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Capitalism, Fascism, and Socialism

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(rev. 2/19/09)

Yesterday (February 16th), Thom Hartmann wrote a truly excellent article on FDR-era Vice President Wallace's remarks about whether Fascism "... Can Happen Here". Hartmann's article did not change my mind, but it did force me to realize that the issue is really "afoot," as they say. As everyone knows explicitly or "in their bones" we are now in very interesting times, the outcome of which could go in any of several undesirable directions.

Moreover, the issue is not straightforwardly explicable. There are a lot of good and true reasons to think that Capitalism is different from Fascist Corporatism. And, equally, there are a lot of people who, believing themselves to be "capitalists," are really more simply "entrepreneurs." And, there are "capitalists" who are already "corporatists" and don't even know it. Finally, there are rational people in politics and in the press who believe their job is to mediate the Obama Administration away from any "socialistic" tendencies the Democrats may have "under their tent" and in so doing these members of the press are misrepresenting "capitalism" and, wittingly or not, playing into the hands of people who are committed "corporatists" and lacking only the propaganda means to accomplish their aims.

Capitalism has become by the beginning of the 21st Century a complex creation of human ingenuity. Even in its early modern days in the Dutch Republic of the 17th century, Capitalism was complex and already linked culturally to Calvinist religion. It was, thus, something of an ideology with assumptions established in different parts of the Dutch culture. The Dutch were, arguably, the first modern country to dominate world trade. In a sense they defined what mercantilism was and, in so doing, gave a modern definition to "capital." Fundamentally, the study of macroeconomics begins to take shape during this period, that is, "mercantilists" began to understand the larger implications of the accumulation of capital and the necessary role of the state in the accumulation and preservation of capital.

Capital is according to 19th century analysis the accumulation of "surplus value," which is in the simplest terms the difference between cost of production and price. Capital has two important functions: one is to simply exist, accumulated, and to represent potential, and the other is as investment, that is, capital committed to discrete purpose. Capitalists are, therefore, persons who accumulate surplus value and persons who commit that value toward some kind of enterprise. Capitalists are not necessarily entrepreneurs and entrepreneurs are not necessarily capitalists, although they seek and must have capital. Capitalists naturally are aware of the environment in which they operate and so they seek safety for their accumulations of capital and they seek to minimize the risk associated with the capital they commit into investment. In other words, since the beginning Capitalists have not and do not exist in a vacuum; they exist in cultures and polities and like every other being on the planet they do what they can to control their cultures and polities. The activities of control are what interests us.

Capital and capitalists are but one part of the equation, however. You will find many definitions of what constitutes an operational economy, but the traditional view is that land and labor are the other two main components. There is not time to fully argue the reason for doing so, but I am going to substitute the term "commons" for the term "land" in this essay, because I think we need to understand the materiality of enterprise as also embodying the air, the water, the ecosystem, the planet. Perhaps we come to this substitution too late. The commons is the neglected part of the human enterprise equation, and the insertion of a partisanship for the commons is not only necessary, but has been largely misunderstood and too often deliberately suppressed.

But labor has its day. The Marxist analysis comes to the more than slightly simplistic conclusion that "surplus value" is actually the congealed value of the work of Labor. Taking that as a moral point, which Marx and Engels do (which is why Marxism has been so acceptable to many), they (along with the less precise predecessor utopians) arrive at the conclusion that control of the polity (and the economy) ought to belong to—be in the control of—labor, not in the control of culturally and religiously "irrelevant" or "unnecessary" individuals whose main aim and virtue seems to be acquisitiveness and more acquisitiveness through investment. Once the role of the capitalist is partly revealed, it becomes easy to see a way to replace them within the "division of labor" with technicians. It should be obvious at this point that these technicians will learn to call themselves "management" and that they have exploited both Capitalists and Labor to a calamitous fare-thee-well recently.

When Labor takes over the function of accumulating the surplus value of an economy and the function of determining how that value is to be invested, we call that Socialism. The idea that our elected representatives in Congress represent Labor is only partly correct, of course, so the current bailout situation is only by a long stretch of the imagination Socialism. Socialism is "social" only in the sense that the private accumulation and investment ambitions of individuals is replaced by putatively "public individuals," those elected or hired to do what Capitalists did theretofore. It is important to see that Socialism does not obviate the need for capital or "capitalists." It is merely a mode of control over the economy and the polity and the culture.

So then what is Fascism and Corporatism? In brief, it is the control of the polity and the economy and the culture by a combination of the Capitalists with the collusion of Management (now separating itself from the category of Labor), and importantly with "management" being defined and conditioned by the organized enterprises in which Capitalists have invested, that is, the corporations. The control of government, whether elected or not, is achieved by well-known indirect means, of which we have ample experience in the past sixty years. Rather than allowing themselves to be "dispossessed" by the threat of Labor taking matters into its own hands, Capitalists and Management use the government and economy to control Labor ... and to provide enterprises into which they can safely invest.

Almost needless to say in such a short essay, Corporatism is not a whether, but like Capitalism and Socialism a question of how much. It has already happened. The control of the polity is always a balance (or imbalance) among the contestant members of the economy. However, you should notice that of the three methods, Fascist Corporatism has the least moral authority ... only that which the Capitalist brings in from the remnants of Calvinist considerations for one's fellow man.

So, this is the point at which to introduce a concept from Barry Schwartz at TED. It is the concept of "incentive" v. "moral will and moral skill." The current Corporatists and Capitalists complain that Socialism provides no "incentives" for individuals to excel. They are incorrect, of course, but they miss the point that is crucial to the paradigm we as a People are about to create and pursue. It is that mere monetary incentives per se eviscerate moral will and destroy moral skills, the very things that liberal democracies depend upon as the antidote to the well-known problems of the human condition, the very thing that prompted the Founding Fathers to propose a form of government both strong and vital, but also checked and balanced against the all-too-familiar excesses of the human personality in the possession of the power of control.

It is and will be those who speak for the Commons who are possessed of the missing moral will and moral skill. It is the Commons that by definition unites us, the Commons that must above all other considerations be husbanded, cultivated, cared for, developed—yes, developed—and made the objective of Capital, the nexus of investment, the raison d'etre of management, the "happiness" we pursue.



James R. Brett, Ph.D. taught Russian History before becoming an academic administrator in faculty research administration. His academic interests are the modern period of Russian History since Peter the Great, Chinese History, the history of (more...)
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Socialism is something that Corporatists and Capit... by Simple Truth on Tuesday, Feb 17, 2009 at 8:20:25 PM
When you strip away the baloney it always boils do... by James Brett on Tuesday, Feb 17, 2009 at 9:19:24 PM
The government is being corrupted by capitalists?I... by UncleSim on Thursday, Feb 19, 2009 at 12:50:55 PM
The socialists created the treasury you don't ... by UncleSim on Sunday, Feb 22, 2009 at 11:40:25 AM
Fascism As an economic system, fascism is socia... by Darren Wolfe on Tuesday, Feb 17, 2009 at 9:07:04 PM
Google this: "picture of the U.S. House of Re... by James Brett on Tuesday, Feb 17, 2009 at 9:31:59 PM
liberal democracies depend upon as the antidote to... by William Whitten on Tuesday, Feb 17, 2009 at 10:51:28 PM
A Republic is a representative democracy, as oppos... by James Brett on Tuesday, Feb 17, 2009 at 11:04:56 PM
An Important Distinction: Democracy versus Republi... by William Whitten on Thursday, Feb 19, 2009 at 3:13:22 PM
"The U.S. House of Representatives has always... by francine on Wednesday, Feb 18, 2009 at 8:49:58 AM
Representative Representative democracy involves t... by James Brett on Wednesday, Feb 18, 2009 at 9:58:08 AM
As I have often found, those who don't really ... by William Whitten on Thursday, Feb 19, 2009 at 4:09:51 PM
Crookism, Fascism and Nazism have always existed.&... by John Hanks on Wednesday, Feb 18, 2009 at 10:59:14 PM
After explaining that we all exist in an interrela... by UncleSim on Thursday, Feb 19, 2009 at 12:05:00 PM
Two things, Sim.  I specifically added to the... by James Brett on Thursday, Feb 19, 2009 at 12:53:49 PM
It sounds like you're saying a property owner,... by UncleSim on Thursday, Feb 19, 2009 at 2:31:14 PM
In Common law, "The Commons" is NOT cons... by William Whitten on Thursday, Feb 19, 2009 at 4:29:23 PM
Now I see that you are starting from a basis of Ma... by UncleSim on Thursday, Feb 19, 2009 at 12:43:33 PM
James Brett wrote:"Capitalists are, therefore, per... by Ludwik Kowalski on Thursday, Feb 19, 2009 at 1:08:48 PM
Another alternative is to make money "by selling o... by Ludwik Kowalski on Thursday, Feb 19, 2009 at 1:18:05 PM
If someone else has already contributed their labo... by UncleSim on Thursday, Feb 19, 2009 at 2:49:41 PM
Uncle Simms,Your arguments have been on the money ... by William Whitten on Thursday, Feb 19, 2009 at 4:21:06 PM
  The Adjutant General. In Boston, the Sons o... by William Whitten on Thursday, Feb 19, 2009 at 5:22:05 PM
1) It occurred to me, after reading the above (inc... by Ludwik Kowalski on Thursday, Feb 19, 2009 at 10:51:46 PM