People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 19

May 09, 2010

Sixty-Five Years After the Defeat of Fascism


                                          Prabhat Patnaik



ON May 2, 1945, German General Weidling, whom Hitler had entrusted with the defence of Berlin, surrendered unconditionally to   General Chuikov of the Red Army, bringing to an end the worst nightmare in human history. The Third Reich, which was supposed to last a thousand years, had collapsed amidst unprecedented ruin and loss of human life.

Today when we look back on that period, the question naturally arises: how did it happen? Fritz Stern, scholar of German history, attributes �Germany's descent from decency to Nazi barbarism� to "a historic process in which resentment against a disenchanted secular world found deliverance in the ecstatic escape of unreason" (quoted in Noam Chomsky�s �Remembering Fascism�). While Stern�s description is apposite, it misses something vital, namely that the cause of the �disenchantment� and the orchestrator of the �unreason� was the self-same entity, finance capital.

The �disenchantment� of the people with the economic fall-out of the hegemony of finance capital, whose ambitions had pushed Germany into war and broken its back with war reparations under the Treaty of Versailles, even before the onset of the Great Depression, had given rise to fascism as a mass movement. This mass movement, created around unreason but with an anti-capitalist rhetoric, which identified capitalists with Jews, and appealed both to the anti-semitism and the anti-big-capital sentiments of the petty bourgeoisie, was then manipulated by the very same finance capital into betraying itself. Fritz Thyssen, the �great magnate of the Ruhr� financed Hitler�s elections and, together with other German monopolists, made deals with the Nazi leadership, which, once it had come to power, liquidated its own cadre of lumpens and hoodlums that had constituted the backbone of its petty bourgeois mass movement.

In the �night of long knives�, Ernst Rohm, the leader of the SA that had carried Hitler to power, was executed and the entire SA leadership was purged, so that the �mass nature� of fascism could not stand in confrontation against its �class nature�. The German army accepted the symbol of the swastika, while Hitler took over the German army by eliminating its rival, his own SA. A Nazi State came into being that represented at the same time, in Dimitrov�s words, the �open terrorist dictatorship of the most reactionary and revanchist sections of finance capital�. A petty bourgeois mass movement with anti-capitalist rhetoric had transmogrified itself into an open terrorist dictatorship of finance capital.

This is not to say that the petty bourgeoisie deserted Hitler, but its support was now obtained not on the basis of any anti-capitalist programme of action but through appeals to its revanchist nationalism that the war fanned. And with unemployment of the Depression overcome through the military expenditure that swelled in preparation for the war, the Nazi mass base was retained for a while, and even expanded up to a point, despite the complete identification of the Nazi leadership with German monopoly capital. War which brought the entire resources of Europe under the control of German finance capital, also cemented the social support base for the open terrorist dictatorship of this finance capital, at least as long as Germany was winning.

The question naturally arises: was this an exceptional conjuncture which can now be safely relegated to the pages of history as something horrific, though sui generis, that had occurred long ago? History no doubt does not repeat itself with any predictable monotony, but it would be a mistake not to see certain chilling similarities between the 1930s and now.

True, we do not have today the intense inter-imperialist rivalry of the early twentieth century, which had produced the first world war, and, as its sequel, the unbearable burden of war reparations on Germany that John Maynard Keynes had castigated in his Economic Consequences of the Peace. But we do have a capitalist crisis that, notwithstanding all protestations to the contrary, is likely to be as deep and protracted as the one during the thirties, and associated with it an acute problem of unemployment that constitutes fertile ground for fascism.

Indeed according to one estimate, if the rate of unemployment were to be measured today using the same method as was used in the thirties, then it would turn out to be no lower than during the thirties; and since there are no prospects of its coming down in the foreseeable future, certain phenomena that the world had witnessed during the thirties could well make a distorted reappearance.

It would in fact be no exaggeration to say that world capitalism today is in an impasse. The neo-liberal regime imposed upon the world by the ascendancy of globalised finance capital has generated four basic tendencies which combine to produce this impasse.

The first consists in the fact that free movement of goods and services and of capital (though not of labour) has made it difficult to sustain the wage difference between the advanced and backward economies that had traditionally characterised capitalism. Since the same technology is available to all economies (and the free movement of capital ensures this), commodities produced with the cheaper labour that exists in the third world economies can outcompete those produced in the metropolis. Or, putting it differently, competition arising from the free movement of goods and services ensures that workers in the metropolis find their wages being dragged down towards the levels that prevail in the third world, levels which are no higher, thanks to the existence of substantial labour reserves, than those needed to satisfy some historically-determined subsistence requirements; they can no longer escape the baneful consequences of third world labour reserves (themselves the product of colonial and semi-colonial exploitation that caused �deindustrialisation� and a �drain of surplus�). And even as wages in the metropolis get dragged down towards those prevailing in the periphery, labour productivity in the periphery moves up towards the level prevailing in the metropolis, since such wage differences that still exist induce a diffusion of activities from the metropolis to the periphery. This double movement means that the share of wages in the total world output decreases.

Such a reduction in the share of wages in world output also occurs for yet another reason: as technological progress in the world economy raises the level of labour productivity all around, the wages of workers do not increase pari passu, again owing to these wages being tied to the existence of substantial labour reserves in the world economy. As a result, taking the world economy as a whole there is both an increase in income inequalities, and, as a consequence, a tendency towards underconsumption which makes the realization of surplus value exceedingly difficult. Credit financed expenditure and expenditure stimulated by speculative asset price �bubbles� provide only temporary antidotes to this tendency towards underconsumption at the world level, but with the bursting of such �bubbles� and the inevitable termination of such credit financing, the basic underlying crisis of the world economy reappears with all its intensity.

The second basic tendency that manifests itself under the neo-liberal regime arises from this. Any deficiency of aggregate demand resulting in unemployment and recession naturally affects the high-wage and therefore high-cost producers in the metropolis more severely than the low-wage countries like India or China. Countries like the United States therefore experience, as a result of this world tendency towards underconsumption, not only higher levels of unemployment but also continuous and growing current account deficits on their balance of payments. In short, acute unemployment, particularly in the hitherto high-wage economies, and the so-called problem of �world imbalances� (whereby countries like China have continuous and growing current account surpluses while the United States has growing deficits and hence gets increasingly indebted) are both caused by the ubiquity of the neo-liberal regime imposed upon the world by globalised finance capital. While the US multinational corporations and US financial interests demand neo-liberal regimes everywhere to further their goals of global domination, the fall-out of this demand is reduced wages and employment for the US workers.

Why, it may be asked, can State intervention in demand management not overcome this tendency towards world underconsumption and the associated problem of �world imbalances�? And here we come to the third tendency of neo-liberal capitalism, namely that finance capital invariably insists that all State intervention, all State activism, must be undertaken exclusively in its own interest. It is not that the State withdraws from intervening, as is often supposed when the discussion of neo-liberalism is set within the �State versus market� discourse; the nature of State intervention changes, with the State intervening no longer as an entity perched above society and apparently impartial between different specific class interests, but as a defender and promoter of the exclusive interests of finance capital, on the claim that what is good for finance is good for society. Hence Keynesian demand management is frowned upon, with most States following the �principle of sound finance� and putting statutory ceilings on fiscal deficit even as they curtail taxes on the rich. Of course, the State of the leading economy, the US, whose currency, being almost �as good as gold�, enjoys a degree of immunity from the caprices of international finance capital in this respect, can still undertake demand management with some impunity, since capital flight away from its currency will still be generally eschewed. But when the leading-currency country itself is getting progressively indebted, its ability to undertake demand management also suffers. In the era of neo-liberalism therefore there is no effective leading capitalist State to thwart the tendency towards underconsumption in the world economy.

Neo-liberalism in other words pushes capitalism towards a protracted crisis for several co-acting reasons: it creates a tendency towards underconsumption in the world economy by engendering inequalities in income distribution; it enfeebles capitalist nation-States for undertaking demand management; and it also undermines the capacity of the leading State for playing a similar role, but for a different reason, namely by saddling it with continuous and growing current account deficits.

Economists like Charles Kindleberger have argued that capitalism enters into a period of deep crisis when there is no effective leader among the capitalist countries. They attribute the 1930s crisis to the fact that Britain was no longer able to play its leadership role in the inter-war period, while the US was as yet unwilling to play this role. In the current period while the US�s ability to play this role is getting undermined, there is no alternative leader in sight, which portends a deep and serious crisis for world capitalism.

It may be thought that the crisis we are talking about is primarily concerned with the metropolis, which will continue to remain sunk in it for a long time to come (and if perchance there is a new �bubble� that temporarily lifts it out of this crisis, its inevitable collapse will plunge it back into crisis), that the third world, especially countries like India, are immune to it. This, however, is where the fourth tendency of neo-liberal capitalism becomes relevant. And this relates to the fact that under neo-liberal capitalism, since the State withdraws from its role of supporting, protecting and promoting the peasant and petty producers� economy, which it had taken upon itself during the dirigiste period as a part of the legacy of the struggle for decolonisation, the decimation of petty production, the unleashing of a process of primitive accumulation of capital (or what may be more generally called a process of �accumulation through encroachment�) proceeds apace. Multinational retail chains like Walmart come up to displace petty traders; agribusiness comes in to squeeze the peasantry; land grabbing financiers come in to displace peasants from their land; and petty producers of all descriptions everywhere get trapped between rising input prices and declining output prices. When we add to all this the rise in the cost of living, because of the privatisation of education, health and several essential services, which affects the entire working population, we can gauge the virulence of the process of primitive accumulation that is unleashed.

The current period therefore is one where it is not only the advanced capitalist countries that are beset with crisis and unemployment, but even apparently �successful� �high growth� countries like India. The former are affected by the problem of inadequate demand, the latter by both the fall-out of the former�s crisis and also by the additional problem of distress and dispossession of petty producers and the unemployment engendered by it. In both segments of the world economy therefore there arises a tendency towards fascism.

This tendency which has been sporadically evident in Europe through the rise of extreme right racist political parties has now suddenly manifested itself menacingly in the United States. Even President Obama�s tepid healthcare legislation brought forth physical attacks in Town Hall meetings against Democratic legislators, not to mention death threats, by hoodlum elements in the pay of the capitalists; the fact that they were emboldened to do this reflects the underlying political mood in that country. Indeed sixty-three percent of what are called �mainstream Americans� find the newly formed extreme right Tea Party to be representing their views! The disillusionment with the so-called Liberal democratic political elements is complete among a populace that is battered by unemployment, recession and economic insecurity. The fact that 13 trillion dollars are pledged to bail out the financial system, while the government appears profoundly incapable of bringing down unemployment strengthens the appeal of fascism. To be sure, this appeal appears to centre around an opposition to Wall Street and to finance capital; but finance capital, as in the case of Germany in the 1930s, is perfectly capable of buying up this opposition itself. While being the cause of the �disenchantment against the secular world�, it becomes, simultaneously and paradoxically, the manipulator of this �disenchantment�, directing it against an imagined or external �other�; it becomes thereby the orchestrator of �unreason� as well.

Countries like India are not immune to the growth of such fascist tendencies. Communal fascism already occupies a prominent place in the Indian polity. But it has several complementary currents, such as the one underlying Raj Thackeray�s call for �Mumbai for the Maharashtrians�. In short, the period of ascendancy of finance capital, albeit in its newly-acquired garb of international finance capital, has once again brought fascism back on to the agenda.

Many would argue that nothing comparable to what the world had seen at the time of the rise of Hitler and Mussolini is visible today, so that this talk of fascism is just crying wolf. This may be true in the sense that the intensity of the fascist threat, both as fascism and as threat, that we are talking about now may not be comparable to what was evident in the thirties. But any consolation one may derive from this has to be offset against another basic fact, namely that while in the thirties there was a massive Left presence, spearheaded by the Soviet Union, against this threat (which ultimately after all led to its defeat), nothing comparable exists today. It is all the more important therefore that we remain alert to the emerging threat of fascism, since the slightest negligence in dealing with it, can exact an even heavier toll today than in the thirties and forties.