base grew by less than 4.65 percent, a far cry from the around 30 percent annual rate of growth during the years of quantitative easing. That itself was a slowdown from the height of the panic of 2008, when the Fed gunned up the monetary base at annualized rates measured in four digits.

Despite the claims of the Associated Press and Reuters that the U.S. economy has been doing very well and is approaching “full employment,” a glance at the Federal Reserve’s own index of industrial production shows a slight decline since the beginning of 2015. This is evidence that the U.S. economy is already feeling the effects of the Fed’s “monetary normalization” program.

Outside of recessions, this index normally shows a rising trend. This is a reversal of the historically slow—considering the severity of the preceding recession—but definitely rising trend in U.S. industrial production since mid-2009, which seemed to be gaining momentum in 2014.

Particularly hard hit by the Fed’s “monetary normalization” and the associated economic slowdown have been countries that depend on the export of primary commodities and did well during the period of the Federal Reserve’s “quantitative easing.” Many of these counties have fallen into outright recession over the last year. Among these are Brazil, Canada, Russia, and of course Venezuela, whose economy has been devastated by the falling price of oil from over $100 a barrel to below $40 a barrel.

Most of Europe, though it has been less affected by the current slowdown, is still with the exception of Germany mired in double-digit unemployment. Depression—defined as conditions comparable to the U.S. during the 1930s—continues in Greece. The situation in Spain is only slightly better. Why is the Federal Reserve raising interest rates when the global economy remains depressed and the slow recovery from 2008 has for at least a year been slowing even further? I will explore this question later in the new year, so stayed tuned.

Finally, how does the current generally dismal world economic and political situation compare to the time of the rise of Mussolini or Hitler? Of course, history neither in economics nor politics repeats itself exactly. There are many differences between today’s political and economic conditions and the times of Hitler and Mussolini. But there are some striking similarities as well. The similarities include unusually high indebtedness, unstable currency systems, relatively slow economic growth, and in many countries chronic high unemployment.

Why is the current economic slowdown enabling the right to win victories?

Ever since Marx analyzed the economic conditions that led to the outbreak of the 1848 February Revolution in France and found them in the economic crisis of 1847, it has been a belief on the left, indeed almost a superstition, that recessions and hard economic times are generally good for the left because they radicalize the working class. This has been true under some conditions, such as those that prevailed in Europe at the time of the 1848 revolutions. (3)

These revolutions were, as regular readers of this blog know, soon drowned out by the wave of capitalist prosperity that spread over the capitalist world in the wake of the gold discoveries in California (1848) and then Australia (1851). Another example of prosperity killing revolutionary hopes was the wave of capitalist prosperity that set in soon after the end of World War II, which undermined the radicalism of the workers of Europe and the United States.

We, of course, will never know what might have happened after 1848 if the greatest expansion of capitalism up to that time had not occurred, or what would have happened if the expectations of many Marxists and others that the Depression would return with the coming of peace after World War II had been met. What we do know is that economic crises have often as not favored not the cause of revolution but the cause of reaction.

What is true is that an economic crisis leads to an intensification of the class struggle. Whether this leads to the victory of revolution or of reaction then depends on the concrete political course of the class struggle.

The reason for this is that it is far easier for the working class to win concessions from the capitalists and make gains when profits, both in terms of the rate and total quantity, are rising. Rising profits lead to a growth in the demand for the commodity labor power. This strengthens the bargaining position of the working class relative to the bosses. When the national income—the sum of wages and and profits—is rising, it is possible for the capitalist class to raise both wages and social insurance—within limits of course—without immediately reducing profits. Therefore, eras of capitalist prosperity tend to favor the part of the left that aims not at the overthrow of capitalism but rather improving the position of the oppressed classes and nations within the limits of the capitalist system.

However, when the national income shrinks like it does in recession and much more in acute economic crises, capitalists become extremely resistant to granting economic concessions. On the contrary, they become determined to take back the concessions previously granted. This pulls the rug out from under the reformist left.

Nothing illustrates this better than the history of Germany along with Russia, the two countries where the class struggle was fought out to the end during the first half of the 20th century. Now let’s return to the Germany of the mid-1920s where I left off last month.

During the mid-1920s, as economic conditions improved the rule of the German capitalists in the form of Wiemar Republic (bourgeois) democracy appeared to be consolidating. The right-wing monarchist Field Marshal Paul von Hindenburg won the presidential race to succeed the Social Democratic Frederick Ebert, who had died in office in 1925.

The victory of the reactionary Prussian warlord was a consequence of the failure of the German working class to seize political power either in 1918 or in 1923. However, Hindenburg’s victory occurred during a time of improving economic conditions. A new, stable convertible-into-gold Reichsmark, backed by U.S. credit, had been established beginning in 1924. As a result, the Social Democratic Party remained Germany’s single largest party despite its inability to elect another Social Democrat to replace Ebert.

However, the election of Hindenburg showed a dangerous trend toward the right. This reflected the fact that the German working class had lost the initiative in the class struggle, which now lay with the capitalist class and their landlord allies. But thanks to the relative prosperity, the swing to the right was toward the “moderate” right and not the extreme right.

The leading statesman of Germany between 1923 and 1929 was Gustav Stresemann (1878-1929), who served briefly as chancellor and then foreign minister. Stresemann was the leader of the reactionary but “moderate” German People’s Party, whose electoral base was among middle-class Germans. Stresemann’s policy was to gradually reduce the weight of reparation payments demanded by the imperialist victors in the Great War into something manageable. However, the continued success of Stresemann’s policies, and of the Social Democrats, who remained Germany’s largest political party, depended on the continued flow of loan money capital from New York.

There were already storm warnings on this score. One was the spread of protective tariffs in Europe and the world in general. In the U.S., the Republican Party, which championed high tariffs, was in control of both the presidency and the Congress. The Republicans clung to their traditional high-tariff policy, which they had followed since the days of Abraham Lincoln. Unlike the era of Lincoln, however, by the mid-1920s the U.S. was by far the most industrialized nation on Earth, both in terms of industrial production and the level of labor productivity. Its nearest rival was Germany.

This created a major problem for postwar Germany. Before World War I, Germany had been able to export its way out of recessions—much like modern Germany has been able to do, though at the cost of generating resentment among its less successful European neighbors. However, the high-tariff policies of Germany’s capitalist competitors made this much more difficult in the period between the world wars.

For the time being, the flow of money from New York into Germany reduced the immediate need for Germany to export. But what would happen when the first postwar industrial cycle ended in the inevitable recession? Indeed, what would happen when the “average prosperity” of the mid-1920s gave way to boom conditions in the United States? As soon as a boom developed in the U.S., the increased demand for loan money within the United States would mean that the money lenders of the United States would loan less money to Germany. Therefore, all it took to begin to disrupt the shaky economic and political equilibrium of the mid-1920s was for the phase of average prosperity in the U.S. industrial cycle to be replaced by the boom phase.

The first shock—the boom of 1928-1929

The shaky economic, financial and political equilibrium of the mid-1920s, and with it the entire basis of Stresemann’s and the SPD’s policies, was therefore first disrupted by the U.S. boom of 1928-1929. As this happened, industrial production began to stagnate in Germany. With industrial production rapidly increasing in the United States during 1928 and the first half of 1929 and stock market prices soaring in New York, there were suddenly vastly increased opportunities to lend money at high interest rates in the U.S. itself. Why lend money to Germany with all the risks that involved when you could lend money at high interest rates right here at home?

The second shock was the recession of 1929 and its associated stock market crash. During the 1928-1929 boom, loans to stock brokers on Wall Street—the “call market”— as well as to industrial capitalists, who were rapidly increasing production, and to commercial capitalists, who were rapidly accumulating inventory, took off. As a result, the flow of money from New York to Germany slowed to a trickle. During this period the Federal Reserve, fearing the consequences of the huge amount of money flowing into the U.S. stock market, raised its (re)discount rate in hopes of lowering stock market prices in an “orderly way.”

The Fed hoped that lower stock market prices would free up funds for “productive uses” and thus moderate the recession that was sure to follow the boom of 1928-1929. But Germany was already feeling the pain even before the U.S. recession arrived beginning in June 1929. Though the industrial boom came to an end in the U.S. in June, the stock market continued to climb, not peaking until September 3, 1929. By then, the U.S. recession was rapidly deepening. When Wall Street speculators finally realized in late October that the 1928-1929 boom had been replaced by deepening recession, they panicked. The result was the (in)famous stock market crash of 1929.

The crash of 1929, the Smoot-Hawley tariff and the German economy

If the economic cycle had followed a normal course, a fall of U.S. stock market prices combined with a growing industrial recession would likely have led to a renewal of the flow of funds from New York to Germany. With stock market prices radically lowered and credit demands of U.S. industry and commerce falling off as the industrial capitalists moved to reduce production and the commercial capitalists shifted from inventory accumulation to inventory liquidation, the flow of money from New York to Germany, interrupted by the 1928-1929 boom, would be expected to resume. This would have enabled the German central bank to lower interest rates and moderate the developing recession in Germany. The continued domination of “moderate” parties in German politics depended on exactly just such a development.

However, on June 17, 1930, U.S. President Herbert Hoover signed the Smoot-Hawley tariff. The idea was to accelerate the recovery from the ongoing U.S. recession by reducing the inflow of foreign-produced commodities competing with U.S.-produced commodities on the home market. In other words, the U.S. attempted to export its recession to other countries, including Germany. This effectively slammed the door shut on Germany’s already limited access to the U.S. market—the largest in the capitalist world—blocking Germany’s traditional method of getting out of recession through increased exports.

Now the German economy was in a double bind. Germany still had to pay its reparation debts under the Young Plan, but how was it to raise the money to do so if its ability to export to the world’s largest market was crippled? Even if it could continue to borrow money from New York, how would it pay these debts if it couldn’t export to America?

The only way out under these conditions was bankruptcy, which of course then hit Germany’s U.S. money lenders and further undermined the already shaky U.S. credit system. The global recession that began in 1929 as an apparently normal cyclical downturn—though in far from ordinary circumstances thanks to the aftermath of the Great War—was to be transformed into a super-crisis.

This transformation was announced by the failure of Austria’s Credit-Ansalt bank, which declared bankruptcy on May 11, 1931. The Credit-Ansalt collapse was only part of a wave of bank failures and runs in the U.S., Germany itself, Austria and Poland that caused global credit markets to seize up.

Germany’s response

Faced with this growing disaster, Berlin concluded that Stresemann’s attempt to meet the victors halfway, or really more than halfway, in the years after Germany’s surrender had failed. Stresemann, who had died in 1929, was dead not only physically; his policies were dead as well. German big business was now convinced that the only way out was through a new war. Consequently, Wiemar democracy had to be replaced, the leaders of German big business concluded, by a right-wing authoritarian government capable of waging war against the Soviet Union.

The only question from the viewpoint of big business was what the exact nature of the authoritarian government would be. In the 1930s, with the Reichstag deadlocked, a so-called presidential cabinet under Heinrich Brüning (1885-1970) of the Center Party was established. The Brüning government embarked on a brutally deflationary policy designed to slash imports to a minimum and raise new money for Germany by increased exports. The problem was that the regime of high protective tariffs crowned by the U.S.’s Smoot-Hawley tariff, combined with what was rapidly turning into the worst economic crisis in all of capitalist history, made increasing exports impossible.

The “hunger Chancellor,” as Brüning was nicknamed, was at least as unpopular as Herbert Hoover was in the U.S. As a result, the kind of strong right-wing authoritarian government capable of waging a new world war against the Soviet Union could not be built around the hated Brüning. Who would fight and die fighting for the “hunger chancellor”?

Who to wage war against

Under the conditions then prevailing, there were two possible strategies open to Germany in the coming war. Germany could attempt to regain its colonial empire in Africa and Asia and expand it well beyond the modest territories it possessed in 1914, or it could expand east, creating a colonial empire in eastern Europe, especially in the agriculturally rich Ukraine, Belorussia and Russia itself, all then part of the Soviet Union. The first strategy meant certain war with France, Belgium, the Netherlands and Britain, since these colonial powers would not give up colonies on a voluntary basis to Germany. The second meant certain war with the Soviet Union.

If this second course was followed, Germany could say to France, Britain, Belgium and the Netherlands: We need a colonial empire, but we will build it on the bones of the Soviet Union. This way we—the European monopoly capitalists—can all win. We get our needed empire, but you win too. By destroying the Soviet Union, we will also take care of your and our “Communist problem.” The end of the Soviet Union will mean the collapse of the Communist International and its national sections—the Communist Parties. By destroying the Communist International, our common class enemy the working class will be decapitated.

It was this latter strategy that was to become the basis of Adolf Hitler’s foreign policy in the 1930s.

But a war against the Soviet Union would inevitably encounter mass opposition from the members and supporters of Germany’s Communist Party—the largest in the West—and even to a certain extent from the rank and file of the Social Democracy. Though the Social Democratic workers didn’t want a Soviet-style dictatorship of the proletariat in Germany, many of these workers sympathized with the Russian Revolution.

Therefore, before German imperialism could wage a war with the Soviet Union, it had to first settle accounts with the workers’ movement at home. Adolf Hitler and his Nazi Party were more than willing to wage the necessary war at home against the workers’ movement in order to pave the way for war with the Soviet Union. That is, after all, what they were all about.

The second wave of fascism

The first wave of fascism swept Europe right after the end of the Great War and achieved a breakthrough in Italy in 1922 when Mussolini and his National Fascist Party—the name of which is the source of the term “fascism”—came to power. By 1926, Mussolini had crushed Italy’s workers’ movement, including the Communist Party, the Socialist Party and all trade unions. Mussolini—called Il Duce in Italian, for “the Leader”—outlawed all bourgeois parties except for the ruling National Fascist Party. The media was then forced to march to the tune of Mussolini and his party.

Hitler greatly admired Mussolini and was determined to establish a similar regime in Germany, adapted of course to German conditions and traditions. As we saw last month, in Germany fascism at first took the form of the Free Corps Movement. This movement largely consisted of middle-class non-commissioned officers, who were used by the top military brass and their Social Democratic stooges to put down the attempts to realize a workers’ revolution in Germany.

The revolutionary years of 1918-1923 in Germany had ended indecisively. The monarchy was gone and there was far more political democracy than there had been under the old “Kaiserreich.” But the basic social structure remained unchanged. Not only did the property of the capitalists remain untouched, the Junker landowners and the military caste closely linked to them also remained in place. Then, in 1925, presidential elections brought the very symbol of Prussian militarism, the monarchist Prussian field marshal and landowner Hindenburg, to the German presidency.

A monarchist as president of the Republic—that was the essence of Wiemar democracy. The state apparatus—officer corp, judiciary and police—were all handed down virtually unchanged from the Kaiserreich, though many Social Democrats did get jobs in the police force. This was true in Prussia, Germany’s largest state, which was politically dominated by the SPD. This gave rise to illusions among the German Social Democrats that the Prussian police could be counted on to defend the Wiemar Republic against any attempt by the far right to establish a dictatorship.

As a result of their experience between 1918 and 1923, members of the middle class came to the conclusion that the workers would never become the masters of society. When a limited prosperity returned to Germany in the mid-1920s, this seemed at first to make relatively little practical difference. Exhausted by the horrors of the Great War and its war economy, the indecisive revolution of 1918 and finally the Ruhr hyperinflation crisis of 1923, which wiped out what was left of their savings, the middle class was in no mood for new adventures.

Instead, the middle class yearned for the familiar and tried. They supported “moderate” bourgeois parties, which complemented the support of the great majority of the working class for the moderate SPD. If the prosperity had continued, there is every reason to assume that the rule of the German capitalist class through the Wiemar Republic, even if under a monarchist president, would have continued indefinitely. However, the new German prosperity was anything but stable. It depended as we have seen on the continuing flow of loans from the U.S. that had begun with the stabilization of the mark in 1924.

The fascist forces emerged from the chaos of the years 1918-1923 far better organized. They now had a political party, the so-called National Socialist German Workers’ Party—called the Nazis by their opponents—a militia in the form of the SA, and a spell-casting orator for a leader—a “Fuhrer” in German—named Adolf Hitler. But with the middle class’s optimism about its financial future gradually recovering, Hitler and his fascist party were largely deprived of their potential mass base—a desperate middle class. As result, the Nazis were pushed to the margins of German politics. If the prosperity had continued and grown—as it did in post-World War II (West) Germany from 1949 onward, Hitler would hardly be remembered by anybody today.

The middle class turns toward the Nazis

In the spring of 1928, just before economic conditions began to go downhill in Germany, elections to the German Reichstag were held. The Social Democratic Party came in first with 29.8 percent of the total vote, while the Communist Party got only 10.6 percent. Within the working class, the moderates far outnumbered the revolutionists. At the other end of the spectrum, Hitler’s fascist “National Socialists” got a pathetic 2.6 percent of the total vote. This was the last national election held during the 1920s prosperity.

The September 1930 election was held at a time when the global recession was already well underway but before it had been transformed into a super-crisis. In this recession-time election, the Social Democrats maintained their position as Germany’s largest party. But their total vote dropped to 24.5 percent. It is not surprising that the leading party of the Wiemar Republic would lose votes as the limited prosperity of the mid-1920s gave way to deepening recession and soaring unemployment. But the Social Democrats had managed to keep the great bulk of their working-class votes.

On the revolutionary side, the Communist Party increased its vote from 10.6 to 13.1 percent. This was a modest but real gain—in and of itself an encouraging sign for revolutionaries. A portion of the working class was shifting its allegiance from the pro-Wiemar Republic, pro-imperialist SPD to a revolutionary workers’ party that wanted to replace capitalist class rule in all its forms with a workers’ socialist revolution.

But it was not on the left but on the right where an electoral earthquake occurred. The National Socialist—Nazi—Party vote rose from a tiny 2.6 percent to 18.3 percent of the vote. This was enough for Hitler’s party to rise from the smallest party with representation in the Reichstag to Germany’s second largest party, just behind the SPD. The Communist Party ended up in third place.

Bourgeois elections don’t of course tell the whole story. Hitler’s party was no ordinary bourgeois party but a party designed to wage civil war against the entire organized workers’ movement through its now rapidly growing brown-shirted SA militia.

The number of impoverished middle-class people, which had declined since the stabilization of the mark in 1924, was with the change in the phase of the economic cycle rising again. A new younger generation that had not fought in the Great War was streaming into the Nazi Party and its brown-shirted militia. This was the second wave of fascism. The election results confirmed that the middle class was rapidly losing its confidence in the Wiemar Republic. But in its great majority, it was swinging behind not the Communist Party but the Nazis.

From global recession to super-crisis

The world and German economy spiraled downward between the failure of the Austrian Credit-Ansalt Bank in May 1931 and mid-1932, which proved to be the low point of an industrial cycle unlike any other in the history of capitalism. What was the effect on German politics by this transformation of a severe global recession into a super-crisis unique—so far—in the history of capitalism? Elections reflected in a limited and distorted way the course of the class struggle, though this struggle was taking place not in the voting booths but in the streets of Germany.

Three elections were held in Germany during the super-crisis year of 1932. The first was a presidential election held in March, just before the low point in the industrial cycle was reached. In this election, the reactionary monarchist President Paul von Hindenburg was up for re-election. His main opponent was Adolf Hitler. The Social Democrats in order to prevent the election of the fascist Hitler to the German presidency decided to support Hindenburg. (4) The Communist Party ran its own candidate, Ernst Thälmann (1886-1944).

With the working-class vote split between Hindenburg and Thälmann, the reactionary Hindenburg won 49.6 percent of the total vote, which forced a runoff. Hitler won 30.1 percent, well below Hindenburg’s total but a huge gain over the 18.3 percent the Nazis had won in the September 1930 parliamentary elections. This confirmed that the Nazis were reaping huge political gains from the super-crisis.

In contrast, Thälmann, the Communist candidate and the only representative of the working class in the presidential election, got 13.2 percent, virtually unchanged from the 13.1 percent the Communists had won in the September 1930 parliamentary elections. A runoff was held between the top three candidates Hindenburg, Hitler and Thälmann.

Hitler made an all-out effort to win the presidential election in the April runoff. He traveled by air around Germany and ran a campaign that in many ways anticipated the methods used by non-fascist bourgeois politicians later in the century. The Nazis were again to be disappointed. Hindenburg won with 53 percent of the vote—again supported by the Social Democrats. Hitler got only 36.8 percent, while Thälmann got 10.2 percent, no improvement over what the KPD had won in the parliamentary elections of 1928. Presumably, some workers who had voted for Thälmann in the first round shifted to Hindenburg in the second round in order to avoid a Hitler presidency.

These results show that while a large minority of the German population now backed Hitler, the majority still rejected him. But few members of the middle class had any confidence in the ability of the Communist Party to solve the crisis through a socialist transformation of society. Indeed, this lack of confidence in the Communist Party’s ability to solve the unprecedented economic crisis was shared by a majority of the working class as well as shown by Thälmann’s relatively low vote total.

The flood tide of German fascism

On July 31, at the very bottom of the super-crisis, new elections were held to the Reichstag in an attempt to resolve Germany’s political impasse. In this election, Hitler’s Nazis won the greatest percentage of the vote that he was to win in a free election. Frustrated in his hopes of being elected president, Hitler now put his hopes in being named chancellor, as the German prime minister is called. The Nazis won 37.4 percent of the vote, enough to make Herman Goering, second to Hitler in the Nazi Party, president of the Reichstag. Hitler himself was not a member of the Reichstag.

The Social Democrats, who had consistently won the largest number of votes since well before the Great War in German elections, now came in second with 21.6 percent. The fascist National Socialists had replaced the Social Democrats as Germany’s largest electoral party even though the main strength of the Nazis lay not in parliament but in the streets. But even given the absolute disaster the Wiemar Republic had been for the German people, the pro-Wiemar Social Democrats still got the largest number of working-class votes. The Communist Party did, however, increase their votes to 14.6 percent of the total cast.

The election results showed that the German workers were continuing a gradual shift of their allegiances from the Social Democrats to the Communists. The younger unemployed workers were increasingly attracted to Communism—what, after all, had the bourgeois democracy of Wiemar given them besides hunger and unemployment? But workers who had managed to hold on to their factory jobs through the worst of the super-crisis remained loyal to their traditional party, the SPD. Between them, the two workers’ parties, the revolutionary KPD and the reformist SPD, got 36.2 percent of the vote, just under the Nazi total.

Germany was almost equally divided between the mostly middle-class supporters of fascism and the workers’ movement. But while middle-class supporters of fascism were now united behind Hitler’s party, the supporters of the workers’ movement were divided between those who sought a revolutionary solution to the crisis—mostly the young and unemployed—and those who still believed that the Wiemar Republic was a better option than betting on a leap into the unknown of a proletarian revolution under the leadership of the KPD.

But there is another interesting fact revealed in these election returns. If we add the Nazi vote and the Communist vote together, 52 percent of the voters wanted the Wiemar Republic to go and be replaced by some type of dictatorship, either a fascist-style dictatorship or a Soviet-style dictatorship of the proletariat. A bourgeois-democratic system where the majority of the electorate is hostile to bourgeois democracy is generally not long for this world.

Increasingly, the supreme question of German politics was not whether dictatorship would replace Wiemar democracy but rather the class character of the dictatorship that would replace it. Looked at this way, the middle-class supporters of fascist dictatorship greatly outnumbered the working-class supporters of proletarian dictatorship. This was not a good sign. The working class remained in a deeply defensive position.

If this had been a normal election, President Hindenburg would have been expected to ask the National Socialists—who had won a large plurality—to form a government. But this was no ordinary election. Hindenburg, the very model of a Prussian militarist landowner of the old school, despised “the Austrian corporal,” who had not even graduated from high school. How could a man who didn’t even have a high school education be expected to lead the German nation through the greatest crisis in its history?

True, things seemed to be going okay in Mussolini’s Italy—from the viewpoint of the magnates of capital and landed property, that is—but Italy was still only a semi-industrialized country. How would fascism be expected to play out in the country that along with the United States was the most industrialized and technologically advanced country in the world and had a decades-long history of independent working-class politics? The German ruling class was not yet ready to bet everything on the Hitler option.

What seemed a more reasonable alternative to most of the magnates of German capital and landed property was to set up a right-wing authoritarian government that would include the Nazis but in a subordinate role. Such a government would be headed by a “responsible” right-wing political leader from the upper classes—what the Nazis themselves called “the reaction.” One leading candidate for such a role was Franz von Papen (1879-1969). Hindenburg had replaced the hated Brüning ahead of the July 31 Reichstag election with von Papen.

Von Papen, a wealthy landowner who like Brüning was a member of the Center Party, was a military officer by profession. He seemed to Hindenburg to be far more qualified to be Germany’s leader than Hitler. Von Papen’s idea was to lure the Nazi leader to accept a subordinate position in the cabinet. In this way, the Nazis and their SA militia would be able to crush the workers’ movement while being transformed into a base of support for a responsible, educated, truly qualified leader, namely himself.

The only problem was that Hitler wasn’t buying it. Hitler’s aim was to become dictator on the model of Mussolini, not play second fiddle to some representative of the traditional “reaction” like von Papen. The Nazi Fuhrer realized that if he agreed to von Papen’s proposal, his fascist movement would become identified in the eyes of the German people with the rule the large property owners and their representative von Papen. The Nazis would then begin to lose support and Hitler’s dreams of becoming the German Mussolini would come to nothing.

Lacking any mass base of support of its own, the von Papen government could only balance itself between the two warring camps of German society—the middle-class brown-shirted fascist SA and the workers’ movement. For the moment, the equilibrium held as fighting raged between the Nazi SA militia and Red Front fighters of the Communist Party on the streets of Germany.

But while there was unity in the “brown” camp of the Nazis, there was no unity in the workers’ movement. The Communist leadership, both within Germany and at the level of the Third International in Moscow, claimed that the Social Democrats themselves represented a form of fascism—”social fascism”—and that Germany was already a fascist regime.

In 1918-1919, it is true that the Social Democratic Party had formed an alliance with the fascistic Free Corps movement to prevent a German socialist revolution. The Social Democrats, who had supported the imperialist war, insisted that socialism could only be achieved by democratic electoral means through the Reichstag. One of the fruits of this alliance was the murder by Free Corps fascists of Rosa Luxemburg and Karl Liebneckt in January 1919. For these reasons, the Social Democrats had earned the hatred of the Communist Party, not only the top leadership but the rank and file as well.

However, the situation in 1932 was radically different from what it had been in 1918-1919. With only a minority of the working class supporting the Communist Party, there was no immediate chance of establishing a Communist-led dictatorship of the proletariat in Germany. In contrast to their Free Corps predecessors, the Nazis now had enough support to aspire not to save bourgeois democracy from the proletarian revolution as the proto-fascists had done in 1918-1919 but to establish a dictatorship of their own. Under these conditions, the road to the proletarian dictatorship in Germany now lay through the defense of democracy—especially the democracy of the workers’ organizations—from the immediate threat of fascist dictatorship.

This situation put the Social Democrats in a jam. If the Nazis succeeded in establishing their dictatorship, there would be no role for the Social Democrats and their vast army of party secretaries, other paid party functionaries, newspaper editors, journalists, parliamentarians, and their counterparts in the Social Democratic-led trade union movement. While there was no hope of drawing in the SPD tops and the labor bureaucracy they represented into a struggle for the dictatorship of the proletariat—the events of 1914 and 1918 had proven that—there was a chance to draw them into a fight for their own right to exist within capitalist society (5). In a defensive struggle, the conservative workers among other things wanted to conserve democracy and the historic gains they had won through the Social Democracy in the struggles of years gone by.

If Germany’s Communists proved to be the most resolute fighters in the defense of democracy, they could still gain the respect of many Social Democrats workers who would then be radicalized through the struggle. A successful defense of democracy against Hitler—which was really a defense of the workers’ movement’s right to exist—was the only way under the circumstances to reopen the road to the dictatorship of the proletariat that had been closed by the stabilization of German capitalism in 1924.

Instead, the leaders of the KPD and the Communist International advanced the slogan “after Hitler us.” They reasoned that if Hitler gained power, he would be rapidly discredited because he would not be able to resolve the economic crisis. The road would then be opened for a proletarian revolution led by the Communist Party. This perspective was to prove radically false.

A change in the economic situation

For many years preceding the political crisis of 1932, the market prices of commodities exceeded the prices of production. But thanks to the super-crisis of 1929-1932, this contradiction was now resolved. Market prices for the first time since before the outbreak of the Great War had fallen below the prices of production. As productive capital shrank worldwide in the course of the crisis, the production of money material soared. In the very depths of the super-crisis, the output of gold bullion by the world’s gold mines and refiners finally exceeded the all-time highs set around the outbreak of the Great War and kept rising until World War II.

This development was to lead to the prolonged stabilization of world capitalism that set in after World War II. But this did not happen right away. First, the process of economic recovery did not immediately transform the super-crisis into a boom. As regular readers of this blog should know, intermediate phases separate the crisis phase of the industrial cycle from the boom phase. The unprecedented crisis of mass unemployment that was hitting Germany—about six million is the usual figure given for the total number of unemployed in Germany at that time—for now continued.

Nor did the change in the economic situation that occurred in 1932 (6), resolve the prolonged crisis of leadership that world imperialism was passing through. The crisis of world imperialist leadership could only be resolved by the emergence of a dominant imperialist country and the establishment of a new relationship—economic, political and military—between the dominant imperialist country and the subordinate imperialist countries. Under the prevailing circumstances, the crisis of leadership among the imperialists could only be resolved through war.

The period of incipient recovery after a severe crisis as a general rule is a very dangerous period because the capitalist governments can use the vast amounts of idle money that accumulates in the banks during this phase of the industrial cycle to finance wars that would have been difficult to finance during the boom that preceded the crisis. During the boom, capitalist governments find themselves in growing competition for loan money with the large industrial and commercial corporations that need more money capital in order to expand, as well as the buyers of houses and other durable consumer goods, which are usually purchased on credit.

In addition, old bourgeois governments discredited by the crisis are often replaced by new governments that take credit for the recovery that is actually brought about through the automatic operation of the industrial cycle. These governments then enjoy great popularity—for example, Roosevelt in the U.S. in the 1930s—and are therefore in a far better political position to wage war than their predecessors.

The change in the economic situation in 1932, therefore, did not yet mean an end to the prolonged social, political and military crisis that had been affecting world capitalism in general and German capitalism in particular since August 1914. But it did mean this historic crisis of the capitalist system was entering a new and very dangerous phase.

Hitler becomes chancellor

The final elections of 1932 in Germany were held in November 1932 when the first signs of economic recovery from the depths of the super-crisis were beginning to be felt. With the end of the crisis phase of the industrial cycle, the support for the Nazis declined, though they were still the largest party. The Nazi vote dropped from 37.4 percent in July to 33.1 percent in November. Just as important as the decline in the Nazi vote, the Communist vote rose. The KPD won 16.9 percent of vote, up from 14.6 percent in July 1932, while the SPD vote continued to decline, dropping to 20.4 percent.

The recovery that was undermining the Nazis was favoring the KPD and thus potentially giving the Communists a second chance to win the confidence of first the majority of the working class and then a portion of the middle class as well.

In the May 1928 elections, held at the peak of the 1920s “prosperity,” the SPD won 29.8 percent while the Communist Party won only 10.6 percent of the vote. The gap between the reformist pro-imperialist Social Democratic Party and the revolutionary KDP was 19.2 percentage points in favor of the reformists. But in the November 1932 elections, the gap in favor of the reformists had shrunk to only 3.5 percent.

As we know, bourgeois elections reflect the balance between and within the classes in a distorted way. The Social Democratic Party got its support from older workers who had managed to hold on to their jobs. The KPD had its base of support among young workers who had for the most part never held a steady job and were full of youthful energy. The greatest weakness of this section of the working class was its lack of any connection to the process of production. But as the upturn progressed, these previously young unemployed workers would be swept into the factories. With their youthful energy, they would be expected to take the lead as the workers both young and old took advantage of the upturn in the industrial cycle to win back what they had lost during not only the crisis of 1929-1932 but since August 1914.

Unlike the older workers, who were somewhat demoralized by being taken in at least to some extent by the patriotism of 1914, these young workers had no use for German patriotism and looked to the revolutionary KPD and the Communist International for leadership. Within a short time, the KPD would be expected to eclipse the SPD, not only at the polls but far more importantly on the factory floor, as Germany’s largest workers’ party. Under these conditions, it would be difficult indeed for the German ruling class to wage war against the Soviet Union, since if they did and they lost, the result would be a socialist Germany. Not only the future of the German workers’ movement but of the Soviet Union—and much else as well—now lay in the balance.

In December, in the wake of alarming—from the ruling class’s perspective—results of the November 1932 elections, President Hindenburg gave von Papen his walking papers and appointed General Kurt von Schleicher (1882-1934) chancellor in his place.

Schleicher had a different approach to the problem of establishing a right-wing government. In contrast to the reactionary von Papen, Schleicher hinted that he was open to some “socialist” ideas to deal with the Depression and mass unemployment—the turn of the economic cycle meant that Germany had passed from the crisis phase to the depression phase of the industrial cycle. Something like a German version of the “New Deal” aimed at accelerating economic recovery through “Keynesian-type” policies seemed to be in the air. But in order to achieve his aims, Schleicher needed the support of the Nazi party—or a portion of it.

A crisis of leadership in the Nazi Party

On the Nazi side, the relatively poor results in the November election, combined with the threat of more losses to come as the economic upturn gained momentum, led to an internal crisis of leadership. Gregor Strasser (1892-1934) had been appointed the Nazi leader for industrial northern Germany by Hitler in the mid-1920s. Since there were more workers and fewer middle-class people in northern Germany than in the south, where Hitler’s primary base lay, Strasser had made more attempts to win over workers to the Nazi Party by stressing the “socialist” side of “National Socialism.”

While Strasser had only limited success in this, he began to develop leadership ambitions of his own. With economic recovery beginning and perhaps opening up a new era of social reform, Strasser began to think he rather than Hitler should lead the National Socialist Workers’ Party. After the November elections, the friction between Hitler and Strasser increased.

Strasser’s emphasis on the “socialism” in National Socialism seemed to fit with the “socialism” of General von Schleicher. Schleicher, therefore, attempted to split the Nazi Party by winning over Strasser and his followers. Unlike Hitler, who would not settle for anything less than the chancellorship, Strasser was more than willing to join a government headed by Schleicher in a position other than the chancellorship.

Strasser complained that Hitler by insisting on the chancellorship or nothing was preventing the Nazis from influencing government policy through a coalition government. But Hitler held firm and kicked Strasser out of the Nazi Party. Nobody within the Nazi Party was allowed to oppose Der Fuhrer and get away with it. With Strasser out of the Nazi Party and Hitler holding firm, Schleicher had come to the end of the road.

Franz von Papen now thought of yet another idea to resolve the prolonged crisis of leadership. Perhaps Hitler could be given the chancellorship in a coalition government but with a solid majority of traditional reactionaries like himself. As vice-chancellor, von Papen reasoned he would be backed up with a solid majority of the direct representatives of capital and landed property within the cabinet. He von Papen would then be the real power. In this way, the vast army of SA storm troopers terrorizing working-class Germany could then be enlisted behind a government dominated by the traditional representatives of the large capitalists and landed property.

Germany’s bankers, capitalists and landowners had now come to the conclusion that Hitler had to be brought into the cabinet if a strong authoritarian government capable of waging war in the not too distant future was to be established. If this meant Hitler had to be chancellor, they concluded, let Hitler be chancellor.

Hitler agreed, since it gave him what he most wanted, the chancellorship, the most powerful office in the German government. On January 30, 1933, President Hindenburg appointed Hitler chancellor and von Papen vice-chancellor in a government that at the cabinet level was dominated by the traditional direct representatives of the capitalists and landowners. And unlike the earlier governments of Brüning, von Papen and Schleicher, the new government enjoyed the full support of the brown-shirted SA. Hitler now held the single most powerful office in Germany, but he was not yet dictator. Hitler’s next step was to use the chancellorship to make himself Germany’s dictator.

To be continued.

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1 We will see that Hitler’s government often did not support the local fascist parties but instead backed more traditional politicians who were willing to do Berlin’s bidding. The reason was that the nationalism of the fascist parties clashed with Nazi Germany’s determination to crush the nationalisms of all other European countries. (back)

2 During the Cold War, the U.S. adopted a “differentiated” policy toward the eastern European socialist countries. Those that had governments that were willing to flirt with Washington—especially the governments of Poland and Hungary—were given various economic favors. Washington’s polices of “friendship” toward Poland and Hungary were extensions of its “friendship” with Tito’s Yugoslavia that followed after the break between Moscow and Belgrade in 1948.

The eastern European ruling workers’ parties were divided into “internationalists,” strongly allied to the USSR, and so-called “national communists,” who adapted to anti-Soviet nationalist tendencies in their countries. They were willing to flirt with the West independent of the USSR to the extent that circumstances allowed. In Poland and Hungary, where anti-Russian sentiment was strong due to historical factors, the “national Communists” had the greatest influence. Ironically, both Poland and Hungary are now ruled by far-right bourgeois-nationalist parties that are considered troublemakers by Washington. (back)

3 Marx attributed the rapid decline of the 1848 revolutions to the swift economic recovery that set in starting around the middle of 1848. This was in contrast to the much more prolonged depression that followed the preceding crisis of 1837. During the 1850s, both Marx and Engels scanned the business news for signs of the next crisis that they believed would lead to a renewed outbreak of revolution in Europe. In addition, they believed the new revolution would take a socialist form. The next crisis broke out in 1857, but unlike in 1847 this crisis did not lead to a European revolution, let alone a socialist revolution. The relationship between economic crisis and revolution proved far more complex than Marx and Engels had at first assumed.

While in their later writings Marx and Engels continued to stress that crises played a key role in the economic evolution of capitalism toward a stage where socialist revolution would be necessary if human society were to continue to advance, they abandoned at least for their own lifetimes, the belief that the very next crisis would directly lead to the outbreak of socialist revolution. (back)

4 This is exactly the method that was used by the French Socialist Party to “defeat” the National Front in the recent French elections. (back)

5 It is sometimes said that fascism is the last desperate act of the capitalists to save themselves from socialist revolution. However, the history of German and also Italian fascism shows this is not quite right. In a situation of immanent proletarian revolution, the entire bourgeois political spectrum, from the most left “democratic socialists” to the fascists on the right, unite under the banner of “democracy.” In this situation, fascism generally has no immediate chance of winning power. Fascism’s chance comes only after the working class has shown an incapacity to seize power in a preceding revolutionary crisis. (back)

6 In Germany and most other capitalist countries, the low point in the industrial cycle was around the middle of 1932. In the United States, the economy began to shows signs of recovery after July 1932, but in the first quarter of 1933 it suffered a relapse. The causes of this relapse are examined here. (back)

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