IG Farben's Entrepreneurial Collaboration With Nazi Germany

Abstract

IG Farben was a German chemicals combine that was formed early in the 1920's and that later became infamous for its collaboration with Nazi Germany in the '30s and '40s. IG Farben produced synthetic fuel and rubber that enabled Nazi Germany to rearm at an aggressive pace and then fight the Second World War into 1945, despite having little access to those strategic resources from the global market. By thee end of that war, IG Farben had largely morphed into a criminal enterprise, having participated in some of the Third Reich's most atrocious crimes. In this paper, I examine the history of IG Farben and its collaboration with Nazi Germany from an economic point of view, by examining its principal decision makers as entrepreneurs. I argue that IG Farben collaborated with Nazi Germany and its bellicose ends because coordinating its synthetic-fuel technology with NSDAP's ends offered a profit opportunity that could not be rivaled on the free market. Although entrepreneurship is a sine qua non for the evolution of wealth, the cause of IG Farben's entrepreneurial collaboration with Nazi Germany demonstrates that entrepreneurship can have destructive consequences outside of a free market and therefore helps economic theory improve its empirical understanding of non-market entrepreneurship.