Conclusion: Fascism and the Problem of American Exceptionalism

WHAT CAN WE say about the coming of the American Behemoth in the 1920s and 1930s now that it is fully grown? How is it that we never saw the fascist monster growing within and above us to the point where it threatens the entire world? Who is responsible for this debacle in the making? Why all the evidence for its genesis and still no history of it?

These are the questions that arise in light of the evidence I present in this book. The extent that it appears in a basic chronological form is designed only to create entry points for further discussion. This is possible thanks to those writers in the 1930s and early 1940s who recognized the genesis of American fascism in monopoly-finance capitalism, that is, Big Business. My attempt to focus on the capital-labor relationship comes from their observations, analysis, and commentary.

Yet these writers are wholly absent in mainstream U.S. history. There is no mention of Lewis Corey’s great work on the structural contradictions of American capitalism that located the seeds of the Great Depression in the Great Boom. It is startling to learn how Americans have been denied Corey’s work given the attention it once received. When The Decline of American Capitalism was published in 1934, even the Wall Street Journal reported that Corey “has undertaken what is perhaps the most complete statistical and factual study made to date of the underlying disharmonies of our economic system” and “is almost monumental in its scope and wealth of factual detail.” In short, it was not a book to ignore. “Mr. Corey sees a trend toward state capitalism and then on to Fascism in the attempt of the propertied classes to save themselves from the consequences of capitalist decline.” Naturally, the reviewer was not sympathetic to Corey’s communist alternative. “But as a comprehensive study of class, labor and political conditions” he concluded:

The Decline of American Capitalism should stand out as an important reference work. Some of the questions it poses will be very hard for business and political leaders of the present order to solve. Whether or not one concurs in Mr. Corey’s findings, he can hardly fail to discover pertinent sidelights on today’s national hodge-podge.1

One would think such praise coming from finance capital’s main media advocate would have prompted serious attention. Instead, liberal historians in the 1950s and 1960s, adamant in their Cold War hostility toward Marxism, ignored or trivialized Corey’s book and other valuable studies that shed light on the bust in the boom. Among the earliest of these notable, liberal Cold War historians is William Leuchtenburg, whose highly acclaimed The Perils of Prosperity appeared in 1958. Leuchtenburg argued that the prosperous 1920s had changed the United States in significant yet problematic ways. Chief among them was the failure by businessmen to act responsibly given the enormous political and social power that prosperity had provided. For Leuchtenburg, the general crisis of the U.S. economy was explicable mainly for the cultural and moral failings of business elites; it was a crisis of leadership and character. Leuchtenburg extended his thesis of moral failure to the masses, whose collective mindset had shifted away from “facets of the American character that had developed under an economy of scarcity.”2 The promise of a universal abundance that assured everyone they had the power to become wealthy made money the full measure of a man’s worth. Capitalist tenets had found their way into a fundamentalist Christianity devoid of spirituality and godly virtues. There was no room for Corey’s analysis of capitalism’s structural contradictions as the cause of a general crisis of U.S. capitalism in decline and decay, which could open the door to fascism.

Less than a decade later, Arthur Schlesinger Jr. ridiculed Corey’s book in The Politics of Upheaval, the third volume in his Age of Roosevelt, a triumph of Cold War liberal historiography and the politics of liberalism. “The Decline was a long-winded and pretentious book, turgid in style, abstract and pedantic in its approach, filled with irrelevant learning,” Schlesinger wrote. “Corey detested the notion that the American experience might compel the slightest modification in Marxist theory.” Schlesinger noted that American communists liked the book until “headquarters began to perceive in Corey a possible threat to the Party pundits. Nearly everybody else was unmoved.”³ Schlesinger could not have been more wrong. Admittedly, The Decline of American Capitalism is repetitive and challenges the reader’s ability to engage the text. But Schlesinger’s shoddy dismissal is telling; his explanation of the economic causes of the Great Depression are severely lacking without Corey’s Marxist analysis.

In his biography of Corey, Paul Buhle writes that Decline “was hailed by radical and conservative critics alike as a powerful treatise against the existing order” when it appeared. Buhle cited a review by Louis Hacker, a Columbia University economics historian and one of the many “independent-minded Marxist academics.” His review “overflowed with praise” for Corey’s book, proclaiming it to be “Radicalism’s Complete Handbook” and “an amazing economic, historical and ideological exposition of the communist position in the United States.” For Hacker, Corey’s book was “an indispensable prolegomenon to capitalist economics” and “a brilliant appendix, drawn entirely from American experience, to Marx’s Capital.”4

In the end, The Decline of American Capitalism has mattered little to the architects of liberal historiography, from Schlesinger to Ira Katznelson. There is no mention of Corey in Katznelson’s recent book, Fear Itself!, about the New Deal and its legacy in our times. To my knowledge, the best of non-Marxist historiography still perpetuates a learned ignorance about Lewis Corey or others who wrote about the Great Depression and the threat of American fascism from a Marxist standpoint, or were in some way informed by the Marxist worldview and method. There are exceptions. Alan Dawley, one of the few American historians during the last two decades to recognize the significance of The Decline of American Capitalism, recalled that Corey and a few other Marxists in the early and mid-1930s had not been surprised when the stock market crashed in 1929. Only Marxists, Dawley wrote, understood that crisis was inevitable in the processes of capitalist accumulation, the product of “inner contradictions” that arose and became a crisis when “capitalists could no longer squeeze more surplus value (profits) out of wage labor.” With the exception of some attention given to Decline by the late Chris Harman in his impressive 2009 work, Zombie Capitalism, there is little recognition of its significance in contemporary U.S. historiography or political commentary.⁵

All the more reason why reading these works of the 1930s and early 1940s by Corey, Carmen Haider, Robert Brady, and others helps us to recover an important and highly relevant chapter of American history, omitted or marginalized in mainstream historiography. We would be better off today if their seminal contributions to the study of American fascism had not run dry in the erudite works of eminent liberal historians. Then again, some were victims of political circumstances independent of their will. Always confronting great personal difficulties as a dissident Marxist economist, Corey died in despair from the twists and turns of the Communist Party. Perhaps we can reason that Corey died on the slaughterhouse floor of history, a Marxist intellectual wrecked by forces he once so completely understood only to wind up bewildered by them in the end. Within only a few years after Decline was published, Corey had turned away from communism as vigorously as he had forged it in the formative days of Communist Party–building in the United States in the immediate aftermath of the First World War.

We know very little about most of the others whose works are so instrumental in making my case. Carmen Haider virtually disappeared from the political scene after her prescient book Do We Want Fascism? came out in 1934. I found only a few reviews; the best one paid short shrift of its seminal argument and contents. Robert Brady published three more books on industrial organization, technology, and labor after his great work, Business as a System of Power, appeared in 1943. Clinging to his belief that democratic decision making was the key to rational planning under capitalism—one commentator said he looked vaguely toward a guild socialism—Brady could never make the leap to socialism despite what his own dedicated study had revealed. He was a professor of economics for thirty years at UC Berkeley until a series of strokes in the 1950s left him an invalid. Brady died in 1963. Haider and Corey are just two of the many writers whose contributions to our knowledge of embryonic American fascism have disappeared from the pages of later histories.

THE FORGOTTEN VOICES RESTORED

Whatever their individual shortcomings, these early writers provided the foundation for our understanding of the conditions that led to the emergence of fascism in the United States. Collectively, they point to monopoly-finance capitalism as the seedbed. They agreed on other key points. Our fascism would not look like Italy and Germany. It would not arise from a mass movement led by a demagogue who eventually seized state power and became a dictator. The obverse was true in the United States. Here, it was quite literally the growing power of finance capital over all aspects of American life. This is what A. B Magil and Henry Stevens meant when they pointed to Wall Street as the “fountainhead” of American fascism.

Like Magil and Stevens, all of these writers were internationalists to varying degrees. Their understanding of fascism as a nascent global phenomenon distinct to the contemporary world, synonymous with the epoch of monopoly-finance capitalism and imperialism, enabled them to locate its genesis in the advanced capitalist nations after the First World War. Its national forms varied according to political institutions, traditions, and other cultural characteristics. But the one thing all national forms had in common was that they emerged in a moment of capitalist crisis and came to power when the rule of the capitalist class was in jeopardy. It was like this for Mussolini’s meteoric rise to power in Italy in 1922, as well as the protracted yet mightier affair managed by Hitler and the National Socialists a decade later that created the most powerful and destructive capitalist dictatorship in history.

Though it would take a more grounded understanding of fascism as a function of the contemporary world-capitalist system—the sociologist Walter Goldfrank indicated as much in 1978—these writers, whether Marxists or radical Republicans like Brady and George Seldes, understood that Big Business in America meant the expansion of imperialist reach.

They had pointed to the biggest bankers and financiers who were the real policymakers at home and abroad. During the 1920s, Andrew Mellon used the Treasury Department to set things right for the plutocrats whose loans had propped up the fascist regime in Italy because Mussolini was their man in Europe. Franklin Roosevelt would do the same as president when he called a Central American dictator “our son-of-a-bitch.” Herbert Hoover, from the time he became the commerce secretary in 1920 until his election to the presidency eight years later, had turned the Commerce Department into an advertising arm and public relations clearing house for Big Business and Wall Street. As the epicenter of the world capitalist system—in all respects unique in its history as perhaps the first and only core of the world capitalist system—fascist processes inhered in the rise of Pax Americana in all their terrorist and non-terrorist forms.

The hidden powers of capital in the epicenter of the world system also explain another important characteristic of embryonic American fascism—its disguises. When the drunkard and alleged dullard Warren Harding took up the slogan “America First” to rally the small capitalist behind flag and country, he knew which Americans he was serving. As a businessman in the White House, Harding made it clear a month after his inauguration that he had always called for “less of government in business as well as more business in government.” In fulfilling this objective, Harding embodied the nativist, racist impulses of the white middle classes now being swept up by the forces of capitalist modernization and controlled by the plutocracy of Big Business. This more than anything—grasped within the paradigm of political culture shaped by monopoly-finance capitalism and imperialism—explains why the disguises of American fascism made up the greatest of masquerades. The line usually attributed to Huey Long that fascism would come in the name of anti-fascism is the most practical expression of a deeply complex political phenomenon. The utterly paradoxical form of American fascism as the ideology of corporate capitalism, its spell so powerful as to create a phantasmagoria—an exhibition of shadows created by the magic lantern of commodification and reification—corresponded to the paradox of capitalist progress during the booming 1920s: growing poverty in a rising sea of prosperity. Though fascism everywhere showed two faces, terrorist and non-terrorist, the role of the latter was greatest in the United States where the powers of capital were most highly developed.

FASCIST PROCESSES IN CAPITALIST MODERNIZATION

In the capitalist epicenter, fascist processes inhered in capitalist modernization itself, in the imperatives of monopoly-finance capitalism and Big Business now steadily acquiring political power in its own right.6 The forces of production governed by the general law of capitalist accumulation, as explicated by Marx in Capital and applied by Corey in The Decline of American Capitalism, demonstrated how capital bound labor more tightly to its dictates. This was all due to the concentrated wealth and centralizing powers of Big Business, the collective face of America’s most powerful corporations as revealed in a landmark study by Adolf A. Berle and Gardiner C. Means, The Modern Corporation and Private Property, published in 1932. In the preface, Berle wrote that “American industrial property, through the corporate device, was being thrown into a collective hopper wherein the individual owner was steadily being lost in the creation of a series of huge industrial oligarchies.”⁷ Capitalism was becoming more collective in its organization and function.

In chapter 3, “The Concentration of Economic Power,” Berle and Means explained how the corporate system functioned and its inherent trajectory. “Within it,” they wrote, “there exists a centripetal attraction which draws wealth together into aggregations of constantly increasing size, at the same time throwing control into the hands of fewer and fewer men. The trend is apparent; and no limit is as yet in sight.” What they found was astonishing. As of 1930, the 200 largest non-banking corporations had combined assets that amounted to nearly half of all the corporate wealth in the United States. Throughout American society, every individual, directly or indirectly, was in some way impacted by the growing concentration of wealth and economic power. Financially, these largest of the non-banking corporations also dominated the New York Stock Exchange, the nerve center of U.S. finance capital. According to weekly reports, 130 out of the 573 independent American corporations engaged in a typical week of activity were “huge companies” with gross assets over $100 million in each. Below them were 71 corporations with between $50 million and $100 million, and then 372 corporations with assets of under $50 million. Put another way, the top 130 corporations held 81.7 percent of the total assets represented on the exchange while the 372 at the bottom tier held only 10.9 percent of the total. The “small corporations” had no importance in the daily operations of the stock market. The dominant role of the largest non-banking corporations was also evident in relation to the total number operating in the country. At the beginning of 1930, these 200 largest companies—42 railroads, 52 public utilities, and 106 industrials—had combined assets of over $81 billion, which from a total of $165 billion meant that they controlled nearly half of all non-banking corporate wealth. According to their research, Berle and Means estimated that the roughly 300,000 smaller companies that made up business enterprise owned the other half.8

Almost a decade later, in its final report to President Roosevelt on March 31, 1941, the summarized findings of the Temporary National Economic Committee (TNEC) showed an even greater concentration and centralization of wealth. The committee affirmed the intent and purpose of Roosevelt’s request to find a way to curb the power of monopolies. But it exceeded Roosevelt’s expectations and may have caused him discomfort. He realized that what he had deemed the rising, internal fascist menace—monopoly—was now needed to prepare the United States for entry into the widening global war. Against fascism!

The final report makes clear that the president and the committee were of one mind. It was now necessary “to marshal the resources of America in defense of democracy” and organize them in a way for the United States to meet the threat of totalitarian aggression that threatened all democratic nations in the world. But in so doing, it fueled the very thing that had brought the committee into existence—the fear that monopoly would take America toward its own fascism. War preparation fueled the massive defense contracts by the War and Navy Departments that between June 1, 1940, and March 1, 1941, amounted to some $12.7 billion, a sum “more than half of all the value added by manufacture in all the industrial plants of America for all industrial commodities during the year 1939” and also one that “exceeds the total assessed valuation of all the real and personal property within the boundaries of 21 States.” Moreover, the distribution among the states confirmed “most dramatically the degree to which the concentration of economic power and wealth has proceeded in America.” Here the investigation saw distinct features that were alarming to anyone who equated capitalist competition with democracy. Most states had barely gotten more than a small percentage of these defense contracts, while four—California, Pennsylvania, New Jersey, and New York—received almost 40 percent of the total. Given all the evidence on the distribution of these contracts, just over 82 percent of the total went to only fifteen of the forty-eight states. What troubled the committee was that the defense contracts had gone to those states where industry and its organization was already the most advanced. This was the one great imbalance in the U.S. economy that had to be corrected after the war. “This committee recites the facts only for the purpose of demonstrating that concentration does exist and that America must find the way to bring about a permanent decentralization if the ideals of a democratic social and economic structure for all our people are to be achieved.”9

The work of the TNEC was unprecedented for its comprehensive investigation that led to thirty-two published volumes of material and forty-three monographs. The investigation that was supposed to curb the problem of monopolies became a forum for determining how they could instead be directed toward greater responsibility in creating a balanced economy and more equitable economic growth in the future. The opening pages of the final report affirmed Roosevelt’s commitment to preserve the freeenterprise system against the abuses of concentrated wealth and monopoly. The central task of the TNEC was to assemble information that when “eventually properly analyzed and disseminated” would enable the American people to preserve free-enterprise and competition in the economy as the bedrock of American democracy.¹⁰ To that end, one of the monographs focused on economic power and its political arm made up of various organizations and groups that worked as an invisible force to influence public opinion. Pressure groups such as major trade associations like the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM), as well as other organizations less directly involved in the forging of corporate and banking economic policies, effectively promoted the political agenda of the “business community.”11

Here was the real story behind the familiar face of Big Business, in essence, a business system driven by the need to go political as Robert Brady had written in 1943. And it could be heavy-handed. The interwar period is replete with examples of Big Business employment of vigilantes, cops, private security firms, hooligans, and at times the “small-fry fascisti” groups like the Silver Shirts as George Seldes called them. According to historian Frederick Rudolph in 1950, it had taken less than a year into the New Deal for many prominent members of the ruling class, “whose gods were Adam Smith and Herbert Spencer,” to determine that their future was highly uncertain. “Correspondence, reflecting despair and anger, flowed from one citadel of economic power to another,” Rudolph wrote. Though much of it remained in private hands and unknown to the public, some evidence of the frustration did come to light. One example was an exchange in March 1934 between R. R. M. Carpenter, a retired DuPont vice president, and John J. Raskob, retired chair of the Democratic Party, former head of General Motors, and still a vice president with DuPont. “Five Negroes on my place in South Carolina refused work this spring,” Carpenter complained to Raskob, adding that “a cook on my houseboat in Fort Myers quit because the government was paying him a dollar an hour as a painter.” Knowing that Raskob had access to Roosevelt, would he please ask the president where the country was going. It all seemed to be the opposite of what America had always promised to its people. Raskob urged Carpenter to “take the lead in trying to induce the DuPont and General Motors groups, followed by other big industries, to definitely organize to protect society from the sufferings which it is bound to endure if we allow communistic elements to lead the people to believe that all businessmen are crooks.” To this end, Raskob saw the need for “some very definite organization that would come out openly with some plan for educating the people to the value of encouraging people to work; encouraging people to get rich.” No one was in a better position to do this than Carpenter, who, along with friends in high places, controlled the largest share of American industry.12

Carpenter did just that, and the result was the creation of the American Liberty League on August 15, 1934. Charging itself with instilling “respect for the rights of persons and property” in American society, it also called on government “to protect individual and group initiative and enterprise, to foster the right to work, earn, save, and acquire property, and to preserve the ownership and lawful use of property when acquired.” The Liberty League, Rudolph wrote, was “as indigenously American as the New Deal which it was determined to destroy.” Merging long-standing American traditions with the new realities of contemporary economic, social, and political life, the League dedicated itself to a broad defense of the Constitution against a host of alleged enemies, from the so-called socialist New Deal and various small political groups on the left and right, as well as demagogues like Senator Huey Long and Father Charles Coughlin. Its Statement of Principles and Purposes complained that business, which bore the responsibility of employment and wages in the national economy, had little voice in government. Once again, businessmen must be enabled to do the business of America just as it had under Roosevelt’s three Republican predecessors, Harding, Coolidge, and Hoover. With the Republican Party now weakened, the Liberty League took up the mantle of defending civilization on the basis of enabling the “uncommon man,” who, standing at the “pinnacle” of society, must once more be free “to follow the bent of his natural talents, unfettered by government regulation and control.”¹³

At the top of its founders’ list were the DuPont brothers (Irénée, Pierre, and Lamont), whose vast industrial empire produced everything from plastic to paint to munitions. Other representatives of Big Business included leaders of America’s largest companies, including Alfred P. Sloan of General Motors, Edward F. Hutton of General Foods, J. Howard Pew of Sun Oil, Sewell L. Avery of Montgomery Ward, and Ernest T. Wier of National Steel. The rest of its membership was filled out by financiers and financial officers, corporation lawyers, politicians, and some academicians. All were grounded to a greater or lesser degree in the racist thinking of Social Darwinism. Its leading political spokesman was Roosevelt’s former mentor and now bitter rival, Al Smith, the former Democratic governor of New York. Until 1936, much of its membership came from the upper echelons of the Democratic Party. Rudolph pointed to “the cloak” of an organization whose program was made up of “respectable generalities, partial self-delusion, intense sincerity, and frequently embarrassing hypocrisy.” Its most effective cover was the Constitution, held up as the ultimate guarantor of the right of the individual to engage freely in whatever rightful activity he chose—in this case the right to pursue wealth and become rich at the expense of others—without impediment by government bureaucracy.14 Presenting itself as a nonpartisan educational group whose aim was to combat radicalism and preserve property rights, it sometimes used the Constitution to promote its ideals among unsavory associations. Irénée DuPont hoped the League would form alliances with other groups that he believed aimed to defend the Constitution in perilous times, including the American Legion and “even the Ku Klux Klan.”¹⁵

For Grace Hutchins, a communist and radical labor historian, it was critical for Americans to grasp the League’s true motives. Writing in 1936 on the eve of the General Election and Roosevelt’s bid for a second term, Hutchins contended that its defense of the Constitution, which protected the rights and privileges of Big Business, was a cover for the real intent of its members, which was to do as their predecessors had done so successfully before the Depression—get rich. But this went hand-in-hand with the defense of the ruling class by government. Raskob said as much in a letter penned on his personal stationery encouraging capitalist elites to become members of the League, “which is doing everything possible to root out the vicious radical element that threatens the destruction of our government.”16 The League’s support for the Republican candidate, Alf Landon, showed its resolve to oppose every progressive measure in the interest of workers and labor organizations.

According to Hutchins, this gave the League a primary role in the trajectory toward fascism. To protect society from “communistic elements” required it to defend big businessmen who were, in fact, the biggest crooks in America. Its defense of the Constitution was nothing more than a platform to oppose organized labor’s ongoing struggle for higher wages and better working conditions. And by stressing nonpartisanship, the League showed that it represented the common interests of capitalists, Democrats and Republicans alike. It had opposed the National Labor Relations Act because it guaranteed the right to collective bargaining and the right of workers to choose their own unions. This, the League said in one of its pamphlets, dealt “an unjust blow at company unions which have been highly successful in the establishment of mutually satisfactory relations between employees and the management in many large industries.” It opposed other New Deal measures and agencies that provided relief to the unemployed millions, calling it “wasteful [and] inefficient” and “boondoggling.” It demanded that the Roosevelt administration abolish all federal government relief and return the responsibility to state and local agencies, only “contributing temporarily such amounts as are necessary for direct relief and subsequently assisting with loans” to states to do so on their own. The League opposed the Social Security Act because unemployment and old age insurance “should be dealt with entirely under state laws” and because the act “imposes a heavy financial burden upon industry.” It blasted the Roosevelt administration for its use of taxation “to accomplish social objectives.” It called for broadening the tax base while cutting taxes on the rich. “The purpose of the Congress should be to ease rather than to increase the tax burden upon business, upon the home and upon the individual.” It even called for “civil liberties” for corporations.¹⁷

To demonstrate the fascist intent of the Liberty League, Hutchins focused on who paid for all its propaganda by drawing on the findings of a Special Senate Committee to Investigate Lobbying Activities. The investigation examined the books of the League as well as other related organizations like the Crusaders, the Sentinels of the Republic, and the Southern Committee to Uphold the Constitution that together contributed significant amounts of money to other right-wing extremist organizations and white supremacist groups.18

Finally, one of the largest contributing members to the League and a member of its national executive committee was Grayson M. P. Murphy, director of Guaranty Trust and the Bethlehem Steel Corporation. Murphy was the individual identified by retired Marine Corps General Smedley Darlington Butler, recipient of two Medals of Honor and an iconic figure in the American military, who tried recruiting him to lead a private army against the White House. Butler subsequently told congressional members of a Special Committee on Un-American Activities in a secret session that he had been approached by Murphy, as a representative of finance capitalists, to organize 500,000 veterans to march on the capital and install extraordinary executive power to co-run the federal government with the president—or simply remove Roosevelt if he refused to go along with the program. Butler was reporting a plot aimed at a fascist coup planned by members of the American Liberty League.¹⁹

THE MIDDLE-CLASS REACTION

And what can we say of the middle class? To begin, I prefer “middling men,” as Nancy MacLean so astutely observed from its wide social composition, thus freeing us from the notion that the lower middle class alone drives American fascism from below. Regardless of differing strata and respective peculiarities, the middle-class outlook had become increasingly pervasive in American society during the Great Boom of the 1920s. Many millions of middling men and women, mostly white, were swept up in the spectacle and bustle of urban life, ever listening to the ballyhoo about continued prosperity and uninterrupted social progress. The spell cast upon society by the gurus of advertising, public relations, and propaganda pulled their minds into the force field of capital. Modernization meant the steady bourgeoisification of society aimed at turning the entire public into a commodity. Ballyhoo was thoroughly middle class in design and purpose. What to wear? What to drive? How to avoid halitosis so the man or woman of your dreams does not turn away and then disappear?

But middle-class consciousness was by nature reactionary, as the writers included in these chapters have shown. Perhaps the one true revolutionary moment in the contemporary epoch came during the worst years of the Depression when the middle class looked to the progressive Roosevelt as someone who would use state power to its benefit, only to be left behind as the New Deal propped up the capitalist order under the aegis of Big Business. Now it was laissez-faire for the top 200 non-financial corporations and the Wall Street fountainhead that pumped capital into productive and then into speculative, unproductive enterprise. Only the second New Deal kept the middle class loyal to Roosevelt, and that was the product of renewed labor militancy that could not be bottled up. But renewed crisis in 1937—the recession within the Depression—forced Roosevelt into a Keynesian turn, which restored confidence to the business system. It could now prepare for a new round of capitalist accumulation in preparing industry for war. Then war came, and profitability was fully restored. Keynesianism was in fact military Keynesianism and the beginning of a permanent war economy in the United States.

Nancy MacLean’s exceptional class analysis of the middling men of the Klan allows us to ponder their mental outlook during the Great Boom of the 1920s. From Albram Lipsky, the author of the 1925 book Man the Puppet, comes an introduction to the methods of mind control in capitalist America. Here was irony. As advertisers tapped into the realm of individual desire to sell a product, public opinion makers sought to create a “crowd-mind” mentality that lowered the “sense of personal responsibility” required “for the correctness of one’s thinking.” Ideas were peddled not for their soundness but for acceptability by the crowd. “With the surrender of responsibility,” Lipsky wrote, “there comes an intoxication, a feeling of irresistibility.”20 It all depended on the work of the public relations gurus:

Everywhere in business we see individuals engaged in laboring to influence the minds of others, sometimes by means of logical argument, but more often by indirect appeals to the subconscious, to masked instincts, and to that curious susceptibility to mob contagion that is just beginning to be understood. The bulls try to communicate their bullishness; the bears their bearishness. Business is the sum total of this bluffing and higgling, this cajolery, deception, intimidation, propaganda and persuasion.²¹

To wander further into the mentality of the American middle classes during the 1920s and 1930s requires a study all its own. Yet, it is tempting to speculate on the split personality of the middling men in the 1920s, personalities whose internal cracks would deepen in the crisis decade that followed, and with political consequences throughout the period. Unlike the big capitalist, his middle-class counterpart perhaps can be understood as Dr. Jekyll and Mr. Hyde. The good doctor resents the big capitalist for his excesses, but the evil man longs to have it all himself—maybe not all, but comfortable enough. Jekyll embraces the principles of democratic capitalism—Everyman a capitalist!—while his evil other shouts “only for 100 percent Americans!” As small capitalists, salaried employees, or teachers and lawyers whose oath is to serve others, they always perform at a disadvantage to the elites they serve, forever hoping they could coexist, even if not entirely as equals. As for the small merchant, the backbone of an earlier American capitalism, he must sell the product knowing that his profit can never match the department store chain. By day he endures the unfair competition with a smiling face just as Babbitt did, praising the virtues of his product as the advertisers urged. That night, he attends a Klan meeting and is compelled to consider that all these modern products he is laboring to sell are directly or indirectly immoral and even sinful. Anything to do with enhancing the look or scent of a cosmopolitan woman could be nothing else. In most cases, he is a True Christian who really worships the market; his faith is in the hustle as well as in Jesus.

LIBERALISM AND THE PERSISTENT MYTH OF AMERICAN EXCEPTIONALISM

When in 1935 the political scientist Arthur Steiner arrived at his “minimum doctrinal standards” to determine whether America would or could go fascist, he gave license to a conviction that fascism was primarily a European political affliction from which America was immune. Herein was another important contribution to the myth of American exceptionalism, perhaps the most fatal. We see this in a book by Stephen Raushenbush, The March of Fascism, published by Yale University Press in 1939. Raushenbush believed in the possibility of an American-style fascism based on standard comparisons with Italy and Germany. Yet there were mitigating factors. The “great dissimilarities” that existed in the United States “should not be forgotten.” For one thing, democratic tradition and loyalties were far stronger in America than in Italy or Germany. Raushenbush made his case for American exceptionalism based on liberal-democratic assumptions, some quite dubious:

We are a people of sections, stubborn to resist sectional prejudices and habits other than our own. We have no overwhelming racial majority. We have no tradition of being regimented, no conscript army to teach us an unconditional obedience to superiors in office…. Our religious divisions are less strong than theirs were. Our major political parties have not been entirely discredited by their failure to give security. We have not, like Germany, been defeated, nor, like Italy, frustrated in war. We are not confined to an area too small for us to expand our economic possibilities to the full. No strong leader of a Fascistic movement has as yet arisen to challenge us, talking American to us. We have no tradition of absolutism. These are strong but not insurmountable barriers to Fascism in the United States.22

Raushenbush presupposed a unique American character on a historic path in order to suggest that simple comparisons between fascist developments in the United States and those in Italy and Germany were misleading. He warned that America could very well pave its own fascist road if citizens remained ignorant or dismissive of conditions that had caused Italy and Germany, their own democratic weaknesses notwithstanding, to go fascist. Americans needed quickly to learn how unemployment, insecurity, instability, and anxiety proved fertile ground for fascist development. This applied especially to middle-class businessmen and professionals who felt squeezed by the concentrated wealth and power above them and the frustration over a perceived lack of purchasing power they believed they deserved as members of a rising productive class.

Raushenbush pointed to the desperation felt by millions of young people, especially those in the hardest-hit regions, who worked for beggar’s wages even if employed and who were vulnerable to a Hitler promising any kind of future. There were also the farmers, whose long-standing suspicions of urban workers drove them into alliances with industrialists. Given these conditions, fascism would come to America if neither of the major political parties took sufficient heed of history and read the warning signs, which were similar to Italy and Germany in their respective pre-fascist years. “To stay democratic,” Raushenbush advised, “a state must meet adequately certain fundamental demands of its people.” If not:

Fascism comes by default. While it can be aided by members of the wealthier groups of society, its driving force comes from the lower middle classes who feel insecure, disinherited, abandoned by the state. When the state stops moving, stops giving its citizens a sense of motion, of endeavor, when it accepts a huge unemployment as normal, for example, the people start deserting it. The man who comes along with a promise of a future for youth, jobs and security for the older people, can then secure their assent to his destruction of liberty. Fascism is not simply dictatorship, it is dictatorship with mass support.23

For Raushenbush, the world had not yet created a “successful defense against Fascism.” Democracy had come to depend on a “thin liberalism” that was no longer working. Leaders of these “liberal nations” were necessarily drifting toward conservative and reactionary positions because there was no other alternative.²⁴ Here was fascism by default for most of Europe, and the same was possible for the United States. Americans could be drawn into a movement led by a demagogue. Democracy was not a given in any nation, even in the United States—where democratic traditions were considered the strongest anywhere—if government failed to offer livelihoods and security for basic needs. People would give up their freedoms to halt “an endless prolongation of misery or humiliation.”²⁵ After almost four years of New Deal recovery, the recession of 1937 had made this obvious. So much of the New Deal had failed to alleviate the insecurity of the people. Moreover, parts of it, such as the National Recovery Administration, were undemocratic, granting all the power to industrialists.²⁶ The American people were “not participating in many of the significant decisions of their lives.” Democracy at the local level was beaten down by the “chain belts of our factories to the national arena.” People could still decide what was best for their communities in matters of schooling and policing. “But whether the community can afford good schooling, or whether children can afford to continue in school, are matters determined by factors beyond local control. Even the functions of the local police are more and more affected by national developments.”²⁷

The solution to the nation’s ills—and halt of the march toward fascism—was to create a “bridge from local to national democracy” to save the “liberal state,” especially “when another depression comes.” The response would have to surpass New Deal efforts:

Attempts to increase the national income by collaboration between industry, labor, and government will again be made. If they are to succeed in a democratic way there will have to be democratic controls from the bottom up. Otherwise great and dangerous power may be given to industry or government or a combination of the two. The N.R.A. indicated this to us clearly.28

Raushenbush pointed to the deeper danger to democracy, one that was “growing formalistic and empty of living content.” Americans knew little how to vote on national issues except increasingly “in fear, either of Fascism or of radicalism.” Conservatives and liberals alike understood that changes requiring more democratic controls of the economy needed to be made. But they were paralyzed. So were their political parties. To prevent American fascism required a “strong state, carefully guarded by the democratization of its controls.”²⁹ Even this was not enough. It all depended on Americans rediscovering their

sense of values about life, human personality, and dignity. Only a profound conviction and determination to give reality to equality and fraternity as well as liberty will give us immunity to the values of the totalitarian states.³⁰

Raushenbush made clear that if any nation in the world could successfully defend itself from fascism, it was the United States. This is what made it exceptional. Americans must “recapture the world for our way of life” so they could “realize the American Dream in our time and set the nation in full motion again.”³¹

Today, we are being treated to more sophisticated arguments about why America is immune from fascism. All boil down to perpetuating the myth of American exceptionalism. A good example is Ira Katznelson, who, in his 2013 book Fear Itself!, deftly explains how responses by U.S. leaders to the Depression resembled those in fascist Italy and Germany. Katznelson mentions how powerful people called for some form of dictatorship immediately preceding and following Roosevelt’s election in 1932. He also focuses on the commentary about resemblances between the New Deal and fascist corporatism in Italy; indeed, these discussions are prominent in his book. Katznelson even challenges the usual liberal narrative of the New Deal by pointing to the role played by southern Democrats. While the latter were critical in helping Roosevelt to create the New Deal and lead the crusade against fascism abroad, they did so in return for a pass by Roosevelt allowing them to buttress white supremacy and institutionalized racism.

In this respect, Katznelson’s important contribution to the historiography of the New Deal also brings to light the contradictory and paradoxical course of American liberalism. Yet his failure to consider how these developments unfolded within the broader framework of political economy is glaring. He shows little interest in analyzing how capitalist imperatives bound ownership and management to the politics of white supremacy in the South other than to see the matter in the usual terms of cheap labor and racism, and he never mentions the earlier, liberal critique of monopoly capitalism that viewed racism as a contingent form of American fascism. For that matter, none of the individuals whose works are central to this study are to be found in Katznelson’s 700-page tome. Instead, he seemingly breaks with the logic of his own case, which points to the same indigenous fascist processes his predecessors saw clearly, and resorts to an eloquent defense of American exceptionalism:

During the Roosevelt and Truman years, Washington successfully wrestled with the problem of how to find a durable and democratic role for Congress in the face of crises characterized by fear and an urgent need for action. The breakdown of so many democracies between the two world wars was marked by the failure to find productive answers to this challenge. Indeed, the very triumphant assertiveness of the dictatorships was rooted in their rejection of the need to find an answer, since they totally discarded the eighteenth- and nineteenth-century liberal idea of a separation of powers and promoted the utter collapse of a parliamentary system. The United States, by contrast, stood for the ways in which American democracy secured the capacities of Congress to make laws and oversee their consequences. Congress did not become obsolete or irrelevant. It was not an anachronism. To the contrary, it kept and utilized the authority that liberal principles and democratic practices required that it not cede to others.32

The perpetuation of such liberal historiography flies in the face of contemporary Marxist analysis and historical method, which is grounded in the concept of totality—all relations in capitalist society are interconnected within the whole of capitalist society. This concept is evident in Marx’s understanding of “real, profane history,” the history that presents “men as the actors and authors of their own history,” which for Marx is “the real starting point” in the approach to writing history.³³ Perhaps only a revolutionary impulse from society that views its profane history from the standpoint of class, gender, race, religion, and other cultural forms of differentiation within the totality of capitalist relations—always subject to the fundamental contradiction between capital and labor—will spark such writing about American fascism.

GOOD VS. BAD CAPITALISM: THE FALSE DICHOTOMY IN LIBERALISM THAT LEADS TO FASCISM

In its final report to Roosevelt, the TNEC affirmed the intent and purpose of his request to examine the problem of monopoly. But he also made clear he meant no harm to solid and principled businessmen. In his April 29, 1938, request to Congress for the inquiry into monopoly, Roosevelt opposed “any ill-considered ‘trust-busting’ activity which lacks proper consideration for economic results.” Instead, he insisted:

It is a program to preserve private enterprise for profit by keeping it free enough to be able to utilize all our resources of capital and labor at a profit.

It is a program whose basic purpose is to stop the progress of collectivism in business and turn business back to the democratic competitive order.

It is a program whose basic thesis is not that the system of free private enterprise for profit has failed in this generation, but that it has not yet been tried.

Roosevelt was resolute. Once Americans “realized that business monopoly in America paralyzes the system of free enterprise on which it is grafted, and is as fatal to those who manipulate it as to the people who suffer beneath its impositions, action by the government to eliminate these artificial restraints will be welcomed by industry throughout the nation.”34

In its report to Roosevelt three years later, the Temporary National Economic Committee recommended that the government seek to reverse the trajectory toward greater monopolization of the economy and instead move toward its “reconstruction” based on “permanent decentralization,” creating more ownership across the board and less control by giants at the top. It is jarring, however, to learn how the committee viewed its findings in the context of world events. Europe was already at war, and the conflict would soon expand to Eurasia with the German invasion of the Soviet Union in June and the Japanese attack on Pearl Harbor in December. Thus, a solution to the current problem of concentrated wealth and the power of monopoly would have to be addressed in the future. “In submitting its recommendations,” the report began,

the Temporary National Economic Committee is conscious that with democracy engaged in a world-wide struggle for its very life, public attention has been diverted momentarily from the study of the problems of economic concentration for which the committee was brought into existence. Far from detracting from the importance of economic reconstruction, however, the events of the past year have served only to emphasize the need for readjustments after the present crisis is over. It is quite conceivable that the democracies might attain a military victory over the aggressors only to find themselves under the domination of economic authority far more concentrated and influential than that which existed prior to the war.35

Roosevelt and the Committee typified the liberal belief that capitalism was essentially good because it was competitive and therefore democratic. But to preserve good capitalism required the elimination of its abuses, bad capitalism—which meant monopoly-finance capital and fascism. Roosevelt was the beacon of such thought in 1930s America. Attacking monopoly as the driving force of American fascism, he wrongly believed that it could be controlled. We know from the arguments presented in this book, however, that this has not been the case, nor will it ever be. As Marx proved and Corey affirmed, the general law of capitalist accumulation only widened the fundamental divide between capital and labor during the 1920s and 1930s. All progress under capitalism was a paradox. The widening gap between wealth and poverty led to a general crisis of American capitalism and with it the plausibility of fascism. The liberal perpetuation of a false dichotomy of good vs. bad capitalism wrapped in the ideology of American exceptionalism does much to explain how we got to where we are today.

The recovery of forgotten voices that have spoken once again in this text can help us to establish a critical framework for the study of American fascism. More important, they provide us with the knowledge and insight of people who feared its rise in their time—knowledge and insight we must possess as we fight its much greater strength today. As we go to press, the fascist reordering of government is underway under Trump, one that replicates what the Germans called Gleichschaltung under Hitler—a fascist dictatorship in the making. We now have the gangster state that Franz Neumann saw in Hitler’s regime.