July 24, 2003

Germany on the Eve of the Great Depression

The second saddest book on my bookshelf was published in 1928, by the British publisher Methuen. The book's title was Republican Germany: An Economic and Political Survey. It was written by two British political scientists: H. Quigley and R.T. Clark. In the introduction the authors wrote that they were fortunate because they had a single, central, powerful theme: the coming-to-maturity of the post-World War I German republic:

The consolidation of the German [Weimar] Republic is in itself a theme of the most absorbing interest; it lends itself to dramatic presentation with the leading characters active at moments with a real dramatic force.... The fifth and probably last act is now being played, and promises something more heartening than a catastrophic ending. There may be scenes of conflict, world-shaking events, accompanied by the possibility and dangers of war, but the real consumation will probably be reached--namely, the recognition of the German Republic as a permanent feature in German history and its economic and political relations, and, with it, the opening of a new era of international prosperity.

Quigley and Clark's--long--book contains three mentions of Adolf Hitler: a passing reference to the "Hitler incident", a half-page narrative of Hitlerís unsuccessful 1923 attempt to take over the Bavarian provincial government via a coup, and a classification of Hitler as one of the leaders of:

...secret societies in morality and mentality far more akin to the worst traditions of medievalism than to those of the twentieth century...

Writing in 1928, five years before Hitler was to take power and destroy the German Republic, and Adolf Hitler is simply not a big deal to two people writing a political and economic survey of Germany. Were Quigley and Clark obtuse? Not at all. Hitler was an unimportant part of the political fringe in Germany in 1928.

In May 1928 Germany held elections for its legislature, the Reichstag. The Nazis won 2.6% of the vote: they were part of a fringe of small parties with more-or-less impractical and nutty programs that together drew off some twelve percent of the vote from the established parties on the right-left spectrum.

1928 Reichstag Election: Distribution of Votes

Party May 1928 Vote Share
Communists 11.7%
Social Democrats 33.0%
Democrats 5.4%
Center 13.4%
German People 5.2%
German National People 15.8%
Bavarian People 3.4%
Nazi 2.6%
Landbund 0.6%
Economics Party 5.0%
Landvolk 2.2%
Farmersí Party 1.7%

On the far left were the Communists--obedient to the Kremlin's every whim, dedicated to the overthrow of the democratic Weimar Republic and to the coming social revolution. They polled 11.7% of the vote in May 1928. But their 11.7% of the vote did not shift the center of gravity of German politics to the left, but to the right. The fact that the Communists attracted a sizeable share of the vote terrified the center and right wing parties. And the Communists devoted more of their attention to undermining the Social Democrats to their left--"social fascists," they called them--than to advancing Germanyís welfare state or to opposing the right.

Why did the Communists hate the Social Democrats so? One reason was that the Social Democratic government had assassinated the Communistsí two best-loved leaders--Karl Leibknecht and Rosa Luxemburg--when they were under arrest in 1919 after the unsuccessful Spartakist uprising. But a second reason was that Stalin and his henchmen in Moscow were more interested in making the Moscow-run Communist International the only political force on the European left than in pushing for liberal and leftist parliamentary victories. Since Communism was to be established by a revolution that would sweep away the old order, why bother to try to make the old order better? The only purpose of parliamentary struggles, to Lenin and Stalin, was to solidify the working class and teach them that compromise with the capitalists was a mistake. A more brutal and right-wing government did more to advance the cause: "the worse, the better," in a formulation ascribed to Lenin. So why help the Social Democrats make the Weimar Republic a success? Moreover, Karl Marxís theory of history guaranteed the victory of socialism. It did not guarantee the victory of Leninís Bolshevik brand of Marxist socialism rather than, say, German Social Democrat Friedrich Ebertís revisionist brand. So from Stalinís perspective to made sense to spend all your institutional resources trying to discredit the Social Democrats, and to leave the broader task of destroying capitalism and fascism to the Angel of History.

The belief was that if the Nazis should come to power they would not be able to maintain themselves for long. They would quickly alienate the people, radicalize the masses, and set the stage for a Communist revolution in Germany. Or so was the justification for making tactical alliances with the Nazis against the Social Democrats in the hope of bringing down the Weimar Republic. Not until the end of 1934 would Moscow and the Comintern give their blessing to the idea of the "Popular Front"--the general alliance of all forces in the center and on the left against fascism. And by the end of 1937 the Popular Front would be losing support inside the Kremlin once again, although Stalin would not formally ally with Hitler until the middle of 1939.

On the near left were the Social Democrats, with 33% of the vote. The Weimar Republic had been their creation. The Social Democrats, as the major parliamentary opposition to the Imperial regime, had seized power with the fall of the German Imperial government in November 1918. They had quickly reached an agreement with the army: the army would support the Social Democratic provisional government if the Social Democrats would refrain from large-scale expropriations, confiscations, and executions and would set up a genuinely democratic, rather than a socialist, republic. To Friedrich Ebert and his colleagues, this had seemed like a good deal: universal suffrage would lead to large socialist majorities in the Reichstag as workers, peasants, and small shopkeepers realized their common interest in social democracy. Thus they would be the natural party of government.

They were wrong, in the 151 months between the first elections for the Reichstag and the fall of the Weimar Republic, a Social Democrat was Chancellor--Prime Minister--for only twenty-one of them. Three things kept the Social Democrats from being the natural center of the Weimar government. First, the Communists would not support them under any circumstances. Second, the farmers, paper-shufflers, and small shopkeepers of Germany were scared by the Marxist class-struggle-and-nationalization rhetoric of the Social Democrats. Third, the Social Democrats had signed the Treaty of Versailles and accepted the reparations burden imposed on Germany by the victorious Allies: they were thus seen as the servants of foreign domination, and were anathema to any interested in German national reassertion.

Further to the right were the Democratic Party, the Catholic Center Party, the German Peopl'ís Party, the German National Peopleís Party, and the Bavarian Peopleís Party, all with varying degrees of fear of the Social Democrats and the Communists, nostalgia for the old order, desire to reverse the humiliation of the Treaty of Versailles, and--among the rightmost--contempt for a democracy that gave Social Democrats and Communists more than forty percent of the seats in the legislature. For most of the 1920s, these parties to the right of the Social Democrats made up a shifting coalition government, with Gustav Stresemann (of the German Peopleís Party), Wilhelm Marx (of the Center Party), or Hans Luther (who claimed to have no party at all) as the dominant player in the government.

It is traditional to blame the German Social Democratic Party of Ebert and Hilferding and company for having failed to have any plan for the transformation of the economy when they took power upon the collapse of the Kaiserreich at the end of World War I. Instead of socializing the means of production and concentrating on economic transformation, the Social Democratic Party focused on building a solid political democracy. Thus it found itself the creator and the principal bulwark of the Weimar Republic in a political climate in which most parties to its right would have been happier with a somewhat more authoritarian and less democratic state.

Such criticisms of German social democracy seem to me to be wrongheaded. A political party with a base of 30 percent of the vote has no business undertaking radical social and economic transformation unless it wants to transform itself into a dictatorship--or into martyrs at the hands of some general staging a military coup. No one today has any idea today of how to create a "socialist" economy that is an improvement over the mixed economies that we have.

Thus the German social democrats' strategy of being first in defense of the republic--defending democracy above all, because democracy is the ultimate sine qua non to social and economic progress--seems to me to have been the right one to follow up until the beginning of the Great Depression. And it almost worked. For Quigley and Clark are correct when they write that up until 1928 the story of post-World War I Germany is the story of the triumpth of democracy: the consolidation of the Weimar Republic.

But no one expected the Great Depression...

Posted by DeLong at July 24, 2003 01:38 PM | TrackBack


"But no one expected the Great Depression... "

So if Benjamin Strong had lived another year or two ... Is this still in play as a "what if" these days?

Posted by: Jim Glass on July 24, 2003 02:40 PM

The missing story here is the role of the Weimar electoral system in facilitating the sort of political extremism that begat the Third Reich.

Proportional Representation, especially when unrestrained by reasonable qualification thresholds, is a godsend to political extremists. There is such a thing as too responsive a political system, and the Weimar example, along with that of Italy and Israel, illustrates how debilitating PR voting can be in the real world. Either you have revolving-door governments that rarely last more than a year, or fringe extremists playing the role of king-makers.

If most of the English-speaking countries - by which I mean America, Britain and the former Dominions - have been free of the blight of socialist and nationalist extremism that characterized much of twentieth century history, they owe their good fortune less to the innate qualities of their peoples - eugenics originated in Britain, but was first practiced in America - than to the restraints First-Past-the-Post elections put on the chances of newcomers.

Voters in a FPTP system know for the most part not to waste their votes on single-issue parties (unless they are Naderites), but to make space for themselves within one of the two big tents. The Democrats and the Republicans (or, if you're British, Labour and the Conservatives) may never fully satisfy the yearnings of ideological purists, but the very breadth of these parties is a powerfully moderating factor. One has only to look at the GOP in 1992 to see what happens when the ideologues are given free rein.

Posted by: Abiola Lapite on July 24, 2003 04:42 PM

I must agree with Mr. Lapite. There were too many political parties ... the Weimar Republic was too democratic. It was a weakness when it came time for opposition to NSDAP (Nazis). Another depressant was the characterization of the Versailles treaty as the "stab in the back". The notion that Germany was not defeated -- and the reparations were killing the economy. Sometimes overlooked are the wars that continued on the "eastern front" wherein "Frei Korps" (Free booters) kept up battles and military organization through the early 1920s. These veterans were a prime source of NSDAP recruitment and membership when the depression hit. Unemployed veterans/mercenaries provided the muscle against the weak Weimar Uber Democracy. IMHO

Posted by: Don Majors on July 24, 2003 05:50 PM

Um... no, first past the post with geographical constituencies doesn't discourage small groups in general, it only discourages those with no geographical base. Britain found that out from the Irish MPs after union with Ireland. Or look at the way Scottish and Welsh Nationalists outperform (say) green parties in the UK.

As Germany had regions with great significance - the Nazis started in Bavaria - first past the post might not have put so much of damper on them after all.

Posted by: P.M.Lawrence on July 24, 2003 06:24 PM

"Um... no, first past the post with geographical constituencies doesn't discourage small groups in general, it only discourages those with no geographical base."

Yes, but the problem for small parties is that translating whatever regional support they garner into parliamentary clout. It is a lot easier to grab 3-5% of the vote nationwide than it is to win pluralities in several voting districts. This is a roadblock that single-issue parties like the Greens find impossible to surmount.

To illustrate, let's take your own example. Scottish and Welsh nationalist parties can win a few seats in parliament, but that represents the maximum extent of their electoral appeal, and the same is true of the Ulster Unionists. There is simply no chance that any of these parties will ever get to form a government.

As for the Nazis in Bavaria, extending their electoral strength into the rest of Germany would have been a lot harder under FPTP, precisely because it tends to assign lesser parties a smaller number of seats in parliament than they deserve by dint of their proportional appeal. The fact that voters fear that their votes might go to waste also serves to discourage them from backing upstart parties, especially when it comes to representing them on the national stage.

As an empirical illustration of the effects of FPTP vs. PR, look at Jean-Marie le Pen and the National Front; it was Mitterand's decision to switch to PR in 1986 that gave le Pen the electoral breakthrough he needed, and the NF won 15 parliamentary seats that year. Conversely, when PR was scrapped 2 years later, the NF just as abruptly vanished from parliament.

Posted by: Abiola Lapite on July 24, 2003 07:33 PM

"The second saddest book on my bookshelf . . ."

And the first?

Posted by: Ken D on July 24, 2003 08:15 PM

The saddest book is Norman Angell's THE GREAT ILLUSION, which won a Nobel peace prize for conclusively proving that the economic interdependence of the great powers was so strong that they would never dare go to war with one another.

It was published in 1909.


Posted by: FMguru on July 24, 2003 09:06 PM

"Why did the Communists hate the Social Democrats so?"

Probably the most important reason was the split at the start of the first world war, when some socialists voted for the war credits, and others later peeled off to form their own party, the Independent SPD. The Communist party eventually broke off from them in turn. That was certainly the main reason for Lenin's hatred for the SPD. When he met Karl Kautsky of the SPD in (I think) Zurich shortly thereafter, he shrieked insults at him. I personally would regard it as a warm compliment to have Lenin shrieking insults at me, but there you are.

Posted by: PJ on July 24, 2003 10:21 PM

"The saddest book is Norman Angell's THE GREAT ILLUSION"; indeed, an early example of the "no two nations that have a mcDonald's franchise have ever gone to war against each other" meme.

about no one foreseeing the Great Depression:
Don't you think that Keynes had an idea something bad was coming though?

Posted by: bryan on July 25, 2003 02:12 AM

"the worse, the better," -Lenin

Sounds like Nader: 'A Republican administration will bring people to the left.'

Posted by: goethean on July 25, 2003 09:31 AM

There is a sad deja vu comment to be made about the last French presidential elections. In the first round, social democrats (and even more so leftists in general) as a group had a clear majority of the votes but their votes go spead out on so many leftist candidates that LePen ended up beating even the main contender, i.e. the PM Lionel Jospin. The rest is history: in the second round all voters opposed to the Front National (which typically represents between 10 and 15% of the votes) rallied around Chirac. At least, we had a happy ending for democracy in this case. I don't know if I can indefinitely predict this to happen; I think so, but then again, all it would take perhaps is another Great Depression...

Posted by: Jean-Philippe Stijns on July 25, 2003 09:42 AM

I don't know about the assertion that the Social Democratic government assassinated Luxemburg and Liebknecht in 1919. At minimum, social democratic culpability was more complicated.

There is no doubt who pulled the trigger, and threw Luxemburg's body in the canal: it was the right-wing Freikorps, who had no love for the social-democratic government. It is true that Gustav Noske, a social democrat, made the decision to call some of the most right wing parts of the army to put down the Spartacist insurrection in Berlin. It is also true that no really complete investigation was held into the murders.

However, it is not true that the SPD authorized extra-judicial killings. At most, they knew that they were using undemocratic rightists to stop undemocratic leftists from overthrowing the republic and some extra-judicial killings were predictable.

None of this explains the post-1928 policy of the German Communists to consider the SPD "social fascists" worse than Hitler. That was a new tack taken by the entire Comintern at that time mostly as a stick to beat Communists who might sympathize with Stalin's "right" opponent Bukharin. Bukharin sympathizers in the Comintern had been the leading proponents of the "united front" policy of common action with social democrats against the right as a way of increasing communist influence. Between 1928 and 1933, Stalin's factional interests required him to isolate those people. After Hitler came to power, Stalin and the Comintern returned to a "popular front" policy of aligning with social democrats and liberals, a policy that was interrupted in 1939-41 and then returned to after the invasion of Russia. These twists and turns had the useful effect(from Stalin's point of view) of ensuring the Comintern was filled only with loyal hacks prepared to say and do whatever Moscow wanted, even if it was the opposite of the polciy promoted last week.

Any resemblance to the current conservative movement is purely coincidental.

Posted by: Gareth on July 25, 2003 03:56 PM

Abiola Lapite has actually done an accidental bait and switch when he put "let's take your own example". My main example was IRELAND during union (which was mainly during the 19th century) - and he substituted Ulster unionists, who have only been distinct for the last thirty years or so. During much of the 20th century they were merely the Ulster branch of the party that was most frequently in power - so he is wrong even using the substitution (the formal title of the Conservatives was Unionists, until the 1970s).

But returning to my own examples, we see that these parties really did succeed in "translating whatever regional support they garner into parliamentary clout"; all of them - the Irish earliest - managed to inflict enough political cost that they were able to get regional self government. Irish Home Rule was on the verge of implementation when overtaken by events in 1914. It's also worth noticing that a connection with these regions has often given a leg up to many leaders with regional origins within the other parties, to head off threats from the regional groups - the current British government is dominated by two Scots, for instance.

The reason for this is that Abiola Lapite has also substituted a different thing for "parliamentary clout" when he put "no chance that any of these parties will ever get to form a government". The Irish learned THAT early on, but since that wasn't what they were after they instead went for disrupting the working of parliamentary processes for everybody. Basically they said "of course it hurts the system if people don't play according to its spirit - but having this system imposed on us is just precisely what we didn't want in the first place". As democracy came in rigged rules had to be invented to subdue it to stop the regional groups using it, things like the "guillotine" on debates.

Returning to the Nazis, it was possible for them to build from one regional base to another without discarding their purposes and having to reach a wider constituency. But the argument that Abiola Lapite presented against regional groups being effective falls, on empirical evidence.

Posted by: P.M.Lawrence on July 25, 2003 08:34 PM

P.M. Lawrence would be well advised to refrain from accusations of "accidental bait and switch" when referring to the arguments of others, as P.M. Lawrence comes off as a rather pompous individual for so doing. In fact, one might even say that P.M. Lawrence is in fact the one guilty of the "bait and switch" that P.M. Lawrence is so eager to accuse others of.

That two "Scotsmen" head the British government is neither here nor there - the point P.M. Lawrence fails (refuses?) to appreciate is that neither the Scottish nor Welsh sectional PARTIES have managed to turn themselves into major players on the national stage. They may have managed to obtain some concessions by way of home rule, but they stand no chance of bringing to power a force like the National Socialist movement.

In addition, P.M. Lawrence, in bringing up Bavaria yet again as some sort of trump card, fails to appreciate that Bavaria, being a Free State of the German Republic, is in an even stronger position than the Welsh or the Scottish are to simply pull out of the union with the rest of Germany, yet has never managed to elect a SINGLE chancellor in the history of the Bundesrepublik.

Finally, let it be noted that P.M. Lawrence ignores the example set by France in the 1980s with the rise and subsequent demise of the National Front as a presence in the National Assembly. It would also seem that P.M. Lawrence is unaware of the rapidity with which upstart parties like the Danish People's Party or the Lijst Pim Fortuyn have risen to prominence in countries with Proportional Representation, and the contrasting failure of corresponding parties like the BNP to make any sort of impression in the United Kingdom, despite similarly substantial reservoirs of anti-immigrant feeling in Britain as in the rest of Europe.

Indeed, taking all of the apparent lacunae in P.M. Lawrence's knowledge into account, it becomes manifestly clear that it is P.M. Lawrence, and no one else, who is guilty of presenting the empirically unsubstantiated arguments P.M. Lawrence has accused others of making.

Posted by: Abiola Lapite on July 26, 2003 12:58 AM

No one ever expects the Great Depression.

Posted by: RonK, Seattle on July 26, 2003 09:03 AM

No one expects the Spanish Inquisition, either

Posted by: 'Ghan on August 20, 2003 06:12 PM
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