September 2005: The Recurrence of Fascism

Today’s corporate dominance eerily similar to pre-fascist era in Europe
September 1, 2005

Observing political and economic discourse in North America since the 1970s leads to an inescapable conclusion: the vast bulk of legislative activity favours the interests of large commercial enterprises. Big business is very well off, and successive Canadian and U.S. governments, of whatever political stripe, have made this their primary objective for at least the last 25 years.

Digging deeper into 20th century history, one finds this steadfast focus on the well-being of big business in other times and places. The exaltation of large corporations at the expense of the citizen was a central characteristic of government policy in Germany and Italy in the years before those countries were swallowed, chewed to bits, and spat out by fascism. Fascist dictatorships were borne to power in each of these countries by big business, and they served the interests of big business with remarkable ferocity.

These facts have been lost to the popular consciousness in North America. Fascism could therefore rise again, and we will not even recognize it. Indeed, Huey Long, one of America’s most brilliant and most corrupt politicians, was once asked if America would ever see fascism. His answer was, “Yes, but we will call it anti-fascism.”

By exploring the disturbing parallels between our own time and the era of overt fascism, we can avoid the same hideous mistakes. At present, we live in a constitutional democracy. The tools necessary to protect ourselves from fascism remain--at least potentially--in the hands of the citizen. All the same, North America is clearly on a fascist trajectory. We must recognize this threat for what it is, and we must change course. Current economic and political trends are already leading us down the path trod by Italy and Germany in the 1920s and ‘30s.

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.”

Arnold made his point even more clearly in a 1939 address to the American Bar Association: “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.”

Thurman Arnold’s words may not resonate with most Canadians today. They think they know what fascism is, but, 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, with no awareness of 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 that these nations underwent while they were still democracies. In both 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 fuelled and gave rise to 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 operations 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 anti-trust laws, and the proliferation of business associations was generally encouraged by government.

This was a period eerily like our own, insofar as economists and businessmen constantly clamored for self-regulation in business. By the mid-1920s, however, self-regulation had become self-imposed regimentation. By means of monopoly and cartel, the business executives 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 dutifully slashed the taxes on large corporations, while simultaneously increasing the same taxes on smaller firms. Previous decrees establishing price ceilings were repealed, substantially increasing the cost of living for the average family. Hitler’s economic policies thus hastened the destruction of Germany’s middle class.

Ironically, Hitler pandered in his speeches to the middle class, which provided some of his most enthusiastically violent supporters. That he was able to do this while at the same time undermining their way of life was a tribute to the effectiveness of Nazi propaganda.

Hitler also destroyed organized labour by making strikes illegal. Despite the pseudo-socialist rhetoric in which he appealed to the masses, Hitler’s labour 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) labour was the crowning achievement of Nazi labour relations. Along with millions of Jews and other people, trade unionists died in the concentration camps. These camps were not only the most depraved of all human brutalities, but they were also a part and parcel of Nazi economic policy. Hitler’s untermenschen, largely Jews, Poles and Russians, supplied slave labour to German industry--surely a capitalist bonanza.

In another bitter irony, the gates over many of the camps bore a sign that read: “Urbeit Macht Frei” -- “Work shall set you free.” Whether seen as black humour or propaganda, these signs exemplified the deception that lies at the heart of fascism.

The same economic reality existed in Italy between the two World Wars. In that country, too, nearly all industrial activity was owned or controlled by a few corporate giants, F.I.A.T. and the Ansaldo shipping empire 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 destitute sharecroppers 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 “corporazione,” bodies comprised of both labour and management representatives. The corporazione would resolve all labour-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 corporazione, to the extent that they were actually put in place, were tightly controlled by the employers. Together with Mussolini’s ban on strikes, these measures reduced the Italian labourer to the status of peasant.

Mussolini, the one-time socialist, went on to abolish the inheritance tax, whose elimination mainly favoured 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 U.S. Department of Justice in 1939. As of 2005, however, it is all but forgotten.

It is always dangerous to forget the lessons of history--and 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 1920s and ‘30s, business associations clamor for more deregulation and deeper tax cuts. The gradual erosion of anti-trust legislation, especially in the United States, has spurred 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 corporations 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 perversion of public policy are themselves fascistic. President Bill Clinton, however, was not worrying about fascism when he repealed the federal anti-trust laws that had been enacted in the 1930s. The Canadian Council of Chief Executives is similarly unconcerned about fascism when it pressures 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 anti-trust laws. It was essentially written by industry officials 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 anti-trust laws must be revamped and strengthened in a way which recognizes the political danger of monopolistic conditions. Anti-trust laws do not just protect the marketplace; they protect democracy.

Our collective forgetfulness about the economic nature of fascism is also dangerous at a more philosophical level. As contradictory as it may seem, fascist dictatorship was made possible because of the flawed notion of freedom which held sway during the era of laissez-faire capitalism in the early 20th century. It was the liberals of that era who demanded unfettered personal and economic freedom, no matter what the cost to society. Such untrammeled freedom is not suitable to civilized humans. It is the freedom of the jungle: the strong have more of it than the weak. It is a notion of freedom which is inherently violent, because it is enjoyed at the expense of other people’s destitution.

Such a notion of freedom legitimizes each and every increase in the wealth and power of those who are already powerful, regardless of the misery that will be suffered by others as a result. The use of the state to limit such “freedom” was denounced by the laissez-faire liberals of the early 20th century. The use of the state to protect such “freedom” was in fact a form of fascism. Just as monopoly is the ruin of the free market, fascism is the ultimate degradation of liberal capitalism.

In the post-war period, this flawed notion of freedom has been perpetuated by the neo-liberal school of thought. The neo-liberals denounce any regulation of the marketplace. In so doing, they emulate the stance of big business in the pre-fascist period. Under the sway of neo-liberalism, Thatcher, Reagan, Mulroney, and George W. Bush have decimated labour and exalted capital. (At present, only 7.8% of workers in the U.S. private sector are unionized--about the same percentage as in the early 1900s.) Neo-liberals call relentlessly for tax cuts which, in a previously progressive system, disproportionately favour the wealthy. Regarding the distribution of wealth, the neo-liberals have nothing to say. So the rich keep getting richer and the poor get poorer.

As in Weimar Germany, the function of the state is being reduced to that of a steward for the interests of the moneyed élite. All that is required now for a more rapid descent into fascism is for the majority of citizens to be kept unaware that they are being ripped off. The racist hatred of Arabs, the rise of fundamentalist Christianity, or an illusory perpetual “war on terror” may well be taking the place of Hitler’s hatred of Jews and communists.

Neo-liberal intellectuals often rationalize the need for violence to protect what they regard as freedom. Thomas Freidman of the New York Times has written enthusiastically that “the hidden hand of the market will never work without a hidden fist,” and that “McDonald’s cannot flourish without McDonnell Douglas, the designer of the U.S. Air Force F-15…” As in pre-fascist Germany and Italy, the laissez-faire businessmen call for the state to do their bidding, even as they insist that the state should stay out of the marketplace. Put plainly, neo-liberals advocate the use of the state’s military force for the sake of private gain. Their view of the state’s role in society is identical to that of the businessmen and intellectuals who supported Hitler and Mussolini. There is no real fear of the powerful state here. There is only the desire to control and direct its power. Neo-liberalism thus provides fertile soil for fascism to grow and flourish once again.

Since fascism arises from a flawed notion of freedom, it is imperative that we re-examine what we mean when we talk about “freedom.” We must conceive of freedom in a more enlightened way. Indeed, it was the thinkers of the Enlightenment who envisioned a balanced and civilized freedom which did not impinge upon the freedom of one’s neighbour. Put in the simplest terms, my right to life means that you must give up your freedom to kill me. This may seem terribly obvious to decent people. Unfortunately, in our neo-liberal era, this civilized sense of freedom, like the dangers of fascism, has been all but forgotten.

(Paul [email protected]--is a lawyer practicing in Markham, Ontario. He is a commentator on trade and political issues. This article is drawn from his work on an upcoming book about the persistence of fascism.)