The Wages of Destruction
Adam Tooze
800 pages including notes and index
published in 2006

When I read Hitler's Empire back in August, I had actually wanted to read The Wages of Destruction, due to Alex Harrowell's review when it came out. I couldn't find it so Mark Mazower's book was a more than acceptable substitute. Both books look at the economy of Nazi Germany and the empire it carved out, each in their own way. Whereas Mazower's point of view is that of a historian turned economist, Tooze approached the subject from the other side: economicst first, historian second. And while Mazower primarily looked at the interaction and tensions between nazi ideology, economci reality and the demands of war, Tooze goes for the more fundamental question of how the fundamental constrains of the German economy influenced nazi decision making, argueing that seemingly irrational decisions made by Hitler and the nazi leadership, not the least the decision to invade Russia, made perfect sense when looking at the economic context.

Which is not to say, nor does Tooze, that Nazi ideology wasn't not irrational or evil, but that if you take into account their worldview, that in this context their decisions were rational and clearheaded and clearly informed by the economic realities of Germany. To the Nazis, as to most intelligent observers between the wars, it was clear that Germany was doomed to be a second rate power, not big or rich enough to seriously challenge countries like England, with its vast colonial empire, let alone America or the USSR. Under the Weimar Republic, the best it could hope to achieve was to become a middling European power, growing rich on American coat tails. Nazism set out to change this, to conquer a larger living space for the German race by force and through pure willpower and technology transform the German economy into the equal or even the superior of the American. This struggle lies behind all strategic decisions the Nazi leadership made in the runup to the war and during it, each time putting their faith into another great leap forward, each time still finding themselves in the same box, in the end not having been able to overcome these fundamental limitations.

The most fundamental constraint on the German economy was the foreign exchange; like any other European economy Germany was dependent on both foreign exports to earn money and foreign imports for part of its basic needs: fertiliser and animal feed, oil, various metals (copper, zinc, etc). Under the Weimar republic the strategy was to stick close to America, use its capital to modernise and extend German industry while using its political power to get out from under the Versailles Treaty reparation payments, but that strategy was largely scuppered by the depression, not to mention distasteful to the Nazis, as well as more mainstream conservatives. The same went for devaluation to improve Germany's export position, so throughout the thirties the government depended on various ever more desperate wheezes to earn the money to pay for the nazi's expansion plans had in mind for the Wehrmacht, Luftwaffe and Kriegsmarine.

These needed to be strong to gain Germany a place in the sun again and the nazis pumped enormous amounts of money into arms building and expansion, but this was always in conflict with the need to export enough to pay for this all. Rearmament and export were competiting for the same resources, the limiting ones being coal and especially steel. As Tooze argues and supports through quite a lot of statistics, the ups and downs in weapon production throughout the war can be directly linked to the availability of enough steel for the army. In the runup to the war especially, several times it was needed to interrupt weapons production to satisfy the need to export enough to actually be able to pay for weapons production, a catch-22 Germany would never escape. Even during the war Germany needed its exports to prop its allies and occupied Europe and keep neutral countries like Sweden or Switzerland happy.

The fundamental logic of nazism was that only strong countries could survive and that Germany needed to carve out its own empire to be strong and survive, but every step it took to become stronger caused a counterreaction. So while Germany managed to mobilise its peacetime economy to a dramatic effect, with never before reached percentages of its national economy being invested in the army, this caused an arms race with France, England and Russia, as well as America worsening the odds against Germany. Hitler and the Nazi top were quite clearheaded about the dangers of the arms race, that they only had a limited time to transform Germany and as Tooze shows, it's possible to see the various decision points on the road to WWII and during it, as attempts to bootstrap themselves out of this mess. The Sudetenland crisis, the decision to invade Poland, the attack on France, especially the invasion of Russia, all attempts to transform the strategic situation to one in their favour, all ultimately failed.

But Tooze is quite clear these failed not because the Nazi schemes and their mobilisation of the German wartime economy failed, but because their enemies were more succesful. He takes great pains to show that the mainstream view of the Nazi wartime economy as hopelessly crippled by ideology, corruption and mismanagement is wrong. Again, looked from their worldview the nazis were quite succesful in wringing the most out of their economy, but this ideology did put some constrains on what they could and could not afford to do, as we've also seen in Mark Mazower's book. Objectively looked at, it's clear that there was little more the Nazis could've done to manage the war economy better, but in the end this wasn't enough because the American and Russian economies were still bigger. Hitler had a limited window of opportunity in 1941-1942 to defeat the USSR and use the resources of the Ukraine and Caucasus to prepare for war with the US and England, but once this opportunity was missed, the outcome was never in doubt.

I'm not sure I believe everything in The Wages of Destruction, especially not the idea that if the British had kept concentrating their strategic bombing campaigns against the industrial areas along the Ruhr instead of shifting focus to Berlin, they could've knocked out the German war industry in 1943 or 43. It seems to me the British just did not have the resources to do that, until the Americans had build up their bomber force. As Tooze himself showed, the Germans were very good at escaping from seemingly unavoidable crisises and I think they would've espaced here as well. But this is a minor quibble; this is a great look at a difficult subject and should be read together with the Mazower book.