When we were in chemistry class, we were told to be careful when mixing certain chemicals together. Most chemicals were inert and safe on their own, but when mixed with another chemical, a dangerous reaction could occur which could yield toxic or even deadly results. A similar toxic reaction can be realized in the world of economics once corporate wealth is mixed with government power.
Some History
What is commonly known today as crony-capitalism is actually a form a fascism. Although many a lay person might equate fascism with Nazism and thus, gas chambers and mass genocide, it actually is more than just a mad man’s political philosophy. Fascism is also an economic philosophy. It first rose to prominence with Benito Mussolini’s Italian version of the idea. Mussolini split from the Italian
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| Benito Mussolini 1883-1945 |
socialists in his early years because of their adherence to the neutrality doctrine as taught by Marx and Engels. He thought intervention into WWI was a better option for the beleaguered Italian economy while wrapping his claim in the glory of nationalism. Notice that interventionism and nationalism are the fundamental planks of fascism. Mussolini’s socialist past still held some sway in his thinking. The idea of merging State control with corporate wealth and industry is a key printable in both socialism and fascism. The difference being that capital and property would still remain privately owned in a fascist economy. The State would control all facets of decision making that the entrepreneur once performed. Ownership of a business would be in name only. No economic activity happened unless it contributed to the health of the nation state.
Mussolini tried to win over the national syndicalists to grow his base. Syndicalism is an economic philosophy that was intended to replace capitalism with confederations or syndicates of trade and industrial unions. Economic decision making would begin with the worker then work its way upward through a maze of state established bureaucratic offices. It first found its beginnings in Spain and France but later, when introduced in Italy, it transformed into national syndicalism which was rooted in violence, war and national glory. Using the syndicalist model, Italian fascism places all of the nation’s industries into syndicates. These syndicates would have state granted monopoly power and would be fully regulated by their established bureaucratic office. Mussolini, who thought of socialism as a failure, wanted to invent something different than Marxism or socialism. He wanted to devise a socio-economic system that emphasized national glory and heroics. He envisioned an Italian world empire as great as ancient Rome. Heavily influenced by Plato’s “The Republic”, along with Vilfredo Pareto and Nietzsche, he theorized an Italy that would be controlled by an elite warrior class. Only, according to Il Deuce, a pseudo-capitalism system, controlled by the elitist State, would be the economic vehicle to propel Italy into the position of this world empire.
Nazism, Fascism and Communism
Hitler’s Nazism, on the other hand, borrowed much from Mussolini’s fascism. Both were draped in collective nationalism and the glory of their old cultures. Italy’s Roman heritage and Germany’s Teutonic history. The divergence came when Adolf Hitler envisioned a whole new order of Aryans and a total wiping out of any old elitists with a heavy emphasis on Darwinian racism. Although Hitler claimed his was the National Socialist Party, economically it was almost identical with Italian fascism. The State granted monopoly privilege and private ownership to big business but maintained all control over every aspect of the national economy. Nazism was built upon the massive 19th century bureaucratic social state framework of Otto Von Bismarck. Once the needs of the German masses were met (welfare), Hitler began to construct a huge militarized industrial state (warfare). Totalitarian controls of both economic and civil life became a kind of new normal. Imperialism was next logical stage and Hitler began by spreading fascism to Franco’s Spain. In 1939 Germany invaded Poland and began to grow the empire, following on Mussolini’s doctrine of spazio vitale or as Hitler called it, lebensraum.
Many confuse socialism or communism with fascism because both are rooted in collectivism. However, where socialism intends to abolish the elite class, fascism purposes to cement them in permanence. Moreover, communism was revolutionary by definition, whereas fascism is counter-revolutionary by the establishment of a permanent old guard elitist class. By definition, it is a type of far right-wing conservatism which established a monopoly privilege for business interests. This is why fascism was so appealing to western big business more so than socialism. It was the Italian anti-fascist philosopher and politician Gaetano Salvemini who once said of fascism, “Profit is private and individual. Loss is public and social.” Does this sound familiar?
Fascism: An American Idea
As we can see, there are many similarities with what we experience today in the United States. Our fascist-like history, some claim, began in the Progressive Era of the late 19th and early 20th centuries. Government granted monopoly and cartel privilege was the order of business during the Theodore Roosevelt and Woodrow Wilson administrations. All manner of business was either cartelized or monopolized by government edict and safeguarded by an emerging bureaucratic leviathan state. This was much to the business and banking interest’s delight. Competition was the last thing big business and high finance wanted to experience. This merging of business and banking with government power and control stifled competition. Theodore Roosevelt would be considered as the “trust buster” by mainstream historians. What they fail to identify is the ever influencing hand of J.P. Morgan in the background. Roosevelt provided a willing administration to diminish Rockefeller competition. He may have broken up the trusts, but not the Morgan trusts. President Taft, on the other hand, relentlessly pursued the Morgan interests. In return, Morgan persuaded his friend Theodore Roosevelt to run on the progressive Bull Moose Party ticket in order to split the Republican ticket and throw the election over to the progressive in chief, Woodrow Wilson.
President Wilson continued where his predecessor, Theodore left off. After tossing the United States into WWI, he created the collectivist warfare state. Economic controls were imposed on the entire economy for the war effort. In 1918 he signed the Espionage and Sedition Act into law and government controls were imposed on the freedom of speech. Literally thousands of people would be imprisoned for five to twenty years by simply using “disloyal, profane, scurrilous, or abusive language about the United States government, its flag, or its armed forces or that caused others to view the American government or its institutions with contempt.” Any attempt to suggest or persuade another not to enlist or buy war bonds would also be prosecuted under this act.
As horrible as all of this may sound, Wilson was not the originator of these kinds of extreme federal abuses. He paled in comparison to President Lincoln. During the Civil War, Lincoln locked up thousands of war dissenters, known as “Copperheads”, shut down hundreds of newspapers and even arrested the entire Maryland State assembly without trial and for an indeterminate amount of time. He even went so far as to put the Chief Justice of the Supreme Court, Taney, under house arrest. This outrages action prevented him from meeting at the court building with the other justices to discuss the constitutionality of Lincoln’s suspension of Habeas Corpus. Lincoln also put the economy on a war stance by issuing controls on wages, prices and the production of goods required for the war effort. He put the nation on a temporary fiat standard by printing non-specie backed “greenbacks” and passing legal tender laws to enforce their acceptance. Inflated greenbacks and federal war funds from the new income tax were diverted to Republican cronies in the northeast through the national banking act. Lincoln’s friends got very rich while southerners died trying to preserve the concept of a voluntary federal re
public. Shockingly, even Lincoln cannot be credited for being the founder of the American fascist system. For that we have to go back to Alexander Hamilton, the first Treasurer of the United States. Alexander Hamilton, who knew very little of economics, in 1791 issued his famous “Report on Manufacturers” as treasurer. In his report he explained his “American System,” as Kentucky Senator Henry Clay would later call the idea, based upon British mercantilism. Hamilton proposed a tariff on trade, subsidies for northern industries, internal improvements (infrastructure projects) and a central bank that would create a large national debt. This idea would later be the planks of the Whig Party and later the Republican Party of Abraham Lincoln. Jefferson and James Madison disagreed with Hamilton. Jefferson explained that such a system would lead to corruption in government and an antagonistic sectionalism of northern states against southern states. It was this antagonism that would bring the nation to conflict in 1861. Moreover, it was Abraham Lincoln who would prove Thomas Jefferson correct by the deaths of some 800,000 Americans in a war to enshrine this very same economic system of early American fascism. It was German economist Friedrich List (1789-1846) who credits Hamilton and Clay for his theory on a national German economy. List’s ideas where implemented under Bismarck and created the largest nationalized economy in Germany until the Nazi Party was democratically elected. It was during the 19th and early 20th century when Americans would have to travel to Germany in order to acquire a PhD. These new professors would spread the same recycled national economics in America and the cycle would continue.
Totalitarianism: The Main Ingredient
As was outlined, the theories and practices of national political economics that gave rise to Italian fascism were first experienced in America. From Hamilton’s “American System”, to Lincoln’s Republican Platform, Theodore Roosevelt’s Progressive Fair Deal, Wilson’s War Collectivism, Franklin Roosevelt’s New Deal, Kennedy’s New Frontier, Johnson’s Great Society or Nixon’s New Economic Plan all portray a progression of a centrally planned, national economic policy that benefit the health of the State’s bureaucratic regime. War collectivism has been in place since American fascism defeated European fascism in WWII. Corporatist elitism is the political norm. Legal entities called corporations are considered “persons” by our Supreme Court and have the same constitutional protections as you and I. The only thing that has kept us from sliding down the slippery slope of all out Nazism has been the lack of totalitarianism. Although, since September 11, 2001, totalitarian controls have been increasing, America is becoming a police state.
Recent revelations of N.S.A. spying on American citizens and the ever increasing militaristic build up of local law enforcement gives one pause. The Bush White House even had a “rat out my neighbor” policy reminiscent of Nazi Germany. Bush started Operation TIPS, with a toll-free hotline, e-mail, and website access for people who wanted to pass information on suspicious activity to the FBI. President Bush and congress gave American fascism its largest leap forward with the Gestapo-like agency called “Homeland Security”. The executive branch has usurped power onto itself by detaining citizens indefinitely. In the name of “The War on Terrorism” federal agencies no longer need a warrant to search your property, to include your body. At any time a person could be declared an enemy combatant and be swept away, never to be seen again. All of this is not new. It happened under Lincoln during the Civil War, Wilson in WWI and Roosevelt during WWII.
Fascism is built on the welfare/warfare state. Taxes are needed to generate the needed funding to maintain such a state. The people eventually become restless over the high level of taxation and overthrow such systems, as in Benito Mussolini’s case. However, Nazi Germany was defeated by the Allied forces and had never gotten to that point. Both governments had racked up huge national debts. The question needing to be asked is, “Why has American fascism lasted so much longer than the previous forms?” The answer can be found in monetary policy. In 1944, while the Allies were beating back Imperial Japan and fascism in Europe, the world was set up on a gold exchange standard at the Bretton Woods Conference. The result was a world currency system backed by U.S. dollars which, in turn, could be converted into gold. After President Nixon removed the dollar from gold convertibility in 1971, he had actually put the world on a fiat currency standard. The world currencies being essentially only backed by the dollar and the U.S. government’s promise not to over inflate.
In order for a modern fascist state to remain for any length of time it must heavily inflate the money supply. Politicians understand full well that raising taxes is a very unpopular policy. In order to hide the government’s increasing rate of spending and growth the central bank will inflate the supply of the currency. Those closest to source of the new money receive it first and spend or loan this new money into the economy. This is the essence of the Hamiltonian American System. This is also how the United States has been getting away with its build up of its welfare/warfare fascist state. This is how those business interests closest to government power have become so wealthy. This is why wages and the working class have lagged behind. President Eisenhower was right to warn the American people about the national military industrial complex for this is what he was talking about.
Conclusion
The entire American way of life has been built around a system that we’ve been told for generations was the worst thing a human being could come up with. Fascism has been happening all along in America and for a long time. Minus the goose-stepping and brown shirts there isn’t much difference with what so many lost their lives fighting in WWII and what we have now. With every new “War on …” the fascist power of the police state is ever increasing. It is taboo to call the American way of life as being fascist. “Fascist” has always been a derogatory term used to denounce conservatives or has been synonymous with racism. Understanding its economic element, it is plain to see just how fascism has dominated the western world. Undeniably, the American system of governance and finance is fascist. It may have started off on a the principles of liberty and free markets but one founding father had different plans. His actions alone set this country and the world on a very destructive course. Think about that the next time you spend a ten dollar bill.
For further reading on this subject, I have devised a list of reading material that can be downloaded or purchased online by clicking the titles.
As We Go Marching by John T. Flynn
The Blue Collar Economist 
Don’t forget the direct influence Lincoln had on Bismarck!
http://opinionator.blogs.nytimes.com/2011/10/02/why-bismarck-loved-lincoln/
http://mises.org/daily/1026
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