Once More, with Feeling: Our System Is Not Socialism, but Participatory Fascism
By Robert Higgs • Tuesday October 30, 2012 2:11 PM PDT • 17 Comments
I continue to encounter many discussions in which the author or speaker bemoans the economic order’s drift toward socialism or, in some cases, its actual existence as such. If this characterization were simply a matter of linguistic imprecision, it might not matter much. But it is much more than a matter of terminology, because one’s understanding of the nature of our current economic order hinges on how we characterize it.
Socialism is a system in which all the major means of production are owned and operated by the state. Except perhaps for small firms or farms, all productive enterprises are state enterprises. All natural resources belong to the state. All resources are allocated and employed as the state dictates, insofar as its dictates can actually be carried out in practice (all such systems display much slack between orders given and actual conduct on the ground, owing to corruption and attempts to “fix” flaws embedded in the state’s overall plan).
Obviously the economic order that prevails in the economically advanced countries is not socialism. Indeed, these systems are commonly called capitalistic or market-oriented, notwithstanding the many types of government intervention that pervade their markets—various taxes, subsidies, direct government production, and regulations galore. Some people refer to these systems as “mixed economies,” which at least helps us to recognize that they are not market economies in any pure sense, not even in an approximate one. But in calling them mixed economies, we gain no insight into their nature or operation.
For thirty years or so, I have used the term “participatory fascism,” which I borrowed from my old friend and former Ph.D. student Charlotte Twight. This is a descriptively precise term in that it recognizes the fascistic organization of resource ownership and control in our system, despite the preservation of nominal private ownership, and the variety of ways in which the state employs political ceremonies, proceedings, and engagements—most important, voting—in which the general public participates. Such participation engenders the sense that somehow the people control the government. Even though this sense of control is for the most part an illusion, rather than a perception well founded in reality, it is important because it causes people to accept government regulations, taxes, and other insults against which they might rebel if they believed that such impositions had simply been forced on them by dictators or other leaders wholly beyond their influence.
For the rulers, participatory fascism is the perfect solution toward which they have been groping for generations, and virtually all of the world’s politico-economic orders are now gravitating toward this system. Outright socialism is a recipe for widespread poverty and for the ultimate dissolution of the economy and the disavowal of its political leadership. Socialism is the wave of the past; everywhere it has been tried seriously, it has failed miserably. Participatory fascism, in contrast, has two decisive advantages over socialism.
The first is that it allows the nominal private owners of resources and firms enough room for maneuver that they can still innovate, prosper, and hence propel the system toward higher levels of living for the masses. If the government’s intervention is pushed too far, this progress slows, and it may eventually cease or even turn into economic regress. However, when such untoward conditions occur, the rulers tend to rein in their plunder and intervention enough to allow a revitalization of the economy. Of course, such fettered economies cannot grow as fast as completely free economies can grow, but the latter system would preclude the plunder and control that the political leaders now enjoy in the fettered system, and hence they greatly prefer the slower-growing, great-plunder system to the faster-growing, no-plunder one.
Meanwhile, most people are placated by the economic progress that does occur and by their participation in political and legal proceedings that give them the illusion of control and fair treatment. Although the political system is rigged in countless ways to favor incumbent rulers and their key supporters, it is far from dictatorial in the way that Stalin’s Russia or Hitler’s Germany was dictatorial. People therefore continue to believe that they are free, notwithstanding the death of their liberties by a thousand cuts that continues day by day.
Participatory fascism’s second great advantage over socialism is that when serious economic problems do arise, as they have during the past five years, the rulers and their key supporters in the “private” sector can blame residual elements of the market system, and especially the richest people who operate in that system, for the perceived ills. No matter how much the problems arise from government intervention, it is always possible to lay the blame on actors and institutions in the remaining “free enterprises,” especially the biggest bankers and other apparent top dogs. Thus, fascistic rulers have build-in protection against popular reaction that the rulers in a socialist system lack. (Rulers under socialism tend to designate foreign governments and capitalists and domestic “wreckers” as the scapegoats for their mismanagement and inability to conduct economic affairs productively and fairly.)
Americans do not like to admit that they live in a system that is most accurately characterized as participatory fascism. They insist that fascism requires death camps, goose-stepping brown shirts, comical yet murderous leaders in funny hats, and others hallmarks of the fascism that operated in Germany and Italy between the world wars. But fascism takes many specific forms. If you wish to see the form that it has increasingly taken in the economically advanced countries during the past century, just look around you.
Tags: Corporatism, Economics, Fascism, History, Liberty, Politics, Regulation, Socialism, The State 
The big question is: Is participatory fascism stable and sustainable?
Tom E. Snyder | Oct 30, 2012 | Reply
I wonder if the term “democratic fascism” would be equally as apt.
Jordan Bullock | Oct 30, 2012 | Reply
I don’t think so, Tom! It too “contains the seeds of its own destruction”:
http://blog.independent.org/2009/11/02/can-the-rampaging-leviathan-be-stopped-or-slowed/
I have to share this Wendy McElroy QotD which applies to this piece, the U.S. government, and American citizens:
“The test of fascism is not one’s rage against the Italian and German war lords. The test is — how many of the essential principles of fascism do you accept and to what extent are you prepared to apply those fascist ideas to American social and economic life? When you can put your finger on the men or the groups that urge for America the debt-supported state, the autarkical corporative state, the state bent on the socialization of investment and the bureaucratic government of industry and society, the establishment of the institution of militarism as the great glamorous public-works project of the nation and the institution of imperialism under which it proposes to regulate and rule the world and, along with this, proposes to alter the forms of our government to approach as closely as possible the unrestrained, absolute government — then you will know you have located the authentic fascist.
“But let us not deceive ourselves into thinking that we are dealing by this means with the problem of fascism. Fascism will come at the hands of perfectly authentic Americans, as violently against Hitler and Mussolini as the next one, but who are convinced that the present economic system is washed up and that the present political system in America has outlived its usefulness and who wish to commit this country to the rule of the bureaucratic state; interfering in the affairs of the states and cities; taking part in the management of industry and finance and agriculture; assuming the role of great national banker and investor, borrowing millions every year and spending them on all sorts of projects through which such a government can paralyze opposition and command public support; marshaling great armies and navies at crushing costs to support the industry of war and preparation for war which will become our greatest industry; and adding to all this the most romantic adventures in global planning, regeneration, and domination all to be done under the authority of a powerfully centralized government in which the executive will hold in effect all the powers with Congress reduced to the role of a debating society. There is your fascist. And the sooner America realizes this dreadful fact the sooner it will arm itself to make an end of American fascism masquerading under the guise of the champion of democracy.”
– John T. Flynn, As We Go Marching, 1944
http://www.wendymcelroy.com/news.php?extend.4833.7
MacGhil | Oct 30, 2012 | Reply
This is the first article I’ve read stating that we have a fascist system. I argued that point numerous times in the comment sections of blog posts that categorized our system as crony capitalism or capitalism with some socialism. You will not be surprised to learn that no one agreed with my fascism label despite the blatant evidence of government control over every aspect of our economy. One blogger (www.coyoteblog.com) deleted my posts because he insists that the Obama government established crony capitalism. Coyote doesn’t realize that crony capitalism is an important benefit (to the politicians) of fascism. When the government regulates everything, businesses will pay bribes to get special treatment.
MingoV | Oct 30, 2012 | Reply
I agree with most of what is said in this article. However, to me it is an open question whether the U.S. can maintain control when its fiscal/monetary situation unravels (i.e. significantly beyond the unraveling which has taken place thus far).
D. Saul Weiner | Oct 31, 2012 | Reply
I agree with you that the US has a blended fascist economic-political system.
However I disagree with you that the people calling the system socialist are wrong in anything other than a hyper technical sense. That is because fascism is a more advanced form of applied socialism than the classical definition of state ownership of the means of production.
The fascists discovered that they could separate the good bits of ownership, control and profit, from the bad bits of responsibility and liability. Which leads to a collectivist centrally planned economy which requires increasing degrees of repression to remain viable. In many ways it leads to worse results than actual state ownership.
The people that look at the direction the US is headed and seeing more repression, central planning and economic stagnation use the term socialism as a short hand to describe that path are not wrong.
Furthermore, most of the people that refute that word are either ignorant of the actual state of the economy or are lying about their immediate and long term goals of greater government control of economic freedom.
JoshINHB | Nov 1, 2012 | Reply
Both FDR and Mussolini defined fascism as the power of the State married to the power of Big Business. We’ve had fascism here for decades. The mega, transnational corporations and their bought & paid for puppet politicians have obliterated the Republic of the USA. That Republic now exists in name only; in any significant way, it is long gone. Sad, but true.
Scott Haley | Nov 5, 2012 | Reply
Reigning in the plunder might be a little tricky with half the population expecting timely government subsidies – subsidies which currently consume the entire federal government’s yearly tax heist. Residents of ancient Rome would sometimes riot if free bread wasn’t distributed on a timely basis. Would the situation today be any different if our far more comprehensive version of the all important grain supply was terminated, diminished or even temporarily interrupted? On a similar vein, Roman emperors who were foolish enough to mess with the pay and privileges of the military were usually killed. Sadly, those who demonstrated otherwise admirable administrative and leadership skills did not escape the practice. I wonder how our military-industrial-security complex would react to an announcement of real spending cuts. Can we expect our Praetorian Guard to exhibit stoic acceptance?
Marc | Nov 5, 2012 | Reply
What a powerful, apt, but distressing quote.
al | Nov 6, 2012 | Reply
“Socialism is a system in which all the major means of production are owned and operated by the state.”
I don’t have any problem with this definition. However, a problem occurs with the definition of the term “owned.” Do you mean someone has the paper title to property, or do you mean someone has control over the property?
Soviet style socialism gives the state the paper title as well as control of property. Fascism allows the paper title to remain with the private citizen while the state controls the property. So Fascism is just a flavor of socialism because ownership without control is no ownership at all.
McKinney | Nov 6, 2012 | Reply
I have often had the same argument. In fact I contend that “Crony Capitalism” is nothing more than Fascism without the snappy uniforms, military parades and death camps.
The problem is one that was addressed by George Orwell way back in the 40s or 50s; “The word Fascism has now no meaning except in so far as it signifies “something not desirable”...In the case of a word like democracy, not only is there no agreed definition, but the attempt to make one is resisted from all sides. It is almost universally felt that when we call a country democratic we are praising it: consequently the defenders of every kind of regime claim that it is a democracy, and fear that they might have to stop using the word if it were tied down to any one meaning.”
Which is why people gravitate to the less hyperbolic term “crony capitalism”.
Zundfolge | Nov 7, 2012 | Reply
An excellent piece. Participatory fascism, as Dr. Higgs points out, is far more successful for our rulers than outright control through socialism. For socialism to survive 70 years in Russia, for example, it required the outside “nourishment” and technical assistance from participatory fascist countries (those of Western Civilization) that had, and still have, a certain permitted level of voluntary development and exchange. For well-documented evidence of this immoral aid to Russia, read Antony Sutton’s three-volume “Western Technology and Soviet Economic Development”; if you can find copies. More easily obtained (and far more affordable) is his later summary in book form, “National Suicide: Military Aid to the Soviet Union.”
One of Sutton’s conclusions, I believe, was that the West’s support of socialism, particularly American support, was a long-term experiment (among other nefarious goals) to determine what elements of a socialist or “mixed-economy” would be most enduring and successful, without the parasite completely destroying the host. Participatory fascism was the winner. It has lasted, and grown in interventionist strength, for over 100 years.
bill | Nov 11, 2012 | Reply
Dr. Higgs’ assessment of economic and democratic fascism is still technically accurate, even though Sutton’s work may have predated Higgs and Twight’s thesis by a decade or two. Clearly, the federal government’s influence over the economic affairs of individual citizens continues unabated regardless of the so-called political persuasion of the statists in power. Flynn and others appear to have seen this clearly coming out of WWII.
Believe All Things | Nov 12, 2012 | Reply
I agree, and inconveniently our system can also be easily described as “national socialism,” though I like the “participatory” adjective.
CR Cobb | Dec 31, 2012 | Reply