The Socialist Economics of Italian Fascism

If classical liberalism spells individualism, Fascism spells government. Sound familiar? 

Lawrence K. Samuels writes: The economics of Italian Fascism is often ignored or trivialized because so much of it is found in today’s world economies. Consider some of the components of fascist economics: central planning, heavy state subsidies, protectionism (high tariffs), steep levels of nationalization, rampant cronyism, large deficits, high government spending, bank and industry bailouts, overlapping bureaucracy, massive social welfare programs, crushing national debt, bouts of inflation and “a highly regulated, multiclass, integrated national economic structure.”1

“The Fascist conception of life accepts the individual only in so far as his interests coincide with the State…Fascism reasserts the rights of the state. If classical liberalism spells individualism, Fascism spells government.”

— Benito Mussolini, from “Doctrine of Fascism”

On numerous occasions, Benito Mussolini identified his economic policies with “state capitalism”—the exact phrase that Vladimir Lenin used to usher in his New Economic Policy (NEP). Lenin wrote: “State capitalism would be a step forward as compared with the present state of affairs in our Soviet Republic.”2 After Russia’s economy collapsed in 1921, Lenin allowed privatization and private initiative, and he let the people trade, buy and sell for private profit.3 Lenin was moving towards a mixed economy.

[Order Jonah Goldberg’s book “Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning”  from Amazon]

He even demanded that state-owned companies operate on profit/loss principles.4Lenin acknowledged that he had to back away from total socialism and allow some capitalism.

 “In his 1928 autobiography, Mussolini made clear his dislike for liberal capitalism: ‘The citizen in the Fascist State is no longer a selfish individual who has the anti-social right of rebelling against any law of the Collectivity.’”

Mussolini followed Lenin’s example and proceeded to establish a state-driven economic model in Italy. In essence, Mussolini’s fascism was simply an imitation of Lenin’s “third way,” which combined market-based mechanisms and socialism—similar to Red China’s “market socialism.” In short, Lenin’s revised Marxism culminated in “socialist-lite” policies that helped inspire Mussolini to craft his own Italian-style fascism with a right-wing socialist twist. Thus, one could argue that Lenin’s politics were the first modern-day version of fascism and state-corporatism.

“As the effects of the Great Depression lingered, Italy’s government promoted mergers and acquisitions, bailed out failing businesses and ‘seized the stock holdings of banks, which held large equity interests.’ The Italian state took over bankrupt corporations, cartelized business, increased government spending, expanded the money supply, and boosted deficits. The Italian government promoted heavy industry by ‘nationalizing it instead of letting the companies go bankrupt.”

Economist Ludwig von Mises, who fled the Nazi conquest of Europe, contended that the “economic program of Italian Fascism did not differ from the program of British Guild Socialism as propagated by the most eminent British and European socialists.”5,6

“The Fascist conception of life accepts the individual only in so far as his interests coincide with the State…Fascism reasserts the rights of the state. If classical liberalism spells individualism, Fascism spells government.”

— Benito Mussolini

In The Concise Encyclopedia of Economics, Sheldon Richman succinctly states: “As an economic system, fascism is socialism with a capitalist veneer.”7 He contends that socialism seeks to abolish capitalism outright, while fascism gives the appearance of a market-based economy, even though it relies heavily on the central planning of all economic activities. According to authors Roland Sarti and Rosario Romeo, “[U]nder Fascism the state had more latitude for control of the economy than any other nation at the time except for the Soviet Union.”8

[Read the full text here, at Library of Economic Liberty]

Interestingly, Mussolini found much of John Maynard Keynes’s economic theories consistent with fascism, writing: “Fascism entirely agrees with Mr. Maynard Keynes, despite the latter’s prominent position as a Liberal. In fact, Mr. Keynes’ excellent little book, The End of Laissez-Faire (1926) might, so far as it goes, serve as a useful introduction to fascist economics. There is scarcely anything to object to in it and there is much to applaud.”9

After the worldwide Great Depression, Mussolini became more vocal in his claims that fascism explicitly rejected the capitalist elements of economic individualism and laissez-faire liberalism.10 In his “Doctrine of Fascism,” Mussolini wrote: “The Fascist conception of life accepts the individual only in so far as his interests coincide with the State…Fascism reasserts the rights of the state. If classical liberalism spells individualism, Fascism spells government.” In his 1928 autobiography, Mussolini made clear his dislike for liberal capitalism: “The citizen in the Fascist State is no longer a selfish individual who has the anti-social right of rebelling against any law of the Collectivity.”11 Read the rest of this entry »