Barkley Rosser's point is dead on, and very important. There is
indeed no other explanation for the extraordinary plunge in
unemployment in Germany between 1933 and 1936 (not 1939, as Barkley
suggests) than the large scale public spending of the German
government on roads, infrastructure and similar capital projects
(largely related only indirectly to military objectives, as in the
case of the Autobahnen), financed by public debt through the device
of Mefo bills, undertaken from the outset of the Nazi regime. This
was precisely what Keynes's letter to the New York Times prescribed
on December 31, 1933, and was widely recognized as such at the time,
as Friedrich Baerwald's admiring account in the AER in 1934 makes
clear. Despite some divergences from what the General Theory would
later advocate (higher taxes, enforced saving and, of course,
increasing dirigisme over the entire period), there's no serious
doubt that Hitler's policy in these crucial years represented the
first serious experiment in "Keynesian economics," at least as
Keynes's himself understood it at the time, and that this is true
whatever Hitler's ultimate intentions in reviving the German economy
might have been, and whether Hitler knew anything at all about
Keynes's economics, or anyone else's.
Modern historians like Rochard J. Overy, concerned that any
association of Keynes's name and Hitler's could only sully the
reputation of a great liberal thinker, seize on the technical
deviations of Hitler's policies and Keynes's prescriptions, obviously
not significant enough to impede the rapid growth in GDP and drop in
unemployment brought on by the deficit spending, to insist that
Hitler was no "Keynesian." It is certainly true that Keynes's was
not a fascist, but it is less clear to what degree the aggregation
intrinsic to his theory makes it susceptible to or compatible with
collectivist, even "totalitarian" political theories and regimes, and
for this reason it is worth discussing the significance of Hitler's
experiment and its relation to Keynes's ideas in their broadest
contours openly and in some depth. Certainly Keynes himself thought
so, as his curious Preface to the German Edition, written in
September 1936, makes clear -- there, three years after the fact, he
notes that "totalitarian" regimes can indeed make use of his ideas
(indeed, he says, these regimes can't have much use for free markets
and laissez faire, so his is a theory they can use) and cordially
invites the theory-starved Germans to try it out.
Rich Adelstein
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