THE REAL THREAT OF FASCISM

Observing political and economic discourse in North America since the 1970’s leads to an
inescapable conclusion: the vast bulk of legislative activity favours the interests of large
commercial enterprises. Big business is very well off, and successive Canadian and U.S.
governments, of whatever political stripe, have made this their primary objective for at least the
last 25 years. Digging deeper into twentieth century history, one finds this steadfast focus on the
well-being of big business in other times and places. The exaltation of big business at the
expense of the citizen was a central characteristic of government policy in Germany and Italy in
the years before those countries were chewed to bits and spat out by fascism. Fascist
dictatorships were borne to power in each of these countries by big business, and they served the
interests of big business with remarkable ferocity. These facts have been lost to the popular
consciousness in North America. Fascism could therefore return to us, and we will not even
recognize it. Indeed, Huey Long, one of America’s most brilliant politicians, was once asked if
America would ever see fascism. His answer was, “Yes, but we will call it anti-fascism”.

By exploring the disturbing parallels between our own time and the era of overt fascism, I am
confident that we can avoid the same hideous mistakes. At present, we live in a constitutional
democracy. The tools necessary to protect ourselves from fascism remain in the hands of the
citizen. All the same, I believe that North America is on a fascist trajectory. We must recognize
this threat for what it is, and we must change course.

Consider the words of Thurman Arnold, head of the Anti-trust Division of the U.S. Department
of Justice in 1939:

“Germany, of course, has developed within 15 years from an industrial autocracy into a
dictatorship. Most people are under the impression that the power of Hitler was the result
of his demagogic blandishments and appeals to the mob… Actually, Hitler holds his
power through the final and inevitable development of the uncontrolled tendency to
combine in restraint of trade.”

Arnold made his point even more clearly in a 1939 address to the American Bar Association:

“Germany presents the logical end of the process of cartelization. From 1923 to 1935
cartelization grew in Germany until finally that nation was so organized that everyone
had to belong either to a squad, a regiment or a brigade in order to survive. The names
given to these squads, regiments or brigades were cartels, trade associations, unions and
trusts. Such a distribution system could not adjust its prices. It needed a general with
quasi-military authority who could order the workers to work and the mills to produce.
Hitler named himself that general. Had it not been Hitler it would have been someone
else.”

I suspect that to most readers, Thurman Arnold’s words are bewildering. Most people today are
quite certain that they know what fascism is. When asked to describe it, however, they will
typically tell you what it was, the assumption being that it no longer exists. Most people
associate fascism with concentration camps and rows of stormtroopers, yet they know nothing of
the political and economic processes which led to these horrible end results.

Before the rise of fascism, Germany and Italy were liberal democracies. Fascism did not swoop
down on these nations as if from another planet. To the contrary, fascist dictatorship was the end
result of political and economic changes which these nations underwent while they were still
democratic. In both these countries, economic power became so utterly concentrated that the
bulk of all economic activity fell under the control of a handful of men. Economic power, when
sufficiently vast, becomes by its very nature political power. The political power of big business
supported fascism in Italy and Germany.

Business tightened its grip on the state in both Italy and Germany by means of intricate webs of
cartels and business associations. These associations exercised a very high degree of control over
the businesses of their members. They frequently controlled pricing, supply and the licensing of
patented technology. These associations were private, but were entirely legal. Neither Germany
nor Italy had effective anti-trust laws, and the proliferation of business associations was
generally encouraged by government. This was an era eerily like our own, insofar as economists
and businessmen constantly clamoured for self-regulation in business. By the mid 1920’s,
however, self-regulation had become self-imposed regimentation. By means of monopoly and
cartel, the businessmen had wrought for themselves a “command and control” economy which
effectively replaced the free market. The business associations of Italy and Germany at this time
are perhaps history’s most perfect illustration of Adam Smith’s famous dictum: “People of the
same trade seldom meet together, even for merriment and diversion, but the conversation ends in
a conspiracy against the public, or in some contrivance to raise prices”.

How could the German government not be influenced by Fritz Thyssen, the man who controlled
most of Germany’s coal production? How could it ignore the demands of the great I.G. Farben
industrial trust, controlling as it did most of that nation’s chemical production? Indeed, the
German nation was bent to the will of these powerful industrial interests. Hitler attended to
reduction of certain taxes applicable to large businesses, while simultaneously increasing the
same taxes as they related to small business. Previous decrees establishing price ceilings were
repealed such that the cost of living for the average family was increased. Hitler’s economic
policies hastened the destruction of Germany’s middle class by decimating small business.
Ironically, Hitler pandered to the middle class and they provided some of his most
enthusiastically violent supporters. The fact that he did this while simultaneously destroying
them was a terrible achievement of Nazi propaganda.

Hitler also destroyed organized labour by making strikes illegal. Notwithstanding the socialist
terms in which he appealed to the masses, Hitler’s labour policy was the dream come true of the
industrial cartels that supported him. Nazi law gave total control over wages and working
conditions to the employer. Compulsory (slave) labour was the crowning achievement of Nazi
labour relations. Along with millions of people, organized labour died in the concentration
camps. The camps were not only the most depraved of all human achievements, they were a part
and parcel of Nazi economic policy. Hitler’s untermenschen, largely Jews, Poles and Russians,
supplied slave labour to German industry. Surely this was a capitalist bonanza. In another bitter
irony, the gates over many of the camps bore a sign that read “Arbeit Macht Frei” – “work shall
set you free”. I do not know if this was black humour or propaganda, but it is emblematic of the
deception that lies at the heart of fascism.

The same economic reality existed in Italy between the two world wars. In that country, nearly
all industrial activity was owned or controlled by a few corporate giants, F.I.A.T. and the
Ansaldo shipping concern being the chief examples. Land ownership in Italy was also highly
concentrated and jealously guarded. Vast tracts of farmland were owned by a few latifundisti.
The actual farming was carried out by a landless peasantry who were locked into a role
essentially the same as that of the share cropper of the U.S. deep south. As in Germany, the few
owners of the nation’s capital assets had immense influence over government. As a young man,
Mussolini had been a strident socialist, and he, like Hitler, used socialist language to lure the
people to fascism. Mussolini spoke of a “corporate” society wherein the energy of the people
would not be wasted on class struggle. The entire economy was to be divided into industry
specific “corporazioni”, bodies composed of both labour and management representatives. The
corporazioni would resolve all labour/management disputes, and if they failed to do so, the
fascist state would intervene. Unfortunately, as in Germany, there laid at the heart of this plan a
swindle. The corporazioni, to the extent that they were actually put in place, were controlled by
the employers. Together with Mussolini’s ban on strikes, these measures reduced the Italian
labourer to the status of peasant.

Mussolini the one-time socialist went on to abolish the inheritance tax, a measure which
favoured the wealthy. He decreed a series of massive subsidies to Italy’s largest industrial
businesses and repeatedly ordered wage reductions. Italy’s poor were forced to subsidize the
wealthy. In real terms, wages and living standards for the average Italian dropped precipitously
under fascism.

Even this brief historical sketch shows how fascism did the bidding of big business. The fact that
Hitler called his party the “National Socialist Party” did not change the reactionary nature of his
policies. The connection between the fascist dictatorships and monopoly capital was obvious to
the US Department of Justice in 1939. As of 2005, however, it is all but forgotten.

It is always dangerous to forget the lessons of history. It is particularly perilous to forget about
the economic origins of fascism in our modern era of deregulation. Most Western liberal
democracies are currently held in the thrall of what some call market fundamentalism. Few
nowadays question the flawed assumption that state intervention in the marketplace is inherently
bad. As in Italy and Germany in the 20’s and 30’s, business associations clamour for more
deregulation and deeper tax cuts. The gradual erosion of antitrust legislation, especially in the
United States, has encouraged consolidation in many sectors of the economy by way of mergers
and acquisitions. The North American economy has become more monopolistic than at any time
in the post-WWII period. (By way of example, U.S. census data from 1997 shows that the
largest four companies in the food, motor vehicle and aerospace industries control 53.4%, 87.3%
and 55.6% of their respective markets. Over 20% of commercial banking in the U.S. is
controlled by the four largest financial institutions, with the largest 50 controlling over 60%.
Even these numbers underestimate the scope of concentration, since they do not account for the
myriad interconnections between firms by means of debt instruments and multiple directorships,
which further reduce the extent of competition. Actual levels of U.S. commercial concentration
have been difficult to measure since the 1970’s, when strong corporate opposition put an end to
the Federal Trade Commission’s efforts to collect the necessary information.)

Fewer, larger competitors dominate all economic activity, and their political will is expressed
with the millions of dollars they spend lobbying politicians and funding policy formulation in the
many right-wing institutes which now limit public discourse to the question of how best to serve
the interests of business. The consolidation of the economy, and the resulting perversion of
public policy are themselves fascistic. I am quite certain, however, that President Clinton was not
worrying about fascism when he repealed federal antitrust laws that had been enacted in the
1930’s. The Canadian Council of Chief Executives is similarly unworried about fascism when it
lobbies the Canadian government to water down our Federal Competition Act. (The Competition
Act regulates monopolies, among other things, and itself represents a watering down of Canada’s
previous antitrust laws. It was essentially written by industry and handed to the Mulroney
Government to be enacted.)

At present, monopolies are regulated on purely economic grounds to ensure the efficient
allocation of goods. If we are to protect ourselves from the growing political influence of big
business, then our antitrust laws must be reconceived in a way which recognizes the political
danger of monopolistic conditions. Antitrust laws do not just protect the marketplace, they
protect democracy.

It might be argued that North America’s democratic political systems are so entrenched that we
needn’t fear fascism’s return. The democracies of Italy and Germany in the 1920’s were in many
respects fledgling and weak. Our systems will surely react at the first whiff of dictatorship. Or
will they? This argument denies the reality that the fascist dictatorships were preceded by years
of reactionary politics, the kind of politics that are playing out today. Further, it is based on the
conceit that whatever our own governments do is democracy. Canada still clings to a quaint,
19th century “first past the post” electoral system in which a minority of the popular vote can
and has resulted in majority control of Parliament. In the U.S., millions still question the legality
of the sitting President’s first election victory, and the power to declare war has effectively
become his personal prerogative. Assuming that we have enough democracy to protect us is
exactly the kind of complacency that allows our systems to be quietly and slowly perverted. On
paper, Italy and Germany had constitutional, democratic systems. What they lacked was the
eternal vigilance necessary to sustain them. That vigilance is also lacking today.

Our collective forgetfulness about the economic nature of fascism is also dangerous at a more
philosophical level. As contradictory as it may seem, fascist dictatorship was made possible
because of the flawed notion of freedom which held sway during the era of laissez-faire
capitalism in the early twentieth century. It was the liberals of that era that clamoured for
unfettered personal and economic freedom, no matter what the cost to society. Such
untrammeled freedom is not suitable to civilized humans. It is the freedom of the jungle. In other
words, the strong have more of it than the weak. It is a notion of freedom which is inherently
violent, because it is enjoyed at the expense of others. Such a notion of freedom legitimizes each
and every increase in the wealth and power of those who are already powerful, regardless of the
misery that will be suffered by others as a result. The use of the state to limit such “freedom” was
denounced by the laissez-faire liberals of the early twentieth century. The use of the state to
protect such “freedom” was fascism. Just as monopoly is the ruin of the free market, fascism is
the ultimate degradation of liberal capitalism.

In the post-war period, this flawed notion of freedom has been perpetuated by the neo-liberal
school of thought. The neo-liberals denounce any regulation of the marketplace. In so doing, they
mimic the posture of big business in the pre-fascist period. Under the sway of neo-liberalism,
Thatcher, Reagan, Mulroney and George W. Bush have decimated labour and exalted capital. (At
present, only 7.8 per cent of workers in the U.S. private sector are unionized – about the same
percentage as in the early 1900’s.) Neo-liberals call relentlessly for tax cuts which, in a
previously progressive system, disproportionately favour the wealthy. Regarding the distribution
of wealth, the neo-liberals have nothing to say. In the result, the rich get richer and the poor get
poorer. As in Weimar Germany, the function of the state is being reduced to that of a steward for
the interests of the moneyed elite. All that would be required now for a more rapid descent into
fascism are a few reasons for the average person to forget that he is being ripped off. The racist
hatred of Arabs, fundamentalist Christianity or an illusory sense of perpetual war may well be
taking the place of Hitler’s hatred for communists and Jews.

Neo-liberal intellectuals often recognize the need for violence to protect what they regard as
freedom. Thomas Freidman of the New York Times has written enthusiastically that “the hidden
hand of the market will never work without a hidden fist”, and that “McDonald’s cannot flourish
without McDonnell Douglas, the designer of the U.S. Air Force F-15…”. As in pre-fascist
Germany and Italy, the laissez-faire businessmen call for the state to do their bidding even as
they insist that the state should stay out of the marketplace. Put plainly, neo-liberals advocate the
use of the state’s military force for the sake of private gain. Their view of the state’s role in
society is identical to that of the businessmen and intellectuals who supported Hitler and
Mussolini. There is no fear of the big state here. There is only the desire to wield its power. Neo-
liberalism is thus fertile soil for fascism to grow again into an outright threat to our democracy.

Having said that fascism is the result of a flawed notion of freedom, I respectfully suggest that
we must re-examine what we mean when we throw around the word “freedom”. We must
conceive of freedom in a more enlightened way. Indeed, it was the thinkers of the Enlightenment
that imagined a balanced and civilized freedom which did not impinge upon the freedom of one’s
neighbour. Put in the simplest terms, my right to life means that you must give up your freedom
to kill me. This may seem terribly obvious to decent people. Unfortunately, in our neo-liberal era,
this civilized sense of freedom has, like the dangers of fascism, been all but forgotten.

By PAUL BIGIONI

Paul Bigioni is a lawyer practicing in Markham, Ontario. He is a commentator on trade and

political issues. This article is drawn from his work on a book about the persistence of fascism.