February 13, 2008


Who Is “Fascist”?: The abuse and proper use of a politcal label (Thomas Sowell, 2/13/08, National Review)

Because the word “fascist” is often thrown around loosely these days, as a general term of abuse, it is good that Liberal Fascism begins by discussing the real Fascism, introduced into Italy after the First World War by Benito Mussolini.

The Fascists were completely against individualism in general and especially against individualism in a free-market economy. Their agenda included minimum-wage laws, government restrictions on profit-making, progressive taxation of capital, and “rigidly secular” schools.

Unlike the Communists, the Fascists did not seek government ownership of the means of production. They just wanted the government to call the shots as to how businesses would be run.

They were for “industrial policy,” long before liberals coined that phrase in the United States.

Indeed, the whole Fascist economic agenda bears a remarkable resemblance to what liberals would later advocate.

Actually, that economic agenda is the mainstream politics of both American parties. It is the Third Way reforms of Newt Gingrich, Bill Clinton and George W. Bush that are specifically borrowed from a fascist model, Pinochet's legacy still flourishes (Tom Burgis, 17 January 2005, New Statesman)
The military government's apologists always said the omelette of an "economic miracle" is not made without breaking a few eggs. If we are to believe [the Council on Hemispheric Affairs in Washington] they may have been right. Chile's 6 per cent growth rate and booming exports, she says, are founded on "the continued implementation of the policies of the military regime".

"The basic ideas of the system today," says Victor Hugo de la Fuente, founder of the Chilean Social Forum, "are the same as those founded by Pinochet and the Chicago Boys [acolytes of Milton Friedman, father of neoliberalism]: disarming the social apparatus, privatising to the maximum, free-market competition."

Chile is the gold tooth in the IMF's grin. President Ricardo Lagos is nominally socialist, but devoted like no other leader in South America to the Third Way and the free market. Chile has signed six free-trade agreements, including one with the US; a score more are under discussion. Two-thirds of mining resources are owned by foreign corporations, as are swathes of salmon stocks. Workers' rights are minimal; the social security system stays privatised (George W Bush is modelling the new US private pension scheme on Chile's); copper and cellulose giants ignore what environmental regulations there are.

It's hardly fair for those of us who believe in privatizing Social Security to accuse others of fascism. Instead the Right ought to resist the unfortunate reflexive tendency to use fascist as a pejorative.

The Franco Era, 1939-75 (CountryStudies)

A further impetus to economic liberalization came from the September 1953 signing of a mutual defense agreement, the Pact of Madrid, between the United States and Spain. In return for permitting the establishment of United States military bases on Spanish soil, the Eisenhower administration provided substantial economic aid to the Franco regime. More than 1 billion dollars in economic assistance flowed into Spain during the remainder of the decade as a result of the agreement. Between 1953 and 1958, Spain's gross national product (GNP) rose by about 5 percent per annum.

The years from 1951 to 1956 were marked by substantial economic progress, but the reforms of the period were only spasmodically implemented, and they were poorly coordinated. One large obstacle to the reform process was the corrupt, inefficient, and bloated bureaucracy. A former correspondent of London's Financial Times, Robert Graham, described the Franco era as "the triumph of paleocapitalism--primitive market skills operating in a jungle of bureaucratic regulations, protectionism, and peddled influence." By the mid-1950s, the inflationary spiral had resumed its upward climb, and foreign currency reserves that had stood at US$58 million in 1958 plummeted to US$6 million by mid-1959. The standard of living remained one of the lowest in Western Europe, and the backwardness of agriculture and of the land-tenure system, despite lip service to agrarian reform, kept farm productivity low. The growing demands of the emerging middle class--and of the ever greater number of tourists--for the amenities of life, particularly for higher nutritional standards, placed heavy demands on imported foodstuffs and luxury items. At the same time, exports lagged, largely because of high domestic demand and institutional restraints on foreign trade. The peseta fell to an all-time low on the black market, and Spain's foreign currency obligations grew to almost US$60 million.

A debate took place within the regime over strategies for extricating the country from its economic impasse, and Franco finally opted in favor of a group of neoliberals. The group included bankers, industrial executives, some academic economists, and members of the semi-secret Roman Catholic lay organization, Opus Dei (Work of God).

During the 1957-59 period, known as the pre-stabilization years, economic planners contented themselves with piecemeal measures such as moderate anti-inflationary stopgaps and increases in Spain's links with the world economy. A combination of external developments and an increasingly aggravated domestic economic crisis, however, forced them to engage in more far- reaching changes.

As the need for a change in economic policy became manifest in the late 1950s, an overhaul of the Council of Ministers in February 1957 brought to the key ministries a group of younger men, most of whom possessed economics training and experience. This reorganization was quickly followed by the establishment of a committee on economic affairs and the Office of Economic Coordination and Planning under the prime minister.

Such administrative changes were important steps in eliminating the chronic rivalries that existed among economic ministries. Other reforms followed, the principal one being the adoption of a corporate tax system that required the confederation of each industrial sector to allocate an appropriate share of the entire industry's tax assessment to each member firm. Chronic tax evasion was consequently made more difficult, and tax collection receipts rose sharply. Together with curbs on government spending, in 1958 this reform created the first government surplus in many years.

More drastic remedies were required as Spain's isolation from the rest of Western Europe became exacerbated. Neighboring states were in the process of establishing the EC and the European Free Trade Association (EFTA). In the process of liberalizing trade among their members, these organizations found it difficult to establish economic relations with countries wedded to trade quotas and bilateral agreements, such as Spain.

Spanish membership in these groups was not politically possible, but Spain was invited to join a number of other international institutions. In January 1958, Spain became an associate member of the Organisation for European Economic Co- operation (OEEC), which became the Organisation for Economic Co- operation and Development (OECD) in September 1961, and which included among its members virtually every developed country in the noncommunist world. In 1959 Spain joined the International Monetary Fund (IMF) and the World Bank. These bodies immediately became involved in helping Spain to abandon the autarchical trade practices that had brought its reserves to such low levels and that were isolating its economy from the rest of Europe.

Spain traditionally paid close attention to events in France and was often influenced by them. In December 1958, the French government adopted a stabilization program in order to overcome a severe economic slump; this program included devaluation of the franc, tax increases, and the removal of restrictions on most of France's trade with OECD countries. The French action removed whatever doubts the Spanish authorities had harbored about embarking on a wholesale economic transformation. After seven months of preparation and drafting, aided by IMF and French economists, Spain unveiled its Stabilization Plan on June 30, 1959. The plan's objectives were twofold: to take the necessary fiscal and monetary measures required to restrict demand and to contain inflation, while, at the same time, liberalizing foreign trade and encouraging foreign investment.

The plan's initial effect was deflationary and recessionary, leading to a drop in real income and to a rise in unemployment during its first year. The resultant economic slump and reduced wages led approximately 500,000 Spanish workers to emigrate in search of better job opportunities in other West European countries. Nonetheless, its main goals were achieved. The plan enabled Spain to avert a possible suspension of payments abroad to foreign banks holding Spanish currency, and by the close of 1959 Spain's foreign exchange account showed a US$100-million surplus. Foreign capital investment grew sevenfold between 1958 and 1960, and the annual influx of tourists began to rise rapidly.

As these developments steadily converted Spain's economic structure into one more closely resembling a free-market economy, the country entered the greatest cycle of industrialization and prosperity it had ever known.

Posted by Orrin Judd at February 13, 2008 2:28 PM
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