Wednesday, January 09, 2013

Did Heinrich Brüning have no other choice but austerity economics in the Great Depression?

German economic historian Knut Borchardt caused a stir in the late 1970s and 1980s when he offered a spirited defense of the austerity policies of the "Hunger Chancellor" Heinrich Brüning (1885-1970).

Brüning served as German Chancellor from March 30, 1930 to May 30, 1932, holding his office by Presidential decree rather than by normal Parliament electoral procedures. Unemployment and the human distress that came with it rose significantly during Brüning's Chancellorship, as did the votes for Hitler's NSDAP (Nazi Party) as they exploited the issue. The NSDAP's popular vote in parliamentary elections rose from 6.4 million in 1930 - already a huge increase in their support from 0.8 million in 1928 - to 13.7 million in 1932, for the first time getting more votes than the Social Democrats and Communists combined.

Heinrich Brüning (1885-1970)

Several things struck me in my first reading of Borchardt's argument. (Chapters 9-11 of his Wachstum, Krisen, Handlunsspielräume der Wirschaftspolitik. Studien zur Wirschafsgeschichte des 19. un 20. Jahrhunderts, 1982) One is that it sounded awfully like a dogmatic defense of Brüning's "Hunger Chancellor" policies. And he sounds like he basically wants to blame the whole economic problem of the Weimar Republic on greedy workers demanding too much in wages. Both of those inclined me to take a dim view of his argument.

And, like Brüning's other defenders, he also argues that the foreigners made him do, i.e., that the reparations demands of the First World War victor countries are largely to blame for the restricted scope of decision-making by Brüning's administration.

Between the greedy workers ruining the economy and the bad foreigners forcing him to do exactly what he did, what choice did poor Brüning have to pursue deflationary, pro-cyclical antilabor policies that exacerbated unemployment and gave the NSDAP (Nazi Party) their highest margin in Parliament in 1932?

Although he describes several possible alternatives, his descriptions are an odd mishmash of discussions of who advocated them, the fact that there were arguments against them, and suggestions that they weren't politically plausible anyway.

Doing "what if?" scenarios on historical events are tricky, and there is always an argument that what actually happened was the best of all feasible occurrences. But that method of looking at alternatives reduces history to a bare description of events. Which is why it is well suited to a polemical defense of whatever happened in the case being discussed.

The trickiness of it can be seen at the time of this writing in the January 1, 2013 tax bill that ended the phony "fiscal cliff crisis" in the US. Those who followed the disputes closely at this point could point to several feasible alternatives whose advocacy by key leaders might well have produced other results with other implications. But defenders of the deal do essentially what Borchardt does for Heinrich Brüning's entire record on economic policy as German Chancellor in 1930-32. They argue that the deal struck was the best of all possible worlds. Twenty years from now, it will be more of a challenge for an historian to make a case for alternatives, because what happened will be embedded in the various narratives of the whole period and the possible alternatives won't be so fresh in the minds even of those who followed the events closely at the time.

A more realistic way of looking at possible historical alternatives would be to state the alternatives clearly; look at who advocated those alternatives, who might have advocated them, and why those were either rejected or not seriously considered; and, examine the ways events might have developed if key decision-makers had taken an alternative approach.

Brüning's failures are most remembered now for their implications on the events that followed, which led to Adolf Hitler's appointment as Chancellor on January 30, 1933. Virtually everyone would agree that some alternative that would have avoided that eventuality could have produced a much better result for Germany and the world.

And the outlines of an alternative scenario to Hitler's actual selection as Chancellor are not that hard to produce. President von Hindenburg could have decided to keep Hitler out of the government. The key political figures in the decision like Kurt von Schleicher could have taken different positions. Hitler's Chancellorship wasn't a foreordained event of destiny. It was the result of concrete decisions taken by real people, people who could have decided differently. There are many other ways to approach that question, such as looking at the positions of the various political parties in the year before. And any "what if" scenario requires a certain amount of humility from the historian, a quality not always in abundant supply among academics. But there are more reasonable approaches than Borchardt's.

Borchardt was looking at a longer series of events than a discrete decision like Hitler's appointment as Chancellor. But he effectively eliminates any look at what might have happened if Brüning or other key figures had insisted on a very different course of action. If Brüning had refused to continue his austerity course and insisted to the Western Allies that the Weimar Republic would be destroyed if he did, France might have proved more accommodating than they actually were. Similarly, Borchardt seems oblivious to the fact that the NSDAP was benefiting mightily from the dire economic conditions Brüning's policies produced. If the Nazis could make an issue out of unemployment, why couldn't Brüning?

In history as it actually occurred, with Brüning's accession to the Chancellorship in 1930, the Weimar Republic degenerated into a semi-authoritarian state. And Brüning's Chancellorship represented a major step toward the Third Reich. On the other hand, Brüning was very much opposed to Hitler's participation in government, and he fled Germany when Hitler actually did take power. It's not a counter-factual to argue that he really didn't want Hitler to take over. Given that reality, it seems feasible on its face that Brüning could have decided on policies that would have combated unemployment, if only to deprive the Nazis of that issue. That didn't happen. But why it didn't happen is more complicated than Borchardt's steadfast defense of Brüning would suggest.

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