Picking at an old scab: Michal Kalecki on whether Fascism can properly be called socialist

Every widening of state activity is looked upon by business with suspicion, but the creation of employment by government spending has a special aspect which makes the opposition particularly intense.  Under a laissez-faire system the level of employment depends to a great extent on the so-called state of confidence.  If this deteriorates, private investment declines, which results in a fall of output and employment (both directly and through the secondary effect of the fall in incomes upon consumption and investment).  This gives the capitalists a powerful indirect control over government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis. But once the government learns the trick of increasing employment by its own purchases, this powerful controlling device loses its effectiveness.  Hence budget deficits necessary to carry out government intervention must be regarded as perilous.  The social function of the doctrine of ‘sound finance’ is to make the level of employment dependent on the state of confidence.

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One of the important functions of fascism, as typified by the Nazi system, was to remove capitalist objections to full employment. The dislike of government spending policy as such is overcome under fascism by the fact that the state machinery is under the direct control of a partnership of big business with fascism.  The necessity for the myth of ‘sound finance’, which served to prevent the government from offsetting a confidence crisis by spending, is removed. In a democracy, one does not know what the next government will be like.  Under fascism there is no next government.

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The fact that armaments are the backbone of the policy of fascist full employment has a profound influence upon that policy’s economic character.  Large-scale armaments are inseparable from the expansion of the armed forces and the preparation of plans for a war of conquest.  They also induce competitive rearmament of other countries.  This causes the main aim of spending to shift gradually from full employment to securing the maximum effect of rearmament.  As a result, employment becomes ‘over-full’.  Not only is unemployment abolished, but an acute scarcity of labour prevails.  Bottlenecks arise in every sphere, and these must be dealt with by the creation of a number of controls.  Such an economy has many features of a planned economy, and is sometimes compared, rather ignorantly, with socialism.  However, this type of planning is bound to appear whenever an economy sets itself a certain high target of production in a particular sphere, when it becomes a target economy of which the armament economy is a special case. An armament economy involves in particular the curtailment of consumption as compared with that which it could have been under full employment.The fascist system starts from the overcoming of unemployment, develops into an armament economy of scarcity, and ends inevitably in war.

Michal Kalecki, Political Aspects of Full Employment

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