Falling in love with fascist Italy.
The Italian “Corporatist” System
So-called “corporatism” as practiced by Mussolini and revered by so many intellectuals and policy makers had several key elements:
The state comes before the individual. Webster’s New Collegiate Dictionary defines fascism as “a political philosophy, movement, or regime that exalts nation and often race above the individual and that stands for a centralized, autocratic government.”
This stands in stark contrast to the classical liberal idea that individuals have natural rights that pre-exist government; that government derives its “just powers” only through the consent of the governed; and that the principal function of government is to protect the lives, liberties, and properties of its citizens, not to aggrandize the state.
Mussolini viewed these liberal ideas (in the European sense of the word “liberal”) as the antithesis of fascism: “The Fascist conception of life,” Mussolini wrote, “stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State. It is opposed to classical liberalism [which] denied the State in the name of the individual; Fascism reasserts the rights of the State as expressing the real essence of the individual.” 1Benito Mussolini, Fascism: Doctrine and Institutions (Rome: Adrita Press, 1935), p. 10.
Mussolini thought it was unnatural for a government to protect individual rights: “The maxim that society exists only for the well-being and freedom of the individuals composing it does not seem to be in conformity with nature’s plans.” 2Benito Mussolini, Fascism: Doctrine and Institutions (Rome: Adrita Press, 1935), p. 10.
If classical liberalism spells individualism, Fascism spells government.
The essence of fascism, therefore, is that government should be the master, not the servant, of the people. Think about this. Does anyone in America really believe that this is not what we have now? Are Internal Revenue Service agents really our “servants”? Is compulsory “national service” for young people, which now exists in numerous states and is part of a federally funded program, not a classic example of coercing individuals to serve the state? Isn’t the whole idea behind the massive regulation and regimentation of American industry and society the notion that individuals should be forced to behave in ways defined by a small governmental elite? When the nation’s premier health-care reformer recently declared that heart bypass surgery on a 92-year-old man was “a waste of resources,” wasn’t that the epitome of the fascist ideal—that the state, not individuals, should decide whose life is worthwhile, and whose is a “waste”?
The U.S. Constitution was written by individuals who believed in the classical liberal philosophy of individual rights and sought to protect those rights from governmental encroachment. But since the fascist/collectivist philosophy has been so influential, policy reforms over the past half century have all but abolished many of these rights by simply ignoring many of the provisions in the Constitution that were designed to protect them. As legal scholar Richard Epstein has observed: “[T]he eminent domain . . . and parallel clauses in the Constitution render . . . suspect many of the heralded reforms and institutions of the twentieth century: zoning, rent control, workers’ compensation laws, transfer payments, progressive taxation.” 3Richard Epstein, Takings (Cambridge, Mass.: Harvard University Press, 1985), p. x. It is important to note that most of these reforms were initially adopted during the ‘30s, when the fascist/collectivist philosophy was in its heyday.
Planned industrial “harmony.” Another keystone of Italian corporatism was the idea that the government’s interventions in the economy should not be conducted on an ad hoc basis, but should be “coordinated” by some kind of central planning board. Government intervention in Italy was “too diverse, varied, contrasting. There has been disorganic . . . intervention, case by case, as the need arises,” Mussolini complained in 1935. 4Mussolini, Fascism, p. 68. Fascism would correct this by directing the economy toward “certain fixed objectives” and would “introduce order in the economic field.” 5Mussolini, Fascism, p. 68.
Corporatist planning, according to Mussolini adviser Fausto Pitigliani, would give government intervention in the Italian economy a certain “unity of aim,” as defined by the government planners. 6Mussolini, Fascism, p. 122.
These exact sentiments were expressed by Robert Reich (currently the U.S. Secretary of Labor) and Ira Magaziner (currently the federal government’s health care reform “Czar”) in their book Minding America's Business. 7Ira C. Magaziner and Robert B. Reich, Minding America’s Business (New York: Vintage Books, 1982). In order to counteract the “untidy marketplace,” an interventionist industrial policy “must strive to integrate the full range of targeted government policies—procurement, research and development, trade, antitrust, tax credits, and subsidies—into a coherent strategy . . . .” 8Ira C. Magaziner and Robert B. Reich, Minding America’s Business, p.370.
Current industrial policy interventions, Reich and Magaziner bemoaned, are “the product of fragmented and uncoordinated decisions made by [many different] executive agencies, the Congress, and independent regulatory agencies . . . . There is no integrated strategy to use these programs to improve the . . . U.S. economy.” 9Ira C. Magaziner and Robert B. Reich, Minding America’s Business, p.370.
In his 1989 book, The Silent War, Magaziner reiterated this theme by advocating a coordinating group like the national Security Council to take a strategic national industrial view.” 10Ira C. Magaziner, Silent War (New York: Random House, 1989), p. 306.
The White House has in fact established a “National Economic Security Council.” Every other advocate of an interventionist “industrial policy” has made a similar “unity of aim” argument, as first described by Pitigliani more than half a century ago.
Government-business partnerships. A third defining characteristic of economic fascism is that private property and business ownership are permitted, but are in reality controlled by government through a business-government “partnership.” As Ayn Rand often noted, however, in such a partnership government is always the senior or dominating “partner.”
In Mussolini’s Italy, businesses were grouped by the government into legally recognized “syndicates” such as the “National Fascist Confederation of Commerce,” the “National Fascist Confederation of Credit and Insurance,” and so on. All of these “fascist confederations” were “coordinated” by a network of government planning agencies called “corporations,” one for each industry. One large “National Council of Corporations” served as a national overseer of the individual “corporations” and had the power to “issue regulations of a compulsory character.” 11Fausto Pitigliani, The Italian Corporative State (New York: Macmillan, 1934), p. 98
The purpose of this byzantine regulatory arrangement was so that the government could “secure collaboration . . . between the various categories of producers in each particular trade or branch of productive activity.” 12Fausto Pitigliani, The Italian Corporative State (New York: Macmillan, 1934), p. 93
Government-orchestrated “collaboration” was necessary because “the principle of private initiative” could only be useful “in the service of the national interest” as defined by government bureaucrats. 13Fausto Pitigliani, The Italian Corporative State (New York: Macmillan, 1934), p. 95
This idea of government-mandated and -dominated “collaboration” is also at the heart of all interventionist industrial policy schemes. A successful industrial policy, write Reich and Magaziner, would “require careful coordination between public and private sectors.” 14
Magaziner and Reich, Minding America’s Business, p. 379. “Government and the private sector must work in tandem.” 15
Magaziner and Reich, Minding America’s Business, p. 378. “Economic success now depends to a high degree on coordination, collaboration, and careful strategic choice,” guided by government. 16
Magaziner and Reich, Minding America’s Business, p. 378.
The AFL-CIO has echoed this theme, advocating a “tripartite National Reindustrialization Board—including representatives of labor, business, and government” that would supposedly “plan” the economy. 17
Lane Kirkland, “An Alternative to Reaganomics,” USA Today, May 1987, p. 20 The Washington, D.C.-based Center for National Policy has also published a report authored by businessmen from Lazard Freres, du Pont, Burroughs, Chrysler, Electronic Data Systems, and other corporations promoting an allegedly “new” policy based on “cooperation of government with business and labor.” 18 Center for National Policy, Restoring American Competitiveness (Washington, D.C.: Center for National Policy, 1984), p. 7 Another report, by the organization “Rebuild America,” co-authored in 1986 by Robert Reich and economists Robert Solow, Lester Thurow, Laura Tyson, Paul Krugman, Pat Choate, and Lawrence Chimerine urges “more teamwork” through “public-private partnerships among government, business and academia.” 19Rebuild America, An Investment Economics for the Year 2000 (Washington, D.C.: Rebuild America, 1986), p. 31. This report calls for “national goals and targets” set by government planners who will devise a “comprehensive investment strategy” that will only permit “productive” investment, as defined by government, to take place.
Mercantilism and protectionism.
Whenever politicians start talking about “collaboration” with business, it is time to hold on to your wallet. Despite the fascist rhetoric about “national collaboration” and working for the national, rather than private, interests, the truth is that mercantilist and Protectionist practices riddled the system. Italian social critic Gaetano Salvemini wrote in 1936 that under corporatism, “it is the state, i.e., the taxpayer, who has become responsible to private enterprise. In Fascist Italy the state pays for the blunders of private enterprise.” 20Pitigliani, The Italian Corporative State, p. 93. As long as business was good, Salvemini wrote, “profit remained to private initiative.” 21Pitigliani, The Italian Corporative State, p. 93. But when the depression came, “the government added the loss to the taxpayer’s burden. Profit is private and individual. Loss is public and social.” 22Pitigliani, The Italian Corporative State, p. 93.
The Italian corporative state, The Economist editorialized on July 27, 1935, “only amounts to the establishment of a new and costly bureaucracy from which those industrialists who can spend the necessary amount, can obtain almost anything they want, and put into practice the worst kind of monopolistic practices at the expense of the little fellow who is squeezed out in the process.” Corporatism, in other words, was a massive system of corporate welfare. “Three-quarters of the Italian economic system,” Mussolini boasted in 1934, “had been subsidized by government.” 23Gaetano Salvemini, Under the Axe of Fascism (New York: Viking Press, 1936), p. 380.
If this sounds familiar, it is because it is exactly the result of agricultural subsidies, the Export-Import bank, guaranteed loans to “preferred” business borrowers, protectionism, the Chrysler bailout, monopoly franchising, and myriad other forms of corporate welfare paid for directly or indirectly by the American taxpayer.
Another result of the close “collaboration” between business and government in Italy was “a continual interchange of personnel between the . . . civil service and private business.” 24S. Belluzzo, Liberta, September 21, 1933, cited in Salvemini, Under the Axe of Fascism, p. 385.
Because of this “revolving door” between business and government, Mussolini had “created a state within the state to serve private interests which are not always in harmony with the general interests of the nation.” 25Salvemini, Under the Axe of Fascism, p. 380.
Mussolini’s “revolving door” swung far and wide:
Signor Caiano, one of Mussolini’s most trusted advisers, was an officer in the Royal Navy before and during the war; when the war was over, he joined the Orlando Shipbuilding Company; in October 1922, he entered Mussolini’s cabinet, and the subsidies for naval construction and the merchant marine came under the control of his department. General Cavallero, at the close of the war, left the army and entered the Pirelli Rubber Company . . . ; in 1925 he became undersecretary at the Ministry of War; in 1930 he left the Ministry of War, and entered the service of the Ansaldo armament firm. Among the directors of the big . . . companies in Italy, retired generals and generals on active service became very numerous after the advent of Fascism. 26Adolph Hitler, Mein Kampf (Boston: Houghton Mifflin, 1943), p. 297.
Such practices are now so common in the United States—especially in the defense industries—that it hardly needs further comment.
From an economic perspective, fascism meant (and means) an interventionist industrial policy, mercantilism, protectionism, and an ideology that makes the individual subservient to the state. “Ask not what the State can do for you, but what you can do for the State” is an apt description of the economic philosophy of fascism.
The whole idea behind collectivism in general and fascism in particular is to make citizens subservient to the state and to place power over resource allocation in the hands of a small elite. As stated eloquently by the American fascist economist Lawrence Dennis, fascism “does not accept the liberal dogmas as to the sovereignty of the consumer or trader in the free market . . . .
Least of all does it consider that market freedom, and the opportunity to make competitive profits, are rights of the individual.” Such decisions should be made by a “dominant class” he labeled “the elite.” 27Lawrence Dennis, The Coming American Fascism (New York: Harper, 1936), p. 180
