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Dwight Macdonald


Germany – Capitalism or Bureaucratic Collectivism?

What Is the Fascist State?

(February 1941)

From New International, Vol.7 No.2, February 1941, pp.22-27.
Transcribed & marked up by Damon Maxwell for the Encyclopaedia of Trotskyism On-Line (ETOL).

TWO YEARS BEFORE HITLER came to power, Trotsky wrote: “A victory of fascism in Germany would signify the inevitable war against the U.S.S.R. It would be sheer political stupidity to believe that once they came into power, the German National Socialists would begin with a war against France or even Poland.... If he wins power. Hitler will become the super-Wrangel of the world bourgeoisie.” (Germany, the Key to the International Situation, 1931.)

It would be hard to compress more errors in prediction into so small a space. The “inevitable” war against the U.S.S.R. has turned out to be quite “evitable”; the National Socialists did begin with a war against France and Poland; Hitler and his movement are shattering to bits the world order of the bourgeoisie. Trotsky made these errors because he made a mistake typical of post-war Marxist thinking: he overestimated economic forms and underestimated political controls of these forms. The Soviet Union was a “workers state” with collectivized property forms; the Nazis were the political agents of German finance capitalism, which represented private capitalism in its most advanced, rationalized, concentrated form. The “antagonism” between these economies was therefore so acute as to make war between them “inevitable” (a dangerous word in any scientific discussion, doubly so in a period like this one) . When the war actually came, however, these two antagonistic economies made a pact for joint imperialist aggression, and the super-Wrangel of the bourgeoisie set his armies in motion against France and England (with America as sleeping partner), the nations where the bourgeois order is making its last historical stand. What Trotsky did not foresee was that new forms of political control were to arise during the Thirties which, while retaining the economic forms of socialism (Russia) and capitalism (Germany), injected into them an entirely new content – call it, for want of a better term, “bureaucratic collectivism” – which has turned out to be the decisive factor.

Our Analysis of the War

Even after the war came and the Soviet Union made its pad with the Nazis and entered on a course of military conquest, even then Trotsky refused to revise his theory, and allowed the American movement to split in half over the question of Russia’s role in the war. The Workers Party, I think, was correct in its interpretation of this issue. But after the split, there came the other big surprise of the war: Germany’s conquest of the Continent in 38 days of Blitzkrieg. Our analysis of the war had been that it would be in all essentials a repetition of the 1914-1918 war – a long-drawn out stalemate (with the Maginot and Siegfried Lines in place of the trench fortifications of the last war) between capitalist imperialisms of the same order, and with the “democracies” having a distinct edge because of their superior wealth and resources, their control of the seas and their support from the United States. In a long war of the 1914-1918 type these advantages would have probably proved decisive – as they did last time. But while the Allies were fighting the last war over again, the Germans were fighting a different kind of war, expressing a different, non-capitalist economic and social order. Germany’s crushing superiority in war machines (planes, tanks, guns) over the richer “democracies,” the new military tactics her armies displayed, and the new and non-capitalist ways in which she is now exploiting her victory – all of these phenomena can be explained only on the basis of a radical difference in economic and social systems between Germany and France-England.

But, just as Trotsky refused to reshape his theories on the Soviet Union when events proved them incorrect, so the Workers Party refused to reshape its mistaken conception of the war and of the nature of German fascism when the Blitzkrieg exposed its falsity. (It should be understood that the Blitzkrieg did not cause the differentiation between the German and the Anglo-French-American economic systems which it is the main purpose of this article to analyze and evaluate. This differentiation began to take decisive shape in 1936. The Blitzkrieg was simply an unmistakable indication of the change that had taken place several years previously.) The most serious attempt of the Workers Party leadership to answer the problems raised by the Blitzkrieg was J. R. Johnson’s article, which took up the entire July issue of The New International, entitled: “Capitalist Society and the War.” With his customary broad sweep, Johnson marshals sixteen printed pages of arguments drawn from every epoch and every clime to prove his main point: although we didn’t expect the Blitzkrieg, there is nothing really unexpected about it. (Cannon sang the same tune during the factional struggle: “Nothing has changed. We reaffirm our old position. Don’t get excited.”) Johnson goes back to Hannibal to demonstrate that the side taking the offensive has a big military advantage. (But why was it the Nazis and not the Allies who took the offensive?) He shows conclusively that Germany is the most highly industrialized and rationalized nation in Europe and so naturally could create a greater war machine than the Allies. (But an even more convincing argument, on economic grounds, could be made and was made that the Allies had the advantage.) He shows that the German Army has for generations been the most formidable military force in Europe. So the whole business can be explained simply in terms of higher industrial development and a more effective Army, factors which considerably antedate the coming to power of Hitler.

Excellent! But the question naturally arises: if the nature of the war and of the Nazi economy was so dear that the veriest tyro, armed with Johnson’s kind of “Marxism,” could correctly judge events, then how does it happen that we did not judge the events correctly? If Johnson’s premise is accepted, then he and all of us must be accounted either fools or ignoramuses to have failed to take into account such long-familiar factors as the high level of German industry and the military prowess of the Prussianized German Army. But I don’t think Johnson is a fool, nor the rest of us. We failed to understand both the nature of this war and the character of the Nazi economy because of the forms of our thought, because we used in our analysis an instrument which is badly in need of reshaping if it is to be useful in understanding the world of 1940 – the instrument of “traditional” or “orthodox” Marxism.

What Is “Marxism”?

Here it is important to state clearly that by “traditional Marxism” I mean not the basic theories of Marx and Engels but the school of thought which has developed historically since 1917 on this basis, and especially its present-day manifestations in this country in the Trotskyist movement. Personally, I consider myself a “Marxist” in that (1) I accept what seems to me the basic structure of Marxism, namely, historical materialism, the Marxist theories of the state and of classes, the economic contradictions (and increasing un-workability) of capitalism, the necessity for revolution, the desirability of socialism, and even – as an illuminating and useful way of interpreting history, not as a universal scientific law – the dialectic; and (2) I know no more realistic and fruitful approach to history than the Marxian. It is true that the bureaucratic collective regimes in Russia and Germany cannot be explained in the terms of Marx’s specific analysis of capitalism, since, in my view, they represent a post-capitalist kind of economic organization. But a distinction must be made between Marx’s analysis of capitalism and his more general theories, applicable to all historical periods. These latter, I think, are the best tools we have to analyze the new phenomenon of bureaucratic collectivism. I am also a great admirer of Marx’s concrete and empirical approach to historical questions, his painstaking examination of data, and the scientific character of his thought. In this article I have, therefore, argued the case pretty much in Marxist terms. The problem before us is not to “defend” Marxism by trying to show that basic changes are not occurring in the world today, but rather to recognize these changes and to use Marxism as an instrument to cope with them.

Marxism I conceive to be a scientific discipline, a method of interpreting data and an instrument for bringing about political change. As such an instrument, its value is not in itself (as is the case with a religious doctrine, for example) but rather in its efficiency in achieving certain ends. Change and modification from time to time are therefore normal procedures. The dominant tendency in post-war Marxist thought, however, seems to be rather to regard Marxism as something having value in itself, hence something to be “defended” against the onslaught of the impious and unorthodox, just as a religious person defends the doctrines of his church. (I cannot conceive of “defending” a tool.)

“Traditional Marxism” No Longer Adequate

It is this kind of “Marxism,” which has unfortunately long dominated the Trotskyist movement, that I criticize throughout this article. It is this kind of thinking we must get rid of, especially in a period like this one, when the death-crisis of capitalism is proceeding at such a headlong pace and with such convulsive and unexpected turns. In The Third International After Lenin, Trotsky memorably contrasts the relatively gradual, “organic” evolution of capitalism in the pre-1914 period with the “irregular, spasmodic curtailments and expansions of production” and the “frenzied oscillations of the political situation towards the left and towards the right” in the post-war period. (The terms in which, in 1928, Trotsky criticised Bukharin’s Draft Program can unfortunately be largely applied to Trotsky’s own analysis of the evolution of the Russian and the German economies a decade later – “abstract... supra-historical ... didactic ... scholastic.”) The conclusions which Trotsky in 1928 drew from his analysis are doubly to the point today: “The role of the subjective factor in a period of slow, organic development can remain quite a subordinate one.... But as soon as the objective prerequisites to the revolutionary overthrow of capitalism have matured, the key to the whole historical process passes into the hands of the subjective factor, that is, the party.... Without an extensive and generalized dialectical comprehension of the present epoch as an epoch of abrupt turns, a real reeducation of the young parties, a correct strategical leadership of the class struggle, a correct combination of tactics, and, above all, a sharp and bold and decisive rearming at each successive breaking point of the situation – all this is impossible.”

The pre-war social democracy, as Trotsky points out, could get along on a policy of following in the wake of the development of capitalist society; a miscalculation here or there was not fatal, since the general line of evolution was clear and the whole process proceeded so slowly as to allow time to reorient the party to meet the new conditions. Today, however, just as it is necessary for the state to intervene consciously into the economy, so too it is necessary for the revolutionary party to intervene positively into the class struggle, to estimate with scientific accuracy its precise tempo and character at the given historical moment. But this cannot be done successfully unless the theoretical weapons of the party are constantly overhauled and reshaped to meet changing conditions, or, in Trotsky’s words, unless there is “above all, a sharp and bold and decisive rearming at each successive breaking-point of the situation.”[1]

“What Is Capitalism”?

Before we can very well decide whether Germany today is a “capitalist” nation, we must first agree on a definition of “capitalism.” As it has historically developed, the capitalist system has various features, such as – political: democracy; ethical: liberalism, humanitarianism; philosophical: materialism; juridical: substitution of contract for status in social relations; economic: private property, production for profit, not for use. The feature which distinguishes it from all other historical systems of property relations, and the one which is basic in the sense that the other features can be shown to derive from it, is the last – production for profit, which means the regulation of production by the market. All of these features disappear under fascism, but it is the destruction of the capitalist market that decisively marks fascism as a new and different system.

In his introduction to the Living Thoughts of Karl Marx volume, Trotsky writes (emphasis mine throughout):

In contemporary society, man’s cardinal tie is exchange. Any product of labor that enters into the process of exchange becomes a commodity. Marx began his investigation with the commodity and deduced from that fundamental cell of capitalist society those social relations that have objectively shaped themselves on the basis of exchange, independently of man’s will. Only by pursuing this course is it possible to solve the fundamental puzzle – how in capitalist society, in which each man thinks for himself and no one thinks for all, are created the relative proportions of the various branches of economy indispensable to life.
The worker sells his labor power, the farmer takes his produce to market, the money lender or banker grants loans, the storekeeper offers an assortment of merchandise, the industrialist builds a plant, the speculator buys and sells stocks and bonds – each having his own considerations, his own private plans, his own concern about wages or profit. Nevertheless, out of this chaos of individual strivings and actions emerges a certain economic whole, which, true, is not harmonious but contradictory, yet does give society the possibility not merely to exist but even to develop. This means that, after all, chaos is not chaos at all, that in some way it is regulated automatically, if not consciously.... By accepting and rejecting commodities, the market, as the arena of exchange, decides whether they do or do not contain within themselves socially necessary labor, thereby determines the ratios of various kinds of commodities necessary for society....

This seems to me a reasonably accurate description of how capitalism works. There are two main elements: (1) production is regulated by exchange, that is, by the prospects of the individual and corporate property owners making a profit by selling their goods on the market; (2) this market regulates “not consciously” but as an impersonal, autonomous mechanism working “independent of man’s will.”[2]

In Germany today the market still exists, but it has lost its autonomy: it does not determine production, but is used merely as a means of measuring and expressing in economic terms the production which is planned and controlled by the Nazi bureaucracy. The old capitalist forms exist, but they express an entirely new content.[3] Since 1936, production in Germany has not been determined by the market but by the needs of Wehrwirtschaft: guns, tanks, shoes, steel, cement are produced in greater or lesser quantities not because there is more or less prospect of making profits on this or that commodity, but because this or that is considered more or less useful for making war. Economically, this is production for use, the use being, of course, a highly undesirable one from the social point of view.[4] Nor is this production controlled by a market mechanism working “independent of man’s will” but by a bureaucratic apparatus which plans production (as against the well-known “anarchy” of capitalist production) and which consciously and wilfully works out the best solution to the particular problem. No individual producer thinks “for himself”; on the contrary, if not one man, at least a small group of top bureaucrats, “think for all.” Trotsky speaks of each individual producer having “his own private plan,” but Dr. Ley of the Labor Front says: “There are no longer any private people. All and every one are Adolf Hitler’s soldiers, and a soldier is never a private person.”

This Is Not Capitalism

If we take Trotsky’s description of the role of the banker, the farmer, the worker, etc., under capitalism and apply it to Nazi Germany, we must conclude that, whatever Nazism is, it is not capitalism. Let us see.

The worker sells his labor power.”

The labor market no longer exists. The price at which the worker sells his labor to the employer is set by the Labor Trustee for his industry, and wages cannot be changed without the Trustee’s OK. In most basic industries the worker cannot change his job without such permission, nor can the employer either hire or fire any large number of workers without permission. By decree of June 22, 1938, the state can conscript labor “for tasks of special political importance,” and hundreds of thousands of workers were thus drafted from German industry to build the Polish and Westwall fortifications in 1939. The present widespread use of war prisoners as conscript labor is an extension of this principle. The state has become a real “employer” of German labor and – as with the emergence of the state as the real “owner” and “entrepreneur” in the sphere of production – this means that the political aspect of the relationship has become more important than its economic aspect.

The farmer takes his produce to market.”

But the price he gets there, like all prices, is determined by the Reich Price Commissar. The state rationing of foodstuffs instituted in the summer of 1939 and the slate control of foreign trade further make it possible for the state to control agricultural production. The Hereditary Homestead Law of 1933 removed some 700,000 peasant families from the class of capitalist producers and fixed them to the land as firmly and permanently as medieval serfs. The state is constantly requiring the farmers to produce more of this or less of that, and the grumblings of the bureaucracy about recalcitrant “kulaks” often has a real Soviet flavor to it.

The banker grants loans.”

But the criterion is no longer profitability but usefulness to the “interests of the community,” as defined by the bureaucracy. No loan of any size may be granted, regardless of how “sound” economically it may be, unless it furthers the general war effort. The German banking system, furthermore, has been directly subordinated to the state. In 1917, the Reichsbank, fortress of German finance capital under the Weimar Republic and in the early years of Nazism, was “placed under Chancellor Hitler’s direct authority as an organ of the German government.” To quote Reimann’s The Vampire Economy: “The totalitarian state reverses the former relationship between the state and the banks. Previously, their political influence increased when the state needed financial help. Now the opposite holds true. The more urgent the financial demands of the state become, the stricter measures are taken by the state in order to compel these institutions to invest their funds as the state may wish.”

The storekeeper offers an assortment of merchandise.”

At prices set by the Reich Price Commissar, without regard to their profitability. When the demand for industrial labor of the Second Four Year Plan outran the supply, the bureaucracy even deliberately used its control of retail prices to drive out of business and into industrial jobs many shopkeepers. Furthermore, since a main aim of Nazi economics is to curtail spending on consumers’ goods in favor of spending on munitions, the “assortment of merchandise” the storekeeper offers has been steadily reduced by state action at the source of supply and by state rationing. The shopkeeper is reduced to a cog in the machinery of state distribution.

The industrialist builds a plant.”

That is, he builds it if he is able to get a permit from the state to do so. It he cannot, he is unable either to build a new plant or to repair his old one. The permit is granted or not granted, depending on the view the state official concerned takes as to (1) how much the proposed plant is necessary for war purposes; (2) whether the materials and labor needed could be better used elsewhere. Profits are not relevant. Thus although many industries have made large profits and have accumulated liquid cash reserves, they are unable to spend their money on much-needed new plants, with the result that many sectors of German industry (those considered least essential to the war effort by the bureaucracy) are nearing a state of physical collapse. Contrariwise, if the state decides that certain new plants should be built – for exploiting iron ore of such low grade as not to be profitable, or for making expensive artificial rubber or oil – then, whether he sees profit or ruin as the result, “the industrialist builds a plan.” Much of the recent ersatz, industrial plant was built up by such forced investment of private profits.

The speculator buys and sells stocks and bonds.”

The continued existence of the Berlin Boerse seems to give a peculiarly intense personal pleasure to orthodox Marxists. For how can a stock exchange exist in a non-capitalist society? Like all other markets in Germany, the Boerse has lost its autonomy. Its fluctuations can be and are controlled by the state, which controls all the economic factors which influence the Boerse. It is also controlled more directly: the new capital market is reserved almost wholly for the sale of government securities, with a few war goods producers being allowed from time to time to issue new securities. In so far as it has any important function today, the Boerse is a medium for extracting funds from the bourgeoisie for the state’s purposes. For the rest, it is a vestigial organ of no utility or significance, like the vermiform appendix. How could it be otherwise when, according to official estimates, two-thirds of the national income passes through the hands of the State and can be directed into whatever channels those in control of the state think best?

To sum up the matter: the decisions that in a capitalist economy are made by the entrepreneur on the basis of his expectation of profit, in Nazi Germany since 1936 have been made by the state bureaucracy. To carry out the Second Four Year Plan in certain key industries, for example, Goering appointed a number of Reich Commissars. The function of this official is described, in a Nazi journal, in these terms? “He deals with factory regulations and technical problems, the process of work and its regulation, employment, distribution of raw materials, the flow of investment, the control of the capital marketů coordination of capital goods production with consumer’s goods production and ... exports.”

Commodities Lose Their Mystery

It is illuminating to reread Marx’s Capital with the present German economy in mind. The two great riddles which Marx so brilliantly solved – the nature of commodity production and the process of extracting surplus value – seem to lose, in a fascist economy, most of the subtle mystery which cloaks them under capitalism.

“The wealth of those societies in which the capitalist mode of production prevails,” begins Capital, “presents itself as ‘an immense accumulation of commodities,’ its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.” What is a commodity? It is, says Marx, “a very queer thing, abounding in metaphysical subtleties and theological niceties.” The reason for this mystery is the dual nature of commodities: they are “both objects of utility and, at the same time, depositories of value,” that is, they exist as both “use values” and “exchange values.” It is the latter which gives them their capitalist character, and Marx describes how these “exchange values” are realized through the market (emphasis mine):

As a general rule, articles of utility become commodities only because they are products of the labor of private individuals or groups of individuals who carry on their work independently of each other. The sum total of the labor of all these private individuals forms the aggregate labor of society. Since the producers do not come into social contact with each other until they exchange their products, the specific social character of each producer's labor does not show itself except in the act of exchange.

When a state bureaucracy displaces the market as the regulator of production, the individual producers do not have to wait until the verdict of the market has been rendered to find out whether they have been producing socially useful goods or not, increasing or decreasing their production according to this verdict. They come into social contact with each other in the sphere of production, that is, they produce according to a conscious, prearranged plan, so that it would be technically possible – however politically inadvisable – for each individual producer to know before he begins to produce just where his own contribution fits into the general scheme.

A page of two later, Marx writes:

The categories of bourgeois economy consist of such like forms. [He has been describing the forms in which capitalist value is expressed.] They are forms of thought expressing with social validity the conditions and relations of a definite, historically determined mode of production viz., the production of commodities. The whole mystery of commodities, all the magic and necromancy that surrounds the products of labor as long as they take the form of commodities, vanishes therefore, so soon as we come to other forms of production.

Today we may see in Germany what Marx meant: “the whole mystery of commodities” has indeed vanished there. Steel is produced there for use, in guns, in tanks, in ships. Shoes are produced for use, on feet. The fact that the shortage of shoes (in itself produced by state planning) would have made the building of new shoe plants extremely profitable in the last few years meant nothing to the bureaucracy. That was a “theological nicety” they disregarded in the interests of Wehrwirtschaft. One secret of the superior effectiveness of the Nazi war economy as compared to the British or French is this directness of its approach, this freedom to plan for use without bothering about the mysteries of the market.

Labor’s Fetters Become Visible

So, too, with the other great mystery of the capitalist mode of production: the extraction of surplus value. There has unquestionably been an intensive exploitation of labor under the Nazi regime, expressing itself in the lengthened working hours and lowered living standards.[5] From this certain Marxists seem to infer, in a vague way, that Germany is still a capitalist state. But obviously all class societies have been characterized by such exploitation. The differentiating criterion must be sought elsewhere. Marx gives it: “The essential difference between the various economic forms of society, between, for instance, a society based on slave labor and one based on wage labor, lies only in the mode in which this surplus-labor is in each case extracted from the actual producer, the laborer.” Under slavery this surplus-labor (the labor over and above that needed for the maintenance and reproduction of the laborer himself) is appropriated by the ruling class in one way, under feudalism in another, and under capitalism in still another, through the appropriation of “surplus value.”

Surplus value is realized through the mechanism of the market system. The worker sells his labor power to the capitalist. Here, as in the case of the commodity, what seems at first glance a perfectly simple transaction, Marx was able to demonstrate is actually very subtle and complex. In previous forms of economy, the subject class could not possibly overlook the fact of its subjection, since its surplus-labor was directly, openly appropriated by the ruling class. But under capitalism, this relationship is concealed by the market mechanism. “He [the worker] and the owner of money meet in the market, and deal with each other as on the basis of equal rights, with this difference alone, that one is buyer, the other seller; both, therefore, equal in the eyes of the law.... He must constantly look upon his labor-power as his own property, his own commodity, and this he can only do by placing it at the disposal of the buyer temporarily, for a definite period of time. By this means alone can he avoid renouncing his rights of ownership over it.” The result is that the worker conceives of himself as the owner of a commodity (his labor-power) which he sells to the employer just as any owner sells any other commodity – free to dispose of his private property as he thinks best, to sell or not sell according to the price offered. Thus he doesn’t realize he is contributing surplus-labor to the employer, and it was of course Marx’s great task to make this clear to him. “The Roman slave was held by fetters; the wage laborer is bound to his owner by invisible threads.... His economical bondage is both brought about and concealed by the periodic sale of himself, by his change of masters, and by the oscillation in the market price of labor-power.”

In Nazi Germany, the threads have again become visible. Since wages have been frozen along with prices by state action, there are no more “oscillations in the market price of labor power.” Nor is there any “change of masters,” since the state is now his master, exercising all the functions of the employer: setting of wage rates, conditions of labor, hiring and firing. It is true that the forms of the old labor market are still for the most part kept up – though even here, as I have noted above, there is a trend towards direct state conscription of labor power – but these, as in the case of the capitalist market in general, are purely forms. A strike for higher wages or shorter hours would have to be directed against the state power which decides wages and hours; it would become at once a political act, to be dealt with directly by the Gestapo. The private “employer” is little more than a straw boss, enforcing orders handed down to him by the state bureaucracy. This change in some ways greatly intensifies the sharpness of the struggle between exploited and exploiter. But this struggle takes place in terms quite different from those which Marx described as characteristic of the capitalist system of society.

*  *  *

The objection that has probably occurred to many readers long before this point is that I am describing a kind of “pure” capitalism, in which competition and the laws of the market both have absolute validity, that this sort of system has never existed, and that the whole trend of evolution of modern capitalism has been away from it. Long before fascism, you had the rise of monopolistic finance-capital, in which these laws of the market were also violated on a large scale. Yet no one denies that monopoly capitalism is also capitalism.

In the following sections, I propose to deal with twentieth-century monopoly capitalism and to try to show that, although fascism clearly is the logical extension of this system, it differs from it basically. It has been necessary to spend a few pages on analyzing “pure” capitalism because only by first looking at “pure” capitalism is it possible to separate out its basic theory, to determine what are the essential characteristics which must be found if an economic system is to be termed “capitalistic.” This, of course, is why Marx spends most of his first volume on a dissection of an admittedly “ideal” capitalist system which never existed and never could exist. In the kind of monopoly capitalism that has grown up in the twentieth century, it is generally agreed that these essential characteristics of capitalism do exist and do determine production – though in a perverted and weakened form. What I have tried to show above is that in Germany they do not determine production; they have not been perverted or weakened, but rather displaced.



1. The attention of traditional Marxism, especially of the Trotskyist movement. has been centered almost wholly on how Hitler came to power, rather than on what happened afterwards. Thus we find that practically all the best known Marxist (or Stalino-Marxist) works on German fascism – Dutt, Guerin, Brady, Henri. Schumann – were written before the decisive “breaking-point” of 1936; that Trotsky published only one study – a brief pamphlet in 1934 – on the post-1933 development of German fascism, and that in the whole run of The New International, the theoretical organ of the movement. from 1934 to the present, there have been printed only four articles on the subject: a long editorial on the significance of the 1934 “blood purge” (which has turned out to be a complete miscalculation); a chapter reprinted from Guerin’s Fascism and Big Business; Johnson’s recent “Capitalist Society and the War”; and Robbins. “The Nature of German Economy” in the following issue. Such blindness to a major historical development suggests a radically mistaken conception of the period we live in. (The two post-Blitzkrieg articles are, of course, attempts to show that nothing has really happened. It is bad to be blind. It is worse not to realize it.)

2. Compare with Trotsky’s description of capitalism, the definition of fascist economy recently given by Otto Dietrich, Nazi press chief: “Economic society is not a mechanism regulating itself automatically.... It is an organism that is regulated and directed from one central point.”

3. Those Marxists who insist that the persistence of these forms – profits. wages, prices, etc. – proves that the German economy is still capitalist should remember that in the Soviet Union these forms also largely exist. The Soviet state trusts keep books in capitalist style and if they don’t show profits, the managers are liquidated; the workers are paid wages in rubles and spend them in shops on food, clothing, etc.; there is even a budding rentier class, living on the proceeds of investments in 6% government bonds. But most of us would agree that this is not a capitalist economy, that its contradictions are not those of capitalism but of quite another kind. (Speaking of forms note that formally Germany is still a republic: the Weimar Constitution is still formally intact, and Hitler rules merely by virtue of certain extraordinary emergency powers granted him quite legally under the Constitution.)

4. This seems a good point at which to clear up certain misconceptions as to terminology. In my Partisan Review article, and throughout this article. I use such terms as “a social war,” “production for use,” and “black socialism.” These terms are generally used in a favorable, approving sense: I use them, however, in these cases in a purely descriptive sense. Once this is understood, it should be possible to avoid much misdirected indignation.
The term “social” I use as referring not to the general interests of society, but as an adjective describing what the noun “society” means. It can be applied to this war in two senses: (1) it is a “social” war in the sense that in my view, Germany represents one social system (bureaucratic collectivism) and England another (democratic capitalism), which is not to say that either is thereby endorsed; (2) war today is a “social” enterprise in the sense that to prosecute it successfully the whole society must be organized for a general group-aim, the winning of the war.
By “production for use,” I mean this: although war materials are fold to the state by private producers, who make a profit, this is an incidental aspect of the transaction. The state does not buy more or less guns depending oh the market price of guns at the moment; the production of munitions is not regulated by their profitability. The state – and the ruling class whose interests it defends – must have munitions to survive, and they must be produced according to a plan and regardless of market considerations. (Nationalization of munitions industries, actually carried out in France under Blum and today in England, is not a serious blow at capitalism.) The objection is also raised that munitions are produced for profit in the sense that the aim of the war (in capitalist nations) is to win greater profits. But the purpose for which munitions are to be used has nothing to do with the economic forma within which they are produced. A. gunsmith who makes a gun to sell is producing for the market. A gunsmith who makes a gun for his own use is producing for use – even though he later takes his gun, goes out hunting, and makes a profit from the sale of his game.
As to “black socialism,” a formulation which seems to be especially enraging, it means simply that in Germany you have certain of the economic characteristics of socialism together with a most reactionary political and social system. Much the same situation exists in the Soviet Union, and Shachtman’s formulation of “state socialism” is the same sort of an attempt to find a term combining these discordant elements.

5. J R. Johnson. writing in the July New International [Capitalist Society and the War], absurdly overrates this factor: “We can sum up the ‘dynamism’ of fascism in a sentence. Every victory of Hitler in every field is due to his first act on coming into power – the destruction of the organized working-class movement.” In my opinion, the superiority of fascist to capitalist economy is due less to its undoubtedly more intense exploitation of human labor than to its superior ability to plan and control national production without hindrance from the archaic market system.


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