"Private capitalism makes a steam engine; State capitalism makes pyramids." ~ Frank Chodorov
Fascism, State Capitalism and Outsourcing
Fascism is a type of state socialistic government. The Merriam-Webster dictionary definition is: 'a political philosophy, movement, or regime (as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition.' Fascism is most often associated with the regimes of Mussolini and Hitler during WWII. The difference between fascism and communism is that in communism, the state owns everything outright; in fascism, a thin veneer of private ownership is maintained while the state exercises absolute control over industry. So the biggest difference between communism and fascism, which are both state socialistic governments, is that communism is complete state ownership, while fascism is complete state control. In economic and political effect, both are remarkably similar, and both oppose true free markets. Both communism and fascism value collectivism over individualism, and see the state as the ultimate expression of good, with the individual only existing to serve the state. Both communism and fascism have given rise to totalitarian police states, where the freedoms of individuals were sacrificed for the good of the state. In both communism and fascism, the state is everything, the individual is nothing. It is interesting to note that though both communism and fascism claim to be ideological enemies and complete opposites, for someone who values individual freedom and free markets, there is really no difference.
To get a better understanding of what fascism meant to Mussolini, one needs only read Benito Mussolini: What is Fascism, 1932. From that short article we get this insight: 'Fascism, the more it considers and observes the future and the development of humanity quite apart from political considerations of the moment, believes neither in the possibility nor the utility of perpetual peace. It thus repudiates the doctrine of Pacifism -- born of a renunciation of the struggle and an act of cowardice in the face of sacrifice. War alone brings up to its highest tension all human energy and puts the stamp of nobility upon the peoples who have courage to meet it.' This is almost exactly identical to the current neo-CON and US policy of perpetual war for perpetual peace. Il Duce also writes, 'For Fascism, the growth of empire, that is to say the expansion of the nation, is an essential manifestation of vitality, and its opposite a sign of decadence. Peoples which are rising, or rising again after a period of decadence, are always imperialist; and renunciation is a sign of decay and of death.' Again, this is almost exactly the current US and neoCON policy (Was Mussolini the first neoCON?), and should be a frightening wakeup call to all Americans.
Of more general interest are these thoughts of Mussolini: '(g)iven that the nineteenth century was the century of Socialism, of Liberalism, and of Democracy, it does not necessarily follow that the twentieth century must also be a century of Socialism, Liberalism and Democracy: political doctrines pass, but humanity remains, and it may rather be expected that this will be a century of authority . . . a century of Fascism. For if the nineteenth century was a century of individualism it may be expected that this will be the century of collectivism and hence the century of the State . . . . The foundation of Fascism is the conception of the State, its character, its duty, and its aim. Fascism conceives of the State as an absolute, in comparison with which all individuals or groups are relative, only to be conceived of in their relation to the State . . . . The Fascist State organizes the nation, but leaves a sufficient margin of liberty to the individual; the latter is deprived of all useless and possibly harmful freedom, but retains what is essential; the deciding power in this question cannot be the individual, but the State alone.' The bold emphasis is mine, and currently reflects how socialistic democratic states now operate. I find it alarming that current democratic nation-states share so much in common with the basic tenets of fascism and that most people are completely unaware of this.
In Milton Friedman Unraveled, Murray Rothbard shows that there can be quite a difference between those who claim to support free markets and what they actually support. The section on Friedman's Chicagoite Egalitarianism is especially illuminating, and contains the following insights: 'The idea is that there are two sharply separated and independent worlds of economics. On the one hand, there is the 'micro' sphere, the world of individual prices determined by the forces of supply and demand. Here, the Chicagoans concede, the economy is best left to the unhampered play of the free market. But, they assert, there is also a separate and distinct sphere of 'macro' economics, of economic aggregates of government budget and monetary policy, where there is no possibility or even desirability of a free market . . . . In common with their Keynesian colleagues, the Friedmanites wish to give to the central government absolute control over these macro areas, in order to manipulate the economy for social ends, while maintaining that the micro world can still remain free. In short, Friedmanites as well as Keynesians concede the vital macro sphere to statism as the supposedly necessary framework for the micro-freedom of the free market.' (Bold emphasis mine.) This is currently how democratic 'free market' nation-states operate, and is very close or identical to the economic model of fascist state control. In truth, democratic socialist nation-states have mostly shunned state ownership of industries (communism), and have increasingly turned to privatization of state assets, while maintaining and increasing strict control of industries through legislation (fascism).
The relationship between the state and corporations that support the state is often termed 'state capitalism.' Though there are others terms, like corporatism, that are also used, state capitalism fully denotes the illegal use of the state to fund capitalism. In state capitalism, the power of the state is used to create favorable legislation that rewards the politically well connected with legal plunder by eliminating or reducing competition and requiring that certain products be purchased or funded. State capitalism is the antithesis to free market capitalism. As Murray Rothbard denotes in A Future of Peace and Capitalism, 'The difference between free-market capitalism and state capitalism is precisely the difference between, on the one hand, peaceful, voluntary exchange, and on the other, violent expropriation.' Mr. Rothbard shows that claims that capitalism is always the result of free market activity are not necessarily true, and any claims that any capitalistic activity is the result of free market policies needs to be judged solely on objective criteria of the free market itself.
So the question is where does outsourcing, also known as globalization, fit in the current political and economic scheme? While many capitalist libertarians proclaim outsourcing as a triumph for freedom and the free market, many others are quick to denounce outsourcing as corporate exploitation and statism. Is outsourcing/globalization the product of voluntary association, cooperation and trade (the free market), or is it the result of state intervention into the market (state capitalism)?
The article Outsourcing the American Economy, by Paul Craig Roberts, cites the new book Outsourcing America, which disputes the value of outsourcing. In the article, Mr. Roberts proclaims that corporate-funded studies have painted a misleading picture of the effects of outsourcing, and that many technical and professional jobs are disappearing, and that equivalent or better jobs are not being created as foretold by economic experts. Mr. Roberts concludes that 'Only fools will continue clinging to the premise that outsourcing is good for America .' While not directly addressing the issue of free market versus state capitalism, the charges leveled against outsourcing are serious, and the implications are that it has not been a result of free market activities.
An even more scathing indictment of globalization is given in the commentary Free Trade v Fair Trade. In a speech the author Sean Gabb gave on a debate on free trade vs. fair trade, he had this to say: 'But do not suppose for a moment that the world trading order as it actually exists is liberal or more than incidentally connected with free markets . . . .The multinational corporations are creatures of these states. They shelter behind the privilege of limited liability. They get their political friends to cartelise markets, and do favours in return . . . . It is a fraud played on us all by our ruling classes ' these being those politicians, bureaucrats, educators, lawyers and media and business people who derive wealth, power and status from an enlarged and activist state.' Mr. Gabb points out that free markets do not exist in any meaningful sense, and that what many people attribute to the free market is really just a form of state capitalism. These charges are quite grave, and seem to hold up under scrutiny.
Many of the causes of outsourcing/globalization can be directly attributed to state policies, not the effect of the free market. Consider just the pernicious effects of US government fiscal policy caused by the Federal Reserve, which has destroyed the value of the dollar through inflation (enter 1, 2005, 1913 submit) so that a dollar today is only worth the value of a nickel in 1913. Now add in the effects of trade restrictions and tariffs, labor laws, minimum wage, environmental regulations, welfare, Social Security, and myriad other state policies that limit or eliminate free market competition in favor of politically connected individuals and corporations. One can conclude that Americans have been inflated, taxed, regulated, legislated, and cheated out of a level playing field to sell their services by the state and its corporate sponsors. Instead of telling Americans to celebrate their emasculation at the hand of the state and its corporate minions as a triumph of freedom and the free market, it's much more honest to describe Americans' economic and other problems, including outsourcing and globalization, as self-inflicted problems stemming from their unconditional support of the state and its policies.
If one is still unconvinced, one needs only consider Wal-Mart, supposedly the epitome of how outsourcing and globalization is a triumph for freedom and the free market. In the article Wal-Mart, the Abuse of Eminent Domain and Corporate Welfare, we learn that Wal-Mart not only practices stealing property through eminent domain abuse but that 'Wal-Mart leads the pack in attracting subsidies, this year collecting $10 million in Denver; $500,000 in Dallas; $36.7 million in Scottsdale, Ariz., (as part of a shopping center that includes Lowe's); $9 million in Bartlesville, Okla.; and $17 million in Lewiston, Maine.' In Wal-Mart's Free Market Fallacy, we learn that Wal-Mart thrives on government coercion and pork and 'Wal-Mart could not survive in a real free market: It would, for example, have to pay Chinese workers more (which would ruin its low-wage business model) and spurn any offers of government subsidies. Indeed, it's fitting that Wal-Mart, the business model fawned over by free-marketeers, exposes the so-called 'free market' as a lie, no more than a crude'albeit effective'marketing phrase.' Of course all this government coercion and pork doesn't come free, as Wal-Mart now has cracked the top 20 of PACs and contributes more than $1.6 million in bribes. In Wal-Mart in Washington, we find out how Wal-Mart has grown to be one of the top PAC contributors and garnered the praise of the Bush administration: 'In May 2004, Vice President Dick Cheney praised the company in an economic policy speech at Wal-Mart's distribution center in Bentonville, Ark., saying: 'The story of Wal-Mart exemplifies some of the very best qualities in our country -- hard work, the spirit of enterprise, fair dealing, and integrity.'' This from the same neoCON Dick Cheney who thinks killing foreigners, destroying their property, and stealing their resources exemplifies some of the very best qualities in our country. In truth, it seems Wal-Mart, with its blatant government coercion, pork, and bribes, has little or nothing to do with the free market, but could be the poster child for state capitalism.
In many ways, modern socialist democracy nation-states are strange amalgamations of communism (state ownership) and fascism (state control). Due to the overwhelming failure of communism, most socialist democracy nation-states are moving away from a state ownership (communism) economic model to a state control (fascism) economic model. This is usually touted as 'free market' capitalism, but really is just an unholy alliance between corporations and states that results in state capitalism. Outsourcing and globalization have taken place under the auspices of state capitalism, and have not been a triumph for freedom or the free market.