Does Capitalism Inevitably Lead to Fascism?

Yeah, yeah, what’s this to do with tech bullshit? Not a ton specifically, but we have the misfortune to live in interesting times. Don’t worry — I promise you someone in Silicon Valley will do something dumb soon.

Inevitably is a large word doing a large amount of work in that headline. Almost nothing, aside from death, is inevitable. But headlines are headlines, and the question probably deserves to be thought about given how many former democracies are drifting, or running the case of the US, into some form of fascist-like authoritarianism. Maybe it is just a coincidence that liberal democracies were at their strongest right before the Berlin Wall fell, but maybe not.

Capitalism is the economic theory that it is fine to allow someone to starve to death if they cannot find employment. Yes, economists will quibble (and by quibble, I mean call me an idiot) but from a practical standpoint, that is what it boils down to — if you cannot find work that pays enough to eat, then you deserve to starve to death. If you had talents, then the market would ensure that your talents were rewarded. Now, of course, the idea that a free market will treat everyone fairly is a moronic way to look at the world. Anyone who ignores power relationships when dealing with any system of human relationships should be kept as far away from actual power and influence as possible. Maybe give them a nice, short piece of string to play with — that seems about what they can handle.

Except in economics, a lot of people seem to believe that nonsense. Free market fundamentalists on the right think that as long as contracts are enforced, everything is fine. Neoliberalists on the left think that the power of the market will make government more efficient — a lessor but related claim. It is no wonder that many of the most powerful businesspeople act as if they believe it as well.

Capitalism will always produce externalities — costs that are generated by a business but borne by the society around the business. Pollution is the canonical example, but things like paying people too little to afford homes manifests in people living on the street in one form or another and paying people too little to afford to eat manifests in strains on government services and charities. The textbook way to deal with these externalities is to tax the people generating them to pay for the cost of dealing with said externalities.

Except capital hates paying taxes the way healthy people hate the plague.

Inevitably, then, the people with the money attempt to reshape the political environment. Soon or later, the power of the government — anti-trust laws, labor laws, a robust social safety net including things like education and food for people who cannot pay market prices — to interfere with the collection of capital, to make capital pay for the cost of the damage they do to society is weakened or removed. That in turn leads to society becoming harder to live in for most people. And that in turn leads to anger, resentment, and fear, all of which are fertile breeding ground for authoritarianism.

Because if the normal workings of government have been neutered, why would people believe that normal politics works? Why wouldn’t they believe that a strong man has all the answers, especially if he or she has a ready scapegoat that the majority already distrusts or is biased against? In theory, this could work for the left, but targeting the power of capital is difficult when capital is powering your election funds. So, money leads to power leads to inefficient or helpless government leads to despair leads to turning to strongmen solutions leads to the effective end of liberal democracy.

This is not necessarily a brief for communism. It is easy to fall back on the old trope that true communism has never been tried, etc.etc. But, mate, every single fully communistic nation has been an authoritarian nightmare (and a good example that the forms of democracy do not equal the content of democracy. Most communist nations had elections and constitutions that were, on paper, freer than most in the so-called free world. Fat lot of good it did their people in practice.) Nor is this necessarily a brief for social democracy. Most of the nations that are falling to the right-wing authoritarianism had strong social democratic components. And of course, this is the just the ramblings of some random idiot, per your local economist, on the internet. It is not a serious work of social science.

But I don’t think that anyone can disagree that, at a minimum, capitalism is no guarantee of freedom or liberal democracy. And I think everyone can agree that capitalism as it is practiced today tends toward unlimited power for the few, and that unlimited power is bad. We need to start treating capital as a dangerous force in our communities, not as benign or naturally beneficial one.

Capital is like fire — something to be handled very, very carefully. Contained in my furnace and fireplace it’s helpful. Love me some fire. Fire left to its own devices, though, burns down a third of Los Angelos. Fire bad. I am not entirely sure what the political form of a fireplace is. Probably making all companies above a certain sized worker-owned collectives with only limited outside investment allowed, intense anti-trust regulations paired with some form of work guarantee or UBI and fully funded election campaigns, where donations are seen as the bribes they really are. And yes, there are problems with every item on my list. I never claimed to have all the answers to everything.

But if we do not operate from the principal that capital is bad in its natural form, then we have no chance of keeping our liberal democracies in the long term.