In this lecture I try to develop an analysis of German fascism with the intellectual tools of libertarian theory. The analysis concentrates on the socioeconomic dynamics of the interactions between organized interest groups which brought about fascism.
Why do we need a special theory of fascism? Many libertarians seem to think it sufficient by comparing fascism, state-communism, and the welfare state to find equal totalitarian structures. But the very fact that those American critics of the New Deal who pointed out its underlying fascist economy, such as Rose Wilder Lane, Albert Jay Nock, and John T. Flynn, survived without being shot by the Roosevelt administration whereas German, Italian, and Spanish critics were shot if they had no chance to emigrate, demonstrates the great difference between fascism and the democratic welfare state.
The difference between fascism and state-communism, on the other hand, has nothing to do with the structure of the state. Both structures are totalitarian. They do not allow political competition between different parties, freedom of the press, and freedom of association. But fascism and state-communism differ in the objects of their policies.
Of course, to those who are subjected to totalitarian oppression the objects of the policies are of no great importance. But if we want to understand why the masses of the people or the state apparatus turn either to state-communism or to fascism we must analyze especially the differences between the two political concepts. Only by looking at these differences can we develop a strategy against the totalitarian tendencies of both.
My analysis of German fascism contains four elements: I. Fascism as socialism of property owners (socio-economic conditions); II. Fascism as a conservative revolutionary mass-movement (socio-psychological conditions); III. Fascism as "rational" public choice (dynamics of pressure groups); IV. Fascism as the result of statist traditions (the statist ethos).
Historians, mostly Marxist ones, have shown the close relationship between business leaders and the National Socialist Party in the early 1930's. This relationship is a fact. Marxists, of course, use this fact to bloster their calling fascism a "variant of capitalist rule." To a libertarian observer this interpretation of the undeniable fact is obviously false. Let us take a closer look at the relationship of National Socialism and business.
There were three types of businessmen supporting the Nazi Party: (1.) big business leaders engaged in business totally dependent on the state, like banking; (2.) big business leaders of huge corporations encouraged, subsidized, or founded by the state, most often in the second half of the nineteenth century; (3.) many small businessmen working in what was left of the market.
Turning to the first two types of businessmen supporting Hitler, it is clear to any libertarian what they expected from a Nazi government. During the 1920's, they had financed moderate liberal, conservative, and even socialist parties and their formulas of solving the economic and political crisis. Problem-solving from these businessmen's points of view meant securing or expanding their economic profits by political means and at the same time keeping the impoverished masses quiet. The moderate democratic parties failed to reach this aim. After the great success of the Nazi Party in the 1930 election, totally unexpected by all observers, the monopoly business leaders turned fascist. They hat two objects: first, they tried to "domesticate" the anti-proprietarian mentality of the left-wing Nazis, because they feared that if the Nazis gained power there would be nationalisation of the most important industries; second, they hoped that the domesticated Nazi Party seizing power would not be squeamish about using the instruments of the state to solve the crisis in their manner. But even Marxists must admit that the big business support for Hitler did not create the success of the Nazi Party in the first place but followed that success, thus helping the Party to finally gain power.
Small business support, from shop owners, company owners, craftsmen, peasants and so forth, added more to the original success of the Nazi Party. People owning minor pieces of property are estimated to have formed 15% of the German population in the 1920's and 30's, but more than 30% of the Nazi Party members and the Nazi Party voters before 1933. As we know from libertarian economic theory, the class of independent small businessmen suffers severely from the unfree market manipulated by the state; that is, by inflation, excessive taxation, regulations, and by unfair competition from state-created big business. Under normal conditions these people are either unpolitical, being absorbed by their daily problems, or vote for moderate conservative-liberal parties promising to leave them alone. In the crisis of the 1920's and the early 30's, the class of small property owners turned not to free market ideals but to fascism. They abandoned the link between property rights and the free market, as long ago big business had done. They turned to what the Marxist historian Gabriel Kolko calls "political capitalism" and what in my opinion should be called "socialism of property owners." The decisive economic difference between communism and fascism is that communism asks for socialization of all property, whereas fascism insists superficially on defending property rights. What fascism calls for is, instead, a strong government which regulates the market in the alleged general interest. The regulations, in the fascist theory, should follow the principle of preventing the present property owners from changes in the market which supposedly are intended results of unfair competition from uncontrolled big business.
The average small businessman in the 20's reasoned thus: the economic concept of free market and capitalism was identified with the status quo. From the libertarian point of view this identification is wrong; but because all parties interested in the status quo were caling themselves "liberals," defenders of the "market" and of "capitalism," one can understand that the unpolitical businessman not educated in economic theory was unable to see the difference between capitalism and mixed economy. Thus he thought of the market as a failure. Of course he disliked the communist solution because he wanted to preserve his property. The alternative was fascism which promised to abolish the market and to keep property rights.
The fascist concept of "socialism of property owners" was derived from the more fundamental concept of a "conservative revolution" appealing not only to property owners but to a more general public. While communism speaks of changing society totally, which hurts the conservative feelings of the masses, fascism calls for changing the political structure only. Fascism intends to change the political structure while preserving the society as it is, or, critically said, as fascists see society; namly to preserve property, family, work for everybody, safety on the streets, and authority. The enemies of all these fine things are seen by fascists in market changes resulting from unrestricted big business activities, egoism &endash; especially of such scapegoats as Jews and other minorities &endash;, non-conformists supposedly destroying the lifestyle of so-called "normal" people, and liberalism leading to a weak state which invites every kind of decadence, nihilism, criminality, and laziness.
Fascism at the same time appeals to the conservative and revolutionary feelings of the people: the conservative feelings are satisfied by saying that the structure of society is not to be changed; the revolutionary feelings are satisfied by promising that everyone will be better off after a strong state is established which ensures that the general welfare is placed before egoism.
Libertarian theory defines the modern state as a bundle of means to intervene in the voluntary actions of individuals and freely formed communities. Politics is defined as the fight among different interest groups and pressure groups to employ these means as they wish. In the light of this theory fascism is the ultimate statist formula: fascism ends politics by promising most interest groups that their wishes will be fulfilled. Only very few interest groups are not invited to enter the fascist coalition, and these interest groups are defamed as being antisocial to serve as scapegoats. The conflict about who can use the power of the state and how the power of the state is to be used is, says the fascist theory, solved. Everyone can happily work to make the state stronger and stronger, because he, as all his fellows, will benefit from the strong state. Even the communist concept of class struggle, which allows for conflict and compromise, is less radical than the statist formula of fascist conservative revolution and fascist mass-coalition.
Of course, the reality of fascism does not fit this idylic picture. Someone pays for the other's wellbeing; Peter pays Paul &endash; Paul, to be sure, being a member of the ruling class and Peter being an oppressed and exploited worker or businessman. And therefore there is an ongoing conflict in fascist governments. In fascist Germany struggles went on, for instance, between the general Party and the anti-proprietarian left-wing storm troopers; the Party and the traditional administration; the security unit and the army.
The brutality of fascist rule has a paradoxical root: on the one hand, the brutality reflects the promise that the state will serve every legitimate interest. Thus, whoever dares to work against the state must be seen as someone who endangers the wellbeing of his fellows, and no means to silence such anti-social behaviour ought to be ruled out. On the other hand, because the fascist promise is mere ideology to form the coalition, the ongoing clashes of interest groups must result in violent fights. The theory does not allow for peaceful procedures to solve conflicts. Every interest group engaged in a conflict must defame its opponents as inherently anti-social. Success of an interest group in the context of a fascist state inevitably leads to extinction of the opposing groups; and failing to have success means that one's own group will be extinct. That is, brutality of fascist rule flows out of a theory which denies the existence of interest groups and a practice which is structured by fights of interest groups unrestricted by the rules known in democracies. In the long run, such a violent form of government is unprofitable and uneasy to the ruling class itself. If they can keep power long enough, most totalitarian governments will, as could be observed in the communist Soviet Union as well as in fascist Spain, develop a kind of quasi-democratic process allowing interest groups to fight more peacefully.
There is one more source of the brutality of fascist governments, namly a strong need for scapegoats. Because of the enormous promises employed to form the fascist mass coalition, promises are made which are impossible to keep, the state is in permanent need to blame others for the failures. But to disrupt the good functioning of the supposedly almighty state, the scapegoats must seen to have bigger-than-life powers at hand; so in fighting these evil enemies no brutality is forbidden.
Only two interest groups remained immune to Nazi propaganda: organized labour and the Catholics. To be clear, they remained immune before the fascist takeover. Afterwards they submitted themselves to the fascist conformity. It is estimated that until the Second World War broke out, 80-90% of the German population were faithful adherents of Hitler.
The libertarian should have expected the immunity of organized labour and Catholics against the call from the fascist coalition: these two groups were those interest groups in the Weimar Republic who felt that the status quo gave them all the power they could get. Organized workers realistically saw the unions privileged by law as the most efficient instrument fighting for their interests; the Nazi party was not a better choice. But workers in little companies and in rural areas and unemployed, especially young unemployed workers, that is, workers who were not unionized or who suffered real losses from union actions, showed a strong tendency towards the fascist coalition.
The German Catholics were organized in the "Center Party." The Party, with about 15% of the votes, was very strong, especially because the Party, having a left-socialist and a right-conservative oriented wing, was the only force in parliament which could integrate the left- and the right-wing of the democratic spectrum in a workable coalition. Because of their powerful position in the so-called "Weimar Coalition," Catholics could not expect anything from the National Socialist Party, so much less so because the Nazis employed a kind of paganism to avoid being involved in the clash of the two Christian religions.
The reason why, after the Nazi take-over, all interest groups submitted to the new state can easily be explained in libertarian theory, too: not to submit would have wasted any possibility to influence the political events. Thus it was more profitable to co-operate, at least in the short run. Even Jewish organizations tried it this way. That is, the mechanism of integration is the same in totalitarian and in democratic states. This mechanism is best described by the term "rent-seeking-society," and it consists of the insight that opposition in most cases is more costly than lobbying.
It is not possible to interpret the whole phenomena of fascism with the three interrelated elements "socialism of property owners," "conservative revolution," and "dynamics of pressure groups" (public choice theory). Neither many of the property owners nor the conservatives nor any other interest group taking part in the fascist coalition realistically could have hoped for satisfaction. Any rational calculation must have led to the conclusion that Hitler's promises were worth nothing.
The only explanation for the fact that so many people, even otherwise rational people like businessmen, committed themselves to the fascist cause is a long established faith in the godlike abilities of the state. The modern German statist tradition has three roots:
1. The formation of the German nation-state came extremely late. Early in the nineteenth century, German liberals abandoned many anti-statist features of the original liberal theory and invented the so-called "nationalistic liberalism" which stressed the unity of the nation more than individual freedom. For instance, it is heart-breaking to read how the German philosopher Johann Gottfried Fichte developed from his early quite libertarian writings to a position of early national socialism based on worship of the nation. Thus, in Germany there was no successful liberal revolution or evolution. The era of Prussian liberal reforms did not last more than ten years at the beginning of the nineteenth century. The liberals compromised too early with the powers-that-be to win the coveted national unity. The degeneration of the French revolution and the subsequent conquest of Germany by Napoleon's troops destroyed liberal hopes and strengthened the nationalistic feelings.
2. What was left from the liberal ideas were some features in the economic sphere. Liberalism was regarded as a strictly economic doctrine with no connections to other human activities. Therefore liberalism seemed to be non-emotional or even anti-emotional. All community activities or other activities involving emotions were thought of as necessarily authoritarian organized enterprises. The liberal idea of free associations, of communities based on consent, remained strage to most Germans.
3. Finally: armed with the most statist philosophy developed in Germany, Hegel's philosophy, Karl Marx, living in England, got to know the new utilitarianism. The utilitarian formulation of liberal theory abandoned the principled stance of the classical liberals, concentrating on the welfare of the society as a whole. In the connection of statist metaphysics and utilitarian quasi-socialist practical concepts, Marx opened new grounds for statism in the modern world. Fascism is not Marxist in the strict sense of the term, but is, as Ludwig von Mises and Friedrich Hayek showed, only possible within the framework of the combination of statism and utilitarianism which Marx developed.
In every country which developed a fascist rule some sort of statist tradition can be found. Of course, these traditions differed in detail. On the other hand strong American liberal tradition is probably the explanation for why the New Deal did not result in a European-style fascism. The American New Deal was equally a socialism of property owners, not quite a conservative revolution but a conservative evolution. But the New Deal did not develop the idea that to accomplish its program it would be necessary to abolish all civil rights.
One of the most horrible results of anti-individualist traditions which failed to teach the Germans tolerance, was the antisemitism of the National Socialists. Every statist rule depends on creating scapegoats to be accused of the responsibility for the failures actually originating in the administration. Normally, however, the scapegoats are critics, intellectuals, non-conformists, and foreigners. To be sure, these scapegoats were used by the Nazis, too. But the Nazis directed their fiercest hatred against the Jews. This hatred was based on the belief that a person by mere virtue of birth can be part of a conspiracy. It is impossible to explain why so many Germans followed this absurd non-rational belief without taking the long tradition of collectivist intolerant thinking into account.
This anti-individualist thinking still works, for instance, when the Germans are thought of, or think of themselves, as collectively guilty of fascism, even if they were born after the war (like myself); or when after the violence of British football fans in Brussels (1985) the whole British "nation" is held responsible.
Middle-of-the-road liberals and democrats like to describe National Socialism as an accident in modern history. They tell us that now Western democracy is safe from fascism. On the other hand, Marxists used to say that the socio-economic conditions on which fascism is based still exist, thus endangering the world with new fascism. I think the latter conclusion is right, but for the wrong reasons. While Marxists blame capitalism for fascism, libertarians show that fascism is an extreme type of statism, of anti-capitalism.
The fascist threat in our times, in my opinion, has three dimensions:
n It seems possible that the ongoing crisis of the mixed western economies will lead to a situation in which the New Dealish "good fascism," as John T. Flynn termed it, turns into real totalitarian fascism. We know from libertarian economic theory that the mixed econonomy is inherently unstable. The experience of fascism teaches us not to put too much faith in the assumption that people in the crisis of statism realize the only true long-run solution, i.e. libertarian revolution. Sadly enough, it is more likely that they tend to more extreme statist short-run solutions &endash; fascism or, sometimes, authoritarian communism.
n The second dimension of today's fascist threat is Third World fascism. Educated by the colonial powers in statist econonomy, Third World leaders seem to think of only two possible social structures: communism or fascism. It makes things even more difficult that Third World fascism is sometimes linked to alleged "capitalist" ideas and that the leading alleged "capitalist" power, the USA, supports many proto-fascist governments in the Third World. This means that the real solution for the problems of poverty, hunger, and oppression cannot be seen by the average people of the third world.
n Thirdly, I have to add now, it seems likely that the break-down of the eastern state-Communism leads to fascism. Unfortunately, the eastern bloc was not blown by a people's revolution, but by the smarter or more nationalist minded administrators. That is, the statist ideology was left intact. Quite to the contrary, some of the limits which the communist ideology set to state power were abolished, e.g. some new "nations" emerging out of the USSR now oppress their minorities more than was the case before.
Consequently, fascism is not less dangerous today than it was in the 1920's and 30's. What then is the lesson we should learn from the fascist experience? In my opinion there are four main lessons to learn:
A. The first lesson libertarians should learn from the fascist experience is best stated in a paradox. On the one hand, our strategy must not be a sectarian purism. We probably will not succeed in building a totally free world, but we have to succeed in defending the next best thing: civil liberties. We should not be afraid of forming coalitions with everyone willing to defend civil liberties, conservatives, liberals, social democrats, or whoever. It is naive to think that we can profit from a breakdown of the economic or political order of liberal democracies and mixed economies. From such a breakdown only fascists and sometimes communists profit because people are not ready to accept the libertarian solution. Our only chance lies within the securing and the security of civil liberties to educate people and propagate our views.
B. On the other hand, our strategy must not consist of cheap compromise. We have to be radical in order to demonstrate that libertarianism is different. We should help people realize that libertarianism is not only a makeshift but that it can improve the whole structure of society. A main failure of the liberals in the beginning of the twentieth century was that they lost their utopian vision by making peace with the powers-that-be, with statists and with owners of unjustly acquired property. If, for instance, we do not draw a clear-cut line between libertarianism and Reaganism or Thatcherism, we must not be surprised should people turn their backs on us. It is obvious to me that if we make peace with the status quo, that is, if we engage ourselves in the stupid political battles between parties or candidates which make no difference, we will have no chance to change anything for the better.
C. A further lesson is that we must not, under any circumstances, separate the ideas of property rights, economic freedom, and civil liberties. The separation of property rights from economic freedom leads to the fascist "socialism of property owners." The separation of economic freedom from civil liberties leads to the impression that liberalism has nothing to do with the daily and emotional community life. Libertarians do not defend property rights as such, but as part of the whole spectrum of civil liberties. The alleged protection of property rights in a country where Jews, homosexuals, non-conformists, and all critics of the government are harrassed, imprisoned, and murdered is worth nothing. Property rights not grounded in the fundamental principle of self-ownership, that is, of individual self-determination, cannot be regarded as real property rights.
D. I think it a clear lesson of the fascist experience that we need a practical program to help those people impoverished by state action. If there are millions of unemployed, it serves nothing telling them that in the long run things will get better after deregulating the market. They are in need now and they follow any statist, communist or fascist, leader promising a short-term program. By a workable libertarian aid program I do not mean, of course, a government program, although I think something like Milton Friedman's negative income tax would be better than nothing. But in my opinion, the negative income tax could only be looked upon as a makeshift. We should search for a real libertarian solution without government involvement. I am thinking of a combination of Sam Konkin's idea of counter-economy and Hubert Jongen's idea of a Libertarian Foundation for Human Assistance.
E. The last lesson, as I see it, probably poses the hardest challenge to libertarians. We must bring about a universal solidarity among human beings. To say that selfishness will lead to a situation in which everybody realizes that freedom is the best organization of society, securing the greatest chances of each and every one to reach self-determined aims, is very unrealistic. Every individual acting in a selfish manner tries to maximize profits under the existing conditions. There is no joy of imagined future freedom which can compete with the horrors of being imprisoned or tortured for not submitting to totalitarian rules. For instance: Why shouldn't a teacher teach children that Jews, or Blacks, or Whites, or whoever, are inferior creatures, when ordered to do so by the government threatening to imprison or even kill him if he refuses? The strengh to resist comes only from a passion for truth, for justice, for humanity, a passion which I call "universal solidarity." A person without such a passion will always find the costs of opposition exeeding the benefits. I am not saying that selfishness is not a virtue, but the libertarian needs two virtues &endash; selfishness and passion for justice. Because the two virtues are not harmonious, there is a problem within every libertarian.