Was the Nazi economy a success story that pulled Germany out of the Great Depression, or a catastrophic failure built on coercion and war? Dylan Aunger’s article, “Was the Nazi Economy a Success? Assessing the Economic Policies and Outcomes of the Third Reich,” tackles this intense historical debate. He evaluates how the regime’s short-term gains in reducing unemployment and boosting industry were deeply intertwined with rearmament and ideological goals. If you’ve ever wondered about the true nature of Nazi Germany’s economic revival, this article offers a critical examination of its unsustainable and ultimately disastrous enterprise.
Was the Nazi Economy a Success? Assessing the Economic Policies and Outcomes of the Third Reich
The economic record of Nazi Germany remains a subject of intense historical debate, shaped by both the dramatic transformations of the 1930s and the catastrophic collapse during the Second World War. Between 1933 and 1945, Adolf Hitler’s regime implemented a series of ambitious economic policies aimed at reviving Germany from the depths of the Great Depression, achieving autarky, and preparing the country for aggressive military expansion. On the surface, the Nazi economy achieved notable gains: unemployment fell sharply, infrastructure projects flourished, and industrial production surged. However, these developments were deeply intertwined with rearmament, coercion, and short-term objectives. This article evaluates the nature and consequences of Nazi economic policies, ultimately arguing that while the regime achieved short-term successes in reducing unemployment and mobilizing industry, the long-term sustainability and ethical implications of these policies render the Nazi economy a deeply flawed and ultimately disastrous enterprise.
The backdrop to Nazi economic policy was the catastrophic economic crisis of the Weimar Republic. The Great Depression, triggered by the 1929 Wall Street crash, devastated the already fragile German economy. By 1932, unemployment had reached six million, and industrial output had collapsed by over 40 percent compared to pre-crash levels.[1] Economic despair contributed significantly to the erosion of democratic legitimacy and the rise of radical parties, most notably the National Socialist German Workers’ Party (NSDAP). Hitler’s promise of economic revival, employment, and national rebirth resonated powerfully with a disillusioned electorate.
Upon assuming power in 1933, the Nazi regime inherited a capitalist economy under extreme duress. Rather than immediately imposing a radically new system, Hitler and his ministers, particularly Hjalmar Schacht, President of the Reichsbank and later Minister of Economics, pursued a pragmatic path. Schacht introduced a series of interventionist policies designed to stimulate demand, including public works programs such as the construction of the Reichsautobahn, subsidies to industry, and protectionist tariffs.[2] These measures, combined with state-directed credit expansion and suppression of labor unions, formed the early economic foundation of the Third Reich.
One of the most frequently cited “successes” of the Nazi economy was the dramatic reduction in unemployment. By 1936, official unemployment had dropped to under two million and virtually disappeared by 1939.[3] Historians have debated the extent to which this decline reflected genuine economic revival. On one hand, Richard Overy argues that public works and rearmament played a crucial role in absorbing surplus labor and stimulating growth.[4] On the other hand, Adam Tooze emphasizes the manipulation of labor statistics—such as removing women and Jews from the workforce—and the use of compulsory labor schemes that masked persistent underemployment.[5]
Additionally, the regime’s emphasis on employment served political purposes. Job creation was not only an economic goal but also a mechanism for social control. The German Labor Front (DAF), which replaced trade unions, enforced discipline in the workplace and promoted Nazi ideology through the “Strength Through Joy” program. Workers were expected to conform to the new order, and economic participation was closely tied to political loyalty.
By 1936, Hitler’s economic focus shifted decisively toward preparation for war. The appointment of Hermann Göring to oversee the Four-Year Plan marked a new phase of economic planning aimed at achieving autarky—economic self-sufficiency—and accelerating rearmament. The Plan sought to reduce reliance on foreign imports by expanding synthetic production of rubber, oil, and other strategic materials.[6] Industries such as IG Farben became central to this effort, receiving extensive state support in exchange for alignment with military objectives.
The Four-Year Plan reflects the central tension in the Nazi economy between ideology and practicality. Autarky was driven by a racialized view of geopolitics, particularly Hitler’s vision of Lebensraum, which imagined Eastern Europe as a colonial frontier to be conquered for German settlement.[7] Economic planning under Göring became increasingly irrational and bureaucratic, with overlapping agencies, redundant efforts, and frequent conflicts among party officials, technocrats, and industrialists. Timothy Mason has described this phenomenon as a “chaotic pluralism,” where personal power and ideological loyalty often outweighed efficiency.[8]
Despite considerable investment, autarkic goals were only partially realized. Germany remained dependent on foreign imports, especially for oil and strategic metals, and balance-of-payments crises persisted throughout the late 1930s. The regime relied on bilateral trade agreements with smaller countries, often involving barter or political pressure, to sustain critical supplies. These arrangements were unstable and foreshadowed the expansionist wars that followed.
With the onset of war in 1939, the character of the Nazi economy changed dramatically. The conquest of much of Europe provided both a solution to raw material shortages and a new labor pool. Occupied territories were systematically looted, with resources redirected to the German war machine. In France, for example, nearly one-third of the national income was transferred to Germany through occupation costs.[9]
The exploitation of forced labor became a defining feature of the wartime economy. Millions of foreign workers, including prisoners of war and civilians from Eastern Europe, were deported to Germany to work in factories, farms, and construction. These laborers were subjected to brutal conditions, racial discrimination, and violence.[10]
Albert Speer’s appointment as Minister of Armaments in 1942 led to further rationalization and intensification of war production. Speer centralized control over key sectors, increased the use of forced labor, and succeeded in boosting output despite Allied bombing.[11] However, this “Speer miracle” was only possible through extreme coercion and was ultimately unsustainable. By 1944, economic collapse was looming, with supply chains disintegrating, transport networks in chaos, and morale disintegrating both on the front and at home.
Any evaluation of the Nazi economy must grapple with its moral foundations. While employment and industrial growth were achieved, they were inseparable from violent repression, racial persecution, and preparation for genocidal war. Economic measures were not neutral technocratic decisions; they were embedded within the broader ideological goals of Nazism. As Michael Burleigh has argued, “the economy was subordinated to political and racial imperatives, not the other way around.”[12]
Historians differ in their assessments of Nazi economic performance. Traditionalist interpretations, such as those by Alan Milward, emphasize short-term achievements and see the economy as relatively successful in its objectives.[13] Revisionists, including Tooze and Mason, focus on internal contradictions, inefficiencies, and ethical costs. Tooze, in particular, argues that the Nazi economy was “built on sand,” driven by unsustainable borrowing, autarkic fantasies, and violent expansionism.[14]
Some scholars have debated whether Nazi economic policy represented a form of Keynesianism avant la lettre. The use of deficit spending, public investment, and state intervention appear to parallel certain Keynesian strategies. However, this comparison is misleading. As Nicholas O’Shaughnessy notes, Nazi economic policy was not aimed at social welfare or egalitarianism but at militarism and racial dominance.[15] Moreover, the suppression of political dissent, destruction of trade unions, and reliance on slave labor place the Nazi economy outside the ethical boundaries of any legitimate economic theory.
The Nazi economy achieved notable short-term gains, particularly in reducing unemployment, stimulating industry, and mobilizing for war. However, these achievements were predicated on coercion, ideological extremism, and preparation for aggression. Economic planning was often chaotic, shaped more by personal rivalries and ideological fervor than rational strategy. While the regime did achieve certain targets, such as expanding synthetic production and increasing military output, these gains proved unsustainable in the long term and came at immense human cost. The ultimate collapse of the German economy in 1945, amid ruin and genocide, underscores the fundamentally destructive nature of the Nazi economic model. In this light, any notion of “success” must be critically re-examined in terms of both practical sustainability and moral legitimacy.
References:
[1] Richard J. Evans, The Third Reich in Power (New York: Penguin, 2005), 339
[2] Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi Economy (New York: Viking, 2006), 41–45
[3] Tim Mason, “Nazism, Fascism and the Working Class,” in Labour and Socialist Movements in Europe (Cambridge: Cambridge University Press, 1980), 53
[4] Richard Overy, War and Economy in the Third Reich (Oxford: Oxford University Press, 1994), 24–28
[5] Tooze, Wages of Destruction, 98–103
[6] Overy, War and Economy, 49–52
[7] Ian Kershaw, Hitler: 1936–1945, Nemesis (London: Penguin, 2000), 175
[8] Tim Mason, Social Policy in the Third Reich (Oxford: Berg, 1993), 28–29
[9] Mark Mazower, Hitler’s Empire: Nazi Rule in Occupied Europe (New York: Penguin, 2008), 90
[10] Evans, Third Reich in Power, 543
[11] Albert Speer, Inside the Third Reich, trans. Richard Winston and Clara Winston (New York: Macmillan, 1970), 271–275
[12] Michael Burleigh, The Third Reich: A New History (London: Macmillan, 2000), 279
[13] Alan S. Milward, The German Economy at War (London: Athlon, 1965), 36–41
[14] Tooze, Wages of Destruction, 652–659
[15] Nicholas O’Shaughnessy, Selling Hitler: Propaganda and the Nazi Brand (London: Hurst, 2016), 112
Author:
Dylan Aunger is a modern historian specialising in Nazi Germany and the 20th-century experiences of the Roma and Sinti. Educated at Canterbury Christ Church University, his research delves into the histories of racial policy, marginalisation, and state violence. His work meticulously traces the legal and social restrictions faced by Roma and Sinti communities, from their origins and migrations to the intensified persecution under the Nazi regime. He is the author of The Roma and Sinti: A Forgotten Holocaust, a crucial work dedicated to illuminating this often-neglected aspect of Holocaust history and challenging conventional narratives of Europe’s past.
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English