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Fascism then. Fascism now?

When people think of fascism, they imagine Rows of goose-stepping storm troopers and puffy-chested dictators. What they don't see is the economic and political process that leads to the nightmare.

By Paul Bigioni

11/27/05 "
Toronto Star" -- -- 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 past 25 years.

Digging deeper into 20th century history, one finds the exaltation of big business at the expense of the citizen was a central characteristic of government policy in Germany and Italy in the years before those countries were 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 return to us, 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. "Yes," he replied, "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 us from fascism remain in the hands of the citizen. All the same, North America is on a fascist trajectory. We must recognize this threat for what it is, and we must change course.

Consider the words of Thurman Arnold, head of the Antitrust Division 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."

I suspect that to most readers, Arnold's words are bewildering. People today are quite certain that they know what fascism is. When I ask people to define it, they typically tell me what it was, the assumption being that it no longer exists. Most people associate fascism with concentration camps and rows of storm troopers, yet they know nothing of the political and economic processes that led to these horrible end results.

Before the rise of fascism, Germany and Italy were, on paper, liberal democracies. Fascism did not swoop down on these nations as if from another planet. To the contrary, fascist dictatorship was the result of political and economic changes 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 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 clamoured for self-regulation in business. By the mid 1920s, 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 that 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 the reduction of 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 labour by making strikes illegal. Notwithstanding the socialist terms 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 people, organized labour 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 labour 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 humour 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, Fiat and the Ansaldo shipping concern being the chief examples of this.

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 sharecropper 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 labour and management representatives. The corporazioni would resolve all labour/management disputes; 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 labourer to the status of peasant.

Mussolini, the one-time socialist, went on to abolish the inheritance tax, a measure that 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. It is particularly perilous to forget about the economic origins of fascism in our modern era of deregulation. Most Western liberal democracies are currently 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 '20s and '30s, business associations clamour 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.

U.S. census data from 1997 shows that the largest four companies in the food, motor vehicle and aerospace industries control 53.4, 87.3 and 55.6 per cent of their respective markets. Over 20 per cent of commercial banking in the U.S. is controlled by the four largest financial institutions, with the largest 50 controlling over 60 per cent. Even these numbers underestimate the scope of concentration, since they do not account for the myriad interconnections between firms by means of debt instruments and multiple directorships, which further reduce the extent of competition.

Actual levels of U.S. commercial concentration have been difficult to measure since the 1970s, when strong corporate opposition put an end to the Federal Trade Commission's efforts to collect the necessary information.

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 that 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 certain, however, that former president Bill Clinton was not worried about fascism when he repealed federal antitrust laws that had been enacted in the 1930s.

The Canadian Council of Chief Executives is similarly unworried about fascism as it lobbies the Canadian government to water down proposed amendments to our federal Competition Act. (The Competition Act, last amended in 1986, regulates monopolies, among other things, and itself represents a watering down of Canada's previous antitrust laws. It was essentially rewritten 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 that recognizes the political danger of monopolistic conditions.

Antitrust laws do not just protect the market place, they protect democracy.

It might be argued that North America's democratic political systems are so entrenched that we needn't fear fascism's return. The democracies of Italy and Germany in the 1920s were in many respects fledgling and weak. Our systems will surely react at the first whiff of dictatorship.

Or will they? This argument denies the reality that the fascist dictatorships were preceded by years of reactionary politics, the kind of politics that are playing out today. Further, it is based on the conceit that whatever our own governments do is democracy. Canada still clings to a quaint, 19th-century "first past the post" electoral system in which a minority of the popular vote can and has resulted in majority control of Parliament.

In the U.S., millions still question the legality of the sitting president's first election victory, and the power to declare war has effectively become his personal prerogative. Assuming that we have enough democracy to protect us is exactly the kind of complacency that allows our systems to be quietly and slowly perverted. On paper, Italy and Germany had constitutional, democratic systems. What they lacked was the eternal vigilance necessary to sustain them. That vigilance is also lacking today.

Our collective forgetfulness about the economic nature of fascism is also dangerous at a philosophical level. As contradictory as it may seem, fascist dictatorship was made possible because of the flawed notion of freedom that held sway during the era of laissez-faire capitalism in the early 20th century.

It was the liberals of that era who clamoured for unfettered personal and economic freedom, no matter what the cost to society. Such untrammelled freedom is not suitable to civilized humans. It is the freedom of the jungle. In other words, the strong have more of it than the weak. It is a notion of freedom that is inherently violent, because it is enjoyed at the expense of others. 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 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 mimic the posture 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 per cent 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. In the end, the rich get 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 elite. All that would be required now for a more rapid descent into fascism are a few reasons for the average person to forget he is being ripped off. Hatred of Arabs, fundamentalist Christianity or an illusory sense of perpetual war may well be taking the place of Hitler's hatred for communists and Jews.

Neo-liberal intellectuals often recognize the need for violence to protect what they regard as freedom. Thomas Friedman 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 fear of the big state here. There is only the desire to wield its power. Neo-liberalism is thus fertile soil for fascism to grow again into an outright threat to our democracy.

Having said that fascism is the result of a flawed notion of freedom, we need to re-examine what we mean when we throw around the word. We must conceive of freedom in a more enlightened way.

Indeed, it was the thinkers of the Enlightenment who imagined a balanced and civilized freedom that 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 has, like the dangers of fascism, been all but forgotten.

Paul Bigioni is a lawyer practising in Markham. This article is drawn from his work on a book about the persistence of fascism.

Copyright Toronto Star Newspapers Limited

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