National Socialism (and how they are doing it here)

........Of all businessmen, the small shopkeeper is the one most under control and most at the mercy of the party," recounts Reimann. "The party man, whose good will he must have, does not live in faraway Berlin; he lives right next door or right around the corner. This local Hitler gets a report every day on what is discussed in Herr Schultz's bakery and Herr Schmidt's butcher shop. He would regard these men as ‘enemies of the state' if they complained too much. That would mean, at the very least, the cutting of their quota of scarce and hence highly desirable goods, and it might mean the loss of their business licenses. Small shopkeepers and artisans are not to grumble."

In 1944, Ludwig von Mises published one of his least-known masterworks: Omnipotent Government: The Rise of the Total State and Total War. Drawing on his prewar experience in Vienna, watching the rise of the national socialists in Germany (the Nazis), who would eventually take over his own homeland, he set out to draw parallels between the Russian and German experience with socialism.

It was common in those days, as it is in ours, to identify the Communists as leftist and the Nazis as rightists, as if they stood on opposite ends of the ideological spectrum. But Mises knew differently. They both sported the same ideological pedigree of socialism. "The German and Russian systems of socialism have in common the fact that the government has full control of the means of production. It decides what shall be produced and how. It allots to each individual a share of consumer's goods for his consumption."

The difference between the systems, wrote Mises, is that the German pattern "maintains private ownership of the means of production and keeps the appearance of ordinary prices, wages, and markets." But in fact the government directs production decisions, curbs entrepreneurship and the labor market, and determines wages and interest rates by central authority. "Market exchange," says Mises, "is only a sham."

Mises's account is confirmed by a remarkable book that appeared in 1939, published by Vanguard Press in New York City (and unfortunately out of print today). It is The Vampire Economy: Doing Business Under Fascism by Guenter Reimann, then a 35-year old German writer. Through contacts with German business owners, Reimann documented how the "monster machine" of the Nazis crushed the autonomy of the private sector through onerous regulations, harsh inspections, and the threat of confiscatory fines for petty offenses.

"Industrialists were visited by state auditors who had strict orders to examine the balance sheets and all bookkeeping entries of the company or individual businessman for the preceding two, three or more years until some error or false entry was found," explains Reimann. "The slightest formal mistake was punished with tremendous penalties. A fine of millions of marks was imposed for a single bookkeeping error."

Reimann quotes from a businessman's letter: "You have no idea how far state control goes and how much power the Nazi representatives have over our work. The worst of it is that they are so ignorant. These Nazi radicals think of nothing except ‘distributing the wealth.' Some businessmen have even started studying Marxist theories, so that they will have a better understanding of the present economic system.

"While state representatives are busily engaged in investigating and interfering, our agents and salesmen are handicapped because they never know whether or not a sale at a higher price will mean denunciation as a ‘profiteer' or ‘saboteur,' followed by a prison sentence. You cannot imagine how taxation has increased. Yet everyone is afraid to complain. Everywhere there is a growing undercurrent of bitterness. Everyone has his doubts about the system, unless he is very young, very stupid, or is bound to it by the privileges he enjoys.

"There are terrible times coming. If only I had succeeded in smuggling out $10,000 or even $5,000, I would leave Germany with my family. Business friends of mine are convinced that it will be the turn of the ‘white Jews' (which means us, Aryan businessmen) after the Jews have been expropriated. The difference between this and the Russian system is much less than you think, despite the fact that we are still independent businessmen."

As Mises says, "independent" only in a decorous sense. Under fascism, explains this businessman, the capitalist "must be servile to the representatives of the state" and "must not insist on rights, and must not behave as if his private property rights were still sacred." It's the businessman, characteristically independent, who is "most likely to get into trouble with the Gestapo for having grumbled incautiously."

"Of all businessmen, the small shopkeeper is the one most under control and most at the mercy of the party," recounts Reimann. "The party man, whose good will he must have, does not live in faraway Berlin; he lives right next door or right around the corner. This local Hitler gets a report every day on what is discussed in Herr Schultz's bakery and Herr Schmidt's butcher shop. He would regard these men as ‘enemies of the state' if they complained too much. That would mean, at the very least, the cutting of their quota of scarce and hence highly desirable goods, and it might mean the loss of their business licenses. Small shopkeepers and artisans are not to grumble."

"Officials, trained only to obey orders, have neither the desire, the equipment, nor the vision to modify rules to suit individual situations," Reimann explains. "The state bureaucrats, therefore, apply these laws rigidly and mechanically, without regard for the vital interests of essential parts of the national economy. Their only incentive to modify the letter of the law is in bribes from businessmen, who for their part use bribery as their only means of obtaining relief from a rigidity which they find crippling."

Says another businessman: "Each business move has become very complicated and is full of legal traps which the average businessman cannot determine because there are so many new decrees. All of us in business are constantly in fear of being penalized for the violation of some decree or law."

Business owners, explains another entrepreneur, cannot exist without a "collaborator," i.e., a "lawyer" with good contacts in the Nazi bureaucracy, one who "knows exactly how far you can circumvent the law." Nazi officials, explains Reimann, "obtain money for themselves by merely taking it from capitalists who have funds available with which to purchase influence and protection," paying for their protection "as did the helpless peasants of feudal days."

"It has gotten to the point where I cannot talk even in my own factory," laments a factory owner. "Accidentally, one of the workers overheard me grumbling about some new bureaucratic regulation and he immediately denounced me to the party and the Labor Front office."

Reports another factory owner: "The greater part of the week I don't see my factory at all. All this time I spend in visiting dozens of government commissions and offices in order to get raw materials I need. Then there are various tax problems to settle and I must have continual conferences and negotiations with the Price Commission. It sometimes seems as if I do nothing but that, and everywhere I go there are more leaders, party secretaries, and commissars to see."

In this totalitarian paradigm, a businessman, declares a Nazi decree, "practices his functions primarily as a representative of the State, only secondarily for his own sake." Complain, warns a Nazi directive, and "we shall take away the freedom still left you."

In 1933, six years before Reimann's book, Victor Klemperer, a Jewish academic in Dresden, made the following entry in his diary on February 21: "It is a disgrace that gets worse with every day that passes. And there's not a sound from anyone. Everyone's keeping his head down."

It is impossible to escape the parallels between Guenter Reimann's account of doing business under the Nazis and the "compassionate," "responsible," and regulated "capitalism" of today's U.S. economy today. At least the German government was frank enough to give the right name to its system of economic control.

_________ Ralph R. Reiland, owner of Amel's Restaurant in Pittsburgh, is associate professor of economics at Robert Morris College. Further Reading: Ludwig von Mises, Omnipotent Government (Libertarian Press, [1944] 1985); Guenter Reimann, The Vampire Economy: Doing Business Under Fascism (Vanguard Press, 1939); F.A. Hayek, The Road to Serfdom (Chicago, 1947). Books by Mises and Hayek are available in our on-line catalog.

c) copyright The Ludwig von Mises Institute, 1998

“The Free Market”

The Problem of Fascism

Llewellyn H. Rockwell, Jr.

Our times are much like the 1930s, when it was widely assumed that there were only two viable ideological positions: communism or fascism. Liberalism of the old school was considered to be a failure, and not even worth considering. In the name of anticommunism, and lacking a full faith in the workings of freedom, many weak-willed old liberals turned to fascism as a viable alternative.

This was not a choice outside the mainstream: Professor Mussolini’s writings appeared in scholarly venues in English and were the subject of glowing articles in the New York Times and other publications. In US politics, many intellectuals and journalists had already bought into the view that society needed to be planned by a strong man, and FDR took up the role.

In the early 1930s, it was not obvious to everyone that Hitler was an intolerable evil rather than a belligerent presence that needed to be restrained and perhaps even flattered for his interest in national planning. Thus it was John Maynard Keynes himself who wrote the introduction to the 1935 German edition of his treatise, and suggested that the total state that the National Socialists were then building was perfectly suited for the implementation of his investment schemes.

It seemed that in the US, at the height of the depression, very few intellectuals and public figures resisted the temptation of both communism and fascism. There was Henry Hazlitt, who resigned from The Nation in opposition to that publication’s support of the New Deal. There was Albert Jay Nock who loathed statism in every respect. There was John T. Flynn, who came to write a large treatise against the politics of fascism, which he rightly saw as a species of socialist planning. H.L. Mencken held true to his libertarian commitments. With the immigration of Ludwig von Mises in 1940, all these people had a new champion, and his influence after World War II helped create a new classical-liberal movement in the United States.

Today as then, intellectuals and writers are buffeted between two forms of statist styles: right and left. It is as important for libertarians to be antisocialist as it is for them to be antifascist. But first we need to recognize that fascism is a reality, not just a smear term. We see it in the economic and political program of the current administration, which seems to be advancing a distinctly right-wing style of central planning: planning in the name of family, faith, and freedom (as versus the left-wing style of planning in the name of equality, liberty, and fraternity).

As regards foreign policy, what began as expedience has turned, over time, into a full-blown program. Militarism, of course, is an old standby, useful for example during the Cold War to keep the masses distracted from noticing what was happening to their liberty. What makes it different today is how it is united to an overarching ideology, a distinctly right-wing form of central planning, which takes careful thought to understand.

The ideology of the regime is nationalist and culturally conservative. It is consistently antileftist in the sense that it rejects egalitarianism, cultural toleration, free speech, and overt appeals to socialist envy. It is religious and Christian in rhetoric. It makes an appeal for family, country, patriotism, and traditional American values. It is ostensibly pro-business. It is anti-intellectual. It backs middle-class welfare to the hilt.

Behind the rhetoric you find the iron fist of the state, forcing conformism and regimentation. We have a kind of cult of personality too, in which the public is led to believe through hints and nudges that the leader has a direct line to God.

What all this has taught us is that there is a difference between being anti-leftist and being pro-liberty. The threats to liberty emanate not only from leftist thought but also rightist thought in which the state is used to impose a particular view of the good at home and abroad. I don’t think the US has ever had a left-wing president as convinced as the present administration of the ability of government to work miracles.

The confluence of these ideological factors and their success in appealing to the middle class can only prompt us to look at history to find its predecessors. Where do we find central planning, warmongering, and justifications for cracking skulls on a global scale? The 20th century offers many examples of dictatorial antileft regimes. It is not a stretch to call these fascist.

Just as socialism is different in every country, so too is fascism. We don’t see the appeal to racial solidarity of the Nazis at work here. The Italian and Spanish cases of interwar right-wing dictatorship come to mind, but there are differences there too. In the case of Chile or pre-Castro Cuba, you had business working with government to monopolize the economy.

So while our case borrows from all of these, it is its own unique variety of fascism: evangelical Christianity and a global crusade, with anti-leftist but pro-statist policies that show complete contempt for individual liberty at home and abroad.

How did conservative intellectuals and activists go from hating big government in the 1990s to loving it and celebrating it today? There is a bad seed in the ideology of American conservatism that spawns power worship. If you can get a group of people to sing the murderous Battle Hymn of the Republic in their churches, and to take a position on foreign affairs that is Mark Twain’s “War Prayer” come to life, the rest is just a mop-up operation.

There is also an American precedent. Reagan played the war card to great effect, and Nixon manipulated the cultural issues to his advantage. FDR, Wilson, and Lincoln demonstrated that presidents can ignore the Bill of Rights in wartime, and historians have faithfully celebrated their legacies. Bush invokes this American tradition and thereby taps into the form of patriotism inherent in conservative ideology. It is as cynical as it is effective.

American fascism doesn’t need these two additives to exist and thrive, but the inclusion of them helped round out the ideology, and helped it become particularly dangerous for the world. More and more, I fear that the administration is doing terrible ideological damage, demolishing what remained of the old liberal impulse in the middle class and shoring up support for imperialist practices in the post-Cold War world.

Is there a way out? The libertarian tradition stretches from the ancient world through the Middle Ages to our own day. But I do think we are living through a high point in intellectual development and recruitment. The body of theoretical work is vast and the intellectuals are hardened and ready for battle. The web and blogosphere give us the means to compete in the world of ideas as never before.

There is no sure blueprint for success other than for libertarians to do what each individually does best, whether that means teaching students, organizing antiwar or antitax rallies, writing large books on technical economic topics, or tirelessly managing a compelling blog. Resistance is not futile but the most constructive and noble stance of all.

Llewellyn H. Rockwell, Jr. is president of the Ludwig von Mises Institute (Rockwell@mises.org).

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