Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning

point when they decry special deals for Halliburton or Archer Daniels Midland as proof of creeping fascism. What they misunderstand completely is that this is the system they set up. This is the system they want. This is the system they mobilize and march for.

Debates about economics these days generally enjoy a climate of bipartisan asininity. Democrats want to 'rein in' corporations, while Republicans claim to be 'pro-business.' The problem is that being 'pro-business' is hardly the same thing as being pro-free market, while 'reining in' corporations breeds precisely the climate liberals decry as fascistic.

The fascist bargain goes something like this. The state says to the industrialist, 'You may stay in business and own your factories. In the spirit of cooperation and unity, we will even guarantee you profits and a lack of serious competition. In exchange, we expect you to agree with — and help implement — our political agenda.' The moral and economic content of the agenda depends on the nature of the regime. The left looked at German business's support for the Nazi war machine and leaped to the conclusion that business always supports war. They did the same with American business after World War I, arguing that because arms manufacturers benefited from the war, the armaments industry was therefore responsible for it.

It's fine to say that incestuous relationships between corporations and governments are fascistic. The problem comes when you claim that such arrangements are inherently right-wing.⁹ If the collusion of big business and government is right-wing, then FDR was a right-winger. If corporatism and propagandistic militarism are fascist, then Woodrow Wilson was a fascist and so were the New Dealers. If you understand the right-wing or conservative position to be that of those who argue for free markets, competition, property rights, and the other political values inscribed in the original intent of the American founding fathers, then big business in Fascist Italy, Nazi Germany, and New Deal America was not right-wing; it was left-wing, and it was fascistic. What's more, it still is.

Since the dawn of the Progressive Era, reformers have constructed an army of straw men, conjured a maelstrom of myths, to justify blurring the lines between business and government. According to civics textbooks, Upton Sinclair and his fellow muckrakers unleashed populist rage against the cruel excesses of the meatpacking industry, and as a result Teddy Roosevelt and his fellow progressives boldly reined in an industry run amok. The same story repeats itself for the accomplishments of other muckrakers, including the pro-Mussolini icons Ida Tarbell and Lincoln Steffens. This narrative lives on as generations of journalism students dream of exposing corporate malfeasance and prompting government-imposed 'reform.'

The problem is that it's totally untrue, a fact Sinclair freely acknowledged. 'The Federal inspection of meat was, historically, established at the packers' request,' Sinclair wrote in 1906. 'It is maintained and paid for by the people of the United States for the benefit of the packers.' The historian Gabriel Kolko concurs: 'The reality of the matter, of course, is that the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors.' A spokesman for 'Big Meat' (as we might call it today) told Congress, 'We are now and have always been in favor of the extension of the inspection, also to the adoption of the sanitary regulations that will insure the very best possible conditions.' The meatpacking conglomerates knew that federal inspection would become a marketing tool for their products and, eventually, a minimum standard. Small firms and butchers who'd earned the trust of consumers would be forced to endure onerous compliance costs, while large firms not only could absorb the costs more easily but would be able to claim their products were superior to uncertified meats.¹⁰

This story plays itself out again and again during the Progressive Era. The infamous steel industry — heirs to the nineteenth-century robber barons — embraced government intervention on a massive scale. The familiar fairy tale is that the government stepped in to control predatory monopolies. The truth is almost exactly the opposite. The big steel firms were terrified that free competition would undermine their predatory monopolies, so they asked the government to intervene and the government happily obliged. U.S. Steel, which was the product of 138 merged steel firms, was stunned to see its profits decline in the face of stiff competition. In response, the chairman of U.S. Steel, Judge Elbert Gary, convened a meeting of leading steel companies at the Waldorf-Astoria in 1907 with the aim of forming a 'gentlemen's agreement' to fix prices. Representatives of Teddy Roosevelt's Justice Department attended the meetings. Nonetheless, the agreements didn't work, as some firms couldn't be trusted not to undersell others. 'Having failed in the realm of economics,' Kolko observes, 'the efforts of the United States Steel group were to be shifted to politics.' By 1909 the steel tycoon Andrew Carnegie was writing in the New York Times in favor of 'Government control' of the steel industry. In June 1911 Judge Gary told Congress, 'I believe we must come to enforced publicity [socialization] and government control...even as to prices.' The Democrats — still clinging to classical liberal notions — rejected the proposal as 'semi- socialistic.'¹¹

One need only look at Herbert Croly's Promise of American Life to see how fundamentally fascistic progressive economics were. Croly was contemptuous of competition. Trust-busting was a fool's errand. If a corporation got so big that it became a monopoly, Croly didn't believe it should be broken up; rather, it should be nationalized. Big business 'contributed enormously to American economic efficiency,' he explained. 'Cooperation' was Croly's watchword: 'It should be the effort of all civilized societies to substitute cooperation for competitive methods.'¹² As a philosophical and practical matter, Croly opposed the very conception of the neutral rule of law for business. Since all legislation was ultimately aimed at discriminating against one interest or another (a view revived by critical legal theorists more than a century later), the state should abandon the charade of neutrality and instead embrace a 'national' program that put the good of the collective ahead of the individual.

As we've seen, World War I offered a golden opportunity for Croly's agenda. Big business and the Wilson administration formed the Council of National Defense, or CND, according to Wilson, for the purpose of redesigning 'the whole industrial mechanism...in the most effective way.' 'It is our hope,' Hudson Motor Car Company's Howard Coffin explained in a letter to the Du Ponts, 'that we may lay the foundation for that closely knit structure, industrial, civil, and military, which every thinking American has come to realize is vital to the future life of this country, in peace and in commerce, no less than in possible war.'¹³

When the war broke out, the CND was largely folded into the War Industries Board, or WIB. Run by 'dollar- a-year men' from the world of finance and business, the WIB set prices, trade quotas, wages, and, of course, profits. Trade associations were formed along vaguely syndicalist lines. 'Business willed its own domination, forged its bonds, and policed its own subjection,' wrote Grosvenor Clarkson, a WIBer and historian of the effort. The aim was for the 'concentration of commerce, industry and all the powers of government.' 'Historians have generally concluded,' writes Robert Higgs, 'that these businessmen-turned-bureaucrats used their positions to establish and enforce what amounted to cartel arrangements for the various industries.'¹⁴

Many industrialists wanted to keep the War Industries Board going after World War I, and politicians, including Herbert Hoover, tried to grant their wish. The war, horrible as it was, had proved that national planning worked. Stuart Chase, who coined the phrase 'New Deal,' explicitly cited two models for what America needed to do, the Soviet Gosplan and the war socialism of World War I. Rexford Tugwell gushed that laissez-faire had 'melted away in the fierce new heat of nationalistic vision.'¹⁵

The propaganda of the New Deal — 'malefactors of great wealth' and all that — to the contrary, FDR simply endeavored to re-create the corporatism of the last war. The New Dealers invited one industry after another to write the codes under which they would be regulated (as they had been begging to do in many cases). The National Recovery Administration, or NRA, was even more aggressive in forcing industries to fix prices and in other ways collude with one another. The NRA approved 557 basic and 189 supplementary codes, covering roughly 95 percent of all industrial workers.

It was not only inevitable but intended for big business to get bigger and the little guy to get screwed. For example, the owners of the big chain movie houses wrote the codes in such a way that independents were nearly run out of business, even though 13,571 of the 18,321 movie theaters in America were independently owned. In business after business, the little guy was crushed or at least severely disadvantaged in the name of 'efficiency' and 'progress.' The codes for industries dealing in cotton, wool, carpet, and sugar were — 'down to the last comma' — simply the trade association agreements from the Hoover administration. And in almost every case big business came out the winner. In 'virtually all the codes we have examined,' reported Clarence Darrow in his final report investigating Hugh Johnson's NRA, 'one condition has been persistent...In Industry after Industry, the larger units, sometimes through the agency of...[a trade association], sometimes by other means, have for their own advantage written the codes, and then, in effect and for their own advantage, assumed the