Chapter 19: The New Fabians

Before the Russian Revolution, the Communist Party had two wings: Bolshevik and Menshevik. The Bolsheviks believed in immediate establishment of Socialism through violence. The Mensheviks (who also called themselves social democrats) argued for a gradual, nonrevolutionary path to the same goal. Liberty and property were to be abolished by majority vote.

The Bolsheviks won, but after committing unimaginable crimes, they have pretty much disappeared. The Mensheviks, however, are taking over America.

Our local Menshevism has its roots not in Lenin's Russia, but in London of 1883, when a group of go-slow socialists founded the Fabian Society.

Founded the year of Marx's death to promote his ideas through gradualism, the Fabian Society sought to "honeycomb" society, as Fabian Margaret Cole put it, with disguised socialist measures. By glossing over its goals, the Fabian Society hoped to avoid galvanizing the enemies of socialism.

Unlike revolutionary Marxists, the Fabian socialists also knew the workings of British public policy. As the original "policy wonks," they did much research, drew up plans, wrote pamphlets and books, and made legislative proposals, drawing on their allies in universities, churches, and newspapers for help.

Although the Fabian Society had more than 4000 members, they originated, promoted, and steered through parliment most of British social policy in the last 80 years. The result was a wrecked economy and society, until Margaret Thatcher began to defabianize England. [Editor's Note: "The trouble with socialism is that you eventually run out of other people’s money." --- Margaret Thatcher, former Prime Minister of Great Britain]

Whether it was workmen's compensation, old-age pensions, unemployment benefits, or socialized medicine, the Fabians always stressed "social reform," noted John T. Flynn. They

saw early the immense value of social reform for accustoming the citizens to looking to the state for the correction of all their ills. They saw that welfare agitation could be made the vehicle for importing socialist ideas into the minds of the common man.

Another Fabian innovation: social reform invariably involved some sort or "insurance". People were induced to accept socialism through the model of the insurance company.

Real insurance companies, relying on a random distribution of accidents, pool money to make the world less uncertain for all of us. Pool everyone's wealth in the state ---- the Fabian argued ---- and we could be happy, healthy, and wise.

Bill Clinton was trained by modern Fabians during his Rhodes scholarship days at Oxford. Carroll Quigley, his mentor at Georgetown, was also a sort of Fabian. Perhaps this is why Clinton calls higher taxes "contributions," government spending "investment," blind obedience to him "patriotism," and private property owners "special interests."

Like other social democrats, Clinton lies to the public. He says that taxing the rich will have no effect on middle class wealth. But concentration of private capital at the top of the social hierarchy is good. It makes everyone better off. Plundering that wealth may lead to more equality, but it's an equality of poverty.

Chapter 20: The Violence of Central Planning, August 2003 (also)

For today's generation, Hitler is the most hated man in history, and his regime the archetype of political evil. This view does not extend to his economic policies, however. Far from it. They are embraced by governments all around the world. The Glenview State Bank of Chicago, for example, recently praised Hitler's economics in its monthly newsletter. In doing so, the bank discovered the hazards of praising Keynesian policies in the wrong context.

The issue of the newsletter (July 2003) is not online, but the content can be discerned via the letter of protest from the Anti-Defamation League. "Regardless of the economic arguments" the letter said, "Hitler's economic policies cannot be divorced from his great policies of virulent anti-Semitism, racism and genocide.… Analyzing his actions through any other lens severely misses the point."

The same could be said about all forms of central planning. It is wrong to attempt to examine the economic policies of any leviathan state apart from the political violence that characterizes all central planning, whether in Germany, the Soviet Union, or the United States. The controversy highlights the ways in which the connection between violence and central planning is still not understood, not even by the ADL. The tendency of economists to admire Hitler's economic program is a case in point.

In the 1930s, Hitler was widely viewed as just another protectionist central planner who recognized the supposed failure of the free market and the need for nationally guided economic development. Proto-Keynesian socialist economist Joan Robinson wrote that "Hitler found a cure against unemployment before Keynes was finished explaining it."

What were those economic policies? He suspended the gold standard, embarked on huge public-works programs like autobahns, protected industry from foreign competition, expanded credit, instituted jobs programs, bullied the private sector on prices and production decisions, vastly expanded the military, enforced capital controls, instituted family planning, penalized smoking, brought about national healthcare and unemployment insurance, imposed education standards, and eventually ran huge deficits. The Nazi interventionist program was essential to the regime's rejection of the market economy and its embrace of socialism in one country.

[Editor's Note: Do any of those policies sound familiar?]h

Such programs remain widely praised today, even given their failures. They are features of every "capitalist" democracy.

Keynes himself admired the Nazi economic program, writing in the foreword to the German edition to the General Theory:

"[T]he theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under the conditions of free competition and a large measure of laissez-faire."

Keynes's comment, which may shock many, did not come out of the blue. Hitler's economists rejected laissez-faire, and admired Keynes, even foreshadowing him in many ways. Similarly, the Keynesians admired Hitler (see George Garvy, "Keynes and the Economic Activists of Pre-Hitler Germany," The Journal of Political Economy, Volume 83, Issue 2, April 1975, pp. 391–405).

On one level, this is not surprising. Hitler instituted a New Deal for Germany, different from FDR and Mussolini only in the details. And it worked only on paper in the sense that the GDP figures from the era reflect a growth path. Unemployment stayed low because Hitler, though he intervened in labor markets, never attempted to boost wages beyond their market level. But underneath it all, grave distortions were taking place, just as they occur in any non-market economy. They may boost GDP in the short run (see how government spending boosted the US Q2 2003 growth rate from 0.7 to 2.4 percent), but they do not work in the long run.

"To write of Hitler without the context of the millions of innocents brutally murdered and the tens of millions who died fighting against him is an insult to all of their memories," wrote the ADL in protest of the analysis published by the Glenview State Bank. Indeed it is.

Perhaps the worst part of these policies is that they are inconceivable without a leviathan state, exactly as Keynes said. A government big enough and powerful enough to manipulate aggregate demand is big and powerful enough to violate people's civil liberties and attack their rights in every other way. Keynesian (or Hitlerian) policies unleash the sword of the state on the whole population. Central planning, even in its most petty variety, and freedom are incompatible.