Comment on Tomas Kierstein

Submitted by Pseudoerasmus (United States), Jan 17, 2008 at 20:36

1/ Property is private when (a) one can earn and keep the returns from the productive use of that asset ; and (b) one can sell that asset freely at a fair price.

Restrictions on the use of property, no matter how extensive, do not constitute socialism. To suppose that restrictions on the use of property amount to socialism reveals an extreme laissez-faire view of property rights and capitalism. But capitalism comes in many forms, and laissez-faire is just one amongst many.

Capitalism and socialism are about who owns the capital, i.e., the means of production and distribution. In capitalism, productive assets are privately owned. Under socialism, they are not in private hands. Beyond that, the terms 'socialism' and 'capitalism' by themselves say very little. They are silent about the character and behaviour of the state. All four permutations -- capitalist democracy, socialist democracy, capitalist dictatorship and socialist dictatorship -- have existed in various degrees of realisation.

Socialism is not intrinsically statist. There have always been two kinds of socialism: state socialism, in which the means of production are held directly by the state; and democratic socialism, sometimes called anarchosocialism, in which the means of production are owned cooperatively or collectively by workers in each enterprise, and the state owns as little as possible. The only thing common to both flavours of socialism is the absence of private ownership of the means of production.

Capitalism is not to be held as equivalent to laissez-faire, which is an ideology associated traditionally with liberalism, in which the state does not intervene in the operation of the market economy. Another variant of capitalism is mercantilist (or, in American parlance, Hamiltonian), in which the state intervenes in the market economy in order to promote some perceived national interest. In practise, all capitalist states intervene in the operations of the market; it's just a matter of degree.

The economic system of Nazi Germany was capitalist. It was not laissez-faire capitalism, but it was unequivocally capitalist in the sense that productive assets were owned privately, and owners of capital accumulated profits. Those who argue that Nazi Germany was 'socialist' either don't know what they are talking about, or are judging from the behaviour of the Nazi state during the war, particularly the last several years of it, when the economy was put on war footing and considerable centralised planning was under way. But that is just a feature of any economy during a total war. A truer state of the German economy under the Nazis is to be had in 1933-39.

2/ It is simply false that "formal ownership meant nothing" in Nazi Germany and Fascist Italy, as was argued by Tomas Kierstein In both cases, property rights were real and were not eroded away by actions of the fascist state. Moreover, what ever power was actually wielded by Hitler and Mussolini, their governments did not redistribute away private wealth, nor did they mindlessly infringe on property rights.

In peace time, most private enterprises in Nazi Germany could produce what they wanted. Instead of resorting to brute compulsion, the Nazi regime influenced the production decisions of private enterprises by rationing foreign currency and raw materials, manipulating the ration schedules and offering very lucrative terms to businesses. The Nazi regime also cartelised some industries to simpify its relationship with suppliers. These measures were fundamentally similar to the way in which J P Morgan created monopolistic trusts. Moreover, most businessmen did not resist cartelisation and profited handsomely from participating in the cartels.

3/ Even in war time, the primary instrument of the Nazi regime in its relationship with private businesses was not brute compulsion and peremptory diktats, but incentives and manipulation. I highly recommend the following article from The Journal of Economic History : http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=449534 , which amply demonstrates this point.

Anyone unable to retrieve the article for himself may email me and I will send him a PDF of that article.

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