Among the Intellectualoids/Reich's Friendly Fascism
Krauss, Melvyn B.
AMONG THE INTELLECTUALOIDS
REICH'S FRIENDLY FASCISM
When Ronald Reagan claimed that "Fascism was really the basis of the New Deal," the Democrats thought it preposterous. At the 1980 Democratic...
...Finally, so as not to disappoint the supply-siders, the ratio of taxes to GNP in Japan is the lowest of the industrialized powers...
...The Swedish corporate state with such features as worker-managed firms, high taxes, government incentives to prevent business from moving in view of alleged social costs to workers and communities, and extensive government retraining programs is closer to what Reich has in mind for America than anything that has taken place in Japan...
...According to fascist theorists, workers and employers were to be collectivized into separate groups on the basis of exclusive representation in each private industry...
...It would enable government, business, and labor to fashion explicit agreements to restructure American industry [emphases added...
...In broad outline," writes Reich, "the system may look like this: Government will assist businesses in modernizing and adapting their production processes...
...economic performance relative to Japan and West Germany, the decrease from the sixties to the seventies was less in the U.S...
...Businesses will be contractually obligated to restructure themselves, as a condition for receiving the assistance...
...Reich has no use for the free market, dismissing it as the stuff of wild cowboy capitalism...
...Reich's plans for the U.S...
...Indeed, it can be argued that the sick seventies in all the industrialized countries were caused by the very welfare-corporative policies that Reich advocates...
...Reich and other neoliberals (e.g., Felix Rohatyn who for openers would import Mussolini's Istituto per la Ricostruzione Industriale and call it the Reconstruction Finance Corporation, a la FDR) turn a deaf ear to the argument that the weakness of the corporate state derives precisely from the political process through which key economic decisions are made...
...Apparently innocent of economic history and the fascist origins of his ideas, Reich argues for supplanting the market economy by a process of political negotiations between big labor, big business, and big government...
...Nothing less than America's economic future is at stake...
...They thought that private ownership with government management and control a la the Italian system was the way to go and that has been evident in all their writings...
...Reich is doing more than just calling for fundamental change in the character of business enterprise in the U.S...
...economy are grandiose: The restructuring process will be extended to cover other forms of human capital investment...
...The relative ease with which a consensus about structural policy has been achieved in both countries may have more to do with their recently feudal (and more recently totalitarian) histories than with institutional design...
...Senator Gary Hart has observed that Reich's "penetrating insights on how to adapt should be heeded...
...And recently (1980-82), this trend has become even more pronounced...
...At this point in American history," writes Reich, we need a political revitalization as badly as-and in large measure because-we need an economic one...
...We will need leaders who are not afraid to recognize frankly the political choices that are entailed in major economic change and who are willing to choreograph openly the' bargaining about them...
...Out of ideas, several candidates for the Democratic presidential nomination have turned to "neoliberal-ism" to do for them what supply-side economics did for Ronald Reagan in the 1980 campaign...
...in cases of Japanese export success, the informed consensus now is that MITI has followed more than it has led...
...economy has not performed nearly as badly vis a vis the Japanese as Reich would have us believe...
...That was what the NRA was all about...
...countries during the periods 1960-70 and 1970-80...
...Anyone who wants to look at the writings of the members of the Brain Trust of the New Deal will find that President Roosevelt's advisors admired the fascist system...
...Is Reich suggesting that a corporate state requires a totalitarian environment...
...Among these were the Swedish Social Democrat Gunnar Myrdal and FDR...
...He sees the tentacles of Big Government and concentrated economic power everywhere, and his object is simply to make this economic concentration more efficient...
...social democracies, he would have discovered that their troubles have been much greater than ours (see Table 1...
...For the second time this century, the Democratic party is flirting with economic fascism as an answer to our presumed economic problems...
...Hie National Industrial Recovery Act, which established "codes of conduct" for different industries, was said to be justified by the country's dire economic condition...
...Clearly, Frances Perkins understood Italian fascism to be more than imperialism, anti-Semitism, and goonism...
...According to Reich and Thurow, to beat the Japanese, we must become more like them...
...Professor Leuchtenburg should read The Roosevelt I Knew by Frances Perkins...
...Trade Representative's office is compared with what has occurred in West Germany and Japan: We have only to compare the USTR with the comprehensive bargaining arena in which West German structural policy is formulated-where many levels of industry, labor, financial, and government leaders thrash out workable agreements on wage rates, selective credit policies, and adjustment-or with the structure and influence of Japan's MITI [Ministry of International Trade and Industry] to comprehend the scale and effort that is implied...
...As the electorate will realize, the neoliberal call for a new "industrial policy" is a call to catch up with the losers...
...W]e will also need a national bargaining arena for allocating the burdens and benefits of major adjustment strategies...
...Walter Mondale's crowd-pleasing orations notwithstanding, Ronald Reagan's charge that fascism-its economic theorywas the basis of the New Deal is essentially correct...
...Ironically, the same appeal for a corporate state is being made today by Democratic party advisor and Harvard professor Robert B. Reich in his new book, The Next American Frontier.* Walter Mondale has praised the book as "one of the'most important works of the decade...
...The United States did much better because it lagged behind...
...There continues to be tremendous competition in the domestic Japanese market, the survivors often going on to become major exporters...
...The firm's employees collectively will run these company-wide human capital programs [emphasis added...
...Rather than Japan, the country that truly has adopted the corporate model is Sweden...
...Sweden did worst in the seventies because it went furthest in a corporate direction...
...There is absolutely no evidence in the writings of the Brain Trust of admiration for fascism...
...After all," said Mondale, "what kind of person would try to wipe out every program since Roosevelt...
...Though Democrats are reluctant to admit it, the corporate state constituted the economic basis of the New Deal of the 1930s...
...He had the interests of labor at heart, too...
...If it continues to fall at the same pace, Japan's real per capita GNP would still be only 74% of ours in 2083...
...Just how dramatic and far reaching these changes would be is made clear when Reich laments how powerless the proposed U.S...
...That is well and good, for Robert Reich's ideas are dangerous and the sooner put to rest the better...
...As a matter of fact, the seventies have been sick for all the Western industrialized countries and not just the United States...
...To correct this, a new partnership between government, business, and labor must be forged...
...economy was endangered by cheap Oriental labor...
...Recently, FDR admirer and historian William E. Leuchtenburg opined in the New Republic that "Reagan would have been well advised to let Mondale's reminder of his earlier misstatement lie...
...Intent on pinning the fascist tail on the Democratic donkey, Reagan did not withdraw his charge-he expanded it...
...Such an arena would enable the nation to achieve a broad-based consensus about adjustment...
...The larger competitive problems between industries he could settle himself...
...There are several problems with this new "yellow-peril" argument...
...Through labor-management councils also comprised of worker representatives, workers will participate in company decisions about physical capital, helping choose the direction and magnitude of new investment in research, plant, and machinery...
...Today, with the economy recovering rather briskly, it would seem that it is the Democratic party and not the economy that is in trouble...
...For example, we can expect that a significant part of the present welfare system will be replaced by government grants to businesses that agree to hire the chronically unemployed...
...AMONG THE INTELLECTUALOIDS REICH'S FRIENDLY FASCISM When Ronald Reagan claimed that "Fascism was really the basis of the New Deal," the Democrats thought it preposterous...
...Today it is nonsense...
...He is proposing to politicize our economic life beyond anything we've seen since the New Deal (World War II excluded...
...30.2%) than in either Japan (-54.1%) or West Germany (-40...
...Italy under Mussolini developed a unique economic structure known as the corporate state...
...Difficult times required radical solutions...
...But the issue of economic freedom notwithstanding, Reich has marshalled no evidence that the political settlements he proposes would in any way benefit the economic needs of Americans...
...Public funds now spent directly on these services will instead be made available to businesses...
...Corporatism sat uneasily on the Italians, with their individualistic tradition, and it only affected the country superficially...
...Second, the Ministry of International Trade and Industry and the corporate state behind it have hardly been the source of Japan's economic success...
...His thesis is a simple one: American (and British) firms have become outmoded and inefficient because they do not adequately serve the economic and social needs of their employees...
...But the rate of gain on us fell sharply...
...Given the economic recovery presently taking place under the Administration's auspices, Democratic visions of the government's economic role will not prove very popular...
...Table 1 indicates the average annual growth rates of real gross domestic production for selected industrial...
...He'd have to be a person who believes, 'Fascism was really the basis for the New Deal...
...Though Reich's book has received wide attention, interest is likely to recede at approximately the same pace as the U.S...
...Reich should look more closely at Sweden, its economic system, and its economic and social problems...
...Consider his understanding of the Japanese economy...
...This is not to suggest that either West Germany or Japan provides the United States with an appropriate model...
...The neoliberal version sees our economy threatened by high quality corporate state labor in Japan-i.e., "Japan Inc...
...Interestingly enough, though Reich never tires of badmouthing U.S...
...Before Mussolini teamed up with Hitler, the Italian corporate state had many foreign admirers...
...The union bosses and captains of industry were expected to bargain and reach agreement over such key economic variables as wages, prices, and hours of work, and then submit their agreement to the government for final approval...
...Reich's championing of social democratic economic institutions might have been convincing twenty years ago...
...This means importing not so much Japanese autos, TVs, and steel, as it does the corporate state...
...In advocating a corporate state for the United States, Reich (along with Lester Thurow) has become a major proponent of a new *'yellow peril" argument...
...At the 1980 Democratic Convention Walter Mondale attacked Reagan by reminding the delegates of Reagan's claim...
...The old yellow peril argument had it that the U.S...
...If the corporate state was a wrong-headed response to the economic crisis of the 1930s, it is totally inappropriate to our present economic situation...
...But instead of outright giveaways . . . this new form of assistance will be tied explicitly to upgrading capital and labor...
...Roland Huntford writes in The New Totalitarians, "Like Fascist Italy, Sweden today is a corporate state, but the Swedish version of the corporate state is far more complete than the Italian one...
...If he hadn't just given me a copy of The Corporate State by Raffaello Viglione in -which the neat Italian system of dictatorship for the benefit of the people was glowingly described, I might have felt easier about his counter-proposal to select a labor man to sit at his right and a businessman at his left, for whom he could outline the code and ask if they had -any objections...
...Had Reich bothered to look at the record of Sweden for the 1970s, not to mention other Northern European TABLE -I Average Annual Growth Rates of Real Gross Domestic Product, Selected Industrialized Countries 1960-70 1970-80 United States 4.3% 3.0% United Kingdom 2.9% 1.9% Japan 10.9% 5.0% France 5.5% 3.5% West Germany 4.4% 2.6% Sweden 4.4% 1.7% Source: World Development Report, 1982...
...First, the U.S...
...MITI has been far from invincible...
...University of California economist William Ouchi claims "the Japanese are successful because their government doesn't get as directly involved in policy making as ours does in the U.S...
...World Bank...
...Herbert Stein points out in his Fortune magazine review of Reich's book that "between 1960 and 1979 Japanese real per capita output rose from 31.5% of ours to 70.2% of ours...
...economy expands...
...Other social services-health care, Social Security, day care, disability benefits, unemployment benefits, relocation assistance-will become part of the process of structural adjustment...
...in Sweden, it has permeated all corners of national life...
...The corporate state, in other words, was to be a system where the bosses made the big decisions and the little guys were expected to follow...
...In Chapter 17, Roosevelt's Secretary of Labor describes NRA official Hugh Johnson as "a member of the President's so-called 'brain trust,' " and adds: It was no easy task to persuade General Johnson to agree to set up advisory committees...
...Who would ever say something like that...
Vol. 16 • September 1983 • No. 9
