N. Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
by Thomas J. DiLorenzo
When most people hear the word ``fascism,'' they naturally think of its ugly racism
and anti-Semitism as practiced by the
totalitarian regimes of Mussolini and Hitler.
But there was also an economic policy
component of fascism, known in Europe
during the 1920s and '30s as ``corporatism,''
that was an essential ingredient of economic
totalitarianism as practiced by Mussolini and
Hitler. So-called corporatism was adopted in
Italy and Germany during the l930s and was
held up as a ``model'' by quite a few
intellectuals and policy makers in the United
States and Europe. A version of economic
fascism was in fact adopted in the United
States in the 1930s and survives to this day.
In the United States these policies were not
called ``fascism'' but ``planned capitalism.''
The word fascism may no longer be politically
acceptable, but its synonym, ``industrial
policy,'' is as popular as ever.
The Free World Flirts With Fascism
Few Americans are aware of or can recall
how so many Americans and Europeans
viewed economic fascism as the wave of the
future during the 193Os. The American Am-
bassador to Italy, Richard Washburn Child,
was so impressed with ``corporatism'' that he
wrote in the preface to Mussolini's 1928
autobiography that ``it may be shrewdly
forecast that no man will exhibit dimensions
of permanent greatness equal to Mussolini.
The Duce is now the greatest figure of this
sphere and time.''1 Winston Churchill wrote in
1927 that ``If I had been an Italian I am sure
I would have been entirely with you'' and
``don the Fascist black shirt.''2 As late as
1940, Churchill was still describing Mussolini
as ``a great man.''
U.S. Congressman Sol Bloom, Chairman
of the House Foreign Relations Committee,
said in 1926 that Mussolini ``will be a great
thing not only for Italy but for all of us if he
succeeds. It is his inspiration, his determination, his constant toil that has literally
rejuvenated Italy . . .''3
One of the most outspoken American
fascists was economist Lawrence Dennis. In
his 1936 book, The Coming American
Fascism, Dennis declared that defenders of
``18th-century Americanism'' were sure to
become ``the laughing stock of their own
countrymen'' and that the adoption of eco-
nomic fascism would intensify ``national
spirit'' and put it behind ``the enterprises of
public welfare and social control.'' The big
stumbling block to the development of eco-
nomic fascism, Dennis bemoaned, was ``lib-
eral norms of law or constitutional guarantees
of private rights.''
Certain British intellectuals were perhaps
the most smitten of anyone by fascism.
George Bernard Shaw announced in 1927
that his fellow ``socialists should be delighted
to find at last a socialist [Mussolini] who
speaks and thinks as responsible rulers do.''4
He helped form the British Union of Fascists
whose ``Outline of the Corporate State,''
according to the organization's founder, Sir
Oswald Mosley, was ``on the Italian Model.''
While visiting England, the American author
Ezra Pound declared that Mussolini was
``continuing the task of Thomas Jefferson.''5
Thus, it is important to recognize that, as
an economic system, fascism was widely
accepted in the l920s and '30s. The evil
deeds of individual fascists were later con-
demned, but the practice of economic fascism
never was. To this day, the historically
uninformed continue to repeat the hoary
slogan that, despite all his faults, Mussolini at
least ``made the trains run on time,''
insinuating that his interventionist industrial
policies were a success.
The Italian ``Corporatist'' System
So-called ``corporatism'' as practiced by
Mussolini and revered by so many intellec-
tuals and policy makers had several key
- 1. The state comes before the individual.
- Webster's New Collegiate Dictionary de-
fines fascism as ``a political philosophy,
movement, or regime that exalts nation and
often race above the individual and that
stands for a centralized, autocratic govern-
ment.'' This stands in stark contrast to the
classical liberal idea that individuals have
natural rights that pre-exist government; that
government derives its ``just powers'' only
through the consent of the governed; and that
the principal function of government is to
protect the lives, liberties, and properties of
its citizens, not to aggrandize the state.
Mussolini viewed these liberal ideas (in
the European sense of the word ``liberal'') as
the antithesis of fascism: ``The Fascist
conception of life,'' Mussolini wrote, ``stress-
es the importance of the State and accepts
the individual only in so far as his interests
coincide with the State. It is opposed to
classical liberalism [which] denied the State in
the name of the individual; Fascism reasserts
the rights of the State as expressing the real
essence of the individual.''6
Mussolini thought it was unnatural for a
government to protect individual rights: ``The
maxim that society exists only for the well-
being and freedom of the individuals
composing it does not seem to be in con-
formity with nature's plans.''7 ``If classical
liberalism spells individualism,'' Mussolini
continued, ``Fascism spells government.''
The essence of fascism, therefore, is that
government should be the master, not the
servant, of the people. Think about this. Does
anyone in America really believe that this is
not what we have now? Are Internal Revenue
Service agents really our ``servants''? Is
compulsory ``national service'' for young
people, which now exists in numerous states
and is part of a federally funded program, not
a classic example of coercing individuals to
serve the state? Isn't the whole idea behind
the massive regulation and regimentation of
American industry and society the notion that
individuals should be forced to behave in
ways defined by a small governmental elite?
When the nation's premier health-care
reformer recently declared that heart bypass
surgery on a 92-year-old man was ``a waste
of resources,'' wasn't that the epitome of the
fascist ideal that the state, not individuals,
should decide whose life is worthwhile, and
whose is a ``waste''?
The U.S. Constitution was written by
individuals who believed in the classical liberal
philosophy of individual rights and sought to
protect those rights from governmental
encroachment. But since the fas-
cist/collectivist philosophy has been so
influential, policy reforms over the past half
century have all but abolished many of these
rights by simply ignoring many of the pro-
visions in the Constitution that were designed
to protect them. As legal scholar Richard
Epstein has observed: ``[T]he eminent domain
. . . and parallel clauses in the Constitution
render . . . suspect many of the heralded
reforms and institutions of the twentieth
century: zoning, rent control, workers'
compensation laws, transfer payments,
progressive taxation.''8 It is important to note
that most of these reforms were initially
adopted during the '30s, when the fas-
cist/collectivist philosophy was in its heyday.
- 2. Planned industrial ``harmony.''
- Another keystone of Italian corporatism
was the idea that the government's
interventions in the economy should not be
conducted on an ad hoc basis, but should be
``coordinated'' by some kind of central
planning board. Government intervention in
Italy was ``too diverse, varied, contrasting.
There has been disorganic intervention, case
by case, as the need arises,'' Mussolini
complained in l935. 9 Fascism would correct
this by directing the economy toward ``certain
fixed objectives'' and would ``introduce order
in the economic field.''10 Corporatist
planning, according to Mussolini adviser
Fausto Pitigliani, would give government
intervention in the Italian economy a certain
``unity of aim,'' as defined by the government
These exact sentiments were expressed
by Robert Reich (currently the U.S. Secretary
of Labor) and Ira Magaziner (currently the
federal government's health care reform
``Czar'') in their book Minding America's
Business.12 In order to counteract the ``untidy
marketplace,'' an interventionist industrial
policy ``must strive to integrate the full range
of targeted government policies
procurement, research and development,
trade, antitrust, tax credits, and
subsidies into a coherent strategy. . . .''13
Current industrial policy interventions,
Reich and Magaziner bemoaned, are ``the
product of fragmented and uncoordinated
decisions made by [many different] executive
agencies, the Congress, and independent
regulatory agencies. . . .There is no integrated
strategy to use these programs to improve
the. . . U.S. economy.''14
In his 1989 book, The Silent War, Maga-
ziner reiterated this theme by advocating ``a
coordinating group like the National Security
Council to take a strategic national industrial
view.''15 The White House has in fact
established a ``National Economic Security
Council.'' Every other advocate of an
interventionist ``industrial policy'' has made a
similar ``unity of aim'' argument, as first
described by Pitigliani more than half a
- 3. Government-business partnerships.
- A third defining characteristic of
economic fascism is that private property and
business ownership are permitted, but are in
reality controlled by government through a
business-government ``partnership.'' As Ayn
Rand often noted, however, in such a part-
nership government is always the senior or
In Mussolini's Italy, businesses were
grouped by the government into legally
recognized``syndicates'' such as the ``Na-
tional Fascist Confederation of Commerce,''
the ``National Fascist Confederation of Credit
and Insurance,'' and so on. All of these
``fascist confederations'' were ``coordinated''
by a network of government planning
agencies called ``corporations,'' one for each
industry. One large ``National Council of
Corporations'' served as a national overseer
of the individual ``corporations'' and had the
power to ``issue regulations of a compulsory
The purpose of this byzantine regulatory
arrangement was so that the government
could ``secure collaboration . . . between the
various categories of producers in each
particular trade or branch of productive
activity.''17 Government-orchestrated ``col-
laboration'' was necessary because ``the
principle of private initiative'' could only be
useful ``in the service of the national interest''
as defined by government bureaucrats.18
This idea of government-mandated and
dominated ``collaboration'' is also at the
heart of all interventionist industrial policy
schemes. A successful industrial policy, write
Reich and Magaziner, would ``require careful
coordination between public and private
sectors.''19 ``Government and the private
sector must work in tandem.''20 ``Economic
success now depends to a high degree on
coordination, collaboration, and careful
strategic choice,'' guided by government.21
The AFL-CIO has echoed this theme,
advocating a ``tripartite National Reindus-
trialization BoardÄincluding representatives
of labor, business, and government'' that
would supposedly ``plan'' the economy.22
The Washington, D.C.-based Center for
National Policy has also published a report
authored by businessmen from Lazard Freres,
du Pont, Burroughs, Chrysler, Electronic Data
Systems, and other corporations promoting an
allegedly ``new'' policy based on
``cooperation of government with business
and labor.''23 Another report, by the
organization ``Rebuild America,'' co-authored
in 1986 by Robert Reich and economists
Robert Solow, Lester Thurow, Laura Tyson,
Paul Krugman, Pat Choate, and Lawrence
Chimerine urges ``more teamwork'' through
``public-private partnerships among
government, business and academia.''24 This
report calls for ``national goals and targets''
set by government planners who will devise a
``comprehensive investment strategy'' that
will only permit ``productive'' investment, as
defined by government, to take place.
- 4. Mercantilism and protectionism.
- Whenever politicians start talking about
``collaboration'' with business, it is time to
hold on to your wallet. Despite the fascist
rhetoric about ``national collaboration'' and
working for the national, rather than private,
interests, the truth is that mercantilist and
protectionist practices riddled the system. Ital-
ian social critic Gaetano Salvemini wrote in
1936 that under corporatism, ``it is the state,
i.e., the taxpayer, who has become respon-
sible to private enterprise. In Fascist Italy the
state pays for the blunders of private
enterprise.''25 As long as business was good,
Salvemini wrote, ``profit remained to private
initiative.''26 But when the depression came-
,``the government added the loss to the
taxpayer's burden. Profit is private and
individual. Loss is public and social.''27
The Italian corporative state, The Econ-
omist editorialized on July 27, 1935, ``only
amounts to the establishment of a new and
costly bureaucracy from which those indus-
trialists who can spend the necessary
amount, can obtain almost anything they
want, and put into practice the worst kind of
monopolistic practices at the expense of the
little fellow who is squeezed out in the
process.'' Corporatism, in other words, was
a massive system of corporate welfare.
``Three-quarters of the Italian economic
system,'' Mussolini boasted in 1934, ``had
been subsidized by government.''28
If this sounds familiar, it is because it is
exactly the result of agricultural subsidies, the
Export-Import bank, guaranteed loans to
``preferred'' business borrowers, protec-
tionism, the Chrysler bailout, monopoly
franchising, and myriad other forms of cor-
porate welfare paid for directly or indirectly by
the American taxpayer.
Another result of the close ``collabora-
tion'' between business and government in
Italy was ``a continual interchange of per-
sonnel between the . . . civil service and
private business.''29 Because of this ``re-
volving door'' between business and gov-
ernment, Mussolini had ``created a state
within the state to serve private interests
which are not always in harmony with the
general interests of the nation.''30
Mussolini's ``revolving door'' swung far
- Signor Caiano, one of Mussolini's
most trusted advisers, was an officer
in the Royal Navy before and during
the war; when the war was over, he
joined the Orlando Shipbuilding
Company; in October 1922, he
entered Mussolini's cabinet, and the
subsidies for naval construction and
the merchant marine came under the
control of his department. General
Cavallero, at the close of the war, left
the army and entered the Pirelli
Rubber Company . . .; in 1925 he
became undersecretary at the
Ministry of War; in 1930 he left the
Ministry of War, and entered the
service of the Ansaldo armament
firm. Among the directors of the big
. . . companies in Italy, retired
generals and generals on active
service became very numerous after
the advent of Fascism.31
Such practices are now so common in the
United States especially in the defense
industriesÄthat it hardly needs further com-
From an economic perspective, fascism
meant (and means) an interventionist indus-
trial policy, mercantilism, protectionism, and
an ideology that makes the individual
subservient to the state. ``Ask not what the
State can do for you, but what you can do for
the State'' is an apt description of the
economic philosophy of fascism.
The whole idea behind collectivism in
general and fascism in particular is to make
citizens subservient to the state and to place
power over resource allocation in the hands of
a small elite. As stated eloquently by the
American fascist economist Lawrence Dennis,
fascism ``does not accept the liberal dogmas
as to the sovereignty of the consumer or
trader in the free market. . . .Least of all does
it consider that market freedom, and the
opportunity to make competitive profits, are
rights of the individual.'' Such decisions
should be made by a ``dominant class'' he
labeled ``the elite.''32
German Economic Fascism
Economic fascism in Germany followed a
virtually identical path. One of the intellectual
fathers of German fascism was Paul Lensch,
who declared in his book Three Years of
World Revolution that ``Socialism must
present a conscious and determined
opposition to individualism.''33 The philosophy
of German fascism was expressed in the
slogan, Gemeinnutz geht vor Eigennutz, which
means ``the common good comes before the
private good.'' ``The Aryan is not greatest in
his mental qualities,'' Hitler stated in Mein
Kampf, but in his noblest form he ``willingly
subordinates his own ego to the community
and, if the hour demands, even sacrifices
it.''34 The individual has ``not rights but only
Armed with this philosophy, Germany's
National Socialists pursued economic policies
very similar to Italy's: government-mandated
``partnerships'' between business,
government, and unions organized by a
system of regional ``economic chambers,'' all
overseen by a Federal Ministry of Economics.
A 25-point ``Programme of the Party''
was adopted in 1925 with a number of
economic policy ``demands,'' all prefaced by
the general statement that ``the activities of
the individual must not clash with the
interests of the whole . . . but must be for the
general good.''36 This philosophy fueled a
regulatory assault on the private sector. ``We
demand ruthless war upon all those whose
activities are injurious to the common
interest,'' the Nazis warned.37 And who are
these on whom `war'' is to be waged?
``Common criminals,'' such as ``usurers,'' i.e.,
bankers, and other ``profiteers,'' i. e., ordinary
businessmen in general. Among the other
policies the Nazis demanded were abolition of
interest; a government-operated social
security system: the ability of government to
confiscate land without compensation
(wetlands regulation?); a government
monopoly in education; and a general assault
on private-sector entrepreneurship which was
denounced as the ``Jewish materialist
spirit.''38 Once this ``spirit'' is eradicated,
``The Party . . . is convinced that our nation
can achieve permanent health from within
only on the principle: the common interest
Virtually all of the specific economic pol-
icies advocated by the Italian and German
fascists of the 1930s have also been adopted
in the United States in some form, and
continue to be adopted to this day. Sixty
years ago, those who adopted these inter-
ventionist policies in Italy and Germany did so
because they wanted to destroy economic
liberty, free enterprise, and individualism.
Only if these institutions were abolished could
they hope to achieve the kind of totalitarian
state they had in mind.
Many American politicians who have ad-
vocated more or less total government control
over economic activity have been more
devious in their approach. They have advo-
cated and adopted many of the same policies,
but they have always recognized that direct
attacks on private property, free enterprise,
self-government, and individual freedom are
not politically palatable to the majority of the
American electorate. Thus, they have enacted
a great many tax, regulatory, and income-
transfer policies that achieve the ends of
economic fascism, but which are sugar-
coated with deceptive rhetoric about their
alleged desire only to ``save'' capitalism.
American politicians have long taken their
cue in this regard from Franklin D. Roosevelt,
who sold his National Recovery
Administration (which was eventually ruled
unconstitutional) on the grounds that ``gov-
ernment restrictions henceforth must be
accepted not to hamper individualism but to
protect it.''40 In a classic example of
Orwellian doublespeak, Roosevelt thus argued
that individualism must be destroyed in order
to protect it.
Now that socialism has collapsed and
survives nowhere but in Cuba, China, Viet-
nam, and on American university campuses,
the biggest threat to economic liberty and
individual freedom lies in the new economic
fascism. While the former Communist
countries are trying to privatize as many
industries as possible as fast as they can,
they are still plagued by governmental con-
trols, leaving them with essentially fascist
economies: private property and private
enterprise are permitted, but are heavily
controlled and regulated by government.
As most of the rest of the world struggles
to privatize industry and encourage free
enterprise, we in the United States are
seriously debating whether or not we should
adopt 1930s-era economic fascism as the
organizational principle of our entire health
care system, which comprises 14 percent of
GNP. We are also contemplating business-
government ``partnerships'' in the automobile,
airlines, and communications industries,
among others, and are adopting government-
managed trade policies, also in the spirit of
the European corporatist schemes of the '30s.
The state and its academic apologists are
so skilled at generating propaganda in support
of such schemes that Americans are mostly
unaware of the dire threat they pose for the
future of freedom. The road to serfdom is
littered with road signs pointing toward ``the
information superhighway,'' ``health
security,'' ``national service,'' ``managed
trade,'' and ``industrial policy.''
- Benito Mussolini, My Autobiography (New York,
Charles Scribner's Sons, 1928).
- Cited in John T. Flynn, As We Go Marching (New
York: Doubleday, 1944), p. 70.
- Cited in Richard Griffiths, Fellow Travellers of the
Right: British Enthusiasts for Nazi Germany, 1939 (Lon-
don: Trinity Press. 1980), p. 259.
- Alastair Hamilton, The Appeal of Fascism: A Study
of Intellectuals and Fascism, 1919-1945 (New York:
Macmillan, 1971), p. 288.
- Benito Mussolini, Fascism: Doctrine and Institutions
(Rome: Adrita Press, 1935), p. 10.
- Richard Epstein, Takings (Cambridge, Mass.:
Harvard University Press, 1985), p. x.
- Mussolini, Fascism. p. 68.
- Ibid., p. 122.
- Ira C. Magaziner and Robert B. Reich, Minding
America's Business (New York: Vintage Books, 1982).
- Ibid., p. 343.
- Ibid., p. 370.
- Ira C. Magaziner, Silent War (New York: Random
House, 1989), p. 306.
- Fausto Pitigliani, The Italian Corporative State (New
York: Macmillan, 1934), p. 98.
- Ibid., p. 93.
- Ibid., p. 95.
- Magaziner and Reich, Minding America's Business,
- Ibid., p. 378.
- Lane Kirkland, ``An Alternative to Reaganomics,''
USA Today, May 1987, p. 20.
- Center for National Policy, Restoring American
Competitiveness (Washington, D.C.: Center for National
Policy, 1984). p. 7.
- Rebuild America, An Investment Economics for the
Year 2000 (Washington, D.C.: Rebuild America, 1986), p.
- Pitigliani, The Italian Corporative State, p. 93.
- Gaetano Salvemini, Under the Axe of Fascism (New
York: Viking Press, 1936), p. 380.
- S. Belluzzo, Liberta, September 21, 1933, cited in
Salvemini, Under the Axe of Fascism, p. 3115.
- Salvemini, Under the Axe of Fascism, p.380.
- Ibid., p. 385.
- Lawrence Dennis, The Coming American Fascism
(New York: Harper, 1936), p. 180.
- Adolph Hitler, Mein Kampf (Boston: Houghton
Mifflin, 1943), p. 297.
- Ibid., p. 126.
- Norman H. Baynes, The Speeches of Adolph Hitler
(New York: Howard Fertig, 1969), p. 104.
- Ibid., p. 105.
- Ibid., p. 104.
- Cited in Samuel Rosenman, ed., The Public Papers
and Addresses of Franklin D. Roosevelt (New York:
Random House, 1938-50), p. 750.
Thomas J. DiLorenzo is Professor of
Economics at Loyola College, Baltimore.
This article is reprinted, with permission,
from the June, 1994, issue of the Freeman,
which is published by the Foundation for
Economic Education, Inc., Irvington-on-
Hudson, New York 10533.
FEE, established in 1946 by Leonard E.
Read, is a non-political, educational
champion of private property, the free
market, and limited government.
Reprints available from:
Association of American Physicians and Surgeons
1601 N. Tucson Blvd. Suite 9, Tucson, AZ 85716
Pamphlet No. 1036, February, 1995