Fascism and economics is one of the more complex aspects of fascism. The purpose of the nation’s economy, fascists agreed, was to serve the state. Economic power increased national power. How to make this happen most efficiently, however, was the question.
Philosophically, fascism and capitalism had disagreements, at least on the surface. As I wrote in the last post, capitalists believe that a free market economy will, overall, produce the greatest amount of individual prosperity and happiness. The individual should act in that individual’s own self-interest. If they do, overall, society will be better off. Scotsman Adam Smith was the first person to lay out these ideas systematically in his book Wealth of Nations, published in 1776. (That year was a major one when it came to documents of historical importance!)
Some people in today’s United States have distorted Smith’s ideas significantly. He did not believe, for instance, that acting in one’s self-interest always produces the best results, only that it did not always produce the worst results. Individual self-interest produced good results more often than bad. Likewise, Smith employs the term “invisible hand” just once in Wealth of Nations, and that one time (in chapter 2 of book 4) to describe why merchants prefer to trade domestically rather than abroad. In any case, anyone who has read my posts so far knows that promoting the welfare of the individual was not what mattered when it came to fascism and economics. Smith also believed that greater individual wealth meant greater national wealth and power. For him, however, that was a side effect of what capitalism did for individuals. For the fascists, it needed to be the other way around.
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How History Contributed to Fascism and Economics
In fact, it seems fair to say that fascism arose abetted by capitalism’s darkest moment. Other than Mussolini in Italy, most other fascist movements gained strength during the Great Depression of the 1930s. The economic distress of that decade undermined the confidence of people in democracy and capitalism in Europe. Anyone who promised decisive action leading to jobs was likely to gain a sympathetic ear, and many fascists did exactly that. Some core groups of the movement’s early years were the alienated working class, the unemployed, young people, and the small business class of Europe. They hated big banks and large corporations, it’s true. However, this is because they wanted to turn back the clock to a time before these institutions threatened their livelihood, not because they desired socialism. When an authoritarian government promised these groups action, they responded.
A handful of examples from Nazi Germany help make this point. They also illustrate the complex relationship of fascism and economics and, at least in Germany, its reliance on a lower middle class devastated by economic hard times. The Nazis called for nationalization of banks and trusts. The main reason seems to be to get easy credit for small business owners and to eliminate the competition of large corporations that could undersell smaller firms. Additionally, because the Nazis often stereotyped Jews as part of an international conspiracy in world finance, this fit their anti-Semitic beliefs as well. The Nazis also did away with trade unions in the name of eliminating the class struggle. The point was not to destroy capitalism. Rather, the Nazis wanted to destroy or change the parts of it most damaging to their core supporters.
Fascism and Economics Meant Capitalism
Fascists didn’t have many other choices, however. The nations where they came to power were capitalist ones, even if underdeveloped capitalist ones like Romania. Therefore, whatever its theories, when it came to fascism and economics, that meant capitalism. What mattered was increasing the power of the state. This is where capitalism often proved useful. The power of the state meant, above all else, military power. Putting industry to the service of the state was always a priority, in Germany particularly. Doing so, and rearming the nation, was of great value to the Nazis. They often preached Germany’s national greatness and the destiny of the German people, and military power was at the core of this message.
This meant, however, defying certain aspects of the peace treaty that ended World War 1, the Versailles Treaty. That treaty placed limits on the size of the German military, among other things disliked by Germans. Hitler’s decision to rearm in violation of the Versailles Treaty, combined with the reluctance of the other treaty signatories to enforce its limits on German military power, served a dual purpose. One, it returned Germany to what its people and politicians deemed its rightful place among the leading powers of the world. This reinforced fascist claims to national greatness. Two, it allowed fascists to claim a diplomatic triumph over the democracies of Europe. In fascist eyes, it confirmed the softness and weakness of democracy when faced with the aggressive action of fascism.
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Fascism and economics tends to get less attention as an important aspect of fascism. However, it is an important one. Especially in Germany, fascists used capitalism to serve the state, focusing its productive potential on greater military power. Besides fascism and economics, however, there are other key values that fascists typically shared. That’s what the next post will explore.
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