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The Economics of Fascism

I’ve described myself as “liberal leaning with a Libertarian streak.” In short, I believe social responsibility and fiscal responsibility are not mutually exclusive. We can have it all, but it takes a careful implementation of both traditional (socially) liberal and (fiscally) conservative philosophies to make it work in practice. In this sense, I describe myself as an “Obamatarian.” I honestly believe that Obama is actually one of the few candidates in recent times who has the intelligence, charisma, and skill to walk this delicate line. He’s not perfect in this regard (hey, he’s a politician who wants to be President, ‘nuf said), but does offer a clear social and economic vision that both raises the social baseline for everyone while still driving innovation in industry, business, and science. He’s not a Socialist (to think Warren Buffett would endorse a Socialist candidate is just plain nuts) but rightly believes that by raising the social baseline, everyone wins in the long run: the rich get richer AND the poor get richer. “Spread the wealth” in this context is really a “social investment” with high medium-term returns for the wealthy AND the poor.

In contrast, here’s an interesting read from wikipeida on the Economics of Fascism. I’m not saying that the current Republican candidate is a Fascist (with a capital “F”). He’s definitely not. But he does have a distinctly fascist economic philosophy. Indeed, modern conservatives and Republicans today, including John McCain, have slipped further and further into fascists economic thinking without really realizing it. I believe is clear that a fascist economic philosophy is not a path we want to pursue.

General characteristics of fascist economies

The first fascist or proto-fascist movements arose in the last years of World War I. They carried a promise of national rebirth, they blamed liberalism, communism and materialism for the decadence they perceived in society and culture, and they advocated a return to traditional conservative values (though they proposed to achieve this through a new political system).

One significant fascist belief was that prosperity would naturally follow once the nation has achieved a cultural and spiritual re-awakening. As a result, fascists considered the economy to be of little importance and did not have clear economic views. Often, different members of a fascist party would make completely opposite statements about the economic policies they supported. Once in power, fascists usually adopted whatever economic program they believed to be most suitable for political goals. Long-lasting fascist regimes (such as that of Benito Mussolini in Italy) made drastic changes to their economic policy from time to time.

Nevertheless, fascists did have a number of important political views that shaped many of their economic decisions. The first of these was the fundamental fascist opposition to both socialism and liberal capitalism. Fascists argued that the implementation of their ideas into the economic sphere would represent a “third way”, and they favoured corporatism and class collaboration. They believed that the existence of inequality and separate social classes was beneficial (contrary to the views of socialists), but they also argued that the state had a role in mediating relations between these classes (contrary to the views of liberal capitalists).

Fascists claimed to provide a realistic economic alternative that was neither laissez-faire capitalism nor communism. An inherent aspect of fascist economies was economic dirigisme, meaning an economy where the government exerts strong directive influence, and effectively controls production and allocation of resources.

In general, apart from the nationalizations of some industries, fascist economies were based on private property and private initiative, but these were contingent upon service to the state.

Fascism also operated from a Social Darwinist view of human relations. Their aim was to promote “superior” individuals and weed out the weak. In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class. Historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise, because “the State pays for the blunders of private enterprise… Profit is private and individual. Loss is public and social.”

Finally, fascism was highly militaristic. As such, fascists often increased military spending significantly, and their main reason for economic development was the wish to have a strong economy backing a strong military. Fascist governments encouraged the pursuit of private profit and offered many benefits to large businesses, but they demanded in return that all economic activity should serve the “national interest”. In most cases, this meant that foreign trade was discouraged or outright banned; fascists believed that too much international trade would make the national economy dependent on international capital, and therefore vulnerable to international economic sanctions. Economic self-sufficiency, known as autarky, was a major goal of most fascist governments.

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