Book Review: Wages of Destruction: The Making and Breaking of the Nazi Economy

This year's entry for the ACX book review contest.

The narrative around WW2 has always struck me as suspicious.

It just fits the framework of good-guys vs bad-guys too perfectly. If I had to imagine some way the Nazi’s could be more cartoonish evil, it’s genuinely difficult. And the Allied side represents everything that’s good and holy, freedom and democracy etc. Even the name “Allies” sounds pro-social.

It’s a flattering narrative for us as the political descendants of the Allies. But from the inside view, every side in every war has framed themselves as the good-guys and the enemy as the bad-guys. And from the outside view, modern historians typically attribute past wars to morally neutral economic, cultural or geopolitical factors; even WW1, a war closely related to WW2, is usually explained in those terms. And it’s also a historical narrative that we got to write ourselves as the victors of the war.

Is it really the case that the most recent major war, a war many living people still feel a personal attachment to, and a war that plays a defining role in the Western World’s self conception, just happens to also be the only one with the same ethical themes as Star Wars?

Could there be some more impartial, less morally charged account of WW2, beyond narratives of the war that may or may not be relics of propaganda from the war itself? One that renders the Nazis more legible without labelling them as essentially evil.

If you asked a persuasive Nazi officer or official to justify all the conquest and genocide, and skull badges, is there anything they could say that would sound even vaguely sympathetic to someone with modern liberal sensibilities?

Did anyone ever actually ask this? I can’t even imagine how that conversation would go.

I’ve wondered that for a long time, but it always seemed unlikely because of the brute historical fact of the Nazi’s many atrocities, and their quite alien, and maybe irrational ideology.

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An unassuming book, mainly focussed on economic history, The Wages of Destruction: The Making and Breaking of the Nazi Economy by Adam Tooze is the best attempt to explain the war in those terms that I’ve read.

Released in 2006, the book was the first expansive study of the economics of the Third Reich, won several prestigious awards and majorly reshaped the academic consensus on Nazi Germany in several areas.

I first came across Wages of Destruction in online WW2 discussions where it had the reputation of being the book serious history enthusiasts read, and that if you had read let you condescend to the wehraboos on their threads about which side in the war had better tanks, or whatever.

Given its reputation as a meticulous, respectable academic work heavy on economics, I wasn’t expecting anything too sensational; it’s 800 pages of fairly dense economic analysis which took me over a year to read (on and off), but Tooze has an analysis of the war that’s ambitious, sometimes even quite shocking. Tooze’s analysis goes like this:

Germany was relatively un-industrialised and poor (compared to Britain or the US)

Nazi Germany is famous for the quality of the engineering of its weapons, and its pioneering use of mechanised warfare, Tooze illustrates that parts of the economy were at the technological frontier, but taken as a whole the German economy was not very industrialised compared to its rivals: Britain, the US and the USSR.

“The census of 1933 counted no less than 9.342 million people as working in agriculture, almost 29 per cent of the total workforce.“ Google tells me the equivalent number was around 5% in the UK in 1935. The population growth of the late 19th and early 20th centuries also meant that the population density was high and consequently there wasn’t much land for each of those agricultural workers to work. Urbanisation during the 1930s was also only around 50% compared to around 80% for the UK.

Inter-war Germany was also comparatively poor, at about half the GDP per capita of the US.. “[T]he German economy differed little from the European average: its national per capita income in the 1930s was middling; in present-day [2006] terms it was comparable to that of Iran or South Africa.“

Which meant conditions for those agricultural workers were especially poor.

“In the inter-war period, class photographs from rural elementary schools routinely captured images of row upon row of barefoot children, whose parents were too poor to afford shoes, at least for the summer months. Images of fieldwork show broken old people bent double over primitive ploughs pulled by worn-out cattle. Hay mowing, reaping, threshing and the muddy ordeal of the potato and beet harvest were all performed by hand.“

Tooze also claims they worked 16 hour days.

This poverty and lack of mechanisation also extended to the military, contrary to popular depictions of the Wehrmacht units that often show them with a lot of equipment. A more representational depiction might be un-mechanised (without vehicles) infantry walking, or on bicycles, along with artillery pieces and logistics being pulled by horses. Infact the German army in WW2 is thought to have had the largest number of horses of any army in history.

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Tooze explains that Inter-war Germany was still undergoing the process leading to urbanisation and industrialisation and that it still had a sizeable population of low productivity peasant farmers in the 1930s, into the 1940s and “[Even] until the 1950s a substantial minority of the German population continued to eke out a living from the soil, under conditions, in many cases, of extraordinary backwardness.”

Germany was deeply concerned with access to key resources and its position in the global economy

The weak agricultural sector meant Germany was reliant on food imports.

A major factor leading to German defeat in WW1 was the Royal Navy blockade that blocked food imports and eventually led to widespread shortages. On its own there wasn’t enough land in Germany to feed its population, and this food insecurity wasn’t just a dampener on per capita consumption it was also a major strategic consideration for the German high command.

Another key resource that Germany depended on imports for was oil.

Many key production processes were bottle necked by a lack of oil, notably fertiliser production worsening the food situation even further. And again a shortage of resources limited Germany’s military, oil had to be rationed and allocated between the different branches of the military, the Kriegsmarine was forced to stay in port for a lot of the war for lack of fuel for ships, Panzer offensives into Russia were slowed down and then slowed even further waiting for the un-mechanised infantry to catch up. Germany was so desperate for oil during the war that it invents a process to artificially produce it from its domestic coal reserves, despite coal also being in short supply, and coal was also processed into an artificial kind of butter.

Nickel, tin, manganese and chrome ore were also key metals needed in industry that needed to be supplied from outside. And maybe more importantly, rubber for tyres amongst other things.

To finance those imports Germany relied on exporting manufactured goods, but foreign currency was always in short supply and trade-offs had to be made.

The first section of WoD is all about the Nazi regime’s programs to ration the use of those resources within the German economy, promote manufactured exports to supply the foreign reserves to buy them, and restrict import purchases in the civilian sector to preserve that foreign currency.

This part of the book about the Nazi’s management of the economy in the run-up to the war was maybe my favourite. Tooze gave a vivid overview of the German economy at the macro level. There’s a relatively large but unproductive agricultural sector not quite supplying Germany’s food needs. Compensating for that lack of agricultural productivity is a relatively small but world class manufacturing sector that is heavily reliant on imports for raw resources and which acquires the foreign currency that’s crucial to keep everything running.

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That reliance on imports meant that terms of trade mattered a huge amount to Germany’s prosperity and security, and, in Hitler’s view at least, the international trading system is under the control of Britain and the US.

“In Hitler’s mind, the threat posed to the Third Reich by the United States was not just that of conventional superpower rivalry. The threat was existential and bound up with Hitler’s abiding fear of the world Jewish conspiracy, manifested in the shape of ‘Wall Street Jewry’ and the ‘Jewish media’ of the United States. It was this fantastical interpretation of the real balance of power that gave Hitler’s decision-making its volatile, risk-taking quality. Germany could not simply settle down to become an affluent satellite of the United States, as had seemed to be the destiny of the Weimar Republic in the 1920s, because this would result in enslavement to the world Jewish conspiracy, and ultimately race death.“

I couldn’t get a clear sense of whether Tooze thinks the Anglo powers really were using international trade as a weapon against Germany, it might not be the kind of thing that’s openly discussed in the historical record. But it certainly was the case that between them, the British Empire and the US held large territories around the world, were the dominant naval powers, and have both been described as world hegemons. Advantages they did make use of in WW1 to strangle Germany’s economy.

As Tooze says:

“Britain and the United States controlled the agricultural heartlands of both halves of the American continent as well as Australasia. With their complete domination of the sea-lanes it was hardly surprising that they were happy to see German agriculture declining and its urban population slipping into dependence on imported food.“

Real or imagined, for Hitler the obvious solution to a shortage of domestic resources and a weak position on the global stage was to capture those resources by force and to try to shift the world order in Germany’s favour.

WW2 is significantly (maybe primarily) about control of resources

I don’t think Tooze is arguing that control of resources was the sole of cause of WW2, he does discuss more conventional accounts of the events leading up to the war like the Treaty of Versailles and German expansionism in Eastern Europe… briefly and then goes straight back to talking about resources again for hundreds of pages. At the very least the war gives Germany an opportunity to overcome its resource bottlenecks and break out of the position it had fallen into in the global economy.

Germany’s initial success early in the war, conquering France and a large part of the rest of Europe, went some way to alleviating its resource needs. Capturing France’s oil reserves, bought the Wehrmacht several extra months of operational time, and the atmosphere that WoD describes in Germany after its initial victories is exuberance at having overcome the dire circumstances the book detailed in the first section. Tooze is very clear those initial conquests were major economic boons.

However, German occupied Europe still suffered from the same import dependency because most of the rest of Europe also lacked farmland and oil reserves, and cut off from their Allied controlled international trading connections, the new occupied territories were significantly less productive than they had been. Food and oil imports from the USSR were particularly vital.

Which is the explanation that Tooze gives for why Hitler decided to attack the USSR, despite already being engaged with Britain and the US, whereas a common view among historians prior to WoD, was that it didn’t make sense for Germany to attack another Great Power when it was already at war with Britain and while the US threatened to also enter the war.

Tooze claims that Germany’s primary war aim on its new Eastern Front was capturing territory that would alleviate its resource constraints, particularly the productive grain fields in Ukraine and the oil fields in the Caucuses.

“Despite the extraordinary extent of the Wehrmacht’s victories, the space under Germany’s control in the autumn of 1940 was not, therefore, the self-sufficient Lebensraum of which Hitler had dreamed. Nor did Western Europe provide a promising platform from which to fight the long war of attrition that Britain and its backers in the United States were clearly determined to force on Germany.

[…]

In the short term the only way to sustain Germany’s Western European Grossraum at anything like its pre-war level of economic activity was to secure a vast increase in fuel and raw material deliveries from the Soviet Union. “

This framing also explains Hitler’s decision to focus the main thrust of Operation Barbarossa southward towards Ukraine and the Caucasus, which Tooze considers the primary war goal, and away from Moscow which was otherwise close to capture. A decision that eventually led to Germany’s main strategic defeat in the war at the battle of Stalingrad, and which before Tooze was often considered evidence of Hitler’s irrationality.

Tooze’s ability to frame Germany’s strategic decision in a coherent light lends credence to his analysis in my view, and is also a large part of why his work became so influential. He gives a clear explanation of how the international system pushed Germany to gamble on war and why once started the war pushed them to gamble on more war.

It’s a perspective that comes uncomfortably close to ascribing part of the blame to the Western Powers, but his revisionist theories on the origins of the war don’t seem to attract much controversy, probably because he’s so scholarly. Even so, he isn’t afraid to push his analysis into even more sensitive topics.

He doesn’t just think resources explain why Germany wanted to capture so much new territory, he also thinks they explain why it acted so genocidally in the territory it did capture.

The Nazis only managed to carry out a fraction of their genocidal ambitions

Casualties on the Eastern Front for the Soviets were roughly 6.5 million soldiers killed in action, around another 3 million POWs that died in captivity mostly from starvation, and maybe as many as 20 million civilian casualties, making it arguably the deadliest theatre of conflict in world history.

Even so, the Nazi plan for their conquest of the East was even more deadly than that, it involved liquidating most of the population of the USSR and most non-German people in Eastern Europe to free up farming land and ease the pressure of their food shortage. A program referred to as the “Hunger Plan“.

“[A]ll German soldiers and occupation administrators in Soviet territory were enjoined to understand and to commit themselves to its strategic logic. This genocidal plan commanded such wide-ranging support because it concerned a practical issue, the importance of which, following Germany’s experience in World War I, was obvious to all: the need to secure the food supply of the German population, if necessary at the expense of the population of the Soviet Union.“

The Hunger Plan’s objective was to starve at least 30 million inhabitants of the Soviet Union, by means of requisitioning grain and blocking food deliveries to cities. In practice the death toll was smaller than that, because the Nazis only ever controlled a part of the USSR’s territory, and because to logistics of starving out captured cities proved difficult. Still hunger among civilians was widespread. In early 1940 for example, the 'ration' for the inhabitants of Poland's major cities was set at 609 calories and Jews in Minsk were provided with no more than 420 calories per day.

The Nazis also extracted large numbers of slave workers from their captured eastern territories, most of which were worked to death on starvation rations and then replaced with new arrivals. Tooze gives an overview of the kinds of calculations Nazi officials were making to maximise the amount of useful labour they could extract given the tight calorie constraints, exactly how low the rations could go, the life expectancy of deployed slave labours to aim for in days etc.

The longterm plan was that the captured territories in the east would be used to alleviate Germany’s shortage of farmland and be turned into estates run by veterans of the SS, employing gangs of Slavs as farmhands. Essentially a form of colonisation.

Tooze makes repeated comparisons between the plan to secure “Lebensraum” and British colonial expansion, as well as the American expansion on the frontier. He describes the invasion of the USSR as “the last great land-grab in the long and bloody history of European colonialism”.

“[Germany] was simply refusing to accept that the distribution of land, resources and population, which had resulted from the Imperial wars of the eighteenth and nineteenth centuries, should be accepted as final. It was refusing to accept that Germany’s place in the world was that of a medium-sized workshop economy, entirely dependent on imported food. This, as Hitler saw it, was a recipe for ‘race death’. “

I’m not sure what to make of that comparison, Nazi genocide was more comprehensive, industrialized, ideologically driven, and rapid which gives it a more evil vibe in my mind. Whereas modern Australia or the US just have the vibe of normal 21st century countries. Is that what countries built on historical evil feel like? Would the SS run slave estates eventually have become like Sydney? Maybe it’s a case of us being uncomfortable framing our own history that way as modern Westerners. Anyway, it’s potentially another angle in the book that’s challenging to the conventional view of the Nazis as uniquely evil.

Another provocative view Tooze presents surprisingly bluntly is that he thinks the Holocaust was also largely motivated by food scarcity. Before the war the Nazis made plans to relocate the Jewish population rather than killing them. It wasn’t until the food situation became precarious and especially after the Nazis failed to capture enough farmland in the USSR that they essentially decided to stop allocating food to Jews in particular or killed them directly to free up supplies in conjunction with the rest of the Hunger Plan.

So there are several areas Tooze’s analysis that raise difficult ethical questions about the Nazi’s conduct in the war, but for understandable reasons WoD doesn’t delve too deeply into its own moral implications, it’s not the main focus of the book and Tooze probably doesn’t want to come across as too provocative. I think it’s still interesting to ask what those implications are though:

To what extent does Tooze’s analysis exonerate Nazi conquest and genocide?

So coming back to asking Hanz whether we’re the baddies.

Imagine Hanz presented the arguments of Wages of Destruction as justification for Germany’s conquests and genocide, and it was as erudite and painstakingly researched as Tooze’s book. If he argued conquest was necessary because of the position that the US and Britain had put Germany in internationally and that the genocides had been necessary because of the shortage of food. I’d think those were brutally utilitarian arguments, but potentially they might garner some sympathy, even if you rejected the Nazi’s other more racist and conspiratorial justifications for their actions.

Would or should a more liberal country, without a leadership that believed in globe-spanning conspiracies and with a normal level of ethno-nationalism, have acted similarly if it found itself in the same geo-political and geo-economic situation as mid-20th-century Germany?

WoD doesn’t directly answer this. But extrapolating from Tooze’s arguments, I’d say it comes down to two factors:

• How bad becoming a vassal of the US would have been, in expectation at the time.

• Exactly how high was the risk of famine in Germany?

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Vassalage:

Tooze summarises Hitler’s anxiety over Germany’s future if it remained a small workshop economy in a world ruled by foreign powers as:

“ Faced with overcrowding and low wages in the cities, urban families would do their best to reduce the birth rate. The best and the brightest would emigrate to new territories that offered more scope for advancement. For lack of natural resources, the German economy would never be able to match the affluence on show in the United States. And if Germany were ever to emerge as a serious trade competitor, it would be at the mercy of the British and the Jewish propagandists of global liberalism, who would not hesitate to unleash a second, ruinous world war, whilst crippling the German home front by means of blockade.“

He also claims that the default outcome for Weimar Germany was to drift towards the American sphere of influence.

Being incorporated into the sphere of influence of a late 19th century or early 20th century Great Power typically meant some degree of economic subjugation. The kind of vassalage that modern Britain, Germany or Japan experience, where they’re about as wealthy per capita as the hegemon itself, really is unprecedented in world history as far as I know, it’s exceptional at the least. The period after WW2 in Europe also saw much stronger growth and a faster rise in living standards than the inter-war period that might have been Hitler’s reference baseline.

In hindsight, Germany’s inclusion in the US sphere of influence after the war has been prosperous, and arguably not too destructive to its national character, certainly it hasn’t led to “race death“. Tooze seems to think Hitler was right, with the available information, to believe that gambling on conquest could be in the best interests of the German people.

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Famine:

It wasn’t clear to me reading WoD exactly how desperate Germany’s food problem was during the war or how many less drastic plans to expand the food supply they tried before enacting the Hunger Plan. Germany never experienced outright famine, or seemed close to it at any point in WoD’s narrative.

One thing that Tooze mentions repeatedly is that Germany maintained “giant herds of pigs and cows“ to provide meat and dairy products and that a large portion of Germany’s limited imports were being used up supplying feedstock to those animals, and that this was an important motivator for the invasion of the USSR.

“Only the Ukraine produced the net agricultural surpluses necessary to support the densely packed animal populations of Western Europe.“

Raising livestock is a much less efficient way of producing calories than growing crops. Today, 1 calorie of pork takes 15 calories of plant matter to produce and the ratio is 25x for beef, I’d guess it was even higher with the less efficient, less industrialised agricultural practices of the 1940s. Tooze mentions that the Nazi high command considers culling its’ livestock herds several times to free up arable land, but decides against it because meat and dairy products were so important to civilian morale.

A common talking point in Allied propaganda during the war was that the Nazis had impoverished ordinary Germans because such a large share of economic output had to go towards their wars, and that view carried over into a lot of post-war history. WoD was influential in overturning that “Guns vs Butter“ dichotomy, as Tooze argued the logic of the wars was economic. Even so, several times in WoD Tooze brings up trade offs, in which imports to prioritise and where to allocate resources internally, between civilian needs and the needs of the military-industrial machine and often the Nazis prioritise what the civilians want.

Tooze wants to argue that it was the fear of hunger that pushed Germany to the Hunger Plan, and even the Holocaust, but he never quantifies, even approximately, how necessary reducing the number of mouths really was. That agro-ecological investigation is missing from the book and it left me asking whether the Holocaust was… for the sake of sausages.

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Overall I think Tooze makes a strong case that the Nazis acted in what plausibly could have been in the interest of the German people, and at the expense of non-Germans, based on expectations of how the international system functioned at the time and what Germany’s future in that system would look like, as well as resource constraints.

To the extent that all nations favour their own citizens over outsiders, I think we have to say that was reasonable, but it’s not clear in Tooze’s analysis whether the Nazi’s reasons were actually quite trivial. There’s a big difference between starving outsiders to feed your own people and being so nationalistic as to starve outsiders so your own people can live more comfortably.

The main contention of WoD is that you don’t need to invoke theories of exceptional German ethno-nationalism, or racist conspiracy theories to explain why the Nazis were so murderous in their waging of the war, or why the war happened in the first place. Still, the Nazis were exceptionally ethno-nationalistic and did believe in racist conspiracies. Even though Tooze does leave room in his analysis for those factors he isn’t completely clear or consistent in explaining how much he thinks they mattered, or what the limits are to how much his geo-economic analysis can explain.

I don’t know if it would have been reasonable to expect Germany to sink into a subordinate role on the world stage without resistance. But starting a world war you expect to commit mass genocide in doesn’t seem reasonable either. Maybe as a 21st century Briton I’m unusually sanguine about American vassalage, and since I don’t work 16 hour days on an un-mechanised farm maybe meat and dairy products mean less to me. But I’d like to think a more liberal, less chauvinistic society wouldn’t have made the same choice under the same pressures, even if just for the sake of people outside the national in-group.

Take-aways and extrapolating Tooze’s analysis to the current day

I think Tooze views WW2 (and WW1, which he has another book on that follows a similar analysis) as the war that inevitably had to follow the industrial revolution.

Industrialisation made national economies reliant on resources, particularly oil, that often can’t be sourced domestically. Mechanised transportation created a global market in food that boosted population numbers in some countries above the level that can be sustained under autarchy. Industrialisation causes some states to grow rapidly in relative economic strength, destabilising the international system. Britain became the world hegemon and took control of the world’s sea lanes because it was the first to industrialise, for example, and the US in the early 20th century was viewed as a sleeping giant. Together those processes create an arms race pressuring states to secure more resources, to industrialise faster, to become militarily stronger, to secure more resources, to industrialise faster…

As a late adopter of industrialisation (compared to Britain), late 19th century Germany entered into a globalising world economy on terms already decided by the established players, and as a country with unfavourable geography (compared to the US and USSR), Germany naturally fell into the role of a resource importer and exporter of manufactured goods. A role that may have left it vulnerable and relatively poor, but also meant it controlled a large proportion of the world’s manufacturing capacity.

It’s a bit worrying that modern China also fits the description of a formerly weak country, dependent on imports, rising in strength due to rapid export-manufacturing led growth, with a distrust of the global trading system established by the West.

Regarding international relations, my take-away from Tooze’s analysis is that international trade can promote peace by making national economies dependent on each other, but it can also incentivise aggression if states already feel threatened and are reliant on non-secure external supply lines for their military-industrial machinery, or when weaker less established players think the stronger, more established players are rigging the game. So WoD might have some answers about how to defuse tensions with China, by allowing it more control over international trading institutions perhaps.

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Overall I found Tooze’s analysis to be persuasive even if I thought it could be pushed further in some places. But I also found it quite troubling. Attributing the war to structural factors does seem to suggest it was somewhat inevitable, and it raises questions about how stable the current world order is and whether our liberal institutions can ensure peace.

WoD has fuelled my worry that there’s a tendency in modern Western society to dismiss our geopolitical enemies as non-rational or evil, and to avoid more structural accounts of past wars or current international relations and global trade.

I’d like to think liberal democracy is a categorically more moral system than Nazi fascism, that it protects us from ethical atrocities and promotes peace. But I also don’t think that any liberal, democratic society has ever faced the extreme geo-economic pressure that Tooze argues mid 20th century Germany was under, and he does seem to suggest that part of the blame for the war lies with Britain and the US. Which, if true, is definitely something that could be more widely acknowledged.