By exploring the disturbing parallels between our own time and the era of overt fascism, I am confident that we can avoid the same hideous mistakes. At present, we live in a constitutional democracy. The tools necessary to protect ourselves from fascism remain in the hands of the citizen. All the same, I believe that North America is on a fascist trajectory. We must recognize this threat for what it is, and we must change course. I propose to identify the core economic elements of fascism. In doing so, I will show that present-day political fashions are leading us down the path already trodden by Italy and Germany.
Consider the words of Thurman Arnold, head of the Anti-trust Section of the U.S. Department of Justice in 1939:
"Germany, of course, has developed within 15 years from an industrial autocracy into a dictatorship. Most people are under the impression that the power of Hitler was the result of his demagogic blandishments and appeals to the mob" Actually, Hitler holds his power through the final and inevitable development of the uncontrolled tendency to combine in restraint of trade."
"Germany presents the logical end of the process of cartelization. From 1923 to 1935 cartelization grew in Germany until finally that nation was so organized that everyone had to belong either to a squad, a regiment or a brigade in order to survive. The names given to these squads, regiments or brigades were cartels, trade associations, unions and trusts. Such a distribution system could not adjust its prices. It needed a general with quasi-military authority who could order the workers to work and the mills to produce. Hitler named himself that general. Had it not been Hitler it would have been someone else."
I suspect that to most readers, Thurman Arnold's words are bewildering. Most people today are quite certain that they know what fascism is. When I ask people to define fascism, they typically tell me what it was, the assumption being that it no longer exists. I have asked this question on numerous occasions, and the usual answer contains references to dictatorship and racism which trail off into muttering when the respondent realizes that he or she knows almost nothing about fascism's political and economic characteristics.
Before the rise of fascism, Germany and Italy were liberal democracies. Fascism did not swoop down on these nations as if from another planet. To the contrary, fascist dictatorship was the end result of political and economic processes which these nations underwent while they were still democratic. In both these countries, economic power became so utterly concentrated that the bulk of all economic activity fell under the control of a handful of men. Economic power, when sufficiently vast, becomes by its very nature political power. The political power of big business supported fascism in Italy and Germany.
Business tightened its grip on the state in both Italy and Germany by means of intricate webs of cartels and business associations. These associations exercised a very high degree of control over the businesses of their members. They frequently controlled pricing, supply and the licensing of patented technology. These associations were private, but were entirely legal. Neither Germany nor Italy had effective antitrust laws, and the proliferation of business associations was generally encouraged by government. This was an era eerily like our own, insofar as economists and businessmen constantly clamored for self-regulation in business. By the mid 1920's, however, self-regulation had become self-imposed regimentation. By means of monopoly and cartel, the businessmen had wrought for themselves a "command and control" economy which effectively replaced the free market. The business associations of Italy and Germany at this time are perhaps history's most perfect illustration of Adam Smith's famous dictum: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices".
How could the German government not be influenced by Fritz Thyssen, the man who controlled most of Germany's coal production? How could it ignore the demands of the great I.G. Farben industrial trust, controlling as it did most of that nation's chemical production? Indeed, the German nation was bent to the will of these powerful industrial interests. Hitler attended to reduction of certain taxes applicable to large businesses, while simultaneously increasing the same taxes as they related to small business. Previous decrees establishing price ceilings were repealed such that the cost of living for the average family was increased. Hitler's economic policies hastened the destruction of Germany's middle class by decimating small business. Ironically, Hitler pandered to the middle class and they provided some of his most enthusiastically violent supporters. The fact that he did this while simultaneously destroying them was a terrible achievement of Nazi propaganda.
Hitler also destroyed organized labor by making strikes illegal. Notwithstanding the socialist terms in which he appealed to the masses, Hitler's labor policy was the dream come true of the industrial cartels that supported him. Nazi law gave total control over wages and working conditions to the employer. Compulsory (slave) labor was the crowning achievement of Nazi labor relations. Along with millions of people, organized labor died in the concentration camps. The camps were not only the most depraved of all human achievements, they were a part and parcel of Nazi economic policy. Hitler's untermenschen, largely Jews, Poles and Russians, supplied slave labor to German industry. Surely this was a capitalist bonanza. In another bitter irony, the gates over many of the camps bore a sign that read "Arbeit Macht Frei" - "work shall set you free". I do not know if this was black humor or propaganda, but it is emblematic of the deception that lies at the heart of fascism.
The same economic reality existed in Italy between the two world wars. In that country, nearly all industrial activity was owned or controlled by a few corporate giants, F.I.A.T. and the Ansaldo shipping concern being the chief examples. Land ownership in Italy was also highly concentrated and jealously guarded. Vast tracts of farmland were owned by a few latifundisti. The actual farming was carried out by a landless peasantry who were locked into a role essentially the same as that of the share cropper of the U.S. deep south. As in Germany, the few owners of the nation's capital assets had immense influence over government. As a young man, Mussolini had been a strident socialist, and he, like Hitler, used socialist language to lure the people to fascism. Mussolini spoke of a "corporate" society wherein the energy of the people would not be wasted on class struggle. The entire economy was to be divided into industry specific "corporazioni", bodies composed of both labor and management representatives. The corporazioni would resolve all labor/management disputes, and if they failed to do so, the fascist state would intervene. Unfortunately, as in Germany, there laid at the heart of this plan a swindle. The corporazioni, to the extent that they were actually put in place, were controlled by the employers. Together with Mussolini's ban on strikes, these measures reduced the Italian laborer to the status of peasant.
Mussolini the one-time socialist went on to abolish the inheritance tax, a measure which favored the wealthy. He decreed a series of massive subsidies to Italy's largest industrial businesses and repeatedly ordered wage reductions. Italy's poor were forced to subsidize the wealthy. In real terms, wages and living standards for the average Italian dropped precipitously under fascism.
Even this brief historical sketch shows how fascism did the bidding of big business. The fact that Hitler called his party the "National Socialist Party" did not change the reactionary nature of his policies. The connection between the fascist dictatorships and monopoly capital was obvious to the US Department of Justice in 1939. As of 2005, however, it is all but forgotten.
It is always dangerous to forget the lessons of history. It is particularly perilous to forget about the economic origins of fascism in our modern era of deregulation. Most Western liberal democracies are currently held in the thrall of what some call market fundamentalism. Few nowadays question the flawed assumption that state intervention in the marketplace is inherently bad. As in Italy and Germany in the 20's and 30's, business associations clamor for more deregulation and deeper tax cuts. The gradual erosion of antitrust legislation, especially in the United States, has encouraged consolidation in many sectors of the economy by way of mergers and acquisitions. The North American economy has become more monopolistic than at any time in the post-WWII period. Fewer, larger competitors dominate all economic activity, and their political will is expressed with the millions of dollars they spend lobbying politicians and funding policy formulation in the many right-wing institutes which now limit public discourse to the question of how best to serve the interests of business. The consolidation of the economy, and the resulting perversion of public policy are themselves fascistic. I am quite certain, however, that President Clinton was not worrying about fascism when he repealed federal antitrust laws that had been enacted in the 1930's. The Canadian Council of Chief Executives is similarly unworried about fascism when it lobbies the Canadian government to water down our Federal Competition Act. (The Competition Act regulates monopolies, among other things, and itself represents a watering down of Canada's previous antitrust laws. It was essentially written by industry and handed to the Mulroney Government to be enacted.)
At present, monopolies are regulated on purely economic grounds to ensure the efficient allocation of goods. If we are to protect ourselves from the growing political influence of big business, then our antitrust laws must be reconceived in a way which recognizes the political danger of monopolistic conditions. Antitrust laws do not just protect the marketplace, they protect democracy.
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