Germany's Second State

It is a commonplace assertion that a cabal of German bankers and industrialists fixed Hitler's appointment as Chancellor in January, 1933, at a time when support among the electorate for the Nazis was waning. The business figures were scared that the Communists in alliance with the Social democrats could take power: then the Social Democrats would be dealt with and a Communist revolution would be achieved. To forestall that possibility, an alliance of the Nazis with other right-of-centre groups in parliament was cobbled together, and vonPapen was installed as vice-chancellor to provide a restraint on Hitler. vonPapen was easily set aside, but the Nazis followed policies that were endorsed, broadly, by both the bankers and the industrialists who got the orders for rearmament and the construction of the motorways.

Over the last weekend, as Mrs Merkel struggled to cobble a government together after her disastrous loss of seats in the parliamentary election, a cabal of German industrial and commercial bosses put out a statement to the effect that Brexit must be prevented. It looks likely that Germany will have to go through another election, in which the anti-immigrant, eurosceptic Alternative for Germany is likely to retain [or even improve] its share of the vote. If that election is to be avoided, Mrs Merkel must find coalition partners who will agree with the agenda suggested by the business lobby. If that election becomes necessary, Mrs Merkel will be replaced and a new coalition will have to be formed - probably on the lines of past left-right 'Grand Coalitions' that will start with the business sector resolution high on their agenda.

Several other European states want the EU to cut a deal with the UK, including the central European countries that have never submitted to Mrs Merkel's instructions to accept a share of the immigrants whose admission to the continent has caused her to loose her electoral power.

Unfortunately, the shambolic British Brexit secretary, David Davis, will flatter himself that his address to a business group in Berlin last week influenced at least the timing of this exercise of the influence of German's Second [or Secret] State's muscle; which has always been powerful within and behind Germany's politics. The massive economic success of Germany since the utter devastation of the country in 1945 has been driven by the lineal descendants of the people who put Hitler into power, and that lobby remains hugely powerful. Their recent announcement included a reference to the need for flexibility on the EU's principle of free movement of people, since it is well understood that immigration was a key element in the British people's vote for Leave; as it was the key to Mrs Merkel's electoral disaster in Germany itself.

Britain voted to 'leave the European Union'. The 'Tories for National Self-Destruction' [aka the headbangers] interpret that vote as meaning that the UK must leave the political club of Brussels and the Common Market. I have always assumed that it is only rational to split those two: we must leave the antidemocratic political institutions, but remain in the economic community [whether formally, or under the guise of a new trade deal]. That now looks feasible.

The Tories spent much of last week excoriating the MPs who have argued for such a solution. They will soon be vindicated. Then the real target for contempt, those who plan the economic devastation of the United Kingdom by quitting the European Economic Area, must be exposed and defeated. 

Little and Large

There is no doubt that the USSR regarded Britain as a potent enemy during and after the Second World War. After Hitler launched his Blitzkrieg on The Soviet Union, Churchill openly said that if Hitler invaded Hell the British coalition government would make a pact with the Devil: the read-across from 'Devil' to 'Stalin' was unambiguous.

While Churchill ran the war with the support of his inner War Cabinet, the Lord President of the Privy Council - Clement Attlee, the Labour Leader - effectively ran the home affairs of the nation as Chairman of the Lord President's Committee of the Cabinet. When the war ended, Attlee became the Prime Minister, pledged to a programme of specifically democratic socialism in which he was constantly harassed by Moscow-supporting Communists who campaigned overtly and covertly, most obviously by infiltrating the trade unions which both provided funding of the national Labour Party and local support for MPs and Councillors through Trades Councils. Other significant fields of infiltration were the expanding universities and 'higher journalism': a very limited number of people wrote editorials and think-pieces in the broadsheet newspapers and in the upper-end periodical magazines. In those pre-television days the fashionable commentators also got a platform on BBC radio. Among their un-idealogical pupils and followers the 'fellow travellers' disseminated a dogma that Britain had done magnificent things in the war, but that this had been the last hurrah of an exhausted political and economic system: Britain was now finished. We should give up the Empire - let tiny cohorts of Marxist guerillas take over one colony after another, just as quickly as Moscow could train and equip them, and thereby save British soldiers from risk in confronting them. The government should reduce the defence establishment while it taxed incomes and inheritances so heavily that the aristocratic and capitalist cohorts would be squeezed out of existence in a few decades. This would leave the country to be led by a 'meritocracy' of people whose qualifications for power would be based on education and experience: assessed and monitored by the cohorts who were most heavily penetrated by the inspired left.

The political right was too powerful to be submerged. There was a strong corps of right-wing intellectuals, especially in the older universities, who could keep key posts from capture by disruptives. The military and the civil service mostly stuck to the plain meaning of their oaths of loyalty to the Crown. Religious institutions remained strong and largely uninfluenced by the left; and the most powerful trade union leaders had obtained and retained their positions by confronting assaults from the left, which left people like Ernest Bevin among the strongest and most-aware resistants to left-wing 'entryism'. This resistance did not defeat the left; it forced them to adopt Fabian tactics [named after a Roman commander who waited for the right moment to strike, despite the frustration that his approach provoked in many of his contemporaries].

The right also settled down to a long and largely unheralded strategy of defence: by a mixture of influence and 'philanthropy' conservative graduates influenced appointments in universities; magazines [most notably Time and Tide] were funded heavily by UK and US institutions to counterbalance the prevalent left tendency in 'heavy' journalism.

Meanwhile the mass of the population was presented with a policy that was essentially the Roman model: bread and circuses, paid for by exploiting the empire. As the empire shrank in area as as Britain's former preponderance in global trade shrank with it, the limits to taxing the rich were quickly exposed. Spending on investment [which had largely been paid through defence procurement] was reduced dramatically, leading to the decline of shipbuilding, aviation, computing and a massive range of other industries over four decades between the 'sixties and the 'nineties. As industry declined, the options of allowing credit inflation and 'selling the family silver' - disposing of the nationalised industries - became the preferred methods for balancing the books as the state spent vastly more than the economy earned.

This came to a head in 2007-8, but it had been inevitable since at least the mid-sixties, when the policy of handouts regardless of earning-power became evident. The major factor in making this bizarre impossibility the reality was the charade of democracy by which politicians acted out a shadowy conflict that blinded almost everyone to the economic reality. In this they were abetted by Economists, whose normative models transcended material reality. This blog has spent a lot of words on trying to present that situation in palatable doses. it has repeatedly been pointed out that a major component of the current incomprehension is the fact that the inventors of Economics progressively dropped the older and mature science of Political Economy as the fantasies supported by Economists became increasingly discordant with the truths exposed by the older science. Over the next couple of weeks I will lay out the Principles of Political Economy for the twenty-first century. People may now become willing to pay attention, as the evidence of failure of Economics and of charade-Politics becomes more blatant.