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Work Creation and Rearmament in Germany 1933-1938: A Revisionist Assessment of NS-Economic Policy Based on Input-Output Analysis

Author

Listed:
  • Rainer Fremdling
  • Reiner Stäglin

Abstract

We try to measure the impact work creation programs and rearmament had on employment and production of the German economy before World War II. Theoretically based on an extended version of the conventional input-output analysis, our model or analytical framework integrates the Keynesian multiplier into Leontief´s traditional model. Empirically, we apply our recently presented input-output table of Germany for the benchmark year of 1936. Putting together the effects of both work creation proper and rearmament demonstrates that more than one million jobs were created here as early as 1933. And in 1934 and 1935, even three to four million people were employed in this manner. Several hundred thousand and later millions of jobs profited from the additional income spent on consumption. In the years from 1936 onwards, the enormous increase to five million and more for armament production alone was accompanied by additional employment and measures to restrict additional consumption. Of course one can speculate about the counterfactual scenario of whether or not such an upswing would have taken place without Hitler´s economic policy. It is true that the turning point of the business cycle had been passed in 1932, thus before Hitler had become chancellor and maybe it is also true that work creation programs and rearmament were not a necessary condition to achieve full employment as early as 1936/37. On basis of our reassessment, however, we can safely claim that they were a sufficient condition for this purpose. In more general terms, our reassessment rather supports the former view put forward, e. g. by Overy that the NS-regime introduced “a wide range of government policies designed to augment and speed up the existing recovery”. We would, however, modify his chronology, that rearmament became increasingly important from 1936 onwards: rearmament actually gathered momentum as early as 1934.

Suggested Citation

  • Rainer Fremdling & Reiner Stäglin, 2015. "Work Creation and Rearmament in Germany 1933-1938: A Revisionist Assessment of NS-Economic Policy Based on Input-Output Analysis," Discussion Papers of DIW Berlin 1473, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1473
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.502764.de/dp1473.pdf
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    References listed on IDEAS

    as
    1. Degler Stephanie & Streb Jochen, 2008. "Die verlorene Erzeugungsschlacht: Die nationalsozialistische Landwirtschaft im Systemvergleich," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 49(1), pages 161-181, August.
    2. Ritschl Albrecht, 2003. "Hat das Dritte Reich wirklich eine ordentliche Beschäftigungspolitik betrieben?," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 44(1), pages 125-140, June.
    3. Cohn, Raymond L., 1992. "Fiscal policy in Germany during the Great Depression," Explorations in Economic History, Elsevier, vol. 29(3), pages 318-342, July.
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    More about this item

    Keywords

    Nazi-Germany; Leontief-Keynes-Model; Multiplier; Employment Policy 1930s; Deficit Spending 1930s;

    JEL classification:

    • E16 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Social Accounting Matrix
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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