LIBERAL FASCISM: The Secret History of the AMERICAN LEFT from MUSSOLINI to the POLITICS OF MEANING

by Jonah Goldberg

  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 followers 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. Mem 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.

  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.”

  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. If the collusion of big business and government is right-wing, then FDR was a right-winger. If corporatism and propagandists 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 realit
y 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.

  This story plays itself out again and again during the Progressive Era. The infamous steel industry—heirs to the nineteenth-century robber barons—embraced government intervention on a massive scale. The familiar fair)’ 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.”

  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.” 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.

  As we’ve seen, World War I offered a golden opportunity for Croly’s agenda. Big business and the Wilson administration formed the Council of National Defense, or CND, according to Wilson, for the purpose of redesigning “the whole industrial mechanism...in the most effective way.” “It is our hope,” Hudson Motor Car Company’s Howard Coffin explained in a letter to the Du Ponts, “that we may lay the foundation for that closely knit structure, industrial, civil, and military, which every thinking American has come to realize is vital to the future life of this country, in peace and in commerce, no less than in possible war.”

  When the war broke out, the CND was largely folded into the War Industries Board, or WIB. Run by “dollar-a-year men” from the world of finance and business, the WIB set prices, trade quotas, wages, and, of course, profits. Trade associations were formed along vaguely syndicalist lines. “Business willed its own domination, forged its bonds, and policed its own subjection,” wrote Grosvenor Clarkson, a WIBer and historian of the effort. The aim was for the “concentration of commerce, industry and all the powers of government.” “Historians have generally concluded,” writes Robert Higgs, “that these businessmen-turned-bureaucrats used their positions to establish and enforce what amounted to cartel arrangements for the various industries.”

  Many industrialists wanted to keep the War Industries Board going after World War I. and politicians, including Herbert Hoover, tried to grant their wish. The war, horrible as it was, had proved that national planning worked. Stuart Chase, who coined the phrase “New Deal,” explicitly cited two models for what America needed to do, the Soviet Gosplan and the war socialism of World War I. Rexford Tugwell gushed that laissez-faire had “melted away in the fierce new heat of nationalistic vision.”

  The propaganda of the New Deal—”malefactors of great wealth” and all that—to the contrary, FDR simply endeavored to re-create the corporatism of the last war. The New Dealers invited one industry after another to write the codes under which they would be regulated (as they had been begging to do in many cases). The National Recovery Administration, or NRA, was even more aggressive in forcing industries to fix prices and in other ways collude with one another. The NRA approved 557 basic and 189 supplementary codes, covering roughly 95 percent of all industrial workers.

  It was not only inevitable but intended for big business to get bigger and the little guy to get screwed. For example, the owners of the big chain movie houses wrote the codes in such a way that independents were nearly run out of business, even though 13,571 of the 18,321 movie theaters in America were independently owned. In business after business, the little guy was crushed or at least severely disadvantaged in the name of “efficiency” and “progress.” The codes for industries dealing in cotton, wool, carpet, and sugar were—”down to the last comma”—simply the trade association agreements from the Hoover administration. And in almost every case big business came out the winner. In “virtually all the codes we have examined,” reported Clarence Darrow in his final report investigating Hugh Johnson’s NRA, “one condition has been persistent...In Industry after Industry, the larger units, sometimes through the agency of...[a trade association], sometimes by other means, have for their own advantage written the codes, and then, in effect and for their own advantage, assumed the administration of the code they have framed.” We may believe that FDR fashioned the New Deal out of concern for the “forgotten man.” But as one historian put it, “The principle...seemed to be: to him that hath it shall be given.”

  Indeed, FDR’s pragmatism and experimentalism, so cherished by liberals then and now, were of a deeply ideological sort: social planners should be given a free rein to do what they like until they get it right. Thurman Arnold, the theorist behind the new “religion of government” and director of FDR’s antitrust division, abandoned the standard liberal antipathy for cartels, monopolies, and trusts and instead emphasized consumption.

  All this was done with the acquiescence of the liberal establishment, later called the “new class” of managers, experts, and technocrats. The idea was that the smartest people should be immune to the rules of chaotic capitalism and vulgar politics. The “best practices” of business and engineering should be applied to politics. These schemes went by any number of labels—syndicalism, Fordism, Taylorism, technocracy—but the underlying impulse was the same. Businessmen were part of this new conventional wisdom. Gerard Swope, the president of GE. provides a perfect illustration of the business elite’s economic worldview. A year before FDR took office, he published his modestly titled The Swope Plan. His idea was that the government would agree to suspend antitrust laws so that industries could collude in order to adjust “production to consumption.” Industry would “no longer operate in independent units, but as a whole, according to rules laid out by a trade association...the whole supervised by some federal agency like the Federal Trade Commission.” Under Swopism, as many
in and out of government called it. the state would remove the uncertainty for the big-business man so that he could “go forward decisively instead of fearsomely.”

  As transparently fascistic as all this sounds today, it sounded even more fascistic back then. New Deal staffers studied Mussolini’s corporatism closely. Fortune and the fairly liberal BusinessWeek both devoted considerable space to praising the Italian “experiment.” “The Corporate State is to Mussolini what the New Deal is to Roosevelt.” proclaimed Fortune. During both the Hoover and the early Roosevelt administrations, hosts of independent economists from across the ideological spectrum noted the similarities between Italian and Nazi economic policies and American ones. William Welk. a leading scholar of Italian Fascist economics, wrote in Foreign Affairs that the NRA codes seemed like imitations of their Italian counterparts, only the Italian Fascists had paid much more attention to social justice.

  The view from abroad was little different. “We have not vet been informed whether, now that Rooseveltism has become openly and unmistakably Fascist, the British Trades Union Council means to withdraw its blessing and support from America’s attempt to reform Capitalism,” wrote Fenner Brockway. the British pacifist, socialist, and journalist, in the New Leader. Giuseppe Bottai, the Fascist minister of corporations until 1932, wrote an essay for Foreign Affairs, “Corporate State and the N.R.A.,” in which he suggested that while the similarities were real, the Italian system treated labor better.

  The Nazis saw the similarities as well. “There is at least one official voice in Europe that expresses understanding of the methods and motives of President Roosevelt,” began a New York Times report in July 1933. “This voice is that of Germany, as represented by Chancellor Adolf Hitler.” The German leader told the Times, “I have sympathy with President Roosevelt because he marches straight toward his objective over Congress, over lobbies, over stubborn bureaucracies.” In July 1934 the Nazi Party’s newspaper, Der Volkische Beobachter, described Roosevelt as America’s “absolute lord and master.” a man of “irreproachable, extremely responsible character and immovable will,” and a “warmhearted leader of the people with a profound understanding of social needs.” Roosevelt’s books Looking Forward (which, as mentioned earlier, had been favorably reviewed by Mussolini himself) and On Our Way were translated into German and received lavish attention. Reviewers were quick to note the similarities between Nazi and New Deal policies.