By Jens Meierhenrich

“State capitalism is the authoritarian state of the present.”

— Max Horkheimer[1]

When Max Horkheimer took the reins, in 1931, of the Institut für Sozialforschung, the critique of capitalism received an unexpected jolt. His directorship of the fêted think tank marked a turning point in the development of critical theory. For Horkheimer streamlined the nascent Frankfurt School. He saw to it that staff trained their eyes on varieties of capitalism.[2] In Germany and later at Columbia University, he cultivated an “interdisciplinary materialism.”[3] For the best part of a decade, the critique of advanced capitalism was the overarching focus of the Institute for Social Research.

Mind you, the focus on the economic transformation of the public sphere that Horkheimer cultivated in the fledgling Weimar Republic was not entirely new. Even under Carl Grünberg, Horkheimer’s predecessor, did the Institute inquire into the violence of capital. The dislocations of Germany’s working class and the future of the labor movement were on the minds of several associates. They sought to update Karl Marx’s critique of political economy—to bring it in line with recent advances in the methodology of the social sciences, notably Max Weber’s. What changed in 1931 was not the object of the Institute’s critique, only the focus of the early Frankfurt School. Horkheimer octroyed a new explanandum: “[T]he issue was no longer the critique of political economy in the sense of the accumulation process and its intricacies, but the critique of political economy – the relationship between state and economy.”[4]

The Frankfurt School never again applied its critical faculties in as concerted a manner as during Germany’s transition to totalitarianism. Never again was the scholarship of the Frankfurt School as consequential as during the few short years when some of its early members (and a handful of fellow travelers) endeavored to make sense—with varying degrees of success—of the political economy of dictatorship. For all the fierce disagreements among them, the critical theorists with whom our panel is concerned (Friedrich Pollock and Franz Neumann, Ernst Fraenkel and Otto Kirchheimer) belonged to an epistemic community of left-leaning intellectuals that collectively shed light on the economic origins of dictatorship and democracy.[5] Progressive thinkers all, they engaged in extensive auto-critique. Leaving aside the explanatory power of their respective arguments about the political economy of dictatorship, they took peer review seriously and performed it—sometimes unsparingly—on one another. They did both overtly (e.g., Neumann’s critiques in Behemoth of Pollock’s “State Capitalism” and Fraenkel’s The Dual State) but also covertly (e.g., Neumann’s letter to Horkheimer of July 23, 1941 in which he sought to nix the publication of Pollock’s aforementioned article). Capitalism in this epistemic collective was an essentially contested concept.[6]

The contours and depth of the theoretical cleavages that divided this collective of intellectual resistance are the subject of our panel. Whereas Pollock singled out the state as a conceptual variable, Neumann homed in, among three other “totalitarian bodies,” on the role of the corporation.[7] According to Pollock, the state was indispensable to explaining the transformation of capitalist economies, in Germany and elsewhere.[8] Neumann and Kirchheimer—for different but related reasons—disagreed. Neither saw value in bringing the state back in. Both disputed, one more vehemently than the other, Pollock’s claim that in the Third Reich a power motive had replaced capitalism’s profit motive. What they saw was a continuation of private capitalism by other means.

Given the changing character of capitalism in our time, a centennial assessment of contending arguments about the changing character of capitalism in their time is apposite. By revisiting the Frankfurt School’s only truly interdisciplinary debate about the constitution of politics and society in times of crisis—and perhaps the only one to leave a demonstrable mark on the real world—we stand to gain valuable insights about the promise and limits of thinking critically about capitalism, then and now.[9]

In my oral remarks, I reflect, with the 1930s and 1940s in mind, on what Katharina Pistor calls “the laws of capitalism.” To this end, I locate Ernst Fraenkel’s argument about “the German economic order” on a half-way point between Pollock’s argument from state capitalism and Neumann’s argument from totalitarian monopoly capitalism.[10] I defend, like Horkheimer, Pollock’s use of ideal type analysis. I also insist on taking the state seriously as an explanans. At the same time, I emphasize the importance of exploring empirically—not just abstractly—the extent to which the Nazi dictatorship was seeing like a state. For Neumann and Kirchheimer were right: fundamental institutions of capitalism survived, if not entirely unscathed, Germany’s transition to totalitarianism. Pace Pollock, the reach of the state in the Third Reich was considerable—but it was not total.

What Neumann had in common with Pollock, unfortunately, was a disregard for the law of the Third Reich. By writing law out of existence as a structural parameter to choice, Neumann, especially in Behemoth, obscured not only the legal origins of the Third Reich; he obscured the economic origins of that dictatorship as well. By contrast, I find that the Nazi state was routinely able “to influence the behavior of capitalists and enterprisers.”[11] In fact, the political economy of dictatorship has always been governed by hierarchies andmarkets.[12]

To watch the seminar and read other essays from Coöperism 8/13 on “the Frankfurt School Critique of State Capitalism and National Socialism,” please continue here.

Notes

Jens Meierhenrich is Professor of International Relations at the London School of Economics and the Stephen and Barbara Friedman Visiting Professor of Law at Columbia Law School. He is the author of The Remnants of the Rechtsstaat: An Ethnography of Nazi Law (Oxford, 2018).

[1] Max Horkheimer, “The Authoritarian State,” Telos, Vol. 15 ([1940] 1973), p. 3. Emphasis omitted.

[2] For a very influential—and fundamentally different—approach to studying capitalist variation, see Peter A. Hall and David Soskice, eds., Varieties of Capitalism: The Institutional Foundations of Comparative Advantage(Oxford: Oxford University Press, 2001).

[3] Seyla Benhabib, Critique, Norm, and Utopia: A Study of the Foundations of Critical Theory (New York: Columbia University Press, 1986), p. 149.

[4] Harry F. Dahms, “The Early Frankfurt School Critique of Capitalism: Critical Theory between Pollock’s ‘State Capitalism’ and the Critique of Instrumental Reason,” in Peter Koslowski, ed., The Theory of Capitalism in the German Economic Tradition: Historism, Ordo-Liberalism, Critical Theory, Solidarism (Berlin: Springer, 2000), pp. 326-327.

[5] For a much later effort, Daron Acemoglu and James A. Robinson, Economic Origins of Dictatorship and Democracy (Cambridge: Cambridge University Press, 2005).

[6] W. B. Gallie, “Essentially Contested Concepts,” Proceedings of the Aristotelian Society, Vol. 56 (1955), pp. 167-198.

[7] Franz L. Neumann, Behemoth: The Structure and Practice of National Socialism (Toronto: Oxford University Press, 1942), p. 469.

[8] Frederick Pollock, “State Capitalism: Its Possibilities and Limitations,” Zeitschrift für Sozialforschung, Vol. 9 (1941), pp. 200-225.

[9] On the real-world effects of Neumann’s argument from “totalitarian monopoly capitalism” and the concept of lawlessness to which it is tethered, see Jens Meierhenrich, The Remnants of the Rechtsstaat: An Ethnography of Nazi Law (Oxford: Oxford University Press, 2018), pp. 50-52. On the salience of Neumann’s ideas at the U.S. Office of Strategic Services, see Barry M. Katz, Foreign Intelligence: Research and Analysis in the Office of Strategic Services, 1942-1945 (Cambridge: Harvard University Press, 1989). On the reach of Neumann’s argument at the International Military Tribunal at Nuremberg, see Doreen Lustig, Veiled Power: International Law and the Private Corporation, 1886-1981 (Oxford: Oxford University Press, 2020), esp. pp. 77-82, 91-92.

[10] Ernst Fraenkel, The Dual State: A Contribution to the Theory of Dictatorship, with an Introduction by Jens Meierhenrich (Oxford: Oxford University Press, [1941] 2017), p. 184.

[11] Fraenkel, The Dual State, p. 187.

[12] More generally, see Oliver E. Williamson, “Markets and Hierarchies: Some Elementary Considerations,” American Economic Review, Vol. 63 (1973), pp. 316-325.