Soviet and Nazi economic planning in the 1930s 1

This paper argues that economic planning under Stalin and Hitler in the 1930s was essentially similar, both in process and outcome. Both economies had fixed prices and used coercion as part of a rather chaotic process of resource allocation; consumption in both countries was sacrificed to investment in heavy industry. Both economies can be thought of as socialist, and socialism in the 1930s was hardly more than military mobilization. The economy of the Soviet Union is distinguished from that of capitalist economies by having both public ownership of property and centralized economic planning. This two-dimensional classification gives rise to questions about intermediate cases, particularly now that the Soviet economy is in the process of change. Economies with public ownership of property but not planning have been analyzed under the label of market socialism. Economies with private ownership and central planning have suffered neglect by comparison. The Nazi and wartime economies are mentioned occasionally as examples, but little attention has been paid to them in this context. (For example, Pryor, 1985, p. 24, ) This paper compares the process of economic planning in Nazi Germany and Soviet Russia in the 1930s. I argue that there were many similarities between planning in the two economies. The commonalities derived in large part from the use of fixed prices and economic coercion. Planning in the Soviet Union was less well organized and planning in Nazi Germany was more organized than might be thought. Two implications follow from this finding. First, actual socialist planning in the 1930s was closer to military mobilization than the market socialism of Western theorists or postwar Yugoslavia. Although not a new view, this conclusion has dropped out of recent discussions of the Soviet economy and needs reemphasis (Gregory and Stuart, 1990) . Second, the Nazi economy shared many characteristics with the dominant socialist economy of the time. The National Socialists were socialist in practice as well as name. The investigation will proceed in three steps. I will look first at the inputs to planning: bureaucracy, fixed prices, economic incentives. Then I will examine the major outputs of planning: the growth of output, its composition, and the standard of living. Finally I will attempt to infer the planners* aims from their activities as well as their statements. A concluding section reiterates some important differences between the Nazi and Soviet economies.