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

29 Pages Posted: 8 May 2015

See all articles by Rainer Fremdling

Rainer Fremdling

University of Groningen - Faculty of Economics and Business

Reiner Stäglin

German Institute for Economic Research (DIW Berlin)

Date Written: May 2015

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.

Keywords: Nazi-Germany, Leontief-Keynes-Model, Multiplier, Employment Policy 1930s, Deficit Spending 1930s

JEL Classification: E16, N44, N14, H5

Suggested Citation

Fremdling, Rainer and Stäglin, Reiner, Work Creation and Rearmament in Germany 1933-1938: A Revisionist Assessment of NS-Economic Policy Based on Input-Output Analysis (May 2015). DIW Berlin Discussion Paper No. 1473, Available at SSRN: https://ssrn.com/abstract=2603213 or http://dx.doi.org/10.2139/ssrn.2603213

Rainer Fremdling

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands
+31503637018 (Phone)

Reiner Stäglin (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
124
Abstract Views
1,025
rank
287,460
PlumX Metrics