Rothbard on Progressivism, World War I, and Economic Fascism

"Every president has been inspired by Woodrow Wilson. It was reported that Richard Nixon’s first act when he came into the White House was to hang a picture of Woodrow Wilson in front of his desk. The same influence has held on domestic affairs. As a matter of fact if I had to single out – this is one of my favorites pastimes – the biggest SOB in American history in the sense of evil impact – I think Woodrow Wilson is way, way at the head of the list for many reasons. The permanent direction which Woodrow Wilson set for foreign policy included the permanent collective security concept, which means America has some sort of God-given role to push everybody around everywhere and set up little democratic governments all over the world, and to suppress any kind of revolution against the status quo – that means any kind of change in the status quo either domestic or foreign. In the domestic sphere the corollary was the shift from a relatively laissez-faire economy – corrupted as it was by the Civil War subsidies it was still and all a relatively laissez-faire capitalism – a deliberate shift to in essence a so-called corporate state, what openly became a Corporate State in Mussolini’s Italy and Nazi Germany.

Q: As of what time?

A: Well, the Progressive period begins around 1900 with Teddy Roosevelt and so forth. Woodrow Wilson cements it with his so-called reforms which totally subject the banking system to federal power and with the Federal Trade Commission, which did for business what the Interstate Commerce Commission did for the railroads. In other words, he imposed a system of monopoly capitalism, or corporate state monopoly, which we now call the partnership of the government and of big business and industry, which means essentially a corporate state, or we can call it economic Fascism. It culminated in World War I economic planning, for the war consisted of a totally collectivized economy headed by the sainted and revered Bernard Mannes Baruch, head of the War Industries Board.

The economy had a central board and each industry was governed by a committee from the industry – say the iron and steel industry was governed by the Iron and Steel Board, the heads of the board were deliberately selected from the biggest firms in that particular industry and they would negotiate with committees of industry set up by the government, and the government would encourage trade associations in the industries to set up committees and negotiate with these boards.

So what you have is the so-called commodity sections – the government boards selected from the biggest businessmen in the industry and they fixed prices and production and priority and everything else with other committees set up by the same big firm, and everyone loved it. Big businesses loved it, the government loved it and the Progressive intellectuals – as they were called then – said, this is a magnificent third way, a "middle way" as they called it – to battle the old laissez-faire capitalism on the one hand, and the new Proletarian Marxian socialism on the other.

They didn’t like the idea of Marxian socialism because it was messy, emphasized class struggle, and led to a revolution perhaps. What they saw here was a new order – and this was a vision held by Baruch and Hoover and all sorts of Progressive intellectuals from the universities and so forth – they saw a beautiful new order with big government controlling the economy, regulating it, subsidizing it, largely staffed by big businessmen in collaboration with unions, which were deliberately encouraged as disciplinary agents for the labor force, and which were practically created by the war labor system. All this of course was staffed and apologized for by the Progressive intellectuals, who acquired prestige, power, and a great sense of accomplishment pushing people around in their government bureaus.

So we have, then, this unholy partnership of big government, big business, big unions, and intellectuals, and it was developed so much in World War I planning that the business leaders and the government leaders who pushed the thing were very reluctant to see it end. They saw in it not just a wartime measure; this was the model they wanted for the permanent peacetime economy. They wanted to end all messy competition. As one big business writer said, "As General Sherman said ‘war is Hell, competition is war, and therefore competition is Hell.'" They wanted to eliminate competition, and to establish a system of industrial "cooperation" monopolies. And they were very sorry to see the War Industries Board scrapped when the war was over.

As a matter of fact, it almost wasn’t scrapped. Wilson finally decided to scrap it, but it was touch and go. Then afterwards the same people – Hoover, Franklin Roosevelt, Bernard Baruch, all the people who had earned their stripes in World War I mobilization planning – for the rest of their lives tried and then succeeded in reestablishing World War I planning – it was known as war collectivism – as a permanent peacetime set up. Herbert Hoover during the 1920s was trying to use the power of the government to encourage and support trade association cartel agreements, and Franklin Roosevelt also. When Roosevelt and the New Deal got in, they used not only the same agencies as World War I collectivism, but the same people.

In case after case the people were brought back to do for the economy what had been done in war, to treat the depression in a military manner, and then World War II, of course, finishes it. In World War II, we have another big quantum leap – enormous government spending and military-industrial pump priming, and the permanent cold war, and so we then have the plans for a permanent peacetime welfare-warfare state – a corporate state – pushed through of course by partnership of these powerful forces plus intellectuals, done by means of wartime crisis."