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

by Jonah Goldberg

  Despite the Nazis' complete control of society, many still felt that big business was getting away with murder. Himmler was particularly vexed by the slow pace of his efforts to transform the way Germans ate: "The artificial is everywhere; everywhere food is adulterated, filled with ingredients that supposedly make it last longer, or look better, or pass as 'enriched,' or whatever else the industry's admen want us to believe...[W]e are in the hands of the food companies, whose economic clout and advertising make it possible for them to prescribe what we can and cannot eat...[A]fter the war we shall take energetic steps to prevent the ruin of our people by the food industries."28 Here we can see the inexorable undertow of Third Way totalitarianism. Every problem in life must logically be the result of insufficient cooperation by institutions or individuals. If only we could turn the ratchet one more notch, then--click!--everything would fall into place and all contradictions would be eliminated.

  Obviously, the Jews bore the brunt of the Gleichschaltung. They were the "other" against whom the Nazis defined their organic society. Given Jewish economic success, the business community of necessity played a central role in the "Aryanization" of society--a convenient excuse for businesses to seize Jewish holdings and for German professionals to take Jewish jobs in academia, the arts, and science. A great many Germans simply refused to make good on their debts to Jewish creditors. Banks foreclosed on mortgages. Vultures seized Jewish businesses or offered to pay pennies on the dollar for them, knowing full well that Jews had no recourse. Or they informed on their competitors, charging that Firm X was insufficiently committed to purging the stain of Judaism from its business.

  Nothing so horrific happened in the United States, and it's unlikely that it would have, even if Hugh Johnson's darkest fantasies had been realized. But the practices of the Nazis and Johnson's NRA were more similar than different. Johnson's thugs broke down doors and threw people in jail for not participating with the Blue Eagle. Hitler's goons did likewise. "Those who are not with us are against us," Johnson roared, "and the way to show that you are a part of this great army of the New Deal is to insist on this symbol of solidarity." The New Dealers' slogan "We do our part" echoed the Nazi refrain "The common good before the private good." After all, it was Stuart Chase, not Albert Speer, who argued in his Economy of Abundance that what was required was an "industrial general staff with dictatorial powers."29

  As for popular culture, there isn't enough room to discuss the subject as fully as it deserves. The New Deal invested millions of dollars funding artists and writers who repaid this kindness by generating a vast body of artistic and literary work propping up the New Deal. But one episode in particular may shed light on the true nature of the period.

  Like many other leading Americans, the media tycoon William Randolph Hearst believed America needed a dictator. After first backing the America Firster Jack Garner, he switched to FDR (and claimed that he put Roosevelt over the top at the Democratic convention). Deciding that the best way to influence FDR--and the American people--was via Hollywood, he personally reworked a script based on the book Gabriel Over the White House, which became a movie of the same name starring Walter Huston as President Judd Hammond.

  The propagandistic nature of the film cannot be exaggerated. Hammond, a Hoover-like partisan hack of a president, has a car accident and is visited by the archangel Gabriel. When he recovers, he is reborn with a religious fervor to do good for America. He fires his entire cabinet--big-business lackeys all! Congress impeaches Hammond, and in response he appears before a joint session to proclaim, "We need action--immediate and effective action." After this he suspends Congress, assuming the "temporary" power to make all laws. He orders the formation of a new "Army of Construction" answerable only to him, spends billions on one New Deal-like program after another, and nationalizes the sale and manufacture of alcohol. When he meets with resistance from gangsters, presumably in league with his political enemies, he orders a military trial run by his aide-de-camp. Immediately after the trial, the gangsters are lined up against a wall behind the courthouse and executed. With that victory under his belt, Hammond goes on to bring about world peace by threatening to destroy any nation that disobeys him--or reneges on its debts to America. He dies of a heart attack at the end and is eulogized as "one of the greatest presidents who ever lived."

  One of the project's uncredited script doctors was the Democratic presidential nominee, Franklin D. Roosevelt. He took time off from the campaign to read the script and suggested several important changes that Hearst incorporated into the film. "I want to send you this line to tell you how pleased I am with the changes you made in 'Gabriel Over the White House,'" Roosevelt wrote a month into office. "I think it is an intensely interesting picture and should do much to help."30

  Ever since, Hollywood has been equally eager to help liberal causes and politicians. The movie Dave, starring Kevin Kline as a bighearted populist who is asked to impersonate a stricken (conservative) president and engineers a socially conscious coup d'etat, is merely an updating of the same premise.

  THE LIBERAL FASCIST BARGAIN

  Today we still live under the fundamentally fascistic economic system established by Wilson and FDR. We do live in an "unconscious civilization" of fascism, albeit of a friendly sort infinitely more benign than that of Hitler's Germany, Mussolini's Italy, or FDR's America. This is the system I call liberal fascism.

  Just because business thrives under capitalism doesn't mean businessmen are necessarily principled capitalists. Businessmen--at least those at the helm of very large corporations--do not like risk, and capitalism by definition requires risk. Capital must be put to work in a market where nothing is assured. But businessmen are, by nature and training, encouraged to beat back uncertainty and risk. Hence, as a group, they aren't principled capitalists but opportunists in the most literal sense.31

  Most successful businessmen would prefer not to bother with politics. For years both Wal-Mart and Microsoft boasted that they had no interest in Washington. Microsoft's chief, Bill Gates, bragged that he was "from the other Washington," and he basically had one lonely lobbyist hanging around the nation's capital. Gates changed his mind when the government nearly destroyed his company. The Senate Judiciary Committee invited him to Washington, D.C., to atone for his success, and the senators, in the words of the New York Times, "took a kind of giddy delight in making the wealthiest man in America squirm in his seat."32 In response, Gates hired an army of consultants, lobbyists, and lawyers to fight off the government. In the 2000 presidential election, Wal-Mart ranked 771st in direct contributions to federal politicians. In the intervening years, unions and regulators began to drool over the enormous target the mega-retailer had become. In 2004 Wal-Mart ranked as the single largest corporate political action committee. In 2006 it launched an unprecedented "voter education" drive.

  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 Wal-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.33

  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."34 His solution to conquer the fascist beast? I
nvite 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.35 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 1980, when twenty new federal agencies were born, the number of lawyers in Washington roughly doubled to forty thousand.36 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 modern-day tobacco industry alongside the worst of civilization's evil empires." Christopher Lehmann-Haupt suggested in the New York Times 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.37

  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 e
very 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?38

  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."39 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.