Fascism, from The Theory of Capitalist Development

This piece was originally published as a chapter in Paul Sweezy’s The Theory of Capitalist Development (Monthly Review Press, January 1942).

Speaking in general terms, fascism, as it exists in Germany and Italy, is one form which imperialism assumes in the age of wars of redivision. The present chapter will be devoted to the elaboration of this theme on the foundation of the theory of imperialism set forth in the preceding pages.

1. The Conditions of Fascism

Fascism arises under certain specific historical conditions which are in turn the product of the impact of imperialist wars of redivision on the economic and social structure of advanced capitalist nations. According to military and diplomatic usage, at the end of a war belligerent nations are put into two categories, those on the winning side and those on the losing side. The extent of the damage to the internal social structure of the various countries, however, provides a more significant basis for classification. According to the extent and severity of the damage suffered it is possible to arrange the countries in a series, ranging from those which emerge virtually unscathed or even actually strengthened to those in which the pre-existing structure of economic, political, and social relations is completely shattered. Usually the nations on the winning side stand nearer the top and those on the losing side nearer the bottom of the scale, but the correlation is far from perfect.

It is not easy to establish criteria by which to judge the extent and severity of the damage suffered by a country as a result of war, but certain related symptoms would no doubt be widely recognized as indicative: extreme scarcity of food and other necessaries of life; partial breakdown of ‘law and order’; disorganization, poor discipline, and unreliability in the armed forces; loss of confidence on the part of the ruling class; and lack of regard for established habits of thought and behavior among wide sections of the population. Conditions of this sort are almost certain to give rise to revolutionary struggles which may eventuate in a decisive victory for the counter-revolution; in an overthrow of the existing structure of property relations and the establishment of socialism—as happened in Russia in 1917; or in a temporary stalemate in which neither of the major contending forces, the working class or the capitalist class, is able to gain a decisive triumph—as happened in Germany and, less unambiguously, in other parts of central and eastern Europe in 1918 and 1919. It is the last case which interests us here.

The fact that the revolution stops short of a socialist consummation is, in a very real sense, the key to subsequent developments. What emerges may best be described as a transitional condition of class equilibrium resting on a foundation of capitalist property relations. Juridically this balance of class forces tends to express itself in an ultra-democratic state form, to which the name of the ‘people’s republic’ was applied by Otto Bauer.* The people’s republic leaves the capitalists in control of the economy but at the same time affords to the working class a share in state power and freedom to organize and agitate for the achievement of its own ends. The personnel of the state apparatus is largely unchanged, but the weakness and unreliability of the armed forces at the disposal of the state obliges the capitalists to pursue a policy of temporization and compromise.

The democratic character of the people’s republic gives rise to a variety of illusions. Liberals see in the sharing of state power and the compromises which necessarily result an earnest of class co-operation and the softening of social conflict; revisionists believe that the people’s republic is merely a stepping stone to the gradual achievement of socialism. The reality of heightened class antagonism behind the temporary balance of forces is too often overlooked. But these optimistic diagnoses are soon discredited by events. Nothing proves so clearly the unstable and impermanent character of the people’s republic as its inability to meliorate the contradictions of capitalist production. These contradictions, far from being eliminated, are on the contrary intensified. The gains won by the greatly strengthened trade unions and the enactment of social legislation under working-class pressure put burdens on capitalist production which it is ill prepared and even less willing to bear. Big capital meets this situation in two ways. First, by tightening up its monopolistic organizations and squeezing the middle classes. The latter, already impoverished by the war and the subsequent derangement of economic life which, in the form of inflation, bears particularly heavily on those with small savings and no organizations to protect them, now find that their desperate position is but slightly improved by the return of ‘law and order,’ that they are in effect the orphan children of the people’s republic. Second, the capitalists embark upon an intensive campaign of ‘rationalization,’ that is to say the substitution of machinery for labor power and the intensification of the labor process, which has the consequence of swelling the ranks of the reserve army. It is, of course, true that making good the economic destruction and wastage of the war period provides the basis for a considerable upswing in economic activity, an upswing which nearly everywhere in Europe during the 1920s was encouraged and supported by the importation of capital from the United States. For a time the production of means of production is severed from its dependence on the market for consumption goods, but only for a time. Once the productive mechanism has been substantially rebuilt the discovery is made that the demand for consumption goods, depressed as it is by the impoverishment of the middle classes and by technological unemployment among the workers, is inadequate to support high levels of economic activity. A crisis followed by a sharp decline of production and employment becomes unavoidable.

From the standpoint of capitalist production such a crisis could be mitigated or overcome by the normal imperialist method of expansion abroad. But it is precisely the countries which were most severely weakened by the preceding war which have the least opportunities to follow this course. Their colonies were taken from them, and their military strength is so depleted that they cannot pursue an aggressive foreign policy. Moreover the political influence of the working class under the people’s republic is definitely opposed to embarking upon new imperialist adventures. Hilferding, writing in 1931 and with recent German experience in mind, was so impressed by this state of affairs that he regarded imperialist expansionism as almost a thing of the past. ‘It is the stronger control over foreign policy in the democratic countries,’ he wrote, ‘which limits to an extraordinary degree finance capital’s disposal over the state power.’¹ This was true enough at the time it was written, but unfortunately Hilferding was no longer able, as he once had been, to draw conclusions from his own analysis.

The argument of this section may be briefly summed up as follows: a nation, the economic and social structure of which is seriously disrupted as the result of an imperialist war of redivision, may, failing a successful socialist revolution, enter upon a period of class equilibrium on the basis of capitalist relations of production. Under such conditions, the intensification of the contradictions of capitalism leads to a severe internal crisis which cannot be ‘solved’ by resort to the normal methods of imperialist expansion. This is, so to speak, the soil in which fascism takes root and grows.

2. Fascism’s Rise to Power

Both the origins and the mass base of fascism are to be found in the middle classes, which form such a large section of the population of capitalist countries in the period of monopoly capitalism. Lenin pointed out very clearly the characteristics of middle-class psychology which, under appropriate circumstances, foster and encourage the growth of a fascist movement:

For Marxists it is well established theoretically—and the experience of all European revolutions and revolutionary movements has fully confirmed it—that the small proprietor (a social type that is very widely represented in many European countries), who, under capitalism, suffers constant oppression and very often an incredibly sharp and rapid worsening of conditions of life and even ruin, easily becomes extremely revolutionary, but is incapable of displaying perseverance, ability to organize, discipline and firmness. The petty bourgeois, ‘furious’ over the horrors of capitalism, is a social phenomenon which like anarchism, is characteristic of all capitalist countries. The instability of such revolutionism, its barrenness, its ability to become swiftly transformed into submission, apathy, phantasy, and even into a ‘mad’ infatuation with one or another bourgeois ‘fad’—all this is a matter of common knowledge.²

What Lenin here says of the small proprietor applies in varying degrees to wide sectors of the middle classes. It is precisely these groups which are most disastrously affected during the period of class-equilibrium capitalism which may follow an unsuccessful war of redivision. They constitute the core of fascism’s popular support. Once the movement has begun to make headway, other elements of the population are attracted to it, though not always for the same reasons; these include certain groups of unorganized workers, independent farmers, part of the army of unemployed, declassed and criminal elements (the so-called lumpenproletariat), and youths from all classes who see ahead but meager opportunities for a normal career.

The ideology and program of fascism reflect the social position of the middle classes and in this respect are merely an intensification of attitudes which have already been shown to be characteristic of imperialism.^† The chief ingredients have a negative character, namely, hostility to organized labor on the one hand and to monopoly capital on the other hand. On the positive side the middle classes compensate for their lack of common class interests and solid organizational bases by glorification of the nation and the ‘race’ to which they belong. Foreigners and racial minorities are blamed for misfortunes the nature of which is not understood.^‡ So far as internal economic and social problems are concerned the program of fascism is a mass of ill-digested and often mutually contradictory proposals which are notable chiefly for their unmistakably demagogic character. Hardly any of these proposals is novel or original; almost without exception they have appeared and reappeared in earlier periods of social distress. What gives to fascism coherence and vitality is its stress on nationalism, its demand for the restoration of a strong state power, and its call for a war of revenge and foreign conquest. It is this which provides a firm foundation for rapprochement between fascism and the capitalist class.

The attitude of capitalists towards fascism is at first one of reserve and suspicion; they particularly distrust it for its intemperate attacks on financial capital. But as the movement spreads and gains in popular support, the attitude of capitalists undergoes a gradual transformation. Their own position is a difficult one, caught as they are between the demands of the organized working class and the ‘encirclement’ of rival capitalist powers. Ordinarily under such circumstances the capitalist class would make use of the state power to curb the workers and to improve its own international position, but now this course is not open to it. The state is weak and the workers share in its control. Consequently fascism, once it has proved its right to be taken seriously, comes to be looked upon as a potentially valuable ally against the capitalists’ two worst enemies, the workers of their own country and the capitalists of foreign countries; for the genuineness of fascism’s hatred of workers and foreigners is never open to doubt. By means of an alliance with fascism the capitalist class hopes to re-establish the strong state, subordinate the working class, and extend its vital ‘living space’ at the expense of rival imperialist powers. This is the reason for the financial subsidies by which capitalists support the fascist movement and, perhaps even more important, for the tolerance which the capitalist-dominated state personnel displays in dealing with the violent and illegal methods of fascism.

It must not be supposed, that the capitalists are altogether happy about the rise of fascism. Unquestionably they would prefer to solve their problems in their own way if that were possible. But their impotence forces them to strengthen fascism, and when at length conditions become generally intolerable and a new revolutionary situation looms on the horizon, the capitalists, from their positions inside the citadel of state power, throw open the gates and admit the fascist legions.

3. The Fascist ‘Revolution’

Once in power, fascism sets out with ruthless energy to destroy the class equilibrium which underlies the indecision and paralysis of the people’s republic. Trade unions and working-class political parties receive the first and hardest blows; their organizations are smashed and their leaders killed, imprisoned, or driven into exile. Next comes the establishment of the strong state and finally, with these necessary preliminaries attended to, the swinging into full-scale preparations for a new war of redivision. In these three steps are comprehended what is often called the fascist ‘revolution.’

The building up of state power is itself a complex process which inevitably involves the sloughing off of the middle-class radical program on the basis of which fascism rose to power. Whether or not this is a deliberate choice on the part of the fascist leaders is a question which need not even be raised. The fascist program is self-contradictory and takes no account of the real character of economic laws; it would be bitterly opposed by all the powerful elements of the capitalist class. To attempt to put it into practice would be to court disaster and perhaps to make forever impossible the realization of the dreams of foreign conquest which constitute the ideological core of fascism. Not only can fascism not afford to incur the hostility of capitalists; it requires their full co-operation, since they occupy the strategic positions in the economy and possess the necessary training and experience to make it run. The capitalists, on their side, welcome the smashing of the organized power of the working class and look forward with enthusiasm to the resumption of a policy of foreign expansionism. Rebuilding the state power therefore takes place on the basis of an ever-closer alliance between fascism and capital, particularly monopoly capital in the all-important heavy industries.

Politically, the establishment of the strong state involves scrapping the paraphernalia of political parties appropriate to parliamentary democracy. But this is not all. Extremist elements within the fascist party itself are bitterly resentful at what they can only regard as a betrayal of the fascist program of social reform, and they insistently press for a ‘second revolution.’ The developing crisis within the ranks of fascism is met by a purge of the dissident leaders and the integration of the private fascist armies into the regular armed forces of the state. From this time on the fascist party loses its independent significance and becomes in effect a mere adjunct of the state apparatus. By these acts fascism finally and irrevocably transfers its social base from the middle classes to monopoly capital. There now takes place an interpenetration of the top fascist leadership and the dominant circles of monopoly capital which results in the creation of a new ruling oligarchy disposing in a coordinated fashion over economic and political power. The full energies of the nation are henceforth directed to rearming; all other considerations of economic and social policy are subordinated to the overriding aim of waging and winning a new imperialist war of redivision.

The accomplishments of the fascist ‘revolution’ are thus the smashing of the pre-existing class equilibrium, the establishment of the strong state, and the preparation of the nation for a new war of redivision. Far from overthrowing capitalist imperialism, fascism in reality lays bare its monopolistic, violent, and expansionary essence.

4. The Ruling Class Under Fascism

There have been so many theories of fascism which interpret it as a novel social order, fundamentally neither capitalist nor socialist in character, that it may not be out of place to formulate somewhat more explicitly our own attitude towards this problem.§ The theories in question usually concede that fascism has retained the forms of capitalism but hold that these forms merely constitute a screen under cover of which a new ruling class takes over the real controls and manipulates them for its own ends. What these ends are is commonly left somewhat vague, but it is perhaps not inaccurate to say that most writers conceive of them in terms of power. In pursuit of power the fascist ruling class, it is alleged, disregards the ‘rules of the capitalist game’; consequently fascism is a new society which neither obeys the laws nor suffers from the contradictions of capitalism. A full exploration of this thesis would, of course, require an analysis of concrete fascist societies such as cannot be attempted here.^¶ But it may be a useful exercise to test the concept of the new fascist ‘ruling class’ in the light of the theory of capitalism set forth in this book.

Class affiliation is not a question of social origins. One who is born into the working class can become a capitalist and vice versa. Common social origins are important to the thinking and cohesiveness of a class, but they do not determine its composition. This is a matter of the position which individuals actually occupy in society, that is to say their relations to others and to society as a whole. For Marxism this means, primarily, position in the structure of economic relations which dominate the totality of social relations. It is by this path that we arrive at the definition of the ruling class as comprising those persons who individually or in combination exercise control over the means of production.

This is a general definition which is unobjectionable as far as it goes, but it is important to realize that it does not go very far and that its uncritical application can be misleading. While it is correct that the ruling class is made up of those who control the means of production, the converse is not necessarily true. Control over the means of production is by no means synonymous with exploitation of one part of society by another. If the relation of exploitation does not exist, the concept of a ruling class is inapplicable; the society is said to be classless. The most unambiguous example of a classless society is provided by what Marx called ‘simple commodity production’ in which each producer owns and works with his own means of production. Moreover, because of its nature as a general definition applying equally to all class societies, the definition in question furnishes no clue to the differences between them and hence no criteria for telling one ruling class from another. To put the problem crudely, suppose that a new set of individuals acquires control over the means of production. Is it a new ruling class or just a new personnel for the old ruling class? The general definition is of no assistance in answering this question.

This example should serve to warn us of the impossibility of treating the problem of the ruling class as an abstract problem of society in general. We must be historically specific if we are to make the concept a useful instrument of social analysis. This means that in the case of every particular ruling class we must carefully specify the character of the social relations in which it occupies the dominant position, and the form of control which it exercises over the means of production. It is these factors, and these factors alone, which determine the motives and objectives of the ruling class. In this way we can distinguish between ruling classes; we shall, in short, have a method of separating genuine social revolutions (shifts in class rule) from mere substitutions, more or less thorough as the case may be, of new faces for old.

Let us now apply these considerations to the case of capitalism. Here we have two basic classes, apart from intermediate groups and remnants of earlier social forms, namely, the capitalists who own the means of production and the class of free wage laborers who own nothing but their own capacity to work. The importance of the form of control exercised over the means of production cannot be overemphasized. This form is the ownership of capital, from which, of course, capitalism derives its designation; exploitation correspondingly takes the form of the production of surplus value. ‘Capital’ is not simply another name for means of production; it is means of production reduced to a qualitatively homogeneous and quantitatively measurable fund of value. The concern of the capitalist is not with means of production as such, but with capital, and this necessarily means capital regarded as a quantity, for capital has only one dimension, the dimension of magnitude.

We have already seen in earlier chapters that the concern of the capitalist with the quantity of capital has the consequence that the expansion of capital becomes his primary and dominant objective. His social status is decided, and can only be decided, by the quantity of capital under his control; moreover even if the capitalist as an individual were content to ‘maintain his capital intact,’ without increase, he could rationally pursue this end only by striving to expand. Capital ‘naturally’ tends to contract —the forces of competition and technological change work wholly in this direction—and this tendency can be defeated only by a continuous effort to expand. Fundamentally surplus value is an increment to capital; the fact that the capitalist consumes a part of his income is a secondary phenomenon.

The objective of expanding capital is thus not one which capitalists are free to take or leave as they choose; they must pursue it on pain of elimination from the ruling class. This holds equally for actual owners of capital and for those who, though not themselves substantial owners, come into the ‘management’ of capital, as not infrequently happens in the modern large corporation. Neither is in any sense a free agent. The ruling class under capitalism is made up of the functionaries of capital, those whose motives and objectives are prescribed for them by the specific historical form of their control over the means of production. It was this which caused Marx to remark, in the Preface to the first edition of Capital: ‘My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them.’

This analysis helps us to solve the problem of the ruling class under fascism. As we have seen, the forms of capitalism are preserved: the means of production retain the form of capital; exploitation continues to take the form of production of surplus value. Consequently the ruling class is still the capitalist class. Its personnel, however, is somewhat altered. For example, Jewish capitalists may be expropriated, and many fascist leaders use their political power to acquire important positions in industry. But these new members of the ruling class do not bring with them a new set of motives and objectives which are at variance with the outlook of the incumbent capitalists. On the contrary, they soon adopt as their own the motives and objectives which inevitably flow from the position in society which they come to occupy. They are now responsible to capital; like every one else in this position they must strive to preserve and expand it. As in the case of all parvenus, however, they bring to their task greater energy and fewer scruples than those who, by training and tradition, are accustomed to fulfilling the obligations imposed upon the functionary of capital.

The infusion of new blood into the ranks of the capitalist class is thus one very significant consequence of the victory of fascism. Another, no less important, is the increasing absorption of the organs of monopoly capital into the state apparatus. Chambers of commerce, employers’ associations, cartels, and other similar bodies are made compulsory and are directly clothed with the authority of the state; their activities in turn are coordinated through a hierarchical series of boards and committees, leading up to governmental ministries at the top. At each stage officials and experts are drawn primarily from the experienced personnel of industry and finance, with the addition, however, of many who have risen to prominence through their political activity in the fascist movement. Tendencies inherent in capitalism in its imperialist phase here reach their climax. The expanding economic functions of the state and the centralization of capital meet in what might be described as a formal marriage between the state and monopoly capital. The separate channels through which the ruling class exercises economic and political power in a parliamentary democracy are merged into one under fascism.

It is important not to misunderstand the nature and significance of this process. In particular it must be stressed that what takes place is not the organic unification of all capital into one gigantic trust—what Hilferding called the ‘general cartel’³—with the government, so to speak, as the board of directors. Capital remains divided into organizationally distinct units which for the most part have the corporate form. Those who dominate the largest corporations constitute the ruling oligarchy, while those attached to smaller units of capital occupy an inferior position in the economic and social hierarchy. Moreover within the ruling oligarchy itself the position of the individual is roughly proportional to the magnitude of the capital which he represents, just as, for example, in feudal society the lords holding the greatest domains outrank their lesser rivals. For this reason the urge to self-expansion remains as strong as ever in the separate segments of capital. There are four methods of expansion open to the larger units of monopoly capital: internal accumulation, absorption of smaller capitals, expansion abroad, and expansion at the expense of each other. The last of these, if practiced to extremes, can seriously weaken monopoly capital as a whole and hence must be kept under fairly strict control by the ruling oligarchy; but no such objection applies to the first three. Consequently the great corporations and combines reinvest their profits, vie with one another in gobbling up small capitals and use the state in a variety of ways to extend their ‘living space’ at the expense of foreign nations. Each hopes by skilful exploitation of its opportunities to enhance its relative importance and power without, however, becoming involved in a costly and possibly even suicidal struggle with its rivals. The imperative need for a unified policy against the masses at home and against the outside world does not, therefore, prevent monopoly capitalists from carrying on a continuous, though largely unobserved, campaign for expansion and preferment within the framework of the fascist economy.

At one time I thought fascism could be aptly described as ‘state capitalism,’ which I defined as ‘a society which is entirely capitalist in its class structure but in which there is a high degree of political centralization of economic power.’⁴ The definition itself, while perhaps lacking in exactness, is not an incorrect characterization of fascism, but a consideration of the way in which other writers, and particularly Marxists, have used the term ‘state capitalism’ has led me to the conclusion that its application to the case of fascism is more likely to be confusing than helpful. Bukharin’s description of state capitalism may be taken as more or less typical of the way in which the concept has often been understood. Starting from a society ‘in which the capitalist class is unified in a single trust and we have to do with an organized but at the same time from a class standpoint antagonistic economic system,’ Bukharin proceeds as follows:

Is accumulation possible here? Naturally. Constant capital grows since the consumption of capitalists grows. New branches of production corresponding to new needs are always arising. The consumption of workers grows, though definite limits are placed upon it. In spite of this ‘underconsumption’ of the masses no crisis arises since the demand of the various branches of production for each other’s products as well as the demand for consumption goods…is laid down in advance. (Instead of ‘anarchy’ of production—what is from the standpoint of capital a rational plan.) If a mistake is made in production goods, the surplus is added to inventory and a corresponding correction made in the next production period. If a mistake is made in workers’ consumption goods the surplus can be divided among the workers or destroyed. Also in the case of a mistake in the production of luxury goods ‘the way out’ is clear. Thus there can be no kind of crisis of general overproduction. In general, production proceeds smoothly. Capitalists’ consumption provides the motive for production and for the production plan. Consequently there is in this case not a specially rapid development of production.⁵

Now whatever the merits of this model for the particular restricted theoretical purposes which Bukharin had in mind, it is clear that it does not fit the case of fascism, nor for that matter does it throw light upon any actual tendencies of capitalist production. Fascism is not a society ‘in which the capitalist class is unified in a single trust,’ and it is emphatically not true that ‘capitalists’ consumption provides the motive for production and for the production plan.’ On the contrary, capital, and hence also the capitalist class, remains divided into organizationally distinct units; and accumulation remains the dominant motive of production under fascism as under all other forms of capitalist society. In the next section we shall attempt to bring out the implications of these closely related facts.

5. Can Fascism Eliminate the Contradictions of Capitalism?

The contradictions of capitalism arise, as Marx expressed it, ‘from the fact that capital and its self-expansion appear as the starting and closing point, as the motive and aim of production; that production is merely production for capital, and not vice versa, the means of production mere means for an eer expanding system of the life process for the benefit of the society of producers.’⁶ This characterization, as we have seen, holds good for fascism, but there is this difference, that under fascism control over the economic system is centralized, conflicts between the different branches of capital are largely suppressed in the interests of capital as a whole, and heavy risks are pooled through the instrumentality of the state. We have here what Nazi economists have appropriately called a ‘steered economy’ (gesteuerte Wirtschaft) in which the individual capitalist must subordinate himself to a unified national policy. The question naturally arises, whether complete centralization of economic control in itself provides a basis for the elimination of the contradictions of capitalism.

Those who reply to this question in the affirmative commonly argue that the correctness of their answer has already been demonstrated in practice. The chief contradiction of capitalism, according to this view, consists in economic stagnation, relatively low levels of production, and mass unemployment. It was capitalism’s inability to overcome this condition which set the stage for fascism’s rise to power. But once in power, fascism quickly demonstrated its ability to eliminate unemployment and step up production to maximum levels. Consequently it must be concluded that fascism has succeeded in freeing itself from the basic contradiction of capitalism. While this argument may have a certain surface plausibility, a closer examination clearly reveals its fallacious character. Actually the contradiction of capitalism consists in an inability to utilize the means of production ‘for an ever expanding system of the life process for the benefit of the society or producers.’ Under certain circumstances this manifests itself in stagnation and unemployment, that is to say, in the non-utilization of a part of the means of production. Under other circumstances, however, it manifests itself in the utilization of the means of production for the purposes of foreign expansion. Stagnation and unemployment on the one hand and militarism and war on the other are therefore alternative, and to a large extent mutually exclusive, forms of expression of the contradiction of capitalism. When this fact is understood the achievement of fascism appears in its true perspective. Fascism has given no evidence of ability to overcome stagnation and unemployment through the use of material and human resources for the expansion of use values for the mass of the people. On the contrary, it has from the beginning devoted all the resources at its disposal to the preparation and waging of an imperialist war of redivision. Under fascism enforced idleness gives way to violence and bloodshed. This is not an overcoming of the contradictions of capitalism; rather it is a revelation of how deep-seated they really are.

Let us suppose, for purposes of carrying the analysis a step further, that a fascist nation emerges from war with its social structure intact and with its territory and colonies vastly expanded. What then would be its probable subsequent development? Would it be able to create a planned and stable economic order capable alike of avoiding internal depression and of eschewing further external aggression? If it were legitimate to assume that the objective of production would, under such circumstances, be shifted from the accumulation of capital to the expansion of use values, then we should certainly have to answer this question in the affirmative, for it is impossible to question the abstract possibility of a planned economy free of the contradictions of capitalism. We are, however, not dealing with an abstract possibility but with a concrete form of society which can be understood only in terms of its own history and structure. From this standpoint there is not the slightest ground for anticipating that fascism either could or would abandon accumulation of capital as the primary objective of economic activity. On the contrary, there is every reason to assume that monopoly capital, with the full assistance and protection of the state, would set out at once to exploit for its own self-expansion any new territories or colonies which might be gained as the result of war.

Nevertheless, it is more than probable that fascism would retain a highly centralized, state-directed economy. We can therefore take it for granted that stagnation and mass unemployment would under no circumstances be allowed to appear. But this does not imply the elimination of the contradictions of capitalism any more than the suppression of a symptom implies the cure of a disease. If, and this seems a likely case, the consumption of the masses were held under strict control and accumulation were allowed to proceed at an accelerating tempo, there would intervene a period of boom conditions which might last for a considerable period of time. Eventually, however, the tendency to underconsumption would begin to make itself felt in the appearance of excess capacity not only in the consumption-goods but also in the production-goods industries. Fascism would now have to face again the very same problem which confronted it when it first achieved state power. Should means of production be diverted to raising the living standards of the masses, or should they be mobilized once more for a new war of conquest? Knowing what we do of fascism, and remembering that we have assumed that one adventure in foreign aggression turned out to be a success, it is not difficult to imagine what the decision would be.

This is not the only possible course of development. Alternatively, the fascist state might find it advisable to allow living standards to rise in the metropolis and correspondingly to check the rate of accumulation to a certain extent. Such a policy would undoubtedly be feasible for a time, but if it were persisted in, it would certainly entail a falling rate of profit. Since we have ruled out crisis and depression as a corrective of a decline inprofitability, we must assume that the ruling oligarchy would find it necessary to initiate deliberate measures to reverse the trend. This could be done by reducing wages, a device which never fails to appeal to capitalists but which has the unfortunate effect of bringing to life the tendency to underconsumption. The cure is no improvement over the disease. But it is more likely that the problem would present itself in the form of a lack of national ‘living space’ and hence would directly result in a renewed drive for foreign conquest.

Even under the most favorable conditions, therefore, there is no reason to suppose that fascism would succeed in escaping from the economic contradictions of capitalism. But to assume these ‘most favorable conditions’ is really an unwarranted concession to those who believe in the stability of fascism. This explains why the foregoing analysis has been carefully couched in the conditional mode. The analysis, it will be recalled, started from the assumption that fascism emerged from a war of redivision intact and with greatly expanded territory. As it happens, the fascist nations are even now engaged in a gigantic war which was precipitated by their own drive to expansion and foreign conquest. Not only is there no assurance that they will be victorious; there is even no assurance that they will survive in their present form. In other words, fascism has already demonstrated in the clearest possible way its fundamentally selfdestructive character. Under these conditions, to speculate on what will happen to fascism after the present world crisis is past can easily turn into what Lenin once described, in a similar connection, as ‘a slurring-over and a blunting of the most profound contradictions of the newest stage of capitalism, instead of an exposure of their true depth.’⁷

6. Is Fascism Inevitable?

Every capitalist nation, in the period of imperialism, carries within it the seeds of fascism. The question naturally arises whether it is inevitable that these seeds should take root and grow to maturity. Marx, in writing Capital, drew most of his material from English experience, but he was careful to warn his native country that it could not expect to escape a similar fate—‘de te fabula narratur.’ In writing of fascism today must we issue such a warning to the peoples of the non-fascist capitalist nations?

If our analysis is correct it would seem to follow that fascism is not an inevitable stage of capitalist development. Fascism arises only out of a situation in which the structure of capitalism has been severely injured and yet not overthrown. The approximate class equilibrium which ensues at once intensifies the underlying difficulties of capitalist production and emasculates the state power. Under these conditions the fascist movement grows to formidable proportions, and when a new economic crisis breaks out, as it is bound to do, the capitalist class embraces fascism as the only way out of its otherwise insoluble problems. So far as history allows us to judge—and in questions of this sort there is no other guide—a prolonged and ‘unsuccessful’ war is the only social phenomenon sufficiently catastrophic in its effects to set in train this particular chain of events. It is, to be sure, not inconceivable that an economic crisis could be so profound and long-drawn-out as to have substantially the same results. But this seems unlikely unless the structure of capitalist rule has already been seriously undermined; for a capitalist state which retains relative freedom of action and disposes over strong armed forces is quite capable of initiating measures, internal or external or both, which will effectively check an economic depression before it reaches dangerous proportions.

To maintain the inevitability of fascism it would appear to be necessary to demonstrate two things: (1) that every capitalist nation must at some time have its social structure severely damaged by war, and yet (2) that capitalist relations of production must survive even though in a greatly weakened form. Clearly neither of these contentions will stand examination. We need only cite the Soviet Union and the United States to prove the point. Russia was prostrated as the result of the last war, but capitalist relations of production did not survive the debacle; a new socialist society arose on the ruins of capitalism. The United States, on the other hand, emerged from the last war stronger than ever, and so far as one can now judge, there is no necessity to suppose that the internal structure of capitalism will be irre¬parably damaged as a result of the present war. To be sure, if we had to anticipate an endless succession of wars in the future, matters would some day almost certainly turn out differently. But whether there will be a series of further wars in the future is a question not of a single nation but rather of the character of world economy as a whole. In this respect there are tendencies at work today which may completely change the character of international relations and therewith the course of development of each individual nation. In the final chapter we shall attempt to sketch some of the most important considerations which must be taken into account in forming an opinion about the probable future of world capitalism.

* Die Osterreichische Revolution (1923), especially Ch. 16 (‘Die Volks- republik’). Bauer was under no illusions as to the stability or permanence of the people’s republic.

† See above, pp. 316 f.

‡ This is not to deny that middle-class support for discrimination against minorities also rests on grounds of immediate economic advantage.

§ Much of the following analysis is taken from the author’s article, “The Illusion of the ‘Managerial Revolution,’” Science and Society, Winter 1942.

¶ For an admirable study of German fascism, see Franz Neumann, Behemoth, 1942. Neumann’s conclusions are substantially identical with those reached in the present work.