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The Dictators March: From Political to Economic Totalitarian

ISSUE:  Summer 1936

When Mussolini announced recently that he intended to nationalize large-scale industry in Fascist Italy, his statement fell upon the ears of a world emotionally and philosophically unprepared for Such an announcement. One can understand this unprepar-edness. The common ground upon which reactionary cap-|italists and revolutionary radicals have been able to stand has been their complete agreement that the Fascist state in Italy and the National Socialist state in Germany were created by capitalists and have remained the creatures of capitalists since their foundation. This unanimity sprang from a curious kind of wishful thinking on the part of both reactionaries and radicals. It could be fitted with reasonable snugness into the Marxian doctrine of the radicals, and it gave a sense of security to the reactionaries. It was a plausible theory, and I believed it for a long time. If it had not happened that I was later in a position where the weight of evidence overwhelmed me, I would, no doubt, have gone on believing it until the present time.

I went to Germany in the early fall of 1932, to watch Hitler’s advent to power. I carried firmly fixed in my mind this popular error about National Socialism. It was relinquished only with the slowness and reluctance which are customary when deeply planted conceptions have to be uprooted. It had to be relinquished because the theory simply would not stand analysis. I was forced finally to recognize that National Socialism, although it derived its support primarily from the lower middle class, was still a true mass movement of distinctly anti-capitalistic characteristics and implications. Instead of either a triumph for capitalism, as visualized by conservatives outside Germany, or a temporary victory for capitalism in its decadence, as seen by the Communists, Hitler’s victory had been a crushing defeat for capitalism. During the months preceding his final success, capitalists had actually been fighting what turned out to be a hopeless rear-guard action under von Papen and von Schleicher against National Socialist radicalism. When Thyssen and the other Rhenish-Westphalian industrialists, with the connivance of the clique surrounding von Hindenburg, made their fatal deal with Hitler by which they betrayed von Schleicher, they were playing the same role with respect to their own class as that of the legendary Christian governor of Ceuta who let the Moors into Spain.

Recounting the culminating events of those days in Germany, I wrote: “At present, the fact confronts us that through the National Socialist success in Germany, liberalism, democracy, and old-style capitalism have lost their most important stronghold on the continent.” Inevitably, although everyone agreed that a citadel of democracy and liberalism had indeed been lost, almost no one agreed that capitalism had suffered a defeat. The evidence of economic radicalism inherent in National Socialism that was afforded by the installation of industrial commissars during the early days of the Nazi revolution, and the more recent conflicts of Schacht with the Nazi radicals, have been either discounted or overlooked. The erroneous interpretations, by public opinion outside Germany, of the Blood Purge as a decisive defeat for the economic radicals in the Party, have served to nourish the old misconceptions concerning the fundamental character of National Socialism. For the same reasons Mussolini’s dramatic announcement of his intention to nationalize industry has not yet been placed in its setting alongside developments in Germany, and is not recognized as a logical stage in the normal development of a totalitarian state.

There has been, it is true, a fairly widespread recognition of the political similarities of the Soviet, National Socialist, and Fascist systems. At least a few liberals recognize that parliamentary democracy and state guarantees of personal liberty do not exist in Russia. At least a few conservatives admit the like for Germany and Italy. Liberals are correct, of course, in contending that there is, nevertheless, a significant difference in the incidence of the loss of individual liberties in Russia as compared with Germany and Italy. It is the former privileged classes in Russia upon whom the deprivation of liberty sharply presses, while the former leaders of the working classes in Germany and Italy bear an equally painful burden in these countries. It may be added that in all three countries no class suffers more than the middle-class intelligentsia.

This class distinction in suffering which exists between Soviet Russia on the one hand and National Socialist Germany and Fascist Italy on the other, has helped to obscure the fact that there are important economic as well as political similarities between the three totalitarian states. In December, 1934, I wrote: “To the extent that Fascism and National Socialism are likely to develop an economic and social system in which pecuniary income and social prestige are determined as nearly as possible by service to the nation or race, there would then be a strong resemblance on this point between them and the Soviet system which makes rewards dependent, in theory at least, on service to the Soviet society. It may be at once objected that no such evolutionary trend is discernible in Italy or in Germany. Personally I am convinced that this trend does exist. . . . If one in addition could imagine the National Socialist state, for example, after a score of years of evolution, with all directors of industrial enterprises appointed by the National Socialist Party just as Red directors are now appointed by the Communist Party, then there would be further very marked similarity between the Soviet state and the National Socialist state.”

Communists, Fascists, and National Socialists alike reject with ridicule this concept of economic and social similarity between the Soviet and the other two forms of the totalitarian state. They argue that the systems are diametrically opposed in fundamental respects. Communists in particular point out that the Soviet state was created by the proletariat and is operated for the proletariat until the goal of the classless society shall have been attained. They further emphasize the point that private property has been abolished in Soviet Russia, while this institution is protected by both the National Socialists and the Fascists. Finally, Communists contend that while Fascism and National Socialism lead consciously and inevitably to war, the Soviet system is fanatically opposed to imperialism and to war.

It would be ridiculous to deny that these are important differences, or to claim that the differences do not exist. Private property, except for personal possessions and government bonds, is, of course, non-existent in Russia. Private property does have the protection of the state in both Italy and Germany. That the Soviet government was set up by means of the dictatorship of the proletariat and that the economy is now operated by the Communist Party, made up primarily of former proletarians who do operate the economy for what they believe to be the best interests of the proletariat, can hardly be questioned. It is indisputable, on the other hand, that the personnel of the Fascist and National Socialist Parties is not principally proletarian in origin.

Nevertheless, these differences between the types of the totalitarian state are neither so absolute nor so all-embracing as they first appear. Private property does not consist of things. It consists of rights, the most important of which is the right to receive an income without the requirement of any personal service rendered. Viewed from this angle, one sees that private property in Germany and Italy has been sharply limited. In Italy one may not use one’s land to produce the most profitable crop, but instead one must use it to produce the crops which Italy’s need for self-sufficiency dictates. Through its control of all important financial institutions, the Fascist state uses the savings of individuals where the interest of the state demands, and the return upon them is determined by the state. Even though it is probable that, after industries have been nationalized, private security-holders will continue to receive a limited return, the state will have the right and power to determine the rate that will be paid. Inflation of the price level may well reduce the value of interest and dividends paid to a purely nominal value.

So likewise in Germany. The capital savings of the German people are used for rearmament and other work-creating projects. The profits of industry are levied upon to pay for export subsidies. The rate of return is limited to a minimum, and all above this minimum must be invested in rearmament loans. The circumstance that private corporations had so largely quit paying dividends during the depression made this innovation much less onerous to the rentier class, but it does not change the fact that private property has been curtailed by the Nazi state. For reasons which will be stated later, this shrinkage of the sphere of private property will inevitably continue.

Communists contend, however, that the profits of industry in Soviet Russia go to improve the standard of living of the people instead of for armament, as in Germany and Italy. Anyone who is really familiar with Soviet Russia could not agree with such a contention. Actually the economic resources of the country have been used to attain the goal of industrialization, self-sufficiency, and armed security, with iron-willed disregard for the immediate well-being of the population. No really informed person can question that up till now the Communist Party has demanded greater sacrifices of the people of Russia than have either National Socialism or Fascism of their nationals. This is not to deny that from the Communist viewpoint these sacrifices were necessary, or to deny that this policy of sacrifice was in large measure made inevitable by the natural hostility of capitalist countries to a Communist state. It does mean, however, that no significant difference exists between the Soviet, National Socialist, and Fascist dictatorships with respect to the relative importance placed upon the economic well-being of the people of each state compared with the interests of the state itself as interpreted by its rulers.

It is rather more difficult to determine the importance of the second of the distinguishing characteristics of the two types of totalitarian state. Suppose, as an hypothesis, that the economic systems of Soviet Russia, Germany, and Italy were to develop over a period of fifty years along mutually converging lines. Private property as a source of income would have disappeared and would have been displaced by an authoritatively directed economy, with the distribution of personal incomes determined by functional service to the totalitarian society. How much difference would it make that the origin of the directors of the Soviet state had been more exclusively proletarian than in the National Socialist or Fascist States? The question is asked in good faith, for we cannot wholly disregard the possibility that the difference in origin of the ruling personnel might cause important cultural differences to persist indefinitely.

The hypothesis of the converging economic development of the three totalitarian states may of course be considered as wholly unreal. Communists would contend that it is precisely because of the proletarian origin of the Soviet state that the institution of private property has been destroyed in Russia, while the non-proletarian character of the National Socialist and Fascist states would insure the maintenance and protection of private property, and consequently would preserve the fundamental elements of capitalism as long as Fascism and National Socialism exist. Yet it is not only the unmistakable trend toward the nationalization of industry in Italy and the existence of forces pressing towards the same end in Germany upon which we can count as evidence. It is just as significant that in recent years in Soviet Russia developments have taken place which push the Soviet system in the direction of what one might expect under National Socialism or Fascism. The trend toward the restoration of authority and discipline in industry and in all branches of Russia’s economy is very noticeable. The resumption of the old military titles in the army likewise indicates this trend. The constantly increasing emphasis upon authority and discipline, and the perhaps temporary concession of differential compensation for the exercise of responsibility and authority in industry, have been widely misunderstood. Communists are quite right in denying that the latter represents a recrudescence of capitalism. It is not associated in any way with a resurrection of the institution of private property. Differences in compensation were characteristic of feudal society, for example, and these differences are not at all inconsistent with a society in which private property has disappeared. Likewise authority enforced by a state monopoly of the instruments of violence is by no means exclusively characteristic of capitalist society. On the contrary, it has been characteristic of laissez-faire capitalism that authority and discipline have depended far more upon economic pressure than upon the actual invocation of physical force by agents of the state. Thus the growing role of authority and discipline in Soviet Russia, which depends upon the sanction of the police and military power of the state, is by no means evidence of the renaissance of capitalism, but may more correctly be interpreted as the normal development of the new totalitarian form of the state.

Let us consider the Communists’ claim that, as compared with other totalitarian states, the Soviet state opposes war and does not have territorial ambitions such as Germany and Italy have. That a difference does exist in this respect, no one can deny. The territorial ambitions of Italy and Germany do lead to war. The warlike spirit is glorified and the youth of the nation is physically and psychologically conditioned to the bearing of arms. A tremendous proportion of the resources of both nations is expended in the process of armament for war, the coming of which is reckoned as certain. However, if one looks at Soviet Russia, one sees that the youth of this country are also being trained to arms, and that an enormous proportion of Russia’s resources is being used for armament.

Communists answer, of course, that all this preparation for war by Soviet Russia is defensive. One might make the cheap retort that both Italy and Germany claim that their armament programs are for defense. Such an answer is unallowable, however, since there can be no doubt that at the present time Soviet Russia would greatly prefer not to have to fight. Mussolini, on the contrary, has certainly demonstrated that Italy’s armament is not exclusively for defense; and only a fool or a German who was blinded by sympathy for his own country could believe that all of Hitler’s armament is exclusively for defense. If one probes more deeply it must be recognized that Communists are no more pacifists than are Fascists or National Socialists. Class warfare is considered just as right as national warfare is wrong. A dynamic and hard-boiled attitude rather than solicitude for the feelings and rights of others characterizes personal contacts and relations in Russia. The doctrine of nonresistance enjoys no more respect in Russia than it enjoys in Italy or in Germany.

Communists insist, however, that when capitalism has been destroyed, the necessity which urges capitalist countries to war in the search for markets will have disappeared. Further, with the triumph of the World Revolution, national boundaries would have disappeared also. Consequently it is argued that in contrast to Fascism or National Socialism, Communism offers world peace as an eventual goal. But it is not apparent that, even if Communism should sweep over the world, universal peace would result. If Japan and China were to become Communist, would Russian Communists be willing to share the resources of Russia with Japanese and Chinese? Might not armed conflicts between rival contenders for power be combined with disputes based upon nationality and geography? In sum, one would have to say that, while the pressure towards war is much greater in Germany and Italy than in Russia, it is to be doubted that Communism at any stage offers an assurance of ending war.


The question still remains: How can converging economic trends in the three totalitarian states of which the origins were so different be explained? The three had one common element in origin which has been more determinative than any other. The Soviet, the National Socialist, and the Fascist states from the beginning have had as a central core the concept of an absolute state in which no activity could exist which was not integrated with the state and dominated by it. Propaganda for the masses, rigid discipline for the Party membership, unquestioning obedience to the dictator’s will, made up the formula which Lenin perhaps originated but which has not only been followed, but has been further developed, by Stalin, Mussolini, and Hitler.

It has been no source of embarrassment to Stalin that the absolute state was apparently in outright contradiction to the ultimate goal of Marxism when the state supposedly will have “withered away.” The authoritative, dictatorial, non-democratic state which was associated with the triumph of socialism in Russia was shocking to the majority of professing socialists in the world. From the Mensheviki in Russia, the Social Democrats in Germany, the Labor Party in England, and the Socialist Party in the United States, there has always been vehement insistence that true socialism was synonymous with the widest possible development of democracy and personal liberty. With the exception of the Mensheviki, however, these socialists have generally apologized for the Soviet state on the ground that its dictatorial characteristics have been due to the historical circumstance of its succession to the Tsarist regime. Even non-Marxian socialists are inclined to find solace in the acceptance by Russian Communists of the Marxian theory of the withering away of the state, and to feel that for this reason, if for no other, the totalitarian state in Russia is only a bridge to a more perfect society in which the state as an instrument of force will have disappeared.

Marx had assumed that the dictatorship of the proletariat would be only temporary, and that after the state had withered away the economic mechanism would function automatically and co-operatively rather after the fashion of a hive of bees. Marx could hardly have foreseen that the totalitarian state which developed out of the dictatorship of the proletariat is precisely the form of state organization that can most readily assume the management of a non-capitalist economy. The typical parliamentary government of a capitalist state, on the contrary, is organized primarily to preserve the elementary framework of property and contract within which the economy of the capitalistic system can operate. At a pinch it can do a job of regulating some part of the economy. The thing for which it most decidedly is not organized, is to carry on economic activity itself. This can be seen most plainly in the organization of the government of the United States. Our dual federal and state system of government, our doctrine of the separation of powers, of checks and balances, is indeed well designed to prevent a president from attempting to attain the purple, but it could not have been better designed to render our government ineffective as an administrative organization for carrying on economic activity. In a lesser degree this is true of other parliamentary governments also.

Certainly one cannot say that it would be impossible to design a form of parliamentary and democratic government which could operate a modern economic system, but the significant thing is that the authoritative, totalitarian state can do so, and once it is in existence it inevitably will do so. It makes little difference that the rulers of the Soviet state claim that dictatorship is only temporarily necessary, while in the Fascist and National Socialist states the totalitarian principle is accepted as the permanent ideal. Thus it is only from a doctrinaire standpoint that domination of all human activity by the state is more characteristic of Fascism and National Socialism than of Communism. In practice this theoretical difference disappears and the absolute form of the state is common to all three. The only significant distinction which remains is that in Russia the totalitarian state arose as a means of establishing economic collectivism. In Italy and in Germany, on the other hand, the totalitarian state was established for its own sake, but leads inevitably to economic collectivism. This difference is of moment, however, only to the student of historical evolution.

The mass propaganda which preceded the establishment of National Socialism in Germany, directed at bringing to a white heat the smouldering discontent with the economic system, is probably more important in pushing Germany towards a state economy than is Mussolini’s socialist origin in pushing Italy towards the same goal. This propaganda characterizes all totalitarian states. It indoctrinates the masses with the philosophy of the totalitarian state, which claims and must have authority over all aspects of life. It has always been a great comfort to the statesmen of parliamentary countries that they do not ordinarily have to accept the intolerably heavy burden of primary responsibility for the economic well-being of the citizens of their respective countries. These statesmen can always quite logically plead that the economic mechanism is not operated by the state and that the state therefore cannot accept responsibility for the way the mechanism works.

The leaders of a totalitarian state, on the contrary, cannot plead that they have political but not economic responsibility, since to do so is impossible psychologically. Consequently, both in good times and in bad these leaders are under great pressure to take over the operation of the economic system. As a matter of fact, it is ordinarily in times of crisis, such as Mussolini experienced during the sanctions accompanying his Ethiopian adventure, that the most radical steps are taken. Further, unlike a parliamentary state, which structurally is likely to be impotent to operate the economy, a totalitarian state has a form which facilitates such operation. Under the pressure of recurring crises such a combination of forces produces a trend towards collectivism that is irresistible. In the totalitarian state the kind of crisis which is inevitable is that induced by war, or by the threat of war, or by the intention to engage in war.

We should note that this need to accept responsibility for the economic well-being of the masses does not mean that the masses actually are better off under a totalitarian state than they otherwise would be. Least of all does it mean that the totalitarian state is more tender of the feelings, preferences, and desires of its population than is a parliamentary, capitalistic state. It is obvious that the people of Russia, Italy, and Germany have been required to make sacrifices in their standard of living which no parliamentary, capitalistic state could have required!, except perhaps in war time. The necessarily voiceless privation of the people is accompanied by admonishment with respect to their duty to suffer all for the state, and by the assurance at the same time that all talk of food shortages or of increased cost of living is the work of lying traitors, and by summary arrest of all who dare to complain. The state can consequently carry out an economic policy to the bitter end, which would have caused the fall of a dozen parliamentary regimes. The one thing that a totalitarian state will never do, can never do, is to admit that the economic destinies of the people are beyond its control. Consequently, in any economic crisis the state must take effective charge of the national economy. The goal of nationalization of industry which is only now in view in Italy always lay at the end of the road down which Mussolini had to travel from the first days of the March on Rome. Hitler must likewise march down this road, for the same forces which pressed upon Mussolini impel the Reichsfilhrer towards the same goal.


What has been the attitude of American capitalists towards the authoritarian state? It is, of course, superfluous to consider the attitude of capitalists towards the Soviet model. With respect to the Fascist type, the attitude of capitalists has ranged between the extremes of virtuous rejection and feverish yearning. Even before Mussolini proclaimed the nationalization of industry it was certainly a minority of American capitalists who would have actually welcomed Fascism in the United States. Even though American capitalists believed that Italian capitalists dominated Fascism, there remained a dislike for the mere potentiality of forceful interference with the economic liberty of the capitalist. Still, most of them felt that it was certainly a good thing for a slipshod country like Italy to have an Iron Man to put the land in order. Beyond this, it was pleasant to have something like Fascism in existence to frighten not only Communists and Socialists, but any others who might be tempted even to tinker with the laissez-faire system.

Hitler never quite succeeded in attaining the same status with foreign capitalists that Mussolini had won. The prolonged but unsuccessful efforts of the conservative elements in Germany to avoid accepting National Socialism by means of the quasi-dictatorships of von Papen and von Schleicher helped to make Hitler suspect. Furthermore, he had had to go through a much longer period of rabble-rousing than had Mussolini, and had thus acquired more of an international reputation as a wild man. Of no small importance, likewise, was Hitler’s anti-Semitism, which was an insuperable obstacle to his popularity with an important fraction of American capitalists. Finally, the consciousness that Hitler was a man of violence, along whose path incidents like the Blood Purge and the wars to come would inevitably be strewn, caused capitalists to regard him with deep uneasiness. It is one of the major virtues of capitalism that internal law and order are essential to its existence. Though individual capitalists may follow policies which tend to involve their countries in war, though individual munition makers may even desire war for their own profit, it is naive to believe that capitalists as a class desire war. On the contrary, the cataclysmic effect of a major war upon the capitalist system has now become recognized even by capitalists themselves. The self-interest of no other class is so much wrapped up in the prevention of any really large-scale war, with its inevitable aftermath of internal social and economic upheaval.

There have always been, no doubt, capitalists who sincerely disapproved of both Hitler and Mussolini, and all their works. Even capitalists who secretly admire Mussolini and Hitler often denounce this or that activity, development, or trend in government as typical of Communism, Fascism, and Hitlerism. Although it is logical enough to bracket these three systems of government and economy together, there is little doubt that ordinarily when these three terms are employed in the same category, the term Communism has been used out of real feeling, while Hitlerism and Fascism have been included in an effort to preserve the appearance of impartiality. Those capitalists who really have been sincere in their opposition to all forms of the totalitarian state have had a feeling of personal virtue in opposing Fascism and National Socialism. They have supposed that they were being loyal to parliamentarianism and democracy in opposition to the selfish interests of their class.

Developments in Italy now demonstrate, on the contrary, that it would be actually in the selfish interests of capitalists to oppose all forms of the totalitarian state. Of course, it still remains true that if the capitalist must choose between the Soviet type and the Fascist-National-Socialist type, he had far better choose the latter. By so doing he would avoid death or what to him would be the slow horror of “liquidation as a class.” Yet in National Socialism and in Fascism or in any similar system the capitalist as capitalist is bound to disappear as surely as, if less painfully than, under Communism. The capitalist himself, or his son, might obtain a post in administering the nationalized economy instead of facing a firing squad or forced labor in a prison camp. Yet few capitalists, and particularly American capitalists, would willingly exchange their status under a parliamentary regime of laissez-faire capitalism for that of bureaucrats in the state apparatus, even if they could be sure of obtaining such posts. Actually, the better of such posts would be reserved for Party men, and many a capitalist would be left unprovided for.

The question which at once suggests itself is: Why is it not possible for capitalists carefully to select and groom a dictator who will defend and maintain laissez-faire capitalism while suppressing parliamentary democratic government? The experience of both Italy and Germany indicates the almost insuperable obstacles to the success of such a scheme. The governments of both von Papen and von Schleicher represented attempts at setting up dictatorships by conservatives. Yet these attempts failed and were bound to fail. For such an effort to be really successful there must be a very large degree of mass support. Such support cannot be obtained for a program which appeals directly only to conservatives, as can be seen in the United States from the experience of the Liberty League. Nor does it seem possible for a mere mercenary demagogue, mouthing a radicalism which he intends to betray, to secure a wide and permanent enough following to support a dictatorship safe for laissez-faire capitalism.

The conclusion which one is bound to reach is that the maintenance of a capitalistic system based on private property and on direction by individual capitalists depends in turn upon the continued maintenance of parliamentary government. Any group of capitalists who attempt to set up a politically totalitarian state as a sort of Praetorian Guard for capitalism would find that they had in effect set their feet on the surprisingly short road which leads to economic totalitarianism.

It has taken Italy fourteen years since the March on Rome to get to the point of announcing the nationalization of large-scale industry. How long it will take to make nationalization effective is yet uncertain. If one judged by the length of time it is taking Mussolini to get rid of the Chamber of Deputies, after the many announcements of its approaching demise, one might expect that it would be a long time. The tempo of events in Italy has, however, been enormously accelerated by Mussolini’s conquest of Ethiopia, and this tempo is not likely to be reduced, One can be sure that Hitler will not require fourteen years in preparation for embarking on far wider and more perilous ventures than those of Mussolini in Africa. In a world shaken by such events, we may expect the evolution from political to economic totalitarianism to run its course far more rapidly in other states of this type, than it has in Italy.


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