Hitler's Handouts

Inside the Nazis' welfare state

Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State, by Götz Aly, New York: Metropolitan Books, 448 pages, $32.50

Few subjects arouse a historian's reductionist instinct like Nazism. It's hard to resist that desire to explain, in a single bullet point, just how "the nation of Goethe and Schiller" descended into imperial, genocidal madness. The earliest Holocaust reductionists saw in the German character a preternatural fealty to power: the stolid Prussian willing to subsume morality to a vague notion of duty, with those not of the Junker class simply terrorized into submission, too fearful to resist.

Among historians, this idea fell out of favor long ago. For non-specialists, it was effectively debunked in 1996 by the Harvard political scientist Daniel Goldhagen, who demonstrated that punishment was rarely if ever meted out to soldiers who refused to participate in mass murder. (According to Goldhagen, S.S. chief Heinrich Himmler allowed the righteous—and the squeamish—to be redeployed from the killing fields.) But Goldhagen merely replaced one monocausal theory with another, contending that the Holocaust was a natural extension of popular anti-Semitism. Fascism flourished, he claimed, because Germany was a country suffused with a "racist eliminationist view of Jews." Goldhagen's book, Hitler's Willing Executioners, was cut to ribbons by his peers, many of whom wondered why, if genocidal anti-Semitism was uniquely German, so many non-Germans willingly betrayed, deported, and executed their Jewish neighbors.

So if anti-Semitism alone cannot explain the fate that befell European Jewry, what can? According to Götz Aly's Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State, most previous treatments of German complicity in genocide overlook a significant aspect of Nazi rule. Aly, a historian at the Fritz Bauer Institut in Frankfurt and the author of more than a dozen books on fascism, urges us to follow the money, arguing that the Nazis maintained popular support—a necessary precondition for the "final solution"—not because of terror or ideological affinity but through a simple system of "plunder," "bribery," and a generous welfare state. When first published in 2005, Aly's book caused a minor sensation in Germany, with critics accusing him of everything from sloppy arithmetic (a charge he vigorously denies in a postscript to the English translation) to betraying his soixante-huitard roots by implicitly connecting West German social democracy to fascism. After the massive success of books like Günter Grass' Crabwalk and Jörg Friedrich's The Fire, two bestsellers stressing that Germans too were victimized by fascism, Hitler's Beneficiaries shifts the brunt of the blame back toward ordinary Germans.

Far from being victims of Nazism, Aly argues, the majority of Germans were indirect war profiteers. Requisitioned Jewish property, resources stolen from the conquered, and punitive taxes levied on local businesses insulated citizens from shortages and allowed the regime to create a "racist-totalitarian welfare state." The German home front, Aly claims, suffered less privation than its English and American counterparts. To understand Hitler's popularity, Aly proposes, "it is necessary to focus on the socialist aspect of National Socialism."

While underemphasized by modern historians, this socialism was stressed in many contemporaneous accounts of fascism, especially by libertarian thinkers. F.A. Hayek famously dedicated The Road to Serfdom to "the socialists of all parties"—that is, Labourites, Bolsheviks, and National Socialists. "It was the union of the anti-capitalist forces of the right and the left, the fusion of radical and conservative socialism," Hayek wrote, "which drove out from Germany everything that was liberal." Ludwig von Mises agreed, arguing in 1944 that "both Russia and Germany are right in calling their systems socialist."

The Nazis themselves regarded the left-right convergence as integral to understanding fascism. Adolf Eichmann viewed National Socialism and communism as "quasi-siblings," explaining in his memoirs that he "inclined towards the left and emphasized socialist aspects every bit as much as nationalist ones." As late as 1944, Propaganda Minister Josef Goebbels publicly celebrated "our socialism," reminding his war-weary subjects that Germany "alone [has] the best social welfare measures." Contrast this, he advised, with the Jews, who were the very "incarnation of capitalism."

Using a farrago of previously unpublished statistics, Aly describes in detail a social system larded with benefits —open only to Aryan comrades, naturally. To "achieve a truly socialist division of personal assets," he writes, Hitler implemented a variety of interventionist economic policies, including price and rent controls, exorbitant corporate taxes, frequent "polemics against landlords," subsidies to German farmers as protection "against the vagaries of weather and the world market," and harsh taxes on capital gains, which Hitler himself had denounced as "effortless income."

Aly demonstrates convincingly that Nazi "domestic policies were remarkably friendly toward the German lower classes, soaking the wealthy and redistributing the burdens of wartime." And with fresh memories of Weimer inflation, "transferring the tax burden to corporations earned the leadership in Berlin considerable political capital, as the government keenly registered."

For instance, at the outset of war Nazi economists established a "wartime tax of 50 percent on all wages" that applied only to the wealthiest Germans. In the end, Aly writes, "only 4 percent of the population paid the full 50 percent surcharge." In occupied Holland, administrators dramatically raised taxes to fund an "anti-Bolshevik campaign," while some Dutch companies paid upward of 112 percent of profits in tax.

But most of the money used to fund the Nazi war machine, Aly argues, was obtained by simple theft. Berlin expressly sanctioned plunder of the occupied territories, urging soldiers to satiate the material desires of the home front with soaps, perfume, coffee, and meat, sent back to the Fatherland via the army post. Limits on package size were lifted expressly for this purpose, while puppet governments seized gold, looted treasuries, and undermined local currencies "to cover a significant proportion of the day-to-day costs of war." Although his estimate has been hotly disputed by the British historians Adam Tooze and Richard Overy, Aly argues that theft accounted for a full 70 percent of the Reich's wartime revenues, ensuring that the burdens of war fell squarely on the shoulders of the conquered.

"The Nazi leadership did not transform the majority of Germans into ideological fanatics who were convinced that they were the master race," Aly concludes. "Instead it succeeded in making them well-fed parasites." Aly notes that food was readily available throughout the war, and that it was not until 1945 that Berliners noticed a scarcity of rations. Thus, he argues, the people were generally well looked after and, until the bitter end, pliant subjects of the Reich.

In making his case, Aly subjects the reader to a dizzying and often tedious array of numbers. And while he ably demonstrates that the Nazis were both accomplished thieves and voodoo economists, I can't help wondering if Hitler's Beneficiaries is asking the right questions. If this loyalty-for-food was indeed the prevailing moral hierarchy amongst "ordinary Germans," if decency was swiftly abandoned in a quest for moderate material gain, you can only wonder: Why were they so easily corruptible?
Can the occasional parcel of Serrano ham, a free dental exam, and a soak-the-rich tax structure convince a people whose population centers were regularly firebombed, whose Jewish neighbors were deported, whose sons were killed on the Eastern Front, whose cities were close to being overrun by the Red Army, to stick by a cruel dictatorship until the bitter end? The reality of Hitler's war was never far from sight. The July 1943 bombing of Hamburg, for example, produced an astonishing 40,000 civilian deaths and 1.4 million refugees. Those seeking safety outside of large urban centers, the historian Robert Gellately notes, caused a ripple effect by "contributing to the fall of morale in cities behind the lines."

Six months earlier, the German Army had capitulated at Stalingrad after having sustained 700,000 casualties. Jews were taken in broad daylight, never to be seen again. And while the material deprivation of Berliners may have been limited to the occasional interruption in the sausage supply, the "parasitic" hausfrau surely observed her city's gradual reduction to rubble. It would be astonishing if, in the midst of this destruction, those in Germany gave much thought to taxes or pensions.

In its best passages, Hitler's Beneficiaries demonstrates a correlation between moral collapse and government largess. But direct causation is harder to establish. And while he is careful not to claim that economics alone motivated the "ordinary German," Aly is vague about just how significant a role it played, failing to make anything resembling a combined case, weighing economic incentive alongside anti-Semitism, nationalism, propaganda, and terror.

There is, perhaps, a rather less satisfying explanation: that ordinary people, German or otherwise, possess an extraordinary capacity—and tolerance—for evil. As the mass killings in Rwanda and Cambodia should demonstrate, a cash incentive is hardly a prerequisite. But the crowded field of Nazi historiography demands a measure of heterodoxy; mainstream publishers prefer the provocative to the prosaic. While Aly's impressive economic history succeeds in reminding readers that Bolshevism and Nazism were, in the words of historian Richard Pipes, both "heresies of socialism," that service is ultimately overshadowed by a needlessly radical conclusion.

Michael C. Moynihan is an associate editor of Reason.