When people hear the word “fascism” they naturally consider its unsightly bigotry and anti-Semitism as practiced by the totalitarian routines of Mussolini and Hitler. However there was likewise a financial policy element of fascism, understood in Europe during the 1920s and ’30s as “corporatism,” that was an important component of financial totalitarianism as practiced by Mussolini and Hitler. So-called corporatism was adopted in Italy and Germany during the 1930s and was held up as a “design” by quite a few intellectuals and policy makers in the United States and Europe. A version of financial fascism remained in truth embraced in the United States in the 1930s and survives to this day. In the United States these policies were not called “fascism” but “planned capitalism.” The word fascism might no longer be politically acceptable, however its synonym “commercial policy” is as popular as ever.
The Free World Flirts With Fascism
Couple of Americans know or can remember how many Americans and Europeans saw financial fascism as the wave of the future during the 1930s. The American Ambassador to Italy, Richard Washburn Kid, was so satisfied with “corporatism” that he composed in the beginning to Mussolini’s 1928 autobiography that “it may be shrewdly forecast that no man will show dimensions of irreversible greatness equal to Mussolini … The Duce is now the best figure of this sphere and time.” Winston Churchill wrote in 1927 that “If I had been an Italian I am sure I would have been completely with you” and “don the Fascist black t-shirt.” As late as 1940, Churchill was still explaining Mussolini as “a great man.”
U.S. Congressman Sol Blossom, Chairman of your home Foreign Relations Committee, stated in 1926 that Mussolini “will be a terrific thing not only for Italy but for everybody if he prospers. It is his inspiration, his decision, his constant toil that has literally renewed Italy.”
Among the most outspoken American fascists was economist Lawrence Dennis. In his 1936 book, The Coming American Fascism, Dennis declared that defenders of “18th-century Americanism” made sure to become “the chuckling stock of their own countrymen” and that the adoption of financial fascism would intensify “nationwide spirit” and put it behind “the business of public well-being and social control.” The huge stumbling block to the advancement of financial fascism, Dennis regreted, was “liberal norms of law or constitutional guarantees of personal rights.”
Particular British intellectuals were perhaps the most smitten of anyone by fascism. George Bernard Shaw announced in 1927 that his fellow “socialists must be delighted to find at last a socialist [Mussolini] who speaks and believes as responsible rulers do.” He helped form the British Union of Fascists whose “Summary of the Business State,” according to the company’s creator, Sir Oswald Mosley, was “on the Italian Design.” While checking out England, the American author Ezra Pound stated that Mussolini was “continuing the job of Thomas Jefferson.”
Hence, it is necessary to recognize that, as a financial system, fascism was widely accepted in the 1920s and ’30s. The evil deeds of private fascists were later on condemned, however the practice of financial fascism never was. To this day, the traditionally uninformed continue to repeat the hoary motto that, in spite of all his faults, Mussolini a minimum of “made the trains operate on time,” insinuating that his interventionist industrial policies were a success.
The Italian “Corporatist” System
So-called “corporatism” as practiced by Mussolini and revered by many intellectuals and policy makers had a number of crucial elements:
The state comes before the individual. Webster’s New Collegiate Dictionary specifies fascism as “a political viewpoint, movement, or program that honors country and frequently race above the specific which stands for a centralized, autocratic government.”
This stands in plain contrast to the classical liberal concept that individuals have natural rights that pre-exist federal government; that government derives its “just powers” just through the permission of the governed; which the principal function of government is to secure the lives, liberties, and homes of its people, not to aggrandize the state.
Mussolini viewed these liberal concepts (in the European sense of the word “liberal”) as the reverse of fascism: “The Fascist conception of life,” Mussolini composed, “worries the value of the State and accepts the private just in so far as his interests coincide with the State. It is opposed to classical liberalism [which] rejected the State in the name of the person; Fascism reasserts the rights of the State as expressing the real essence of the individual.”
Mussolini thought it was abnormal for a federal government to secure specific rights: “The maxim that society exists just for the wellness and liberty of the individuals composing it does not seem to be in conformity with nature’s strategies.” “If classical liberalism spells individualism,” Mussolini continued, “Fascism spells federal government.”
The essence of fascism, for that reason, is that federal government needs to be the master, not the servant, of the people. Think of this. Does anybody in America truly believe that this is not what we have now? Are Irs agents truly our “servants”? Is required “nationwide service” for youths, which now exists in numerous states and belongs to a federally moneyed program, not a traditional example of pushing people to serve the state? Isn’t the whole concept behind the enormous guideline and regimentation of American market and society the notion that individuals should be required to behave in methods defined by a little governmental elite? When the nation’s premier health-care reformer just recently stated that heart bypass surgery on a 92-year-old male was “a waste of resources,” wasn’t that the embodiment of the fascist perfect– that the state, not individuals, should choose whose life is worthwhile, and whose is a “waste”?
The U.S. Constitution was written by individuals who believed in the classical liberal approach of specific rights and sought to safeguard those rights from governmental encroachment. But considering that the fascist/collectivist philosophy has been so influential, policy reforms over the previous half century have all however abolished a lot of these rights by merely ignoring a lot of the provisions in the Constitution that were designed to safeguard them. As legal scholar Richard Epstein has observed:” [T] he eminent domain … and parallel clauses in the Constitution render … suspect much of the heralded reforms and institutions of the twentieth century: zoning, lease control, employees’ compensation laws, transfer payments, progressive taxation.” It is very important to note that most of these reforms were at first embraced during the ’30s, when the fascist/collectivist viewpoint remained in its heyday.
Planned industrial “harmony.” Another keystone of Italian corporatism was the idea that the government’s interventions in the economy should not be carried out on an ad hoc basis, but need to be “coordinated” by some sort of main preparation board. Federal government intervention in Italy was “too diverse, varied, contrasting. There has actually been disorganic … intervention, case by case, as the need occurs,” Mussolini complained in 1935. Fascism would remedy this by directing the economy towards “certain fixed objectives” and would “introduce order in the financial field.” Corporatist preparation, according to Mussolini adviser Fausto Pitigliani, would provide federal government intervention in the Italian economy a certain “unity of goal,” as specified by the federal government organizers.
These specific beliefs were expressed by Robert Reich (currently the U.S. Secretary of Labor) and Individual retirement account Magaziner (currently the federal government’s healthcare reform “Czar”) in their book Minding America’s Business. In order to combat the “messy marketplace,” an interventionist industrial policy “needs to strive to integrate the full variety of targeted government policies– procurement, research and advancement, trade, antitrust, tax credits, and subsidies– into a coherent strategy …”
Current industrial policy interventions, Reich and Magaziner bemoaned, are “the product of fragmented and uncoordinated decisions made by [several] executive firms, the Congress, and independent regulatory firms … There is no integrated technique to use these programs to improve the … U.S. economy.”
In his 1989 book, The Silent War, Magaziner reiterated this style by advocating a coordinating group like the national Security Council to take a strategic national industrial view.”] The White House has in reality established a “National Economic Security Council.” Every other advocate of an interventionist “commercial policy” has made a similar “unity of objective” argument, as very first described by Pitigliani more than half a century back.
Government-business partnerships. A third defining quality of economic fascism is that private property and business ownership are permitted, but remain in truth managed by federal government through a business-government “collaboration.” As Ayn Rand often kept in mind, however, in such a partnership government is always the senior or dominating “partner.”
In Mussolini’s Italy, businesses were grouped by the federal government into legally recognized “distributes” such as the “National Fascist Confederation of Commerce,” the “National Fascist Confederation of Credit and Insurance,” and so on. All of these “fascist confederations” were “collaborated” by a network of government preparation companies called “corporations,” one for each industry. One big “National Council of Corporations” functioned as a national overseer of the private “corporations” and had the power to “release guidelines of an obligatory character.”
The purpose of this byzantine regulative arrangement was so that the government could “protect cooperation … in between the different categories of producers in each specific trade or branch of efficient activity.” Government-orchestrated “cooperation” was needed because “the principle of personal effort” might just work “in the service of the national interest” as specified by federal government bureaucrats.
This concept of government-mandated and -dominated “collaboration” is also at the heart of all interventionist industrial policy schemes. A successful industrial policy, compose Reich and Magaziner, would “need careful coordination in between public and economic sectors.” “Government and the private sector need to work in tandem.” “Economic success now depends to a high degree on coordination, partnership, and mindful tactical option,” directed by government.
The AFL-CIO has echoed this style, advocating a “tripartite National Reindustrialization Board– including representatives of labor, service, and government” that would supposedly “strategy” the economy. [The Washington, D.C.-based Center for National Policy has actually likewise published a report authored by business people from Lazard Freres, du Pont, Burroughs, Chrysler, Electronic Data Systems, and other corporations promoting an apparently “new” policy based on “cooperation of federal government with company and labor.” Another report, by the company “Rebuild America,” co-authored in 1986 by Robert Reich and economists Robert Solow, Lester Thurow, Laura Tyson, Paul Krugman, Pat Choate, and Lawrence Chimerine advises “more teamwork” through “public-private partnerships amongst government, organization and academia.” This report requires “national goals and targets” set by federal government organizers who will devise a “comprehensive investment method” that will just allow “efficient” investment, as defined by government, to take place.
Mercantilism and protectionism. Whenever politicians begin speaking about “cooperation” with business, it is time to hang on to your wallet. In spite of the fascist rhetoric about “national partnership” and working for the national, instead of private, interests, the truth is that mercantilist and Protectionist practices riddled the system. Italian social critic Gaetano Salvemini composed in 1936 that under corporatism, “it is the state, i.e., the taxpayer, who has become accountable to private enterprise. In Fascist Italy the state pays for the oversights of private enterprise.” As long as business was good, Salvemini composed, “profit stayed to personal effort.” But when the depression came, “the government added the loss to the taxpayer’s concern. Revenue is private and specific. Loss is public and social.”
The Italian corporative state, The Economic expert editorialized on July 27, 1935, “just amounts to the facility of a brand-new and costly bureaucracy from which those industrialists who can invest the necessary amount, can acquire almost anything they want, and implemented the worst type of monopolistic practices at the expenditure of the little fellow who is squeezed out while doing so.” Corporatism, simply put, was a massive system of corporate well-being. “Three-quarters of the Italian economic system,” Mussolini boasted in 1934, “had been supported by federal government.”
If this sounds familiar, it is since it is exactly the outcome of agricultural aids, the Export-Import bank, guaranteed loans to “chosen” organization debtors, protectionism, the Chrysler bailout, monopoly franchising, and myriad other kinds of corporate well-being spent for straight or indirectly by the American taxpayer.
Another outcome of the close “collaboration” between service and government in Italy was “a continuous interchange of workers between the … civil service and personal service.” Due to the fact that of this “revolving door” in between service and government, Mussolini had actually “created a state within the state to serve personal interests which are not constantly in consistency with the general interests of the nation.”
Mussolini’s “revolving door” swung far and wide:
Signor Caiano, one of Mussolini’s the majority of relied on advisors, was an officer in the Royal Navy before and throughout the war; when the war was over, he joined the Orlando Shipbuilding Business; in October 1922, he went into Mussolini’s cabinet, and the aids for naval construction and the merchant marine came under the control of his department. General Cavallero, at the close of the war, left the army and got in the Pirelli Rubber Company …; in 1925 he ended up being undersecretary at the Ministry of War; in 1930 he left the Ministry of War, and went into the service of the Ansaldo weaponry firm. Among the directors of the huge … business in Italy, retired generals and generals on active service ended up being very various after the development of Fascism.
Such practices are now so typical in the United States– particularly in the defense industries– that it hardly requires more comment.
From a financial viewpoint, fascism meant (and suggests) an interventionist industrial policy, mercantilism, protectionism, and an ideology that makes the individual subservient to the state. “Ask not what the State can do for you, but what you can do for the State” is an apt description of the financial viewpoint of fascism.
The whole idea behind collectivism in general and fascism in specific is to make people subservient to the state and to put power over resource allotment in the hands of a small elite. As specified eloquently by the American fascist economist Lawrence Dennis, fascism “does not accept the liberal dogmas regarding the sovereignty of the consumer or trader in the free enterprise … Least of all does it consider that market liberty, and the chance to make competitive profits, are rights of the individual.” Such decisions need to be made by a “dominant class” he identified “the elite.”
German Financial Fascism
Economic fascism in Germany followed a ‘essentially identical path. One of the intellectual dads of German fascism was Paul Lensch, who stated in his book 3 Years of World Revolution that “Socialism need to provide a conscious and figured out opposition to individualism.” The viewpoint of German fascism was revealed in the slogan, Gemeinnutz geht vor Eigennutz, which indicates “the common great comes before the private excellent.” “The Aryan is not biggest in his mental qualities,” Hitler stated in Mein Kampf, but in his noblest form he “voluntarily subordinates his own ego to the neighborhood and, if the hour demands, even sacrifices it.” The person has “not rights but only tasks.”
Equipped with this philosophy, Germany’s National Socialists pursued economic policies very similar to Italy’s: government-mandated “collaborations” between business, federal government, and unions arranged by a system of regional “financial chambers,” all supervised by a Federal Ministry of Economics.
A 25-point “Program of the Celebration” was embraced in 1925 with a number of economic policy “needs,” all prefaced by the basic declaration that “the activities of the specific should not clash with the interests of the entire … but must be for the general good.” This approach fueled a regulatory attack on the economic sector. “We require ruthless war upon all those whose activities are damaging to the common interest,” the Nazis warned. And who are these on whom “war” is to be waged? “Typical crooks,” such as “usurers,” i.e., lenders, and other “profiteers,” i. e., ordinary business people in general. Amongst the other policies the Nazis required were abolition of interest; a government-operated social security system; the capability of government to seize land without payment (wetlands regulation?); a government monopoly in education; and a general attack on private-sector entrepreneurship which was denounced as the “Jewish materialist spirit.” Once this “spirit” is gotten rid of, “The Party … is convinced that our country can achieve permanent health from within just on the concept: the typical interest before self-interest.”
Conclusions
Practically all of the particular economic policies promoted by the Italian and German fascists of the 1930s have actually likewise been adopted in the United States in some form, and continue to be adopted to this day. Sixty years ago, those who adopted these interventionist policies in Italy and Germany did so due to the fact that they wanted to destroy financial liberty, capitalism, and individualism. Only if these institutions were abolished could they wish to achieve the type of totalitarian state they had in mind.
Lots of American political leaders who have actually advocated basically total government control over financial activity have actually been more sneaky in their method. They have advocated and adopted much of the exact same policies, however they have actually always acknowledged that direct attacks on private property, free enterprise, self-government, and private liberty are not politically tasty to the majority of the American electorate. Therefore, they have enacted a great lots of tax, regulatory, and income-transfer policies that achieve completions of financial fascism, but which are sugar-coated with misleading rhetoric about their declared desire only to “conserve” industrialism.
American politicians have actually long taken their hint in this regard from Franklin D. Roosevelt, who sold his National Recovery Administration (which was eventually ruled unconstitutional) on the grounds that “government restrictions henceforth should be accepted not to hamper individualism however to protect it.” In a timeless example of Orwellian doublespeak, Roosevelt hence argued that individualism must be destroyed in order to secure it.
Now that socialism has actually collapsed and makes it through no place but in Cuba, China, Vietnam, and on American university campuses, the greatest danger to financial liberty and private freedom depends on the new economic fascism. While the previous Communist nations are trying to privatize as lots of markets as possible as quick as they can, they are still afflicted by governmental controls, leaving them with basically fascist economies: personal property and personal business are permitted, but are heavily regulated and regulated by federal government.
As most of the rest of the world has a hard time to privatize market and motivate capitalism, we in the United States are seriously debating whether or not we should adopt 1930s-era economic fascism as the organizational concept of our entire health care system, which consists of 14 percent of GNP. We are likewise pondering business-government “collaborations” in the auto, airlines, and interactions markets, to name a few, and are adopting government-managed trade policies, also in the spirit of the European corporatist plans of the 1930s.
The state and its scholastic apologists are so proficient at creating propaganda in support of such plans that Americans are mainly uninformed of the alarming hazard they posture for the future of liberty. The road to serfdom is cluttered with road signs pointing toward “the details superhighway,” “health security,” “nationwide service,” “managed trade,” and “industrial policy.”
Initially published in The Freeman, June 1994