Are We Flirting with Fascism?

Folks are loose with ‘fascism’. The cops are fascists because they’re cops. Bush was a fascist because he blew new life into the military-industrial complex and herded protesters into “free speech zones.” And now, Obama is a fascist for sacking the executive of a private corporation and saying the government will back the warranty for your Yukon Denali. Is this fascist?

Fabio Rojas says no. He says fascists want to control capitalism, “but mainly as a tool for nationalism and clientelism, rather than redistribution.” He goes on:

Instead, we’ve got “quarterback capitalism.” The idea is pretty simple: don’t challenge the major features of capitalism, but opportunistically fix what you can with buy outs, loans, subsidies, and other ad hoc interventions. Reminds me of the great quarterback Randall Cunningham, who could scramble his way out of any mess. The idea behind Bush-Obama policy is that what ever mess you’ve got, you can probably fix with the right hodgepodge of incentives. The Federal government is the nimble quarterback who can get you out of the squeeze.

With regard to GM, Obama didn’t do what the fascists actually did – which was to make everyone dependent on the state so they could engage in militarism. Basically, the current strategy is to do what one can to save the financial and manufacturing infrstructure of United States, but not in ways the challenge the underlying structure. Better regulations for banks; new management for the auto people; a little help for homeowners. For GM, it was pushing out old management in exchange for money, a typical move in the private sector. Whether this is good is certainly for debate, but it certainly isn’t a return to fascism, socialism, or laissez-faire economics.

Sheldon Richman’s Concise Encyclopedia of Economics entry says:

Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.) Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically. In doing all this, fascism denatured the marketplace. Entrepreneurship was abolished. State ministries, rather than consumers, determined what was produced and under what conditions.

If Sheldon’s right, it’s hard not to see the U.S. moving in a fascist direction. The government is indeed in the business of setting some prices and wages politically, which is troubling. But it’s pretty clear that we’re still pretty fully in the “mixed economy” mode. As Richman writes:

Fascism is to be distinguished from interventionism, or the mixed economy. Interventionism seeks to guide the market process, not eliminate it, as fascism did. Minimum-wage and antitrust laws, though they regulate the free market, are a far cry from multiyear plans from the Ministry of Economics.

Yet I think it’s clear that we are in fact seeing fascism in vitro, though I don’t think that’s anyone’s intention. Nevertheless, we’d better swallow some gunpowder pretty quick. Like Tom Palmer, I find it extremely troubling to see Barack Obama talking like he personally looked over the GM situation and finally made some decisions because that’s obviously his job, to be the decider, and because the managers of private corporations can’t possibly do the right thing. It’s a very, very, very bad precedent. Tom says:

I was so happy to see the back of George W. Bush and his administration, with their disregard for the Constitution, foolish and unnecessary war, attempt to subvert habeas corpus, reckless spending, and overall arrogance and disregard for limits on power. His successor has decided to follow even more carefully the examples set by Benito Mussolini and Vladimir Putin, and has sacked the head of a company. That is a decision for the shareholders of a private firm to make, not for the head of state. What next? Will private firms end up in the hands of friends of the president? Will the White House Chief of Staff serve simultaneously as head of a major state-directed company? Will journalists who criticize the president end up shot in the head in elevators?

I predict that the answer to Tom’s three concluding questions will be “no.” That doesn’t mean they don’t need to be asked. It happens, and it can happen here. Asking these questions helps ensure the answers will be “no”, prepares us to stand up against overweening power. But it ought to make you a bit sick that it has become  necessary to say that, no, the President doesn’t run everything. Perhaps we’re getting “quarterback capitalism” and not yet “fascism,” but it’s still pretty troubling to anyone with a liberal bone in his body.

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53 thoughts on “Are We Flirting with Fascism?

  1. I think it makes a big difference whether an exec goes to Washington to beg, or if he stays home minding his own business.No one is calling healthy companies to Washington and replacing their execs, not even close.All that happened was that Washington met some punishment to beggars, which is what we actually need if we still care about moral hazard.

  2. I am certainly no fan of Barack Obama, nor am I particularly enamored of his policies. On the contrary, I agree with most of your sentiments. But doesn't GM, or any private company make the proverbial deal with the Devil when it accepts any government largess voluntarily. I mean, once General Motors has taken federal cash, it agrees to federal terms. I may have missed something in the details of the news regarding this story, but I'd be curious to know your take on that aspect of it.

  3. The real test will be when the Administration is tasked with providing some measure of support to the media and newspaper industry. If one media company gets a piece of “bailout” money, the US governement will have the exact same precedent to control the management of a media organization as it does for GM. So much for the 1st ammendment.

  4. You should look into how Rahm earned his $16 million in investment banking. Wasn't it an divestiture by SBC required by an incredibly aggressive view of antitrust law in the Clinton administration, in which SBC sold a company to Rahm's friends, who then flipped it a few months later at 2x the purchase price? The Clinton administration signed off on the SBC deal, as I understand it. Expect to see lots more like this.

  5. I guess this makes me objectively pro-fascist. Or am I objectively pro-communist. I am so confused. . . .

  6. Are the answers to the three questions so clearly “no”? The third one makes quite a leap, obviously, but the first two aren't that far fetched. To the degree that GM will find itself “in the hands” of a car czar(s), how is that *not* coeval with a “yes” to the first question?And is it just me, or is Rojas' analogy really awful? Cunningham was the exception, not the rule–the scrambler is a particular kind of quarterback and definitely not representative of all quarterbacks in general. Or is he trying to say that fascists are more like Dan Marino/Carson Palmer, i.e. slow-footed field general types? I can think of about a million better ways of describing the Obama/Bush approach to intervention, starting with “ad hoc,” “on-the-fly,” “pragmatic,” etc. And now that I think about it, Rojas' other point–that Obama is a redistributionist, not a nationalist–this strikes me as equally wrong (actually, the analogy was just bad, not wrong). How did Obama *repeatedly* justify yesterday's auto takeover? As better for the poor? As somehow more just? No. As necessary for the spirit of America, or some quasi-geist-ish crap like that? Absolutely.

  7. Also, what position would Hitler play if he was on a football team? Wouldn't he play quarterback? Is he supposed to be the coach? No wonder Hobbes warns so vehemently against the use of metaphors.I'm dumbfounded by the analogy. Did he just want to work in a Randall Cunningham reference? Is he from Philadelphia?

  8. Yet I think it’s clear that we are in fact seeing fascism in vitro, though I don’t think that’s anyone’s intention.But that's the thing. To call this fascism or “in virto” fascism or whatever is about as useful and accurate as calling it socialism or communism or monarchism or anything else. Yes, the GM move could be the first step on the way to the great fascist state. But the first step out of my house in the morning could also be the first step toward me walking from here to Patagonia. But it's not. I'm just going to get the paper.The problem is not that what you're arguing is definitely wrong. It's that what you're arguing is supremely unrealistic.

  9. Everyone is getting carried away with bad-faith assumptions about Obama. Every indication is that he intends these government interventions to be short-term to help recover the economy, not long-term to take it over. The magnitude of Obama's actions were a response to the magnitude of the economy's problems. And, as pointed out above, fascists would have responded differently.Moreover, this use of the word “fascist” is nothing but scare tactics. Most people associate fascism with nationalism, militarism, totalitarianism, and genocide. Those who use this word to describe Obama know this very well, and are exploiting a historical definition in order to suggest we are headed toward something like Nazism.

  10. FWIW, I think right of center folks are phonin' it in today. This is a convenient complaint, blog fodder, and that's about it.No one is going to let the US government interfere with healthy (non-bailed) companies.Though, it does sound like they are going to have to let those healthy companies which were strong-armed into bailouts (if they really were), out of the bag. It might be interesting to see with an offer to let them give equity stakes back, how many would.

  11. Milton Friedman would have been WAAAY more successful if, instead of making reasoned arguments about the mixed economy and the welfare state, he had just said John Kenneth Galbraith is a big, tall fascist full of fascisty fascism. He wouldn't have had to waste his time talking about school vouchers and negative income taxes and shit.

  12. Anyone who deals with the government in any way deserves what they get.Don't work for the government, don't work with the government.

  13. There isn't that large a difference. They are both statist philosophies that the government knows best.Which makes them stupid philosophies because usually the government doesn't know jack.

  14. The federal government ought not to bail out auto companies. If it does, then whether it fires incumbent management is a matter of pure indifference to free market principle.

  15. Actually, skylights, we aren't using it that way. We are using the word “fascism” the way the Italians meant it and defined it themselves. I recommend Luigi Vilari's “The Economics of Fascism” as an account of the system by a 1930s Italian. I also recommend reading about how FDR and many of his Brain Trust looked to Mussolini for inspiration during the New Deal. The NRA was very much in the fascist mold. The fact that the word “fascism” has since been associated with a whole variety of nastiness doesn't mean that those of us who are raising it in the contemporary context are just engaging in scare tactics or accusations of Naziism. We are asking exactly the questions Will is raising here because we think fascist economic ideas are bad for the economy and because they can also, as Tom Palmer suggests, give the state all kinds of non-economic forms of power. None of that means Obama is out to create concentration camps. It just means that we are concerned about freedom, peace, and prosperity being threatened.

  16. There is an obvious difference between intentions, described in the first quite, and process, described in the second. Is Obama using indirect methods of control, rather than direct? Sure. And in that way it is more fascist than socialist.But to me, and I think to many (including Megan McArdle in a recent post), it is really intention, not mechanism that is salient about the definition of fascism. Is the point of this to control the economy for nationalistic, military, or racial purposes? People who think that need to take a time out and cool off.It's so very easy to be a critic in a tough situation. Libertarians and conservatives are acting in bad faith by only doing this and not proposing reasonable (or even unreasonable) alternatives. But they know they can't. Because if the only two possibilities are 1) temporarily nationalize GM (or otherwise exert government control over the corporation) or 2) let GM and all its reliant industries fail and fall into bankruptcy, most Americans are going to opt for option 1.

  17. I'm sure that's what people were saying in Russia and Germany in the early days. Reality and history are what happen when you aren't paying attention. 'Oh those Nazis can't be all bad, they just want us to take a little train ride.'

  18. “No one is going to let the US government interfere with healthy (non-bailed) companies.”You are going to stop them? LOL!What are you going to do? Comment on the internet, get on a soap-box? Hilarious.

  19. Most Americans are stupid. Just like most people in the rest of the world as well.Letting GM and Chrysler go into bankruptcy is the natural process. Assets would be sold off and something leaner and more efficient might rise from the ashes.Instead, they will go out of business, cost taxpayers somewhere around $200 billion, and completely screw up the process of creative destruction. Obama's “solutions” are nothing but lies fed to gullible people. There is no such thing as a free lunch.

  20. Sheldon's definition is conveniently narrow enough for Will to run with it, just so long as he ignores what Fabio Rojas' point that Fasicst control of the economy is to pursue the ends of nationalism of clientalism. Stipulating how GM will spend the money they are begging for scarely meets Sheldon's definition, and doesn't come close to fulfilling Rojas'. Maybe all that Naomi Klein is finally getting to Will.

  21. It's my read of where we are as a nation, not what I can (or need to do) personally.Do you believe the opposite, that we are no longer a freedom and free market loving people? Or that we no longer are a market democracy?

  22. I guess I'm a pragmatist about the use of concepts, if nothing else. What possible gain is there to calling this kind of thing “fascist”? It just means that people will look at you like the crazy guy at the bus stop muttering about the anti-christ. Arguments against the auto bailout that might actually persuade someone are not that hard to come up with. Does the Cato Institute feel some great need for further marginalization?

  23. I don't think any President could avoid a “bailout” of GM, even if it was just letting them down softly. The disorganized collapse of the company would be political death for that President and his party.

  24. It's easy for a pundit to say “let them fail” but I can't see any real President letting it happen. Not in this country, not with these voters, not with any election in the distant future.

  25. Perhaps, but the government has a tendency to make offers that companies can't refuse. This is certainly what happened to Wells Fargo and Goldman Sachs with respect to TARP funds. Additionally, if all your competitors are being offered subsides in exchange for doing the bidding of Washington, it is hard to be a holdout. That's why it is best to have rules against this sort of behavior that both companies and the government are compelled to follow. I know that is easier said than done.

  26. “No one is going to let the US government interfere with healthy (non-bailed) companies.”Maybe you did not intend this to be a broadly stated, but it is absurd on its face. Many industries are subject to extensive regulation and receive various types of subsidies. If those do not constitute interference, then “interference” is so narrow as to be meaningless.You can argue about the positive or negative effects of the interference, but it is pretty hard to argue that it does not exist.

  27. I meant it in terms of the status quo, or there abouts.I continue to see the US in the wider context of democratic market economies. They all find a balance, and as far as I know none are completely without market regulation.

  28. That's what makes the pendulum swing back and forth over time.I think we'd only get rank and file call for more government management of business … if government proved good at it, which I think we agree is unlikely.

  29. It's called leadership. Something Obama knows nothing about. Just as he knows nothing about capitalism. Businesses fail all the time.Bush wasn't much better on this topic although I get the sense that he might not have bailed them out if it was his second term coming up instead of Obama's first.It's insane that it's easier to waste billions of dollars rather than let companies go into bankruptcy. It's all play money anyways, weeeeee!

  30. Okay, how 'bout we call it “Italian Fascism” so it's clear what we mean? I think that avoids the truth-in-labeling problem you raise.

  31. Odograph, maybe you're right, but that's all the more reason to criticize it and discuss it. The more political presure we can bring in the opposite direction, the greater the chances (admittedly slim) that the powers-that-be will limit government's interference in the economy. Of course, it'll be a lot easier if the President is actually looking for an excuse not to interfere than if he's looking for an excuse to interfere.

  32. Y. Kahan,Calling auto bailouts “fascism” does not help bring political pressure against them. It is only useful if you want other users of public transport to sit somewhere else.

  33. skylights, I suggest you study the history of U.S. Government intervention in the 20th century as an antidote to your optimism about these steps being “short-term”. You could usefully start with Robert Higgs' Crisis and Leviathan, in which I believe he first coined the phrase “participatory fascism” .Scare tactics, or vigilence? Have you ever seen a government bureau declare its mission accomplished and disband? Me neither, and somehow I doubt that the new Directorate of Recovery for Auto Communities will be the first.

  34. FWIW, I think my comments above, though they may have rankled, are actually in line with Tyler Cowen:

    One thing I like about Bryan Caplan's book is an interpretation which he will probably hate. The truly decisive actors are people directly in the political process. Maybe the “libertarians” who are or have been in politics are not just “sell outs.” Rather they are implementing the net-liberty-enhancing policies that a real libertarian would favor if he or she were truly a decisive agent.</blocquote>

  35. You don't get to use the word “fascism” as if nothing had happened in the world since 1925. Because stuff happened since 1925, stuff that changes the usage of the word. Similarly, if I walk around New York City with a swastika armband, people will not assume I'm a student of ancient Sanskrit fertility symbols. If you don't like it, take it up with the guy who invented what we humans refer to as “language”.

  36. According to Simon Johnson writing in the Atlantic:”But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.”Is he right? Is America all ready governed by an oligarchy. Are we already a fascist, corporatist state?You all are worried about Obama, yet the coup may have already occurred.Where were you all anyway?

  37. I side with those who have suggested that fascism is too closely associated with genocide to be a useful description of what is transpiring now . . . the real problem is that people equate freedom with anarchy.

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  39. Unfortunately, it's looking like a better and better deal to work for the government (as an individual, not as a company).I think Radley Balko had a piece in reason on the exploding incomes around D.C.

  40. Does anyone else hate–like, really hate–analogizing government intervention to a sporting event?Barack Obama is not Randall Cunningham. And for Christ's sake, the recession is more complicated than a cornerback blitz. Rojas, and others who do this, just feed into the idea that the government can survey the situation, gain an omniscient awareness of what's happening, and then rationally choose the correct course of action.

  41. What happens to Ford when it finds itself competing against a GM with a bottomless pit of money behind it? It is going to be awfully hard for its executives to resist a drink from the government's free money fountain. How long before Congress starts to demand more fuel efficient vehicles and less SUVs? We have flirting with economic fascism before and always pulled back. I think we will pull back again but early warnings like this one are very useful just in case.My guess is that the Administration is going to throw 30 billion down a rat hole so they can say in 2012 they did all that they could.

  42. As long as they don't complain when they get blown up by a terrorist. That's pretty much the only way they lose their jobs.I loved the new AIG CEO complaining about doing the government a favor. He should have told them to go F themselves. Serves him right for being a government stooge.I feel little sympathy for any bad things that happen to government employees.

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  44. Would the amount of money spent on lobbying in D.C. be a useful proxy for a measure of clientelism? Why or why not?If Rojas' is correct that we should be concerned about government intervention in the economy insofar as it results in clientelism, how would we know whether or not we are becoming more or less clientelistic? What concrete ways do we have for measuring this sort of thing?

  45. As long as they don't complain when they get blown up by a terrorist. That's pretty much the only way they lose their jobs.I loved the new AIG CEO complaining about doing the government a favor. He should have told them to go F themselves. Serves him right for being a government stooge.I feel little sympathy for any bad things that happen to government employees.

  46. Would the amount of money spent on lobbying in D.C. be a useful proxy for a measure of clientelism? Why or why not?If Rojas' is correct that we should be concerned about government intervention in the economy insofar as it results in clientelism, how would we know whether or not we are becoming more or less clientelistic? What concrete ways do we have for measuring this sort of thing?

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