Architects of Annihilation by Götz Aly & Susanne Heim, trans. A G Blunden

Götz Aly and Susanne Heim were among the generation of rebellious German students of the Sixties who discerned an unbroken thread tying West Germany's economic miracle to the Third Reich. The VW Beetle, nurtured under Hitler's auspices, was only the most visible embodiment of continuity. They characterised the capitalist Federal Republic as the legacy of Hitler's state. The Nazis "inaugurated a drive for modernisation" from which West Germany was the chief benefactor. But how could rational social and economic policies have coexisted with persecution and genocide? The answer lay in the "demographic economics" that guided German policy makers in the Thirties.

Many young German economists were convinced that overpopulation, labour-intensive craft industries and inefficient small-scale agricultural production were responsible for slow growth, poverty, social unrest and political instability. This cadre gained influence after the Nazis won power, when appointed as government advisers.

According to Aly and Heim, the youthful economists Rudolf Gater and Walter Emmerich put theory into practice in Vienna in 1938 when, under the banner of "Aryanisation", hundreds of Jewish businesses were closed down or handed over to "Aryan" rivals. This was "downsizing" on a grand scale, accompanied by forced emigration or imprisonment to get rid of the now-destitute Jews.

The "experts" next offered their ideas for action in occupied Poland. Peter-Heinz Seraphim and Theodor Oberländer decreed that the rural population had to be thinned out to increase productivity. The numerous, mostly poor Jews had to be eliminated from the urban economy to make room for Poles moving up the economic ladder. Statistician Richard Korherr explained that it was necessary to "clear the decks".

Indeed, the twentysomething technocrats now staffing think-tanks in the Reich and economic outposts in the east were convinced that if they did not sort out the Jews and Poles, the Germans would be overwhelmed by dirt and disease. Intoxicated by German military and technological power, they developed a "virulent desire to destroy and exterminate".

So Fritz Arlt's unit for "population management and welfare" recommended starvation rations for the racially undesirable. When Arlt advocated "compressing the Jewish sector", he meant expropriating their property and driving them into ghettos. But transporting even minimal rations for the Jews was expensive. It was cheaper to ship the Jews to death camps because the cost was "incurred only once".

Even after the ghetto Jews started producing goods for the German army, the economists complained that they would never generate sufficient revenue to balance the books. This deficit was to be their death sentence.

When all Europe fell to the Nazis, a similar calculus was applied to the continent. The planners advised it would be necessary for 20 million Russians to starve to feed the German army and population during 1941. Once the USSR was defeated, they envisaged dumping 31-51 million Russians "in Siberia" to enable the settlement of German farmers and to bring population and production into balance.

To Aly and Heim, this racially grounded and inhuman thinking was a "modern procedure" and little different to post-1945 development economics – "leaving aside the method used". And, needless to say, these conclusions provoked controversy when their book was published in Germany.

Other historians slated them for ignoring the anti-Semitic and racist thrust of Nazi policy before the "experts" got a sniff of power. Many plans never left the drawing board and those that did were often merely used to dignify a frenzy of bigotry, greed and sadism. No economic rationale could justify tearing productive Jews from the modern French economy or shipping 1,200 Jews from Rhodes to Auschwitz just to kill them.

Aly and Heim both later qualified their assertions and granted more force and autonomy to Nazi racism. Indeed, Aly decided that the "Final Solution" had completely different origins. So it is disappointing that this translation, though welcome, appears without any recent authorial comment. It is a deeply flawed study that is perhaps now most useful for the light it sheds on the postwar career of the "fore-thinkers of extermination". Many of them enjoyed illustrious reputations in the "new" Germany.

David Cesarani, with Paul Levine, has recently published 'Bystanders to the Holocaust' (Cass)