BUF theoretician Alexander Raven Thomson’s 1935 essay on fascist economic theory

The following essay, ‘Corporate Economics’ by Alexander Raven Thomson, was first published in Fascist Quarterly, Vol. 1, No. 1, January 1935. The Fascist Quarterly (renamed British Union Quarterly in 1936) was the theoretical journal of the British Union of Fascists, intended to act as a kind of counterbalance to the Left Book Club by providing a platform in Britain for the dissemination of the intellectual voices of European fascism. Raven Thomson was one of these voices – a former member of the Communist Party of Great Britain, he had joined the BUF in April 1933 and swiftly became the movement’s primary ideologist. A captivating speaker, an engaging writer, and deeply influenced by Spenglerian philosophy and political syndicalism, Thomson was a revolutionary, a radical opponent of laissez-faire capitalism who saw in the corporate state the key to social justice and the salvation of Western civilization. His writings, such as the essay excerpted below, provided the BUF with much of its theoretical foundations. 

A great problem has been created for the modern world by the collapse of the present economic system. We can no longer tolerate a system which condemns most of us to poverty in the midst of the greatest plenty mankind has ever known, which deprives millions of people of the right to earn their own living, and brings ever nearer the danger of war in the international struggle for contracting world markets. What is the cause of this universal breakdown. Where have we gone wrong?

Before we can fully appreciate the cause of the trouble, we must consider the threefold nature of organized society as follows:

• A Central Government vested with authority to plan and direct the national life.
• A Number of Social Groups with various purposes and interests.
• A Mass of Individuals endowed with powers of initiative and enterprise.

The classical economic theory of the nineteenth century concerned itself almost entirely with the third and least organized aspect of society, resenting either state or group interference with economic affairs. In earlier times of comparative scarcity there may have been some justification for this view, as the initiative and enterprise of the individual was then of vital importance in developing latent powers of production and advancing technical invention. Obviously the individual would develop his powers of initiative and enterprise to the best effect, if granted the largest possible measure of economic liberty, and this is precisely what the economists of the Manchester School demanded, when they advocated “laissez faire” and free trade.

Whatever the advantages of economic liberty in solving the problem of scarcity, however, it has become a positive menace to social welfare in a dawning age of plenty. There is no need to condemn classical economic theory as such, but we must realize that there can be no absolute “laws” of economics independent of social organization. No doubt the individualist system was very necessary in an age of scarcity, and we have to thank the Manchester School for solving the problem of production, but the time has now come for a new economic system in keeping with the needs of a new age. Individual enterprise encouraged by complete liberty of exploitation has put an end to scarcity, but is completely incapable of distributing the plenty it has created to the people as a whole. Production is in its very nature an individual or at most a group process; distribution, on the other hand, is based upon the needs of the whole community, and obviously cannot succeed without a large measure of conscious social planning.

Socialism and the Class War

As individualism has now passed its period of usefulness and has become an actual danger to economic progress, the time has come to turn the focus of economic interest to the social group, if not to the nation as a whole. Hitherto those who have most vigorously attacked the present system, and have adopted such collective terms as “Socialist” or “Communist,” have never really risen above group considerations. Despite their grandiloquent claim to “nationalize” the means of production, the very basis of Socialist and Communist appeal lies in the exaggeration of class differentiation and insistence upon the “class war.” Clearly such a class-conscious doctrine belongs to the realm of the social group, and fails to rise to any appreciation of the whole community as a living organic entity. Indeed the stress laid by the Socialist upon internationalism, and his denial of patriotism, confirm his inability to grasp the full implications of social organization, which should rise far above class considerations to a realization of national purpose. The ultimate “reductio ad absurdum” is reached, when the Soviet regime in Russia claims that it is the “dictatorship of the proletariat” for this would imply the permanent and conscious ascendancy of a group over the national life.

Actually the class war becomes a sheer absurdity in an age of plenty, for what object can there be in a struggle between the classes when there is plenty for all? The class war is nothing more nor less than a grisly relic of the age of scarcity, which is only able to linger on into the present era owing to the inefficiency of our present economic system. Solve the problem of distribution and the class war is at an end. In any case the separation of society into warring classes is very largely an artificial invention of Karl Marx, for the differentiation of owning and exploited classes is becoming more and more difficult, as modern life becomes more and more complex. Karl Marx had no conception of the great stock companies which spread ownership over huge numbers of people who normally earn their own living in industry; nor did he anticipate the great numbers of organizers and engineers, experts and technicians, who would be interposed between employers and workers by the development of modern industry.

Even if we accept the division of society into employers and workers, however, it does not necessarily follow that their interests are opposed. It is true that both employers and workers consider themselves as opposing armies with conflicting interests, but this arises from an inability to grasp the benefit of collective organization for both parties. In the case of every single business enterprise it is obvious that the interests of employer and workers are opposed, and that if the workers demand too high wages there will be no profit left over for the employer, while if the employer can force wages down he will enjoy a higher profit. It does not follow, however, that employers and workers as a whole can, therefore, benefit their own class at the other’s expense. Actually in an age of plenty, as at present, the interests of workers and employers go hand in hand. Obviously the need of modern industry is for large and expanding markets. The attempt to find these in illusory international trade has failed dismally of recent years, with the result that now industrialists are turning more and more to the home market. Clearly the purchasing power of the home market, however, will be determined very largely by wage-rates, so that it has actually become in the interest of the employer that the workers should receive higher wages in order that they may be able to buy the products of modern industry. Surely the Socialist workers will not extend their belief in the class war to the point of refusing higher wages, because they will benefit the employers!

The Corporate Concept

We see then that the present economic system has failed because it placed too much emphasis upon the interests of the individual, but that the Socialist and Communist doctrine is equally at fault because it exalts the social group at the expense of the community as a whole. Fascism turns to the third alternative, and insists upon treating the community as a single organized corporate state, controlled and planned by a central government empowered with sufficient authority over individual and group to protect the general welfare of the whole, and advance the national purpose. This is the corporate concept of the nation as an organism of a higher order, but essentially similar to the human body, with its organs and functions serving a collective purpose. It is the essential basis of the organization of the Fascist regime in Italy which regulates the relations of Italian employers and workers along lines of common interest according to the rules of the famous Charter of Labor.

Such a system, based upon an entirely new concept of economic purpose, will require an equally new science of economic adjustment to social needs. It is my belief that this new economic science will be worked out in this country, which has been for so long the commercial centre of the world. It would be idle to ignore the fact that both Italy and Germany, the first countries to adopt a Fascist political constitution, have had the greatest difficulty in developing the economic side of their regime, although they have both responded far better than democratic countries to the strain of world depression. We must remember that although democracy and liberal principles came first to France and the Continent, it was in Britain that the economic implications of Liberalism were worked out by the Manchester School of individualists. As it was Britain that gave this dangerous, almost disastrous economic theory to the world, it will clearly be the duty of Britain to apply the new principles of Fascism to the economic sphere, and produce the commercial structure of the future that will replace the discredited remnants of Liberal Free Trade.

Corporate Principles

It can be no part of the present discussion to lay down the basis of such a science, but certain principles of corporate economics immediately suggest themselves in contra-distinction to present individualism. In place of the “economic man” whose personal self-seeking was the essential basis of the old school, we shall have the “economic community” for whom the individual will engage in patriotic service. In place of classes of men combining together to protect their common “interests,” we shall have occupational groups combining together in functional service to the community as a whole. In place of the competition of individuals struggling for a living, each against all and the devil take the hindmost, we shall have the co-operation of individuals for their common benefit.

How shall these principles be put into effect? First of all undoubtedly by the exercise of authority. Discipline and control must be introduced into the chaos of present economic affairs. The horrors of the present system, which feed the fires of the class war, and give the Socialist agitator grounds for his attack upon “capitalism,” arise very largely from the undue exercise of economic power by the powerful individual who has amassed sufficient property or capital to exert an appreciable influence upon commercial affairs and thus advance his interests by unfair methods. Under Fascism no individual will be permitted to use his property in this sense as a means of exerting power for his own benefit. “Power” is the monopoly of Government.

Here we have the complete answer to the Socialist who demands the abolition of private capital and the nationalization of the means of production. It is true that the private capitalist has in the past abused his control over capital to advance his own interests, but that does not justify the abolition of private property, but rather the control of its use to prevent anti-social action. The truth is that the Socialist is no more than a disgruntled bourgeois, who envies the capitalist his wealth and power. By implication he accepts the bourgeois principle that the owner may do what he likes with his own, and hence can find no alternative for capitalist exploitation than wholesale confiscation, which overwhelms the good capitalist with the bad. Fascism recognizes that capital and money have endowed individuals with power which they have abused in the past, and demands from the electorate sufficient authority and means of action to deal with the most powerful vested interest in the land. As Oswald Mosley has put it perfectly clearly, “Under Capitalism Capital uses the Nation for its own ends: Under Fascism the Nation uses Capital for its own ends.”

It is clearly impracticable that Government, however powerful and efficient, should attempt the detailed planning of the economic affairs of the whole nation. This would be a denial of all group organization, which is an essential part of the healthy body politic, and would tend to perpetuate and aggravate the present menace of bureaucracy which is rapidly socializing this Country. Socialists and Conservatives alike compete in increasing the power and influence of Whitehall, which is rapidly becoming the “New Despotism” that Lord Chief Justice Hewart has foretold. Under Fascism a great deal of this bureaucratic control will be devolved once more along new lines of functional organization to Corporations controlling the principal industries and groups of industries in the country. Corporations of Agriculture, Fishing, Transport, Mining and Medicine will take the place of Ministries at Whitehall, and will be staffed by men who have worked up through their industry and profession and will be much better fitted to control it than any permanent government official. These new institutions of industrial self-government will replace local self-government which is becoming rapidly out of date in face of the rapidity of modern communications and the wider planning of public utilities. By this means group organization will be transformed from the more rigid structural basis of the past to the more flexible functional basis of the future.

A very large measure of self-government will be granted to the Corporations to settle all internal matters concerning the industries which they control, and employers, workers and consumers will all be represented upon the council of the Corporation . The employers will be represented through their employers’ federation, and the workers through their trade union, while Government will appoint consumers’ representatives to watch over the interests of the general public and those of other Corporations which are particularly interested in the product. The Corporation will be required to lay down standards of wages and conditions of work for the industry as between employers and workers, and also prices and terms of competition as between employers and consumers. All agreements made will be legally binding upon the entire industry and any employer or worker who breaks what is in effect a by-law of the Corporation will be guilty of an offence for which he can be brought before a court of law. Actually, both employers’ federation and trade union will be expected to maintain discipline among their members, who will compose 100% of the industry in question. With such adequate means of arbitration, strike and lock-out alike will, of course, be prohibited, but employers, workers or consumers may appeal to the Minister of Corporations sitting in council with representatives of all industrial corporations for a just decision in keeping with general industrial practice and the national welfare. It will be seen that by this devolution of authority and self-government to the Corporations the central Legislature will be relieved of a large measure of detailed legislation which at present hampers the work of Parliament.

Use of Corporate Organization

So far the new economics may seem an interesting new conception, but of doubtful practical value to compensate for their considerable complexity. Such a system is not, however, devised merely as an intellectual exercise, but has immense advantages just where the present system is particularly weak. For example, let us take the worst problem of all, that of poverty in the midst of plenty, arising from what the Conservatives used to call “over-production,” but which may be much better described as “under-consumption.” Obviously this defect in the present system can only be rectified by bringing about a much higher standard of life, when the people are able to consume the immense production of modern science and technique. Unfortunately the individualist system forces down purchasing power either in the form of wages or profits during a period of plenty, because of the intense competition to sell goods on an already overstocked market, which compels manufacturers to lower prices in a cut-throat endeavor to capture the market. Under Fascism, however, prices and terms of competition will be controlled, and no manufacturer will be permitted to sweat his workers against the regulations of his Corporation in order to steal a march on his competitors. Not only will the decline in purchasing power be checked by this means, but the whole wage system can be permanently raised by concerted action over the whole field of industry. Obviously such action is perfectly sound and has been advocated by several public men of recent years, but unfortunately it cannot be effected under the present individualist system, for if any single employer were foolish enough to attempt to raise the wages of his workers in the cause of national recovery, he would soon find plenty of unpatriotic competitors who would cut theirs and drive him off the market. It is only under the discipline and control of the organized Fascist regime that such a policy can be carried through with success.

By the same means the great scourge of unemployment can also be cured, for it is obvious that this is purely the result of the complete lack of organization in our present national economy. There must be at any one time in this country a certain amount of work, calculated in man-hours, which requires to be done, and a certain number of workers willing and anxious to do this work. The work can certainly be spread over the total number of workers by a readjustment of the hours of work, as is at present being done in Italy, where the 40-hour week is now being introduced. Actually Fascist Government in this country would rather seek a more beneficial solution along the lines of raising the standard of life of the people rather than shortening the hours of work, but in any case the problem of unemployment becomes completely and permanently soluble in the organization of a planned corporate state.

The Function of Finance

One of the major defects of the present system has been its failure to imbue the various occupations and professions of society with a sense of their functional purpose of service to the whole. This has led to the worst results in the realm of finance, where money power has been disgracefully exploited by bankers and financiers for their own benefit. Indeed it is no exaggeration to say that this country, in common with many others, is dominated by a dictatorship of high finance, which is far more interested in lucrative returns of the foreign bond market than in the well-being of the British people. The first and most urgent task of Fascist Government will be to break down this present dictatorship of international finance, and replace it by an authoritative regime empowered by the nation to enforce a functional and social purpose upon even the most powerful interests in the country.

The function of money, which is too often forgotten at the present time, is to facilitate the exchange of goods and services. The fact that we are finding it so difficult to exchange our goods and services today is a clear indication of the failure of finance to carry out its primary duty to the community. However skillful and ingenuous our technicians and inventors may be, the standard of life of the people cannot be raised to a higher level unless sufficient currency and other means of exchange are put into circulation. Otherwise the only result of invention and rationalization of industry will be to throw more and more men out of work. At the present time we suffer from a very serious restriction of money, which is carried out by the banks in pursuit of their policy of deflation. The reason for this policy is twofold. First there is a certain innate conservatism which still clings to the gold standard of currency as a last relic of the age of barter. Secondly, financiers realize that a restriction in the amount of the article in which they trade renders it more valuable and themselves more powerful. For these two reasons the quantity of money in circulation is not adapted, as it should be, to the volume of potential production in the country, but is restricted to a proportion of the supplies of a certain precious metal, gold, in the vaults of the Central Bank. Clearly the available supplies of this metal are entirely irrelevant to the problem of distribution which finance must solve, and in fact the quantity of gold in the whole world is pitifully adequate to finance the immense powers of production of modern industry. Yet instead of expanding currency and credit to meet the needs of industrial development, our financial masters are endeavoring to return to the gold standard by restricting production to the limits set by world gold supplies. No doubt by these means international financiers are maintaining and extending their control over world affairs, but only at the expense of condemning the greater part of the world to poverty in the midst of plenty.

Fascist Government will insist upon a reversal of this unnatural domination of finance over industry. It must be made perfectly clear that finance has a function of service to industry, and is in no way suited for that government of industry which it has usurped. Not only must the encouragement of foreign production in competition with our own through the foreign flotations of the City of London be brought to an end, but our financiers and bankers must be compelled to face the problem of distribution which they have so consistently neglected in the past. We have already pointed out that the future of our trade lies in the revival of the home market, and finance must now turn its attention to means of bringing about this revival by raising the purchasing power of the people.

This involves a tremendous and revolutionary break with all the most sacred traditions of banking business, for the essential feature of the problem is that it involves the financing of consumption. Hitherto bankers have confined their operations entirely to the financing of production in the commercial sphere, for installment-payment business does not really finance consumption, as it merely mortgages future purchasing power for the sake of immediate sales. We must find some method of financing a higher scale of wages and salaries in order to release the powers of production. At present, of course, in an individualist system engaged in intense competition any such proceeding is impossible, and any employer who went to his bank and asked for an overdraft to pay the higher wages would be rightly condemned as a lunatic, for he could give no guarantee that his competitors would do the same or would not lower their wages to capture the market from him. Lord Beaverbrook who has frequently advocated higher wage rates has never been able to overcome this essential difficulty.

Corporate economics, however, offer an immediate solution, for the very purpose of the Corporations is to control and regulate wage rates and conditions of labor, so that if the Fascist Government undertook a policy of higher wages, there would be no question of unpatriotic or alien-controlled firms hanging back to take advantage of their competitors; all would be compelled to conform to the same standards. If the employer then went to his bank and asked for an overdraft to carry through his part of the programme, the banker would have no difficulty in obliging him, for he would know that the increased purchasing power of the whole community would result in increased orders and greater prosperity for the particular firm with which he was doing business. It is by this means that Fascism would raise the standard of life of the people, and place that larger volume of currency and credit in circulation which is necessary to finance the increased productive power of industry.

Clearly this policy of monetary expansion must involve a complete break with the gold standard, and more conservative critics may fear for the stability of the currency in consequence. Fascism, however, points out that money is in reality a claim for goods and services, and that no person in his normal senses really goes to a bank and demands gold bullion for his currency notes; he is perfectly satisfied if he can exchange his money for those goods and services of which he stands in need. Now there are obviously plenty of goods and services available in this country at the present time: warehouses stocked with goods, in fact, and over two million of our fellow countrymen and women offering their services in vain. As long as we do not issue notes that are not covered by available goods and services there can be no danger of inflation; so Fascism will base the currency upon the broad basis of the whole productive resources of the nation, instead of upon the narrow insecure foundation of hold in the Bank of England.

Empire Autarchy

The only valid criticism of this policy of corporate organization of industry, raising, as it does, the standard of life of the whole people, lies in the argument that this country depends upon its foreign trade to a very large extent, and cannot therefore afford a higher standard of life than its competitors upon the markets of the world. This argument can, in fact, be refuted, however, by reference to the example of Henry Ford, who produced the world’s cheapest motor car while paying the highest wages. He was enabled to do this by the huge home market in America, which enabled him to introduce mass-production methods, and compete favorably upon the markets of countries with a much lower standard of life. Actually we are losing our markets overseas, not because our goods are dearer than those of our competitors, so much as because these markets are being closed to us by insurmountable tariff barriers, behind which native industries are being rapidly developed. However cheap our goods may become, we cannot expect other countries to ruin their own industries and put their own people out of work in order to buy them. In any case oriental peoples, like the Japanese, can outbid us hopelessly when the question of wage rates is taken into account.

The export trade is not in any case essential to the well–being of a country, as it implies sending goods out of the country for foreigners to consume, instead of retaining them at home to swell the standard of life of the home population. Only the financial magnates of the City of London stand to benefit in the long run from an excess of exports, since it is upon the basis of this surplus that they float the great foreign loans, from which they draw such munificent commissions. Exports are only really justified to pay for essential imports, and the imports of this country could be very largely reduced by the exclusion of all imported goods which we can produce at home. It is a scandalous fact that large quantities of manufactured articles are imported into this country, which could be perfectly well produced here, and there is no excuse for our neglect of home agriculture merely because our resources are not sufficient to feed our entire population; we should produce at least the maximum of home grown produce before going abroad for the remainder.

Even after we have produced the maximum variety of goods in this country, it would be idle to deny that we cannot make ourselves entirely self-sufficient, but on the other hand there are very few products which we require that cannot be found somewhere within the British Empire. Fascism is no narrow Little England policy, but has a great imperial plan of autarchic development to offer to the Empire as a whole. A much larger share of the expanding home market will be offered to the dominions than was offered at Ottawa, for foreign competition will be entirely excluded. There can be no doubt whatever that the Empire as a whole will be perfectly willing to co-operate in such an economic system, which will form a completely self-sufficient Empire insulated from the effects of world crises and world depressions, and enabled to build up a higher standard of life than has yet been known.

Finally, we must imagine the corporate principles of Fascism applied to international trade. No longer will the importer be permitted to buy in any market he thinks fit, but he will be obliged to work through a Foreign Trade Board, which will use the purchasing power of the nation, as a means of gaining export markets. From the very start Fascism will adopt the policy that Britain buys from those who buy from Britain, and if any foreign country desires to sell us goods that we lack, she will be required to accept our goods in return. As other countries adopt similar methods, we shall eventually arrive at a general system of organized barter from country to country, which is the only practical means of planned international trading, free from the machinations of international finance and the bonds of international usury.

Corporate World Order

It must not be assumed that Fascism is entirely self-centred in the national sense. Certainly it is an essential feature of Fascist philosophy to put one’s own country first, but it would be rash to assume on that account that Fascism implies national rivalry and may lead to war on economic grounds. On the contrary, a very serious danger of the present system is that the ever-increasing struggle for world markets may lead to war. Indeed in the Far East wars for markets have already taken place, and it is only with difficulty that the European powers have avoided being drawn into the struggle. Actually the corporate system of economic planning will minimize the danger of war, for it will bring the economic causes of war under conscious human control. No longer will it be a question of each country’s dumping a maximum of exports upon its neighbors, but of authoritative governments in full corporate control of their national economic affairs meeting together to share and exchange the essential raw materials required for their industrial development. As there is no scarcity of these raw products, and as in fact their production has been drastically curtailed to prevent flooding the market, there should be no difficulty whatever in arriving at an amicable solution of this comparatively simple problem, when once the nations have abandoned the ridiculous idea that they can benefit themselves by ruining one another. Rivalry there certainly will be in the world of the future, but rivalry in achievement, not in competition. It is only along the lines of the corporate organization of society and of economic life that we can attain peace and prosperity in an ordered world. Let us play our part by putting our own national affairs in order and encouraging other nations to do the same.

EXCERPTED FROM FASCIST VOICES: ESSAYS FROM THE ‘FASCIST QUARTERLY’ 1936-1940 (2018), BLACK HOUSE PUBLISHING