Emil Lederer, The Economic Doctrine of National Socialism (1937)

Emil Lederer’s journal article examines National Socialist economic doctrine through its governing conception of the state, then tests that doctrine against spending, autarchy, and rearmament policy. His central argument is that Nazi economics subordinates economic calculation and individual welfare to national power. It does not abolish the underlying requirements of production, credit, and exchange; instead, it seeks to override them through political command, emotional mobilization, and compulsory sacrifice. The resulting tension between supposedly creative national will and persistent economic constraints organizes the article.

Lederer begins with the expectations that preceded the regime’s accession to power. Business interests and “realistic” observers had assumed that its vague program would yield to conservative administration. The distinction between banking and industrial capital seemed to leave room for preserving established economic arrangements, while dramatic but harmless measures might satisfy popular expectations. Such readings underestimated the aggressive implications of the Nazi philosophy. Unlike an organic ideal of cooperation among social groups, National Socialism requires every activity to conform to a totalitarian state whose authority derives from the asserted supremacy of the nation.

The section on “Enforced Harmony” shows how this principle becomes an institutional order. Conflicts between employers and workers, or among producers, are treated not as interests requiring negotiation but as errors to be suppressed through coordination. The labor front and occupational estates do not independently represent their members:

All of them are organs of the state, which, through them, controls every economic activity.

The distinction matters because apparently collective institutions can conceal the destruction of collective autonomy. Leadership replaces cooperation, while regulation extends through prices, wages, profits, production, and investment. Entrepreneurs must nevertheless behave as though state directives were their own initiatives. Lederer acknowledges that actual systems combine different principles, but insists that their governing orientation remains decisive:

Individuals are not goals in themselves, but means.

This formulation supplies the ethical and analytical center of his critique. The doctrine’s promise to serve individuals through the community reverses the relationship between welfare and power: individual interests become instruments for goals established above them.

Lederer next asks what can guide economic administration once autonomous economic reasoning has been rejected. Market analysis explains a price system sustained by supply, demand, and decisions made in pursuit of interests. National Socialism regards those decisions as potentially destructive and therefore subjects them to leadership. Yet the authority regulating the market cannot derive its purposes from the mechanism it rejects. Its alternative is the belief that national will can transform economic circumstances by mobilizing otherwise inaccessible psychological resources:

Propaganda and violence are the means used for this purpose. There are no limits for their application.

Lederer leaves the durability of such mobilization to social psychology rather than pretending to establish its limits here. He does identify its immediate purposes: rearmament, revision of Versailles, colonial restoration, control over German populations abroad, and territorial expansion. These aims lead to two questions: whether the doctrine recognizes economic limits to expansion, and whether Nazi policy has actually transformed the economic process.

His answer distinguishes competing tendencies within National Socialist economic thought. A “rational” tendency recognizes that armament expenditure affects prices and money like other expenditure, and that credit expansion becomes dangerous beyond certain limits. A romantic tendency treats spending for national purposes as intrinsically productive, trusting the resurgent nation to vindicate present commitments. Lederer does not reject depression spending as such; he accepts that expenditure within limits may alleviate a crisis. His objection concerns the suspension of economic scrutiny whenever national values are invoked. He interprets the second four-year plan as evidence that political aims have prevailed over the more cautious tendency.

Autarchy makes this displacement of calculation especially visible. The insistence on domestically produced food and substitute raw materials disregards comparative costs because national control is itself treated as a value. But the supposed transformation remains incomplete:

All the difficulties in the way of a complete utilization of the unused reserves, all the difficulties in the way of expansion of private enterprises, are not mastered by rebuilding the capitalistic process, but by lavishly spending money.

Private capital, labor markets, cost-covering prices, and dependence on bank credit persist. Spending reemploys idle resources, but also creates purchasing power and potential inflation. The regime restrains those consequences through wage suppression, price controls and rationing, restrictions on private investment, increased tax collection, and nominally voluntary contributions. These measures redirect resources toward government expenditure while holding down consumption; undisclosed short-term borrowing supplements them.

The armament section sharpens Lederer’s distinction between increased activity and recovery:

It has been throughout these four years a policy against recovery, because recovery would have increased prices and wages, would have made rearmament much more expensive, and would thus have kept it within limits in which it could not serve the ends of Germany's foreign policy.

Employment therefore cannot by itself establish the policy’s success in welfare terms. Military production serves prospective domination, while competing powers’ armament programs make its expected political returns uncertain. The conclusion identifies mounting debt, regulation, and lost economic liberty as the costs of this strategy. Lederer compares its compulsory sacrifice and directed investment with Soviet planning, but distinguishes their purposes and material prospects: Soviet industrialization seeks productive capacity, whereas German autarchy isolates an already developed economy from the advantages of international specialization. The article’s enduring relevance lies in this separation of economic mobilization from public welfare. Written in 1937, it leaves future outcomes open while exposing how political command can suppress the visible effects of economic constraints without abolishing them.