"...if we be honest with ourselves,
we shall be honest with each other." ~ George MacDonald
"...if we be honest with ourselves,
we shall be honest with each other." ~ George MacDonald


There's only one problem with this quote; Hitler didn't say it. The quote is actually from a pamphlet by a prominent Nazi by the name of Gregor Strasser, whom Hitler had assassinated in 1934.

National Socialist German Workers' Party?

Why Socialist? How were the Nazis socialists? They hated the communists. And didn't German's own their own businesses? Yes they did. So how then were the Nazis socialists?

It is important to understand that there is more than one kind of socialism.

"...practically no one thinks of Nazi Germany as a socialist state. It is far more common to believe that it represented a form of capitalism, which is what the Communists and all other Marxists have claimed." (From the article Why Nazism was Socialism and Why Socialism is Totalitarian by George Reisman).

Many of the policies of the Nazi party were certainly socialist in nature. Hitler was all for government education, government health care, and heavy regulation of industry. (National Socialism is not exactly the same as Democratic Socialism, but it too has it's dangers. Only a fool believes that governments won't become corrupt or that the state won't attempt to use such power to advance its own ideology.)

This is how Reisman's article starts:

"My purpose today is to make just two main points: (1) To show why Nazi Germany was a socialist state, not a capitalist one. And (2) to show why socialism, understood as an economic system based on government ownership of the means of production, positively requires a totalitarian dictatorship.... [emphasis added]

The basis of the claim that Nazi Germany was capitalist was the fact that most industries in Nazi Germany appeared to be left in private hands.

What Mises identified was that private ownership of the means of production existed in name only under the Nazis and that the actual substance of ownership of the means of production resided in the German government. For it was the German government and not the nominal private owners that exercised all of the substantive powers of ownership: it, not the nominal private owners, decided what was to be produced, in what quantity, by what methods, and to whom it was to be distributed, as well as what prices would be charged and what wages would be paid, and what dividends or other income the nominal private owners would be permitted to receive. The position of the alleged private owners, Mises showed, was reduced essentially to that of government pensioners."*

Why Nazism was Socialism and Why Socialism is Totalitarian, is based on a lecture by the same name, and is part of a series of lectures entitled "The Economics of Fascism." (See here. Before reading that little book I thought communism was a great idea, which had failed in practice because of brutal dictators. I believed that a communist state could work without the state oppressing the people, if it was led by a benevolent leader. I was naïve. (Even if power did not corrupt, and the leader sincerely tried to implement the wishes of the people, communism still would not work. It will always result in widespread poverty. See here.)

"Socialism cannot be ruled for very long except by terror. As soon as the terror is relaxed, resentment and hostility logically begin to well up against the rulers. The stage is thus set for a revolution or civil war. In fact, in the absence of terror, or, more correctly, a sufficient degree of terror, socialism would be characterized by an endless series of revolutions and civil wars, as each new group of rulers proved as incapable of making socialism function successfully as its predecessors before it. The inescapable inference to be drawn is that the terror actually experienced in the socialist countries was not simply the work of evil men, such as Stalin, but springs from the nature of the socialist system. Stalin could come to the fore because his unusual willingness and cunning in the use of terror were the specific characteristics most required by a ruler of socialism in order to remain in power. He rose to the top by a process of socialist natural selection: the selection of the worst.

I need to anticipate a possible misunderstanding concerning my thesis that socialism is totalitarian by its nature. This concerns the allegedly socialist countries run by Social Democrats, such as Sweden and the other Scandinavian countries, which are clearly not totalitarian dictatorships.

In such cases, it is necessary to realize that along with these countries not being totalitarian, they are also not socialist. Their governing parties may espouse socialism as their philosophy and their ultimate goal, but socialism is not what they have implemented as their economic system. Their actual economic system is that of a hampered market economy, as Mises termed it. While more hampered than our own in important respects, their economic system is essentially similar to our own, in that the characteristic driving force of production and economic activity is not government decree but the initiative of private owners motivated by the prospect of private profit.

The reason that Social Democrats do not establish socialism when they come to power, is that they are unwilling to do what would be required. The establishment of socialism as an economic system requires a massive act of theft—the means of production must be seized from their owners and turned over to the state. Such seizure is virtually certain to provoke substantial resistance on the part of the owners, resistance which can be overcome only by use of massive force.

The Communists were and are willing to apply such force, as evidenced in Soviet Russia. Their character is that of armed robbers prepared to commit murder if that is what is necessary to carry out their robbery. The character of the Social Democrats in contrast is more like that of pickpockets, who may talk of pulling the big job someday, but who in fact are unwilling to do the killing that would be required, and so give up at the slightest sign of serious resistance (George Reisman, Why Nazism Was Socialism and Why Socialism Is Totalitarian ).

Obviously, the larger the bureaucracy, the more favours politicians and bureaucrats can grant. The larger the bureaucracy, the more corruption and crony capitalism you will have. See here.

The more corrupt a society is, the more impoverished that society will be. 

So if these things are true, why have the Scandinavian countries been successful? Perhaps a little bit of socialism (e.g. socialised medicine) is a good thing? A little bit of socialism (a very little bit) may be a good thing, though it must be extremely limited. Sweden was collapsing before they made the necessary reforms and reduced the size of their bureaucracy. See here.

Few people know this, but America had socialist origins.

Reisman's entire article is available here. (The article itself is mostly taken from chapters 6 to 8 of his book Capitalism, which is available for free here.) Price controls always result in shortages. Under communism the price of all goods are determined by the government; consequently there are always severe shortages. Reisman uses multiple examples to help explain why price controls have such a devastating effect on the economy in his book The Government Against The Economy.


*Given Reisman's definition of socialism as "an economic system based on government ownership of the means of production," his argument is sound.


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