In the following I will reconstruct Sohn-Rethel’s argument that the German fascist economic system was capitalist. I will argue that his classification of it as capitalist rests on a definition of capitalism requiring solely a profit motive. 

In his book The Economy and Class Structure of German Fascism, Sohn Rethel argues while the German economic system was novel, it was capitalist. He begins to build his argument by describing the economic situation of the First World War.  During the First World War, he explains, demand for heavy industry and non-consumer goods was very high.  This led to a process of increased industrial efficiency called rationalization. Different parts of factories linked up into one giant “clockwork” such that “none of the parts could be worked on its own” (Sohn-Rethel, 28).  According to Sohn-Rethel, “the advantages of this production economy were evident during the war” where high demand corresponded to high production (Sohn-Rethel, 28). Because of rationalization, the costs of a business increasingly became fixed rather than adjustable. When the war ended, demand dropped, but since costs were fixed and not adjustable, heavy industry couldn’t decrease production in relation to the decrease in demand. This led to a crisis in the German economy where large business had to continue producing while demand and costs were low. Businesses operated “at a loss” which was “smaller than it would be if production were curtailed” (Sohn-Rethel, 26).  These heavy industrial firms realized they needed to adjust the market to conform to needs of production and realized that they could only continue while existing in a “planned, unified economy” (Sohn-Rethel, 28).  These large industrial producers turned to the Nazis to promote their interests as the Nazis promoted rearmament which could “realize their aims and free the full productive potential of their plant from the restricting shackles of the market system” (Sohn Rethel, 46). Rearmament and war would provide a demand, so these rationalized heavy industrial companies could produce at full capacity. Sohn-Rethel himself describes this as the “political victory of the dysfunctional groups of big and small businesses over the financially sound parts of the German economy” (Sohn-Rethel, 89). He goes on to call this a “viable system of dysfunctional capitalism” (Sohn-Rethel, 89). To him, the whole system of the German economy was built around preserving profits of heavy industry.  He acknowledges that this is different from private capitalism, but he continues characterizing the system as capitalist, arguing it was “trans-capitalist” (Sohn-Rethel, 30).  By this he means that it is capitalism in its end form, seeking to preserve its profits.   

Sohn-Rethel’s description of the Nazi economic system as capitalist rests on his unique definition of capitalism, since qualities traditionally seen in prior capitalistic economies were missing in Nazi Germany.  First, the fusion of business interests and government through cartelization removed competition.  Competition is traditionally seen as a defining feature of capitalism.   Additionally, elimination of the market in regulation of production presents another missing aspect of traditional capitalism.  For example, the German four-year plan of 1936-40 replaced supply and demand with state directives on production.  Market control of production through supply and demand is traditionally seen as an element of capitalism.  This shows that his characterization of it as capitalism seems to rest on a definition based solely on the profit motive, highlighting a common debate about the Nazi German Economy.  It had a profit motive, causing some to call it capitalist, but it was state planned and lacking aspects of traditional capitalism, causing some thinkers, like Burnham, to call it something else entirely. Sohn-Rethel probably designates it as capitalist because he views its differences from traditional capitalism as symptoms of capitalism trying to preserve itself.