Regulatory Fascism

One more comment needs to be made about Jonah Goldberg’s very fine book, Liberal Fascism. In order to follow the argument here, it is necessary to make a fundamental distinction that very few in modern political discourse are able to make — because of the prevalence of fascist assumptions — and that distinction is the one between being pro-market and pro-business. Someone who is pro-market believes that no private business should be able to link itself to the coercive powers of the state, whether to squash competition, regulate products, raise trade barriers, and so on. Someone who is pro-business wants the continuation of “this business,” whatever this business may happen to be.

Free markets mean that business transactions are voluntary. Regulated markets mean that business still occurs, but that it occurs in some kind of “arrangement” with the state. The former is non-violent business. The latter is violent business.

One of the things that leftists and progressives have done is mislabel what fascism actually is, and because they have done this, their solutions to the problems they see are generally fascist solutions. First, let us take Goldberg’s definitions of fascism:

“The major flaw in all of this is that fascism, properly understood, is not a phenomenon of the right at all. Instead, it is, and always has been, a phenomenon of the left” (p. 7).

“Finally, since we must have a working definition of fascism, here is mine. Fascism is a religion of the state. It assumes the organic unity of the body politic and longs for a national leader attuned to the will of the people. It is totalitarian in that it views everything as political and holds that any action by the state is justified to achieve the common good. It takes responsibility for all aspects of life, including our health and well-being, and seeks to impose uniformity of thought and action, whether by force or through regulation and social pressure. Everything, including the economy and religion, must be aligned with its objectives. Any rival identity is part of the ‘problem’ and therefore defined as the enemy. I will argue that contemporary American liberalism embodies all of these aspects of fascism” (p. 23).

In using a word like “fascism” it is important to note that we are talking about social/economic systems, and not included in the definition are things like brutality, antisemitism, or genocidal terror. The German fascists were genocidal and the Italian fascists were not. Woodrow Wilson, the American fascist, was not genocidal. Fascist systems can extend their total claims as bullies or nannies. But they always extend them into everything. That’s what makes them fascists.

Complicating the picture is the fact that American liberals and compassionate conservatives (fascists, by Goldberg’s definition) have a tendency to describe as “fascist” any entity that is outside the control of the social/political body, which is actually the mirror image of the truth. Then they call for regulations to curb that fascist entity out there. The result is that government regulators and the co-opted business find themselves in a cozy arrangement, and the business that is in that arrangement soon figures out how to use it against competitors.

“Wal-Mart provides an example, in microcosm, of how liberals use the word ‘fascist’ to descrive anything outside the control of the state. For example, the New York Daily News columnist Neil Steinberg dubbed the company ‘an enormous fascist beast rising to its feet and searching for new worlds to conquer.’ His solution to conquer the facist beast? Invite it into bed with government, under the sheet of regulation, of course. It’s also worth noting that both Wal-Mart and Microsoft found it necessary to protect themselves from Washington, not merely because government couldn’t resist meddling, but because their competitors couldn’t resist lobbying government to meddle” (p. 304).

“For years both Wal-Mart and Microsoft boasted that they had no interest in Washington. Microsoft’s chief, Bill Gates, bragged that he was ‘from the other Washington,’ and he basically had one lonely lobbyist hanging around in the nation’s capital. gates changed his mind when the government nearly destroyed his company. The Senate Judiciary Committee invited him to Washington D.C. to atone for his success, and the senators, in the words of the New York Times, ‘took a kind of giddy delight in making the wealthiest man in America squirm in his seat.’ In response, Gates hired an army of consultants, lobbyists, and lawyers to fight off the government. In the 2000 presidential election, Wal-Mart ranked 771st in direct contributions to federal politicians. In the intervening years, unions and regulators began to drool over the enormous target the mega-retailer had become. In 2004 Wal-Mart ranked as the single largest corporate political action committee. In 2006 it launched an unprecedented ‘voter education’ drive” (pp. 303-304).

Here is how it works. Larger businesses attract the attention of the state because the state wants to do something about all that unregulated success. So they come in to regulate it. The defending businesses quickly realize that a little economic jujitsu is in order — use the power of the state to their company’s advantage, and to the disadvantage of smaller competiors. In come the price supports, regulations that provide a disproportionate burden on smaller businesses, trade barriers, subsidies, and all the rest of it, with all of it funded by the coercive power of the state.

Competing against an unregulated Wal-Mart would be a challenge, but nowhere close to impossible. Competing against a regulated Wal-mart is another thing entirely. And so when progressives call for various regulations to make a business like Wal-Mart “behave,” they are creating the very condition they pretend to oppose. They are creating an official relationship between the state and the business concerned, and the business will soon learn how to manipulate that relationship. Fascism is therefore pro-big business, by definition. Anti-fascism is pro-freedom. An unregulated business should be free to raise prices, lower prices, keep them the same, raise wages, lower wages, keep them the same, raise health benefits, lower health benefits, or keep them the same. A business should be free to take off or flop. What they should not be able to do is help the regulators of their industry draft restrictions that would put me in jail if I figured out a way to undersell them.

One other comment, and I am done. An area that Goldberg does not develop is one that actually worries me more than any of the current economic foolishness at the national level. If we take his description of the situation on the ground (which is, in my view, hard to dispute), then we have to take these principles and do some hard thinking about the unfolding monkeyshines contained in the so-called “free trade zones.” These free-trade zones are actually managed or regulated trade zones, which means that we are seeing the development of international fascism. Genuine free markets would be a blessing to everybody. Free trade that was really free would be an indication that coercion of men and women was decreasing. But regulated expanding trade (as we have between our nation and Canada, or our nation and Mexico) is simply expanding fascism.

As global markets develop, the state is doing everything it can to get the bridle on those markets. To the extent they succeed, to that same extent we will have the smothering of freedom. To the extent they fail, to that same extent we may all breathe freely.