Fascism Is “Capitalism in Crisis”

Princess Bride

This is the third installment in a series on “How Hitler Saved Capitalism and Won the War.”

[Last Monday this series on the Second Coming of Adolf Hitler tried to connect Hitler and the response to the tragedies of September 11th, 2001. In the aftermath of those events, the U.S. Vice President’s wife, Lynne Cheney and her American Council of Trustees and Alumni identified university and college professors as “the weak link in the fight against terrorism.” They found it particularly offensive that some of the latter had identified the September 11th attacks as “blowback” for “American” Hitler-like policies in the Third World. Such response inspired me to do some research on the question paying particular attention to data found in a standard Western Traditions textbook used in many institutions of higher learning, Jackson Spielvogel’s “Western Civilization.” This third installment attempts to clear up some common misconceptions about fascism which many see as threatening to take over the U.S. today just as it did Germany in the early 1930s. (Unless otherwise indicated, all references are to Spielvogel’s text.)]

The thesis here is that privatized globalization is a continuation of Hitler’s system of fascism which is understood here as “capitalism in crisis.” To understand that position, it is first of all necessary to clear up prevailing confusions about fascism itself. Not surprisingly, misunderstandings abound concerning its nature. Most correctly identify fascism with a police state, with institutionalized racism, anti-Semitism, and totalitarianism (though they typically remain unclear about the term’s meaning). Most too are familiar with concentration camps, the Holocaust, and, of course, with Adolf Hitler. Some can even associate the Nazi form of fascism with homophobia and persecution of Gypsies. However, rarely, if ever will anyone connect fascism with capitalism. For instance, here is Jackson Spielvogel’s (Western Civilization) textbook description of Hitler’s thought:

“In Vienna, then, Hitler established the basic ideas of an ideology from which he never deviated for the rest of his life. At the core of Hitler’s ideas was racism, especially anti-Semitism. His hatred of the Jews lasted to the very end of his life. Hitler had also become an extreme German nationalist who had learned from the mass politics of Vienna how political parties could effectively use propaganda and terror. Finally, in his Viennese years, Hitler also came to a firm belief in the need for struggle, which he saw as the “granite foundation of the world.” Hitler emphasized a crude Social Darwinism; the world was a brutal place filled with constant struggle in which only the fit survived” (794).

Here it is interesting to note that racism, especially anti-Semitism, nationalism, propaganda, terror and Darwinian struggle are signaled as defining attributes of the Hitlerian system. Capitalism is not mentioned, though “struggle” is. Perhaps, had the term “competition” been used instead of “struggle,” the basically capitalist nature of “Social Darwinism,” and fascism might have been clearer.

Fascism and Communism

Textbooks typically add to the confusion by closely connecting fascist Nazism and Communism. For instance, Spielvogel’s Western Civilization deals with Hitler’s fascism and Josef Stalin’s socialism back-to-back, linking the two with the term “totalitarianism.” Spielvogel’s transition from one to the other illustrates how the merely mildly interested (i.e. most college students) might come away confused. He writes, “Yet another example of totalitarianism was to be found in Soviet Russia” (801). Spielvogel defines totalitarianism in the following terms:

“Totalitarianism is an abstract term, and no state followed all its theoretical implications. The fascist states – Italy and Nazi Germany – as well as Stalin’s Communist Russia have all been labeled totalitarian, although their regimes exhibited significant differences and met with varying degrees of success. Totalitarianism transcended traditional political labels. Fascism in Italy and Nazism in Germany grew out of extreme rightist preoccupations with nationalism and, in the case of Germany, with racism. Communism in Soviet Russia emerged out of Marxian socialism, a radical leftist program. Thus, totalitarianism could and did exist in what were perceived as extreme right-wing and left-wing regimes. This fact helped bring about a new concept of the political spectrum in which the extremes were no longer seen as opposites on a linear scale, but came to be viewed as being similar to each other in at least some respects” (Spielvogel 789).

Here Spielvogel correctly points out “significant differences between fascism and communism. One is radically right, the other radically left. Nazism is identified with nationalism and racism (not, it should be noted, with capitalism). Communism is associated with Marxism and socialism. In the end, however, the two are viewed as “similar to each other in at least some respects.” Thus, clarity of distinction given with one hand seems to be erased with the other. Confusion is the typical result. Such fogginess might have been cleared had Spielvogel employed greater parallelism in his expression – i.e. had he identified Stalinist communism with police-state socialism and Hitler’s Nazism with police-state capitalism.

National Socialism

Nonetheless, history books and teachers are not solely at fault for student confusion. There are other understandable reasons for the distancing of fascism from capitalism. For one, Hitler’s Party called itself the National Socialist German Workers’ Party (NSDAP). As a result, it is quite natural for students who reflect on the question at all, to conclude that Hitler and his party were “socialist,” or even “communist,” since the two terms are almost synonymous for most Americans. After all, well-indoctrinated students would be justified in reasoning that Hitler did such terrible things he must have been a communist.

Lost in such analysis is the historical realization that during the 1930s, all sorts of approaches to political-economy called themselves “socialist.” This is because they supported state intervention to save the market system that was in crisis during the Great Depression. Thus, there were socialisms of the left as found in Soviet Russia. But there were also socialisms of the right, such as Hitler’s in Germany, Mussolini’s in Italy, and Franco’s in Spain. In other words, interventionist economies easily adopted the “socialist” identification to distinguish themselves from laissez-faire capitalism, which in the aftermath of the Great Stock Market Crash of 1929, had been completely discredited. As we shall see below, in such context (were it politically possible) Franklin Roosevelt’s interventionist program to save capitalism could easily have been called National Socialism instead of the “New Deal.”

However, analysis of fascism’s approach to socialism must recognize the national character of the socialism advocated. [Yet even here, according to Spielvogel, Hitler’s program had a distinctly international dimension eerily evocative of promises associated with the current global economy. Spielvogel recalls, “After the German victories between 1939 and 1941, Nazi propagandists painted glowing images of a new European order based on “equal chances” for all nations and an integrated economic community.” (829)] The critical adjective (nationalist) was intended precisely to distinguish the right wing brand of socialism from its left wing international antagonist. In this connection Hagen Schulze writes in Germany: a New History (2001):

“The catch-phrase “national socialism” itself had been created before the First World War as a means to unite a variety of nationalistic organizations in the battle against “international socialism.” The term was designated to appeal to the working class, but it also proved attractive to young people from the middle and upper classes with romantic notions of Volksgemeinschaft, a “popular” or “national” community” (231)

The implication here is that right wing zealots “co-opted” a popular term to confuse the young – a strategy employed to this day with great success. Here as well one should note that “national socialism” is signaled as a direct opponent of “international socialism.”

Fascism as Mixed Economy

Yet another reason disjoining fascism from capitalism is that fascism was not capitalism pure and simple. (The same might be said of Roosevelt’s New Deal – and even today’s U.S. economy.) Both systems were “mixed economies.” That is, if capitalism’s essential components are private ownership of the means of production, free and open markets and unlimited earnings, socialism’s corresponding elements are public ownership of the means of production, controlled markets and restricted earnings. Both Roosevelt and Hitler combined the two approaches to economy.

Once again, in a period when free market capitalism had been widely discredited, both Hitler and Roosevelt performed a kind of “perestroika.” Soviet Premier, Mikhail Gorbachev would later use the term to refer to the restructuring of socialism, in order to save it by incorporating elements of capitalism. The suggestion here is that more than a half-century earlier, Roosevelt and Hitler had done the opposite; they had incorporated elements of socialism into the capitalist system in order to resurrect it. So, while the means of production most often remained in private hands, others (such as the railroads, the postal system, telephones and highways) were nationalized.

Similarly, while the free market was allowed to continue in many ways, its freedom was restricted by measures socialists had long advocated (e.g. rationing, legalized unions, social security, wage and price controls). Finally, high income taxes were used to restrict earnings and garner income for the state to finance its interventionist programs. [Few recall, for instance, that during the 1940s, U.S. federal income tax rates assessed incomes over $400,000 at a rate of 91% (See Howard Zinn’s A People’s History of the United States, 567-8). Government revenue collected in this way paid for populist programs that modestly redistributed income to the American working class and unemployed. Such redistribution found its way into workers’ pay envelopes, but also took the form of “social wage.”]

None of this is to say that Roosevelt’s and Hitler’s interventionist economies were the same. Mixed economies, after all, are not the identical. The key question for distinguishing between them is, “Mixed in favor of whom?” Some mixed economies are mixed in favor of the working class, others, in favor of their employers. As the product of a liberal capitalist, Roosevelt’s mixture successfully sold itself as the former. That is, while keeping most means of production securely in the hands of capitalists, Roosevelt gained the support of the working classes through his populist programs aimed at gingerly redistributing income downward towards those unable to fend for themselves. In other words, Roosevelt’s “mixed economy” was blended so as to facilitate its defense in populist terms – that is, as mixed in favor of the working class. And the defense achieved plausibility with the American people. Despite objections from more overtly pro-business Republicans, Roosevelt was elected four times in succession. His party remained in control of the U.S. Congress for nearly a half-century.

Hitler had another approach. Influenced by Herbert Spencer and (indirectly) by Friedrich Nietszche (see below), der Fuhrer was an extreme social Darwinist whose programs unabashedly favored elite Aryans and despised “the others,” particularly socialists, Jews, trade unionists, non-whites, Gypsies, homosexuals, the disabled and other “deviants.” On the other hand, Hitler despised “liberal” politicians like Roosevelt, with their programs of social welfare. On those grounds, he vilified the Weimar government which preceded his own. During the early years of the Great Depression, Weimar politicians had attempted to gain the favor of the working class, and to sidestep civil war by implementing wealth distribution programs (233). Funding the programs necessitated tax increases, unpopular with middle and upper classes. It meant strengthening unions along with socialists and communists.

The point here is that is it with good reason that few make the connection between fascism and capitalism. A student of Spielvogel, for instance, would have to be quasi-heroic to do so. After all, he or she would be not only resisting the confusion fostered by the text itself, but would also be swimming against the stream of American propaganda, which treats Hitler’s system as the product of an evil individual, and unconnected with any specific economic system (other than, mistakenly, socialism or communism).

Despite such ambiguity, next week’s blog entry will attempt to demonstrate more specifically that even a closer reading of a text like Spielvogel’s makes unmistakable the connection between fascism and capitalism.

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Mike Rivage-Seul's Blog

Emeritus professor of Peace & Social Justice Studies. Liberation theologian. Activist. Former R.C. priest. Married for 40 years. Three grown children. Four grandchildren.

9 thoughts on “Fascism Is “Capitalism in Crisis””

  1. Pingback: FASCISM
  2. Thank you so much for this: more needed and relevant today than ever. I am trying to find out who first coined the phrase “fascism is capitalism in crisis” — can you help me with that?


    1. Leon Trotsky discussed Fascism as being the last resort of a precarious ruling class amidst Capitalist crisis as early as the 1930s:

      “For the monopolistic bourgeoisie, the parliamentary and fascist regimes represent only different vehicles of dominion; it has recourse to one or the other, depending upon the historical conditions….

      “At the moment that the “normal” police and military resources of the bourgeois dictatorship, together with their parliamentary screens, no longer suffice to hold society in a state of equilibrium—the turn of the fascist regime arrives. Through the fascist agency, capitalism sets in motion the masses of the crazed petty bourgeoisie, and bands of the declassed and demoralized lumpenproletariat; all the countless human beings whom finance capital itself has brought to desperation and frenzy. From fascism the bourgeoisie demands a thorough job; once it has resorted to methods of civil war, it insists on having peace for a period of years. And the fascist agency, by utilizing the petty bourgeoisie as a battering ram, by overwhelming all obstacles in its path, does a thorough job. After fascism is victorious, finance capital gathers into its hands, as in a vise of steel, directly and immediately, all the organs and institutions of sovereignty, the executive, administrative, and educational powers of the state: the entire state apparatus together with the army, the municipalities, the universities, the schools, the press, the trade unions, and the cooperatives. When a state turns fascist, it doesn’t only mean that the forms and methods of government are changed in accordance with the patterns set by Mussolini—the changes in this sphere ultimately play a minor role—but it means, primarily and above all, that the workers’ organizations are annihilated; that the proletariat is reduced to an amorphous state; and that a system of administration is created which penetrates deeply into the masses and which serves to frustrate the independent crystallization of the proletariat. Therein precisely is the gist of fascism.”

      —Leon Trotsky, “What Next? Vital Questions for the German Proletariat” (27 January 1932)


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