Napoleon's Pyramid

Like most other apparently successful dictatorships, Napoleon’s seems to have been a pyramid scheme. He floated it all on exploiting conquered territories. This meant that continual conquest was necessary to keep the books balanced. Necessarily, this meant eventual collapse.

Hitler did the same; as a new book, Hitler’s Beneficiaries (Gotz Aly) outlines, the finances of Nazi Germany were quite mad. Albert Speer states plainly in his biography that much of the regime’s early financial success was achieved simply by printing money, while preventing the sort of transparent financial reporting that would have made this apparent.

But this was a short-term solution. Hence Hitler was under a financial necessity to plunder the Jews; quite apart from any racist motive, and he needed their money to keep the government afloat. Even the famous Kristallnacht pogrom was actually a matter of an urgent need to cover two billion marks in short term debt quickly coming due. Fortunately, the Jews were small in number, clearly identifiable (so that they could be singled out without frightening the larger population), and unusually wealthy. The Knights Templar, in their day, fell to an avaricious and needy government of France in exactly the same way for exactly the same reason. So did the Jesuits, centuries later. It could have been anyone else fitting the description; it just happened to be the Jews.

But it was not enough—couldn’t be, because this was a pyramid scheme. By 1939, the Nazis were spending 36.8 billion marks a year, on weaponry and welfare, and only taking in 17 billion marks in annual revenues.

Hence, as Hitler actually said in so many words at the time, war was inevitable. Hitler needed a larger pool to exploit. He could not possibly back down, no matter what the offered compromise: he needed Czechoslovakia to plunder, and then he needed Poland, and then, when Britain did not fall, he needed the Soviet Union.

This insight explains several other things that would otherwise be puzzling. For example, when the Germans first took the Ukraine, they were hailed as liberators. They had a great opportunity to enlist the Ukraine’s manpower in their support against Russia; and the same was true of most other non-Russian areas they took. Instead, they raped the conquered lands ruthlessly, losing the support of the people and requiring large numbers of solders just to keep the areas pacified.

Why? Because they could not afford to do anything else. And by doing this, Hitler probably managed to keep Stalin and Communism in power in the Soviet Union for generations longer than would otherwise have been the case.

Again, this explains the supposed Nazi “prejudice against women” that allows feminists to claim for women the aura of a group opposed by Hitler. Hitler always resisted putting German women into the workforce to replace the German men sent off to war. Officially, this might have been because “women’s place was in the home.” But the financial truth is that women would have had to be paid, and the government had no money. It was therefore far better from their point of view to use slave labour from the occupied territories.


This seems to be the way of most, if not all, dictators. Napoleon III did it, too, if in a smaller way, by confiscating the estates of the followers of the House of Orleans, his predecessor. After that, he relied on shady financing for the reconstruction of Paris, until this scheme collapsed. When Bismark attacked, he discovered France, now short of funds, had little more than a paper army. Iraq’s Saddam, similarly, was quite overtly forced to invade Kuwait because he owed them too much money as a result of his invasion of Iran. Others, with fewer military capabilities, are limited to exploiting helpless internal “enemies,” just as Hitler did at the start: Mugabe, Amin, Mao, Pol Pot. It’s the economy, stupid.

The most surprising thing about Napoleon is that the French still remember him, despite the ravages his rule caused, despite his brutality, despite his sending hundreds of thousands of young Frenchmen to their deaths unnecessarily, despite the ultimate loss of international position and prestige, fondly. This seems to me a specific example of the French preference for illusion over reality. He put on a good party; that’s what matters, no matter how the morning after feels.

But by and large, people do seem to like this sort of thing. People seem too ready to buy cons from their government that are too good to be true. They want a man on a white horse; and they are even inclined to remember the good days fondly after they are gone, not making the connection of the beginning with the inevitable end. The willing suspension of disbelief is a powerful thing.

As for current pyramid schemes, I continue to suspect China of being one. I suspect it will all come apart some day, probably soon. The lack of transparency makes it possible to conceal too much. The current excitement about the safety of Chinese goods may be enough to do it. Not that cutting corners on safety or quality is enough to explain China’s stats—but it might cause a recession sharp enough to cause the whole house to collapse, if it is a Ponzi scheme based on continual expansion.