LIBERAL FASCISM: The Secret History of the AMERICAN LEFT from MUSSOLINI to the POLITICS OF MEANING

by Jonah Goldberg

  There’s a special irony to the example of Wal-Mart. One of the Nazis’ most salient political issues was the rise of the department store. They even promised in their 1920 party platform to take over the Wai-Marts of their day. Plank 16 reads: “We demand the creation of a healthy middle class and its conservation, immediate communalization of the great [department stores] and their being leased at low cost to small firms, the utmost consideration of all small firms in contracts with the State, county or municipality.” Once in power, the Nazis didn’t completely make good on their promise, but they did ban department stores from entering a slew of businesses—much as today’s critics would like to do with Wal-Mart. In America, too, fascist movements—such as Father Coughlin’s National Union for Social Justice—targeted department stores as the engine of community breakdown and middle-class anxiety.

  Wal-Mart provides an example, in microcosm, of how liberals use the word “fascist” to describe anything outside the control of the state. For example, the New York Daily News columnist Neil Steinberg dubbed the company “an enormous fascist beast rising to its feet and searching for new worlds to conquer.” His solution to conquer the fascist beast? Invite it into bed with government, under the sheet of regulation, of course. It’s also worth noting that both Wal-Mart and Microsoft found it necessary to protect themselves from Washington, not merely because government couldn’t resist meddling, but because their competitors couldn’t resist lobbying government to meddle.

  This is one of the underappreciated consequences of the explosion in the size of government. So long as some firms are willing to prostitute themselves to Uncle Sam, every business feels the pressure to become a whore. If Acme can convince the government to pick on Ajax, Ajax has no choice but to pressure the government not to. In effect, politicians become akin to stockbrokers, taking a commission from clients who win and lose alike. Microsoft’s competitors were eager to have the government tear it apart for their own benefit. This dynamic was rampant in Nazi Germany. Steel firms, increasingly reluctant to play the Nazis’ game, pressed for more protections of their autonomy. As a result, chemical firms leaped up as loyal Nazis and took government contracts away from the steel industry.

  Most businesses are like beehives. If government doesn’t bother them, they don’t bother government. If government meddles with business, the bees swarm Washington. Yet time and again, the liberal “remedy” for the bee problem is to smack the hive with a bigger stick. There are hundreds of medical industry lobbies, for specific diseases, specialties, and forms of treatment, each of which spends a fortune in direct and indirect lobbying and advertising. Do you know which medical profession spends almost nothing? Veterinary care. Why? Because Congress spends almost no time regulating it. Why do pharmaceutical industries spend so much money lobbying politicians and regulators? Because they are so heavily regulated that they cannot make major decisions without a by-your-leave from Washington.

  As the size and scope of government have grown, so have the numbers of businesses petitioning the government. In 1956 the Encyclopedia of Associations listed forty-nine hundred groups. Today it lists over twenty-three thousand. Keep in mind that John Commons, a titan of liberal economics, believed that the proliferating influence of trade associations rendered us a fascist system nearly seventy years ago! Of course, not all of these groups are formal lobbying organizations, but they all work with—or on—government in some way. Meanwhile, the total number of registered lobbyists in the United States has tripled since 1996, and it has doubled in the last five years alone. As of this writing there were roughly thirty-five thousand registered lobbyists in Washington. From 1970 to 19S0. when twenty new federal agencies were born, the number of lawyers in Washington roughly doubled to forty thousand. These numbers don’t come close to capturing the full scope of the situation. PR firms, law firms, advocacy groups, and think tanks have exploded across the nation’s capital to do “indirect” lobbying of the press, opinion makers. Congress, and others in order to create a more favorable “issues environment.” When one of my lobbyist friends takes me out for a beer, he calls it “third-party outreach.”

  Corporations have long had Washington offices, but the tradition used to be that they were professional backwaters, the place you sent Ted when his drinking became too much of a problem or where you let Phil diddle around until he reached retirement age. Now they are enormous and very professional operations. Between 1961 and 1982 the number of corporate offices in Washington grew tenfold. Salaries for corporate lobbyists have been rising exponentially over the last decade.

  In Nazi Germany businesses proved their loyalty to the state by being good “corporate citizens,” just as they do today. The means of demonstrating this loyalty differed significantly, and the moral content of the different agendas was categorical. Indeed, for the sake of argument let us concede that what the Nazi regime expected of “good German businesses” and what America expects of its corporate leaders differed enormously. This doesn’t change some important fundamental similarities.

  Consider, for example, the largely bipartisan and entirely well-intentioned Americans with Disabilities Act, or ADA. celebrated everywhere as a triumph of “nice” government. The law mandated that businesses take a number of measures, large and small, to accommodate customers and employees with various handicaps. Offices had to be retrofitted to be wheelchair compliant. Various public signs had to be written in Braille. Devices to aid the hearing impaired had to be made available. And so on.

  Now imagine you are the CEO of Coca-Cola. Your chief objection to this law is that it will cost you a lot of money, right? Well, not really. If you know that the CEO of Pepsi is going to have to make the same adjustments, there’s really no problem for you. All you have to do is add a penny—or really a fraction of a penny—to the cost of a can of Coke. Your customers will carry the freight, just as Pepsi’s customers will. The increase won’t cost you market share, because your price compared with your competitor’s has stayed pretty much the same. Your customers probably won’t even notice the price hike.

  Now imagine that you own a small, regional soft drink company.

  You’ve worked tirelessly toward your dream of one day going eyeball-to-eyeball with Coke or Pepsi. Proportionally speaking, making your factories and offices handicapped-friendly will cost you vastly more money, not just in terms of infrastructure, but in terms of the bureaucratic legal compliance costs (Coke and Pepsi have enormous legal departments; you don’t). Plans to expand or innovate will have to be delayed because there’s no way you can pass on the costs to your customers. Or imagine you’re the owner of an even smaller firm hoping to make a play at your regional competitors. But you have 499 employees, and for the sake of argument, the ADA fully kicks in at 500 employees. If you hire just one more, you will fall under the ADA. In other words, hiring just one thirty-thousand-dollar-a-year employee will cost you millions.

  The ADA surely has admirable intent and legitimate merits. But the very nature of such do-gooding legislation empowers large firms, entwines them with political elites, and serves as a barrier to entry for smaller firms. Indeed, the penalties and bureaucracy involved in even trying to fire someone can amount to guaranteed lifetime employment. Smaller firms can’t take the risk of being forced to provide a salary in perpetuity, while big companies understand that they’ve in effect become “too big to fail” because they are de facto arms of the state itself.

  Perhaps the best modern example of the fascist bargain at work is the collusion of government and the tobacco companies. Let us recall that in the 1990s the tobacco companies were demonized for selling “the only product which, if used properly, will kill you.” Bill Clinton and Al Gore staked vast amounts of political capital in their war against “Big Tobacco.” The entire narrative of “right-wing” corporations versus progressive reformers played itself out almost daily on the front pages of newspapers and on the nightly news. The attorney general of Texas proclaimed that “history will record the mode
rn-day tobacco industry alongside the worst of civilization’s evil empires.” Christopher Lehmann-Haupt suggested in the New York Tunes Book Review that “only slavery exceeds tobacco as a curse on American history.” Tobacco executives were “the most criminal, disgusting, sadistic, degenerate group of people on the face of the earth.” according to one widely quoted antitobacco activist.

  Out of this environment sprang forth the—unconstitutional—tobacco settlement whereby “Big Tobacco” agreed to pay $246 billion to state governments. Why would the tobacco companies agree to a settlement that cost them so much money and that forced them to take out ads disparaging their own product and pay for educational efforts to dissuade children from ever becoming their customers? The reason, quite simply, is that it was in their interests. The tobacco companies not only had their lawsuits settled; they bought government approval of a new illegal cartel. “Big Tobacco” raised prices above the costs imposed by the settlement, guaranteeing a tidy profit. Smaller companies who did not agree to the settlement are still forced to make large escrow payments. When these firms started to thrive, cutting into the market share of the big tobacco companies, state governments jumped in and ordered them to make even larger payments. “All states have an interest in reducing...sales [by non-settlement companies] in every state,” Vermont’s attorney general warned fellow state attorneys general. The government in effect enforces a system by which small businesses are crushed in order to maintain the high profits of “Big Tobacco.” Now, you might think this is all fine. But how—exactly—is this a free-market approach? How—exactly—is this unlike the corporatism of Fascist Italy, Nazi Germany, and Hugh Johnson’s NRA?

  This is the hidden history of big business from the railroads of the nineteenth century, to the meatpacking industry under Teddy Roosevelt, to the outrageous cartel of “Big Tobacco” today: supposedly right-wing corporations work hand in glove with progressive politicians and bureaucrats in both parties to exclude small businesses, limit competition, ensure market share and prices, and generally work as government by proxy. Many of JFK’s “action-intellectuals” were businessmen who believed that government should be run by post-partisan experts who could bring the efficiencies of business to government by blurring the lines between business and government. Big business rallied behind LBJ. not the objectively free-enterprise Barry Goldwater. Free marketeers often decry Richard Nixon’s wage and price controls, but what is usually forgotten is that big business cheered them. The day after Nixon announced his corporatist scheme, the president of the National Association of Manufacturers declared, “The bold move taken by the President to strengthen the American economy deserves the support and cooperation of all groups.” Jimmy Carter’s supposedly prescient efforts to tackle the energy crisis led to the creation of the Energy Department, which became—and remains—a piggy bank for corporate interests. Archer Daniels Midland has managed to reap billions from the environmental dream of “green” alternative fuels like ethanol.

  Indeed, we are all Crolyites now. It was Croly’s insight that if you aren’t going to expropriate private businesses, but instead want to use business to implement your social agenda, then you should want businesses themselves to be as big as possible. What’s easier, strapping five thousand cats to a wagon or a couple of giant oxen? Al Gore’s rhetoric about the need to “tame Big Oil” and the like is apposite. He doesn’t want to nationalize “Big Oil”; he wants to yoke it to his own agenda. Likewise, Hillary Clinton’s proposed health-care reforms, as well as most of the proposals put forward by leading Democrats (and a great many Republicans), involve the fusion of big government and big business. The economic ideas in Hillary Clinton’s It Takes a Village are breathlessly corporatist. “A number of our most powerful telecommunications and computer companies have joined forces with the government in a project to connect every classroom in America to the Internet.” she gushes. “Socially minded corporate philosophies are the avenue to future prosperity and social stability.” It doesn’t take a Rosetta stone to decipher what liberals mean by “socially minded corporate philosophies.”

  The granddaddy of all such “philosophies” is of course industrial policy, the ghost of corporatism made flesh in modern liberalism. In 1960 President Kennedy called for a “new partnership” with corporate America. In the 1970s Jimmy Carter called for “reindustrialization” under a new “social contract” to deal with the “crisis of competitiveness.” A young aide in the Carter administration named Robert Reich launched his career as a buzz-phrase generator, spewing out such impressive-sounding nuggets as “target stimulants” and “indicative planning.” Later, the “Atari Democrats” once again claimed that the “future” lay in “strategic partnerships” between the public and the private sectors.

  In the 1980s envy for corporatist “Japan Inc.” reached delirious proportions. The intellectual descendants of those who worshipped Bismarck’s Prussia and Mussolini’s Ministry of Corporations now fell under the spell of Japan’s Ministry of International Trade and Industry, which soon became the lodestar of enlightened economic policy. James Fallows led an all-star cast of liberal intellectuals—including Clyde Prestowitz, Pat Choate, Robert Kuttner, Ira Magaziner. Robert Reich, and Lester Thurow—in a quest for the holy grail of government-business “collaboration.”

  Reich was one of the pioneers of the Third Way movement. Indeed, Mickey Kaus writes that Third Way rhetoric is Reich’s “most annoying habit” and his “characteristic mode of argument.” In 1983 Reich wrote The Next American Frontier, in which he championed “an extreme form of corporatism” (Kaus’s words) where in exchange for “restructuring assistance” from the government, businesses would “agree to maintain their old work forces intact.” Workers would become de facto citizens of their companies, in a relationship eerily similar to Krupp’s General Regulations. And in an even more eerie echo of Italian Fascist corporatist thought, corporations would “largely replace geographic jurisdictions as conduits of government support for economic and human development.” Social services—health care, day care, education, and so forth—would all be provided via your employer. This was all not only good but inevitable because “business enterprises,” according to Reich, “are rapidly becoming the central mediating structures in American society, replacing geographic communities as the locus of social services and, indeed, social life.”

  Yet somehow it’s the economic right that wants corporations to have more control over our lives.

  In 1984 the former Republican strategist Kevin Phillips wrote Staying on Top: The Business Case for a National Industrial Strategy. “Businessmen,” Phillips warned, “must set aside old concepts of laissez-faire...it is time for the U.S. to begin plotting its economic future” on a new Third Way course. Amusingly, Phillips has also argued that George W. Bush’s great-grandfather S. P. Bush was a war profiteer because he served on Woodrow Wilson’s War Industries Board, the very model of the system Phillips advocates.

  In 1992 Bill Clinton and Ross Perot both tapped into the widespread craving for a “new alliance” between government and business (in 1991, 61 percent of Americans said they supported some such relationship). “Without a national economic strategy, this country has been allowed to drift,” candidate Clinton declared in a typical speech. “Meanwhile, our competitors have organized themselves around clear national goals to save, promote and enhance high-wage, high-growth jobs.” Clinton was ultimately foiled by Congress and the federal deficit in his hope to “invest” hundreds of billions of dollars in his strategic plan for industry. But his administration did try very hard to * “target” specific industries for help, to very little effect—unless you count Al Gore’s “invention” of the Internet. Hillary Clinton’s ill-fated health-care plan sought to dragoon the health-care industry into a web where it would be impossible to tell where government began and the private sector left off. Small businesses, like those poor dry cleaners and newspaper boys during the New Deal, simply had to take one for the team. When it was poi
nted out to her that small businesses would be devastated by her plan, Clinton dismissed the complaints, saying, “I can’t save every undercapitalized entrepreneur in America.”

  Democratic, and most Republican, health-care plans don’t call for expropriating the private property of doctors and pharmaceutical companies or even for the cessation of employer-provided health care. Rather, they want to use corporations for government by proxy. There’s a reason liberal economists joke that General Motors is a health-care provider that makes cars as an industrial by-product.

  GM offers an ironic confirmation of Marxist logic. According to orthodox Marxism, the capitalist system becomes fascist as its internal contradictions get the better of it. As a theory of political economy, this analysis falls apart. But at the retail level there’s an undeniable truth to it. Industries that once had a proudly free-market stance suddenly sprout arguments in favor of protectionism, “industrial policy,” and “strategic competitiveness” once they find that they can’t hack it in the market. The steel and textile industries, certain automobile companies—Chrysler in the 1980s, GM today—and vast swaths of agriculture claim that the state and business should be “partners” at precisely the moment it’s clear they can no longer compete. They quickly become captives of politicians seeking to protect jobs or donations or both. These “last-gasp capitalists” do the country a great disservice by skewing the political climate toward a modified form of national socialism and corporatism. They’re fleeing the rough-and-tumble of capitalist competition for the warm embrace of If Takes a Village economics, and Hillary Clinton calls it “progress.”