Atrickpay has responded to my Daily Paul post promoting my paper, Fascism: Socialism with Shareholders, by quoting Ayn Rand’s essay, The New Fascism: Rule by Consensus. Rand (1967, p. 227) writes:

"Observe that both 'socialism' and 'fascism' involve the issue of property rights. The right of property is a right of use and disposal. Observe the difference in those two theories: socialism negates property rights altogether, and advocates ’the vesting of ownership and control’ in the community as a whole, i.e., in the state; fascism leaves ownership in the hands of private individuals, but transfers control of the property to the government.

"Ownership without control is a contradiction in terms: it means 'property,' without the right to use it or to dispose of it. It means that the citizens retain responsibility of holding property, without any of its advantages, while the government acquires all the advantages without any of the responsibility."

Rent control is a good example of what Rand is talking about. The owner of an apartment building where rent control has been imposed does not have the right to use his property because he cannot set the rent. And he does not have the right to dispose of his property because everybody knows about rent control and they are not about to buy into that problem. Thus, for all practical purposes, the government has seized his property.

Another good example is a farmer who discovers a spotted owl nesting in his barn and is foolish enough to report it, rather than to just "shoot and shovel." He may still have the deed to his farm but, for all practical purposes, the EPA now owns that land. He cannot use it in the sense of growing crops and he cannot sell it after his neighbors learn of the spotted owl.

But economics is a practical science. If something is true "for all practical purposes," then it is true. Ayn Rand is wrong: These are not examples of fascism but of socialism, albeit, a particular brand of socialism that I will call "socialism without seizure."

Socialism without seizure is a technique that the U.S. government uses in order to be opaque. They want to institute socialism, but without ever uttering the s-word, lest they raise alarms in the news media. In other countries, their governments are more transparent. They freely (even proudly) use the word "socialism" and leave the property owners with nothing, not even their names on the deeds.

The word "fascism" refers to companies like I.G. Farben or Halliburton. The shareholders are not victims who "retain responsibility of holding property, without any of its advantages" but, just the opposite, they receive special privileges. As Paul Krugman writes:

"The case against Fannie and Freddie begins with their peculiar status: although they’re private companies with stockholders and profits, they’re 'government-sponsored enterprises' established by federal law, which means that they receive special privileges.

"The most important of these privileges is implicit: it’s the belief of investors that if Fannie and Freddie are threatened with failure, the federal government will come to their rescue.

"This implicit guarantee means that profits are privatized but losses are socialized. If Fannie and Freddie do well, their stockholders reap the benefits, but if things go badly, Washington picks up the tab. Heads they win, tails we lose."

This implicit guarantee is what I was referring to when I defined fascism as "socialism with shareholders." When I wrote in Fascism: Socialism with Shareholders that it made no difference from the point of view of the average American, I meant that, either way, he is screwed. When you have been robbed, if you have no way of getting your money back, it is a matter of little concern to you how the loot was divided up among the robbers.

Socialism without seizure is just a particular brand (the U.S. brand) of socialism, different in appearance but effectively equivalent to the socialism of Castro or Chávez. Certainly, the socialists themselves agree with my terminology. Websites like www.socialistalternative.org openly advocating what I have labeled "socialism without seizure" and have no qualms about accidentally advocating fascism, which they abhor. And the shareholders themselves agree with my terminology. Halliburton executive do not confuse themselves with the owners of New York apartment buildings, or vice-versa.

Admittedly, pinning people down on exactly what they are advocating can be frustrating. Socialists masquerade as advocates of free enterprise, albeit with "improvements," while simultaneously denouncing everybody that they don’t like, which is just about everybody in the business community, as fascists. Genuine fascists, on the other hand, have traditionally masqueraded as socialists. This is what Hitler was doing when he took the name "National Socialist Worker’s Party," though he had no intention of nationalizing companies like I.G. Farben.

Working-class Germans voted for the Nazis because they thought that Hitler would nationalize the factories and give them jobs. Instead, he gave them rifles, conquered Europe and staffed the factories with captured slaves. The same thing could happen here. Working-class Americans are just dumb enough to vote for Mathematically Perfected Economy because they think that Montagne will nationalize the banks and give them houses for $83 a month, nothing down. When someone makes preposterous promises like that, he is clearly fishing for gullible people. What Montagne intends to do with his army of morons once he acquires them is anybody’s guess ’ probably invade Canada.

So let’s cut through the masquerade and get our terminology straight:

When Paul Krugman writes, "[Fannie Mae’s and Freddie Mac’s] management bought off the political process, systematically hiring influential figures from both parties’ isn’t it shocking that taxpayers may end up having to rescue these institutions? Not really. We’re going through a major financial crisis ’ and such crises almost always end with some kind of taxpayer bailout for the banking system," Krugman is advocating fascism, not socialism.

When Ayn Rand writes, "citizens retain responsibility of holding property, without any of its advantages, while the government acquires all the advantages without any of the responsibility," Rand is describing socialism, not fascism.

Using the wrong word just makes one look ignorant. Both socialism and fascism are worth denouncing. But, even if one’s arguments against a program are sound, one won’t get far by mislabeling it.

REFERENCES

Rand, Ayn. 1967. Capitalism: The Unknown Ideal. New York, NY: Signet