As
an economic system, fascism is socialism with a capitalist veneer. The word
derives from fasces, the Roman
symbol of collectivism and power: a tied bundle of rods with a protruding ax.
In its day (the 1920s and 1930s), fascism was seen as the happy medium between
boom-and-bust-prone liberal capitalism, with its alleged class conflict,
wasteful competition, and profit-oriented egoism, and
revolutionary Marxism, with its violent and socially
divisive persecution of the bourgeoisie. Fascism substituted the particularity
of nationalism and racialism—“blood and soil”—for the internationalism of both
classical liberalism and Marxism.
Where socialism sought totalitarian control of a society’s
economic processes through direct state operation of the means of production,
fascism sought that control indirectly, through domination of nominally private
owners. Where socialism nationalized property explicitly, fascism did so
implicitly, by requiring owners to use their property in the “national
interest”—that is, as the autocratic authority conceived it. (Nevertheless, a
few industries were operated by the state.) Where socialism abolished all
market relations outright, fascism left the appearance of market relations
while planning all economic activities. Where socialism abolished money and
prices, fascism controlled the monetary system and set all prices and wages
politically. In doing all this, fascism denatured the marketplace. Entrepreneurship was abolished.
State ministries, rather than consumers, determined what was produced and under
what conditions.
Fascism is to be distinguished from interventionism, or the
mixed economy. Interventionism seeks to guide the market process, not eliminate
it, as fascism did. Minimum-wage and antitrust laws, though they regulate the free market, are a far cry from multiyear plans
from the Ministry of Economics.
Under fascism, the state, through official cartels, controlled all aspects of manufacturing, commerce,
finance, and agriculture. Planning boards set product lines, production levels,
prices, wages, working conditions, and the size of firms. Licensing was
ubiquitous; no economic activity could be undertaken without government
permission. Levels of consumption were dictated by the state, and “excess”
incomes had to be surrendered as taxes or “loans.” The consequent burdening of
manufacturers gave advantages to foreign firms wishing to export. But since
government policy aimed at autarky, or national self-sufficiency, protectionism was necessary: imports were barred
or strictly controlled, leaving foreign conquest as the only avenue for access
to resources unavailable domestically. Fascism was thus incompatible with peace
and the international division of labor—hallmarks of liberalism.
Fascism embodied corporatism, in which political
representation was based on trade and industry rather than on geography. In
this, fascism revealed its roots in syndicalism, a form of socialism
originating on the left. The government cartelized firms of the same industry,
with representatives of labor and management serving on myriad local, regional,
and national boards—subject always to the final authority of the dictator’s
economic plan. Corporatism was intended to avert unsettling divisions within
the nation, such as lockouts and union strikes. The price of such forced
“harmony” was the loss of the ability to bargain and move about freely.
To maintain high employment and minimize popular discontent,
fascist governments also undertook massive public-works projects financed by
steep taxes, borrowing, and fiat money creation. While many of these projects
were domestic—roads, buildings, stadiums—the largest project of all was
militarism, with huge armies and arms production.
The fascist leaders’ antagonism to communism has been misinterpreted as an
affinity for capitalism. In fact, fascists’ anticommunism
was motivated by a belief that in the collectivist milieu of
early-twentieth-century Europe, communism was its closest rival for people’s
allegiance. As with communism, under fascism, every citizen was regarded as an
employee and tenant of the totalitarian, party-dominated state. Consequently,
it was the state’s prerogative to use force, or the threat of it, to suppress
even peaceful opposition.
If a formal architect of fascism can be identified, it is
Benito Mussolini, the onetime Marxist editor who, caught up in nationalist
fervor, broke with the left as World War I approached and became Italy’s leader
in 1922. Mussolini distinguished fascism from liberal capitalism in his 1928
autobiography:
The citizen in the Fascist State is no longer a selfish
individual who has the anti-social right of rebelling against any law of the
Collectivity. The Fascist State with its corporative conception puts men and
their possibilities into productive work and interprets for them the duties
they have to fulfill. (p. 280)
Before his foray into imperialism in 1935, Mussolini was
often praised by prominent Americans and Britons, including Winston Churchill,
for his economic program.
Similarly, Adolf Hitler, whose National Socialist (Nazi)
Party adapted fascism to Germany beginning in 1933, said:
The state should retain supervision and each property owner
should consider himself appointed by the state. It is his duty not to use his
property against the interests of others among his own people. This is the
crucial matter. The Third Reich will always retain its right to control the
owners of property. (Barkai 1990, pp. 26–27)
Both nations exhibited elaborate planning schemes for their
economies in order to carry out the state’s objectives. Mussolini’s corporate
state “consider[ed] private initiative in production the most effective
instrument to protect national interests” (Basch 1937, p. 97). But the meaning
of “initiative” differed significantly from its meaning in a market economy.
Labor and management were organized into twenty-two industry and trade
“corporations,” each with Fascist Party members as senior participants. The
corporations were consolidated into a National Council of Corporations;
however, the real decisions were made by state agencies such as the Instituto
per la Ricosstruzione Industriale, which held shares in industrial,
agricultural, and real estate enterprises, and the Instituto Mobiliare, which
controlled the nation’s credit.
Hitler’s regime eliminated small corporations and made
membership in cartels mandatory.1 The Reich Economic Chamber was at the top of a complicated
bureaucracy comprising nearly two hundred organizations organized along
industry, commercial, and craft lines, as well as several national councils.
The Labor Front, an extension of the Nazi Party, directed all labor matters,
including wages and assignment of workers to particular jobs. Labor conscription was inaugurated in 1938. Two years
earlier, Hitler had imposed a four-year plan to shift the nation’s economy to a
war footing. In Europe during this era, Spain, Portugal, and Greece also
instituted fascist economies.
In the United States, beginning in 1933, the constellation
of government interventions known as the New Deal had features suggestive of
the corporate state. The National Industrial Recovery Act created code
authorities and codes of practice that governed all aspects of manufacturing
and commerce. The National Labor Relations Act made the federal government the
final arbiter in labor issues. The Agricultural Adjustment Act introduced
central planning to farming. The object was to reduce competition and output in
order to keep prices and incomes of particular groups from falling during the Great Depression.
It is a matter of controversy whether President Franklin
Roosevelt’s New Deal was directly influenced by fascist economic policies.
Mussolini praised the New Deal as “boldly . . . interventionist in the field of
economics,” and Roosevelt complimented Mussolini for his “honest purpose of
restoring Italy” and acknowledged that he kept “in fairly close touch with that
admirable Italian gentleman.” Also, Hugh Johnson, head of the National Recovery
Administration, was known to carry a copy of Raffaello Viglione’s pro-Mussolini
book, The Corporate State, with
him, presented a copy to Labor Secretary Frances Perkins, and, on retirement,
paid tribute to the Italian dictator.
About the Author
Sheldon Richman is the editor of The Freeman: Ideas on Liberty at the Foundation for Economic
Education in Irvingtonon-Hudson, N.Y.
Footnotes
“Laws decreed in October 1937 simply dissolved all
corporations with a capital under $40,000 and forbade the establishment of new
ones with a capital less than $20,000” (Shirer 1959, p. 262).
Library of Economics and Liberty
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