Financing Fascism, Part II by Steven Jonas, MD, MPH

by Steven Jonas, MD, MPH
Featured Writer
Dandelion Salad
crossposted on
Mar. 30, 2010

Graffiti "4 More Years of Fascism"

Image by Dandelion Salad via Flickr

As I noted at the beginning of my Commentary No. 135 that appeared on BuzzFlash last week,fascism may be briefly defined as: “A politico-economic system in which there is: total executive branch control of both the legislative and administrative powers of government; no independent judiciary; no Constitution that embodies the Rule of Law standing above the people who run the government; no inherent personal rights or liberties; a single national ideology that first demonizes and then criminalizes all political, religious, and ideological opposition to it; the massive and regular use of hate, fear, racial and religious prejudice, the Big Lie technique, mob psychology, mob actions and ultimately individual and collective violence to achieve political and economic ends; and corporate domination of economic, fiscal, and regulatory policy.”

That column focused in particular on Nazi Germany and how the Nazis were able to finance their government once they took power.  (The financing of the Nazi Party before it took power is another story.  Principal sources of its funds were a consortium of German companies headed by the steel baron, Fritz Thyssen, and certain foreign contributors. Prominent among the latter were George Herbert Walker, a George Walker Bush great-grandfather and the Brown Brothers Harriman Bank.)  The list included, briefly: 1) the final discontinuance of World War I reparation payments in 1932, before the Nazis took power; 2) in addition to the foreign contributions to the Nazi Party, significant foreign investments being made in Germany, especially by right-wing capitalists from abroad, such as George W. Bush’s grandfather, the pro-Nazi banker Prescott Bush;  3) because of the quality of its manufactured goods and such specialty items as machine tools, Germany maintained a significant foreign trade, even during the Great Depression;  4) the Reichsbank was able to devise a scheme for printing money that didn’t look like the plain old open, flat-out printing of money that had led to the German hyper-inflation of 1923;  5) the Nazis were able to obtain a certain amount of foreign loans, from such friendly foreign bankers as the Bushes and the Harrimans;  6) benefiting from the availability of at least some of these funds, they started a massive, Keynesian-like, public works program, beginning with famed “Autobahns,” which indeed did stimulate economic growth.

Once economic recovery was under way, over time the Nazis also used: a program to remove women from the labor market; national military conscription, at low wages, which further tightened the labor market; the massive, very profitable, rearmament program; the outright theft of Jewish property; the re-militarization of the Rhineland (1936); the “Anschluss” with Austria (1938); the conquest of Czechoslovakia (1938-39); the access to Rumanian oil by alliance; their further conquests to the East and the West and the capital it brought under their control; and then the increasing use, during the War, of slave labor.

What possible parallels might there be for the United States and what limits might be placed on fascist ambitions here (not that there are any, of course) by the current perilous state of the US economy?  It is characterized by: a massive foreign debt, a significant amount of which is held by China; a massive decline of domestic manufacturing capability, a significant amount of which has gone to China; a dependence on finance capitalism for profit-making; the development of what Jonathan Westminster calls in his 1996 book, The 15% Solution: A Political History of American Fascism, 2001-2022, the “Resource-Based Economy” that is petroleum, natural gas, coal, and lumber, both for domestic consumption and export; and a dependency on “small business” for job creation at a time when most small businesses sell goods, services, or food, but do not for the most part pay people for producing things, from which income would then be available to buy the goods, services, and food that small businesses sell.

So where does potential US fascism fit into all of this?  Quite narrowly.  In fact, the potential US fascists, that is, major sections of the “Tea Party” movement, a (sadly) increasing fraction of the GOP, the authoritarian Christian Right like the “Reconstructionist” movement (that has, for example, given political donations to the former Arkansas Governor Mike Huckabee), and the so-called (right-wing) “militia” movement, would have some serious problems with financing.

Because of their stated ideology and very limited political program characterized mainly by “small government” (that is when it comes to participation in and regulation of the economy, not when it comes to such personal choices as abortion, gay marriage, religious belief or non-belief, privacy in sexual matters, end-of-life decision-making and so forth) and “cut taxes,” they would almost have to even further reduce taxes (the US has one of the lowest overall tax rates in the capitalist world), or at least appear to reduce taxes, and, in a polar contrast to the Nazis, would have to end all government-run economic stimulus programs.  Further, unless they did a volte face on this issue as well, they would have to continue to allow the massive export of domestic capital that began under Reagan and has continued under all succeeding Presidents.

So where would the money come from?  First, under a fascist government there would be an explosion of the development of the Resource Based Economy.  Both coal and natural gas would be available for export in increasing quantities as would lumber as the National Forests would be opened up for full exploitation.  There would be a major move to annex Western Canada, either actually or functionally, to massively increase further access to exploitable natural resources.  Second, there would be a massive tax increase, although it would be disguised as best as they could to make it not look like a tax increase and it surely would be retrogressive: that is, the imposition of (or increase in if a predecessor democratic government had already taken a step in that direction) a national sales tax (Value Added Tax).  This would likely be spun as an “anti-terrorism” (read ‘funds for repression of all opposition’) fee.

Third, there would be foreign investment, especially from huge US multi-nationals, bringing money home to take advantage of the further weakened labor pool.  The chronically unemployed would be characterized as “lazy, anti-American, good-for-nothings” but their existence would massively aid in keeping wages down and attractive for foreign investment.  Unions, of course, would be either illegalized or functionally rendered even more powerless than they already are.  So, as wage-levels dropped, manufacturing might actually go up.  Fourth, the recent Supreme Court decision legalizing any kind of corporate political contribution in any amount would mean the pouring of money into the fascists’ political coffers.  This is not direct investment in productive resources, but the more money the fascists could receive in foreign contributions (which could run into the billions) the less they would have to spend from their own government sources on such matters as, say, domestic repression. Of course, the private armies that could be used for such purposes are already very much in existence.

Fifth, there would be a major decrease in government spending, with limits placed on that by the needs and wants of their own “anti-government” supporters in significant numbers — older, white Americans dependent on Social Security and Medicare.  Obvious candidates for major cutbacks or elimination would be: Medicaid, private health insurance subsidies, and food stamps (all programs for the “undeserving poor,” donchaknow), mental health services, the VA health care system, education (do-it-yourself), transportation (same), food, drug, and financial regulation services, etc.  They would take a major look at cutting farm subsidies, but since the food industry, to be freed of all government regulation, would likely be a strong supporter of the fascist enterprise, farm subsidies would likely continue.

Finally (for this column, not for the overall discussion by any means) there would be the role of China.  By far and away the US’ biggest creditor, they could of course just turn off the spigot until, let us say, there would be a return to Constitutional democracy.  In my view, that’s a pipe-dream.  First, the fascists would at some point very likely threaten default, which they would sell to their constituents at home with a race-based, “no more money for the s___t-eyes.”  Second, facing that threat, the Chinese would likely adopt a massive version of the “too big to fail” philosophy which both parties used to bail out the banks in 2008-09.  And the fascists would be able to continue the China-dependency, most likely at increased interest rates for decreased amounts as China started to protect itself to some extent.

And so, friends, a future fascist US would most likely be able to arrange financing for itself, at least for quite some time.  A major factor determining for how long they would be able to keep it up would be their imperialist/foreign war policy which in turn would determine the size of the military, both public and private, but let us leave that one for another time.  The narrative here does give us Constitutionalists (“Connies” for short) enough to worry about, don’t you think?  Speaking especially as a specialist in Preventive Medicine, it makes prevention of fascism here even more important than it already is.  The first step, which certain major columnists like Christopher Hedges and Frank Rich are beginning to take, is to talk about the prospect.

Steven Jonas, MD, MPH is a Professor of Preventive Medicine at Stony Brook University (NY) and author/co-author/editor of 30 books. In addition to being a Columnist for BuzzFlash, Dr. Jonas is also a Contributing Author for TPJmagazine; a Featured Writer for Dandelion Salad; a Senior Columnist for The Greanville POST; a Contributor to TheHarderStuff newsletter; a Contributor to The Planetary Movement; and a Contributing Columnist for the Project for the Old American Century, POAC.


Financing Fascism, Part I by Steven Jonas, MD, MPH

Is America ‘Yearning For Fascism?’ by Chris Hedges

The Iron Heel (1908) by Jack London

The 15% Solution: A Political History of American Fascism, 2001-2022

“The 15% Solution,” Serialization, 2nd Installment: Chapter One

“The 15% Solution,” Serialization, 3rd Installment: Chapter Two