Chartbook #186 Solicitous dictatorship. The political economy of authoritarianism - Aly v. Tooze revisited.

“In some periods they explain practically all major events, and in most periods they explain a great deal … But even greater than the causal is the symptomatic significance of fiscal history. The spirit of the people, its cultural level, its social structure, the deeds its policy may prepare … all this and more is written in fiscal history. He who knows how to listen to its message here discerns the thunder of world history more clearly than anywhere else.”

Regular readers of the newsletter will know my fondness for this clarion call for fiscal sociology trumpeted by Austrian economist Joseph Schumpeter in his essay “The Crisis of the Tax State” (1918).

How often it rings true. How telling is the priority given to military spending in recent US budgetary deliberations, for instance, or the lack of provision for family policy or childcare. How striking is the heavy incidence of indirect taxes that reinforce inequality in modern Germany. How revealing are the gaps in the fiscal net that open the door to offshore havens.

But there is a crucial, rarely noticed qualifier to Schumpeter’s thesis: the message of world history can be derived from the fiscal accounts only by “he who knows how to listen.”

This begs the question: what qualifies one to discern the thunder of world history in such obscure sources? It is one thing to see the world spirit on horseback in the form of Napoleon Bonaparte cantering through Jena in October 1806 on his way to crushing the Prussian army. But to read the world-historic thunder from the fiscal accounts takes a special kind of technical knowledge.

Seen this way, one can read Schumpeter’s famous passage as the manifesto for a new kind of expert, someone equipped with the right kind of knowledge to move back and forth between the details of the budget and the drama of world history. And what is the claim on their behalf? In the essay on fiscal sociology Schumpeter is making a claim to knowledge. He is proposing fiscal sociology as a causal and symptomatic methodology. But it is a short step from there to claiming that that kind of knowledge also confers power, or should do. As Clara Mattei has shown us, that idea would lead several prominent Italian fiscal experts into collaboration with Mussolini's regime. What, after all, was Mussolini’s March on Rome, if not the thunder of history (admittedly, rather carefully stage-managed).

In the wake of World War I Schumpeter was part of a generation of economists developing a new macroeconomics. Over the years that followed Schumpeter’s call, fiscal sociology was braided with the emergence of a new economic vision in which the government budget was increasingly seen as determined by the interaction between political choices and the circular flow of national income and expenditure.

Schumpeter himself emigrated from the German speaking world in the 1930s and unlike in World War I, played no practical part in World War II. But the view of the national budget, in Schumpeter’s terms, as a key matrix for economic, political and social priorities helped in practical terms to organize the war effort. In the US and the UK the war is often regarded as a cradle for what some call the “Keynesian revolution in government”. If World War I gave us Schumpeter’s fiscal sociology, World War II gave us functional finance, the radical Keynesian reading of fiscal accounts entirely in terms of the state of aggregate demand, a perspective that echoes down to the present in the form of MMT.

Given the Keynes- and anglocentric focus of much intellectual-political history it is often left unremarked that the same process of expert development also took place on the Axis side in the war. The Japanese had a notably expansive approach to war finance. As I showed in Statistics and the German State (2001) the Nazi regime too developed an elaborate macroeconomic tool-kit that was intended to steer the rearmament drive and war effort. But, on their side too, the question of interpretation arose.

I was put in mind of this, when I came across an old post on adamtooze.com about the debate over Götz Aly’s controversial book Hitler’s Volksstaat (2005), which appeared in English as Hitler’s Beneficiaries. It is a fascinating book that seeks to offer a sweeping overall assessment of the balance of costs and benefits of the Nazi regime to the German population.

Hitlers Volksstaat reveals both the strengths and weaknesses of Aly’s scholarship. It is brilliantly original in its microscopic reconstructions. It takes a particular type of genius to realize the significance of Reichsbahn baggage allowances for the history of World War 2. But it was the bigger picture that really caused the sensation. Looking at the fiscal account, what Aly claimed was that ordinary Germans had paid only 10 percent of the costs of the Hitler’s wars. Their share was so low because they had benefited from two types of redistribution. A much larger contribution, 20 percent of the total, had been taken from the profits of businesses and higher-income groups in the Reich by means of progressive taxation. The Nazi regime had, in short, made good on some of its social promise. The rest - 70 percent - was paid for by plunder, first of the Jews in Germany and Austria and then of the entire economy of the rest of Europe.

Aly, you might say, followed the Schumpeterian injunction to the letter. 10-20-70 - those stark numbers were the thunder of world history. But was Aly really hearing the thunder? Or was, what he thought he heard, actually an echo inside his own head?

On the face of it, Aly was well equipped for the job of deciphering the fiscal apparatus of the Third Reich. He more than anyone else had focused precisely on the issue of expertise. He had done pioneering work on the complicity of doctors, statisticians, demographers and economists in the Nazi’s racial regime. Especially in Vordenker der Vernichtung (1991) - Architects of Annihilation in English - written together with Susanne Heim, Aly had written one of the most provocative and original contributions to history of Nazi Germany. It directly inspired both my first books. For some background on Aly’s interesting biography see this interview he did for Yad Vashem. If you can follow the German, this is a fascinating recent interview.

It is important to understand not just the factual claim that Aly was making, but also the political stakes.

For Aly, the fact that the regime demanded so little from the German population, confirmed that they were not in fact fanatical Nazi’s willing to sacrifice for their beliefs. Nor, however, were the majority of Germans coerced, as the left had claimed on behalf of the German working-class. They were, Aly claimed, bought off. They were the beneficiaries of a Nazi wartime welfare state funded by redistribution and plunder – first from the Jews and then from the entire population of occupied Europe.

Rather than heaving a sigh of relief and rejoicing in the fact that the Nazi regime was not sustained by fanatical ideological loyalty, for Aly this was cause for resigned despair. He was a veteran of radical politics in the 1960s, 70s and 80s. For him the data confirmed that the true continuity of German history was not fanatical beliefs of any kind, but rather the the persistence of a depoliticized populace clamorously dependent on the state. According to Aly, the “archetype of the German compatriot in the 20th century” is a grotesque figure: “Without stature, or much of a brain”, an individual who can hardly afford proper shoes, but who nevertheless keeps one foot firmly planted in a well-polished jack boot, susceptible to any ideology of salvation, endlessly mercenary and consistently irresponsible. Thus Aly characterizes the “ordinary Germans” who are the principal actors of his books. (If this sounds implausible, follow the footnotes to the original piece at adamtooze.com).

Strikingly, what Aly was offering was a materialist reading of German history in which the culprits of German history were not the usual suspects singled out by materialist analysis i.e. big business etc, but “ordinary Germans” themselves. On this point Aly was emphatic. He engaged in a deliberately polemical rewording of Max Horkheimer’s famous pronouncement: “He who wishes not to speak of capitalism, should hold his peace about fascism”. Aly rephrases this as: “He who wishes not to speak of the advantages for millions of ordinary Germans, should hold his peace about National Socialism and the Holocaust.” And he drove this point home, for instance on the occasion of the award of the Heinrich Mann prize in 2002, when in his acceptance speech Aly dismissed the continued public fascination with the responsibility of large capitalists. ‘Invoking the names of Dresdner Bank, Allianz, Generali, Daimler-Benz, Deutsche Bank, Krupp, IG Farben or Thyssen may serve to veil the real historical background of Aryanization in a cloak of anti-capitalism, but it cannot provide a remotely satisfactory explanation”. The background here was the revival of interest in corporate responsibility propelled by the battles over slave labour claims in the late 1990s.

Hitler’s Beneficiaries thus revealed, even more clearly than Aly’s earlier work, his fundamental suspicion of the 20th century welfare state, a suspicion that was common amongst the anti-establishment radicalism of the 1960s and 1970s. Previously, Aly had focused on the expert personnel that drove the modern biopolitical regime, eugenicists, medics, statisticians, economists. Now his critique was directed at the holy cow of redistribution itself. The welfare state, Aly wanted his readers to realize, was in Germany closely linked to predation.

Now, it should be said, that at least some of the historiographical trends of the period were running in Aly’s direction. Christopher Browning’s Ordinary Men (1992), for instance, showed how few of the German men involved in shootings of Jews in Poland and Western Soviet Union could be described as fanatical anti-Semites or Nazis. They went along and did their grisly job, out of small motives - the fear of non-conformity, fear of comparatively minor reprisals and disadvantages etc. In the right context, Browning believed, very ordinary people were capable of doing extremely violent things for very ordinary reasons. How that context - in this case the Eastern Front - was created was a different matter. Declaring war was a top-down decision, which then unleashed the. possibility of “ordinary atrocity” on a mass scale, which itself created a more extreme context for further atrocity etc. It was a terrifying escalatory spiral, which imposed a genocidal racial regime, and made racial perpetrators out of “ordinary men”, but it did not require genocidal racial ideology all the way down. So at least Browning argued.

On the other side of the coin, in the 1980s and 1990s, Nazi welfarism was being taken more and more seriously. In the 1980s Rainer Zitelmann gained notoriety by identifying a programme of top down social modernization at the heart of Hitler’s thinking - R. Zitelmann, Hitler Selbstverstaendnis eines Revolutionaers (Stuttgart, 1987).. Karl. Heinz Roth had long been pushing in the same direction, see K.H Roth, Intelligenz und Sozialpolitik im “Dritten Reich” (Munich, 1993). In a less contentious fashion Michael Prinz and Marie Luise Recker highlighted the expansive promises of postwar social largesse and egalitarianism made by the regime, see M.-L. Recker, Nationalsozialistische Sozialpolitik im Zweiten Weltkrieg (Munich, 1985) and M. Prinz, Vom neuen Mittelstand zum Volksgenossen (Munich, 1986). And in collaboration with Susanne Heim, Aly himself has explored the visions of social transformation by means of conquest and genocide that motivated key elements of the Nazi leadership. At the same time, work by social and labour historians substantially modified the view of German workers as victims of the regime.

So the interpretive drift was there, but Aly’s most spectacular claims flipped the balance entirely on its head. And they were a matter not of emphasis or reconceptualization, but of calculation: 10-20-70. Aly was bringing the thunder.

So did the numbers make sense? Had he read the message right? The short answer is no. Those who are interested in following the blow by blow may enjoy the original post, which details the exchange of reviews and brief public furore that ensued. Here I want to focus on the substance of the issues at stake.

To start with, Aly’s claim about redistribution between classes within the German population:

As Mark Spoerer pointed out, If you are going to infer tax burden you cannot do simply by looking at revenue flow into the state. To read the numbers in the fiscal budget you need to understand the society and the economy that have generated those flows. Aly’s attempt to demonstrate the redistributive effect of fiscal policy in the Third Reich was rendered misleading by his failure to consider the underlying development of income shares. It is certainly true, as he says, that business tax revenues rose more rapidly than tax on wages and salaries after 1933. But since business profits were soaring in large part as a result of government spending, this is hardly surprising. Once one allows for the underlying dynamics of income shares, which vastly outweighed the impact of taxation, his revisionism falls flat. It was not the working class but German business that was the big beneficiary of Hitler’s regime. Certainly Hitler’s economic recovery brought benefits for the entire population. Working-class families benefited from full employment. College graduates had job prospects. Peasants saw their incomes stabilized and were spared bankruptcy. But all of this was outweighed by the shift of national income towards capital. The business histories of recent decades may argue over the degree of coercion exercised towards business owners. But thanks to the work of Mark Spoerer, the fact that profits surged under the Third Reich was actually beyond dispute - M. Spoerer, Von Scheingewinn zum Ruestungsboom (Stuttgart, 1996).

As to the contribution levied on the Jews of the Reich, it was backbreaking. As it was intended to be. But they made up less than 1 percent of the German population. They were massively disadvantaged after 1933 and their wealth consequently depreciated. Hundreds of thousands of Germans benefited privately from the forced liquidation of Jewish property, the state took the profits. But a fire sale forced on a tiny and beleaguered minority is not how you finance a world-beating rearmament effort which by 1939 was already claiming almost 20 percent of GDP.

The truly dramatic claim Aly made was that when war began, the vast majority of the burden of the war was offloaded on the occupied territories.

Many of the territories that Germany occupied, like Denmark, the Netherlands, Belgium and France were rich. They clearly contributed on a large scale. Those exactions particularly of labour were the material driver of resistance to the Nazi occupation. But could they really have been large enough to provide 70 percent of the resources needed for total war? The answer, is clearly no. No war has ever been funded to this degree from external resources. To see how implausible the idea is, imagine for a second how unstable the international order would be if an aggressor could expect to fund anything like 70 percent of the costs of conquest out of conquest. War would pay for itself!

It does not. Nor did the Nazi regime seriously believe it would. Not before 1939, nor afterwards. Even at the moment of maximum victory such talk was cheap rhetoric, not reality. Of course, the regime intended to impose occupation costs and reparations but the overall balance was negative and, from the point of view of the regime, it was not only worth paying, it was historically necessary. History was struggle. Anyone who thought otherwise had succumbed to the post-historic blandishments of liberal ideology, one of the darkest weapons of world Jewry in its struggle with the Aryan race.

So how did Aly get the thunder of world history so wrong? He arrived at his topsy turvy conclusions, by treating war borrowing as though it imposed no burden on the German population. It would be repaid in the future out of reparations to be imposed on the defeated enemies of Germany. As Aly spelled out in a polemical exchange with me in the pages of the Berlin left-wing daily, the TAZ: “the credits taken up on the German capital market for the purposes of the war” allowed the regime to “postpone” inflicting the “real burden” on the German population, with the intention that these debts “should be imposed as soon as possible on the enslaved populations” of Europe.

The magical idea that borrowing allow societies to shift economic burdens into the future, or conversely, resources from the future to be teleported into the present, is by no means peculiar to Aly. It recurred a few years later in the equally wrong-headed argumentation offered by Wolfgang Streeck in his Adorno lectures, published as Buying Time. The fallacy originates in a conflation between micro and macroeconomic perspectives. An individual borrower may transfer purchasing power across periods, but societies as a whole cannot, unless they borrow from the “outside” i.e. from other societies. For everyone “buying time” there must be someone “selling” it. At a deeper level the attribution of such metaphysical powers to debt echoes the uncanniness of debt relations, a feeling of unease which is shared on the left, by folks like Aly and Streeck, as much as it is by conservatives.

This is where the question of expertise posed by Schumpeter’s invitation to fiscal sociology really bites: How to interpret debt and taxes? And this is where it becomes clear that arguments about this idea are not merely intellectual exercises, but endogenous to fiscal politics and our effort to make sense of them, in the same way that Schumpeter’s original essay was part of its context in the aftermath of World War I.

One of the first to truly skewer the alchemical fallacy of war finance by means of treasure was John Maynard Keynes in his pamphlet on How to Pay for the War published in 1940. But we should not fall into the fallacy of thinking that it took a surpassing genius of Keynes’s ilk to figure this out. Hitler’s Finance Minister Schwerin von Krosigk spelled out the argument perfectly clearly in his memoirs Bilanz des Zweiten Weltkrieges (Oldenburg, 1953), 323:

“The common argument that taxes burden the present whereas debts are carried by future generations, is false. The goods required by the fighting forces can only be provided from stocks accumulated in the past or from goods produced in the present. The burden cannot be transferred to the future.”

The managers of the Nazi war effort never imagined that they could offer a deal remotely as attractive as that suggested by Aly. Clearly, the resources for war, like any other economic activity, have to be found out of the current flow of production. The state could borrow from its citizens to finance its activities, but under conditions of full employment, such as those prevailing in Germany from the late 1930s, any large-scale increase in state activity, whichever mechanism is used to finance it, was at the expense of other economic activity, exports or private consumption or civilian investment. By the late 1930s the Nazi Ministries had a clear idea of “output gaps” and inflationary overhangs. The same labour and raw materials cannot be used twice. Nor can future labour or machine capacity be used in the present. Military activity must be sustained though real resource shifts through cuts to non-military public services and a reduction in consumption and civilian investment. What debt issuance does is to interpose a set of political pronouncements and contractual obligations, which may or may not hold out a more or less credible promise of compensation at a future date. But that too will come from future tax revenue flows. What debt does, no more and no less, is to establish a contractual agreement to tie an allocation of resources in the present to a mirroring reallocation of resources in the future.

Of course, the occupied territories did make a large contribution to the Nazi war effort. They were the “outside” from which the regime could extract resources, inefficiently, but on a large scale. Ironically, in accounting for these flows from occupied Europe Aly’s thinking is more clear-headed than with regard to Germany. When it comes to imports from occupied France, for instance, which were financed not only by occupation charges but also through loans to Germany imposed on the French authorities, Aly recognizes the entire flow, not only the bit paid through occupation taxes, as an immediate burden on the French economy.

When we properly account for Germany’s own contribution to the war effort, what do the foreign contributions amount to? In round numbers 25 percent, a figure I estimated in Wages of Destruction on the basis of numbers collected by Mark Harrison. More recent calculations by Hein Klemann revise that share upwards to 28 percent.

Source: Klemann

So the contribution of German society to the Nazi war effort was not 30 percent, as suggested by Aly, but 72-75 percent. Of course, the political bargain between the Germans who were saving and foregoing consumption and private investment for the war effort, was different from that imposed on the rest of Europe. But it was hardly, as Aly suggested, a “feel-good dictatorship”, or, at least, the good vibes were not attributable to the kind of crude materialist equation Aly drew up. By the later stages of the war, the Third Reich was a fiercely demanding, mobilizing dictatorship. It was a better-run but also intensified version of the total war economies of World War I. It was a gigantic national effort. In economic intensity second only to the even more demanding Soviet regime.

Crucially, what the Third Reich did understand, and in this respect it differed from the Wilhelmine regime, was the need to maintain a cohesive home front. To this end, it did far better at ensuring food rations for the entire German population. And it created a racial hierarchy of labour, in which Germans occupied a superior position. Not for nothing in the last thirty years, Volksgemeinschaft, or racial community, and “racial state” have become the key terms in historical writing about Hitler regime. These terms seek to capture the way in which structures of power and inequality were reorganized in racial terms. This squared the very real transfer of resources away from consumption and civilian investment with the construction of a new sense of cohesion and even of solidarity amongst racial comrades.

To see where the scholarly debate has gone since the 1990s there were two major english-language collections of essays published in the 2010s, on Volksgemeinschaft and the racial state, which are highly recommended.

In Wages of Destruction my focus was squarely on the resource shift i.e. the huge surge in military spending. This was the most dramatic ever accomplished in a capitalist state over a six year period in peacetime. This military-industrial surge came at the expense of consumer investment, housing above all, consumption. But this should not be interpreted simplistically, as a militarism v. consumption trade off. The military industrial complex was a giant social phenomenon. Constructing a modern, rapidly expanding army was a form of collective public consumption, shaping identities and delivering pleasures of all kinds as other forms of consumption do. Young men became soldiers. Many of them relished the experience. The reintroduction of universal conscription in 1935 was wildly popular. Older men returned to the ranks. Rearmament was not a process imposed by the state from the outside, against individuals, men or women, or families, it was an integral component of the Volksgemeinschaft, which was not just racially structured, but a nation in arms. To my mind, compared to the relatively rich literature on Nazi racism, we still lack an adequate social and cultural history of the Third Reich’s militarism that takes in its material manifestations and cultural accoutrements. At times it can seem that we know more about the afterlives of Nazi militaria than their original history.

Such a history might take inspiration from strands of work that explore the fascination exerted by the car and the aeroplane, for instance W. Sachs, For Love of the Automobile (Berkley, 1992) and P. Fritzsche, A Nation of Fliers. German Aviatin and the Popular Imagination (Cambridge Mass, 1992). And yes I’m painfully aware that those references are thirty years old! But in attempting to understand hegemony and regime stability whether in the Third Reich or other illiberal regimes, or for that matter in the West, we still struggle to move beyond approaches that crudely juxtapose material and ideological motivation, as though they were separate rather than inseparably intertwined. Think, rather obviously, about the debates about 2016, Trump and populism, or, my personal favorite, the fortuitous coincidence of the financial crisis of 2008 with the advent of the smart phone and modern social media. In the political history of American capitalism, Apple does a lot of work.

In any case, there can be no doubt that the development of private consumption and the generalization of consumer society in Germany in the 1930s was hemmed in by the regime’s priorities. But it was not stifled or completely repressed. A central priority for the regime was not to avoid making demands, but to do so in ways that did not trigger acute shortage or crisis. It enabled a modest prosperity on a mass scale and affluence for the elite. Nor should this balance be surprising. Looking back from 2022 to a debate that took place in Germany in the early 2000s about the 1930s and 1940s, I cannot help thinking of what we have learned from Asian experiences over the last thirty to forty years - first Japan, then South Korea and China. All of them have experienced growth driven by spectacular levels of investment, much of it publicly financed. This implies a lot of hard work and a concomitant squeeze on consumption. But this severe macroeconomic balance in favor of “jam tomorrow”, by no means prevented the development of a dynamic and innovative consumer culture. Fashion and trend-setting are cheap by comparison with a gigantic rearmament effort or infrastructure drive. You can have your guns or your high speed railway and you can have your Leni Riefenstahl flicks, your occasional summer outing, your “fast fashion”, your weibo, your TikTok and K-pop too. I do not mean to suggest any strong analogy between the two experiences. It is rather that in retrospect, the historical imagination that informed our debates about the interwar period in the 1990s and 2000s seems narrowly constrained by West European and American experience from the 1960s onwards.

And perhaps one can make the same point another way. Of course, consumption in Nazi Germany was not at the level of modern affluence. Nor did it prioritize consumption as the main driver of growth as was the case in the US or the UK for much of the recent past. But nor was the experience of Nazi Germany in the 1930s in any way akin to that in the Soviet Union. No Volksgenossen starved for rearmament, or even for the war effort. Indeed, the regime systematically awakened the promise of a German socialism to come, not the reality supposedly diagnosed by Aly, but a promise of an “economic miracle” that lay in the future, after victory and conquest were complete.

How then did it manage to maintain this tension? This is the important question posed by Birthe Kundrus in her effort to pull together the various strands of the debate.

What does need to be explained, however is how National Socialist leaders were successful in holding off overt disappointment for such a long time, and managed to balance the people’s ambivalence with the divergent hopes linked to the Volksgemeinschaft project and a people’s consumer society. My own explanation is as follows: in its consumer policy, the Nazi state used the emotional added value, the social utopian nature of consumption. This essence of consumption as a promise was a double-edged sword, however, not only because wishes must be fulfilled if they are not to turn into disappointment, but also because of the marked Eigensinn the Volksgenossen could have in their habits, and a degree of initiative the Nazi bureaucracy did not always expect. The regime therefore had to develop quite a sophisticated crisis management strategy. At its centre was the smokescreen of solicitude.

Kundrus illustrates this point precisely with regard to

Separation Allowance (Familienunterstützung). Separation Allowance was a grant for the maintenance of the families of soldiers conscripted during the Second World War. The Allowance was paid to the families of conscripted soldiers for their upkeep and was intended to compensate for the loss to dependants of the man of the family’s earnings. It was a generous amount both by international standards and by those of the German Reich. This was not only a sign of commitment to the families of soldiers in view of their sacrifices, but was essentially a reaction to the collapse of the home front in 1918. Aly correctly regards it as one of the Nazi regime’s ‘good’ social policy enactments. However, the Separation Allowance story did not end, as Aly seems to suggest, with millions of soldiers’ wives sitting at home in Germany, happy with all the money they had been given and feeling that Hitler was looking after them. … These families developed a sense of entitlement.

Neighbors squabbled and appealed to the authorities. The allowances that offered ready cash encouraged consumerist desires and frustrations.

Yet there was still hope and trust in the system, which constantly reiterated that it might not be able to fulfil individual wishes for a higher standard of living in the short term, but that in the long term it would all be possible. … But the concept of the Volksgemeinschaft had more than just a rhetorical dimension. It also offered a guide to action: it committed the Nazi regime at least to meeting the people’s basic needs; and it emboldened the Volksgenossen, as they wavered between obedience and self-assertion, to resist the rejections of their demands. … The example of Separation Allowance shows that every measure concerning social and economic policy, even if initially welcomed by the Volksgenossen, generally produced tensions as well as satisfaction. Or to put it another way: certain benefits met some of the population’s needs, but they also tended to create new wishes and, if these wishes were not fulfilled, there was a risk of social disintegration. This is where the Nazi bureaucracy and its crisis management came in. Loyalties were secured not just by material benefits, but also through the feeling people had that they were being looked after, even when there was dispute. … The longer the war lasted, the less the authorities were in a position to act as intermediaries. By the end, they could only defuse, not solve conflicts. Nevertheless, their solicitude was an important factor in ensuring that the situation did not lead to unappeasable social unease as had emerged during the First World War.

To return from the illuminating minutiae of Separation Allowances to Schumpeter’s vision of discerning the thunder of world history from the fiscal accounts, what Kundrus points us towards is the fact that the Volksgemeinschaft was never a static, achieved balance. It could not simply be read off from a clear and definite allocation of resources. It was rather enacted against a backdrop of insufficiency and shortage, through a constant oscillation between promise, delivery and expectation, mediated by optimistic visions of the future. The Volksgemeinschaft took on reality not in the form of the actual delivery of Volkswagens or apartments, but in the continuous negotiation more or less solicitious more or less argumentative, between the recipients of benefits and those who handed them out. It was this negotiation, not a simple policy of delivering material benefits, that kept a degree of optimism and future-orientated legitimacy alive.

When we think about regime stability today, be it in Ukraine or Russia, in China, Turkey, or for that matter in embattled Western states at moments of crisis, this idea of negotiation is a useful and necessary complement to Schumpeter’s grand vision of how to discern the march of world history from the fiscal accounts.

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