This series of essays will explore some of the large-scale economic trends of the 20th and 21st centuries, culminating with the effects of neoliberalism on modern society. The intention is that these will begin as a very brief overview which I will elaborate on over time adding depth and revisiting sections as my understanding evolves.

In this first instalment we discuss the genesis of fascism and social democracy in Europe, providing background for the next section which will be on on Keynesianism and social democracy.

Introduction

The Spectre becomes Solid

In the wake of the Second World War, Europe was on the brink of communism. The masses of the Europe had never achieved greater class consciousness, and the bourgeoisie had never been so destabilised. Communist parties were on the rise in France and Italy, Germany saw multiple large-scale uprisings, and people’s republics were being proclaimed across Eastern Europe. Even the UK, a bastion of liberal stability, faced its only ever general strike in 1926.

In order to maintain and strengthen the capitalist hegemony, the European bourgeoisie would have to synthesise new anti-communist strategies. As the remaining liberal European states grappled with this rising threat, they generally evolved along two distinct pathways: Fascism and social democracy.

Fascism and Social Democracy

In the UK and France, which had developed industries and massive colonial empires, the government was able to grant concessions to the working class - social housing, public healthcare, and education would form the backbone of the welfare state. Colonial super-profits kept incomes relatively high and jobs relatively stable. Minor wealth redistribution created the illusion of a ‘great society’ where the wealthy took care of the poor, and there was a general perception of class mobility.

In the backwards economies of Italy, Spain, and Eastern Europe, as well as the reparation-crippled Germany, the capital required to form a functional welfare state was not available. These states saw open violence, with far-right paramilitaries supporting government forces against leftist revolutionaries and trade unions.

Aside from overt state terror, the bourgeoisies of these countries diverted class grievances to other enemies. By aligning with the church and petit-bourgeoisie, the bourgeoisie could attack and exclude perceived ‘outsiders’, obscuring class antagonisms by blaming them on an external foe.

In Nazi Germany, a stable (nostalgic) status quo was linked to a grand racial unity, while the Jew was blamed for every social ill. For the petit-bourgeois, the Jew was a communist; for the proletarian, the Jew was a greedy banker and war-traitor; for the bourgeois, the Jew was the union organiser. In all cases, the wealth and labour expropriated from the Jew was used to ‘keep afloat’ the capitalist system in lieu of colonial super-profits.

The example is most obvious in Germany but can be found in any fascist state, be it the regional minorities in Spain or the Masons in Italy.

The commonality between social democracy and fascism is clear: Both aim to obscure and mystify the class antagonisms inherent to capitalism. Both aim to manufacture consciousness of a unified harmonious society. Both introduce ‘illiberal’ elements to liberalism, excluding some aspects of social reality from market conditions. In the case of liberal democracy this is done through removal of some industries from the market, and in the case of fascism by removal of some sections of the population.

The End of Fascism

While the rest of this essay series will focus on social democracy and its successors, it is worth mentioning the Ouroboric nature of fascism.

Fascism is incapable of sustainably addressing the contradictions of capitalism, as it fails to actually engage with them. Excluding and expropriating a section of the population can transiently improve conditions and profits, but simultaneously shrinks the market. A progressively larger enemy must be found to expropriate, until the state self-destructs (as in Francoist Spain or Pinochet’s Chile) or is destroyed by external enemies (as with Germany or Italy).

The next part of this essay series will cover Keynesianism and the economic model of the social democracies, and touch on how they evolved into modern neoliberalism.