October 6, 2000
The fascism which is called 'capitalism' in modern 'liberal democracies' is more beneficial, more productive, and freer than heavier domination of an economy. But those who defend it do so on the basis that there is no better choice. Promethean capitalism is a real choice which is not a matter of improved variation on the same economic system. The advocates of the lesser fascism in this state capitalism also discount the importance of something which should never be ignored: some control of an economy tends toward greater control, through further aggregation of political power. The proof that their capitalism is not something distinct comes again and again when limited economic control so consistently becomes extreme control, as lesser fascism gradually becomes an unbridled economic fascism akin to that of the Axis powers. The problems symptomatic of a controlled economy remain the same, different only in extent and minor variance. And even as control expands to address them, it extends its own symptoms.
Little can be gained in the long-term from hiding economic realities, which is all that control can do directly within an economy. Centralized organization of production cannot produce more in itself, and it will be removed from the intimate knowledge necessary to set appropriate prices and pay appropriate wages. Official but unrealistic wages or prices, or production quotas, or the support of inefficient businesses, cannot really achieve anything. It may be politically popular to give money and goods away as if they are manna from heaven, but in reality they have a source. Whatever is distributed must have come from somewhere; it must be created to be given away, or it will have to be taken from elsewhere. This is what is happening when the involuntary exchanges of taxation and other mandatory allocation is redistributed in a controlled economy, whether it goes to pay wages which are something other than what work is worth to the employer, or allocates prices differently from what supply would indicate, or pays people to do unnecessary work or to produce goods that no one will buy, or pays them to do nothing at all.
The source of economic productivity is always ultimately individual accomplishment, even within a cooperative group. It is impossible to decree productive economic results, except to limit them as a result of individual reaction to a decree. People will not blindly continue to do what they did before, once central planners build boundaries and change the rules. They respond however they will as individual people. They cannot be herded like sheep as long as individuality remains part of humanity, and so long as their freedom allows it. They will respond unpredictably, and control will have unintended effects.
The incentive to achieve is generally decreased within a fascist economy of any degree. For example, if income taxes increase with greater income, the incentive to make more income is lowered. Starting a business requires special taxes and regulations, often making it not quite worthwhile. Changes in taxes schemes and regulations are an added threat to small enterprises. Established, large businesses have less of a problem weathering such costs and risks. A common thread in controlled economies is that the incentive to express ability by reaching for maximum achievement is lowered considerably, and unevenly. This is especially evident when interference is targeted to achieve specific goals which are deemed beneficial in certain industries. Any regulations by the government designed to affect selective or partial controls on final prices provide less incentive for producers, forcing some investment capital into less affected businesses and industries. In an attempt to achieve the original goal of lower prices or more goods, this process must continue farther and farther afield. Regulation must be spread to the businesses which now benefit from increased capital; the government planners must continually chase capital, or give up the pursuit of specific economic goals through artificial means. If they do not stop and accept failure to control the complexities of human action through rough central decree, the eventual product is the extreme controlled economy of a totalitarian state. In the long term, interference with an economy does not achieve the proposed results; it is only successful at expanding power.
These problems, tied to the accretion of centralized political power as both cause and effect, are bad enough. But they are not the worst part of involvement of government in a controlled economy. They are the just some of the weaker evidence against control, based on a simple and rather naïve view of the process in which officials have benevolent, objective, and merely deluded intentions, and those in business fail to exploit political leverage for their own advantage. In reality, objective separation of business and political interests are impossible in such a system of invasive masterminding. The worst symptoms of economic fascism come from the way that the intertwined coexistence of private interests and public rule breeds abuse of power, bribery, political favors, exploitation, and in general brings out the worst of humanity. And again, there are unintentional effects, which sometimes are even worse than this inevitable corruption.
It is essential for private businesses not to receive fascistic assistance. Not only does it decrease or remove accountability, which is dangerous enough, it also props up inefficient and inferior enterprises over better ones, creating monopolies. This is the reason why fascist economies are unproductive and inefficient in proportion to the degree of intertwined collusion between business and government. A good example of this effect is the application of protectionist policies designed to close off local markets from the competition of foreign industries. They are popular especially with the domestic businesses they are designed to assist. Protectionism is protective of nationalism, that is to say the independent power of one government, and selected allied business interests. However, time and time again the example of history shows that any society which is closed even partially serves the interests of its individual members less than a more open society, and chokes off the advantages of open exchange, also squashing competition and incentive.
The inefficiency of fascism is also the reason for major economic instability. In a fully free economy, invested wealth constantly flows from unproductive hands to more productive ones, as enterprises which are not competitive (in terms of quality of goods and services, wages, customer perception, or anything else) are allowed to fail on the basis of their lack of performance. This makes for less instability than would otherwise occur, since it happens continually and gradually, giving people ample opportunity to adapt without terrible hardship. However, in fascist economies, governments (often at the behest of these uncompetitive businesses, especially major industrial concerns) are constantly attempting to control those natural adjustments in a variety of ways. Government interference seeks to maintain a static, stable equilibrium where none is desirable, or possible. Bailouts, grants, loans, credits, subsidies, and price fixing are only the most blatant examples, famously known as 'pork' for political constituents. And despite less corrupt intentions, manipulation of interest rates is another example of trying to maintain impossible stability, an attempt with massive influence and equally massive consequences in terms of supporting false economic results. Eventually, all the supported businesses which should never have been propped up reach a crisis point. All their invested wealth reaches the point where it can no longer be forced to remain in the same hands, hands which should never have held it for so long. At these times, a great amount of wealth changes hands in a very short time, as though sliding under the inexorable weight of gravity. Many poor investments collapse entirely in the waste of unnaturally-supported failed enterprises. Some of these recessions are so severe, such as the Great Depression, that governments again respond with dramatically increased control of the economy due to popular demand. Again power expands, power shows favoritism, and the seeds for further instability and hardship are sown.
The world is all too familiar with the worst symptom of economic fascism, imperialism. A business assisted by the government can be compared to one protected by a mob of criminals. The position of both is ultimately supported by force, sometimes with the same violent results. The collusion of fascism is the source for much of the conflict and war which occurs. When business interests collide in a free market, there is no likely recourse to violence. However, when commercial interests collide and business is tied to government, which is always based on force, then trade wars, colonial wars, imperial power struggles, and other forms of violent oppression will follow. Perhaps most of the bloodletting in history can be traced to a link between economic interests and government.
The worst imperialism comes with the close interconnection of consolidated business interests and the state. Economic achievement and exchange is the lifeblood of every society. The eventual failure of a controlled economy means the inevitable collapse of a state. A rule characterized by authoritarianism must collapse with a rapidity and severity linked to the extent of its interference in exchange and productivity. If those in power, including industry leaders within massive integrated political influence, refuse to yield their control, there is only one option left to them: expand the power base of the state through external oppression. Throughout history, colonialism has been organized by cooperating business and industry leaders to exploit the labor and products of subject colonies by force. The ultimate extension of the life of political domination by a fascist partnership is outright war. An extreme fascist economy, such as Nazi Germany, can never persist under the weight of such tyranny without turning to military expansion, pillaging foreign wealth, and consolidating power by mustering national pride. The persistent link between fascism, violence, and war in history should warn us of the probability of imperialism, colonialism, and war as a consequence of controlled economies, not just in the past, but now and always.
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