Archive for September, 2008

A Third Way?

“While communism is the control of business by government, fascism is the control of government by business.” – Robert F. Kennedy Jr.

Fascists opposed what they believed to be laissez-faire or quasi-laissez-faire economic policies dominant in the era prior to the Great Depression. People of many different political stripes blamed laissez-faire capitalism for the Great Depression, and fascists promoted their ideology as a “third way” between capitalism and Marxian socialism. Their policies manifested as a radical extension of government control over the economy without wholesale expropriation of the means of production. Fascist governments nationalized some key industries, managed their currencies and made some massive state investments. They also introduced price controls, wage controls and other types of economic planning measures. Fascist governments instituted state-regulated allocation of resources, especially in the financial and raw materials sectors.

Other than nationalization of certain industries, private property was allowed, but property rights and private initiative were contingent upon service to the state. For example, “an owner of agricultural land may be compelled to raise wheat instead of sheep and employ more labor than he would find profitable.” According to historian Tibor Ivan Berend, dirigisme was an inherent aspect of fascist economies. The Labour Charter of 1927, promulgated by the Grand Council of Fascism, stated in article 7:

“The corporative State considers private initiative, in the field of production, as the most efficient and useful instrument of the Nation,” then goes on to say in article 9 that: “State intervention in economic production may take place only where private initiative is lacking or is insufficient, or when are at stakes the political interest of the State. This intervention may take the form of control, encouragement or direct management.”

Fascism also operated from a Social Darwinist view of human relations. Their aim was to promote “superior” individuals and weed out the weak. In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class. Historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise, because “the State pays for the blunders of private enterprise… Profit is private and individual. Loss is public and social.”

Fascists were most vocal in their opposition to finance capitalism, interest charging, and profiteering. Some fascists, particularly Nazis, considered finance capitalism a “parasitic” “Jewish conspiracy”. Nevertheless, fascists also opposed Marxism and independent trade unions.

According to sociologist Stanislav Andreski, fascist economics “foreshadowed most of the fundamental features of the economic system of Western European countries today: the radical extension of government control over the economy without a wholesale expropriation of the capitalists but with a good dose of nationalization, price control, incomes policy, managed currency, massive state investment, attempts at overall planning (less effectual than the Fascist because of the weakness of authority).” Politics professor Stephen Haseler credits fascism with providing a model of economic planning for social democracy.

In Nazi economic planning, in place of ordinary profit incentive to guide the economy, investment was guided through regulation to accord to the needs of the State. The profit incentive for business owners was retained, though greatly modified through various profit-fixing schemes: “Fixing of profits, not their suppression, was the official policy of the Nazi party.” However the function of profit in automatically guiding allocation of investment and unconsciously directing the course of the economy was replaced with economic planning by Nazi government agencies.

Quoted from Wikipedia. Also, see another article here.