The New Deal as economic fascism
First taking office in March of 1933, FDR rapidly introduced his New Deal agenda and had Congress pass legislation that, in effect, imposed a fascist-style economic system over the country that was partly inspired by Mussolini’s corporativist state in Italy. The National Recovery Act (NRA) imposed a regimentation over virtually all of American industry in government-mandated cartels that set prices, wages, work conditions, and output levels in manufacturing and retail businesses. At the same time, farming was harnessed to government control through the Agricultural Adjustment Act (AAA), which dictated the crop sizes that might be grown, the livestock herds that could be raised, and prices at which the outputs might be sold throughout the economy. This was accompanied by the Works Progress Administration (WPA), a massive government employment program on infrastructure and other projects determined by the bureaucrats in Washington, D.C., plus an alphabet soup (as it was called) of other government activities, programs, and projects that enveloped almost everything and everyone in the nation.
A permanent centralized planned economy was averted only because of a series of Supreme Court decisions in 1935 and 1936 that declared all of the main elements of the New Deal unconstitutional. Nonetheless, Roosevelt’s administration dramatically changed the institutional and economic landscape of the country through levels of sustained government spending and borrowing never previously experienced in the country’s history. In addition, in 1935, FDR had Congress pass the Social Security Act, which put Uncle Sam in the old-age retirement business for the entire citizenry. Congress also passed a national minimum-wage law, putting the government’s nose in the business of employers and employees who otherwise agreed themselves on what a worker was worth based on supply and demand. Federal legislation also put the power of government behind compulsory unionism and the attempt to impose wage levels on employers.
FDR’s call for total labor mobilization for total war
This all intensified with America’s entry into the Second World War following the Japanese attack on Pearl Harbor on December 7, 1941. Soon, in the name of the wartime emergency, the entire American economy was enveloped in a spider’s web of government production planning and distribution commands, along with wage and price controls over all transactions in the marketplace. Accompanying this was a comprehensive rationing of all goods and services, with Washington bureaucrats determining what the ration quotas for food, clothing, gasoline, and all the other everyday necessities of life would be for every household in the United States.
Not too surprisingly, the country was soon experiencing black markets and ration-coupon corruption in all corners of the society. Movie theaters would run government propaganda “shorts” before the showing of the main film telling people to do their patriotic duty and not buy black-market auto tires or women’s silk stockings, or not to bribe the local butcher to get more than the official family meat quota, or not to purchase extra gallons of gasoline for their cars from the back of a truck in a dark alley. The FBI and local police departments had their hands full trying to stop people from the innocent attempt to buy and sell on mutually agreed terms what the government had forbidden or restricted.
Now, in his 1944 Annual Message to Congress, FDR devoted the first part of the address to insisting upon even more command and control over the entire civilian population in the name of total war. The “selfish” interests of individual Americans were getting in the way of the collective war effort, he said. This included a failure by each citizen to do their part in working for victory in the war. The president wanted, “nothing less than total mobilization of all our resources of manpower and capital.” Just as millions had been conscripted into military service, he said, “there can be no discrimination between men and women who are assigned by the Government to its defense at the battlefront and the men and women assigned to producing the vital materials essential to successful military operations.”
FDR and Joseph Goebbels on total war for victory
Thus, FDR called for the “prompt enactment of a National Service Law” under the claim that, “National service is the most democratic way to wage a war. Like selective service [the military draft] for the armed services, it rests on the obligation of each citizen to serve the Nation to his utmost where he is best qualified.” Then, in true Orwellian “newspeak,” Roosevelt asserted that “the very existence of national service makes unnecessary the widespread use of compulsory power.” In other words, once the Congress passed a law that threatened coercion if a person did not show up where and when the government said, to do the work the government commanded him to perform, people would just show up and do as they are told without actually having to send U.S. marshalls or the FBI to round them up to do what the government dictated.
In further Orwellian fashion, Roosevelt said that there were “millions of American men and women who are not in this war at all. It is not because they do not want to be in it. But they want to know where they can best do their share. National service provides that direction. It will be a means by which every man and woman can find the inner satisfaction which comes from making the fullest contribution to victory.”
In other words, walking around in mindless circles, these poor millions of Americans who wanted to serve their country, just could not figure out on their own that going down to a local military recruitment office or applying to work in a military manufacturing facility might just be a way for them to help win the war. No, they needed government to take them by the hand while Uncle Sam’s other hand was holding a gun, just in the event they resisted the government’s “help” in finding that place they really were looking for to do what the government insisted they should do. When the war was over, all these millions of Americans, FDR said, “will be glad to be able to say many years hence to their grandchildren…. The Government told me … that I was performing my most useful work in the service of the country.”
It is worth noting that about a year earlier, on February 18, 1943, Adolph Hitler’s minister of propaganda, Joseph Goebbels, delivered an address before a crowd of 14,000 Nazi Party members in the Berlin Sports Palace in which he called for total war and total labor service by all good Germans and rhetorically asked his listeners:
Are you and the German people determined, if the Fuhrer orders it, to work ten, twelve and, if necessary, fourteen
and sixteen hours a day and to give your utmost for victory? [Loud shouts of “Yes,” and lengthy applause]…. I ask you: Do you want total war?[Loud cries of “Yes!” Loud applause] Do you want it, if necessary, more total, and more radical than we can even imagine today? [Loud cries of “Yes!” Applause]”
FDR’s voice was, no doubt, more soothing, less rabble rousing, and not as hysterical as Goebbels’s style of emotional delivery. But the message was the same: The individual owed everything to the state in service for victory in the war. No sacrifice could be thought too great or too demanding. FDR could not tell if people listening over the radio to his fireside message to Congress were cheering and applauding as he called for total commanded labor in service to total war, but he added, “It is my conviction that the American people will welcome this win-the-war measure which is based on the eternally just principle of ‘fair for one, fair for all.’” Why would anyone not welcome a government law that commanded them to do whatever the government demanded they do, and which might result in arrest, imprisonment, or worse, if they refused to obey? Surely, there was nothing more fair or “democratic” than that!
FDR’s Economic Bill of Rights for a postwar America
The remainder of Roosevelt’s Annual Message to Congress was devoted to outlining his vision for a postwar America, one that would complete the establishment of an economic total state in which little involving the minute and everyday affairs of every American would not be overseen, determined, and dictated by the federal government. All for the betterment and good of the American people, of course.
FDR said the goal was a higher standard of living than ever known before in the United States. But it would be unacceptable if “some fraction of our people — whether it be one-third or one-fifth or one-tenth, is ill-fed, ill-clothed, ill-housed, and insecure.”
America’s journey for full and real freedom for all, FDR stated, was incomplete. Yes, the country’s Founding Fathers had established and secured certain political rights, such as freedom of speech and the press, freedom of religion, trial by jury, freedom from unreasonable searches and seizures. But that was then, and now was different. In modern industrial America, this was not enough. Merely having such political rights had “proved inadequate to assure us equality in the pursuit of happiness.”
The United States needed a second Bill of Rights — an Economic Bill of Rights. FDR then explained that among these rights were:
The right to a useful and remunerative job in the industries or shops or farms or mines of the Nation;
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
The right of every businessman, large or small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
The right to a good education.
All these rights spell security. And after this war is won, we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and wellbeing.
America’s own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for our citizens. For unless there is security here at home, there cannot be a lasting peace in the world.
FDR and the real fascists
Before closing his Annual Message to Congress, FDR ominously warned the American people listening in on the radio that there was “the grave dangers of a ‘rightist reaction’ in this Nation.” If there was any movement to return to a time before the New Deal days of the 1930s, that is, a “return to the so-called ‘normalcy’ of the 1920s,” then, “we shall have yielded to the spirit of Fascism here at home.”
Here was the president of the United States preempting any reason, rationale, or argument for returning to an America before he entered the White House in 1933 as a “rightist reaction” and a yielding to “the spirit of Fascism.” By using such loaded terms as “rightist” and “Fascism,” FDR was attempting to create an impression in every American’s mind that to want a government less expansive, less intrusive, less controlling than the federal system that the Roosevelt administration had constructed was to be an American Hitler or Mussolini, an advocate of tyranny, brutality, and aggression against others in society.
Ralph Robey (1899–1972) was a Newsweek magazine columnist who wrote the weekly “Business Tides” column from 1938 to 1946 (when it was taken over by Henry Hazlitt). In his October 30, 1944, article, just a week before the presidential election on November 7, 1944, Ralph Robey answered the question, “Who are the Real Fascists in America?”:
They are persons who believe and maintain that our entire economy should be controlled and directed by government. They don’t think it necessary for government as a general policy to nationalize our factories, but they insist that decisions as to what and how much our factories shall produce, and the prices they charge and the wages they pay, must be determined by government. Only in that way, they contend, is it possible for us to keep that balance through our economic system which is necessary, on the one side, to obtain the maximum benefit from our productive facilities and, on the other side, to assure that there will be jobs for all who want to work.
A Fascist, then, is one who believes in the planned economy, with the planning being done by government. He differs from a Communist in only one particular. That is that whereas the Communist believes that all productive facilities should be taken over by the state, the Fascist is willing for the ownership technically to remain with individuals and the state merely to direct what shall be done with the property. Actually, of course, the difference is largely without meaning. If government tells us what and how much we can make in our factory, and if government determines our prices and wages and ‘profits,’ then it is mere legal fiction to say that we ‘own’ the property….
Both [Communists and Fascists], in a word, are “statists” and look forward to the day when the state, rather than the individual, will decide what is best for all of us…. To find those who want more government control one has to look … to our self-styled “liberals” … in The Nation, and The New Republic, or the editorials in such papers as The New York Post…. That is where one finds the demand that the state in the postwar period assume an ever-larger responsibility for the running of our country. And that is where one finds the most ardent support … for President Roosevelt.” (p. 76)
If FDR’s call for total war with total economic control for victory against Germany was no less fascist-like than Joseph Goebbels’s call for the same total war for Nazi victory over America, Roosevelt’s call for a new Economic Bill of Rights was no less in the footsteps of the German example, except in this case it was Imperial Germany before the First World War. There was little in that domestic postwar agenda laid out by FDR in his January 1944 address that had not been implemented in the Germany of the late nineteenth and early twentieth centuries. And there had been people in his New Deal agencies who had long advocated it based on their clear admiration for the “progressive” German welfare state first initiated by the “Iron Chancellor,” Otto von Bismarck.
Imperial Germany’s “different freedom” of the welfare state
Frederic C. Howe (1867–1940) was a well-known member of the American Progressive Movement during the 1910s and 1920s. In the early years of FDR’s New Deal, Howe served as a “Consumers’ Counsel” in the Agricultural Adjustment Administration (AAA), which was responsible for the government setting of farm output and pricing policies. Almost 20 years earlier, Howe had published Socialized Germany (1915), a book devoted to explaining and endorsing the German welfare state as a model for the United States. Said Howe:
The [German] state has its finger on the pulse of the worker from the cradle to the grave. His education, his health, and his working efficiency are matters of constant concern. He is carefully protected from accident by laws and regulations governing factories. He is trained in his hand and his brain to be a good workman and is insured against accident, sickness, and old age. While idle through no fault of his own, work is frequently found for him. When homeless, a lodging is offered so that he will not easily pass into the vagrant class. When sick, he is cared for in wonderful convalescent homes, tuberculosis hospitals, and farm colonies. When old age removes him from the mill or factory, a pension awaits him, a slight mark of appreciation from society, which has taken in labor all that his life had to give and left him with nothing more than a bare subsistence wage. (p. 162)
Howe admitted that, under this system, with its pervasive controls and regulations, “The individual exists for the state, not the state for the individual.” But he went on to say that in this German welfare paradise, the people did not lose freedom; rather they had a different kind of freedom than in America. Explained Howe:
This paternalism does not necessarily mean less freedom to the individual than that which prevails in America or England. It is rather a different kind of freedom. The German enjoys a freedom far greater than that which prevails in America or England. This freedom is of an economic sort…. Social legislation directed against the exploitation of the worker and the consumer insures freedom in many other ways. It protects the defenseless classes from exploitation and abuse. It safeguards the weak. Universal education offers opportunities to even the poorest to advance whether it be in the service of the state or in the fields of individual effort. Germany protects industrial and social equality.” (pp. 83–85)
Furthermore, Howe explained, this “different” German “freedom” was guided not by outdated notions of limited government under constitutional rules and restraints. No, the guiding idea behind the German welfare state was political expediency:
In the mind of the Germans, the functions of the state are not susceptible to abstract, a priori deductions. Each proposal [for greater government control and command] must be decided by the time and the conditions. If it seems advisable for the state to own an industry it should proceed to own it; if it is wise to curb some class or interest, it should be curbed. Expediency and opportunism are the rules of statesmanship, not abstractions as to the philosophical nature of the state.” (pp. 82–83)
The welfare state means the loss of liberty
While declaring his anger and opposition to all that existed in the Germany against which the United States was at war, all of Franklin Roosevelt’s economic policies and ideological presumptions were based on the German model of the all-encompassing, all-controlling, and all-commanding interventionist-welfare state. There was nothing in Frederic Howe’s 1915 description of the Imperial German welfare state that was not a part of FDR’s Economic Bill of Rights.
The America that FDR wished to permanently turn against was an America based on the principles of individual rights and liberty, the sanctity of private property and freedom of enterprise and trade, and the importance of a constitutional order clearly limiting the powers and scope of government precisely to prevent political tyranny and economic despotism. The American founding was based on a set of political-philosophic principles precisely meant to prevent arbitrary government and to hinder the ability of those in political positions of power to act on the bases
of expediency and opportunism, which Frederic Howe had hailed as the progressive new and better system of government.
Once this path is followed, the end to personal and economic liberty almost becomes inevitable. This “different kind of freedom,” as Howe called it, is in fact the freedom of government and those in its positions of authority to control, command, and manipulate the lives of each and every person under its jurisdiction. To use Franklin Roosevelt’s list in his Economic Bill of Rights, if government is to guarantee everyone a useful and ruminative job, then government must determine and dictate where everyone is to work and at what pay.
If government is to assure everyone adequate food, clothing, and recreation, then government has to decide what is a necessary and desirable diet, what type of wardrobe is fitting and essential for all family members, what are the forms of recreation that people need and should have, along with the government declaring what is a “decent home” to live in and taking on the production responsibility of providing it, including its size and location and allocation to every citizen and resident of the country.
If every farmer and business enterprise is going to be assured an appropriate price for a “decent living,” then government must control and command the supply of all things produced and set the prices at which they are sold. If government is to provide “adequate medical care” for all, then government has to fully fund, plan, and decide what every American should have based on its definition of a healthy life.
If government is to “protect” people from the uncertainties of old age, sickness, accident, and unemployment, then the government has to reduce every member of the society to the status of a ward of the state, dependent upon those in political position who dictate what standard of living a person should have upon retirement and what forms of medical care and treatment anyone suffering from an illness or an accident should be considered to have a “right” to receive, along with taxing others to fund those who experience unemployment and spending even more tax dollars to ensure work for those unemployed at a job that the government decides is appropriate and productive.
Welfare-state privileges vs. individual liberty
FDR said that “All these rights spell security,” but it is the security of the prison inmate whose every activity, movement, and standard of life and care is in the hands of and dependent upon the government and those welding political power. Benito Mussolini was famous in defining the fascist ideal of the totalitarian state (a term he coined) as a political regime in which, “Everything in the State, nothing outside of the State, nothing against the State.” This, in fact, was the interventionist-welfare state ideal desired by Franklin Delano Roosevelt in the midst of the Second World War as the vision of a new America when the conflict had ended.
Eighty years after FDR outlined his Economic Bill of Rights, we can see very much of it around us. It is certainly not as comprehensive or as rigidly applied as a full implementation would have entailed. Yet, eight decades later, the government controls and provides much of what Roosevelt wanted America’s future to be like. And to this extent, Americans are not benefiting from the rhetorical sleight-of-hand of possessing some type of “different” freedom but rather a reduction and loss of liberty in ever more corners of everyday life. With the additional danger of national financial disaster, given the existing and seemingly uncontrollable fiscal costs of giving everything to everyone on the basis of a set of imaginary economic “rights.”
Not one of these “rights” can be provided to anyone without some other American reduced in his liberty to determine his own use of his honestly earned income or deciding how he wants to live, work, and enjoy his own life as he sees fit rather than having some political ideologue dictating these things for him. These supposed rights are redistributive privileges given to some at the expense of others, whose rights to their own life, liberty, and property logically have to be curtailed for the privileged ones to receive their welfare state and interventionist benefits.
Liberal principles vs. paternalistic expediency
What is also clear 80 years after Franklin Roosevelt’s call for this new Economic Bill of Rights is that only belief in and adherence to articulated political principles can stave off such a fascist-like welfare state. It can be reversed only by a renewed understanding of and desire for a free society of individual liberty and freedom of enterprise and exchange. Fredric Howe’s politics of expediency and opportunism is ultimately the road to political disaster and loss of liberty.
This was concisely explained by Austrian economist and Nobel Laureate Friedrich A. Hayek (1899-1992) in Law, Legislation, and Liberty, vol. 1 (1973):
When we decide each issue solely on what appear to be its individual merits, we always over-estimate the advantages of central direction…. If the choice between freedom and coercion is thus treated as a matter of expediency, freedom is bound to be sacrificed in almost every instance … To make the decision in each instance depend upon the foreseeable particular results must lead to the progressive destruction of freedom….
That freedom can be preserved only if it is treated as a supreme principle which must not be sacrificed for particular advantages was fully understood by the leading [classical] liberal thinkers of the nineteenth century, one of whom even described liberalism as “the system of principles” [Benjamin Constant]. Such is the chief burden of their warnings concerning, ‘What is seen and what is not seen in political economy’ [Frederic Bastiat] and about the “pragmatism that contrary to the intentions of its representatives inexorably leads to socialism” [Carl Menger]. (p. 57)
Finding the way to reverse the course we are on is the great and challenging task for all friends of freedom.
This article was originally published in the January 2024 edition of Future of Freedom.
