Hitler and Keynes

Bruce Bartlett
|
Posted: Jan 16, 2004 12:00 AM

After all the recent fuss about comparisons of George W. Bush to Adolph Hitler at the MoveOn.org website, you would think that those on the far left would lay off Hitler analogies for a while. But in the Jan. 26 issue of The Nation, columnist Alexander Cockburn puts yet another twist on the issue. Hitler, you see, may have been a nasty warmonger, but he was also far-sighted enough to adopt progressive economic policies that greatly benefited the German people.

As Cockburn writes, "Hitler, genocidal monster that he was, was also the first practicing Keynesian leader. ... There were vast public works, such as the autobahns. He paid little attention to the deficit or to the protests of the bankers about his policies. ... By 1936, unemployment had sunk to 1 percent."

Cockburn goes on to say, "Not just Bush but Howard Dean and the Democrats could learn a few lessons in economic policy from that early Keynesian."

At first glance, I thought Cockburn was totally off base. But as I looked into it, I found that respected academics have long drawn analogies between the economic theories of John Maynard Keynes, generally considered the most important economist of the 20th century, and the economic policies of Nazi Germany.

For example, an article in the April 1975 issue of the prestigious Journal of Political Economy points out that German economists in the early 1930s were well aware of Keynes' work and were developing theories along parallel lines. These involved the now familiar prescription for economic depressions of large budget deficits, public works programs and easy credit.

A July 1992 article in the journal Explorations in Economic History found that German fiscal policy stopped being restrictive and turned "Keynesian" as soon as Hitler took power. Government spending increased almost immediately, helping to pull Germany out of the depression while America and Britain still maintained restrictive fiscal policies.

Furthermore, it turns out that Keynes' greatest admirers have long maintained that Hitler's economic policies were indeed Keynesian. In a lecture to the American Economic Association's annual meeting in 1971, economist Joan Robinson, a close colleague of Keynes, said, "Hitler had already found how to cure unemployment before Keynes had finished explaining why it occurred."

In 1977, John Kenneth Galbraith, the famous Harvard economist, wrote in his book, "The Age of Uncertainty," that Hitler "was the true protagonist of the Keynesian ideas."

Keynes himself even explained that his theories were not incompatible with national socialism. In the forward to the German edition of his book, "The General Theory" (1936), Keynes wrote that "the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than ... under conditions of free competition and a large measure of laissez-faire."

For these reasons, some right-wingers have attempted to show that Keynes was a totalitarian himself. Keynes "admired the Nazi economic program," wrote Lewellyn Rockwell of the Ludwig von Mises Institute last year. In the Mises Institute newsletter in April 1997, historian Ralph Raico virtually accused Keynes of being a communist. He was "a statist and an apologist for the century's most ruthless regimes," Raico wrote.

In my view, such criticism is completely wrong. Keynes was very anticommunist. "Red Russia holds too much which is detestable," he wrote in 1925. "I am not ready for a creed which does not care how much it destroys the liberty and security of daily life, which uses deliberately the weapons of persecution, destruction and international strife."

Keynes developed his theories in the 1930s precisely in order to save capitalism. He understood that it could not long survive the mass unemployment of the Great Depression. His goal was to preserve what was good about capitalism, while saving it from those who would destroy it completely.

Said Keynes in "The General Theory," "The authoritarian state systems of today seem to solve the problem of unemployment at the expense of efficiency and of freedom. ... But it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom."

That Keynes' theories were fundamentally anti-socialist can perhaps best be demonstrated by the way communists viewed his work. This can be found in the 1969 book, "An Analysis of Soviet Views on John Maynard Keynes" by Carl Turner. He shows that leaders of the old Soviet Union saw Keynes as one of their greatest enemies precisely because he saved capitalism from collapsing into socialism, as Karl Marx had predicted would happen.

Of course, there is much in Keynes' work to criticize. Many of the economic problems of the postwar era result from it. But in the context of his time, I believe Keynes is a man to be admired, not slurred as a crypto-fascist.