Liberal Fascism: The Secret History of the American Left, from Mussolini to the Politics of Meaning

by Jonah Goldberg

  8

  Liberal Fascist Economics

  IN RECENT YEARS liberals have largely succeeded in defining the conventional wisdom when it comes to economics. "Corporations are too powerful." They have a "stranglehold" on "the system," the entirety of which is now corrupted by the soiled touch of commerce. Every liberal publication in America subscribes to this perspective to some extent, from the Nation to the New Republic to the New York Times. The further you move to the left, the more this conviction becomes a caricature. Thus Bill Maher showed up at the Republican National Convention in 2000 dressed in a NASCAR-style tracksuit festooned with corporate logos to mock how the Republicans were stooges of Wall Street. Arianna Huffington supposedly switched from right to left due to her disgust with corporate "pigs at the trough." William Greider, Kevin Phillips, Robert Reich, Jonathan Chait, and every other would-be Charles Beard on the American left hold similar views. Corporations are inherently right-wing, we are assured, and if left unchecked, these malign and irresponsible entities will bring us perilously close to fascism. The noble fight against these sinister "corporate paymasters" is part of the eternal struggle to keep fascism--however ill defined--at bay.

  Ever since the 1930s, there has been a tendency to see big business--"industrialists," "economic royalists," or "financial ruling classes"--as the real wizards behind the fascist Oz. Today's liberals are just the latest inheritors of this tradition. On the conspiratorial left, for example, it is de rigueur to call George W. Bush and Republicans in general Nazis. The case is supposedly bolstered by the widely peddled smear that Bush's grandfather was one of the industrialists who "funded" Hitler.1 But even outside the fever swamps, the notion that liberals must keep a weather eye on big business for signs of creeping fascism is an article of faith. Robert F. Kennedy Jr. recycles this theme when he writes, "The rise of fascism across Europe in the 1930s offers many lessons on how corporate power can undermine a democracy. Mussolini complained that 'fascism should really be called corporatism.' Today, George Bush and his court are treating our country as a grab bag for the robber barons." Countless others have echoed these sentiments, arguing, in the words of Norman Mailer, that America is already a "pre-fascist" society run by corporations and their lickspittles in the Republican Party. The political scientist Theodore Lowi has said that the Republicans are "friendly fascists, a dominant effort to combine government and corporations." The Canadian novelist John Ralston Saul argues in his book The Unconscious Civilization that we live in a corporatist-fascist society but we are unwilling to see it. Corporate CEOs, Saul laments, are "the true descendants of Benito Mussolini."2

  There is much unintentional truth to this collective diagnosis, but these would-be physicians have misread both the symptoms and the disease. In the left's eternal vigilance to fend off fascism, they have in fact created it, albeit with a friendly face. Like a medieval doctor who believes that mercury will cure madness, they foster precisely the sickness they hope to remedy. Good medicine, like good economics, depends on discarding unproven mythology. Yet for nearly a century the left and liberals have been using textbooks brimming with superstition. These myths are entwined with one another in a magnificent knot of confusion. Among the strands of this knot are the palpably false notions that big business is inherently right-wing or conservative (in the American sense); that European fascism was a tool of big business; and that the way to keep business from corrupting government is for government to regulate business to within an inch of its life.

  In reality, if you define "right-wing" or "conservative" in the American sense of supporting the rule of law and the free market, then the more right-wing a business is, the less fascist it becomes. Meanwhile, in terms of economic policy, the more you move to the political center, as defined in American politics today, the closer you get to true fascism. If the far left is defined by socialism and the far right by laissez-faire, then it is the mealymouthed centrists of the Democratic Leadership Council and the Brookings Institution who are the true fascists, for it is they who subscribe to the notion of the Third Way, that quintessentially fascistic formulation that claims to be neither left nor right.3 More important, these myths are often deliberately perpetuated in order to hasten the transformation of American society into precisely the kind of fascist--or corporatist--nation liberals claim to oppose. To a certain extent we do live in a fascistic "unconscious civilization," but we've gotten here through the conscious effort of liberals who want it that way.4

  CUI BONO?

  The notion that fascism was a tool of big business is one of the most persistent and enduring myths of the past century. It has been parroted by Hollywood, countless journalists, and generations of academics (though not necessarily by historians who specialize in the subject). But as Chesterton said, fallacies do not cease to be fallacies simply because they become fashions.

  Doctrinaire Marxism-Leninism defined fascism as "the most reactionary and openly terroristic form of the dictatorship of finance capital, established by the imperialistic bourgeoisie to break the resistance of the working class and all the progressive elements of society." Trotsky, an admirer of Mussolini's, conceded that fascism was a "plebeian movement in origin" but that it was always "directed and financed by big capitalist powers."5 This interpretation was fore-ordained because by the 1920s communists were convinced that they were witnessing capitalism's long overdue collapse. Marxist prophecy held that the capitalists would fight back to protect their interests rather than face extinction in the new socialist era. When fascism succeeded in Italy, communist seers simply declared, "This is it!" At the Fourth Congress of the Communist International in 1922, less than a month after the March on Rome--long before Mussolini consolidated power--the assembled communists settled on this interpretation with little debate over the actual facts on the ground.

  That the defeated Italian Reds had already spread the rumor that their former comrade had betrayed the movement for his thirty pieces of silver only made this self-serving myth easier to swallow. Convinced that they alone were on the side of the people, the Reds responded to every political defeat by asking, "Cui bono?"--"Who benefits?" The answer had to be the ruling capitalists. "Fascism" thus became a convenient label for "desperate capitalists."

  Ever since, whenever the left has met with political defeat, it has cried, "Fascism!" and insisted the fat cats were secretly pulling the strings. Max Horkheimer, the Frankfurt School Freudian Marxist, declared that no anticapitalist theories of fascism could even be entertained. "Whoever is not prepared to talk about capitalism should also remain silent about fascism." "Central to all socialist theories of fascism," writes the historian Martin Kitchen, "is the insistence on the close relationship between fascism and industry." Yale's Henry Ashby Turner calls this an "ideological straightjacket" that constrains virtually all Marxist-influenced scholarship. "Almost without exception...these writings suffer, as do those of 'orthodox' Marxists, from over-reliance on questionable, if not fraudulent scholarship, and from egregious misrepresentation of factual information."6 In point of fact, there is zero evidence that Mussolini was the pawn of monolithic "big capitalism." Far from being uniformly supportive of fascism, big business was bitterly divided right up until Mussolini seized power. Fascist intellectuals, moreover, were openly contemptuous of capitalism and laissez-faire economics.

  This socialist mythology became even cruder in response to Nazism. Hitler's success horrified the communists, though not because the communists were delicate little flowers. Nazi tactics in the 1920s were no more barbaric than communist tactics. What terrified the Reds was the fact that the Browns were beating them at their own game. Like Macy's bad-mouthing Gimbels, the Bolsheviks and their sympathizers mounted a desperate campaign to discredit Nazism. Marxist prophecy, it turned out, also made for good propaganda. Stalin personally issued orders never to use the word "socialist" when referring to fascists--even when fascists routinely identified themselves as socialists--and later, under the doctrine of social fascism, instructed fol
lowers to dub all competing progressive and socialist ideologies "fascist." Meanwhile, the left-wing press in Germany and throughout the West became a transmission belt for one bogus rumor after another that German industrialists were bankrolling the mad corporal and his Brownshirts. The success of this propaganda effort remains the chief reason liberals continue to link capitalism and Nazism, big business and fascism.

  This is all nonsense, as we've seen. The National Socialist German Workers' Party was in every respect a grassroots populist party. Party leaders spouted all sorts of socialist prattle about seizing the wealth of the rich. Mein Kampf is replete with attacks on "dividend-hungry businessmen" whose "greed," "ruthlessness," and "short-sighted narrow-mindedness" were ruining the country. Hitler adamantly took the side of the trade union movement over "dishonorable employers." In 1941 he was still calling big-business men "rogues" and "cold-blooded money-grubbers" who were constantly complaining about not getting their way. When the left charged that Hitler was being funded by the capitalists, he responded that these were nothing but "filthy lies." In particular, German leftists claimed that the capitalist icon Hugo Stinnes was Hitler's secret patron--a charge for which there is still no evidence. Hitler exploded in rage at the suggestion. After all, he'd demonized Stinnes in speeches and articles for quite some time. Stinnes believed that economic improvement and not political revolution would solve Germany's woes, a view that Hitler considered sacrilegious.7

  It's also important to recognize that while Hitler was first among equals in the Nazi Party in the 1920s, his comrades spoke for "the movement" as well. And the rank-and-file radicals of the "old fighters" were resolutely anti-big-business populists. Upon seizing power, the radicals in the Nazi Party Labor Union threatened to put business leaders in concentration camps if they didn't increase workers' wages. That is hardly the sort of thing one would expect from a party secretly on the take from big business all along.

  According to Henry Ashby Turner's definitive scholarship, throughout the 1920s the Nazis received virtually no significant support from German--or foreign--industrialists. Some successful professionals, merchants, and small-business men did give nominal support, but that was usually driven by noneconomic concerns, such as rank anti-Semitism and populist rage. The Nazis made most of their money from membership dues and small contributions. Much of the rest came from selling the 1920s equivalent of bumper stickers and T-shirts. The Nazis hawked brown shirts and National Socialist flags. They also endorsed products such as cigarettes (despite Hitler's hatred of them) and even margarine. They charged admission to rallies, which were really youth "happenings." The foreign media also paid for interviews with Hitler. "Compared to the sustained intake of money raised by membership dues and other contributions of the Nazi rank and file," Turner explains, "the funds that reached the [party] from the side of big business assume at best a marginal significance."8

  When Hitler did raise small amounts from wealthy donors, the motivations for such support more often had to do with radical chic than with preserving the capitalist system. Edwin Bechstein and Hugo Bruckmann are often cited as wealthy supporters of Nazism. But they only met Hitler through their wives, Helene and Elsa. Both women were middle-aged, established members of Munich high society, and while they jealously competed with each other, they shared a common love for Wagnerian opera and were united by their crushes on the fiery radical who would titillate the patrons of their respective salons by hanging his holstered gun and bullwhip on the coatrack before entering and expounding on everything from Wagner to Bolshevism to the Jews. Both women were incensed when rumors circulated that Hitler's whip was a gift from the other woman. The reality was that Hitler had received bullwhips from both women and let each believe that he only carried hers. Such scenes were more reminiscent of Tom Wolfe's account of Leonard Bernstein's fund-raising party for the Black Panthers than of some star chamber where the scions of international capitalism schemed to use Hitler as a sword to beat back the Red menace. Eventually, the husbands offered their wives' pet project some money, but not very much. Hitler still had to ride to many appearances in the back of an old pickup truck.

  THE FASCIST BARGAIN

  Many liberals are correct when they bemoan the collusion of government and corporations. They even have a point when they decry special deals for Halliburton or Archer Daniels Midland as proof of creeping fascism. What they misunderstand completely is that this is the system they set up. This is the system they want. This is the system they mobilize and march for.

  Debates about economics these days generally enjoy a climate of bipartisan asininity. Democrats want to "rein in" corporations, while Republicans claim to be "pro-business." The problem is that being "pro-business" is hardly the same thing as being pro-free market, while "reining in" corporations breeds precisely the climate liberals decry as fascistic.

  The fascist bargain goes something like this. The state says to the industrialist, "You may stay in business and own your factories. In the spirit of cooperation and unity, we will even guarantee you profits and a lack of serious competition. In exchange, we expect you to agree with--and help implement--our political agenda." The moral and economic content of the agenda depends on the nature of the regime. The left looked at German business's support for the Nazi war machine and leaped to the conclusion that business always supports war. They did the same with American business after World War I, arguing that because arms manufacturers benefited from the war, the armaments industry was therefore responsible for it.

  It's fine to say that incestuous relationships between corporations and governments are fascistic. The problem comes when you claim that such arrangements are inherently right-wing.9 If the collusion of big business and government is right-wing, then FDR was a right-winger. If corporatism and propagandistic militarism are fascist, then Woodrow Wilson was a fascist and so were the New Dealers. If you understand the right-wing or conservative position to be that of those who argue for free markets, competition, property rights, and the other political values inscribed in the original intent of the American founding fathers, then big business in Fascist Italy, Nazi Germany, and New Deal America was not right-wing; it was left-wing, and it was fascistic. What's more, it still is.

  Since the dawn of the Progressive Era, reformers have constructed an army of straw men, conjured a maelstrom of myths, to justify blurring the lines between business and government. According to civics textbooks, Upton Sinclair and his fellow muckrakers unleashed populist rage against the cruel excesses of the meatpacking industry, and as a result Teddy Roosevelt and his fellow progressives boldly reined in an industry run amok. The same story repeats itself for the accomplishments of other muckrakers, including the pro-Mussolini icons Ida Tarbell and Lincoln Steffens. This narrative lives on as generations of journalism students dream of exposing corporate malfeasance and prompting government-imposed "reform."

  The problem is that it's totally untrue, a fact Sinclair freely acknowledged. "The Federal inspection of meat was, historically, established at the packers' request," Sinclair wrote in 1906. "It is maintained and paid for by the people of the United States for the benefit of the packers." The historian Gabriel Kolko concurs: "The reality of the matter, of course, is that the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors." A spokesman for "Big Meat" (as we might call it today) told Congress, "We are now and have always been in favor of the extension of the inspection, also to the adoption of the sanitary regulations that will insure the very best possible conditions." The meatpacking conglomerates knew that federal inspection would become a marketing tool for their products and, eventually, a minimum standard. Small firms and butchers who'd earned the trust of consumers would be forced to endure onerous compliance costs, while large firms not only could absorb the costs more easily but would be able to claim their products were superior to uncertified meats.10

  This story plays itself out again and again during the Progressive Era. T
he infamous steel industry--heirs to the nineteenth-century robber barons--embraced government intervention on a massive scale. The familiar fairy tale is that the government stepped in to control predatory monopolies. The truth is almost exactly the opposite. The big steel firms were terrified that free competition would undermine their predatory monopolies, so they asked the government to intervene and the government happily obliged. U.S. Steel, which was the product of 138 merged steel firms, was stunned to see its profits decline in the face of stiff competition. In response, the chairman of U.S. Steel, Judge Elbert Gary, convened a meeting of leading steel companies at the Waldorf-Astoria in 1907 with the aim of forming a "gentlemen's agreement" to fix prices. Representatives of Teddy Roosevelt's Justice Department attended the meetings. Nonetheless, the agreements didn't work, as some firms couldn't be trusted not to undersell others. "Having failed in the realm of economics," Kolko observes, "the efforts of the United States Steel group were to be shifted to politics." By 1909 the steel tycoon Andrew Carnegie was writing in the New York Times in favor of "Government control" of the steel industry. In June 1911 Judge Gary told Congress, "I believe we must come to enforced publicity [socialization] and government control...even as to prices." The Democrats--still clinging to classical liberal notions--rejected the proposal as "semi-socialistic."11

  One need only look at Herbert Croly's Promise of American Life to see how fundamentally fascistic progressive economics were. Croly was contemptuous of competition. Trust-busting was a fool's errand. If a corporation got so big that it became a monopoly, Croly didn't believe it should be broken up; rather, it should be nationalized. Big business "contributed enormously to American economic efficiency," he explained. "Cooperation" was Croly's watchword: "It should be the effort of all civilized societies to substitute cooperation for competitive methods."12 As a philosophical and practical matter, Croly opposed the very conception of the neutral rule of law for business. Since all legislation was ultimately aimed at discriminating against one interest or another (a view revived by critical legal theorists more than a century later), the state should abandon the charade of neutrality and instead embrace a "national" program that put the good of the collective ahead of the individual.