From Peter Gourevitch (1986), Politics in Hard Times: Comparative Responses to International Economic Crises (Ithaca: Cornell University Press: 0801494362) http://www.amazon.com/exec/obidos/asin/0801494362/braddelong00, pp. 143-4:
As exports plummeted, so industry's ability to pay the costs of the labor alliance dropped. The assertions of the heavy industry groups now sounded more plausible... a revival of sales required lower prices, which required lower costs, which required lower wages and taxes.... [T]he [Great] Depression led immediately to sharp conflict with labor.
Labor found itself squeezed ever more tightly between its economic policy preferences and its desire to preserve a [Weimar] constitution whose political features helped guarantee labor's... power.... As defenders of labor in the market, party and union opposed the reduction of unemployment benefits, the pressure against wages, and the rollback of state expenditures.... [Yet] the Social Democrats felt compelled to support a prosystem government even when that government pursued economic policies contrary to their goals in labor markets.
Socialist leaders, particularly Rudolf Hilferding, the finance minister and leading party intellectual in matters of economic theory, allowed their economic ideas to constrain sharply Social Democratic politics. Their leaders saw no alternative between full socialization of the economy, for which they had no electoral majority, and operation of the capitalist economy by its own logic, which Hilferding understood by means of the same [deflationist] orthodoxy accepted by the [conventional] economists.... Hilferding rejected completely the deamnd stimulus ideas.... The trade-union movement had been persuaded to adopt... the WTB plan (so called for Wladimir Woytinski... Fritz Tarnow... and Fritz Baade...) which called for deficit-financed public works.... Woytinski and his colleaues were unable to overcome Hilferding's commitment to an orthodox capitalist interpretation of capitalism.
The SPD thus lost an opportunity as much political as economic... all circles of German society... were exhibiting considerable dissatisfaction with economic orthodoxy.... Although demand stimulus per se had no particular intellectual basis... the notion of government assistance was thoroughly familiar [to German industry]....
By 1932 political support for waiting for results from Bruening's [deflationist] economic orthodoxy had dissipated...