In part 1 of this series, I discussed Michael Parenti and how he attempts to cover up the connections between socialism and fascism through historical revisionism and fabrications. In this installment, I will focus on his absurd and unsourced claim that,
“Both Mussolini and Hitler showed their gratitude to their big business patrons by privatizing many perfectly solvent state-owned steel mills, power plants, banks, and steamship companies.”1
Communists push this narrative quite often. Needless to say, it’s completely false.2 3 Last time I showed how the fascists were certainly not in cahoots with big business, and that they actually harmed big business more than helped. Now I will focus solely on the claims of “privatization” in Germany and Italy.
Privatize or liberalize?
“‘Private property’ as conceived under the liberalistic economic order … represented the right of the individual to manage and to speculate with inherited or acquired property as he pleased, without regard for the general interests … German socialism had to overcome this ‘private,’ that is, unrestrained and irresponsible view of property. All property is common property. The owner is bound by the people and the Reich to the responsible management of his goods. His legal position is only justified when he satisfies this responsibility to the community.” -Ernst Rudolf Huber, official Nazi Party spokesman (1939)4
Oftentimes there is a conflation of what is privatized and what is liberalized. Privatization simply means putting legal ownership into the hands of a private individual. But the private individual can be a member of a socialist or workers’ party, or have a legal monopoly granted to them by the government, or be subject to extreme governmental regulations. This type of privatization can favor socialist parties when they don’t have full control over the government. It’s better to have an industry privatized under a party member than nationalized under their opposition. Liberalization, on the other hand, deregulates state power and gives ownership to individuals in a competitive free market.5 Economist Germà Bel observed that
“Whereas the modern privatization in the EU has been parallel to liberalization policies, in Nazi Germany privatization was applied within a framework of increasing control of the state over the whole economy through regulation and political interference.”
and,
“The Nazi regime rejected liberalism, and was strongly against free competition and regulation of the economy by market mechanisms.”6
Private ownership, and public control
In fascist regimes, real private ownership did not exist. The state controlled wages, prices, what to produce, how to produce, etc.7 When the state has the unrestricted right to determine the decisions of the owners of the means of production, then the formal legal institution of private ownership no longer means very much.8 The Nazis nullified the constitutional right to private property in the decree of February 28, 1933.9 Marxist economist Günter Reiman wrote that,
“The owner of the property was helpless, since under fascism there is no longer an independent judiciary that protects the property rights of private citizens against the State. The authoritarian State has made it a principle that private property is no longer sacred.”10
The Nazi method was similar in many ways to the Soviet model. They both reached similar economic ends, but the Nazi means was to control the private sector rather than nationalize it. The Nazi state introduced measures commonly found in state socialism, such as national investment boards, state control of prices, banking, and foreign trade, and regimentation of business activities.11 Economic historian Peter Temin wrote,
“Both governments reorganized industry into larger units, ostensibly to increase state control over economic activity. The Nazis reorganized industry into 13 administrative groups with a larger number of subgroups to create a private hierarchy for state control. The state could therefore direct a firm’s activities without acquiring direct ownership of enterprises.”12
The Italian system was not much different. The state fundamentally switched roles with the capitalists as the wielders of economic power.13 Austrian economist Ludwig von Mises pointed out that the system didn’t differ from the program of British Guild Socialism.14 Mussolini mandated union membership, harshly regulated industries, and socialized over 80 firms.15 The stock holdings of banks were confiscated by the fascist government, and practically bankrupt companies were taken over. As a result, the Italian government held substantial positions in numerous other businesses as well as controlling interests in others, including iron production, naval building, and shipping.16 Political scientist Franklin Hugh Adler observed that
“..under Fascism the state had more latitude for control over the economy than in any other nation at the time except for the Soviet Union.”17
Conclusion
“Privatization” in Nazi Germany and Fascist Italy was a total sham. It always consisted of putting more economic power into the hands of the state and/or the fascist parties. Fascism is fundamentally an anti-capitalist ideology. Communists like Michael Parenti would greatly benefit from reading the real history of these regimes and the left-wing economic policies they instilled.
Parenti, Michael, Blackshirts and Reds: (1997), p. 7.
Kennedy, John, “Yes, They Were Socialists: How the Nazis Waged War on Private Property” Ludwig Von Mises Institute (2022).
TIKhistory, “Desperate historians try to defend the Nazi ‘privatization’ myth” (2022).
Huber, Verfassungsrecht des grossdeutschen Reiches. (Hamburg, 1939) in Raymond E. Murphy, et al., ed., National Socialism, reprinted in Readings on Fascism and National Socialism (1952), p. 91.
O'Sullivan, Arthur; Sheffrin, Steven M. Economics: Principles in Action (2003), p. 175.
Bel, Germà, “Against the Mainstream: Nazi Privatization in 1930s Germany.” The Economic History Review 63, no. 1 (2010), pp. 34–55.
Mises, Ludwig von, Planned Chaos (1947), p. 19.
Zitelmann, Rainer, Hitler’s National Socialism (2022), pp. 318-320
Koellreuther, Otto, Jahrbuch des Oeffentlichen Rechtes der Gegenwart, ed. 1 (1935), p. 267.
Reiman, Günter, The Vampire Economy (1939), p. 12
Ibid, p. 314,
Temin, Peter, “Soviet and Nazi Economic Planning in the 1930s.” The Economic History Review 44, no. 4 (1991), pp. 573–593.
Reiman, Güter, The Vampire Economy (1939), p. 24.
Mises, Ludwig von, Planned Chaos (1947), p. 73.
Norling, Erik, Revolutionary Fascism (2011).
Newton, Michael E. The Path to Tyranny: A History of Free Society's Descent Into Tyranny (2010), p. 170-171.
Adler, Franklin Hugh, Italian Industrialists from Liberalism to Fascism: The Political Development of the Industrial Bourgeoisie, 1906-1934 (1995) p. 347.
Good article. You might find this interesting/useful. https://www.econlib.org/archives/2009/08/insurance_reput.html