8
Liberal Fascist Economics
IN RECENT YEARS liberals have largely succeeded in defining the conventional wisdom when it comes to economics. “Corporations are too powerful.” They have a “stranglehold” on “the system,” the entirety of which is now corrupted by the soiled touch of commerce. Every liberal publication in America subscribes to this perspective to some extent, from the Nation to the New Republic to the New York Times. The further you move to the left, the more this conviction becomes a caricature. Thus Bill Maher showed up at the Republican National Convention in 2000 dressed in a NASCAR-style tracksuit festooned with corporate logos to mock how the Republicans were stooges of Wall Street. Arianna Huffington supposedly switched from right to left due to her disgust with corporate “pigs at the trough.” William Greider, Kevin Phillips, Robert Reich, Jonathan Chait, and every other would-be Charles Beard on the American left hold similar views. Corporations are inherently right-wing, we are assured, and if left unchecked, these malign and irresponsible entities will bring us perilously close to fascism. The noble fight against these sinister “corporate paymasters” is part of the eternal struggle to keep fascism—however ill defined—at bay.
Ever since the 1930s, there has been a tendency to see big business—“industrialists,” “economic royalists,” or “financial ruling classes”—as the real wizards behind the fascist Oz. Today’s liberals are just the latest inheritors of this tradition. On the conspiratorial left, for example, it is de rigueur to call George W. Bush and Republicans in general Nazis. The case is supposedly bolstered by the widely peddled smear that Bush’s grandfather was one of the industrialists who “funded” Hitler.1 But even outside the fever swamps, the notion that liberals must keep a weather eye on big business for signs of creeping fascism is an article of faith. Robert F. Kennedy Jr. recycles this theme when he writes, “The rise of fascism across Europe in the 1930s offers many lessons on how corporate power can undermine a democracy. Mussolini complained that ‘fascism should really be called corporatism.’ Today, George Bush and his court are treating our country as a grab bag for the robber barons.” Countless others have echoed these sentiments, arguing, in the words of Norman Mailer, that America is already a “pre-fascist” society run by corporations and their lickspittles in the Republican Party. The political scientist Theodore Lowi has said that the Republicans are “friendly fascists, a dominant effort to combine government and corporations.” The Canadian novelist John Ralston Saul argues in his book The Unconscious Civilization that we live in a corporatist-fascist society but we are unwilling to see it. Corporate CEOs, Saul laments, are “the true descendants of Benito Mussolini.”2
There is much unintentional truth to this collective diagnosis, but these would-be physicians have misread both the symptoms and the disease. In the left’s eternal vigilance to fend off fascism, they have in fact created it, albeit with a friendly face. Like a medieval doctor who believes that mercury will cure madness, they foster precisely the sickness they hope to remedy. Good medicine, like good economics, depends on discarding unproven mythology. Yet for nearly a century the left and liberals have been using textbooks brimming with superstition. These myths are entwined with one another in a magnificent knot of confusion. Among the strands of this knot are the palpably false notions that big business is inherently right-wing or conservative (in the American sense); that European fascism was a tool of big business; and that the way to keep business from corrupting government is for government to regulate business to within an inch of its life.
In reality, if you define “right-wing” or “conservative” in the American sense of supporting the rule of law and the free market, then the more right-wing a business is, the less fascist it becomes. Meanwhile, in terms of economic policy, the more you move to the political center, as defined in American politics today, the closer you get to true fascism. If the far left is defined by socialism and the far right by laissez-faire, then it is the mealymouthed centrists of the Democratic Leadership Council and the Brookings Institution who are the true fascists, for it is they who subscribe to the notion of the Third Way, that quintessentially fascistic formulation that claims to be neither left nor right.3 More important, these myths are often deliberately perpetuated in order to hasten the transformation of American society into precisely the kind of fascist—or corporatist—nation liberals claim to oppose. To a certain extent we do live in a fascistic “unconscious civilization,” but we’ve gotten here through the conscious effort of liberals who want it that way.4
CUI BONO?
The notion that fascism was a tool of big business is one of the most persistent and enduring myths of the past century. It has been parroted by Hollywood, countless journalists, and generations of academics (though not necessarily by historians who specialize in the subject). But as Chesterton said, fallacies do not cease to be fallacies simply because they become fashions.
Doctrinaire Marxism-Leninism defined fascism as “the most reactionary and openly terroristic form of the dictatorship of finance capital, established by the imperialistic bourgeoisie to break the resistance of the working class and all the progressive elements of society.” Trotsky, an admirer of Mussolini’s, conceded that fascism was a “plebeian movement in origin” but that it was always “directed and financed by big capitalist powers.”5 This interpretation was fore-ordained because by the 1920s communists were convinced that they were witnessing capitalism’s long overdue collapse. Marxist prophecy held that the capitalists would fight back to protect their interests rather than face extinction in the new socialist era. When fascism succeeded in Italy, communist seers simply declared, “This is it!” At the Fourth Congress of the Communist International in 1922, less than a month after the March on Rome—long before Mussolini consolidated power—the assembled communists settled on this interpretation with little debate over the actual facts on the ground.
That the defeated Italian Reds had already spread the rumor that their former comrade had betrayed the movement for his thirty pieces of silver only made this self-serving myth easier to swallow. Convinced that they alone were on the side of the people, the Reds responded to every political defeat by asking, “Cui bono?”—“Who benefits?” The answer had to be the ruling capitalists. “Fascism” thus became a convenient label for “desperate capitalists.”
Ever since, whenever the left has met with political defeat, it has cried, “Fascism!” and insisted the fat cats were secretly pulling the strings. Max Horkheimer, the Frankfurt School Freudian Marxist, declared that no anticapitalist theories of fascism could even be entertained. “Whoever is not prepared to talk about capitalism should also remain silent about fascism.” “Central to all socialist theories of fascism,” writes the historian Martin Kitchen, “is the insistence on the close relationship between fascism and industry.” Yale’s Henry Ashby Turner calls this an “ideological straightjacket” that constrains virtually all Marxist-influenced scholarship. “Almost without exception…these writings suffer, as do those of ‘orthodox’ Marxists, from over-reliance on questionable, if not fraudulent scholarship, and from egregious misrepresentation of factual information.”6 In point of fact, there is zero evidence that Mussolini was the pawn of monolithic “big capitalism.” Far from being uniformly supportive of fascism, big business was bitterly divided right up until Mussolini seized power. Fascist intellectuals, moreover, were openly contemptuous of capitalism and laissez-faire economics.
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. Mein 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.7
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.”8
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.9 If the collusion of big business and government is right-wing, then FDR was a right-winger. If corporatism and propagandistic 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 reality 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.10
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 fairy 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.”11
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.”12 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.”13
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.”14
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.”15
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.”16
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.”17
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.18
The view from abroad was little different. “We have not yet 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.19
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.”20 In July 1934 the Nazi Party’s newspaper, Der Völkische 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.
So what was the essence of this “revolution from above”? In the economic sphere it was most often called “corporatism,” a slippery word for dividing up industry into cooperative units, guilds, and associations that would work together under the rubric of “national purpose.” Corporatism simply seemed like a more honest and straightforward attempt at what social planners and businessmen had been groping toward for decades. Other names proliferated as well, from “syndicalism” to “national planning” to, simply, the “Third Way.” The new sense of national purpose, it was thought, would allow business and labor to put aside their class differences and hammer out what was best for everyone, in much the same way the war planners had in Germany, America, and throughout the West. The Third Way represented a widespread exhaustion with politics and a newfound faith in science and experts.
The image of the fasces conjures the spirit of the idea: strength in unity. Corporations or syndicates representing different sectors of the economy would, like the sticks around the fasces, bind tightly together for the “public interest.”21 Fascists agreed with Marxists that class conflict was a central challenge of economic life; they merely differed—often only at a theoretical level—on how the conflict should be resolved. By making citizens see themselves as Germans or Italians rather than as workers or bosses, corporatists hoped to make Hitler’s declaration “There are no such thing as classes” a reality. Hitler in fact believed in classes—siding culturally and politically with the workers over the rich—but he, like most fascists, believed that class differences could be subordinated to the common good through nationalistic fervor. Under the Third Way, society would get all the benefits of capitalism with none of the drawbacks. The market would exist, but it would be constrained within “healthy” and “productive” borders. As the Italian Fascist procurator general Senator Silvio Longhi put it, “The state recognizes and safeguards individual property rights so long as they are not being exercised in a way which contravenes the prevailing collective interest.”22
“I believe,” proclaimed FDR in 1932, “that the individual should have full liberty of action to make the most of himself; but I do not believe that in the name of that sacred word, a few powerful interests should be permitted to make industrial cannon fodder of the lives of half of the population of the United States.” Such Third Way rhetoric had a familiar echo in much Nazi propaganda as well. In a typical editorial, written on May 27, 1929, Goebbels explained that the party “was not against capital but against its misuse…For us, too, property is holy. But that does not mean that we sing in the chorus of those who have turned the concept of property into a distorted monstrosity…A people of free and responsible owners: that is the goal of German socialism.”23
THE NAZI GLEICHSCHALTUNG
Fascism is the cult of unity, within all spheres and between all spheres. Fascists are desperate to erode the “artificial,” legal, or cultural boundaries between family and state, public and private, business and the “public good.” Unlike communist Jacobinism (or Jacobin communism, if you prefer), which expropriated property and uprooted institutions in order to remake society from the ground up, fascism pragmatically sought to preserve what was good and authentic about society while bending it to the common good. Interests or institutions that stood in the way of progress could be nationalized, to be sure. But if they worked with the regime, if they “did their part,” they could keep their little factories, banks, clubs, and department stores.
It’s revealing that corporatism has many of its roots in Catholic doctrine. The 1891 papal encyclical Rerum novarum proposed corporatism or syndicalism in response to the dislocations of the Industrial Revolution. In 1931 an updated encyclical, Quadragesimo anno, reaffirmed the principles of Rerum novarum. The two documents formed the backbone of progressive Catholic social thought. The Church’s interest in corporatism stemmed from its belief that this was the best way to revive medieval social arrangements that gave man a greater sense of meaning in his life.
In short, corporatism was in large measure a spiritual project. Both the cold impersonal forces of Marx’s history and the unloving dogma of Adam Smith’s invisible hand would be rejected in favor of a Third Way that let the “forgotten man” feel like he had a place in the grand scheme of things.
The Nazis had a word for this process: Gleichschaltung. A political word borrowed—like so many others—from the realm of engineering, it meant “coordination.” The idea was simple: all institutions needed to work together as if they were part of the same machine. Those that did so willingly were given wide latitude by the state. “Islands of separateness”—be they businesses, churches, or people—were worn down over time. There could be no rocks in the river of progress. In effect, the entire society agreed to the fascist bargain, in which they bought economic, moral, and political security in exchange for absolute loyalty to the ideals of the Reich. Of course, this was a false security; the fascist bargain is a Faustian bargain. But that is what people thought they were getting.
The Führer Principle was a key mechanism of the Gleichschaltung. Under the Führerprinzip, all of civil society was supposed to operate like a military unit with each cell reporting loyally to its leader, and those leaders to their leaders, all the way up to Hitler himself. For German businesses this was an easy transition because they already implemented something like a Führerprinzip in their organizations. In this sense German business culture contributed to the rise of Nazism, partly by laying the groundwork for a German Swopism, but indirectly as well, by readying the German mind for the sort of social control the Nazis wished to impose.
The Krupp Konzern—the reviled armory for the Third Reich—blazed the trail for the fascist bargain in the nineteenth century with Alfred Krupp’s General Regulations. In the 1870s Krupp instituted a health service, schools, life insurance, workmen’s compensation, a pension scheme, hospitals, even an old-age home for his employees. His General Regulations served as a mini social contract between him and his workers. In return for their loyalty—that is, eschewing labor unions and socialist agitation—Krupp provided all the perks the socialists were fighting for. “What may strike the Ausländer as odd,” writes William Manchester, “is that Alfred’s General Regulations were regarded—and in Essen are still regarded—as liberal. For the first time a German firm was spelling out its duties to its men.”24 Krupp’s General Regulations became one of the central progressive documents for reform in Bismarck’s Prussia and, by extension, much of the West. Today companies with similar policies get fawning profiles on 60 Minutes.
Under the Gleichschaltung, the Nazis merely extended and broadened these arrangements. The state demanded loyalty from Krupp and his ilk in return for the protection of the state. This was merely another way of saying that all of society was to be Nazified—that is, politicized—so that every unit of society did its part for the larger cause. As a result, businesses became transmission belts for Nazi propaganda and values. The Nazi “war on cancer” was taken up by firms that banned smoking. The Nazi war on alcoholism and the Hitlerite emphasis on organic foods slowly pushed the beverage industry away from beer and booze and toward natural fruit juices. Children were a special priority. In 1933 the Nazis banned alcohol advertising aimed at children. In 1936 a new certification system was implemented that labeled some beverages and foodstuffs “fit” or “unfit” for children. (Coca-Cola was ruled unfit for kids.) That same year a full quarter of all the mineral water produced in Germany came from breweries. In 1938 the head of the Reich Health Office, Hans Reiter, declared that henceforth sweet cider was the official “people’s drink” (Volksgetränk) of Germany.
The Nazis—always disproportionately supported by bureaucrats in the “helping professions”—benefited from particularly eager accomplices in the health-care industry. In a nation where democracy and civil liberties were swept aside and experts—doctors, regulators, and “industrial hygienists”—were promoted to positions of unparalleled authority, the Nazis offered a much-yearned-for opportunity to “get beyond politics.” For example, the Reich Anticancer Committee proclaimed in its first annual report: “The year 1933 was a decisive one for the war against cancer: the national socialist revolution (Umwälzung) has created entirely new opportunities for sweeping measures in an area that until now has been rather limited…The energetic and unanimous engagement (Einsatz) of the medical profession has shown that new avenues have opened for the struggle against cancer in the new Germany.”25
Vast public and moral health campaigns were put in place to promote safe working environments, along with the production of wholesome organic foods, anti-animal-cruelty measures, and other progressive advances. While many of these reforms were imposed from above by social engineers with the willing compliance of businessmen now freed from the usual concerns about such costly modifications, the Nazis also worked tirelessly to cultivate and encourage demand from below for these reforms. Everyone from the lowliest worker to the wealthiest baron was encouraged to believe and enforce the idea that if you weren’t part of the solution, you were part of the problem. German consumers, too, were hectored relentlessly to buy products that promoted the “common good.”
Language itself was bent to what could only be called Nazi political correctness. Victor Klemperer, a professor of Romance languages at the University of Dresden fired for his Jewish ancestry in 1935, dedicated himself to chronicling the subtle transformations of speech and daily life brought about by the Gleichschaltung. “The mechanization of the individual,” he explained, “first manifested itself in ‘Gleichschaltung.’” He watched as phrases like “Hitler weather”—to describe a sunny day—crept into everyday conversation. The Nazis “changed the values, the frequency of words, [and] made into common property words that had previously been used by individuals or tiny troupes. They confiscated words for the party, saturated words and phrases and sentence forms with their poison. They made the language serve their terrible system. They conquered words and made them into their strongest advertising tools, at once the most public and the most secret.”26
Popular culture, from television and film to marketing and advertising, was an essential tool for this process. Movie studios in particular were eager to work with the regime and vice versa. Goebbels put a great deal of stock in the medium, believing that “film is one of the most modern and far-reaching means of influencing the masses.” But he assured the film industry that the government would not be taking over. Rather, this would be a public-private partnership. “We have no intention of obstructing production,” he told studio heads in his first address to the industry, “neither do we wish to hamper private enterprise: On the contrary, this will receive a great deal of impetus through the national movement.”27 The film industry worked with the government, formally and informally, releasing mostly escapist fare for German audiences as well as a steady stream of allegorically worshipful films about Hitler. Movie audiences were subtly encouraged to change their thinking not merely about, say, Jews and foreign policy, but about what it meant to be a human being in the modern world.
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’état, 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? Invite 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 every 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.
Indeed, we are all Crolyites now. It was Croly’s insight that if you aren’t going to expropriate private businesses, but instead want to use business to implement your social agenda, then you should want businesses themselves to be as big as possible. What’s easier, strapping five thousand cats to a wagon or a couple of giant oxen? Al Gore’s rhetoric about the need to “tame Big Oil” and the like is apposite. He doesn’t want to nationalize “Big Oil” he wants to yoke it to his own agenda. Likewise, Hillary Clinton’s proposed health-care reforms, as well as most of the proposals put forward by leading Democrats (and a great many Republicans), involve the fusion of big government and big business. The economic ideas in Hillary Clinton’s It Takes a Village are breathlessly corporatist. “A number of our most powerful telecommunications and computer companies have joined forces with the government in a project to connect every classroom in America to the Internet,” she gushes. “Socially minded corporate philosophies are the avenue to future prosperity and social stability.”40 It doesn’t take a Rosetta stone to decipher what liberals mean by “socially minded corporate philosophies.”
The granddaddy of all such “philosophies” is of course industrial policy, the ghost of corporatism made flesh in modern liberalism. In 1960 President Kennedy called for a “new partnership” with corporate America. In the 1970s Jimmy Carter called for “reindustrialization” under a new “social contract” to deal with the “crisis of competitiveness.” A young aide in the Carter administration named Robert Reich launched his career as a buzz-phrase generator, spewing out such impressive-sounding nuggets as “target stimulants” and “indicative planning.” Later, the “Atari Democrats” once again claimed that the “future” lay in “strategic partnerships” between the public and the private sectors.
In the 1980s envy for corporatist “Japan Inc.” reached delirious proportions. The intellectual descendants of those who worshipped Bismarck’s Prussia and Mussolini’s Ministry of Corporations now fell under the spell of Japan’s Ministry of International Trade and Industry, which soon became the lodestar of enlightened economic policy. James Fallows led an all-star cast of liberal intellectuals—including Clyde Prestowitz, Pat Choate, Robert Kuttner, Ira Magaziner, Robert Reich, and Lester Thurow—in a quest for the holy grail of government-business “collaboration.”
Reich was one of the pioneers of the Third Way movement. Indeed, Mickey Kaus writes that Third Way rhetoric is Reich’s “most annoying habit” and his “characteristic mode of argument.”41 In 1983 Reich wrote The Next American Frontier, in which he championed “an extreme form of corporatism” (Kaus’s words) where in exchange for “restructuring assistance” from the government, businesses would “agree to maintain their old work forces intact.” Workers would become de facto citizens of their companies, in a relationship eerily similar to Krupp’s General Regulations. And in an even more eerie echo of Italian Fascist corporatist thought, corporations would “largely replace geographic jurisdictions as conduits of government support for economic and human development.” Social services—health care, day care, education, and so forth—would all be provided via your employer. This was all not only good but inevitable because “business enterprises,” according to Reich, “are rapidly becoming the central mediating structures in American society, replacing geographic communities as the locus of social services and, indeed, social life.”42
Yet somehow it’s the economic right that wants corporations to have more control over our lives.
In 1984 the former Republican strategist Kevin Phillips wrote Staying on Top: The Business Case for a National Industrial Strategy. “Businessmen,” Phillips warned, “must set aside old concepts of laissez-faire…it is time for the U.S. to begin plotting its economic future” on a new Third Way course.43 Amusingly, Phillips has also argued that George W. Bush’s great-grandfather S. P. Bush was a war profiteer because he served on Woodrow Wilson’s War Industries Board, the very model of the system Phillips advocates.
In 1992 Bill Clinton and Ross Perot both tapped into the widespread craving for a “new alliance” between government and business (in 1991, 61 percent of Americans said they supported some such relationship). “Without a national economic strategy, this country has been allowed to drift,” candidate Clinton declared in a typical speech. “Meanwhile, our competitors have organized themselves around clear national goals to save, promote and enhance high-wage, high-growth jobs.” Clinton was ultimately foiled by Congress and the federal deficit in his hope to “invest” hundreds of billions of dollars in his strategic plan for industry. But his administration did try very hard to “target” specific industries for help, to very little effect—unless you count Al Gore’s “invention” of the Internet. Hillary Clinton’s ill-fated health-care plan sought to dragoon the health-care industry into a web where it would be impossible to tell where government began and the private sector left off. Small businesses, like those poor dry cleaners and newspaper boys during the New Deal, simply had to take one for the team. When it was pointed out to her that small businesses would be devastated by her plan, Clinton dismissed the complaints, saying, “I can’t save every undercapitalized entrepreneur in America.”44
Democratic, and most Republican, health-care plans don’t call for expropriating the private property of doctors and pharmaceutical companies or even for the cessation of employer-provided health care. Rather, they want to use corporations for government by proxy. There’s a reason liberal economists joke that General Motors is a health-care provider that makes cars as an industrial by-product.
GM offers an ironic confirmation of Marxist logic. According to orthodox Marxism, the capitalist system becomes fascist as its internal contradictions get the better of it. As a theory of political economy, this analysis falls apart. But at the retail level, there’s an undeniable truth to it. Industries that once had a proudly free-market stance suddenly sprout arguments in favor of protectionism, “industrial policy,” and “strategic competitiveness” once they find that they can’t hack it in the market. The steel and textile industries, certain automobile companies—Chrysler in the 1980s, GM today—and vast swaths of agriculture claim that the state and business should be “partners” at precisely the moment it’s clear they can no longer compete. They quickly become captives of politicians seeking to protect jobs or donations or both. These “last-gasp capitalists” do the country a great disservice by skewing the political climate toward a modified form of national socialism and corporatism. They’re fleeing the rough-and-tumble of capitalist competition for the warm embrace of It Takes a Village economics, and Hillary Clinton calls it “progress.”
Look, for example, at which agricultural sectors lobby the government most and which tend to leave it alone. Big sugar growers in the Midwest and Florida have spent millions to protect their industry from foreign—and domestic—competition precisely because they are so uncompetitive. And the return on their investment has been huge. In 1992 a handful of sugar refiners gave then–New York Senator Al D’Amato a mere $8,500 in campaign contributions. In return D’Amato successfully supported a tariff rebate to the sugar industry worth $365 million—a return of about 4 million percent. The sugar industry accounts for 17 percent of all agricultural lobbying in the United States. Meanwhile, apple growers—like most fruit and vegetable farmers—spend relatively little lobbying for subsidies because their industry is competitive. But they do have to lobby the government to keep it from subsidizing uncompetitive farmers who might try to move into the fruit and vegetable market.45
There’s no sector of the American economy more suffused with corporatism than agriculture. Indeed, both Democrats and Republicans are decidedly fascistic when it comes to the “family farmer,” pretending that their policies are preserving some traditional völkisch lifestyle while in reality they’re subsidizing enormous corporations.
But corporatism is only part of the story. Just as corporations were enmeshed in the larger Nazi Gleichschaltung, supposedly right-wing big business is central to the progressive coordination of contemporary society. If big business is so right-wing, why do huge banks fund liberal and left-wing charities, activists, and advocacy groups, then brag about it in commercials and publicity campaigns? How to explain that there’s virtually no major issue in the culture wars—from abortion to gay marriage to affirmative action—where big business has played a major role on the American right while there are dozens of examples of corporations supporting the liberal side?
Indeed, the myth of the right-wing corporation allows the media to tighten liberalism’s grip on both corporations and the culture. John McCain perfectly symbolizes this catch-22 of modern liberalism. McCain despises the corrupting effect of “big money” in politics, but he is also a major advocate of increased government regulation of business. Apparently he cannot see that the more government regulates business, the more business is going to take an interest in “regulating” government. Instead, he has concluded that he should try to regulate political speech, which is like decrying the size of the garbage dump and deciding the best thing to do is regulate the flies.
These speech regulations in turn give an unfair advantage to some very big businesses—media conglomerates, movie studios, and such—to express their political views in ways exempt from government censorship. It’s no surprise that some of these outlets tend to celebrate McCain’s genius and courage and use their megaphones to expand on the need for him to go even further and for other politicians to follow his lead. Of course, this dynamic is much larger than mere regulation. The New York Times is pro-choice and supports pro-choice candidates—openly on its editorial pages, more subtly in its news pages. Pro-life groups need to pay to get their views across, but such paid advertising is heavily regulated, thanks to McCain, at exactly the moment it might influence people—that is, near Election Day. One can replace abortion with gun control, gay marriage, environmentalism, affirmative action, immigration, and other issues, and the dynamic remains the same.
This is how the liberal Gleichschaltung works; contrary voices are regulated, barred, banned when possible, mocked and marginalized when not. Progressive voices are encouraged, lionized, amplified—in the name of “diversity,” or “liberation,” or “unity,” and, most of all, “progress.”
Go into a Starbucks sometime and pick up one of their brochures highlighting their Corporate Social Responsibility Report. The report covers all the progressive concerns—the environment, trade, sustainable development, and so on. It devotes a whole section to “embracing diversity” in which the huge multinational boasts that it is “striving to increase our diversity in our U.S. workforce.” Thirty-two percent of its vice presidents are women and 9 percent people of color. They spend $80 million a year with minority-and women-owned suppliers and provide “extensive diversity training courses to address our partners’ relevant business needs. Diversity content is also woven through our general training practices.” “Partners,” by the way, is the Orwellian term they use for “employees.”46 In the new corporatism, we are all “partners” after all.
Environmentalism in particular offers a number of eerie parallels to fascist practices, including as an overarching rationale for corporatist policies. According to generic fascism, an atmosphere of crisis must be maintained in order to circumvent conventional rules. Today, while Hollywood and the press relentlessly hype the threat of global warming, big business works assiduously to form alliances and partnerships with government as if the fight against global warming were the moral equivalent of war. Indeed, Al Gore—who makes much of such public-private partnerships—claims that global warming is equivalent to the Holocaust and anybody who denies it is the moral equivalent of a Holocaust denier. Meanwhile, one oil company after another markets itself as a vital ally against global warming. British Petroleum runs creepily propagandistic ads in which it assures the viewer that it has enlisted in the environmental crusade and is moving “beyond petroleum.” When the late libertarian crusader Julian Simon visited an oil installation in Alaska, he got so sick of hearing managers boast about the “environmental benefits” of their work that he finally asked, “What do you produce here? Oil or environmental benefits?”47
GE, the birthplace of Swopism, today spends millions of dollars promoting its “Ecomagination” program, through which it hopes to prove that GE is a progressive company. GE’s CEO declared at the launch of his green initiative, “It’s no longer a zero-sum game—things that are good for the environment are also good for business.” The audience, eating organic hors d’oeuvres and drinking wine from a solar-powered winery, listened enthusiastically as the head of the biggest industrial manufacturer in America explained, “Industry cannot solve the problems of the world alone. We need to work in concert with government.”48 No surprise, then, that GE’s launch party was held at its Washington office. Indeed, the agenda behind “ecomagination” is to invest in “clean” and “green” technologies, and then lobby government to subsidize them through tax cuts or outright grants.
Corporations’ power to “switch on” their workers to larger political agendas is a vastly underappreciated aspect of modern American civilization. Diversity is a perfect case in point. Big corporations have a vested interest in supporting diversity for a host of legitimate reasons. No firm wants to appear hostile to potential customers, for example. Nor is it smart to turn away qualified applicants out of racial animus. Moreover, the legal regime requires firms to be diverse whenever possible. And just as laws like the ADA help big businesses over small ones, affirmative action has the same effect. According to the Yale Law School professor Peter Schuck, affirmative action programs “also tend to advantage large companies by imposing onerous reporting, staffing, and other compliance costs on smaller competitors who cannot bear them as easily.”49 Survey data confirm that CEOs of large firms are more likely to support mandatory affirmative action programs than the CEOs of small firms.
Such progressive leadership doesn’t come without a heavy investment in reeducation. Almost all mid-level and senior executives in corporate America have been through “diversity training” and/or “sexual harassment training,” and often they’re sent back for further reeducation—usually because the definition of “tolerance” has been ratcheted up. Corporations have accepted the logic of diversity gurus who insist that if you aren’t actively promoting diversity—with goals, timetables, and the like—you are actively opposing it. The totalitarian nature of this training has not gotten nearly the attention it deserves—partly because journalists themselves have been so thoroughly reprogrammed by the giant corporations they work for.
Ask yourself this: What would happen to the businessman who simply refused to employ the acceptable number of black—or, one day soon, gay—applicants? Let’s assume that this businessman is an evil person, racist, mean, miserly. But there was once a notion that freedom involved the right to be bad. So let’s say this businessman refuses to hire blacks, gays, Jews, or members of other “oppressed” groups. What happens next? First he gets a letter from the government saying he has to have a workforce that looks like America. Then he’ll get another letter. Perhaps he’ll also get a letter from some disappointed job applicant threatening to sue. Eventually, he will be brought before a judge and told he must hire people he doesn’t want to hire. If he still refuses, he may lose a lot of money in a civil suit. Or he might have his company taken away from him and put into receivership. If he persists in his stubborn independence, the state will, one way or another, take away his company. No doubt the Robert Reichs of the world will say that you have the right to employ the people you want, so long as your rights don’t intrude on the “common good.”
We might even agree with Reich because we think discrimination is evil. But is it really any less fascistic than telling a businessman that he must fire the Jews in his employ? Or if that’s too dark a rumination, consider this: the restaurant chain Hooters came within a hairbreadth of being forced to hire men as “Hooters girls.” It sounds funny, but just because something is done in the name of diversity doesn’t make it un-fascist. It just makes it a nicer form of fascism.