The Great Conflation: Fascism is not Capitalism
I have been an activist for several years and have most recently spent my time at Occupy Los Angeles at LA City Hall. Once more, I ran into the same wall that still divides leftists/socialists/anarcho-communists from libertarians and free market anarchists; that contemporary leftist ideology conflates fascism with capitalism. I will define those terms in the next paragraph.
I first must say though, that this situation is particularly saddening to me as I grew up in a house in which the individuals I can comfortably say self-identified as Democrats. I myself voted for Barack Obama because I (wrongly) believed he would end the wars in Afghanistan and Iraq and bring the troops home. Nevertheless, I find much to like about the left can and often times relate much better to those individuals. However, my experience over the last few years has brought me to writing this article, since I feel so strongly that this is the last remaining obstacle in leftists’ way to becoming full-fledged advocates of the voluntary society.
First, I will give the economic definitions of fascism and capitalism. I cannot stress enough how important this section of the article is to an understanding of our current political and socioeconomic situation. Economic fascism, meaning fascism minus the anti-Semitism and militarism, is synonymous with corporatism. Economic fascism is a system in which there are nominal private property rights, but the coercive apparatus of the government or State violates those property rights whenever it sees fit. This is similar to but not the same as socialism, in which government owns the means of production outright. The proper definition of capitalism, also properly synonymous with the term “the unhampered market” and “the voluntary society” as Rothbard describes it on page 74 of Man, Economy, and State with Power & Market, is “a society based purely on voluntary action, entirely unhampered by violence or threats of violence.”
Here are our three definitions:
• Socialism: Government owns the means of production, i.e. there is no private property.
• Fascism: Government is the de facto owner of the means of production; the State may abridge rights of private property whenever it sees fit, and does through its legalized monopoly over aggressive violence. That is to say, there is no private property.
• Capitalism, the unhampered market, or anarchocapitalism: Property rights are absolute, no individual or group of individuals has the legal right to perform aggressive violence.
It is clear that of the economic systems described above, the one that most certainly does not describe that of the United States is anarchocapitalism; I will now use “anarchocapitalism” in place of “capitalism”, since the philosophy of individual freedom and private property taken to its ultimate logical conclusion is anarchocapitalism. This is no meaningless quibble over semantics. Murray Rothbard once said, “Capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism.”
What I mean to say is that it is vital that leftists realize that “corporate capitalism” or “corporatism”, “corporate monopoly”, etc., have nothing to do with and are polar opposites of anarchocapitalism. Why is that so? A system in which zombie banks are bailed out, defense contractors profit handsomely from war, and the middle and lower classes are trodden into the dirt- this is capitalism, correct? Here is the crux of the leftists’ misconception of what capitalism really means.
Take the first example of zombie banks and bailouts. In an anarchocapitalist system, a bank would be free to store and lend out whatever type of money its customers wanted to deposit. If the bank lent out money on losing projects, that bank would lose profit, and if it continued on that path, it would go bankrupt. Depositors would be harmed to the extent that the bank could not recover its losses. In this way, bad banks would lose market share and sound banks would attract more customers. A bank would also be permitted to print up as much money as it wanted, provided its customers were informed of and agreed to this activity. But would any sane person keep their money at a bank that engaged in this practice? Of course not.
Let us compare and contrast this type of system with the one that is currently in place in the United States. In the US, the government has a legal tender law in place that prohibits individuals from rejecting Federal Reserve Notes in exchange for goods and services. Already we have deviated from the anarchocapitalist system and taken the road to fascism.
Why is this so important to understand? Let us say I had a bank with its own currency, a Steinbaum. The Steinbaum would compete with other currencies and become more or less valuable depending on how people subjectively value it in relation to other currencies. Imagine that a friend’s business went bankrupt and I decided to “bail him out” by printing up 1,000,000,000,000 Steinbaums and giving them to my friend to cover his losses. Do you think my depositors, knowing I was going to make that decision, would keep their Steinbaums at my bank? Of course not. They would sell their Steinbaums as fast as they could for other currencies, commodities, anything of value. My bank would be insolvent and I would be out of business. Furthermore, it is very doubtful I would be trusted as a banker ever again; in this way the unhampered market “regulates” fraud and mischief.
This is where the legal tender law becomes the crucial issue. Instead of my bank going out of business, the government passes a law that says my Steinbaum has legal tender status, and that if you do not accept them you will be subject to a fine or imprisonment. In this way, my bank, properly bankrupt, can go on its money printing ways since the citizens of my region will be forced to accept them. If an individual does not accept them, the government will enforce its legal tender law through aggressive violence- in order to save the economy, of course. This is the system we have today.
Which economic system does the above most closely resemble? Well it cannot be anarchocapitalism, since anarchocapitalism does not allow for the use of legalized aggressive violence. It has elements of socialism, as they both involve legalized aggressive violence, but the Steinbaum bank is nominally under private ownership. Therefore, this system is not socialist.
The correct choice is fascism. Mussolini defined fascism as, “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.”
Take another example, that of war. Is the Iraq conflict for example, a perfect example of free-market capitalism at its worst? Let us see. The government confiscates money from the American people through violence and calls it taxation. Violation of property rights #1. The government confiscates money from the American people through inflation of the money supply. Violation #2. Government unilaterally decides it will inflict massive violence and occupation on a group of human b
eings living in Iraq. Violation #3. You see where this is going- this system is nothing like capitalism, except for the fact that individuals think they have ultimate ownership of their person and property. This is mistaken, however. The omnipotent State may do whatever it wants to the subjects within its territory. This is the essence of fascism.
Herein lies the answer to the confusion. The economic system of the United States is not anarchocapitalism- it is fascism! Fascism leads to unreasonable wealth inequality, wars of aggression, economic instability, and lower living standards. Also, it’s just not a happy system to live under; no longer is the individual the master of his own destiny (as long as he does not infringe upon the property of others) – his life is completely subordinate to the State. Take it from the man who knew a thing or two about fascism, Il Duce himself: “All within the state, nothing outside the state, nothing against the state.” Creepy.
If leftists and libertarians/anarchocapitalists are ever to unite behind a platform of anti-war, humanism, and personal freedom (which is inseparable from economic freedom), leftists must break free of this misconception and consider the facts that I have laid forth in this short paper. They must break free of the conventional wisdom that capitalism leads to wealth inequality, war, profits before people, etc. This statement is true of fascism, not the unhampered market.
Once the general public, leftists among them, shatter this myth in their own mind, we will be one step closer to a humane, just, prosperous, and peaceful society. An anarchocapitalist society will not be Utopia; but it is the most compassionate and moral system human beings can ever hope to have.
 Rothbard, Murray N. Man, Economy, and State with Power and Market. Auburn: Ludwig Von Mises Institute, 2004. PDF. <http://mises.org/rothbard/mes.asp>
 Exclusive Interview With Murray Rothbard The New Banner: A Fortnightly Libertarian Journal (25 February 1972)
 “The Effect of Changes In Money.” Economic. Web. 22 Nov. 2011. <http://www.economictheories.org/2008/08/effect-of-changes-in-money.html>